Document:

exv10w1

Exhibit 10.1

Dated 20 May 2008

 

CMC ZAWIERCIE S.A.

Borrower

ABN AMRO BANK (POLSKA) S.A.

Mandated Lead Arranger

HSBC BANK PLC

ING BANK ŚLĄSKI S.A.

Lead Arrangers

BRE BANK S.A.

Arranger

and

ABN AMRO BANK (POLSKA) S.A.

Facility Agent

 

FACILITY AGREEMENT
 for a PLN
400,000,000 Term Facility

 

 

 

Contents

	 	 	 	 	 	 	 
	Clause	 	Page	 
	 
	 	 	 	 	 	 
	1
	 	Definitions and interpretation 	 	 	1	 
	2
	 	The Facility 	 	 	10	 
	3
	 	Purpose 	 	 	10	 
	4
	 	Conditions of Utilisation 	 	 	10	 
	5
	 	Utilisation 	 	 	11	 
	6
	 	Repayment 	 	 	11	 
	7
	 	Prepayment and cancellation 	 	 	12	 
	8
	 	Interest 	 	 	13	 
	9
	 	Interest Periods 	 	 	14	 
	10
	 	Changes to the calculation of interest 	 	 	15	 
	11
	 	Fees 	 	 	15	 
	12
	 	Tax gross-up and indemnities 	 	 	16	 
	13
	 	Increased Costs 	 	 	18	 
	14
	 	Other indemnities 	 	 	18	 
	15
	 	Mitigation by the Lenders 	 	 	19	 
	16
	 	Costs and expenses 	 	 	19	 
	17
	 	Representations 	 	 	20	 
	18
	 	Information undertakings 	 	 	22	 
	19
	 	Financial covenants 	 	 	25	 
	20
	 	General undertakings 	 	 	26	 
	21
	 	Events of Default 	 	 	32	 
	22
	 	Changes to the Lenders 	 	 	35	 
	23
	 	Changes to the Borrower 	 	 	37	 
	24
	 	Role of the Facility Agent and the Arrangers 	 	 	37	 
	25
	 	Conduct of business by the Parties 	 	 	41	 
	26
	 	Sharing among the Finance Parties 	 	 	42	 
	27
	 	Security Property 	 	 	43	 
	28
	 	Payment mechanics 	 	 	43	 
	29
	 	Set-off 	 	 	45	 

 

 

	 	 	 	 	 	 	 
	Clause	 	Page	 
	 
	30
	 	Notices	 	 	45	 
	31
	 	Calculations and certificates	 	 	47	 
	32
	 	Partial invalidity	 	 	47	 
	33
	 	Remedies and waivers	 	 	47	 
	34
	 	Amendments to the terms of the Finance Documents	 	 	47	 
	35
	 	Counterparts	 	 	48	 
	36
	 	Governing law	 	 	48	 
	37
	 	Jurisdiction	 	 	48	 
	Schedule 1 The original parties	 	 	49	 
	Schedule 2 Conditions precedent	 	 	51	 
	Schedule 3 Wnioski / Requests	 	 	53	 
	Schedule 4 Form of Transfer Certificate	 	 	56	 
	Schedule 5 Form of Compliance Certificate	 	 	58	 
	Schedule 6 Allowed Additional Bank Accounts	 	 	59	 

 

 

THIS AGREEMENT is dated 20 May 2008 and made between:

	(1)	 	CMC ZAWIERCIE S.A. a joint stock company incorporated under the laws of Poland, with its
seat in Zawiercie, with its registered address: ul. Piłsudskiego 82, 42-400 Zawiercie,
registered in the National Court Register under no. KRS 0000017925 by the District Court in
Częstochowa, REGON: 272819315, NIP: 649-00-01-173, share capital and paid in capital: PLN
140,000,000, as the borrower (the Borrower);
	 
	(2)	 	ABN AMRO BANK (POLSKA) S.A. a joint stock company incorporated under the laws of Poland,
with its seat in Warsaw, with its registered address: ul. 1-go Sierpnia 8A, 02-134
Warszawa, registered in the National Court Register under no. KRS 0000020489 by the
District Court for the capital city of Warsaw, REGON: 012019504, NIP: 526-030-12-38, the
share capital and paid in capital: PLN 188,397,900, as the mandated lead arranger and
facility agent acting on behalf of the Lenders (the Facility Agent or AAPL as the context
requires);
	 
	(3)	 	HSBC BANK PLC, a bank incorporated and existing under the laws of England, with its seat
in London, United Kingdom, with its registered address: 8 Canada Square, London, E14 5HQ,
United Kingdom, as the lead arranger (HBEU);
	 
	(4)	 	ING BANK ŚLĄSKI S.A., a joint stock company incorporated under the laws of Poland,
with its seat in Katowice, with registered address: ul. Sokolska 34, 40-086 Katowice,
registered in the National Court Register under no. KRS 0000005459 by the District Court
in Katowice, REGON: 271514909, NIP: 634-013-54-75, the share capital and paid in capital:
PLN 130,100,000, as the lead arranger (ING);
	 
	(5)	 	BRE BANK S.A. a joint stock company incorporated under the laws of Poland, with its
seat in Warsaw, with its registered address at ul. Senatorska 18, 00-950 Warszawa,
registered in the National Court Register under no. KRS 0000025237 by the District Court
for the capital city of Warsaw, REGON: 001254524, NIP: 526-021-50-88, the share capital
and paid in capital as at 1 January 2008: PLN 118,642,672, as the arranger (BRE); and
	 
	(6)	 	THE FINANCIAL INSTITUTIONS listed in Part 2 of schedule 1 as the original lenders (the
Original Lenders).

NOW THIS AGREEMENT is hereby agreed as follows:

	1	 	Definitions and interpretation
	 
	1.1	 	Definitions
	 
	 	 	In this Agreement:
	 
	 	 	AANV means ABN AMRO BANK N.V. a company incorporated under the laws of the Netherlands,
with its seat in Amsterdam, with its registered address: Gustav Mahleraan 10, 1082 PP
Amsterdam, the Netherlands.
	 
	 	 	Accounting Act (Ustawa o Rachunkowości) means the Act on accounting of 29 September 1994
(Journal of Laws from 2002 no. 76, item 694, as amended).
	 
	 	 	Affiliate (Podmiot Powiązany) means, in relation to any person, a Subsidiary of that
person or a Holding Company of that person or any other Subsidiary of that Holding
Company.
	 
	 	 	Approved Bank (Zatwierdzony Bank) means ABN AMRO Bank (Polska) S.A., HSBC Bank Polska
S.A. (or HSBC Bank plc after it acquires the banking enterprise (przedsiębiorstwo
bankowe) from HSBC Bank Polska S.A.), ING Bank Śląski S.A. and BRE Bank S.A
	 
	 	 	Approved Parent (Zatwierdzony Podmiot Dominujący) means Commercial Metals Company.
	 
	 	 	Arranger (Organizator) means any of AAPL, BRE, HBEU and ING.
	 
	 	 	Auditors (Rewidenci) means any of PricewaterhouseCoopers, Ernst & Young, KPMG or Deloitte
or such other internationally organised accountancy firm approved by the Facility Agent
and appointed to

 

 

	 	 	audit the annual separate and consolidated financial statements of the Borrower prepared
in accordance with the Accounting Act.
	 
	 	 	Authorisation (Zezwolenie) means an authorisation, consent, approval, resolution, licence or
exemption.
	 
	 	 	Availability Period (Okres Udostępnienia) means the period commencing from and including the date
of this Agreement up to and including the date falling 18 Months from and including the date of
this Agreement.
	 
	 	 	Available Commitment (Dostępna Kwota Zaangażowania) means a Lender’s Commitment minus:

	 	(a)	 	the amount of its participation in any outstanding Loans; and
	 
	 	(b)	 	in relation to any proposed Utilisation, the amount of its participation in any Loans that
are due to be made on or before the proposed Utilisation Date.

	 	 	Available Facility (Dostępny Kredyt) means the aggregate for the time being of each Lender’s
Available Commitment.
	 
	 	 	Bank Guarantee Fund Cost (Koszty Bankowego Funduszu Gwarancyjnego) means the fee payable by a
Lender in accordance with the Polish Act on the Bank Guarantee Fund of 14 December 1994 (as
amended) and its secondary legislation, or any other applicable regulatory or central bank
requirement relating to the Facility, including any fees payable to successor to such guarantee
fund.
	 
	 	 	Borrower’s Loans (Pożyczki Kredytobiorcy) means the loans granted by the Borrower to:

	 	(a)	 	CMC Centrozłom sp. z o.o. for the amount of PLN 28,000,000 with maturity date falling on
31
January 2012, and
	 
	 	(b)	 	SCRAPENA S.A. for the amount of PLN 11,000,000 with maturity date falling on 31 March 2010.

	 	 	Break Costs (Koszty Przedterminowej Spłaty) means the amount (if any) by which:

	 	(a)	 	the interest which a Lender should have received for the period from the date of the
receipt of all or any part of its participation in the Loan or Unpaid Sum to the last day of the
current
Interest Period in respect of the Loan or Unpaid Sum, had the principal amount or Unpaid
Sum
received been paid on the last day of that Interest Period

	 	 	exceeds:

	 	(b)	 	the amount which that Lender would be able to obtain by placing an amount equal to the principal amount or Unpaid Sum received by it on deposit with a leading bank in the Warsaw
interbank market for a period starting on the Business Day following receipt or recovery
and
ending on the last day of the current Interest Period.

	 	 	Business Day (Dzień Roboczy) means a day (other than a Saturday or a statutory non-working day)
on which banks are open for general business in Amsterdam, London and Warsaw.
	 
	 	 	Cash Pool Arrangements (Porozumienia Cash Pool) means multilateral arrangements entered into by
any member of the Group with any other member of the Group or with CMC Poland S.A. with its seat
in Zawiercie and its Subsidiaries concerning the so-called “cash pooling”, netting or set-off
performed in the ordinary course of its banking arrangements for the purpose of netting debit and
credit balances on bank accounts of parties to such arrangements.
	 
	 	 	Change of Control (Zmiana Kontroli) means a situation in which any person (other than the Approved
Parent) or a group of persons acting in agreement gains, direct or indirect, Control over the
Borrower (in this context any reference to “50%” in the definition of the term “Control” shall be
the reference to
“30%).

2

 

	 	 	Commitment (Kwota Zaangażowania) means:

	 	(a)	 	in relation to an Original Lender, the amount set — in relation to a
specified period — opposite its name under the heading “Commitment” in Part 2 of
schedule 1 (The Original Lenders) and the amount of any other Commitment transferred
to it under this Agreement; and
	 
	 	(b)	 	in relation to any other Lender, the amount of any Commitment transferred to
it under this Agreement,

	 	 	to the extent not cancelled, reduced or transferred by it under this Agreement.
	 
	 	 	Compliance Certificate (Zaświadczenie o Zgodności) means a certificate substantially in
the form set out in schedule 5 (Form of Compliance Certificate).
	 
	 	 	Control (Kontrola) means, in relation to a body corporate having a legal personality, the
right, by virtue of holding shares (akcje/udziały) in that body corporate or any contract
or other arrangement with any holder of shares (akcje/udziały) in that body corporate, to
exercise or control the exercise of more than 50 per cent of the total voting rights
conferred upon the holders of the entire issued share capital for the time being of that
body corporate or the title to over 50 per cent of the total number of shares
(akcje/udziały) in that body corporate and Controlled shall be construed accordingly.
	 
	 	 	Covenant Testing Date (Data Kontroli Zobowiązań) means the First Covenant Testing Date
and every subsequent 28 February and 31 August of each year.
	 
	 	 	Core Business of the Borrower (Podstawowa Dzialalność Kredytobiorcy) means production of
steel and steel products.
	 
	 	 	Current Lenders (Obecni Wierzyciele) means: AANV, AAPL, BRE, Raiffeisen Bank Polska S.A.,
Bank Polska Kasa Opieki S.A., Wojewódzki Fundusz Ochrony Środowiska i Gospodarki Wodnej w
Katowicach and Centrum Zawiercie Sp. z o.o.
	 
	 	 	Dangerous Substance (Niebezpieczna Substancja) means one or more substances or substance
mixtures that — owing to their chemical, biological or radioactive properties — may, if
improperly handled, pose a threat to human life or health or to the environment; any of
the following may be a dangerous substance: raw materials, products, semi finished
products, waste, as well as substances created as a result of a breakdown.
	 
	 	 	Default (Naruszenie) means an Event of Default or an event or circumstance specified in
clause 21 (Events of Default) which, in the reasonable opinion of the Borrower or the
Facility Agent:

	 	(a)	 	with the expiry of a grace period, or
	 
	 	(b)	 	the giving of notice, or
	 
	 	(c)	 	the making of determination under the Finance Documents,

	 	 	could be an Event of Default in accordance with clause 21.
	 
	 	 	Environment (Środowisko) means all, or any of, the air (including the air within natural
or man-made structures above or below ground), water (including ground and surface water)
and land (including buildings, surface and sub-surface soil).
	 
	 	 	Environmental Claim (Roszczenie Środowiskowe) means any claim by any person:

	 	(a)	 	in respect of any loss or liability suffered or incurred by that person as
a result of any violation of Environmental Law; or
	 
	 	(b)	 	that arises as a result of or in connection with Environmental Contamination.

	 	 	Environmental Contamination (Skażenie Środowiska) means an emission, which may be harmful
to human health or the environment, cause damage to material goods, worsen aesthetic
values of the environment or be incompatible with other reasonable ways of using the
environment.

3

 

	 	 	Environmental Law (Prawo Ochrony Środowiska) means all laws and regulations applicable to the
Borrower and having legal effect concerning the protection of human health, the Environment, the
conditions of the work place or the generation, transportation, storage, treatment or disposal of
Dangerous Substances.
	 
	 	 	Environmental Licence (Zezwolenie Środowiskowe) means any Authorisation required by any
Environmental Law.
	 
	 	 	Event of Default (Przypadek Naruszenia) means any event or circumstance specified as such in clause 21 (Events of Default).
	 
	 	 	Existing Security (Istniejące Zabezpieczenie) means the following Security created by the Borrower:

	 	(a)	 	Security in respect of Loan Agreement No. 243/2002/89/OA/od/P of 19 December 2002 (with
annexes) made between Wojewódzki Fundusz Ochrony Środowiska i Gospodarki Wodnej w Katowicach
and the Borrower:

	 	(i)	 	assignment of receivables in the amount of PLN 2,063,813 from a fixed-term
deposit account kept in ABN-AMRO Bank (Polska) in Warsaw owned by the Borrower and
future receivables in the amount of PLN 2,063,813 from fixed-term deposit accounts
opened for subsequent periods with an irrevocable power of attorney to use those
accounts as authorized;
	 
	 	(ii)	 	ordinary mortgage in the amount of PLN 7,244,631 on a real property situated
in Zawiercie with an area of 8.371 ha, entered in the land and mortgage register no.
KW 5048;
	 
	 	(iii)	 	notarial deed — statement on the Borrower’s submission to execution under
Article 777 of the Code of civil procedure.

	 	(b)	 	Surety under civil law for CMC Poland S.A. in relation to Bank Ochrony Środowiska S.A. in
respect of a credit facility granted to CMC Poland S.A. in the amount of PLN 37,935,898
(Agreement no. 1/l/KONS-WFOŚi GW/2005/128 as part of a syndicate of 5 September 2005) and
credit facility granted to CMC Poland S.A. in the amount of PLN 2,000,000 (Agreement no.
5/05/W-12/OZ-UML03-3/128 of 5 September 2005) with all relating rights, limited to the
amount of PLN 45,000,000.

	 	 	Facility (Kredyt) means the term loan facility made available under this Agreement as described
in clause 2 (Facility).
	 
	 	 	Facility Office (Biuro Kredytu) means the bank’s entity notified by a Lender to the Facility
Agent in writing on or before the date it becomes a Lender (or, following that date, by not less
than five Business Days’ written notice) as the bank’s entity through which it will perform its
obligations under this Agreement.
	 
	 	 	Fee Letter (Umowa w Sprawie Wynagrodzenia) means the letter dated on the date of this Agreement
executed by the Borrower and the Facility Agent setting out the agent’s fee referred to in clause
11 (Fees).
	 
	 	 	Final Repayment Date (Ostateczna Data Spłaty) means the date falling five years after the date of
this Agreement.
	 
	 	 	Finance Document (Dokument Finansowania) means this Agreement, the Security Documents, the Short
Term Facility Finance Documents, the Fee Letter, each Submission to Execution and any other
document designated as such by the Facility Agent and the Borrower.
	 
	 	 	Finance Party (Strona Finansowania) means the Facility Agent, the Arrangers and each of the
Lenders.
	 
	 	 	Financial Indebtedness (Zadłużenie Finansowe) means any indebtedness for or in respect of:

	 	(a)	 	moneys borrowed;

4

 

	 	(b)	 	any amount raised by acceptance under any acceptance credit facility;
	 
	 	(c)	 	any amount raised pursuant to any note purchase facility or the issue of bonds,
notes (including promissory notes) or any similar instrument;
	 
	 	(d)	 	the amount of any liability in respect of any lease contract which would, in
accordance with PAS, be treated as a finance or capital lease;
	 
	 	(e)	 	receivables sold or discounted, other than:

	 	(i)	 	any receivables to the extent they are sold on a non-recourse basis;
	 
	 	(ii)	 	any receivables to the extent they are sold on a limited recourse
basis (not higher, however, than 10 per cent of the amount of such receivables
calculated in reference to the most recently delivered US GAAP Consolidated
Financial Statements) in the amount to which the right to recourse is not
applicable;

	 	(f)	 	any amount raised under a transaction (including any forward sale or purchase
agreement) having the commercial effect of a borrowing, in particular the sale of assets
with an obligation to repurchase them at a specific price and a sale and leaseback
transaction;
	 
	 	(g)	 	any derivative transaction entered into in connection with protection against or
benefit from fluctuation in any rate or price (and, when calculating the value of any
derivative transaction, only the marked to market value shall be taken into account);
	 
	 	(h)	 	any counter-indemnity obligation in respect of a guarantee, indemnity, bond,
standby or documentary letter of credit or any other instrument issued by a bank or
financial institution except for discounted and confirmed letters of credit; and
	 
	 	(i)	 	the amount of any liability in respect of any guarantee or indemnity for any of
the items referred to in paragraphs (a) to (h) above,

	 	 	except for transactions concluded within the Group by its members.
	 
	 	 	First Covenant Testing Date (Pierwsza Data Kontroli Zobowiązań) means 29 February 2008.
	 
	 	 	First Repayment Date (Pierwsza Data Spłaty) means the date falling eighteen Months after the
date of this Agreement.
	 
	 	 	Group (Grupa) means the Borrower and all its respective direct or indirect Subsidiaries for
the time being including: CMC Centrozłom sp. z o.o., CMC Putex sp. z o.o., Scrapena S.A., CMC
Serwis sp. z o.o. w likwidacji, Centrum Zawiercie sp. z o.o. w likwidacji.
	 
	 	 	Holding Company (Spółka Holdingowa) means, in relation to a company or corporation, any other
company or corporation in respect of which it is a Subsidiary.
	 
	 	 	Interest Period (Okres Odsetkowy) means, in relation to the Loan, each period determined in
accordance with clause 9 (Interest Periods) and, in relation to an Unpaid Sum, each period
determined in accordance with clause 8.3 (Default interest).
	 
	 	 	Investment in Other Instruments (Inwestycje w Inne Instrumenty) means at any time:

	 	(a)	 	deposit certificates issued by the Approved Bank, maturing up to one year from a
relevant issue date,
	 
	 	(b)	 	investment in transferable debt instruments issued or guaranteed by the Government
of the Republic of Poland, the United States of America, the United Kingdom, any member
state of the European Economic Area, or Member State of the European Union or by their
institution or agency being assigned the equivalent rating, maturing up to one year from
a relevant issue date, which are non replaceable or exchangeable into any other
securities;

5

 

	 	(c)	 	commercial papers which are non replaceable or exchangeable into any other securities
and which:

	 	(i)	 	may be traded in a recognized market;
	 
	 	(ii)	 	have been issued by an issuer registered in the Republic of Poland, the United
States of
America, the United Kingdom, any member state of the European Economic Area or
Member State of the European Union;
	 
	 	(iii)	 	mature within one year from a relevant issue date; and
	 
	 	(iv)	 	have been assigned rating of at least A-1 in the classification by
Standard & Poor’s Rating Services, of at least F-1 in the classification by Fitch
Ratings Ltd or at least by P-1 in the classification by Moody’s Investor Services
Limited, or if no rating is available, its issuer has been assigned an equivalant
rating with respect to its unsecured long-term liabilities with no loan support;

	 	(d)	 	investment into the market money funds which (i) have been assigned rating of at
least A-1 in the classification by Standard & Poor’s Rating Services, of at least F-1 in
the classification by Fitch Ratings Ltd or at least by P-1 in the classification by
Moody’s Investor Services Limited, (ii) in general, invest all assets into securities as
described in (a) through (d) above, and (iii) may be redeemed at most 30 days in
advance; or
	 
	 	(e)	 	any other debt securities approved by the Majority Lenders,

	 	 	in each case, referred to above, which have not been issued or guaranteed by any member of
the Group and which are not subject of any Security.
	 
	 	 	Investment Project (Inwestycja) means the investment project consisting in the development of
a new Danielli roll line with warehouses and infrastructure necessary for the proper
operation of a roll mill.
	 
	 	 	Lender (Kredytodawca) means:

	 	(a)	 	any Original Lender; and
	 
	 	(b)	 	any bank, financial institution, trust, fund or other entity which has become a
Party in accordance with clause 22 (Changes to the Lenders),

	 	 	which in each case has not ceased to be a Party in accordance with the terms of this
Agreement.
	 
	 	 	Loan (Ciągnienie) means the loan made or to be made under the Facility or the principal
amount outstanding for the time being of the Facility.
	 
	 	 	Loan Amount (Kwota Ciągnienia) means, in relation to a Loan, the amount specified in the
Utilisation Request delivered by the Borrower for that Loan adjusted to reflect any
repayment, prepayment, consolidation or division of the Loan.
	 
	 	 	Majority Lenders (Kredytodawcy Większościowi) means:

	 	(a)	 	if there is no Loan then outstanding, a Lender or Lenders whose Commitments
aggregate more than 662/3 per cent of the Total Commitments (or,
if the Total Commitments have been reduced to zero, aggregated more than 662/3 per cent of
the Total Commitments immediately prior to the reduction); or
	 
	 	(b)	 	at any other time, a Lender or Lenders whose participations in the Loan then
outstanding aggregate more than 662/3 per cent of all the Loan then outstanding.

	 	 	Margin (Marża) means an interest rate of 0.79 per cent per annum.
	 
	 	 	Month (Miesiąc) means a period starting on one day in a calendar month and ending on the
numerically corresponding day in the next calendar month, except that:

6

 

	 	(a)	 	if the numerically corresponding day is not a Business Day, that period shall end on
the next Business Day in that calendar month in which that period is to end if there is
one, or if there is not, on the immediately preceding Business Day;
	 
	 	(b)	 	if there is no numerically corresponding day in the calendar month in which that
period is to end, that period shall end on the last Business Day in that calendar month;
and
	 
	 	(c)	 	if an Interest Period begins on the last Business Day of a calendar month, that
Interest Period shall end on the last Business Day in the calendar month in which that
Interest Period is to end.

	 	 	The above rules will only apply to the last Month of any period.
	 
	 	 	New Financing (Nowe Finansowanie) has the meaning given to this term in clause 20.19.
	 
	 	 	Original Financial Statements (Pierwotne Sprawozdania Finansowe) means the consolidated
financial statements of the Borrower for the financial year ended 31 August 2007 prepared in
accordance with US GAAP.
	 
	 	 	Quotation Day (Dzień Kwotowań) means, in relation to any period for which an interest rate is
to be determined, a day falling two Business Days before the first day of that period.
	 
	 	 	Party (Strona) means a party to this Agreement.
	 
	 	 	Permitted Acquisition (Dozwolone Nabycie) means:

	 	(a)	 	acquisition of securities being the Investment in Other Instruments;
	 
	 	(b)	 	acquisition of shares (akcje/udziały) under the Permitted Issue;
	 
	 	(c)	 	acquisition of shares (akcje/udziały) in a company conducting business activities
similar to those conducted by the Borrower, acquisition of an enterprise or an organized
part of an enterprise of an entity conducting activities similar to those conducted by
the Borrower, using own resources, the proceeds of this Facility or cash raised under
the Permitted Issue, provided however that:

	 	(i)	 	in respect of the acquisition of shares (akcje/udziały) — the
operating result plus amortization of the acquired company for the last financial
year is above zero (except for the acquisition of shares (akcje/udziały) of
companies handling scrap metal); and
	 
	 	(ii)	 	the Borrower fulfils the Finance Covenants after such acquisition; and
	 
	 	(iii)	 	the aggregate purchasing price of those shares (akcje/udziały),
enterprise or its organized part is not higher than PLN 100,000,000 for
acquisitions carried out during one financial year of the Borrower.

	 	 	Permitted Issue (Dozwolona Emisja) means:

	 	(a)	 	the issue of the Borrower’s ordinary shares when it does not cause the Change of
Control over the Borrower; or
	 
	 	(b)	 	the issue of shares (akcje/udziały) by a member of the Group.

	 	 	Power of Attorney to the Bank Accounts (Pełnomocnictwo do Rachunków Bankowych) means the
Power of Attorney to the Bank Accounts issued by the Borrower in favour of each of the
Lenders in respect of bank accounts kept in a given Lender or — if a given Lender does not
operate any bank accounts of the Borrower — in respect of bank accounts kept in Affiliates of
a given Lender, as well as the Power of Attorney to the Bank Accounts issued by the Borrower
in favour of the Facility Agent in respect of all bank accounts kept for the Borrower.
	 
	 	 	PLN or Zloty means Polish Zloty, the lawful currency of the Republic of Poland from time to
time
	 
	 	 	Reference Banks (Banki Referencyjne) means the head office in Warsaw of each of the Arrangers.

7

 

	 	 	Repayment Date (Data Spłaty) means:

	 	(a)	 	The First Repayment Date,
	 
	 	(b)	 	13 subsequent Repayment Dates, the first of which falls three months after the First
Repayment Date and each next one three months after the previous Repayment Date; and
	 
	 	(c)	 	the Final Repayment Date.

	 	 	Screen Rate (Kwotowana Stopa Procentowa) means the WIBOR interest rate displayed on the
appropriate page of the Reuters screen as interest rate per annum in respect of a given period. If
the agreed page is replaced or service ceases to be available, the Facility Agent may specify
another page or service displaying the appropriate rate after consultation with the Borrower and
the Lenders.
	 
	 	 	Security (Zabezpieczenie) means a mortgage (including any compulsory mortgage), pledge including
registered pledge, lien (including any tax lien), security assignment, security transfer of title,
security deposit (kaucja), promissory note (weksel własny) issued for the purpose of giving of
security, power of attorney to a bank account, guarantee (poręczenie), guarantee (aval) made in
relation to, or on promissory note, accession to a debt of a third party and/or assumption of such
debt or any other agreement or arrangement having an equivalent effect in another jurisdiction,
however, for the avoidance of doubt expressly excluding retention of title clauses.
	 
	 	 	Security Documents (Dokumenty Zabezpieczenia) means:

	 	(a)	 	Power of Attorney to the Bank Accounts; and
	 
	 	(b)	 	each Submission to Execution.

	 	 	Security Property (Przedmiot Zabezpieczenia) means any funds deposited on the Borrower’s accounts
with respect to which the Power of Attorney to the Bank Accounts was issued.
	 
	 	 	Selection Notice (Zawiadomienie o Wyborze Okresu Odsetkowego) means a notice substantially in the
form set out in Part 2 of schedule 3 (Requests) given in accordance with clause 9 (Interest
Periods).
	 
	 	 	Short Term Facility Agreement (Umowa Kredytu Krótkoterminowego) means the PLN 100,000,000 Short
Term Facility Agreement concluded between the Borrower and the Arrangers or their Subsidiaries on
or about the date of this Agreement.
	 
	 	 	Short Term Facility Finance Documents (Dokumenty Finansowania Dotyczące Kredytu Krótkoterminowego)
means the term “Finance Documents” defined in the Short Term Facility Agreement.
	 
	 	 	Short Term Facility Utilisation (Wykorzystanie Kredytu Krótkoterminowego) means the term
“Utilisation” defined in the Short Term Facility Agreement.
	 
	 	 	Submission to Execution (Oświadczenie o Poddaniu się Egzekucji) means a submission to execution
by the Borrower in favour of each Lender in a notarised form with respect to AANV and HBEU and in
the form required under the Banking Law of 29 August 1997 with respect to other Lenders.
	 
	 	 	Subsidiary (Podmiot Zależny) of a person means: (a) any other person directly or indirectly
Controlled by such person or (b) of whose dividends or distributions on voting share capital that
person is entitled to receive more than 50 per cent.
	 
	 	 	Tax (Podatek) means any tax (including tax on civil legal acts), levy, impost, duty or other
charge or withholding of a similar nature (including any penalty or interest payable in
connection with any failure to pay or any delay in paying any of the same).
	 
	 	 	Total Commitments (Całkowita Kwota Zaangażowania) means the aggregate of the Commitments at the
given date.

8

 

	 	 	Transfer Certificate (Oświadczenie o Przeniesieniu) means a certificate substantially in the
form set out in schedule 4 (Form of Transfer Certificate) or any other form agreed between
the Facility Agent and the Borrower.
	 
	 	 	Transfer Date (Data Przeniesienia) means, in relation to a transfer, the later of:

	 	(a)	 	the proposed Transfer Date specified in the Transfer Certificate; or
	 
	 	(b)	 	the date on which the Facility Agent executes the Transfer Certificate.

	 	 	Unpaid Sum (Niezapłacona Kwota) means any sum due and payable but unpaid by the Borrower
under the Finance Documents.
	 
	 	 	US GAAP (Generally Accepted Accounting Principles in the United States) means standards and
accounting principles established by Financial Accounting Standards Board in the United
States.
	 
	 	 	Utilisation (Wykorzystanie) means utilisation of the Facility.
	 
	 	 	Utilisation Date (Data Wykorzystania) means the date of the Utilisation, being the date on
which the Loan is to be made available.
	 
	 	 	Utilisation Request (Żądanie Wyplaty) means a notice substantially in the form set out in Part
1 of schedule 3 (Requests).
	 
	 	 	VAT (Podatek VAT) means value added tax as provided for in Value Added Tax Act of 11 March
2004 as amended and any other tax of a similar nature.
	 
	 	 	WIBOR means, in relation to the Loan:

	 	(a)	 	the applicable Screen Rate; or
	 
	 	(b)	 	(if no Screen Rate is available for the Interest Period of the Loan) the
arithmetic mean of the rates (rounded upwards to four decimal places) as supplied to the
Facility Agent at its request quoted by the Reference Banks to leading banks in the
Warsaw interbank market,

	 	 	as of 11am on the Quotation Day for the offering of deposits in PLN for a period equal to or
as close as possible to the length of the Interest Period of a given Loan.
	 
	1.2	 	Construction
	 
	1.2.1	 	Unless a contrary indication appears, any reference in this Agreement to:

	 	(a)	 	the Facility Agent, Arrangers, any Finance Party, any Lender, the Borrower or any Party
shall be construed so as to include its successors in title, permitted assigns and
permitted transferees;
	 
	 	(b)	 	assets includes present and future properties, revenues and rights of every
description;
	 
	 	(c)	 	a Finance Document or any other agreement or instrument is a reference to
that Finance Document or other agreement or instrument as amended or novated;
	 
	 	(d)	 	indebtedness includes any obligation (whether incurred as principal or as
surety) for the payment or repayment of money, whether present or future, actual or
contingent;
	 
	 	(e)	 	a person includes any natural or legal person, company, corporation,
government, state or agency of a state or any association, trust or partnership
(whether or not having separate legal personality) or two or more of the foregoing;
	 
	 	(f)	 	a regulation includes any regulation, rule, official directive, request or
guideline (whether or not having the force of law) of any governmental,
intergovernmental or supranational body, agency, department or regulatory,
self-regulatory or other authority or organisation;

9

 

	 	(g)	 	a certified copy means, in relation to the documents required to be submitted
by the Borrower under the Finance Documents, a copy which is certified as true and
complete copy by a legal adviser or two members of the management board of the
Borrower;
	 
	 	(h)	 	a clause is a reference to a clause of this Agreement;
	 
	 	(i)	 	a provision of law is a reference to that provision as amended or re-enacted; and
	 
	 	(j)	 	a time of day is a reference to Warsaw time.

	1.2.2	 	Section, clause and schedule headings are for ease of reference only.
	 
	1.2.3	 	Unless a contrary indication appears, a term used in any other Finance Document or in any
notice given under or in connection with any Finance Document has the same meaning in that
Finance Document or notice as in this Agreement.
	 
	1.2.4	 	A Default (other than an Event of Default) is continuing if it has not been remedied or
waived and an Event of Default is continuing if it has not been remedied or waived.
	 
	2	 	The Facility
	 
	2.1	 	The Facility
	 
	 	 	Subject to the terms of this Agreement, the Lenders make available to the Borrower a term
loan facility in an aggregate amount up to the Total Commitments.
	 
	2.2	 	Finance Parties’ rights and obligations
	 
	2.2.1	 	The obligations of each Finance Party under the Finance Documents are several. Failure by a
Finance Party to perform its obligations under the Finance Documents does not affect the
obligations of any other Party under the Finance Documents. No Finance Party is responsible
for the obligations of any other Finance Party under the Finance Documents.
	 
	2.2.2	 	The rights of each Finance Party under or in connection with the Finance Documents are
separate and independent rights and any debt arising under the Finance Documents to a Finance
Party from the Borrower shall be a separate and independent debt.
	 
	2.2.3 	 	A Finance Party may, except as otherwise stated in the Finance Documents, separately
enforce its rights under the Finance Documents.
	 
	3	 	Purpose
	 
	3.1	 	Purpose
	 
	 	 	The Borrower shall apply all amounts borrowed by it under the Facility towards its
general corporate purposes including, in particular, towards financing of expenses
related to the Investment Project.
	 
	3.2	 	Monitoring
	 
	 	 	Otherwise as required by the mandatory provisions of Polish law no Finance Party is
bound to monitor or verify the application of any amount made available pursuant to this
Agreement.
	 
	4	 	Conditions of Utilisation
	 
	4.1	 	Initial conditions precedent
	 
	 	 	The Borrower may deliver the first Utilisation Request only if the Facility Agent has
received all of the documents and other evidence listed in Part 1 of Schedule 2
(Conditions precedent) in form and substance satisfactory to the Facility Agent. The
Facility Agent shall notify the Borrower and the Lenders promptly upon being so satisfied
and shall inform the Borrower within 7 days from the date of

10

 

	 	 	this Agreement which of the documents and other evidence listed in Schedule 2
(Conditions precedent) have not been delivered to its satisfaction.
	 
	4.2	 	Further conditions precedent
	 
	 	 	The Lenders will only be obliged to comply with clause 5.4 (Lenders’ participation) if on
the date of the Utilisation Request and on the proposed Utilisation Date:
	 
	4.2.1	 	no Default is continuing or would result from the proposed Loan; and
	 
	4.2.2	 	the representations to be made by the Borrower are true and correct in all material
respects.
	 
	5	 	Utilisation
	 
	5.1	 	Delivery of the Utilisation Request
	 
	 	 	The Borrower may utilise the Facility by delivery to the Facility Agent of a duly
completed Utilisation Request not later than by 10 am four Business Days prior to the
intended Utilisation Date.
	 
	5.2	 	Completion of a Utilisation Request
	 
	5.2.1	 	The Utilisation Request is irrevocable and will not be regarded as having been duly completed
unless:

	 	(a)	 	the proposed Utilisation Date is a Business Day within the Availability Period; and
	 
	 	(b)	 	the amount of the Utilisation complies with clause 5.3 (Amount), and
	 
	 	(c)	 	the proposed Interest Period complies with clause 9 (Interest Periods).

	5.2.2	 	Only one Loan may be requested in each Utilisation Request.
	 
	5.3	 	Amount
	 
	 	 	The amount of the proposed Loan must be a minimum of PLN 10,000,000 or its integral
multiple, or if less, the Available Facility.
	 
	5.4	 	Lenders’ participation
	 
	5.4.1	 	The Facility Agent shall promptly (but no later than 3 Business Days prior to the proposed
date of the Loan) inform the Lenders of a duly submitted Utilisation Request and of the
participation of a given Lender in the requested Loan.
	 
	5.4.2	 	If the conditions set out in this Agreement have been met, each Lender shall make its
participation in the Loan available by the Utilisation Date through its Facility Office.
	 
	5.4.3	 	The amount of each Lender’s participation in each Loan will be equal to the proportion
borne by its Available Commitment to the Available Facility immediately prior to making the
Loan.
	 
	6	 	Repayment
	 
	6.1	 	Repayment of the Loans
	 
	 	 	The Borrower shall repay the Loans in 15 equal quarterly instalments payable on the Repayment Dates.

	 
	6.2  	 	Re-borrowing
	 
	 	 	The Borrower may not re-borrow any part of the Facility which is repaid.

11

 

	6.3	 	General provisions concerning the repayment of Loans, interest and other amounts due under the
Finance Documents
	 
	6.3.1	 	The Borrower shall ensure that by 1 pm: (a) on each Repayment Date, (b) on the last
day of each Interest Period and (c) on other days in which other amounts due under Finance
Documents become payable, there are sufficient funds in a bank account kept by ABN AMRO Bank
(Polska) S.A., account no. 63 1670 0004 0000 6439 9117 1444 (Repayment Account), operated by
the Facility Agent, to repay amounts due from the Borrower under this Agreement.
	 
	6.3.2	 	The Borrower hereby authorizes the Facility Agent to debit the Repayment Account with any
amounts due and payable under this Agreement and other Finance Documents without further
instructions or authorizations.
	 
	6.3.3	 	The Facility Agent agrees to debit the Repayment Account, as provided for in clause 6.3.2
above, if there are sufficient funds in the Repayment Account to repay amounts due to be paid
by the Borrower.
	 
	7	 	Prepayment and cancellation
	 
	7.1	 	Illegality
	 
	 	 	If it becomes unlawful for a Lender to perform any of its obligations as contemplated by
this Agreement or to fund or maintain its participation in the Loan:
	 
	7.1.1	 	that Lender shall promptly notify the Facility Agent upon becoming aware of that event;
	 
	7.1.2	 	upon the Facility Agent notifying the Borrower, the Commitment of that Lender will be
immediately cancelled to zero; and
	 
	7.1.3	 	the Borrower shall repay that Lender’s participation in the Loan on the last day of the
Interest Period after the Facility Agent has notified the Borrower or, if earlier, the date
specified by the Lender in the notice delivered to the Facility Agent (being no earlier than
the last day of any applicable grace period permitted by law).
	 
	7.2	 	Mandatory prepayment and cancellation
	 
	7.2.1	 	If:
	 
	 	 	the Approved Parent ceases to have the Control over the
Borrower
	 
	 	 	then:

	 	(a)	 	the Borrower shall notify the Facility Agent upon engaging in, or
becoming aware of that event within five Business Days;
	 
	 	(b)	 	if the Majority Lenders so require:

	 	(i)	 	the Facility Agent in a notification delivered to the
Borrower, at least five Business Days in advance shall cancel the Facility
and declare all outstanding Loans, together with accrued interest, and all
other amounts accrued under the Finance Documents due and payable on the last
day of the Interest Period falling after such notification or on the day
falling 2 Months from the date of such event (whichever is earlier),
whereupon all such outstanding amounts under the Facility will become due and
payable on such date; and
	 
	 	(ii)	 	the Commitment of each Lender will be automatically cancelled to zero.

	7.2.2	 	The Commitment of each Lender will be automatically cancelled to zero on the last day of
the Availability Period.

12

 

	7.3	 	Voluntary cancellation
	 
	 	 	The Borrower may, if it gives the Facility Agent not less than 10 days’ (or such
shorter period as the Majority Lenders may agree) prior notice, cancel the whole or any
part (being a minimum amount of PLN 10,000,000) of the Available Facility. Any
cancellation under this clause 7.3 shall reduce the Commitments of all Lenders rateably.
	 
	7.4	 	Voluntary prepayment of Loans
	 
	7.4.1	 	The Borrower may on the last day of any Interest Period after the expiry of the
Availability Period, if it gives the Facility Agent not less than 10 Business Days’ prior
notice, prepay the whole or any part of any Loan (but, if in part, being an amount that
reduces the amount of the Loan by a minimum amount of PLN 10,000,000 or PLN 10,000,000
increased by an that integral multiple of PLN 5,000,000), without any premium or penalty.
	 
	7.4.2	 	A Loan may only be prepaid after the last day of the Availability Period (or, if earlier,
the day on which the Available Facility is zero).
	 
	7.4.3	 	Any prepayment under this clause 7.4 shall satisfy the obligations under clause 6.1
(Repayment of Loans) in reverse order of maturity.
	 
	7.5	 	Restrictions
	 
	7.5.1	 	Any notice of cancellation or prepayment given by any Party under this clause 7 shall be
irrevocable and, unless a contrary indication appears in this Agreement, shall specify the
date or dates upon which the relevant cancellation or prepayment is to be made and the amount
of that cancellation or prepayment.
	 
	7.5.2	 	Any prepayment under this Agreement shall be made together with accrued interest on the
amount prepaid and, subject to any Break Costs, without premium or penalty.
	 
	7.5.3	 	The Borrower may not re-borrow any part of the Loan which is prepaid.
	 
	7.5.4	 	The Borrower shall not repay or prepay all or any part of the Loan or cancel all or any
part of the Commitment except at the times and in the manner expressly provided for in this
Agreement.
	 
	7.5.5	 	No amount of the Total Commitments cancelled under this Agreement may be subsequently
reinstated.
	 
	7.5.6	 	If the Facility Agent receives a notice under this clause 7 it shall promptly forward a
copy of that notice to the Borrower or the affected Lender, as appropriate.
	 
	8	 	Interest
	 
	8.1	 	Calculation of interest
	 
	8.1.1	 	The rate of interest on the Loan for each Interest Period is the percentage rate per annum
which is the aggregate of:

	 	(a)	 	Margin; and
	 
	 	(b)	 	applicable WIBOR.

	8.1.2	 	The first day of calculating interest in relation to an Interest Period of any Loan shall
be its Utilisation Date (in the case of the first Interest Period of such Loan) or the last day of the
immediately preceding Interest Period of that Loan and the last day of calculating the interest in an Interest
Period shall be the day immediately preceding the last day of that Interest Period.

13

 

	8.2	 	Payment of interest
	 
	 	 	The Borrower shall pay accrued interest on each Loan on the last day of each
Interest Period relating thereto (and, if the Interest Period is longer than three
Months, on the dates falling at three monthly intervals after the first day of the
Interest Period).
	 
	8.3	 	Interest for delay
	 
	8.3.1	 	If the Borrower fails to pay any amount payable by it under a Finance Document on its
due date, interest shall accrue on the overdue amount from the due date up to the date of
actual payment at a rate two per cent points higher than the rate which would have been
payable if the overdue amount had, during the period of non-payment, constituted the Loan in
the currency of the overdue amount for successive Interest Periods, each of a duration
selected by the Facility Agent (acting reasonably). Any interest accruing under this clause
8.3 shall be immediately payable by the Borrower on demand by the Facility Agent.
	 
	8.3.2	 	Interest for delay (if unpaid) arising on an overdue amount will be compounded with the
overdue amount at the end of each Interest Period applicable to that overdue amount but will
remain immediately due and payable.
	 
	8.4	 	Notification of rates of interest
	 
	 	 	The Facility Agent shall promptly notify the Lenders and the Borrower of the
determination of a rate of interest under this Agreement.
	 
	9	 	Interest Periods
	 
	9.1	 	Selection of Interest Periods
	 
	9.1.1	 	The Borrower may select an Interest Period for the Loan in the Utilisation Request or (if
the Loan has already been borrowed) in a Selection Notice.
	 
	9.1.2	 	Each Selection Notice for the Loan is irrevocable and must be delivered to the Facility
Agent by the Borrower not later than 11am on the Business Day immediately prior to the
Quotation Day.
	 
	9.1.3	 	If the Borrower fails to deliver a Selection Notice to the Facility Agent in accordance
with clause 9.1.2 above, the relevant Interest Period will, subject to clauses 9.1.5 and
9.1.6, be three Months.
	 
	9.1.4	 	Subject to this clause 9, the Borrower may select an Interest Period of one or three
Months or any other period agreed between the Borrower and the Facility Agent (acting on the
instructions of all the Lenders), provided that: (a) an Interest Period shall always end on
each Repayment Date; and (b) the first Interest Period for any Loan shall end on the last
day of the Interest Period of any other Loan.
	 
	9.1.5	 	An Interest Period for the Loan shall not extend beyond the Final Repayment Date.
	 
	9.1.6	 	Each Interest Period for the Loan shall start on the Utilisation Date or (if already made)
on the last day of its preceding Interest Period.
	 
	9.2	 	Non-Business Days
	 
	 	 	If an Interest Period would otherwise end on a day which is not a Business Day, that
Interest Period will instead end on the next Business Day in that calendar Month (if
there is one) or the preceding Business Day (if there is not).
	 
	9.3	 	Consolidation of Loans
	 
	 	 	If two or more Interest Periods end on the same date those Loans will, unless that
specifies to the contrary in the Selection Notice for the next Interest Period, be
consolidated into, and treated as, a single Loan on the last day of the Interest Period.

14

 

	10	 	Changes to the calculation of interest
	 
	10.1	 	Absence of quotations
	 
	 	 	Subject to clause 10.2 (Market disruption), if WIBOR is to be determined by reference to
the Reference Banks but a Reference Bank does not supply a quotation by the 11am on the
Quotation Day, the applicable WIBOR shall be determined on the basis of the quotations of
the remaining Reference Banks.
	 
	10.2	 	Market disruption
	 
	10.2.1	 	If a Market Disruption Event (as defined below) occurs in relation to the Loan for any
Interest Period, then the rate of interest on each Lender’s share of the Loan for the Interest Period
shall be the rate per annum which is the sum of:

	 	(a)	 	the Margin; and
	 
	 	(b)	 	the rate notified to the Facility Agent by that Lender as soon as
practicable and in any event before interest is due to be paid in respect of that
Interest Period, to be that which expresses as a percentage rate per annum the
cost to that Lender of funding its participation in the Loan from whatever source
it may reasonably select.

	10.2.2	 	In this Agreement Market Disruption Event means:

	 	(a)	 	at or about noon on the Quotation Day for the relevant Interest
Period the Screen Rate is not available and none or only one of the Reference
Banks supplies a rate to the Facility Agent to determine WIBOR and Interest
Period; or
	 
	 	(b)	 	before close of business in Warsaw on the Quotation Day for the
relevant Interest Period, the Facility Agent receives notifications from a Lender
or Lenders (whose participations in the Loan exceed 24 per cent of the Loan) that
the cost to it of obtaining matching deposits in the Warsaw interbank market would
be in excess of WIBOR.

	10.3	 	Alternative basis of interest or funding
	 
	10.3.1	 	If a Market Disruption Event occurs and the Facility Agent or the Borrower so requires, the
Facility Agent and the Borrower shall enter into negotiations (for a period of not more than
thirty days) with a view to agreeing a substitute basis for determining the rate of interest.
	 
	10.3.2	 	Any alternative basis agreed pursuant to clause 10.3.1 above shall, with the prior consent
of all the Lenders and the Borrower, be binding on all Parties.
	 
	10.4	 	Break Costs
	 
	10.4.1	 	The Borrower shall, within 10 Business Days of demand by a Finance Party made with the
intermediation of the Facility Agent, pay to the Facility Agent for the account of that
Finance Party its Break Costs attributable to all or any part of the Loan or Unpaid Sum being
paid by the Borrower on a day other than the last day of an Interest Period for the Loan or
Unpaid Sum.
	 
	10.4.2	 	Each Lender shall, as soon as reasonably practicable after a demand by the Facility Agent,
provide a certificate confirming the amount of its Break Costs for any Interest Period in
which they accrue.
	 
	11	 	Fees
	 
	11.1	 	Commitment fee
	 
	11.1.1	 	The Borrower shall pay to the Facility Agent (for the account of each Lender) a commitment fee
computed at the rate of 0.30 per cent per annum on that Lender’s Available Commitment
for the Availability Period.

15

 

	11.1.2	 	The accrued commitment fee is payable on the last day of each successive calendar quarter which ends during the
Availability Period, on the last day of the Availability Period and, if the relevant Lender’s Commitment is cancelled in full,
at the time of cancellation.
	 
	11.2	 	Agent’s fee
	 
	 	 	The Borrower shall pay to the Facility Agent the agent’s fee in the amount and at the times agreed in
the Fee Letter.
	 
	11.3	 	Front-end fee
	 
	11.3.1	 	The Borrower shall pay to the Facility Agent for the account of all Arrangers a front-end
fee in the amount of PLN 1,000,000 to be allocated to them pro rata to the Commitment of each
Arranger (or in case of AAPL — pro rata to the Commitment of AANV).
	 
	11.3.2	 	The front-end fee is payable within five days from the execution date of this Agreement,
however no later than on the day of the first Utilisation of the Facility.
	 
	11.4	 	Bank Guarantee Fund Cost
	 
	 	 	The Borrower shall pay to the Facility Agent, within 15 Business Days of receipt of a
demand from a Lender (which may be made only once a year), for the account of the
relevant Lender an amount equal to such portion of the Bank Guarantee Fund Cost payable
by such Lender as, in accordance with regulations in force, is attributed to its
participation in this Agreement and its making a part of the Facility available to the
Borrower. This obligation shall survive the termination and/or expiry of this Agreement.
The Lender shall provide the Borrower with a calculation of the Bank Guarantee Fund Cost
demanded to be paid by the Borrower under this Clause 11.4.
	 
	12	 	Tax gross-up and indemnities
	 
	12.1	 	Definitions
	 
	 	 	In this Agreement:
	 
	 	 	Protected Party means a Finance Party which is or will be subject to any liability, or
required to make any payment, for or on account of Tax in relation to a sum received or
receivable (or any sum deemed for the purposes of Tax to be received or receivable)
under a Finance Document.
	 
	 	 	Tax Credit means a credit against, relief or remission for, or repayment of any Tax.
	 
	 	 	Tax Deduction means a deduction or withholding for or on account of Tax from a payment
under a Finance Document.
	 
	 	 	Tax Payment means either the increase in a payment made by the Borrower to a Finance
Party under clause 12.2 (Tax gross-up) or a payment under clause 12.3 (Tax indemnity).
	 
	12.2	 	Tax gross-up
	 
	12.2.1	 	The Borrower shall make all payments to be made by it without any Tax Deduction, unless a
Tax Deduction is required by law.
	 
	12.2.2	 	The Borrower shall promptly upon becoming aware that it must make a Tax Deduction (or that
there is any change in the rate or the basis of a Tax Deduction) notify the Facility Agent
accordingly. Similarly, a Lender shall notify the Facility Agent on becoming so aware in
respect of a payment payable to that Lender. If the Facility Agent receives such
notification from a Lender it shall notify the Borrower accordingly.
	 
	12.2.3	 	Subject to clause 12.2.6 if a Tax Deduction is required by law to be made by the Borrower,
the amount of the payment due from the Borrower shall be increased to an amount which (after
making any Tax Deduction) leaves an amount equal to the payment which would have been due if
no Tax Deduction had been required.

16

 

	12.2.4	 	If the Borrower is required to make a Tax Deduction, the Borrower shall make that
Tax Deduction and any payment required in connection with that Tax Deduction within the
time allowed and in the minimum amount required by law.
	 
	12.2.5	 	Within 30 days of making either a Tax Deduction or any payment required in connection with
that Tax Deduction, the Borrower making that Tax Deduction shall deliver to the Facility
Agent for the Finance Party entitled to the payment evidence reasonably satisfactory to that
Finance Party that the Tax Deduction has been made or (as applicable) any appropriate payment
paid to the relevant taxing authority.
	 
	12.2.6	 	Each Lender and the Borrower shall co-operate in completing any procedural formalities
necessary for the Borrower to obtain authorisation to make that payment without a Tax
Deduction or subject to a reduced Tax Deduction (as applicable), including but not limited to
rendering tax certificates, statements or other documents or information required by Polish
law. If the Lender fails to complete the procedural formalities, and the Borrower as a result
of such failure is obliged to make a Tax Deduction, the Borrower shall not be obliged to
comply with the gross-up provision set forth in clause 12.2.3 above.
	 
	12.3	 	Tax indemnity
	 
	 	 	The Borrower shall (within 10 Business Days of receipt from the Facility Agent of
reasonable evidence documenting such a claim) pay to a Protected Party an amount equal
to the liability or cost which that Protected Party has (directly or indirectly)
suffered or incurred for or on account of Tax in respect of a Finance Document, save for
circumstances where such loss or liability is attributable to the rate or the basis of
calculating Tax on the overall net income of that Protected Party.
	 
	12.4	 	Tax Credit
	 
	 	 	If the Borrower makes a Tax Payment and the relevant Finance Party determines that:
	 
	12.4.1	 	a Tax Credit is attributable either to an increased payment of which that Tax Payment forms
part, or to that Tax Payment; and
	 
	12.4.2	 	that Finance Party has obtained, utilised and retained that Tax Credit,
	 
	 	 	the Finance Party shall pay an amount to the Borrower which is necessary to leave the
Borrower (after that payment) in the same after-Tax position as it would have been in had
the Tax Payment not been required to be made by the Borrower.
	 
	12.5	 	Stamp taxes, taxes on civil legal acts and other fees and duties
	 
	 	 	The Borrower shall pay and, within 10 Business Days of demand, reimburse each Finance
Party any reasonable cost, loss or liability that Finance Party incurs in relation to
all stamp duty, tax on civil legal acts, registration, court, notarial and other similar
Taxes, fees and duties payable in respect of any Finance Document.
	 
	12.6	 	Value added tax
	 
	12.6.1	 	All consideration expressed to be payable under a Finance Document by any Party to a
Finance Party shall be deemed to be exclusive of any VAT. If VAT is chargeable on any supply
made by any Finance Party to any Party in connection with a Finance Document, that Party
shall pay to the Finance Party (in addition to and at the same time as paying the
consideration) an amount equal to the amount of the VAT.
	 
	12.6.2	 	Where a Finance Document requires any Party to reimburse a Finance Party for any costs or
expenses, that Party shall also at the same time pay and indemnify the Finance Party against
all VAT incurred by the Finance Party in respect of the costs or expenses to the extent that
the Finance Party reasonably determines that it is not entitled to credit or repayment of
the VAT.

17

 

	13	 	Increased Costs
	 
	13.1	 	Increased Costs
	 
	13.1.1	 	Subject to clause 13.3 (Exceptions) the Borrower shall, within 10 Business Days of a
demand by the Facility Agent, pay for the account of a Finance Party the amount of any
Increased Costs (as defined below) incurred by that Finance Party or any of its Affiliates
as a result of (a) the introduction of or any change in any law or (b) compliance with any
law or regulation made after the date of this Agreement, which make it necessary to incur
such Increased Costs.
	 
	13.1.2	 	In this Agreement Increased Costs means:

	 	(a)	 	a reduction in the rate of return from the Facility or on a Finance Party’s overall
capital;
	 
	 	(b)	 	an additional or increased costs; or

	 	 	which is incurred or suffered by a Finance Party to the extent that it is attributable
to that Finance Party having entered into its Commitment or funding or performing its
obligations under any Finance Document.
	 
	13.2	 	Increased Cost claims
	 
	13.2.1	 	A Finance Party intending to make a claim pursuant to clause 13.1 (Increased Costs) shall
notify the Facility Agent of the event giving rise to the claim, following which the
Facility Agent shall promptly notify the Borrower.
	 
	13.2.2	 	Each Finance Party shall, as soon as practicable after a demand by the Facility Agent,
provide a certificate with reasons confirming the amount of its Increased Costs.
	 
	13.3	 	Exceptions
	 
	 	 	Clause 13.1 (Increased Costs) does not apply to the extent any Increased Cost is:
	 
	13.3.1	 	compensated for by the payment of the Bank Guarantee Fund Cost; or
	 
	13.3.2	 	attributable to the wilful breach by the relevant Finance Party or its Affiliates of any
law or regulation, or a negligence causing such breach, or
	 
	13.3.3	 	the result of application of the provisions of clause
7.1.
	 
	14	 	Other indemnities
	 
	14.1	 	Indemnities to Finance Parties
	 
	 	 	The Borrower shall within 15 Business Days of demand, indemnify each Finance Party
against any reasonable and documented cost or actual damage (save for lost gains)
incurred by that Finance Party, provided such cost or damage has not been set off
through the payment of interest (including increased interest if due in accordance with
this Agreement) and which is a result of:
	 
	14.1.1	 	the occurrence of any Event of Default;
	 
	14.1.2	 	a failure by the Borrower to pay any amount due under a Finance Document on its due date,
including without limitation, any cost or loss arising as a result of clause 26 (Sharing
among the Finance Parties);
	 
	14.1.3	 	funding, or making arrangements to fund, its participation in the Loan requested by the
Borrower in the Utilisation Request but not made by reason of the operation of any one or
more of the provisions of this Agreement (other than by reason of default or fault of that
Lender alone); or
	 
	14.1.4	 	the Loan (or part of the Loan) not being prepaid in accordance with a notice of prepayment
given by the Borrower.

18

 

	14.2	 	Indemnity to the Facility Agent
	 
	 	 	The Borrower shall within 15 Business Days of demand indemnify the Facility Agent
against any cost, loss or liability incurred by the Facility Agent (acting reasonably),
which is documented by that agent and which is a result of:
	 
	14.2.1	 	investigating any event which it reasonably believes is a Default; or
	 
	14.2.2	 	acting or relying on any notice, request or instruction, which it believes — acting with due
diligence — to be genuine, correct and appropriately authorised.
	 
	15	 	Mitigation by the Lenders
	 
	15.1	 	Mitigation
	 
	15.1.1	 	Each Finance Party shall, in consultation with the Borrower, take all reasonable steps to
mitigate any circumstances which arise and which would result in any amount becoming payable
under or pursuant to, or cancelled pursuant to, any of clause 7.1 (Illegality), clause 12
(Tax gross-up and indemnities) or clause 13 (Increased Costs) including (but not limited to)
transferring its rights and obligations under the Finance Documents to another Affiliate or
Facility Office.
	 
	15.1.2	 	Clause 15.1.1 above does not in any way limit the obligations of the Borrower under the
Finance Documents.
	 
	15.2	 	Limitation of liability
	 
	15.2.1	 	The Borrower shall indemnify each Finance Party for all costs and expenses reasonably
incurred by that Finance Party as a result of steps taken by it under clause 15.1
(Mitigation).
	 
	15.2.2	 	A Finance Party is not obliged to take any steps under clause 15.1 (Mitigation) if, in the
opinion of that Finance Party (acting reasonably), to do so might be materially prejudicial
to it.
	 
	16	 	Costs and expenses
	 
	16.1	 	Transaction expenses
	 
	 	 	The Borrower shall (irrespectively whether any Loan has been draw down) promptly pay the
amount of all costs and expenses (including legal fees payable under a separate agreement
with the law firm Norton Rose, Piotr Strawa i Wspólnicy, spólka komandytowa, Plac
Pilsudskiego 1, 00-073 Warsaw or any other law firm agreed between the Borrower and the
Facility Agent) reasonably incurred by any of them (and documented in such demand to the
extent it is practical) in connection with the negotiation, preparation, printing,
execution and syndication of:
	 
	16.1.1	 	this Agreement and any other documents referred to in this Agreement — up to the amount
agreed in the Fee Letter; and
	 
	16.1.2	 	any other Finance Documents executed after the date of this Agreement up to the capped
amounts to be agreed from time to time prior to the execution of such other Finance Documents.
	 
	16.2	 	Amendment costs
	 
	 	 	If the Borrower requests an amendment, waiver or consent, the Borrower shall, within 10
Business Days of demand, reimburse the Facility Agent, for the amount of all costs and
expenses (including legal fees) reasonably incurred by the Facility Agent (and
documented in such demand to the extent it is practical) in responding to, evaluating,
negotiating or complying with that request or requirement.
	 
	16.3	 	Enforcement costs
	 
	 	 	The Borrower shall, within 10 Business Days of demand, pay to each Finance Party the
amount of all reasonable and documented costs and expenses (including legal fees)
incurred by that Finance Party in connection with the enforcement of, or the
preservation of any rights under, any Finance Document.

19

 

	17	 	Representations
	 
	 	 	The Borrower makes the representations and warranties set out in this clause 17 to
each Finance Party on the date of this Agreement.
	 
	17.1	 	Status
	 
	17.1.1	 	The Borrower is a Polish joint-stock company (spólka akcyjna), duly incorporated and
validly existing under the laws of Poland.
	 
	17.1.2	 	The Borrower and each of its Subsidiaries have the power to own or have other title
to their assets and carry on their business as it is being conducted.
	 
	17.2	 	Binding obligations
	 
	 	 	The obligations expressed to be assumed by the Borrower in each Finance Document, to
which it is a party, are, subject to any general principles of mandatory provisions of
Polish law limiting its obligations legal, valid, binding and enforceable obligations.
	 
	17.3	 	Non-conflict with other obligations
	 
	 	 	The entry into and performance by the Borrower and the transactions contemplated by, the
Finance Documents, to which it is a party, do not and will not conflict with:
	 
	17.3.1	 	any law or regulation applicable to it;
	 
	17.3.2	 	its constitutional documents; or
	 
	17.3.3	 	to the best of the Borrower’s knowledge, any agreement or instrument binding upon the Borrower.
	 
	17.4	 	Power and authority
	 
	 	 	The Borrower has the required permits to enter into and perform, and have taken all
necessary action to authorise its entry into and performance of the Finance Documents,
to which it is a party, and the transactions contemplated by those Finance Documents.
	 
	17.5	 	Validity and admissibility in evidence
	 
	 	 	No Authorization is required to enable the Borrower lawfully to enter into, exercise its
rights and comply with its obligations in the Finance Documents, to which it is a party
and to make the Finance Documents, to which the Borrower is a party, admissible in
evidence in Poland.
	 
	17.6	 	Deduction of Tax
	 
	 	 	The Borrower is not required under the law of Poland to make any deduction for or on
account of Tax from any payment it may make under any Finance Document.
	 
	17.7	 	No filing or stamp taxes
	 
	17.7.1	 	Subject to clause 17.7.2, under the laws of Poland it is not necessary that the Finance
Documents, to which it is a party, be filed, recorded or enrolled with any court or other
authority in that jurisdiction or that any stamp, registration or similar Tax be paid on or
in relation to the Finance Documents, to which it is a party, or the transactions
contemplated by the Finance Documents, to which it is a party.
	 
	17.7.2	 	A Polish Tax on civil legal acts must be paid in respect of Power of Attorney to the Bank
Accounts.
	 
	17.8	 	No default
	 
	17.8.1	 	No Event of Default is continuing or might reasonably be expected to result from the
drawing of any Loan by the Borrower.

20

 

	17.8.2	 	No other event or circumstance is outstanding which (to the best of the Borrower’s knowledge)
constitutes a material default under any other agreement or a breach of the Borrower’s obligations.
	 
	17.9	 	No misleading information
	 
	17.9.1	 	All factual information provided by the Borrower to the Arrangers and Lenders was true and
accurate in all material respects as at the date it was provided or as at the date (if any)
at which it is stated.
	 
	17.9.2	 	No information has been given or omitted from the information disclosed to the Arrangers
and the Lenders that results in the information disclosed to the Arrangers and the Lenders
being untrue.
	 
	17.9.3	 	The budget most recently delivered to the Finance Parties has been prepared on the basis of
the most recent (as at the date of its preparation) historical information and on the basis
of reasonable assumptions.
	 
	17.10	 	Financial statements
	 
	17.10.1	 	The Original Financial Statements of the Borrower were prepared in accordance with US GAAP
consistently applied.
	 
	17.10.2	 	The Original Financial Statements of the Borrower fairly represent financial condition and
operations of the Borrower during the relevant financial year.
	 
	17.10.3	 	There has been no material adverse change in the business or financial condition of the
Borrower since the date on which the Original Financial Statements were prepared.
	 
	17.11	 	Pari passu ranking
	 
	 	 	The Borrower’s payment obligations under the Finance Documents, to which it is a party,
rank at least pari passu with the claims of all its other unsecured creditors, except
for obligations mandatorily preferred by law applying to companies generally.
	 
	17.12	 	Existing Security and Current Lenders
	 
	17.12.1	 	No Borrower’s asset (or any of its part) is encumbered with any Security other than the
Existing Security.
	 
	17.12.2	 	The Borrower does not owe any Financial Indebtedness other than:

	 	(a)	 	the Financial Indebtedness under this Agreement;
	 
	 	(b)	 	the Financial Indebtedness owed to the Current Lenders (totalling
PLN 121,945,497.97 as at 30 April 2008);
	 
	 	(c)	 	the Financial Indebtedness following from the surety under civil
law for CMC Poland S.A. in relation to Bank Ochrony Środowiska S.A. in respect
of a credit facility granted to CMC Poland S.A. in the amount of PLN 37,935,898
(Agreement no. 1/l/KONS-WFOŚi GW/2005/128 as part of a syndicate of 5 September
2005) and credit facility granted to CMC Poland S.A. in the amount of PLN
2,000,000 (Agreement no. 5/05/W-12/OZ-UML03-3/128 of 5 September 2005) with all
relating rights, limited to the amount of PLN 45,000,000; and
	 
	 	(d)	 	forward (hedging) transactions concluded by the Borrower for a
period not longer than three months (in particular currency swap transactions).

	17.13	 	Change of Control
	 
	 	 	The Borrower is controlled by the Approved Parent.
	 
	17.14	 	No proceedings pending or threatened
	 
	 	 	No litigation, criminal or investigative proceedings, arbitration or administrative
proceedings of or before any court, arbitral body or agency or state body or agency
which, if adversely determined,

21

 

	 	 	might reasonably be expected to cause the Borrower to pay or suffer loss or expense over
the aggregate amount of PLN 10,000,000, have (to the best of its knowledge and belief)
been started against it or any of its Subsidiaries.
	 
	17.15	 	Environmental
	 
	 	 	The Borrower has obtained such Environmental Licences and has complied with the terms of
such licences and Environmental Laws in a manner consistent in all material respects with
generally accepted industry good practice and, so far as it is aware, there has been no
material use or disposal of any Dangerous Substances on any premises in contravention of
any Environmental Law or Environmental Licence and there are no material Environmental
Claims in excess of the aggregate amount of PLN 10,000,000 pending.
	 
	17.16	 	Payment of Taxes and social security payments
	 
	 	 	The Borrower does not delay with any Tax payment or social security payment.
	 
	17.17	 	No action to cease business
	 
	 	 	The Borrower has taken no corporate actions and no other steps or legal actions have
been started or threatened against the Borrower for the Borrower’s cessation of
business, dissolution, winding up, the start of judicial arrangement, declaration of
bankruptcy, the start of recovery proceedings, administration or reorganization (by way
of voluntary arrangement, scheme of arrangement or otherwise) or for the appointment of
an administrative receiver, administrator, receiver or trustee or another person or
entity in respect of the Borrower or any of its assets or revenues.
	 
	17.18	 	Debt service
	 
	 	 	The Borrower is able to repay its obligations when due and payable and has not entered
with any of its creditors into negotiations with a view to restructuring those debts or
changing repayment schedules concerning those debts that, if not repaid, could have a
significant impact on the Borrower’s business, financial condition or ability to fulfil
its obligations under the Finance Documents.
	 
	17.19	 	Permits
	 
	 	 	The Borrower has obtained all consents and permits required by law:

	 	(a)	 	to conduct the Core Business of the Borrower,
	 
	 	(b)	 	in connection with the Investment Project’s specific stages, and
	 
	 	(c)	 	in connection with the conclusion and performance of agreements
relating to the Investment Project,

	 	(i)	 	prior to their conclusion, or
	 
	 	(ii)	 	prior to their performance if performance of a given agreement requires a specific permit

	17.20	 	Repetition
	 
	17.20.1	 	The representations included in clauses 17.8, 17.9, 17.10.3, 17.11, 17.14, 17.15 and 17.19
are deemed to be made by the Borrower to each Finance Party by reference to the facts and
circumstances then existing on the date of the Utilisation Request and on each last day of the
Interest Period. In addition to such representations and warranties the Borrower is deemed to
represent on each such date that its financial statements most recently delivered to the
Facility Agent have been prepared in accordance with US GAAP standards and give a true and
fair view of the results, its state of affairs and financial position as at end of the period
to which they relate.
	 
	18	 	Information undertakings
	 
	 	 	The undertakings in this clause 18 remain in force from the date of this Agreement for
so long as any amount is outstanding under the Finance Documents or any Commitment is in
force.

22

 

	18.1	 	Financial statements and other financial documents

	18.1.1	 	The Borrower shall supply to the Facility Agent (in sufficient copies for all the
Lenders) as soon as the same have been prepared, but in any event within 90 days after the
end of a relevant period, however not before the financial results of CMC Group are published
at the Stock Exchange in New York, the United States, the consolidated financial statements
of the Borrower prepared in accordance with US GAAP for a given half year (the US GAAP Half
Yearly Consolidated Financial Statements) and for a given financial year (the US GAAP Annual
Consolidated Financial Statements) (together US GAAP Consolidated Financial Statements).
	 
	18.1.2	 	The Borrower shall supply to the Facility Agent (in sufficient copies for all the Lenders):

	 	(a)	 	as soon as the same have been prepared, but in any event within 240
days after the end of its financial year, the audited consolidated financial
statements of the Borrower for that financial year prepared in accordance with
the Accounting Act (the PAS Annual Consolidated Financial Statements);
	 
	 	(b)	 	as soon as the same have been prepared, but in any event within 180
days after the end of its financial year, the audited unconsolidated financial
statements of the Borrower for that financial year prepared in accordance with
the Accounting Act (the Annual Unconsolidated Financial Statements);
	 
	 	(c)	 	as soon as the same have been prepared and approved by the
supervisory board of the Borrower, but in any event not later than within: (i) 90
days after the beginning of the first financial year for which the budget was
prepared or (ii) 90 days after the beginning of a financial year for which the
budget was revised — budgets with comments and assumptions for each period of
three years and their annually revised versions for a given financial year;
	 
	 	(d)	 	as soon as the same become available, and in any event within 20
days after the end of each calendar quarter, copies of F-01 form of the Borrower
and its Subsidiaries submitted to Central Bureau of Statistics (Glówny Urząd
Statystyczny);
	 
	 	(e)	 	prior to incurring the same, information on any (i) Financial
Indebtedness (other than indebtedness under Cash Pool Arrangements) to be incurred
by the Borrower or any of its Subsidiaries and (ii) prior to establishing the
same, any Security to be established over its or its Subsidiary’s assets, other
than Security following from Cash Pool Arrangements; and
	 
	 	(f)	 	prior to receiving or paying of the same, information about any
dividend (including the advances for dividends) to be paid or received by the Borrower or any of its Subsidiaries.

	18.2	 	Compliance Certificate
	 
	18.2.1	 	The Borrower shall supply to the Facility Agent, with each set of financial statements
delivered pursuant to clause 18.1.1., a Compliance Certificate setting out (in reasonable
detail) computations as to compliance with clause 19 (Financial covenants) as at the date as
at which those financial statements were drawn up.
	 
	18.2.2	 	Each Compliance Certificate shall be signed by two members of the Borrower’s management
board.
	 
	18.3	 	Requirements as to financial statements
	 
	 	 	In respect of each set of financial statements delivered by the Borrower pursuant to
clause 18.1 (Financial statements) members of the management board of the Borrower shall
certify that:

	 	(a)	 	they fairly represent the financial condition of the Borrower as
at the date as at which those financial statements were drawn up; and
	 
	 	(b)	 	US GAAP Consolidated Financial Statements have been drawn up in
accordance with US GAAP; and
	 
	 	(c)	 	PAS Consolidated Annual Financial Statements and Annual
Unconsolidated Statements have been drawn up in accordance with the Accounting
Act.

23

 

	18.4	 	Information: miscellaneous
	 
	 	 	The Borrower shall supply to the Facility Agent (in sufficient copies for all the Lenders, if the Facility
Agent so requests):
	 
	18.4.1	 	all documents dispatched by the Borrower to its creditors relating to: (a) any waiver in relation to
the obligations of the Borrower; or (b) restructuring of its debt or other payment
obligations at the same time as they are dispatched where the aggregate of such
waivers of obligations and / or restructurings of payment obligations is in excess of
PLN 10,000,000;
	 
	18.4.2	 	promptly upon becoming aware of them, the details of any litigation, criminal or
investigative proceedings, arbitration or administrative proceedings which are current, threatened
or pending against the Borrower, and which might, if adversely determined, cause the
Borrower to pay or suffer loss or expense over PLN 10,000,000;
	 
	18.4.3	 	promptly, such further information regarding the financial condition, business and
operations of the Borrower and regarding the Investment Project as any Finance Party (through the
Facility Agent) may reasonably request;
	 
	18.4.4	 	promptly upon obtaining or executing them, building permits (without attachments) and other
consents to commence the Investment Project with a report on its environmental impact and, at
a Finance Party’s request, other permits relating to the Investment Project; and
	 
	18.4.5	 	promptly upon obtaining them, official periodical reports on monitoring the provisions of
an integrated permit.
	 
	18.5	 	Notification of default
	 
	18.5.1	 	The Borrower shall notify the Facility Agent of any Default (and the steps, if any, being
taken to remedy it) which can occur (or it is occurring) promptly upon becoming aware of its
occurrence.
	 
	18.5.2	 	Promptly upon a request by the Facility Agent, the Borrower shall supply to the Facility
Agent a certificate signed by two of its members of the management board on its behalf
certifying that no Default is continuing (or if a Default is continuing, specifying the
Default and the steps, if any, being taken to remedy it).
	 
	18.6	 	“Know your customer” checks
	 
	18.6.1	 	If:

	 	(a)	 	the introduction of or any change in (or in the interpretation,
administration or application of) any law or regulation made after the date of
this Agreement;
	 
	 	(b)	 	a proposed assignment or transfer by a Lender of any of its rights
and obligations under this Agreement to a party that is not a Lender prior to
such assignment or transfer,

	 	 	obliges the Facility Agent or any Lender (or, in the case of paragraph (b) above, any
prospective new Lender) to comply with “know your customer” or similar identification
procedures in circumstances where the necessary information concerning the Borrower is
not already available to it, the Borrower shall promptly upon the request of the Facility
Agent or any Lender supply, or procure the supply of, such documentation and other
evidence as is reasonably requested by the Facility Agent (for itself or on behalf of any
Lender) or any Lender (for itself or, in the case of the event described in paragraph (b)
above, on behalf of any prospective new Lender) in order for the Facility Agent, such
Lender or, in the case of the event described in paragraph (b) above, any prospective new
Lender to carry out and be satisfied it has complied with all necessary “know your
customer” or other similar checks with respect to the transactions contemplated in the
Finance Documents.
	 
	18.6.2	 	Each Lender shall promptly upon the request of the Facility Agent supply, or procure the
supply of, such documentation and other evidence as is reasonably requested by the Facility
Agent in order for the Facility Agent to carry out and be satisfied it has complied with all
necessary “know your customer” or other similar checks with respect to the transactions
contemplated in the Finance Documents.

24

 

	18.6.3	 	Documentation referred to in clause 18.6.1 and clause 18.6.2 may include, in
particular: excerpts from the National Court Register, copies of passports and
identification documents and other documents confirming the ownership structure of the
Subsidiaries of the Approved Parent.
	 
	19	 	Financial covenants
	 
	 	 	The Borrower undertakes to observe and comply with the financial covenants set out below
from the date of this Agreement and so long as any amounts are owing under the Finance
Documents or any Commitment is in force.
	 
	19.1	 	Financial Debt to EBITDA
	 
	 	 	The Borrower shall ensure that the ratio of Financial Debt to EBITDA does not exceed 3.5 to 1.
	 
	19.2	 	Financial Debt to Equity
	 
	 	 	The Borrower shall ensure that the ratio of Financial Debt to Equity does not exceed 1.5 to 1.
	 
	19.3	 	EBITDA to Debt Service
	 
	 	 	The Borrower shall ensure that the ratio of EBITDA to Debt Service is equal or greater than 1.2 to 1.
	 
	19.4	 	Tangible Net Worth
	 
	 	 	The Borrower shall ensure that its Tangible Net Worth is greater than PLN 600,000,000
(say: six hundred million zlotys).
	 
	19.5	 	Testing of ratios
	 
	19.5.1	 	For the purposes of this clause 19 (Financial Covenants), the ratios shall be tested as at
each Covenant Testing Date by reference to the US GAAP Half Yearly Consolidated Financial
Statements, the US GAAP Annual Consolidated Financial Statements (as the case may be) and, in
the case of the US GAAP Half Yearly Consolidated Financial Statements, the ratios shall be
calculated on a twelve Month rolling basis.
	 
	19.5.2	 	The Borrower shall carry out the test in each Compliance Certificate.
	 
	19.6	 	Accounting terms
	 
	 	 	In this clause 19 (Financial Covenants), accounting terms used shall be construed by
reference to the financial statements referred to in clause 18.1 (Financial Statements)
above, but so that:
	 
	 	 	Debt Service means the aggregate of Interest Payable, annual operating leases, dividends
plus the total amount of the Financial Indebtedness of the Borrower and its Subsidiaries
which fall due for repayment or prepayment within 12 Months period ending on the relevant
Covenant Testing Date.
	 
	 	 	EBITDA means, in respect of any period, the consolidated profit (which shall include,
for the avoidance of doubt, any actual cash movements relating to foreign exchange
gains and losses) on ordinary activities, but before:

	 	(a)	 	exceptional items (other than obsolete property costs) and extraordinary items;
	 
	 	(b)	 	profits and losses on disposals of
capital assets;
	 
	 	(b)	 	amortisation and
depreciation;
	 
	 	(d)	 	Interest Payable and Interest Receivables; and
	 
	 	(e)	 	Taxes,

	 	 	in each case for such period on a consolidated basis for the Group.

25

 

	 	 	Equity means the aggregate of subscribed and paid in share capital of the Borrower, its
spare and reserve capital, the consolidated financial result from previous years and the
consolidated financial result for the current settlement period.
	 
	 	 	Financial Debt means the total amount of the Financial Indebtedness of the Group.
	 
	 	 	Interest Payable means, in respect of a period, the aggregate amount (calculated on a
consolidated basis) of interest, discounts and/or finance charges paid and/or accrued
during that period in respect of any indebtedness, including for this purpose any
acceptance commission paid or payable in respect of any bills of exchange or other
negotiable instruments and the interest component of rentals under finance leases payable
by the Borrower and its Subsidiaries.
	 
	 	 	Interest Receivables means, in respect of a relevant period, the aggregate amount
(calculated on a consolidated basis) of interest (discounts inclusive) received and/or
accrued during that period in respect of any receivable, including for this purpose of
this definition, any acceptance commission received or payable in respect of any bills of
exchange or other debt instruments received by the Borrower and its Subsidiaries.
	 
	 	 	Intangible Assets means goodwill and other intangible assets of the Borrower and its
Subsidiaries; for the avoidance of any doubt, Intangible Assets do not include the value
of perpetual usufruct right.
	 
	 	 	Tangible Net Worth means the value of the Equity, but after:

	 	(a)	 	deducting any amount shown in the balance sheet in respect of Intangible Assets;
	 
	 	(b)	 	deducting (so far as not otherwise excluded as attributable to minority
interests) a sum equal to the aggregate of the amount by which the book value of any
fixed assets of any member of the Group has been written up after the date of this
Agreement (or, in the case of a company becoming a Subsidiary after that date, the
date on which that company became a Subsidiary) by way of revaluation. For the
purposes of this paragraph (c) any increase in the book value of any fixed asset
resulting from its transfer by one member of the Group to another member of the
Group shall be deemed to result from a writing up of its book value by way of
revaluation; and

	 	 	excluding amounts set aside for taxation as at the date of such balance sheet and making
such adjustments as may be appropriate in respect of any significant additional taxation
expected to result from transactions carried out by any member of the Group after such
date and not reflected in that balance sheet;
	 
	20	 	General undertakings
	 
	 	 	The undertakings in this clause 20 remain in force from the date of this Agreement for so
long as any amount is outstanding under the Finance Documents or any Commitment is in
force.
	 
	20.1	 	Authorisations
	 
	 	 	The Borrower shall promptly:
	 
	20.1.1	 	obtain, comply with and do all that is necessary to maintain in full force and effect; and
	 
	20.1.2	 	supply certified copies to the Facility Agent of,

	 
		 	any Authorisation, filing, confirmation or registration required and necessary to be
obtained or made by the Borrower under any law or regulation of the jurisdiction of its
legal seat to enable it to perform its obligations under the Finance Documents and to
ensure the legality, validity, enforceability or admissibility in evidence in the
jurisdiction of its legal seat of any Finance Document.
	 
	20.2	 	Compliance with laws
	 
	 	 	The Borrower shall comply in all respects with all laws to which it may be subject, if
failure so to comply would materially impair its ability to perform its obligations under
the Finance Documents.

26

 

	20.3	 	Negative pledge
	 
	20.3.1	 	Without the prior written consent of the Majority Lenders, the Borrower shall not create or
permit to subsist any Security over any of its assets. The provision does not apply to the
Existing Security.
	 
	20.3.2	 	The Borrower shall not:

	 	(a)	 	sell, transfer or otherwise dispose of any of its assets on terms
whereby they are or may be leased to or re-acquired by the Borrower, unless their
value is lower than limits set by clause 20.4; or
	 
	 	(b)	 	sell, transfer or otherwise dispose of any of its receivables on recourse terms; or
	 
	 	(c)	 	enter into any arrangement under which money or the benefit of a
bank or other account may be applied, set-off or made subject to a combination of
accounts; or
	 
	 	(d)	 	enter into any other arrangement having a similar effect,

	 	 	in circumstances where the arrangement or transaction is entered into primarily as a
method of raising Financial Indebtedness or financing the acquisition of an asset.
	 
	20.3.3	 	Clauses 20.3.1 and 20.3.2 above do not apply to:

	 	(a)	 	any Security and agreements following from Cash Pool Arrangements,
provided that the amount received as a result of the performance of such
security or agreement may not be used to make the payments due from CMC Poland
S.A. with its seat in Zawiercie or its Subsidiaries to the Approved Parent and
its Subsidiaries;
	 
	 	(b)	 	any disposal or establishment of Security arising by operation of
law and in the ordinary course of trading unless following from the Financial
Debt of the Borrower;
	 
	 	(c)	 	disposal of the Borrower’s receivables with or without recourse
limited up to a maximum of 20% of the amount of a single receivable; and
	 
	 	(d)	 	any Security entered into pursuant to any Finance Document.

	20.4	 	Disposals
	 
	 	 	The Borrower shall not enter into a single transaction or a series of transactions
(whether related or not) to sell, lease, transfer or otherwise dispose of any fixed
asset (środki trwałe) and its shares in its Subsidiaries with a value greater in
aggregate per financial year than 5 per cent of the then current Tangible Net Worth as
defined in clause 19.6 of this Agreement, save for the sale of infrastructure relating
to the utilities (electricity, heat and gas) supply of the net book value not exceeding
PLN 25,000,000 as at the date of the Original Financial Statements.
	 
	20.5	 	Merger
	 
	 	 	The Borrower shall not enter into any amalgamation, demerger, merger or corporate
reconstruction, except for:

	 	(a)	 	demerger, merger or corporate reconstruction with any member of the Group;
	 
	 	(b)	 	amalgamation, demerger, merger or corporate reconstruction
within the Group;

	 
	 	(c)	 	Permitted Acquisition.

	20.6	 	Change of business
	 
	 	 	The Borrower shall procure that no substantial change is made to the general nature of
its business from that carried on at the date of this Agreement.

27

 

	20.7	 	Scope of business
	 
	 	 	The Borrower shall ensure that no investments are made in relation to activities
outside Core Business of the Borrower.
	 
	20.8	 	Inspection of books and records
	 
	 	 	The Borrower shall, upon the request of any Finance Party at any time but with
reasonable notice, allow such Finance Party and its representatives, professional
advisers and agents access to inspect the Borrower’s books and records to the extent it
needs to, to comply with banking practice and its own internal credit control
procedures. The costs of such inspections will covered by the Finance Parties unless a
Default has occurred and it is continuing.
	 
	20.9	 	Restriction of Financial Indebtedness
	 
	20.9.1	 	Subject to clause 20.9.2 the Borrower shall procure that its Subsidiaries do not incur any
Financial Indebtedness.
	 
	20.9.2	 	Clause 20.9.1 will not apply to:

	 	(a)	 	Financial Indebtedness incurred by the Subsidiaries of the Borrower, if:

	 	(i)	 	its total amount is less than 10 per cent of the total
amount of the Financial Indebtedness of the Group at the end of the last
financial year or half year (as the case may be) in accordance with the most
recently delivered US GAAP Consolidated Financial Statements; or
	 
	 	(ii)	 	all amounts due to the Finance Parties under this
Agreement are guaranteed by all Subsidiaries of the Borrower in the form and
contents agreed by the Facility Agent (upon consultation with all the
Lenders).

	 	(b)	 	Financial Indebtedness incurred in pursuance of Cash Pool
Arrangements, provided that the amount of such Financial Indebtedness may not be used to make the payments due from
CMC Poland S.A. with its seat in Zawiercie or its Subsidiaries to the Approved Parent and its
Subsidiaries.

	20.10	 	Insurance
	 
	 	 	The Borrower shall maintain, and shall procure that each member of the Group shall
maintain, insurance with financially sound and reputably insurers with respect to its
assets of an insurable nature against such risks and in such amounts as are normally
maintained by persons carrying on the same or a similar class of business and in each
case covering risk areas as at the Agreement date, at least.
	 
	20.11	 	Audit and accounting dates
	 
	 	 	The Borrower will ensure that:
	 
	20.11.1	 	the PAS Annual Consolidated Financial Statements and the PAS Annual Unconsolidated
Financial Statements to be delivered to the Facility Agent pursuant to clause 18.1.2 are
audited by the Auditors;
	 
	20.11.2	 	each member of the Group shall at all times have duly appointed Auditors; and
	 
	20.11.3	 	no member of the Group will change its financial year end (other than to end on 31 August
of each year) without the prior written consent of the Facility Agent (which consent will not
be unreasonably withheld).
	 
	20.12	 	Auditors
	 
	 	 	If the Borrower wishes to change the Auditors the Borrower will notify the Facility
Agent as to the reasons for any such proposed change, however a newly auditor must also
be the Auditor.

28

 

	20.13	 	Bank Accounts
	 
	20.13.1	 	As of 1 September 2008, the Borrower shall conduct all its Banking Operations via bank
accounts maintained by the Approved Banks and shall not hold any bank accounts, in which
Banking Operations are conducted, with any other banks and financial institutions. This
obligation does not apply to the bank accounts opened in connection with the New Financing
and bank accounts kept by the Borrower in Raiffeisen Bank Polska S.A. and Bank Ochrony
Środowiska S.A. to the date of, respectively: (i) the settlement of the current long-term
forward (hedging) transactions with Raiffeisen Bank Polska S.A. and (ii) the final repayment
of the loan facility granted to the Borrower by Bank Ochrony Środowiska S.A.
	 
	20.13.2	 	The Borrower shall procure that all its Subsidiaries will not maintain any account with
any branch of any bank or other financial institution providing similar services, other than
accounts maintained with Approved Banks or a bank accounts listed in Schedule 6 (Allowed
Additional Bank Accounts).
	 
	20.13.3	 	Clauses 20.13.1 and 20.13.2 do not apply to bank accounts:

	 	(a)	 	of newly acquired or taken over companies — Subsidiaries of the Borrower, and
	 
	 	(b)	 	operated for enterprises or their organized parts, included in
the acquired enterprise or its organized part, newly acquired by the Borrower,

	 	 	provided that those accounts are used only for cash desk accounting of such companies or
activities of the acquired enterprise or its organized part and in a town/location where
the acquired company (or enterprise or its organized part) operates, or in the next
closest town/location, there is no branch or affiliate of the Approved Bank or the
Approved Bank is not interested in keeping such an account. The remaining banking
operations should be — within six months of a given company’s takeover — moved and
carried out in bank accounts kept in the Approved Banks.
	 
	20.13.4	 	The Borrower shall procure that Banking Operations conducted via Bank accounts with the
Approved Banks are equal to the proportion borne by:

	 	(a)	 	such Approved Bank’s amount of participation in all Loans
disbursed by all Lenders under this Agreement and all Utilisations under the Short Term Facility Agreement (as the
term “Utilisation” is defined in the Short Term Facility Agreement)

	 	 	to

	 	(b)	 	the total amount of all Loans disbursed by all Lenders under
this Agreement and all Utilisations made available by them under the Short Term Facility Agreement (as
the term “Utilisation” is defined in the Short Term Facility Agreement),

	 	 	provided however that in case of a more attractive offer made by one of the Approved
Banks, the Lender shall be entitled to take advantage of that offer regardless of the
provision above.
	 
	 	 	For the purpose of this clause 20.13, Banking Operations shall mean the banking
operations (including in particular transfers to and from bank accounts) connected
with selling of the Borrower’s products to its customers and purchasing of goods from
its suppliers (including in particular the Borrower’s Subsidiaries), opening of
deposits, trade finance transactions and fx transactions.
	 
	20.14	 	Intellectual property rights.
	 
	 	 	The Borrower will, and will procure that each of its Subsidiaries will:
	 
	20.14.1	 	safeguard and maintain its rights, present and future, in all its intellectual property
rights which are required by it to carry on its business as it is being carried on of this as
of the date Agreement including observing all licence restrictions relating thereto and
paying all applicable renewal fees, licence fees and other outgoings and not enter into any
contract, licence or sub-licence in respect of its material intellectual property rights
other than in the ordinary course of business on arm’s-length terms;

29

 

	20.14.2	 	effect registration of any material design, patent, trademark and service mark
and periodically inform the Facility Agent of events relevant to any registration
application and not without the prior consent in writing of the Facility Agent dispose
of any of its material intellectual property rights or permit any of its material
intellectual property rights to be abandoned or cancelled, to lapse or to be liable to
any claim of abandonment for non-use; and
	 
	20.14.3	 	notify the Facility Agent forthwith of any material infringement or any challenge to the
validity of any of its present or future material intellectual property rights which may come
to its notice and, if the Facility Agent so requests, supply the Facility Agent with all
relevant information in its possession relating thereto, and take all commercially reasonable
steps to prevent or terminate any such infringement and to defend any challenge to the
validity of any such rights.
	 
	20.15	 	Arm’s-length terms
	 
	 	 	The Borrower shall make reasonable efforts to ensure and it shall procure that all
member of the Group will make reasonable efforts to ensure that the Borrower and all
members of the Group will not enter into any transactions with other member of the
Group and/or the Approved Parent otherwise than on arm’s-length terms negotiated by the
independent parties.
	 
	20.16	 	Loans and credit facilities
	 
	20.16.1	 	The Borrower shall not (and shall procure that no member of the Group shall) be a creditor
with respect to any Financial Indebtedness.
	 
	20.16.2	 	Clause 20.16.1 does not apply to:

	 	(a)	 	the Financial Indebtedness under Cash Pool Arrangements,
provided that the amount of such Financial Indebtedness may not be used to make
the payments due from CMC Poland S.A. with its seat in Zawiercie or its
Subsidiaries to the Approved Parent and its Subsidiaries;
	 
	 	(b)	 	loans granted to the Approved Parent and its Affiliates:

	 	(i)	 	with a repayment period not longer than three months; and
	 
	 	(ii)	 	in the amount not higher than five per cent of the
Borrower’s total balance sheet in accordance with the most recently
delivered US GAAP Consolidated Financial Statements; and
	 
	 	(iii)	 	granted in a period when no Default has occurred or is
continuing and no Default would occur as a result of such a loan being
granted.

	20.17	 	No guarantees
	 
	 	 	The Borrower shall not provide (and procure that no member of the Group shall provide)
any guarantee or surety for liabilities of any person. The above provision does not
apply to:
	 
	20.17.1	 	guarantees and sureties up to the total amount of the Borrower’s liability of 5 per cent
of the Borrower’s total balance sheet in accordance with the most recently delivered US GAAP
Consolidated Financial Statements; and
	 
	20.17.2	 	guarantees and sureties following from Cash Pool Arrangements, provided that the amount
of a guaranteed obligation may not include the payments due from CMC Poland S.A. with its
seat in Zawiercie or its Subsidiaries to the Approved Parent and its Subsidiaries.
	 
	20.18	 	Dividends
	 
	20.18.1	 	The Management Board of the Borrower may recommend that the Borrower declare,
make, pay or distribute dividends to the Borrower’s shareholders only provided that:

	 	(a)	 	no Default is continuing or would result from the proposed
declaration, making, paying or distributing of dividends; and

30

 

	 	(b)	 	the Borrower is in full compliance with its financial covenants under clause
19 (Financial covenants).

	 	 	The Borrower shall promptly inform the Facility Agent about any decision regarding
dividend payment to the shareholders of the Borrower no later than five Business Days
after such decision is made, and shall provide copies of pertaining resolutions.
	 
	20.18.2	 	If (A) the Borrower fulfils its obligations referred to in clause 19 (Financial covenants)
of this Agreement and (B) the Event of Default referred to in clause 21.1 of this Agreement has
not occurred nor does it continue for ten days from the due date of a given amount, the Borrower may:

	 	(a)	 	make payments to Commercial Metals International AG, the Approved
Parent or its Subsidiaries and to the Borrower’s shareholders within the scope
of the Borrower’s ordinary business activities on arm’s length terms;
	 
	 	(b)	 	pay amounts due for the Borrower’s use of the trademark owned by
the Approved Parent to Commercial Metals International AG, the Approved Parent
or its Subsidiaries, provided that such payments:

	 	(i)	 	do not exceed 0.85 per cent of the amount of the
Borrower’s sales revenues in a given month,
	 
	 	(ii)	 	were calculated in respect of the Borrower’s actual sales, and
	 
	 	(iii)	 	are not being advanced.

	20.18.3	 	Repayment of obligations by the Borrower to the Approved Parent or its Subsidiaries having the
commercial effect of a borrowing may be made on terms in advance approved in writing by the Facility
Agent acting on instructions of the Majority Lenders.
	 
	20.19	 	New Financing
	 
	 	 	The Borrower may take new loans and/or credit facilities related to financing of its
current operations in relation to its Core Business or investments into its Core
Business (the New Financing) provided that: (a) no Default has occurred and it is
continuing; and (b) sufficient information about such New Financing is provided to the
Facility Agent at least 30 days prior to taking of such New Financing.
	 
	20.20	 	Facility Security
	 
	 	 	The Borrower shall establish additional Facility Security over the Borrower’s assets or
its receivables or shall procure the establishment of additional security for the
Facility by another entity approved by the Facility Agent (in consultation with all
Lenders), if the Borrower breaches any of the obligations set out in clause 19
(Financial covenants). The Borrower shall establish the additional Facility Security
within 20 Business Days of receiving the Facility Agent’s request to this effect. If the
establishment of additional Security requires registration in an appropriate register,
the above time limit will be regarded as met if an appropriate agreement or declaration
(in form and substance satisfactory to the Facility Agent) is signed in that period and
a properly paid for and correctly filled in application for registration of the
Security, with a proof of its filing, is delivered to the Facility Agent. Costs of
establishing such additional Security will be fully paid for by the Borrower.
	 
	20.21	 	Maintenance of Security
	 
	 	 	The Borrower shall maintain in full force and effect all Security interests provided
for in this Agreement and other Finance Documents.
	 
	20.22	 	The Facility
	 
	 	 	The Borrower shall use proceeds from the Facility in accordance with this Agreement, in
particular, in accordance with the Facility’s purpose as set out in clause 3.1 of this
Agreement.

31

 

	20.23	 	Taxes and accounting
	 
	 	 	The Borrower shall:
	 
	20.23.1	 	maintain, with due care, accounting, management information and cost control systems, in
accordance with regulations and bookkeeping and accounting standards.
	 
	20.23.2	 	pay on time taxes, fees and other similar charges and obligations of the Borrower, in particular
those relating to credit facilities, loans, guarantees and sureties under civil law
or the law on bills of exchange; this obligation does not prejudice the Borrower’s
right to dispute in good faith, in a professional manner, with due diligence, and in
accordance with the relevant provisions of law, the existence or the amount of such
taxes, fees, charges or obligations.
	 
	20.24	 	Completion of the Investment Project
	 
	 	 	The Borrower shall take every possible step to ensure that the Investment Project is
completed by 28 February 2010; it shall not drop the Investment Project and shall
forthwith notify the Facility Agent of any material delay in the completion of the
Investment Project or material overrun of estimated costs of the Investment Project
which could significantly affect the Borrower’s business, financial condition or
ability to fulfil its obligations under the Finance Documents.
	 
	20.25	 	Changes in governing bodies
	 
	 	 	The Borrower undertakes that within 20 Business Days it shall notify the Facility Agent
if there are any changes of persons holding the position of the president of the
Management Board, members of the Management Board or members of the Supervisory Board.
	 
	20.26	 	Use of the Financial Indebtedness under Cash Pool Arrangements
	 
	 	 	The Borrower undertakes that its Financial Indebtedness under Cash Pool Arrangements
will not be used to make the payments due from CMC Poland S.A. with its seat in
Zawiercie or its Subsidiaries to the Approved Parent and its Subsidiaries (and shall
procure that the Financial Indebtedness of its Group members in this respect is not
used to make such payments either).
	 
	20.27	 	Powers of Attorney to the Bank Accounts
	 
	 	 	The Borrower undertakes to provide the Facility Agent, within 21 days of this
Agreement’s execution, with Powers of Attorney to the Bank Accounts granted to: (i) the
Facility Agent with a confirmation of its acknowledgement by all banks (or branches of
banks), which keep bank accounts included in this power of attorney and (ii) BRE with a
confirmation of its acknowledgement by a branch of BRE which keeps bank accounts
included in this power of attorney.
	 
	21	 	Events of Default
	 
	 	 	Each of the events or circumstances set out in this clause 21 is an Event of Default.
	 
	21.1	 	Non-payment
	 
	 	 	The Borrower does not pay on the due date any amount payable pursuant to a Finance
Document at the place at and in the currency in which it is expressed to be payable
unless:
	 
	21.1.1	 	its failure to pay is caused by administrative or technical error; and

	 
	21.1.2	 	payment is made within two Business Days of its due date.
	 
	21.2	 	Financial covenants
	 
	21.2.1	 	Any requirement of clause 19 (Financial covenants) is not satisfied.
	 
	21.2.2	 	No Event of Default under clause 21.2.1 above will occur if the failure to satisfy those
requirements is capable of remedy and is remedied within 20 Business Days of the earlier of
the Facility Agent giving notice to the Borrower or the Borrower becoming aware of the
failure to satisfy.

32

 

	21.3	 	Other obligations
	 
	21.3.1	 	The Borrower breaches its obligations under the Finance Documents (other than those
referred to in clause 21.1 (Non-payment) and clause 21.2 (Financial covenants)).
	 
	21.3.2	 	No Event of Default under clause 21.3.1 above will occur if the failure to comply is
capable of remedy and is remedied within 20 Business Days of the earlier of the Facility
Agent giving notice to the Borrower or the Borrower becoming aware of the failure to comply.
	 
	21.4	 	Misrepresentation
	 
	21.4.1	 	Any representation or statement made or deemed to be made by the Borrower in the Finance
Documents, to which it is a party, or any other document delivered by or on behalf of such
person under or in connection with any Finance Document is or proves to have been untrue in
any material respect when made or deemed to be made.
	 
	21.4.2	 	No Event of Default under clause 21.4.1 above will occur if the misrepresentation is
capable of remedy and is remedied within 20 Business Days of the earlier of the Facility
Agent giving notice to the Borrower or the Borrower becoming aware of the misrepresentation.
	 
	21.5	 	Cross default
	 
	21.5.1	 	Any Financial Indebtedness of the Borrower or any payment obligations of the Borrower
relating to Taxes or social security payments amounting in aggregate to PLN 2,000,000 or more
is not paid when due nor within any originally applicable grace period.
	 
	21.5.2	 	Any Financial Indebtedness of the Borrower or any payment obligations of the Borrower
relating to Taxes or social security payments amounting in aggregate to PLN 2,000,000 or more
is declared to be or otherwise becomes due and payable prior to its specified maturity as a
result of an event of default described in a document constituting such an obligation.
	 
	21.5.3	 	Any commitment for any Financial Indebtedness of the Borrower amounting to PLN 2,000,000 or
more is cancelled or suspended by a creditor of the Borrower as a result of an event of
default described in a document constituting such an obligation.
	 
	21.5.4	 	Any creditor of the Borrower becomes entitled to declare any Financial Indebtedness of the
Borrower amounting to PLN 2,000,000 or more due and payable prior to its specified maturity
as a result of an event of default described in a document constituting such an obligation.
	 
	21.5.5	 	Any other indebtedness of the Borrower amounting to PLN 10,000,000 or more is not paid when
due.
	 
	21.5.6	 	No Event of Default under clauses 21.5.1 to 21.5.5 above will occur if the circumstances or
events listed above are capable of remedy and are remedied within 20 Business Days of the
earlier of the Facility Agent giving notice to the Borrower or the Borrower becoming aware of
the relevant event or circumstance.
	 
	21.6	 	Insolvency
	 
	21.6.1	 	The Borrower is unable or admits inability to pay its debts as they fall due, suspends
making payments on any of its debts or, by reason of actual or anticipated financial
difficulties, commences negotiations with one or more of its creditors with a view to into a
composition (ugoda) or arrangement (układ) with respect to restructuring or rescheduling any
of its indebtedness.
	 
	21.6.2	 	The value of the assets of the Borrower is less than its liabilities (taking into account
contingent and prospective liabilities).
	 
	21.6.3	 	No Event of Default under clauses 21.6.1 and 21.6.2 above will occur if the circumstances
or events listed above are capable of remedy and are remedied within 20 Business Days of the
earlier of the Facility Agent giving notice to the Borrower or the Borrower becoming aware of
the relevant event or circumstance.

33

 

	21.7	 	Insolvency proceedings
	 
	 	 	An application for commencement of recovery proceedings
(postępowanie naprawcze)
or bankruptcy proceedings (postępowanie upadłościowe) by the Borrower is filed either by
the Borrower or any of its creditors; and such application is not withdrawn, rejected or
the proceeding commenced on the basis of such application is not otherwise discontinued
within 45 days from the date of filing such application with the relevant Polish court.
	 
	21.8	 	Creditors’ process
	 
	 	 	Any expropriation, attachment, sequestration or execution, including the enforcement of
any Security (whether in a court procedure or otherwise) affects any assets of the
Borrower of the aggregate value exceeding PLN 10,000,000 and it is not discontinued
without satisfaction, or released within 20 Business Days of the earlier of the Facility
Agent giving notice to the Borrower or the Borrower becoming aware of such events.
	 
	21.9	 	Unlawfulness
	 
	21.9.1	 	It is or becomes unlawful for the Borrower to perform any of its material (in the
reasonable opinion of the Facility Agent) obligations under the Finance Documents.
	 
	21.9.2	 	No Event of Default under clause 21.9.1 above will occur if the unlawfulness is capable of
remedy and is remedied within 20 Business Days of the earlier of the Facility Agent giving
notice to the Borrower or the Borrower becoming aware of the unlawfulness.
	 
	21.10	 	Declaration on withdrawal of representations or obligations
	 
	21.10.1	 	The Borrower makes a declaration on withdrawal of its representations or obligations
included in any Finance Document or expresses an intention to withdraw its representations or
obligations included in Finance Documents.
	 
	21.10.2	 	No Event of Default under clause 21.10.1 above will occur if the declaration on withdrawal
of representations or obligations included in any Finance Document is capable of being
cancelled and is cancelled within 20 Business Days of the Facility Agent giving notice to the
Borrower.
	 
	21.11	 	Cessation of business
	 
	21.11.1	 	The Borrower ceases, or shows intention to cease, to carry on all or a substantial part of
its business.
	 
	21.11.2	 	No Event of Default under clause 21.11.1 above will occur if the cessation is capable of
remedy and is remedied within 20 Business Days of the Facility Agent giving notice to the
Borrower.
	 
	21.12	 	Effectiveness of Security
	 
	21.12.1	 	Any Security Document ceases to be in full force and effect or is incapable of
enforcement, or any Security Interest created thereunder is not effective in accordance with
the terms of the relevant Security Document.
	 
	21.12.2	 	No Event of Default under clause 21.12.1 above will occur if such circumstances are
capable of remedy and are remedied within 20 Business Days of the earlier of the Facility
Agent giving notice to the Borrower or the Borrower becoming aware of such circumstances.
	 
	21.13	 	Political and Economic Risk
	 
	21.13.1	 	The government of Poland or any agency of the relevant government takes any step leading
directly to the seizure, expropriation, nationalisation or acquisition (whether compulsory or
otherwise, in whole or in part, and whether or not for fair compensation) of the Borrower or
any material part of its assets.
	 
	21.13.2	 	No Event of Default under clause 21.13.1 above will occur if such event is capable of
remedy and is remedied within 20 Business Days of the earlier of the Facility Agent giving
notice to the Borrower or the Borrower becoming aware of such event.

34

 

	21.13.3	 	All or a material part of the assets of the Borrower are requisitioned by any
government agency for more than 45 days in aggregate.
	 
	21.14	 	Failure to pay final judgement
	 
	 	 	Any member of a Group fails to comply with or pay any sum in excess of PLN 10,000,000
due from it under any final judgement or any final order made or given by any court of
competent jurisdiction and such failure remains outstanding for a period of more than
30 days.
	 
	21.15	 	Change of Control
	 
	 	 	The Change of Control takes place with respect to the Borrower.
	 
	21.16	 	Acceleration
	 
	 	 	On and at any time after the occurrence of an Event of Default, the Facility Agent may,
and shall if so directed by the Majority Lenders, by notice to the Borrower:
	 
	21.16.1	 	terminate this Agreement by written notice served on the Borrower within the minimum time
limit prescribed by the Banking Law (such time limit now being 30 days, or seven days where
Borrower’s bankruptcy is threatened);
	 
	21.16.2	 	cancel to zero the Total Commitments whereupon they shall immediately be cancelled to
zero; and/or
	 
	21.16.3	 	subject to the mandatory provisions of the Banking Law, declare that all or part of the
Loan, together with accrued interest, and all other amounts accrued or outstanding under the
Finance Documents be immediately due and payable, whereupon they shall become immediately due
and payable; and/or
	 
	21.16.4	 	subject to the mandatory provisions of the Banking Law, declare that all or part of the
Loan be payable on demand, whereupon it shall immediately become payable on demand by the
Facility Agent on the instructions of the Majority Lenders; and/or
	 
	21.16.5	 	demand that by the date set by the Facility Agent, the Borrower present a plan to cure the
Event of Default; and/or
	 
	21.16.6	 	demand establishment of additional Security in relation to the Borrower’s indebtedness
hereunder.
	 
	22	 	Changes to the Lenders
	 
	22.1	 	Assignments and transfers by the Lenders
	 
	 	 	Subject to this clause 22, a Lender (the Existing Lender) may assign any of its rights
and/or transfer any of its obligations to another bank or financial institution or to a
fund or other entity which is regularly engaged in or established for the purpose of
making, purchasing or investing in loans, securities or other financial assets (the New
Lender).
	 
	22.2	 	Conditions of assignment or transfer
	 
	22.2.1	 	The consent of the Borrower is required for the assignment and the transfer by a
Lender of its rights and/or obligations, unless the assignment and/or transfer is:

	 	(a)	 	to another Lender;
	 
	 	(b)	 	to The Royal Bank of Scotland plc or its Affiliates;
	 
	 	(c)	 	to an Affiliate of a Lender;
	 
	 	(d)	 	to be made after an Event of Default has occurred.

35

 

	22.2.2	 	The consent of the Borrower to an assignment or transfer must not be
unreasonably withheld or delayed. The Borrower shall give its consent (or refuse it
if permitted under this clause 22.2.2) within 10 Business Days after the Lender has
requested it. When the Borrower’s consent is granted, upon receipt of a notice from
the Facility Agent within 10 Business Days from the date of that notification the
Borrower undertakes to execute (at its own expense if an Event of Default has
occurred and it is continuing and on expense of the Existing Lender and/or the New
Lender otherwise), a Submission to Execution in favour of each New Lender hereunder
and deliver such Submission to Execution to a relevant New Lender.
	 
	22.2.3	 	The consent of the Borrower to an assignment and/or transfer must not be withheld
solely because the assignment or transfer may result in an increase to the Bank
Guarantee Fund Cost.
	 
	22.2.4	 	An assignment will only be effective on receipt by the Facility Agent of written
confirmation from the New Lender (in form and substance satisfactory to the Facility
Agent) that the New Lender will assume the same obligations to the other Finance Parties
as it would have been under if it was an Existing Lender. The Facility Agent shall
promptly notify the Borrower with the details of any assignment for which the consent of
the Borrower is not required.
	 
	22.2.5	 	A transfer will only be effective if the procedure set out in clause 22.4 (Procedure
for transfer) is complied with.
	 
	22.2.6	 	If:

	 	(a)	 	a Lender assigns or transfers any of its rights or obligations
under the Finance Documents or changes its Facility Office; and
	 
	 	(b)	 	as a result of circumstances existing at the date the
assignment, transfer or change occurs, the Borrower would be obliged to make
a payment to the New Lender or Lender acting through its new Facility Office
under clause 13 (Increased Costs),

then the New Lender or Lender acting through its new Facility Office is only
entitled to receive payment under those clauses to the same extent as the Existing
Lender or Lender acting through its previous Facility Office would have been if the
assignment, transfer or change had not occurred.

	22.3	 	Limitation of responsibility of Existing Lenders
	 
	22.3.1	 	Unless expressly agreed to the contrary, an Existing Lender makes no representation or
warranty and assumes no responsibility to a New Lender for:

	 	(a)	 	the legality, validity, effectiveness, adequacy or
enforceability of the Finance Documents or any other documents;
	 
	 	(b)	 	the financial condition of the Borrower;
	 
	 	(c)	 	the performance and observance by the Borrower of its
obligations under the Finance Documents or any other documents; or
	 
	 	(d)	 	the accuracy of any statements (whether written or oral) made
in or in connection with any Finance Document or any other document,

and any representations or warranties implied by law are excluded.

	22.3.2	 	Each New Lender confirms to the Existing Lender and the other Finance Parties that it:

	 	(a)	 	has made (and shall continue to make) its own independent
investigation and assessment of the financial condition of the Borrower and
its related entities in connection with its participation in this Agreement
and has not relied exclusively on any information provided to it by the
Existing Lender in connection with any Finance Document; and
	 
	 	(b)	 	will continue to make its own independent appraisal of the
creditworthiness of the Borrower and its related entities whilst any amount
is or may be outstanding under the Finance Documents or any Commitment is in
force.

36

 

	22.3.3	 	Nothing in any Finance Document obliges an Existing Lender to:

	 	(a)	 	accept a re-transfer from a New Lender of any of the rights and obligations
assigned or transferred under this clause 22; or
	 
	 	(b)	 	support any losses directly or indirectly incurred by the New Lender
by reason of the non-performance by the Borrower of its obligations under the
Finance Documents or otherwise.

	22.4	 	Procedure for transfer
	 
	22.4.1	 	Subject to the conditions set out in clause 22.2 (Conditions of assignment or transfer) a
transfer is effected in accordance with clause 22.4.2 below when the Facility Agent executes
an otherwise duly completed Transfer Certificate delivered to it by the Existing Lender and
the New Lender. The Facility Agent shall, as soon as reasonably practicable after receipt by
it of a duly completed Transfer Certificate appearing on its face to comply with the terms of
this Agreement and delivered in accordance with the terms of this Agreement, execute that
Transfer Certificate.
	 
	22.4.2	 	On the Transfer Date:

	 	(a)	 	the Borrower and shall be released from further obligations and/or
cease to have any rights towards the Existing Lender under the Finance Documents
and the Existing Lender’s rights and Obligations against the Finance Documents
shall be assigned and/or transferred to the New Lender (being the Discharged
Rights and Obligations);
	 
	 	(b)	 	the Facility Agent, the Arrangers, the New Lender and other
Lenders shall acquire the same rights and assume the same obligations towards
the New Lender as the rights and obligations the Existing Lender has upon the
assignment or transfer of rights and obligations; to that extent the Facility
Agent, the Arrangers and the Existing Lender shall each be released from further
obligations to each other under the Finance Documents; and
	 
	 	(c)	 	the New Lender shall become a Party as a “Lender”.

	22.5	 	Disclosure of information
	 
	 	 	Any Lender may disclose to any of its Affiliates and any other person:
	 
	22.5.1	 	to (or through) whom that Lender assigns or transfers (or may potentially assign or
transfer) all or any of its rights and obligations under this Agreement (provided that it
obtains a consent to such disclosure should a given assignment or transfer require such a
consent);
	 
	22.5.2	 	with (or through) whom that Lender enters into (or may potentially enter into) any
sub-participation agreement in relation to, or any other transaction under which payments are
to be made by reference to, this Agreement or the Borrower (provided that is obtains a
consent to such disclosure should the conclusion of an agreement or transaction referred to
above require such a consent); or
	 
	22.5.3	 	to whom, and to the extent that, information is required to be disclosed by any applicable
law or regulation,
	 
	 	 	any information about the Borrower and the Finance Documents as that Lender shall
consider appropriate.
	 
	23	 	Changes to the Borrower
	 
	23.1	 	Assignments and transfer by Borrower
	 
	 	 	The Borrower may not assign any of its rights or transfer any of its rights or
obligations under the Finance Documents.
	 
	24	 	Role of the Facility Agent and the Arrangers
	 
	24.1	 	Appointment of the Facility Agent

37

 

	24.1.1	 	Each of the Arrangers and the Lenders appoints the Facility Agent to act as its
attorney-in-fact under
and in connection with the Finance Documents, including to pay out amounts related to
the Finance Documents and in relation to any other matter, provided that it has been
expressly set out in the Finance Documents.
	 
	24.1.2	 	Each Arranger and Lender authorises the Facility Agent to exercise the rights, powers,
authorities and discretions specifically given to the Facility Agent under and in connection
with the Finance Documents together with any other incidental rights, powers, authorities and
discretions.
	 
	24.2	 	Duties of the Facility Agent
	 
	24.2.1	 	The Facility Agent shall promptly forward to a Party the original or a copy of any document
which is delivered to the Facility Agent for that Party by any other Party.
	 
	24.2.2	 	Except where a Finance Document specifically provides otherwise, the Facility Agent is not
obliged to review or check the adequacy, accuracy or completeness of any document it forwards
to another Party.
	 
	24.2.3	 	If the Facility Agent receives notice from a Party referring to this Agreement, describing
a Default and stating that the circumstances described is a Default, it shall promptly notify
the Lenders.
	 
	24.2.4	 	If the Facility Agent is aware of the non-payment of any principal, interest, commitment
fee or other fee payable to a Finance Party (other than the Arrangers) under this Agreement
it shall promptly notify the other Finance Parties.
	 
	24.2.5	 	The Facility Agent’s respective duties under the Finance Documents are solely mechanical
and administrative in nature.
	 
	24.3	 	Role of the Arrangers
	 
	 	 	Except as specifically provided in the Finance Documents, the Arrangers have no
obligations of any kind to any other Party under or in connection with any Finance
Document.
	 
	24.4	 	No fiduciary duties
	 
	24.4.1	 	Except as specifically provided in the Finance Documents nothing in this Agreement
constitutes the Facility Agent or the Arrangers as a fiduciary of any other person.
	 
	24.4.2	 	None of the Facility Agent or the Arrangers shall be bound to account to any Finance Party
for any sum or the profit element of any sum received by it for its own account.
	 
	24.5	 	Business with the Group
	 
	 	 	The Facility Agent and the Arrangers may accept deposits from, lend money to and
generally engage in any kind of banking or other business with the Borrower.
	 
	24.6	 	Rights and discretions of the Facility Agent
	 
	24.6.1	 	The Facility Agent, may rely on:

	 	(a)	 	any representation, notice or document believed by it to be
genuine, correct and appropriately authorised; and
	 
	 	(b)	 	any statement made by a management board member, authorised
signatory or employee of any person regarding any matters which may reasonably be
assumed to be within his knowledge or within his power to verify.

	24.6.2	 	The Facility Agent may assume (unless it has received notice to the contrary in its
capacity as agent for the Lenders) that:

	 	(a)	 	no Default has occurred (unless it has actual knowledge of a
Default arising under clause 21.1 (Non-payment));

38

 

	 	(b)	 	any right, power, authority or discretion vested in any Party or the Majority
Lenders has not been exercised; and
	 
	 	(c)	 	any notice or request made by the Borrower (other than a
Utilisation Request) is made on behalf of and with the consent and knowledge of
the Borrower.

	24.6.3	 	The Facility Agent may engage and rely on the advice or services of any lawyers,
accountants, surveyors or other experts, if its needs an expert opinion on (including without
limitations) the legal effect of the Finance Documents, the value of the Security Property,
Environmental Claims, financial statements, the release of the Security, etc. The reasonable
cost of such services and/or advice within the upper limit of EUR 40,000 shall be borne by
the Borrower.
	 
	24.6.4	 	The Facility Agent may act in relation to the Finance Documents through their respective
personnel and agents.
	 
	24.6.5	 	The Facility Agent may disclose to any other Party any information each of them reasonably
believes it has received in its capacity as agent under this Agreement.
	 
	24.6.6	 	Notwithstanding any other provision of any Finance Document or, as the case may be, the
Security Documents to the contrary, the Facility Agent and the Arrangers are not obliged to
do or omit to do anything if it would or might in their reasonable opinion constitute a
breach of any law or regulation or a breach of a fiduciary duty or duty of confidentiality.
	 
	24.7	 	Majority Lenders’ instructions
	 
	24.7.1	 	Unless a contrary indication appears in a Finance Document, the Facility Agent shall: (a)
exercise any right, power, authority or discretion vested in it as the Facility Agent in
accordance with any instructions given to it by the Majority Lenders (or, if so instructed by
the Majority Lenders, refrain from exercising any right, power, authority or discretion
vested in it as the Facility Agent); and (b) not be liable to any other Finance Party for any
act (or omission) if it acts (or refrains from taking any action) in accordance with an
instruction of the Majority Lenders.
	 
	24.7.2	 	Unless a contrary indication appears in a Finance Document, any instructions given by the
Majority Lenders will be binding on all the Finance Parties.
	 
	24.7.3	 	The Facility Agent may refrain from acting in accordance with the instructions of the
Majority Lenders (or, if appropriate, the Lenders) until it has received such Security as it
may require for any cost, loss or liability (together with any associated VAT) which it may
incur in complying with the instructions.
	 
	24.7.4	 	In the absence of instructions from the Majority Lenders, (or, if appropriate, the Lenders)
the Facility Agent may act (or refrain from taking action) as it considers to be in the best
interest of the Lenders.
	 
	24.7.5	 	The Facility Agent is not authorised to act on behalf of a Finance Party (without first
obtaining that Finance Party’s consent) in any legal or arbitration proceedings relating to
any Finance Document.
	 
	24.8	 	Responsibility for documentation
	 
	 	 	None of the Facility Agent or the Arrangers:
	 
	24.8.1	 	are responsible for the adequacy, accuracy and/or completeness of any information (whether
oral or written) supplied by the Facility Agent, the Arrangers, the Borrower or any other
person given in or in connection with any Finance Document; or
	 
	24.8.2	 	are responsible for the legality, validity, effectiveness, adequacy or enforceability of
any Finance Document or any other agreement, arrangement or document entered into, made or
executed in anticipation of or in connection with any Finance Document.
	 
	24.9	 	Exclusion of liability
	 
	24.9.1	 	Without limiting clause 24.9.2 below, the Facility Agent and any Lender will not be liable
for any action taken by it under or in connection with any Finance Document, unless directly
caused by its negligence or wilful misconduct.

39

 

	24.9.2	 	No Party may take any proceedings against any officer, employee or agent of the
Facility Agent or any of the Lenders in respect of any claim it might have against the
Facility Agent, in respect of any act or omission of any kind by that officer, employee
or agent in relation to any Finance Document and any officer, employee or agent of the
Facility Agent, or any of the Lenders may rely on this clause subject to the provisions
of article 391 of the Polish Civil Code.
	 
	24.9.3	 	The Facility Agent and any Lender will be not liable for any delay (or any related
consequences) in crediting an account with an amount required under the Finance Documents to
be paid by the Facility Agent if it has taken all necessary steps as soon as reasonably
practicable to comply with the regulations or operating procedures of any recognised clearing
or settlement system used by the Facility Agent or any Lender for that purpose.
	 
	24.10	 	Lenders’ indemnity to the Facility Agent
	 
	 	 	Each Lender shall (in proportion to its share of the Total Commitments or, if the Total
Commitments are then zero, to its share of the Total Commitments immediately prior to
their reduction to zero) indemnify the Facility Agent within three Business Days of
demand, against any cost, loss or liability incurred by the Facility Agent, (otherwise
than by reason of the Facility Agent’s gross negligence or wilful misconduct) in acting
as Facility Agent under the Finance Documents (unless the Facility Agent has been
reimbursed by the Borrower pursuant to a Finance Document).
	 
	24.11	 	Resignation of the Facility Agent
	 
	24.11.1	 	The Facility Agent may resign and appoint one of its Affiliates as successor by giving
notice to the other Finance Parties and the Borrower.
	 
	24.11.2	 	Alternatively, the Facility Agent may resign by giving notice to the other Finance Parties
and the Borrower, in which case the Majority Lenders (after consultation with the Borrower)
may appoint a successor Facility Agent.
	 
	24.11.3	 	If the Majority Lenders have not appointed a successor Facility Agent in accordance with
clause 24.11.2 above within 30 days after notice of resignation was given, the Facility Agent
(after consultation with the Borrower) may appoint a successor Facility Agent.
	 
	24.11.4	 	The retiring Facility Agent shall, at its own cost, make available to the successor
Facility Agent such documents and records and provide such assistance as the successor
Facility Agent may reasonably request for the purposes of performing its functions as
Facility Agent, under the Finance Documents.
	 
	24.11.5	 	The resignation notice of the Facility Agent shall only take effect upon the appointment of
a successor.
	 
	24.11.6	 	Upon the appointment of a successor, the retiring Facility Agent shall be discharged from
any further obligation in respect of the Finance Documents but shall remain entitled to the
benefit of this clause 24. Its successor and each of the other Parties shall have the same
rights and obligations amongst themselves as they would have had if such successor had been
an original Party.
	 
	24.11.7	 	After consultation with the Borrower, the Majority Lenders may, by notice to the Facility
Agent require it to resign in accordance with clause 24.11.2 above. In this event, the
Facility Agent shall resign in accordance with clause 24.11.2 above.
	 
	24.11.8	 	Upon the change of the Facility Agent the relevant Parties shall execute such documents,
as required (including without limitation any amendments to the Security Documents) to ensure
that the Lenders are secured in relation to the obligations of the Borrower under this
Agreement to the same extent as they would be should the change have not been made. The
Borrower shall co-operate in this respect with the Finance Parties and shall execute such
documents, make filings and registrations and do other things, as may be required by the
retiring Facility Agent or the successor Facility Agent, as the case may be.
	 
	24.12	 	Confidentiality
	 
	 	 	If information is received by another division or department of the Facility Agent it
may be treated as confidential to that division or department and the Facility Agent
shall not be deemed to have notice of it

40

 

	24.13	 	Relationship with the Lenders
	 
	24.13.1	 	The Facility Agent may treat each Lender as a Lender entitled to payments under this
Agreement and acting through its Facility Office unless it has received not less than five
Business Days prior notice from that Lender to the contrary in accordance with the terms of
this Agreement.
	 
	24.13.2	 	Each Lender shall supply the Facility Agent with any information required by the Facility
Agent (if any) in order to calculate the Bank Guarantee Fund Cost.
	 
	24.14	 	Credit appraisal by the Lenders
	 
	 	 	Without affecting the responsibility of the Borrower for information supplied by it or
on its behalf in connection with any Finance Document, each Lender confirms to the
Facility Agent and the Arrangers that it has been, and will continue to be, solely
responsible for making its own independent appraisal and investigation of all risks
arising under or in connection with any Finance Document including but not limited to:
	 
	24.14.1	 	the financial condition, status and role of each member of the Group;
	 
	24.14.2	 	the legality, validity, effectiveness, adequacy or enforceability of any Finance Document
and any other agreement, arrangement or document entered into, made or executed in
anticipation of, under or in connection with any Finance Document;
	 
	24.14.3	 	whether that Lender has recourse, and the nature and extent of that recourse, against any
Party or any of its respective assets under or in connection with any Finance Document, the
transactions contemplated by the Finance Documents or any other agreement, arrangement or
document entered into, made or executed in anticipation of, under or in connection with any
Finance Document; and
	 
	24.14.4	 	the adequacy, accuracy and/or completeness of any information provided by the Facility
Agent any Party or by any other person under or in connection with any Finance Document, the
transactions contemplated by the Finance Documents or any other agreement, arrangement or
document entered into, made or executed in anticipation of, under or in connection with any
Finance Document.
	 
	24.15	 	Compliance with law
	 
	 	 	Each of the Facility Agent and any Lender may refrain from doing anything which might,
in its opinion, constitute a breach of any law or regulation or be otherwise actionable
at the suit of any person, and may do anything which, in its opinion, is necessary or
desirable to comply with any law or regulation of a relevant jurisdiction.
	 
	25	 	Conduct of business by the Parties
	 
	 	 	No provision of this Agreement (unless otherwise provided herein) will:
	 
	25.1.1	 	interfere with the right of any Party to arrange its affairs (Tax or otherwise) in whatever
manner it thinks fit;
	 
	25.1.2	 	oblige any Party to investigate or claim any credit, relief, remission or repayment
available to it or the extent, order and manner of any claim; or
	 
	25.1.3	 	oblige any Finance Party to disclose any information relating to its affairs (Tax-related
or otherwise) or any computations in respect of Tax.

41

 

	26	 	Sharing among the Finance Parties
	 
	26.1	 	Payments to Finance Parties
	 
	 	 	If a Finance Party (a Recovering Finance Party) receives or recovers any amount from the
Borrower other than in accordance with clause 28 and applies that amount to a payment due
under the Finance Documents then:
	 
	26.1.1	 	the Recovering Finance Party shall, within three Business Days, notify details of the
receipt or recovery, to the Facility Agent;
	 
	26.1.2	 	the Facility Agent shall determine whether the receipt or recovery is in excess of the
amount the Recovering Finance Party would have been paid had the receipt or recovery been
received or made by the Facility Agent and distributed in accordance with clause 28, without
taking account of any Tax which would be imposed on the Facility Agent in relation to the
receipt, recovery or distribution; and
	 
	26.1.3	 	the Recovering Finance Party shall, within three Business Days of demand by the Facility
Agent, pay to the Facility Agent an amount (the Sharing Payment) equal to such receipt or
recovery less any amount which the Facility Agent determines may be retained by the
Recovering Finance Party as its share of any payment to be made, in accordance with clause
28.5.
	 
	26.2	 	Redistribution of payments
	 
	 	 	The Facility Agent shall treat the Sharing Payment as if it had been paid by the
Borrower and distribute it between the Finance Parties (other than the Recovering
Finance Party) in accordance with clause 28.5.
	 
	26.3	 	Recovering Finance Party’s rights
	 
	26.3.1	 	On a distribution by the Facility Agent under clause 26.2 (Redistribution of payments), the
Recovering Finance Party will be subrogated to the rights of the Finance Parties which have
shared in the redistribution.
	 
	26.3.2	 	If and to the extent that the Recovering Finance Party is not able to rely on its rights
under clause 26.3.1 above, the Borrower shall be liable to the Recovering Finance Party for a
debt equal to the Sharing Payment which is immediately due and payable.
	 
	26.4	 	Reversal of redistribution
	 
	 	 	If any part of the Sharing Payment received or recovered by a Recovering Finance Party
becomes repayable and is repaid by that Recovering Finance Party, then:
	 
	26.4.1	 	each Finance Party which has received a share of the relevant Sharing Payment pursuant to
clause 26.2 (Redistribution of payments) shall, upon request of the Facility Agent, pay to the
Facility Agent for account of that Recovering Finance Party an amount equal to the appropriate
part of its share of the Sharing Payment (together with an amount as is necessary to reimburse
that Recovering Finance Party for its proportion of any interest on the Sharing Payment which
that Recovering Finance Party is required to pay); and
	 
	26.4.2	 	that Recovering Finance Party’s rights of subrogation in respect of any reimbursement shall
be cancelled and the Borrower will be liable to the reimbursing Finance Party for the amount
so reimbursed.
	 
	26.5	 	Exceptions
	 
	26.5.1	 	This clause 26 shall not apply to the extent that the Recovering Finance Party would not,
after making any payment pursuant to this clause, have a valid and enforceable claim against
the Borrower.
	 
	26.5.2	 	A Recovering Finance Party is not obliged to share with any other Finance Party any amount
which the Recovering Finance Party has received or recovered as a result of taking legal or
arbitration proceedings, if:

42

 

	 	(a)	 	it notified that other Finance Party of the legal or arbitration proceedings; and
	 
	 	(b)	 	that other Finance Party had an opportunity to participate in those
legal or arbitration proceedings but did not do so as soon as reasonably
practicable having received notice and did not take separate legal or arbitration
proceedings.

	27	 	Security Property
	 
	27.1	 	Order of application
	 
	27.1.1	 	The proceeds of the Security Property shall be applied in accordance with the following
respective claims:

	 	(a)	 	first, as to a sum equivalent to the aggregate amount owing to the
Finance Parties under the Finance Documents for the Finance Parties absolutely
(pro rata) and shall pay such sum to the Facility Agent for application in
accordance with clause 28;
	 
	 	(b)	 	second, to such other persons (if any) as are legally entitled
thereto in priority to the Borrower under the Finance Documents; and
	 
	 	(c)	 	third, as to the balance (if any) for the Borrower.

	27.2	 	Enforcement
	 
	27.2.1	 	None of the other Finance Parties shall have any independent power to enforce any of the
Security Documents or to exercise any rights, discretions or powers or to grant any consents
or releases under or pursuant to any of the Security Documents or otherwise have direct
recourse to the security and/or guarantees constituted by any of the Security Documents
except when agreed by all Lenders.
	 
	27.3	 	Co-operation to achieve agreed priorities of application
	 
	 	 	The Finance Parties shall co-operate with each other and any compulsory manager or
management under the Security Documents in realising the property and assets subject to
the Security Documents and in ensuring that the net proceeds realised under the Security
Documents after deduction of the expenses of realisation are applied in accordance with
clause 27.1.
	 
	28	 	Payment mechanics
	 
	28.1	 	Payments to the Facility Agent
	 
	28.1.1	 	On each date on which the Borrower or a Lender is required to make a payment under the
Finance Documents, the Borrower or Lender shall make the same available to the Facility Agent
(unless a contrary indication appears in a Finance Document) for a given amount’s value on
the due date at the time and in such funds as specified by the Facility Agent.
	 
	28.1.2	 	Payment shall be made to such account as the Facility Agent specifies.
	 
	28.2	 	Distributions by the Facility Agent
	 
	 	 	Each payment received by the Facility Agent under the Finance Documents for another Party
shall, subject to clause 28.3 and clause 28.4 be made available by the Facility Agent as
soon as practicable after receipt to the Party entitled to receive payment in accordance
with this Agreement (in the case of a Lender, for the account of its Facility Office), to
such account as that Party may notify to the Facility Agent by not less than five
Business Days’ notice.
	 
	28.3	 	Distributions to the Borrower
	 
	 	 	The Facility Agent may (with the consent of the Borrower or in accordance with clause
29) apply any amount received from a third party by it for the Borrower in or towards
payment (on the date and in the currency and funds of receipt by the Facility Agent) of
any amount due from the Borrower under the Finance Documents or in or towards purchase
of any amount of any currency to be so applied.

43

 

	28.4	 	Clawback
	 
	28.4.1	 	 Where a sum is to be paid to the Facility Agent under the Finance Documents for
another Party, the Facility Agent is not obliged to pay that sum to that other Party (or to
enter into or perform any related exchange contract) until it has been able to establish to
its satisfaction that it has actually received that sum.
	 
	28.4.2	 	If the Facility Agent pays an amount to another Party and it proves to be the case that the
Facility Agent had not actually received that amount, then the Party to whom that amount (or
the proceeds of any related exchange contract) was paid by the Facility Agent shall on demand
refund the same to the Facility Agent.
	 
	28.5	 	Partial payments
	 
	28.5.1	 	If the Facility Agent receives a payment that is insufficient to discharge all the amounts
then due and payable by the Borrower under the Finance Documents, the Facility Agent shall apply that
payment towards the obligations of the Borrower under the Finance Documents in the following
order:

	 	(a)	 	first, in or towards payment pro rata of any unpaid fees, costs
and expenses of the Facility Agent under the Finance Documents;
	 
	 	(b)	 	secondly, in or towards payment pro rata of any accrued interest,
fee or commission due but unpaid under this Agreement;
	 
	 	(c)	 	thirdly, in or towards payment pro rata of any principal due but unpaid under this
Agreement; and
	 
	 	(d)	 	fourthly, in or towards payment pro rata of any other sum due but
unpaid under the Finance Documents.

	28.5.2	 	The Facility Agent shall, if so directed by the Majority Lenders, vary the order set out in
clause 28.5.1(b) to 28.5.1(d) above.
	 
	28.6	 	No set-off by Borrower
	 
	 	 	All payments to be made by the Borrower under the Finance Documents shall be calculated
and be made without (and free and clear of any deduction for) set-off or counterclaim.
	 
	28.7	 	Business Days
	 
	28.7.1	 	Any payment which is due to be made on a day that is not a Business Day shall be made on
the next Business Day in the same calendar Month (if there is one) or the preceding Business Day (if there is
not).
	 
	28.7.2	 	During any extension of the due date for payment of any principal or Unpaid Sum under this
Agreement interest is payable on the principal or Unpaid Sum at the rate payable on the original due
date.
	 
	28.8	 	Change of currency
	 
	28.8.1	 	Unless otherwise prohibited by law, if more than one currency or currency unit are at the
same time recognised by the central bank of any country as the lawful currency of that
country, then:

	 	(a)	 	any reference in the Finance Documents to, and any obligations
arising under the Finance Documents in, the currency of that country shall be
translated into, or paid in, the currency or currency unit of that country
designated by the Facility Agent (after consultation with the Borrower); and
	 
	 	(b)	 	any translation from one currency or currency unit to another shall
be at the official rate of exchange recognised by the central bank for the
conversion of that currency or currency unit into the other, rounded up or down
by the Facility Agent (acting reasonably).

44

 

	28.8.2	 	If a change in any currency of a country occurs, this Agreement will be
amended to the extent necessary to reflect the change in currency.
	 
	29	 	Set-off
	 
	 	 	A Finance Party may set off any matured obligation due from the Borrower under the
Finance Documents against any matured obligation owed by that Finance Party to the
Borrower, regardless of the place of payment, booking branch or currency of either
obligation. If the obligations are in different currencies, the Finance Party may
convert either obligation at a “sale of currency” spot rate of exchange announced in
that Finance Party table of exchange rates for the purpose of the set-off.
	 
	30	 	Notices
	 
	30.1	 	Communications in writing
	 
	 	 	Any communication to be made under or in connection with the Finance Documents shall be
made in writing and, unless otherwise stated, may be made by fax, letter or via
electronic mail.
	 
	30.2	 	Addresses
	 
	 	 	The address, fax number and e-mail address (and the department or officer, if any, for
whose attention the communication is to be made) of each Party for any communication or
document to be made or delivered under or in connection with the Finance Documents is:
	 
	30.2.1	 	in the case of the Borrower, that identified with its name below:

	 	 	 
	CMC Zawiercie S.A.

ul. Pilsudskiego 82

42-400 Zawiercie

Poland

	 
	Tel:

	 	+48 32 672 54 52
	Fax:

	 	+48 32 672 54 92
	E-mail:

	 	Justyna.Popielska@cmc.com
	Attention:

	 	Justyna Popielska

	30.2.2	 	in the case of the Facility Agent, that identified with its name below:

	 	 	 
	ABN AMRO BANK (POLSKA) S.A.

ul. 1-go Sierpnia 8A

Warszawa,

Poland

	 
	Tel:

	 	+48 22 573 05 00
	Fax:

	 	+48 22 573 05 02
	E-mail:

	 	dorota.dendura@pl.abnamro.com
	Attention:

	 	Dorota Dendura

	30.2.3	 	in the case of each Lender or any other Party, that notified in writing to the
Facility Agent on or prior to the date on which it becomes a Party,
	 
	 	 	or any substitute address, fax number, e-mail address or department or officer as the
Party may notify to the Facility Agent (or the Facility Agent may notify to the other
Parties, if a change is made by the Facility Agent) by not less than five Business Days’
notice.
	 
	30.3	 	Delivery
	 
	30.3.1	 	Any communication or document made or delivered by one person to another under or in
connection with the Finance Documents will only be effective:

	 	(a)	 	if by way of fax, when received in legible form; or

45

 

	 	(b)	 	if by way of letter, when it has been left at the relevant address or five
Business Days after being deposited in the post postage prepaid in an envelope
addressed to it at that address; or
	 
	 	(c)	 	if by way of electronic mail, when received in legible form and
upon confirmation of receipt received by the sender,

	 	 	and, if a particular department or officer is specified as part of its address details
provided under clause 30.2, if addressed to that department or officer.
	 
	30.3.2	 	Any communication or document to be made or delivered to the Facility Agent will be
effective only when actually received by the Facility Agent and then only if it is expressly
marked for the attention of the department or officer identified with the Facility Agent’s
signature below (or any substitute department or officer as the Facility Agent shall specify
for this purpose). Any communication or document delivered to the Facility Agent via
electronic mail will also be effective; the Facility Agent may at any time demand the
delivery of original communication or documents sent via electronic mail.
	 
	30.3.3	 	All notices from or to the Borrower shall be sent through the Facility Agent unless this
Agreement expressly provides otherwise.
	 
	30.4	 	Notification of address and fax number
	 
	 	 	Promptly upon receipt of notification of an address and fax number or change of address
or fax number pursuant to clause 30.2 or changing its own address or fax number, the
Facility Agent shall notify the other Parties.
	 
	30.5	 	Electronic communication
	 
	30.5.1	 	Any communication to be made between the Facility Agent and a Lender under or in
connection with the Finance Documents may be made by electronic mail or other electronic means, if the
Facility Agent and the relevant Lender:

	 	(a)	 	agree that, unless and until notified to the contrary, this is to
be an accepted form of communication;
	 
	 	(b)	 	notify each other in writing of their electronic mail address
and/or any other information required to enable the sending and receipt of
information by that means; and
	 
	 	(c)	 	notify each other of any change to their address or any other such
information supplied by them.

	30.5.2	 	Any electronic communication made between the Facility Agent and a Lender will be effective
only when actually received in readable form and in the case of any electronic communication made by a
Lender to the Facility Agent only if it is addressed in such a manner as the Facility Agent shall specify
for this purpose.
	 
	30.6	 	Language
	 
	30.6.1	 	This Agreement shall be executed in English and in Polish in five identical copies of each
version, one of each version to be retained by each Party. In case of any discrepancies
between the two versions, the Polish language version shall prevail for the purposes of
interpretation.
	 
	30.6.2	 	Any notice given under or in connection with any Finance Document must be in Polish, except
for Utilisation Requests and Selection Notices, which will be made in English and Polish.
	 
	30.6.3	 	All other documents provided under or in connection with any Finance Document must be:

	 	(a)	 	in English or in Polish; or
	 
	 	(b)	 	if not in English or in Polish, and if so required by the Facility
Agent, accompanied by a certified Polish translation and, in this case, the
Polish translation will prevail unless the document is a constitutional,
statutory or other official document.

46

 

	31	 	Calculations and certificates
	 
	31.1	 	Certificates and Determinations
	 
	 	 	Any certification and determination by a Finance Party of a rate or amount under any
Finance Document is, in the absence of manifest error, conclusive evidence of the matters
to which it relates.
	 
	31.2	 	Day count convention
	 
	 	 	Any interest, commission or fee accruing under a Finance Document will accrue from day to
day and is calculated on the basis of the actual number of days elapsed and a year of 360
days.
	 
	32	 	Partial invalidity
	 
	 	 	If, at any time, any provision of the Finance Documents is or becomes illegal, invalid or
unenforceable in any respect under any law of any jurisdiction, neither the legality,
validity or enforceability of the remaining provisions nor the legality, validity or
enforceability of such provision under the law of any other jurisdiction will in any way
be affected or impaired.
	 
	33	 	Remedies and waivers
	 
	 	 	No failure to exercise, nor any delay in exercising, on the part of any Finance Party,
any right or remedy under the Finance Documents shall operate as a waiver, nor shall any
single or partial exercise of any right or remedy prevent any further or other exercise
or the exercise of any other right or remedy. The rights and remedies provided in this
Agreement are cumulative and, unless provided otherwise, not exclusive of any rights or
remedies provided by law.
	 
	34	 	Amendments to the terms of the Finance Documents
	 
	34.1	 	Required consents
	 
	34.1.1	 	Subject to clause 34.2 (Exceptions) any term of the Finance Documents may be amended or
waived only with the consent of the Majority Lenders and the Borrower and any such amendment
or waiver will be binding on all Parties.
	 
	34.1.2	 	The Facility Agent may effect, on behalf of any Finance Party, any amendment permitted by
this clause and it is hereby authorised to do so.
	 
	34.2	 	Exceptions
	 
	34.2.1	 	An amendment that has the effect of changing or which relates to:

	 	(a)	 	the definition of “Majority Lenders” in clause 1.1 (Definitions);
	 
	 	(b)	 	an extension to the date of payment of any amount under the Finance Documents;
	 
	 	(c)	 	a reduction in the Margin or a reduction in the amount of any payment
of principal, interest, fees or commission payable;
	 
	 	(d)	 	an increase in or an extension of any Commitment;
	 
	 	(e)	 	a change to the Borrower;
	 
	 	(f)	 	any provision of the Security Documents;
	 
	 	(g)	 	any provision which expressly requires the consent of all the
Lenders; or
	 
	 	(h)	 	clause 2.2, clause 22 or this clause 34,

	 	 	shall not be made without the prior written consent of all the Lenders.

47

 

	34.2.2	 	An amendment which relates to the level of Financial Covenants set out in clause 19
shall not be made without the prior written consent of all the Lenders.
	 
	34.2.3	 	An amendment which relates to the rights or obligations of the Facility Agent or the
Arrangers may not be effected without the consent of the Facility Agent or the Arrangers, as
the case may be.
	 
	35	 	Counterparts
	 
	 	 	Each Finance Document may be executed in any number of counterparts, and this has the
same effect as if the signatures on the counterparts were on a single copy of the
Finance Document.
	 
	36	 	Governing law
	 
	 	 	This Agreement is governed by Polish law.
	 
	37	 	Jurisdiction
	 
	 	 	The courts of Poland relevant to the seat of the Facility Agent shall have exclusive
jurisdiction to settle any dispute arising out of or in connection with this Agreement
(including a dispute regarding the existence, validity or termination of this Agreement)
(a Dispute).
	 
	 	 	This agreement has been entered into the day and year first before written.

48

 

Schedule 1

The original parties

Part 1

The Borrower

	 	 	 
	Name of the Borrower

	 	Address and Registration number
	 
	 	 
	CMC Zawiercie S.A.

	 	ul. Pilsudskiego 82
	 

	 	42-400 Zawiercie

Poland

Registration no: KRS 0000017925 (National

Court Register held by the District Court in

Częstochowa)
	 
	 	 
	 

	 	REGON: 272819315
	 
	 	 
	 

	 	NIP: 649-00-01-173
	 
	 	 
	 

	 	Share capital and paid in capital: PLN

140,000,000

49

 

 

Part 2

The Original Lenders

	 	 	 
	Column A	 	Column B
	Original Lenders	 	Period Commitment
	ABN AMRO BANK N.V. a company incorporated under the
laws of the Netherlands, with its seat in Amsterdam, with
its registered address: ul. Gustav Mahleraan 10, 1082
PP Amsterdam, the Netherlands.

	 	20.05.2008 — 27.07.2008 — PLN 24,375,000

28.07.2008 — 25.09.2008 — PLN 40,625,000

26.09.2008 — 05.01.2009 — PLN 48,750,000

06.01.2009 — 27.04.2009 — PLN 56,875,000

28.04.2009 — 27.07.2009 — PLN 73,125,000

28.07.2009 — 18.11.2009 — PLN 81,250,000

19.11.2009 — 20.11.2009 — PLN 130,000,000
	 
	 	 
	BRE BANK S.A. a joint stock company
incorporated under the laws of Poland, with its seat in
Warsaw, with its registered address at
Senatorska 18, 00-950 Warszawa, registered in the
National Court Register under no. KRS
0000025237, REGON: 001254524, NIP: 526-021-50-88,
share capital and paid in capital as at 1 January 2008:
PLN 118,642,672.

	 	20.05.2008 — 27.07.2008 — PLN 13,125,000

28.07.2008 — 25.09.2008 — PLN 21,875,000

26.09.2008 — 05.01.2009 — PLN 26,250,000

06.01.2009 — 27.04.2009 — PLN 30,625,000

28.04.2009 — 27.07.2009 — PLN 39,375,000

28.07.2009 — 18.11.2009 — PLN 43,750,000

19.11.2009 — 20.11.2009 — PLN 70,000,000
	 
	 	 
	HSBC BANK PLC, a bank incorporated and
existing under the laws of England, with its seat in
London, United Kingdom, with its registered
address: 8 Canada Square, London, E14 5HQ, United
Kingdom.

	 	20.05.2008 — 27.07.2008 — PLN 18,750,000

28.07.2008 — 25.09.2008 — PLN 31,250,000

26.09.2008 — 05.01.2009 — PLN 37,500,000

06.01.2009 — 27.04.2009 — PLN 43,750,000

28.04.2009 — 27.07.2009 — PLN 56,250,000

28.07.2009 — 18.11.2009 — PLN 62,500,000

19.11.2008 — 20.11.2009 — PLN 100,000,000
	 
	 	 
	ING BANK SLASKI S.A., a joint stock company incorporated
under the laws of Poland, with its seat in Katowice,
with its registered address: ul. Sokolska 34,
40-086 Katowice, registered in the National Court
Register under no. KRS 0000005459, REGON:
271514909, NIP: 634-013-54-75, share capital and
paid in capital: PLN 130,100,000.

	 	20.05.2008 — 27.07.2008 — PLN 18,750,000

28.07.2008 — 25.09.2008 — PLN 31,250,000

26.09.2008 — 05.01.2009 — PLN 37,500,000

06.01.2009 — 27.04.2009 — PLN 43,750,000

28.04.2009 — 27.07.2009 — PLN 56,250,000

28.07.2009 — 18.11.2009 — PLN 62,500,000

19.11.2009 — 20.11.2009 — PLN 100,000,000
	 
	 	 
	TOTAL

	 	20.05.2008 — 27.07.2008 — PLN 75,000,000

28.07.2008 — 25.09.2008 — PLN 125,000,000

26.09.2008 — 05.01.2009 — PLN 150,000,000

06.01.2009 — 27.04.2009 — PLN 175,000,000

27.04.2009 — 27.07.2009 — PLN 225,000,000

28.07.2009 — 18.11.2009 — PLN 250,000,000

19.11.2009 — 20.11.2009 — PLN 400,000,000

50

 

Schedule 2

Conditions precedent

	1	 	Borrower

	 	(a)	 	A copy of the Articles of Association of the Borrower.
	 
	 	(b)	 	A copy of a resolution of the management board of the Borrower no. 130/Z/11/2007
dated 27 November 2007 with respect to taking a mid- and long-term syndicated facility
up to the amount of PLN 400,000,000 (four hundred million zloty) and supervisory board
of the Borrower no. 69/VI/2007 dated 4 December 2007 with respect to consenting to
taking a mid- and long-term syndicated facility up to the amount of PLN 400,000,000
(four hundred million zloty).
	 
	 	(c)	 	A certificate of duly authorised signatories of the Borrower certifying that each
copy document relating to it specified in this schedule 2 is correct, complete and in
full force and effect as at a date no earlier than the date of this Agreement.

	2	 	Finance Documents

	 	(a)	 	All Powers of Attorney to the Bank Accounts; the Borrower is not required to
obtain a confirmation of their acknowledgement from all banks (or branches of banks),
which keep bank accounts included in those powers of attorney but undertakes to do so
within a time-limit specified in clause 20.27 of this Agreement in respect of powers of
attorney referred to therein.
	 
	 	(b)	 	Fee Letter.
	 
	 	(c)	 	Submission to Execution for each Lender.

	3	 	Other documents and evidence

	 	(a)	 	A legal opinion of Norton Rose, Piotr Strawa i Wspólnicy sp. k., legal advisers
to the Finance Parties, substantially in the form distributed to the Facility Agent
prior to the signing of this Agreement.
	 
	 	(b)	 	The Original Financial Statements.
	 
	 	(c)	 	An original extract from the National Court Register relating to the Borrower.
	 
	 	(d)	 	Confirmation that the Facility Agent has received the payment in respect of
fees, costs and expenses then due from the Borrower to the Finance Parties pursuant to
clause 11 (Fees) and clause 16 (Costs and expenses).
	 
	 	(e)	 	Budget of the Investment Project.
	 
	 	(f)	 	Decision of Wojewoda Śląski (the Śląsk
Province Governor) no. ŚR-ll-6618/06/12/07
dated 22 June 2007 on granting to the Borrower an integrated permit for the installation
of primary or secondary ironmaking or steelmaking, including the installation for
continuous casting, with the production capacity of over 2.5 tons cast per hour and the
installation for metalworking through hot rolling, with the production capacity of over
20 tons of steel per hour.
	 
	 	(g)	 	Periodical reports on monitoring the integrated permit’s provisions prepared so far, such
as:

	 	(i)	 	Report on measurement of the emission of substances to air.
	 
	 	(ii)	 	Annual report on carbon dioxide emission and report on the annual report’s
verification.
	 
	 	(iii)	 	Comprehensive list of data on types and amounts of waste
produced and manner of administering them for 2007

51

 

	 	(h)	 	Agreement no. DP03PN01/07 of 2 October 2007 made with DANIELl & C.
OFFICINE MECCANICHE S.p.A. with its registered office in Buttrio (Udine), Italy.
	 
	 	(i)	 	Budget for 2008.

52

 

Schedule 3

Wnioski / Requests

Część 1 / Part 1

Żądanie wypłaty / Utilisation Request

	 	 	 
	Od/From:

	 	CMC Zawiercie S.A.
	 
	 	 
	Do/To:

	 	ABN AMRO Bank (Polska) S.A. jako Agenta Kredytu / ABN AMRO
Bank (Polska) S.A. as the Facility Agent
	 
	 	 
	Data/Dated:

	 	[•]

Szanowni Państwo / Dear Sirs,

CMC Zawiercie S.A. — Umowa Kredytu
Terminowego w wysokości 400.000.000 PLN

z dnia 20 maja 2008r. (Umowa)

CMC Zawiercie S.A. — PLN 400,000,000 Term Facility Agreement dated 20 May 2008 (the Agreement)

	1.	 	Niniejszy dokument, stanowiący Żądanie Wypłaty, odnosi się do Umowy. Terminy
zdefiniowane w Umowie zachowują to samo znaczenie w niniejszym Żądaniu Wypłaty, o ile nie
zostało im nadane inne znaczenie . / We refer to the Agreement. This is a Utilisation
Request. Terms defined in the Agreement have the same meaning in this Utilisation Request
unless given a different meaning in this Utilisation Request.
	 
	 	 	Zwracamy się z wnioskiem o Wypłatę Ciągnienia zgodnie z
poniższymi warunkami: / We wish to
borrow the Loan on the following terms:

	 	 	 
	Data Wykorzystania: /

	 	[•] (lub — jeżeli nie jest to Dzień Roboczy —
następny Dzień Roboczy)
	Utilisation Date:

	 	(or, if that is not a Business Day, the next Business Day)
	 
	 	 
	Waluta Ciągnienia: /

	 	PLN
	Currency of Loan:
	 	 
	 
	 	 
	Kwota: /

	 	[•]
	Amount:
	 	 
	 
	 	 
	Okres Odsetkowy: /

	 	[•]
	Interest Period:
	 	 

	2	 	Potwierdzamy, że wszystkie warunki określone w par. 4.2 (Dalsze warunki zawieszające)
są spełnione w dacie niniejszego Żądania Wypłaty. / We confirm that each condition specified in
clause 4 .2 (Further conditions precedent) is satisfied on the date of this Utilisation Request.
	 
	3	 	Środki wypłacane w ramach niniejszego Ciągnienia należy przekazać
na następujące rachunki: / The
proceeds of this Loan should be credited as follows:
	 
	 	 	[•] PLN na rachunek nr [•] / PLN [•] to [•] account.
	 
	4	 	Niniejsze Żądanie Wypłaty jest nieodwołalne. / This Utilisation Request is irrevocable.

Z poważaniem / Yours faithfully

53

 

 

osoba upoważniona do podpisu w imieniu spółki CMC Zawiercie S.A.

authorised signatory for CMC Zawiercie S.A.

54

 

Część 2 / Part 2

Zawiadomienie o Wyborze Okresu Odsetkowego

Selection Notice

	 	 	 
	Od/From:

	 	CMC Zawiercie S.A.
	 
	 	 
	Do/To:

	 	ABN AMRO Bank (Polska) S.A. jako Agenta Kredytu / ABN AMRO
Bank (Polska) S.A. as the Facility Agent
	 
	 	 
	Data/Dated:

	 	[•]

Szanowni Państwo / Dear Sirs,

CMC Zawiercie S.A. — Umowa Kredytu Terminowego w wysokości 400.000.000 PLN

z dnia 20 maja 2008r. (Umowa)

CMC Zawiercie S.A. — PLN 400,000,000 Term Facility Agreement

dated 20 May 2008 (the Agreement)

	1	 	Niniejszy dokument, stanowiący Zawiadomienie o Wyborze Okresu Odsetkowego, odnosi się do
Umowy. Terminy zdefiniowane w Umowie zachowują to samo znaczenie w niniejszym Zawiadomieniu,
o ile nie zostało im nadane inne znaczenie . / We refer to the Agreement. This is a Selection
Notice. Terms defined in the Agreement have the same meaning in this Selection Notice unless given a
different meaning in this Selection Notice.
	 
	2	 	Niniejsze Zawiadomienie odnosi się do następującego Ciągnienia [•] i Okresu Odsetkowego, który
upływa [•]. / We refer to the following Loan [•] and
Interest Period ending on [•].
	 
	3	 	Zwracamy się z wnioskiem o ustalenie kolejnego Okresu Odsetkowego dla wyżej wymienionego
Ciągnienia jako [•]. / We request that the next Interest Period
for the above Loan is [•].
	 
	4	 	Niniejsze Zawiadomienie o Wyborze Okresu Odsetkowego jest nieodwołalne. / This Selection Notice
is irrevocable.

Z poważaniem / Yours faithfully

 

osoba upoważniona do podpisu w imieniu spółki CMC Zawiercie S.A.

authorised signatory for CMC Zawiercie S.A.

55

 

Schedule 4

Form of Transfer Certificate

Part 1

	 	 	 
	To:

	 	ABN AMRO Bank (Polska) S.A. as the Facility Agent
	 
	 	 
	Copy:
	 	 
	 
	 	 
	From:

	 	[The Existing Lender] (the Existing Lender)
and [ The New Lender] (the New Lender)
	 
	 	 
	Dated:

	 	[•]

CMC Zawiercie S.A. — PLN 400,000,000 Term Facility Agreement

dated 20 May 2008 (the Agreement)

	1	 	We refer to the Agreement. This is a Transfer Certificate. Terms defined in the Agreement have
the same meaning in this Transfer Certificate unless given a different meaning in this Transfer
Certificate.
	 
	2	 	We refer to clause 22.4 (Procedure for transfer):

	 	(a)	 	The Existing Lender and the New Lender agree to the Existing Lender assigning and
transferring to the New Lender all or part of the Existing Lender’s Commitment, rights and
obligations referred to in the Schedule in accordance with clause 22.4 (Procedure for transfer),
including all Security established in favour of the Existing Lender to secure the obligations of
the
Borrower under the Agreement.
	 
	 	(b)	 	The proposed Transfer Date is [•].
	 
	 	(c)	 	The Facility Office and address, fax number and attention details for notices of the New Lender
for the purposes of clause 30.2 (Addresses) are set out in the Schedule.

	3	 	The New Lender expressly acknowledges the limitations on the Existing Lender’s obligations set
out in clause 22.3.3.
	 
	4	 	This Transfer Certificate may be executed in any number of counterparts and this has the same
effect as if the signatures on the counterparts were on a single copy of this Transfer Certificate.
	 
	5	 	This Transfer Certificate is governed by Polish law.
	 
	6	 	The Existing Lender and the New Lender will execute at their cost all documents and make all
fillings and registrations as required to effect the Transfer.

56

 

The Schedule

Commitment/rights and obligations to be transferred

[insert relevant details]

[Facility Office address,
fax number and attention details for notices and account details for payments.]

	 	 	 
	[Existing Lender]

	 	[New Lender]
	 
	 	 
	By:

	 	By:
	 
	 	 
	This Transfer Certificate is accepted by the
Facility Agent.
	 	 
	 
	 	 
	[Facility Agent]
	 	 
	 
	 	 
	By:
	 	 

57

 

Schedule 5

Form of Compliance Certificate

	 	 	 
	To:

	 	ABN AMRO Bank (Polska) S.A. as the Facility Agent
	 
	 	 
	From:

	 	CMC Zawiercie S.A.
	 
	 	 
	Dated:

	 	[•]
	 
	 	 
	Dear Sirs

CMC
Zawiercie S.A. - PLN 400,000,000 Facility Agreement

dated 20 May 2008 (the Agreement)

	1	 	We refer to the Agreement. This is a Compliance Certificate. Terms defined in the Agreement
have the same meaning when used in this Compliance Certificate unless given a different
meaning in this Compliance Certificate.
	 
	2	 	We confirm that: [Insert details of covenants to be certified]
	 
	3	 	[We confirm that no Default is continuing.]

	 	 	 	 	 	 	 	 	 
	Signed:

	 	 	 	 	 	 	 	 
	 

	 	 
	 	 	 	 	 	 
	 

	 	Member of the
	 	 
	 	Member of the	 	 
	 

	 	Management Board
	 	 	 	Management Board	 	 
	 

	 	of CMC Zawiercie S.A.
	 	 	 	of CMC Zawiercie S.A.	 	 

[insert applicable certification language]

58

 

Schedule 6

Allowed Additional Bank Accounts

Account
no. PL [XXXXXXXX] of

SCRAPENA
S.A Oddział Chrzanów

Ul. Krakowska 33

32-500 Chrzanów

with

Bank Pekao S.A.

II O. w Krakowie

Ul. Kapelanka 1,

30-342 Kraków

59

 

SIGNATORIES

	 	 	 	 	 	 	 
	CMC ZAWIERCIE S.A. as the Borrower	 	 
	 
	 	 	 	 	 	 
	/s/ Jerzy Kozicz

	 	 	 	/s/ Justyna Popielska	 	 
	 

	 	 	 	 	 	 
	Jerzy Kozicz - President of the Management
Board

	 	 
	 	Justyna Popielska - Member of the Management
Board
	 	 
	 
	 	 	 	 	 	 
	ABN AMRO BANK (POLSKA) S.A. as the Arranger and Facility Agent	 	 
	 
	 	 	 	 	 	 
	/s/ Dorota Dendura

	 	 	 	/s/ Paweł Paraszewski	 	 
	 

	 	 	 	 	 	 
	Dorota Dendura - proxy

	 	 	 	Paweł Paraszewski - proxy	 	 
	 
	 	 	 	 	 	 
	ABN AMRO BANK N.V. as the Original Lender	 	 
	 
	 	 	 	 	 	 
	/s/ Dorota Dendura

	 	 	 	/s/ Paweł Paraszewski	 	 
	 

	 	 	 	 	 	 
	Dorota Dendura - proxy

	 	 	 	Paweł Paraszewski - proxy	 	 
	 
	 	 	 	 	 	 
	BRE BANK S.A. as the Arranger and Original Lender	 	 
	 
	 	 	 	 	 	 
	/s/ Adriana Adamiak

	 	 	 	/s/ Ryszard Gburek	 	 
	 

	 	 	 	 	 	 
	Adriana Adamiak - proxy

	 	 	 	Ryszard Gburek - proxy	 	 
	 
	 	 	 	 	 	 
	ING BANK
ŚLĄSKI S.A. as the Arranger and Original Lender	 	 
	 
	 	 	 	 	 	 
	/s/ Edmund Kubeczka

	 	 	 	/s/ Grzegorz Konieczny	 	 
	 

	 	 	 	 	 	 
	Edmund Kubeczka - proxy

	 	 	 	Grzegorz Konieczny - proxy	 	 

60

 

	 	 	 	 	 	 	 
	HSBC BANK PLC as the Arranger and Original Lender	 	 
	 
	 	 	 	 	 	 
	

	 	 	 		 	 
	/s/  Isil Tumer Floden
	 	 	 	/s/  Alastair Wilkinson	 	 
	 
	 	 	 	 	 	 
	Isil Tumer Floden - proxy
	 	 	 	Alastair Wilkinson - proxy	 	 

61exv10w1

Exhibit 10.1

ROCKY MOUNTAIN CHOCOLATE FACTORY

FRANCHISE AGREEMENT

	 	 	 	 	 	 	 
	Franchisee:	 	 	 	 
	Date: 
	 	 	 	 	 
	Franchised Location:	 	 
	 

 

 

TABLE OF CONTENTS

	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	Page	 
	 
	 	 	 	 	 	 	 	 
	1.	 	PURPOSE	 	 	1	 
	 
	 	 	 	 	 	 	 	 
	2.	 	GRANT OF FRANCHISE	 	 	1	 
	 
	 	2.1.	 	Grant of Franchise	 	 	1	 
	 
	 	2.2.	 	Scope of Franchise Operations	 	 	1	 
	 
	 	 	 	 	 	 	 	 
	3.	 	FRANCHISED LOCATION AND DESIGNATED AREA	 	 	2	 
	 
	 	3.1.	 	Franchised Location	 	 	2	 
	 
	 	3.2.	 	Limitation on Franchise Rights; Relocation	 	 	2	 
	 
	 	3.3.	 	Franchisor’s Reservation of Rights	 	 	2	 
	 
	 	 	 	 	 	 	 	 
	4.	 	INITIAL FEES	 	 	3	 
	 
	 	4.1.	 	Initial Franchise Fee	 	 	3	 
	 
	 	 	 	 	 	 	 	 
	5.	 	DEVELOPMENT OF FRANCHISED LOCATION	 	 	3	 
	 
	 	5.1.	 	Approval of Lease	 	 	3	 
	 
	 	5.2.	 	Conversion and Design	 	 	3	 
	 
	 	5.3.	 	Signs	 	 	3	 
	 
	 	5.4.	 	Equipment	 	 	4	 
	 
	 	5.5.	 	Electronic Communications	 	 	4	 
	 
	 	5.6.	 	Permits and Licenses	 	 	4	 
	 
	 	5.7.	 	Anti-Terrorism Representation	 	 	5	 
	 
	 	5.8.	 	Commencement of Operations	 	 	5	 
	 
	 	 	 	 	 	 	 	 
	6.	 	TRAINING	 	 	5	 
	 
	 	6.1.	 	Initial Training Program	 	 	5	 
	 
	 	6.2.	 	Length of Training	 	 	5	 
	 
	 	6.3.	 	Additional Training	 	 	5	 
	 
	 	 	 	 	 	 	 	 
	7.	 	DEVELOPMENT ASSISTANCE	 	 	6	 
	 
	 	7.1.	 	Franchisor’s Development Assistance	 	 	6	 
	 
	 	 	 	 	 	 	 	 
	8.	 	OPERATIONS MANUAL	 	 	7	 
	 
	 	8.1.	 	Operations Manual	 	 	7	 
	 
	 	8.2.	 	Confidentiality of Operations Manual Contents	 	 	7	 
	 
	 	8.3.	 	Changes to Operations Manual	 	 	7	 
	 
	 	 	 	 	 	 	 	 
	9.	 	OPERATING ASSISTANCE	 	 	7	 
	 
	 	9.1.	 	Franchisor’s Services	 	 	7	 
	 
	 	9.2.	 	Additional Franchisor Services	 	 	8	 
	 
	 	 	 	 	 	 	 	 
	10.	 	FRANCHISEE’S OPERATIONAL COVENANTS	 	 	8	 
	 
	 	10.1.	 	Store Operations	 	 	8	 
	 
	 	 	 	 	 	 	 	 
	11.	 	ROYALTIES	 	 	11	 
	 
	 	11.1.	 	Monthly Royalty	 	 	11	 
	 
	 	11.2.	 	Gross Retail Sales	 	 	11	 
	 
	 	11.3.	 	Royalty Payments	 	 	11	 
	 
	 	11.4.	 	Authorization for Prearranged Payments by Electronic Transfer	 	 	11	 

i

 

	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	Page	 
	 
	 	 	 	 	 	 	 	 
	12.	 	ADVERTISING	 	 	12	 
	 
	 	12.1.	 	Approval of Advertising	 	 	12	 
	 
	 	12.2.	 	Local Advertising	 	 	12	 
	 
	 	12.3.	 	Marketing and Promotion Fee	 	 	13	 
	 
	 	12.4.	 	Regional Advertising Programs	 	 	13	 
	 
	 	12.5.	 	Marketing Services	 	 	14	 
	 
	 	 	 	 	 	 	 	 
	13.	 	QUALITY CONTROL	 	 	14	 
	 
	 	13.1.	 	Compliance with Operations Manual	 	 	14	 
	 
	 	13.2.	 	Standards and Specifications	 	 	14	 
	 
	 	13.3.	 	Inspections	 	 	14	 
	 
	 	13.4.	 	Restrictions on Services and Products	 	 	14	 
	 
	 	13.5.	 	Approved Suppliers	 	 	14	 
	 
	 	13.6.	 	Request to Change Supplier	 	 	15	 
	 
	 	13.7.	 	Approval of Intended Supplier	 	 	15	 
	 
	 	 	 	 	 	 	 	 
	14.	 	TRADEMARKS, TRADE NAMES AND PROPRIETARY INTERESTS	 	 	15	 
	 
	 	14.1.	 	Marks	 	 	15	 
	 
	 	14.2.	 	No Use of Other Marks	 	 	15	 
	 
	 	14.3.	 	Licensed Methods	 	 	15	 
	 
	 	14.4.	 	Effect of Termination	 	 	16	 
	 
	 	14.5.	 	Mark Infringement	 	 	16	 
	 
	 	14.6.	 	Franchisee’s Business Name	 	 	16	 
	 
	 	14.7.	 	Change of Marks	 	 	16	 
	 
	 	14.8.	 	Creative Ownership	 	 	16	 
	 
	 	14.9.	 	Non-Disparagement	 	 	17	 
	 
	 	 	 	 	 	 	 	 
	15.	 	REPORTS, RECORDS AND FINANCIAL STATEMENTS	 	 	17	 
	 
	 	15.1.	 	Franchisee Reports	 	 	17	 
	 
	 	15.2.	 	Annual Financial Statements	 	 	17	 
	 
	 	15.3.	 	Verification	 	 	17	 
	 
	 	15.4.	 	Books and Records	 	 	17	 
	 
	 	15.5.	 	Audit of Books and Records	 	 	18	 
	 
	 	15.6.	 	Failure to Comply with Reporting Requirements	 	 	18	 
	 
	 	15.7.	 	Shopping Service	 	 	18	 
	 
	 	 	 	 	 	 	 	 
	16.	 	TRANSFER	 	 	18	 
	 
	 	16.1.	 	Transfer by Franchisee	 	 	18	 
	 
	 	16.2.	 	Pre-Conditions to Franchisee’s Transfer	 	 	18	 
	 
	 	16.3.	 	Franchisor’s Approval of Transfer	 	 	19	 
	 
	 	16.4.	 	Right of First Refusal	 	 	20	 
	 
	 	16.5.	 	Types of Transfers	 	 	20	 
	 
	 	16.6.	 	Transfer by the Franchisor	 	 	20	 
	 
	 	16.7.	 	Franchisee’s Death or Disability	 	 	20	 
	 
	 	 	 	 	 	 	 	 
	17.	 	TERM AND EXPIRATION	 	 	21	 
	 
	 	17.1.	 	Term	 	 	21	 
	 
	 	17.2.	 	Continuation	 	 	21	 
	 
	 	17.3.	 	Rights Upon Expiration	 	 	21	 
	 
	 	17.4.	 	Exercise of Option for Successor Franchise	 	 	21	 
	 
	 	17.5.	 	Conditions of Refusal	 	 	22	 

ii

 

	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	Page	 
	 
	 	 	 	 	 	 	 	 
	18.	 	DEFAULT AND TERMINATION	 	 	22	 
	 
	 	18.1.	 	Termination by Franchisor — Effective Upon Notice	 	 	22	 
	 
	 	18.2.	 	Termination by Franchisor — Thirty Days Notice	 	 	23	 
	 
	 	18.3.	 	Franchisor’s Remedies	 	 	24	 
	 
	 	18.4.	 	Right to Purchase	 	 	24	 
	 
	 	18.5.	 	Obligations of Franchisee Upon Termination or Expiration	 	 	25	 
	 
	 	18.6.	 	State and Federal Law	 	 	26	 
	 
	 	 	 	 	 	 	 	 
	19.	 	BUSINESS RELATIONSHIP	 	 	26	 
	 
	 	19.1.	 	Independent Businesspersons	 	 	26	 
	 
	 	19.2.	 	Payment of Third Party Obligations	 	 	26	 
	 
	 	19.3.	 	Indemnification	 	 	27	 
	 
	 	 	 	 	 	 	 	 
	20.	 	RESTRICTIVE COVENANTS	 	 	27	 
	 
	 	20.1.	 	Non-Competition During Term	 	 	27	 
	 
	 	20.2.	 	Post-Termination Covenant Not to Compete	 	 	28	 
	 
	 	20.3.	 	Confidentiality of Proprietary Information	 	 	28	 
	 
	 	20.4.	 	Confidentiality Agreement	 	 	28	 
	 
	 	 	 	 	 	 	 	 
	21.	 	INSURANCE	 	 	28	 
	 
	 	21.1.	 	Insurance Coverage	 	 	28	 
	 
	 	21.2.	 	Proof of Insurance Coverage	 	 	29	 
	 
	 	 	 	 	 	 	 	 
	22.	 	MISCELLANEOUS PROVISIONS	 	 	29	 
	 
	 	22.1.	 	Governing Law/Consent to Venue and Jurisdiction	 	 	29	 
	 
	 	22.2.	 	Cumulative Rights	 	 	29	 
	 
	 	22.3.	 	Modification	 	 	29	 
	 
	 	22.4.	 	Entire Agreement	 	 	29	 
	 
	 	22.5.	 	Delegation by the Franchisor	 	 	30	 
	 
	 	22.6.	 	Effective Date	 	 	30	 
	 
	 	22.7.	 	Review of Agreement	 	 	30	 
	 
	 	22.8.	 	Attorneys’ Fees	 	 	30	 
	 
	 	22.9.	 	Injunctive Relief	 	 	30	 
	 
	 	22.10.	 	No Waiver	 	 	30	 
	 
	 	22.11.	 	No Right to Set Off	 	 	30	 
	 
	 	22.12.	 	Invalidity	 	 	30	 
	 
	 	22.13.	 	Notices	 	 	30	 
	 
	 	22.14.	 	Payment of Taxes	 	 	31	 
	 
	 	22.15.	 	Acknowledgement	 	 	31	 

       EXHIBITS

	 	 	 
	I.

	 	Addendum to Franchise Agreement — Location Approval
	II.

	 	Personal Guaranty
	III.

	 	Statement of Ownership
	IV.

	 	Addendum to Franchise Agreement Related to the Authorization of Prearranged Payments
	V.

	 	Permit, License and Construction Certificate

	VI.

	 	Confidentiality and Noncompetition Agreement

iii

 

ROCKY MOUNTAIN CHOCOLATE FACTORY, INC.

FRANCHISE AGREEMENT

     THIS AGREEMENT (the “Agreement”) is made this       day of                     , 20     , by and
between ROCKY MOUNTAIN CHOCOLATE FACTORY, INC., a Colorado corporation, located at 265 Turner
Drive, Durango, Colorado 81303 (the “Franchisor”) and                                        
            
         

         ,
located at                
                                              (the
“Franchisee”), who, on the basis of the following understandings and agreements, agree as follows:

1. PURPOSE

     1.1. The Franchisor has developed methods for establishing, operating and promoting retail
stores selling gourmet chocolates and other premium confectionery products (“ROCKY MOUNTAIN
CHOCOLATE FACTORY Stores” or “Stores”) using the service mark “ROCKY MOUNTAIN CHOCOLATE FACTORY”
and related trade names and trademarks (“Marks”) and the Franchisor’s proprietary methods of doing
business (the “Licensed Methods”).

     1.2. The Franchisor grants the right to others to develop and operate ROCKY MOUNTAIN CHOCOLATE
FACTORY Stores, under the Marks and pursuant to the Licensed Methods.

     1.3. The Franchisee desires to establish a ROCKY MOUNTAIN CHOCOLATE FACTORY Store at a
location identified herein or to be later identified, and the Franchisor desires to grant the
Franchisee the right to operate a ROCKY MOUNTAIN CHOCOLATE FACTORY Store at such location under the
terms and conditions which are contained in this Agreement.

2. GRANT OF FRANCHISE

2.1. Grant of Franchise. The Franchisor grants to the Franchisee, and the Franchisee
accepts from the Franchisor, the right to use the Marks and Licensed Methods in connection with the
establishment and operation of a ROCKY MOUNTAIN CHOCOLATE FACTORY Store, at the location described
in Article 3 of this Agreement. The Franchisee agrees to use the Marks and Licensed
Methods, as they may be changed, improved, and further developed by the Franchisor from time to
time, only in accordance with the terms and conditions of this Agreement.

2.2. Scope of Franchise Operations. The Franchisee agrees at all times to faithfully,
honestly and diligently perform the Franchisee’s obligations hereunder, and to continuously exert
best efforts to promote the ROCKY MOUNTAIN CHOCOLATE FACTORY Store. The Franchisee agrees to
utilize the Marks and Licensed Methods to operate all aspects of the business franchised hereunder
in accordance with the methods and systems developed and prescribed from time to time by the
Franchisor, all of which are a part of the Licensed Methods. The Franchisee’s ROCKY MOUNTAIN
CHOCOLATE FACTORY Store shall offer such products and services as the Franchisor shall designate
and shall be restricted from manufacturing, offering or selling any products or services not
previously approved by the Franchisor in writing. The Franchisee is required to devote a minimum
of 50% of all retail display space to ROCKY MOUNTAIN CHOCOLATE FACTORY brand assorted bulk
chocolates and boxed and packaged candies. The Franchisee’s ROCKY MOUNTAIN CHOCOLATE FACTORY Store
must feature ROCKY MOUNTAIN CHOCOLATE FACTORY brand candy manufactured by the Franchisor or its
designees and sold by the Franchisor (“Factory Candy”) and related nonconfectionery items (“Items”)
approved by the Franchisor in writing. Depending on the retail environment and the configuration
of the Store, the Franchisee may also be permitted to make, offer and sell confections made

 

 

in the Store, including caramel-covered apples and candy-covered apples (“Store Candy”) prepared in
accordance with recipes and processes set forth in the Operations Manual, as that term is defined
in Section 8.1. Some Stores do not offer Store Candy.

3. FRANCHISED LOCATION AND DESIGNATED AREA

3.1. Franchised Location. The Franchisee is granted the right and franchise to own and
operate one ROCKY MOUNTAIN CHOCOLATE FACTORY Store at the address and location which shall be set
forth in Exhibit I, attached hereto (“Franchised Location”). The type of Store
configuration shall also be set forth in Exhibit I, attached hereto. Smaller Stores,
regardless of their configuration, are referred to as “Kiosks” or “Kiosk Stores” in this Agreement
and all references to “Stores” shall be deemed to include Kiosk Stores.

3.2. Limitation on Franchise Rights; Relocation. The rights that are hereby granted to the
Franchisee are for the specific Franchised Location and cannot be transferred to an alternative
Franchised Location, or any other location, without the prior written approval of the Franchisor.
If the Franchisee has operated a ROCKY MOUNTAIN CHOCOLATE FACTORY Store for not less than 12 months
and desires to relocate it to an alternative site, the Franchisee must set forth its reasons for
requesting the relocation in writing to the Franchisor, along with a proposed new location. The
Franchisor will have 30 days from receipt of the Franchisee’s written request to respond. If the
Franchisor approves the relocation and the proposed new location, and if the ownership of the
Franchisee does not change in any respect from the ownership of the Franchisee before the
relocation, then the Franchisee may move its Store to the new approved location, provided that the
Franchisee signs the Franchisor’s then current form of Franchise Agreement and opens the Store at
the new location within 12 months after the Store closes at its former Franchised Location. In
addition, the Franchisee will be required to pay a nonrefundable design fee of $2,500 to the
Franchisor for the Franchisor’s Store designers to design the layout of the Franchisee’s new Store
location. A similar design fee will also apply if the Franchisee requests design assistance in
remodeling its Store at any time during the term of this Agreement. See Section 5.2 below.
The Marks and Licensed Methods are licensed to the Franchisee for the operation of the ROCKY
MOUNTAIN CHOCOLATE FACTORY Store only at the Franchised Location; therefore, the Franchisee may not
operate food carts, participate in food festivals or offer any other type of off-site food services
using the Marks and Licensed Methods without the prior written consent of the Franchisor, in which
case the Franchisor and the Franchisee shall execute an addendum to this Agreement relating to the
operation of “Satellite Stores” (if this Agreement governs the operation of a traditional Store,
any Satellite Store(s) shall be governed by separate Franchise Agreements) or “Temporary Stores.”

3.3. Franchisor’s Reservation of Rights. The Franchisee acknowledges that the franchise
granted hereunder is non-exclusive and that the Franchisor retains the rights, among others: (1)
to use, and to license others to use, the Marks and Licensed Methods for the operation of ROCKY
MOUNTAIN CHOCOLATE FACTORY Stores, Kiosk Stores, Satellite Stores and Temporary Stores, at any
location other than at the Franchised Location; (2) to use the Marks and Licensed Methods to
identify services and products, promotional and marketing efforts or related items, and to identify
products and services similar to or the same as those which the Franchisee will sell, but made
available through alternative channels of distribution other than through traditional ROCKY
MOUNTAIN CHOCOLATE FACTORY Stores, at any location other than at the Franchised Location,
including, but not limited to, through Satellite Stores, Temporary Stores, Kiosk Stores, by way of
mail order, (including electronic mail order), the Internet, catalog, telemarketing, other direct
marketing methods, television, retail store display or through the wholesale sale of its products
to unrelated retail outlets or to candy distributors or outlets located in stadiums, arenas,
airports, turnpike rest stops or supermarkets; and (3) to use and license the use of other
proprietary marks or methods in connection with the sale of products and services similar to those
which the Franchisee will sell or in connection with the operation of retail stores selling gourmet
chocolates or other premium confectionery products, at any location other than at the Franchised
Location, which stores

FRANCHISE AGREEMENT-2

 

are the same as, or similar to, or different from a traditional ROCKY MOUNTAIN CHOCOLATE FACTORY
Store or a Satellite Store, a Temporary Store or a Kiosk Store, on any terms and conditions as the
Franchisor deems advisable, and without granting the Franchisee any rights therein.

4. INITIAL FEES

4.1. Initial Franchise Fee. In consideration for the right to develop and operate one
ROCKY MOUNTAIN CHOCOLATE FACTORY Store, the Franchisee agrees to pay to the Franchisor an initial
franchise fee in the amount set forth in Exhibit I attached hereto, all of which is due and
payable on the date the Franchisee signs this Agreement. The Franchisee acknowledges and agrees
that the initial franchise fee represents payment for the initial grant of the rights to use the
Marks and Licensed Methods, that the Franchisor has earned the initial franchise fee upon receipt
thereof and that the fee is under no circumstances refundable to the Franchisee after it is paid,
except as set forth in Section 5.8 of this Agreement. If a transfer occurs, no initial
franchise fee shall be due at the time that the Franchisee transfers the Store to another party,
but a transfer fee will apply as set forth in Section 16.2 of this Agreement.

5. DEVELOPMENT OF FRANCHISED LOCATION

5.1. Approval of Lease. The Franchisee shall obtain the Franchisor’s prior written
approval before executing any lease or purchase agreement for the Franchised Location. Any lease
for the Franchised Location shall, at the option of the Franchisor, contain provisions including:
(1) allowing for assignment of the lease to the Franchisor in the event that this Agreement is
terminated or not renewed for any reason; (2) giving the Franchisor the right to cure any default
by the Franchisee under such lease; and/or (3) providing the Franchisor with the right, exercisable
upon and as a condition of the approval of the Franchised Location, to execute the lease agreement
or other document providing entitlement to the use of the Franchised Location in its own name or
jointly with the Franchisee as lessee and, upon the exercise of such option, the Franchisor shall
provide the Franchisee with the right to use the premises as its sublessee, assignee, or other
similar capacity upon the same terms and conditions as obtained by the Franchisor. The Franchisee
shall deliver a copy of the signed lease for the Franchised Location to the Franchisor within 15
days of its execution. The Franchisee acknowledges that approval of a lease for the Franchised
Location by the Franchisor does not constitute a recommendation, endorsement or guarantee by the
Franchisor of the suitability of the location or the lease and the Franchisee should take all steps
necessary to ascertain whether such location and lease are acceptable to the Franchisee.

5.2. Conversion and Design. The Franchisee acknowledges that the layout, design,
decoration and color scheme of ROCKY MOUNTAIN CHOCOLATE FACTORY Stores are an integral part of the
Franchisor’s proprietary Licensed Methods and accordingly, the Franchisee shall convert, design and
decorate the Franchised Location in accordance with the Franchisor’s plans and specifications which
are contained in a Design and Construction Manual that is considered, for the purposes of this
Agreement, to be a part of the Operations Manual, defined in Section 8.1. The Franchisee
shall hire an architect/designer to prepare written plans for the Store’s layout and construction,
which plans shall be submitted to the Franchisor for its prior written approval. Throughout the
term of this Agreement, the Franchisee shall also obtain the Franchisor’s written consent to any
remodeling or decoration of the premises before remodeling or decorating begins, recognizing that
such remodeling, decoration and any related costs are the Franchisee’s sole responsibility. If the
Franchisee remodels its Store or if the Franchisee relocates its Store at any time during the term
of this Agreement, the Franchisee shall pay the Franchisor $2,500 for the Franchisor’s review and
approval of the new Store design.

5.3. Signs. The Franchisee shall purchase or otherwise obtain for use at the Franchised
Location and in connection with the ROCKY MOUNTAIN CHOCOLATE FACTORY Store, signs which comply with
the standards and specifications of the Franchisor as set forth in the Operations Manual, as that
term is

FRANCHISE AGREEMENT-3

 

defined in Section 8.1. It is the Franchisee’s sole responsibility to insure that any
signs comply with applicable local ordinances, building codes and zoning regulations. Any
modifications to the Franchisor’s standards and specifications for signs that must be made due to
local ordinances, codes or regulations shall be submitted to the Franchisor for prior written
approval. The Franchisee acknowledges the Marks, or any other name, symbol or identifying marks on
any signs shall only be used in accordance with the Franchisor’s standards and specifications and
only with the prior written approval of the Franchisor.

5.4. Equipment. The Franchisee shall purchase or otherwise obtain for use at the
Franchised Location and in connection with the ROCKY MOUNTAIN CHOCOLATE FACTORY Store, equipment of
a type and in an amount which complies with the standards and specifications of the Franchisor.
The Franchisee acknowledges that the type, quality, configuration, capability and/or performance of
the equipment are all standards and specifications which are a part of the Licensed Methods and
therefore such equipment must be purchased, leased, or otherwise obtained in accordance with the
Franchisor’s standards and specifications and only from suppliers or other sources approved by the
Franchisor. The Franchisee must purchase a facsimile machine and connect it to a phone line that
is separate from the main phone number for the Store. The Franchisee shall equip the Store with an
integrated store information system (“System”), computer hardware and software, printers and other
designated equipment consistent with the standards and specifications of the Franchisor. The
Franchisor requires that it be given reasonable access to information and data regarding the
Franchisee’s ROCKY MOUNTAIN CHOCOLATE FACTORY Store by computer modem with a separate phone line
dedicated to such modem, or by another form of electronic transmission. The Franchisee must
purchase and maintain throughout the term of this Agreement a maintenance and support agreement for
the System with the Franchisor’s designated supplier. The Franchisor also requires the Franchisee
to obtain and maintain an account with an Internet service provider that meets the Franchisor’s
standards and specifications to facilitate electronic communication.

5.5. Electronic Communications. The Franchisee shall obtain and maintain computer
hardware, software and an Internet connection meeting the Franchisor’s standards and specifications
as they may exist from time to time. The Franchisee agrees that the Franchisor may assign an
electronic mail address to the Franchisee and the Franchisee agrees to use such address to access
messages and information posted by the Franchisor and other ROCKY MOUNTAIN CHOCOLATE FACTORY
franchise owners. The Franchisor may post information about the Franchisee’s Store on the
Franchisor’s intranet system for comparative analysis purposes. The Franchisee agrees to
participate in the Franchisor’s electronic intranet system and to abide by the terms of use
governing it. Information on the Franchisor’s intranet system and the terms of use governing the
Franchisor’s intranet system are deemed to be incorporated into the terms of the Operations Manual
and any violations of the terms of use will be treated as a violation of the rules governing the
Operations Manual.

5.6. Permits and Licenses. The Franchisee agrees to obtain all such permits and
certifications as may be required for the lawful construction and operation of the ROCKY MOUNTAIN
CHOCOLATE FACTORY Store together with all certifications from government authorities having
jurisdiction over the site, that all requirements for construction and operation have been met,
including without limitation, zoning, access, sign, health, safety requirements, building and other
required construction permits, licenses to do business and fictitious name registrations, sales tax
permits, health and sanitation permits and ratings and fire clearances. The Franchisee agrees to
obtain all customary contractors’ sworn statements and partial and final lien waivers for
construction, remodeling, decorating and installation of equipment at the Franchised Location. The
Franchisee shall sign and deliver to the Franchisor the Permit, License and Construction
Certificate set forth as Exhibit V to this Agreement, to confirm Franchisee’s compliance
with the Americans with Disabilities Act and other provisions of this Section 5.6 not later
than 30 days prior to the date the Store begins operating. Copies of all inspection reports,
warnings, certificates and ratings issued by any governmental entity during the term of this
Agreement in

FRANCHISE AGREEMENT-4

 

connection with the conduct of the ROCKY MOUNTAIN CHOCOLATE FACTORY Store which indicates the
Franchisee’s failure to meet or maintain the highest governmental standards, or less than full
compliance by the Franchisee with any applicable law, rule or regulation, shall be forwarded to the
Franchisor within five days of the Franchisee’s receipt thereof.

5.7. Anti-Terrorism Representation. The Franchisee represents to the Franchisor that it
and all persons or entities holding any legal or beneficial interest whatsoever in the Franchisee
are not included in, owned by, controlled by, acting for or on behalf of, providing assistance,
support, sponsorship, or services of any kind to, or otherwise associated with any of the persons
or entities referred to or described in Executive Order 13224-Blocking Property and Prohibiting
Transactions with Persons Who Commit, Threaten to Commit, or Support Terrorism, as amended.

5.8. Commencement of Operations. Unless otherwise agreed in writing by the Franchisor and
the Franchisee, the Franchisee has 180 days from the date of this Agreement within which to
complete the initial training program, described in Section 6.1 of this Agreement, develop
the Franchised Location and commence operation of the ROCKY MOUNTAIN CHOCOLATE FACTORY Store.
Failure to commence operations within this time frame shall constitute grounds for termination
under Article 18 of this Agreement. If this Agreement is terminated by the Franchisor for
failure to commence operation of the Store within applicable time limits, $5,000 of the initial
franchise fee will be refunded to the Franchisee. The Franchisor will extend the time in which the
Franchisee has to commence operations for a reasonable period of time in the event factors beyond
the Franchisee’s reasonable control prevent the Franchisee from meeting this development schedule,
so long as the Franchisee has made reasonable and continuing efforts to comply with such
development obligations and the Franchisee requests, in writing, an extension of time in which to
have its ROCKY MOUNTAIN CHOCOLATE FACTORY Store established before such development period lapses.
However, notwithstanding the Franchisor’s written agreement to extend the Franchisee’s development
period, if more than 270 days elapse between the date of this Agreement and the commencement of
operation of the Store, the Franchisor reserves the right, in its sole discretion, to require the
Franchisee to execute the Franchisor’s then current form of Franchise Agreement or an amendment to
this Agreement to conform this Agreement with the terms of the then current Franchise Agreement.

6. TRAINING

6.1. Initial Training Program. After the Franchisee executes a lease for the Franchised
Location, the Franchisee or, if the Franchisee is not an individual, the person designated by the
Franchisee to assume primary responsibility for the management of the ROCKY MOUNTAIN CHOCOLATE
FACTORY Store, (“General Manager”) is required to attend and successfully complete the initial
training program which is offered by the Franchisor at one of the Franchisor’s designated training
facilities. Up to three individuals are eligible to participate in the Franchisor’s initial
training program without charge of a tuition or fee. The Franchisee shall be responsible for any
and all traveling and living expenses incurred in connection with attendance at the training
program. At least one individual must successfully complete the initial training program prior to
the Franchisee’s commencement of operation of its ROCKY MOUNTAIN CHOCOLATE FACTORY Store.

6.2. Length of Training. The initial training program shall consist of 7 days of
instruction at a location designated by the Franchisor; provided, however, that the Franchisor
reserves the right to waive a portion of the training program or alter the training schedule, if in
the Franchisor’s sole discretion, the Franchisee or General Manager has sufficient prior experience
or training.

6.3. Additional Training. From time to time, the Franchisor may present seminars,
conventions or continuing development programs or conduct meetings for the benefit of the
Franchisee. The Franchisee or its General Manager shall be required to attend any ongoing
mandatory seminars, conventions,

FRANCHISE AGREEMENT-5

 

programs or meetings as may be offered by the Franchisor. The Franchisor shall give the Franchisee
at least 30 days prior written notice of any ongoing seminar, convention or program that is deemed
mandatory. The Franchisor shall not require that the Franchisee attend any ongoing training more
often than once a year. All mandatory training will be offered without charge of a tuition or fee;
provided, however, the Franchisee will be responsible for all traveling and living expenses which
are associated with attendance at the same.

7. DEVELOPMENT ASSISTANCE

7.1. Franchisor’s Development Assistance. The Franchisor shall provide the Franchisee with
assistance in the initial establishment of the ROCKY MOUNTAIN CHOCOLATE FACTORY Store as follows:

     a. Provision of the initial training program to be conducted at the Franchisor’s
designated training facilities or at another location designated by the Franchisor, as
described in Article 6 above.

     b. Provision of written guidelines for a Franchised Location that shall include,
without limitation, specifications for space requirements and build out. The Franchisee
acknowledges that the Franchisor shall have no other obligation to provide assistance in the
selection and approval of a Franchised Location other than the provision of such written
specifications and approval or disapproval of a proposed Franchised Location, which approval
or disapproval shall be based on information submitted to the Franchisor in a form
sufficient to assess the proposed location as may be required by the Franchisor, in the
Franchisor’s sole discretion, and on information gathered by the Franchisor.

     c. Direction regarding the required conversion, design and decoration of the ROCKY
MOUNTAIN CHOCOLATE FACTORY Store premises, plus specifications concerning signs, seasonal
graphics, music, decor and equipment.

     d. Direction regarding the selection of suppliers of equipment, seasonal graphics,
music, items and materials used and inventory offered for sale in connection with the ROCKY
MOUNTAIN CHOCOLATE FACTORY Store. The Franchisor will determine the Franchisee’s initial
inventory of Factory Candy that the Franchisee will purchase, depending on the size and
configuration of the Store. After execution of this Agreement, the Franchisor will provide
the Franchisee with a list of approved suppliers, if any, of such equipment, items, seasonal
graphics, music, materials and inventory and, if available, a description of any national or
central purchase and supply agreements offered by such approved suppliers for the benefit of
ROCKY MOUNTAIN CHOCOLATE FACTORY franchisees.

     e. Provision of an Operations Manual in accordance with Section 8.1 below.

     f. As the Franchisor may reasonably schedule, and depending on availability of
personnel, the Franchisor will make available to the Franchisee at or close to the opening
of the Franchisee’s ROCKY MOUNTAIN CHOCOLATE FACTORY Store, a representative (“Site
Representative”) who will be present for up to five days beginning approximately three days
prior to the opening of the Franchisee’s ROCKY MOUNTAIN CHOCOLATE FACTORY Store. If the
Franchisee’s Store opens on or near a holiday, however, the Site Representative shall not
begin the in-Store assistance until three days after the holiday. Holidays shall include,
but not be limited to, New Years Day, Valentines Day, Easter, Memorial Day, Fourth of July,
Labor Day, Thanksgiving, Hanukkah and Christmas. There will be no charge to the Franchisee
for this service provided by the Franchisor. The Site Representative will assist the
Franchisee’s

FRANCHISE AGREEMENT-6

 

employees in opening the Store, unless in the Franchisor’s determination, the
Franchisee or the General Manager have sufficient prior training or experience.

8. OPERATIONS MANUAL

8.1. Operations Manual. The Franchisor agrees to loan to the Franchisee one or more
manuals, technical bulletins, cookbooks and recipes and other written materials (collectively
referred to as “Operations Manual”) covering Factory Candy ordering, Store Candy manufacturing,
processing and stocking and other operating and in-store marketing techniques for the ROCKY
MOUNTAIN CHOCOLATE FACTORY Store. The Franchisee agrees that it shall comply with the Operations
Manual as an essential aspect of its obligations under this Agreement, that the Operations Manual
shall be deemed to be incorporated herein by reference and failure by the Franchisee to
substantially comply with the Operations Manual may be considered by the Franchisor to be a breach
of this Agreement.

8.2. Confidentiality of Operations Manual Contents. The Franchisee agrees to use the Marks
and Licensed Methods only as specified in the Operations Manual. The Operations Manual is the sole
property of the Franchisor and shall be used by the Franchisee only during the term of this
Agreement and in strict accordance with the terms and conditions hereof. The Franchisee shall not
duplicate the Operations Manual nor disclose its contents to persons other than its employees or
officers who have signed the form of Confidentiality and Noncompetition Agreement attached hereto
as Exhibit VI and incorporated herein by reference. The Franchisee shall return the
Operations Manual to the Franchisor upon the expiration, termination or transfer of this Agreement.

8.3. Changes to Operations Manual. The Franchisor reserves the right to revise the
Operations Manual from time to time as it deems necessary to update or change operating and
marketing techniques, standards and specifications for all components of the Licensed Methods and
approved Factory Candy, Items and Store Candy offered by Stores. The Franchisee, within 30 days of
receiving any updated information, shall in turn update its copy of the Operations Manual as
instructed by the Franchisor and shall conform its operations with the updated provisions within a
reasonable time after receipt of such updated information. The Franchisee acknowledges that a
master copy of the Operations Manual maintained by the Franchisor at its principal office shall be
controlling in the event of a dispute relative to the content of any Operations Manual.

9. OPERATING ASSISTANCE

9.1. Franchisor’s Services. The Franchisor agrees that, during the Franchisee’s operation
of the ROCKY MOUNTAIN CHOCOLATE FACTORY Store, the Franchisor shall make available to the
Franchisee the following services:

     a. Upon the reasonable request of the Franchisee, consultation by telephone and
electronic mail regarding the continued operation and management of a ROCKY MOUNTAIN
CHOCOLATE FACTORY Store and advice regarding the retail services, product quality control,
inventory issues, customer relations issues and similar advice.

     b. Access to advertising and promotional materials as may be developed by the
Franchisor, the cost of which may be passed on to the Franchisee at the Franchisor’s option.

     c. On-going updates of information and programs regarding the candy industry, the ROCKY
MOUNTAIN CHOCOLATE FACTORY concept and related Licensed Methods, including, without
limitation, information about special or new products which may be developed and made
available to ROCKY MOUNTAIN CHOCOLATE FACTORY franchisees.

FRANCHISE AGREEMENT-7

 

     d. Depending on availability, allow replacement or additional General Managers to
attend the initial training program. The Franchisor reserves the right to charge a tuition
or fee in an amount payable in advance, commensurate with the Franchisor’s then current
published prices for such training. The Franchisee shall be responsible for all travel and
living expenses incurred by its personnel during the training program. Further, the
availability of the training program shall be subject to space considerations and prior
commitments to new ROCKY MOUNTAIN CHOCOLATE FACTORY franchisees.

9.2. Additional Franchisor Services. Although not obligated to do so, upon the reasonable
request of the Franchisee, the Franchisor may make its employees or designated agents available to
the Franchisee for on-site advice and assistance in connection with the on-going operation of the
ROCKY MOUNTAIN CHOCOLATE FACTORY Store governed by this Agreement. In the event that the
Franchisee requests such additional assistance and the Franchisor agrees to provide the same, the
Franchisor reserves the right to charge the Franchisee for all travel, lodging, living expenses,
telephone charges and other identifiable expenses associated with such assistance, plus a fee based
on the time spent by each employee on behalf of the Franchisee, which fee will be charged in
accordance with the then current daily or hourly rates being charged by the Franchisor for
assistance.

10. FRANCHISEE’S OPERATIONAL COVENANTS

10.1. Store Operations. The Franchisee acknowledges that it is solely responsible for the
successful operation of its ROCKY MOUNTAIN CHOCOLATE FACTORY Store and that the continued
successful operation thereof is, in part, dependent upon the Franchisee’s compliance with this
Agreement and the Operations Manual. In addition to all other obligations contained in this
Agreement and in the Operations Manual, the Franchisee covenants that:

     a. The Franchisee shall maintain clean, efficient and high quality ROCKY MOUNTAIN
CHOCOLATE FACTORY Store operations and shall operate the business in accordance with the
Operations Manual and in such a manner as not to detract from or adversely reflect upon the
name and reputation of the Franchisor and the goodwill associated with the ROCKY MOUNTAIN
CHOCOLATE FACTORY name and Marks.

     b. The Franchisee will operate its ROCKY MOUNTAIN CHOCOLATE FACTORY Store in compliance
with all applicable laws, health department regulations and other ordinances. In connection
therewith, the Franchisee will be solely and fully responsible for obtaining any and all
licenses to operate the ROCKY MOUNTAIN CHOCOLATE FACTORY Store. The Franchisee shall
promptly forward to the Franchisor copies of all health department, fire department,
building department and other similar reports of inspections as and when they become
available.

     c. The Franchisee and all persons who work behind the counter at the Store in any
capacity, whether or not they are employees of the Franchisee (“Personnel”), shall conduct
themselves in such a manner so as to promote a good image to the public and to the business
community. At no time shall any of the Personnel engage in unreasonable or disrespectful
behavior toward anyone, including using offensive or rude language or gestures. The
Franchisee shall at all times require its Personnel to follow the Code of Conduct as set
forth in the Operations Manual.

     d. The Franchisee acknowledges that proper management of the ROCKY MOUNTAIN CHOCOLATE
FACTORY Store is important and shall insure that the Franchisee or a designated General
Manager who has completed the Franchisor’s initial training program be responsible for the
management of the ROCKY MOUNTAIN CHOCOLATE FACTORY Store

FRANCHISE AGREEMENT-8

 

after commencement of Store operations and be present at the Franchised Location during
operation of the Store.

     e. The Franchisee shall offer only authorized products and services as are more fully
described in the vendor lists which are a part of the Operations Manual, which may include,
without limitation, Factory Candy, Store Candy, Items and other authorized confectionery
food and beverage products. Further, the Franchisee shall operate the Store using only
those supplies, equipment, ingredients, signs, décor, music and methods which are described
in the Operations Manual. The Franchisee shall offer only the types of products and
services as from time to time may be prescribed by the Franchisor and shall refrain from
offering any other types of products or services, from or through the ROCKY MOUNTAIN
CHOCOLATE FACTORY Store, including, without limitation, filling “Wholesale Orders,” defined
below, selling Factory Candy, Store Candy, Items or other authorized products through the
Internet, or catering or other off-premises sales, without the prior written consent of the
Franchisor. “Wholesale Orders” are defined as those orders or sales where the principal
purpose of the purchase is for resale, not consumption, or any sale other than those sold
over the counter at a price other than that price charged to the general public; provided,
however, that volume discounted sales made on the premises at the Franchised Location to a
single purchaser, not for resale, and discounted sales made on the premises at the
Franchised Location to charitable organizations for fund-raising purposes shall be
permitted. Factory Candy, Store Candy and Items shall never be sold in containers or bags
other than those approved and supplied by the Franchisor or other supplier approved by the
Franchisor.

     f. The Franchisee shall promptly pay when due all taxes and other obligations owed to
third parties in the operation of the ROCKY MOUNTAIN CHOCOLATE FACTORY Store, including
without limitation, unemployment and sales taxes, and any and all accounts or other
indebtedness of every kind incurred by the Franchisee in the conduct of the ROCKY MOUNTAIN
CHOCOLATE FACTORY Store. In the event of a bona fide dispute as to the liability for taxes
assessed or other indebtedness, the Franchisee may contest the validity or the amount of the
tax or indebtedness in accordance with procedures of the taxing authority or applicable law;
however, in no event shall the Franchisee permit a tax sale or seizure by levy or execution
or similar writ or warrant, or attachment by a creditor to occur against the premises of the
Franchised Location, or any improvement thereon.

     g. The Franchisee shall subscribe for and maintain not fewer than two or three separate
telephone numbers for its ROCKY MOUNTAIN CHOCOLATE FACTORY Store at the Franchised Location,
depending on the size and configuration of the Store or Kiosk. One number shall be used
exclusively for voice communication, the second shall be used exclusively for the modem that
is included in the System. If a third telephone number is required, it shall be used
exclusively for a facsimile machine. The telephone number and, if applicable, the facsimile
machine number, shall be listed and identified exclusively with the ROCKY MOUNTAIN CHOCOLATE
FACTORY Store in all official telephone directories and in all advertising in which such
numbers appear and shall be separate and distinct from all other telephone numbers
subscribed for by the Franchisee.

     h. The Franchisee shall comply with all agreements with third parties related to the
ROCKY MOUNTAIN CHOCOLATE FACTORY Store including, in particular, all provisions of any lease
for the Franchised Location.

     i. The Franchisee and all employees of the Franchisee shall adhere to strict grooming
and dress code guidelines, as described in the Code of Conduct set forth in the Operations
Manual, while on duty at the Franchised Location. The Franchisee is required, at the
Franchisee’s expense, to purchase specified apparel from suppliers approved by the
Franchisor.

FRANCHISE AGREEMENT-9

 

All General Managers, employees of the Franchisee, the Franchisee and its owners shall
wear the specified apparel at all times while working at the Franchised Location. The
Franchisor has the right, in its sole and absolute discretion, to change or modify such
grooming and dress code guidelines in the Operations Manual.

     j. The Franchisee agrees to renovate, refurbish, remodel or replace, at its own
expense, the personal property and equipment used in the operation of the ROCKY MOUNTAIN
CHOCOLATE FACTORY Store, when reasonably required by the Franchisor in order to comply with
the image, standards of operation and performance capability established by the Franchisor
from time to time. If the Franchisor changes its image or standards of operation, it shall
give the Franchisee a reasonable period of time within which to comply with such changes.

     k. The Franchisee shall be responsible for training all of its Personnel who work in
any capacity in the ROCKY MOUNTAIN CHOCOLATE FACTORY Store. The Franchisee must conduct its
Personnel training in the manner and according to the standards as prescribed in the
Operations Manual. All Personnel who do not satisfactorily complete the training shall not
work in any capacity in the Franchisee’s ROCKY MOUNTAIN CHOCOLATE FACTORY Store.

     l. The Franchisee shall at all times during the term of this Agreement own and control
the ROCKY MOUNTAIN CHOCOLATE FACTORY Store authorized hereunder. The Franchisee shall not
operate any other business or profession from or through the Store. If the Franchisee is an
entity, the entity shall only operate the ROCKY MOUNTAIN CHOCOLATE FACTORY Store governed by
this Agreement and no other business, unless the Franchisee receives the Franchisor’s prior
written approval. Upon request of the Franchisor, the Franchisee shall promptly provide
satisfactory proof of such ownership to the Franchisor. The Franchisee represents that the
Statement of Ownership, attached hereto as Exhibit III and by this reference
incorporated herein, is true, complete, accurate and not misleading, and, in accordance with
the information contained in the Statement of Ownership, the controlling ownership of the
ROCKY MOUNTAIN CHOCOLATE FACTORY Store is held by the Franchisee. The Franchisee shall
promptly provide the Franchisor with a written notification if the information contained in
the Statement of Ownership changes at any time during the term of this Agreement and shall
comply with the applicable transfer provisions contained in Article 16 herein. In
addition, if the Franchisee is an entity, all of the owners of the Franchisee shall sign the
Personal Guaranty attached hereto as Exhibit II.

     m. The Franchisee shall at all times during the term of this Agreement keep its ROCKY
MOUNTAIN CHOCOLATE FACTORY Store open during the business hours designated by the Franchisor
from time to time in the Operations Manual.

     n. Unless notified in writing otherwise by the Franchisor, all Factory Candy and
related products shall be sold and shipped to the Franchisee on a net 30-day basis, or
according to the then current payment terms set by the Franchisor or its designated
suppliers. The Franchisor reserves the right to charge interest at the rate of 1.5% per
month if the Franchisee fails to pay for its orders on time and the Franchisor reserves the
right to discontinue shipment of Factory Candy and related products to the Franchisee if the
Franchisee is repeatedly delinquent in paying for its Factory Candy and related products, in
the Franchisor’s sole discretion. The Franchisee may be required to “prepay” Factory Candy
orders, notwithstanding the payment policy set forth above, in the event of poor payment
performance. The Franchisor reserves the right to change payment terms and policies at any
time. The Franchisor also reserves the right to change the price for Factory Candy and
related products from time to time as may be set forth in the most recent price bulletin
sent to all franchisees or the then current Operations Manual.

FRANCHISE AGREEMENT-10

 

11. ROYALTIES

11.1. Monthly Royalty. The Franchisee agrees to pay to the Franchisor a monthly royalty
(“Royalty”) equal to 5% of its Gross Retail Sales generated from or through its ROCKY MOUNTAIN
CHOCOLATE FACTORY Store. The Franchisee also agrees to pay a quarterly Royalty based on Adjusted
Gross Retail Sales during each calendar quarter. The amount of monthly Royalty paid during each
quarter shall be credited toward the amount of quarterly Royalty owed. Within 15 days following
the end of each calendar quarter, the Franchisor shall calculate the amount of the Franchisee’s
Adjusted Gross Retail Sales during the previous quarter and the Franchisee shall owe the Franchisor
a quarterly Royalty equal to 10% of its Adjusted Gross Retail Sales. “Adjusted Gross Retail Sales”
shall be calculated as the amount of “Gross Retail Sales,” defined in Section 11.2 below,
minus a fixed dollar amount for each pound of Factory Candy purchased from the Franchisor and minus
a multiple of the wholesale price, as specified by the Franchisor, on certain Store Candy
ingredients, packaging and other products and supplies purchased from the Franchisor during the
previous calendar quarter. The Franchisor reserves the right to change the fixed dollar amount per
pound of Factory Candy and the multiple of the wholesale price from time to time, in the
Franchisor’s sole discretion. The Franchisee shall be notified of any credits from or amounts
owing to the Franchisor for the quarterly Royalty based on Adjusted Gross Retail Sales. Any
credits or amounts owed will be added to or deducted from the following month’s monthly Royalty
payment. If the Franchisee owns other ROCKY MOUNTAIN CHOCOLATE FACTORY Stores governed by other
franchise agreements that calculate Royalties differently than described above, the Franchisor
reserves the right to adjust the calculation of Adjusted Gross Retail Sales based on variances in
other Stores’ past and current purchases.

11.2. Gross Retail Sales. “Gross Retail Sales” shall be defined as receipts and income of
any kind from all products or services sold from or through the ROCKY MOUNTAIN CHOCOLATE FACTORY
Store, including any such sale of products or services made for cash or upon credit, or partly for
cash and partly for credit, regardless of collection of charges for which credit is given, less
returns for which refunds are made, provided that the refund shall not exceed the sales price and
exclusive of discounts, sales taxes and other taxes, amounts received in settlement of a loss of
merchandise, shipping expenses paid by the customer and certain discount sales to corporations or
to charities for fund-raising purposes. “Gross Retail Sales” shall also include the fair market
value of any services or products received by the Franchisee in barter or in exchange for its
services and products.

11.3. Royalty Payments. The Franchisee agrees that Royalty payments shall be paid monthly
and sent to the Franchisor, post-marked no later than the 15th of each month based on Gross Retail
Sales for the immediately preceding month. Royalty payments shall be accompanied by monthly
reports, as more fully described in Article 15 hereof, and standard transmittal forms
containing information regarding the Franchisee’s Gross Retail Sales and such additional
information as may be requested by the Franchisor. The Franchisor reserves the right to require
Royalty payments be made on a weekly or bi-weekly basis if the Franchisee does not timely or fully
submit the required payments or reports. The Franchisor shall have the right to verify such
Royalty payments from time to time as it deems necessary, in any reasonable manner. In the event
that the Franchisee fails to pay any Royalties within 14 days after they are due, the Franchisee
shall, in addition to such Royalties, pay a late charge equivalent to 18% of the late Royalty
payment; provided, however, in no event shall the Franchisee be required to pay a late payment at a
rate greater than the maximum interest rate permitted by applicable law. If the Franchisee pays
Royalties with a check returned for non-sufficient funds more than one time in any calendar year,
in addition to all other remedies which may be available, the Franchisor shall have the right to
require that Royalty payments be made by certified or cashier’s checks.

11.4. Authorization for Prearranged Payments by Electronic Transfer. The Franchisor
reserves the right to require that Royalty payments, late charges and payment of the Marketing and
Promotion Fee and late charges (as set forth in Section 12.3 below) be made by means of
electronic funds transfer and

FRANCHISE AGREEMENT-11

 

the Franchisee agrees to provide the information necessary to implement such transfer payments
within 30 days of receiving notice that such a program is being implemented. By signing this
Agreement, the Franchisee authorizes the Franchisor to initiate debit entries and/or credit
correction entries to the Franchisee’s checking or savings account indicated on the Addendum to
this Agreement related to the Authorization of Prearranged Payments attached to this Agreement as
Exhibit IV, and authorizes the depository named on Exhibit IV (“Depository”) to
debit such account pursuant to the Franchisor’s instructions. The Franchisee shall complete the
form attached as Exhibit IV with the information requested. This authority is to remain in
full force and effect until Depository has received joint written notification from the Franchisor
and the Franchisee of the Franchisee’s termination of such authority in such time and in such
manner as to afford Depository a reasonable opportunity to act on it. Notwithstanding the
foregoing, Depository shall provide the Franchisor and the Franchisee with 30 days’ prior written
notice of the termination of this authority. If an erroneous debit entry is initiated to the
Franchisee’s account, the Franchisee shall have the right to have the amount of such entry credited
to such account by Depository, if (a) within 15 calendar days following the date on which
Depository sent to the Franchisee a statement of account or a written notice pertaining to such
entry or (b) 45 days after posting, whichever occurs first, the Franchisee shall have sent to
Depository a written notice identifying such entry, stating that such entry was in error and
requesting Depository to credit the amount thereof to such account. These rights are in addition
to any rights the Franchisee may have under federal and state banking laws.

12. ADVERTISING

12.1. Approval of Advertising. The Franchisee shall obtain the Franchisor’s prior written
approval of all advertising or other marketing or promotional programs published by any method,
including print, broadcast and electronic media, regarding the ROCKY MOUNTAIN CHOCOLATE FACTORY
Store, including, without limitation, “Yellow Pages” advertising, newspaper ads, flyers, brochures,
coupons, direct mail pieces, specialty and novelty items, radio, television, Internet and World
Wide Web advertising. The Franchisee acknowledges and agrees that the Franchisor may disapprove of
any advertising, marketing or promotional programs submitted to the Franchisor, for any reason, in
the Franchisor’s sole discretion. The Franchisee shall also obtain the Franchisor’s prior written
approval of all promotional materials provided by vendors. The proposed written advertising or a
description of the marketing or promotional program shall be submitted to the Franchisor at least
10 days prior to publication, broadcast or use. The Franchisee acknowledges that advertising and
promoting the ROCKY MOUNTAIN CHOCOLATE FACTORY Store in accordance with the Franchisor’s standards
and specifications is an essential aspect of the Licensed Methods, and the Franchisee agrees to
comply with all advertising standards and specifications. The Franchisee shall display all
required promotional materials, signs, point of purchase displays and other marketing materials in
its ROCKY MOUNTAIN CHOCOLATE FACTORY Store in the manner prescribed by the Franchisor. The
Franchisee shall not, under any circumstances, use handwritten signs in the operation of its Store.
The Franchisee agrees to participate in any gift card or customer loyalty card programs
implemented by the Franchisor in accordance with all of the Franchisor’s standards and
specifications. The Franchise acknowledges and agrees that a gift card or customer loyalty card
program may require the Franchisee to purchase gift cards or other products or services from the
Franchisor or from a designated third-party supplier.

12.2. Local Advertising. The Franchisor reserves the right to require the Franchisee to
spend up to 1% of monthly Gross Retail Sales on local advertising to create public awareness of the
Franchisee’s ROCKY MOUNTAIN CHOCOLATE FACTORY Store. The Franchisee will submit to the Franchisor
an accounting of the amounts spent on advertising within 30 days following the end of each calendar
quarter. If the Franchisor requires its franchisees to advertise locally as described above, all
Franchisor-owned Stores will be required to spend money for local advertising on an equal
percentage basis with all franchised Stores. If the Franchisee’s lease requires it to advertise
locally, the Franchisor may, in its sole discretion, count such expenditures toward the
Franchisee’s local advertising expenditure required by this

FRANCHISE AGREEMENT-12

 

Section 12.2. The Franchisee shall obtain the Franchisor’s prior written approval of all
written advertising and promotional materials before publication, in accordance with Section
12.1 above.

12.3. Marketing and Promotion Fee. The Franchisee shall pay to the Franchisor, in addition
to Royalties, a fee of up to 2% of the total amount of the Franchisee’s Gross Retail Sales
(“Marketing and Promotion Fee”). The Franchisor may change the amount of the Marketing and
Promotion Fee upon 30 days notice, but the amount will not exceed 2% of Gross Retail Sales. The
Marketing and Promotion Fee shall be in addition to and not in lieu of the Franchisee’s
expenditures for local advertising, as described in Section 12.2 above. The following
terms and conditions will apply:

     a. The Marketing and Promotion Fee shall be payable concurrently with the payment of
the Royalties, and transmitted to the Franchisor in accordance with Section 11.3
above, for all Marketing and Promotion Fees for the immediately preceding month.

     b. The Marketing and Promotion Fees will be subject to the same late charges as the
Royalties, in an amount and manner set forth in Section 11.3 above.

     c. Upon written request by the Franchisee, the Franchisor will make available to the
Franchisee, no later than 120 days after the end of each fiscal year, an annual financial
statement which indicates how the Marketing and Promotion Fees have been spent.

     d. The Marketing and Promotion Fees will be administered by the Franchisor, in its sole
discretion, and may be used for production and placement of point of purchase advertising,
in-store signage, in-store promotions, media advertising, direct mailings, brochures,
collateral material advertising, implementing and administering gift card and customer
loyalty card programs, surveys of advertising effectiveness, packaging development, logo,
design or other advertising or public relations expenditures relating to advertising the
Franchisee’s products and services.

     e. The Franchisor may reimburse itself for independent audits, reasonable accounting,
bookkeeping, reporting and legal expenses, taxes and other reasonable direct and indirect
expenses as may be incurred by the Franchisor or its authorized representatives in
connection with the programs funded by the Marketing and Promotion Fees. The Franchisor
will not be liable for any act or omission with respect to such Marketing and Promotion Fees
that is consistent with this Agreement and is done in good faith.

12.4. Regional Advertising Programs. Although not obligated to do so, the Franchisor
reserves the right to allocate up to 50% of the Marketing and Promotion Fees charged in accordance
with Section 12.3 above, toward a regional advertising program for the benefit of ROCKY
MOUNTAIN CHOCOLATE FACTORY franchisees located within a particular region. The Franchisor has the
right, in its sole discretion, to determine the composition of all geographic territories and
market areas for the implementation of such regional advertising and promotion campaigns and to
require that the Franchisee participate in such regional advertising programs as and when they may
be established by the Franchisor. If a regional advertising program is implemented on behalf of a
particular region by the Franchisor, the Franchisor, to the extent reasonably calculable, will only
use contributions from ROCKY MOUNTAIN CHOCOLATE FACTORY franchisees within such region for the
particular regional advertising program. The Franchisor also reserves the right to establish a
co-operative for a particular region to enable the co-operative to self-administer the regional
advertising program. If a regional advertising co-operative is established by the Franchisor, the
Franchisee agrees that it will participate in it. If the Franchisor creates a regional advertising
program, either as a co-operative or otherwise, the Franchisor has the right to charge the program
for the actual costs of forming and administering the program.

FRANCHISE AGREEMENT-13

 

12.5. Marketing Services. The Franchisor may, in its sole discretion, offer marketing and
merchandising services to the Franchisee at rates that are competitive with those charged by third
parties offering similar services. The Franchisee may utilize such services, if they are offered,
at the Franchisee’s option. Services offered by the Franchisor may include marketing consulting,
graphic design, copywriting, advertising, public relations and merchandising consultations.

13. QUALITY CONTROL

13.1. Compliance with Operations Manual. The Franchisee agrees to maintain and operate the
ROCKY MOUNTAIN CHOCOLATE FACTORY Store in compliance with this Agreement and the standards and
specifications contained in the Operations Manual, as the same may be modified from time to time by
the Franchisor.

13.2. Standards and Specifications. The Franchisor will make available to the Franchisee
standards and specifications for products and services offered at or through the ROCKY MOUNTAIN
CHOCOLATE FACTORY Store and specifically, for the recipes for Store Candy, display cases, uniforms,
materials, forms, menu boards, items and supplies used in connection with the Store. The
Franchisor reserves the right to change standards and specifications for services and products
offered at or through the ROCKY MOUNTAIN CHOCOLATE FACTORY Store and for the recipes for Store
Candy, display cases, uniforms, materials, forms, items and supplies used in connection with the
Store upon 30 days prior written notice to the Franchisee. The Franchisee shall strictly adhere to
all of the Franchisor’s current standards and specifications for the ROCKY MOUNTAIN CHOCOLATE
FACTORY Store as prescribed from time to time.

13.3. Inspections. The Franchisor shall have the right to examine the Franchised Location,
including the inventory, products, equipment, materials and supplies, to ensure compliance with all
standards and specifications set by the Franchisor. The Franchisor shall conduct such inspections
during regular business hours and the Franchisee may be present at such inspections. The
Franchisor, however, reserves the right to conduct the inspections without prior notice to the
Franchisee.

13.4. Restrictions on Services and Products. The Franchisee will be required to purchase
all of its Factory Candy for its ROCKY MOUNTAIN CHOCOLATE FACTORY Store from the Franchisor or its
designee. Factory Candy shall consist of any and all varieties from time to time made available to
the Franchisor’s franchisees by the Franchisor and its designated suppliers. The parties hereby
acknowledge the uniqueness and importance of Factory Candy being prepared by the Franchisor or its
designee in order to maintain the uniformity, quality and uniqueness of Factory Candy, and
therefore the Franchisor and its designees are hereby appointed the Franchisee’s exclusive source
of Factory Candy. The Franchisee is prohibited from offering or selling any products or services
not authorized by Franchisor, including, without limitation, operating a catering or wholesale
business or offering Factory Candy, Items, Store Candy or other authorized products for sale on the
Internet, as part of the ROCKY MOUNTAIN CHOCOLATE FACTORY Store. However, if the Franchisee
proposes to offer, conduct or utilize any products, services, materials, forms, items or supplies
for use in connection with or sale through the ROCKY MOUNTAIN CHOCOLATE FACTORY Store which are not
previously approved by the Franchisor as meeting its specifications, the Franchisee shall first
notify the Franchisor in writing requesting approval. The Franchisor may, in its sole discretion,
for any reason whatsoever, elect to withhold such approval. In order to make such determination,
the Franchisor may require submission of specifications, information, or samples of such products,
services, materials, forms, items or supplies. The Franchisor will advise the Franchisee within a
reasonable time whether such products, services, materials, forms, items or supplies meet its
specifications.

13.5. Approved Suppliers. The Franchisee shall purchase all products, services, supplies
and materials required for the operation of the ROCKY MOUNTAIN CHOCOLATE FACTORY Store

FRANCHISE AGREEMENT-14

 

licensed herein, from manufacturers, suppliers or distributors designated by the Franchisor or, if
there is no designated supplier for a particular product, service, supply or material, from such
other suppliers who meet all of the Franchisor’s specifications and standards as to quality,
composition, finish, appearance and service, and who shall adequately demonstrate their capacity
and facilities to supply the Franchisee’s needs in the quantities, at the times, and with the
reliability requisite to an efficient operation.

13.6. Request to Change Supplier. In the event the Franchisee desires to purchase
products, services, supplies or materials from manufacturers, suppliers or distributors other than
those previously approved by the Franchisor, the Franchisee shall, prior to purchasing any such
products, services, supplies or materials, give the Franchisor a written request by certified mail,
return receipt requested, to change supplier. In the event the Franchisor rejects the Franchisee’s
requested new manufacturer, supplier or distributor, the Franchisor must, within 60 days of the
receipt of the Franchisee’s request to change supplier, notify the Franchisee of its rejection.
Failure to notify the Franchisee within such time period shall not constitute approval or a waiver
of objections. The Franchisor may continue from time to time to inspect any manufacturer’s,
supplier’s, or distributor’s facilities and products to assure proper production, processing,
storing and transportation of products, services, supplies or materials to be purchased from the
manufacturer, supplier or distributor by the Franchisee. Permission for such inspection shall be a
condition of the continued approval of such manufacturer, supplier or distributor.

13.7. Approval of Intended Supplier. The Franchisor may at its sole discretion, for any
reason whatsoever, elect to withhold approval of the manufacturer, supplier or distributor;
however, in order to make such determination, the Franchisor may require that samples from a
proposed new supplier be delivered to the Franchisor for testing prior to approval and use. A
charge not to exceed the actual cost of the test may be made by the Franchisor and shall be paid by
the Franchisee.

14. TRADEMARKS, TRADE NAMES AND PROPRIETARY INTERESTS

14.1. Marks. The Franchisee hereby acknowledges that the Franchisor has the sole right to
license and control the Franchisee’s use of the ROCKY MOUNTAIN CHOCOLATE FACTORY service mark and
other of the Marks, and that such Marks shall remain under the sole and exclusive ownership and
control of the Franchisor. The Franchisee acknowledges that it has not acquired any right, title
or interest in such Marks except for the right to use such Marks in the operation of its ROCKY
MOUNTAIN CHOCOLATE FACTORY Store as it is governed by this Agreement. Except as permitted in the
Operations Manual, the Franchisee agrees not to use any of the Marks as part of an electronic mail
address, or on any sites on the Internet or World Wide Web and the Franchisee agrees not to use or
register any of the Marks as a domain name on the Internet.

14.2. No Use of Other Marks. The Franchisee further agrees that no service mark other than
“ROCKY MOUNTAIN CHOCOLATE FACTORY” or such other Marks as may be specified by the Franchisor shall
be used in the marketing, promotion or operation of the ROCKY MOUNTAIN CHOCOLATE FACTORY Store.

14.3. Licensed Methods. The Franchisee hereby acknowledges that the Franchisor owns and
controls the distinctive plan for the establishment, operation and promotion of the ROCKY MOUNTAIN
CHOCOLATE FACTORY Store and all related licensed methods of doing business, previously defined as
the “Licensed Methods”, which include, but are not limited to, gourmet chocolate specialty recipes
and cooking methods, confectionery ordering, processing, manufacturing, stocking and inventory
control, technical equipment standards, order fulfillment methods and customer relations, marketing
techniques, written promotional materials, advertising, and accounting systems, all of which
constitute trade secrets of the Franchisor, and the Franchisee acknowledges that the Franchisor has
valuable rights in and to such trade secrets. The Franchisee further acknowledges that it has not
acquired any right, title or interest in

FRANCHISE AGREEMENT-15

 

the Licensed Methods except for the right to use the Licensed Methods in the operation of the ROCKY
MOUNTAIN CHOCOLATE FACTORY Store as it is governed by this Agreement.

14.4. Effect of Termination. In the event this Agreement is terminated for any reason, the
Franchisee shall immediately cease using any of the Licensed Methods and Marks, trade names, trade
dress, trade secrets, copyrights or any other symbols used to identify the ROCKY MOUNTAIN CHOCOLATE
FACTORY Store, and all rights the Franchisee had to the same shall automatically terminate. The
Franchisee agrees to execute any documents of assignment as may be necessary to transfer any rights
the Franchisee may possess in and to the Marks.

14.5. Mark Infringement. The Franchisee agrees to notify the Franchisor in writing of any
possible infringement or illegal use by others of a trademark the same as or confusingly similar to
the Marks which may come to its attention. The Franchisee acknowledges that the Franchisor shall
have the right, in its sole discretion, to determine whether any action will be taken on account of
any possible infringement or illegal use. The Franchisor may commence or prosecute such action in
the Franchisor’s own name and may join the Franchisee as a party thereto if the Franchisor
determines it to be reasonably necessary for the continued protection and quality control of the
Marks and Licensed Methods. The Franchisor shall bear the reasonable cost of any such action,
including attorneys’ fees. The Franchisee agrees to fully cooperate with the Franchisor in any
such litigation.

14.6. Franchisee’s Business Name. The Franchisee acknowledges that the Franchisor has a
prior and superior claim to the ROCKY MOUNTAIN CHOCOLATE FACTORY trade name. The Franchisee shall
not use the phrase or two or more of the words “ROCKY MOUNTAIN CHOCOLATE FACTORY” or abbreviations
thereof in the legal name of its corporation, partnership or any other business entity used in
conducting the business provided for in this Agreement. The Franchisee also agrees not to register
or attempt to register a trade name using the phrase or two or more of the words “ROCKY MOUNTAIN
CHOCOLATE FACTORY” or abbreviations thereof in the Franchisee’s name or that of any other person or
business entity, without the prior written consent of the Franchisor. When this Agreement is
terminated, the Franchisee shall execute any assignment or other document the Franchisor requires
to transfer to itself any rights the Franchisee may possess in a trade name utilizing any or all of
the words “ROCKY MOUNTAIN CHOCOLATE FACTORY,” any abbreviations thereof or any other Mark owned by
the Franchisor. The Franchisee further agrees that it will not identify itself as being “Rocky
Mountain Chocolate Factory, Inc.” or as being associated with the Franchisor in any manner other
than as a franchisee or licensee. The Franchisee further agrees that in all advertising and
promotion and promotional materials it will display its business name only in obvious conjunction
with the phrase “ROCKY MOUNTAIN CHOCOLATE FACTORY Licensee” or “ROCKY MOUNTAIN CHOCOLATE FACTORY
Franchisee” or with such other words and in such other phrases as may from time to time be
prescribed in the Operations Manual, in the Franchisor’s sole discretion.

14.7. Change of Marks. In the event that the Franchisor, in its sole discretion, shall
determine it necessary to modify or discontinue use of any proprietary Marks, or to develop
additional or substitute marks, the Franchisee shall, within a reasonable time after receipt of
written notice of such a modification or discontinuation from the Franchisor, take such action, at
the Franchisee’s sole expense, as may be necessary to comply with such modification,
discontinuation, addition or substitution.

14.8. Creative Ownership. All copyrightable works created by the Franchisee or any of its
owners, officers or employees in connection with the Store shall be the sole property of the
Franchisor. The Franchisee assigns all proprietary rights, including copyrights, in these works to
the Franchisor without additional consideration. The Franchisee hereby assigns and will execute
such additional assignments or documentation to effectuate the assignment of all intellectual
property, inventions, copyrights and trade secrets developed in part or in whole in relation to the
Store, during the term of this Agreement, as the Franchisor may deem necessary in order to enable
it, at its expense, to apply for, prosecute and obtain

FRANCHISE AGREEMENT-16

 

copyrights, patents or other proprietary rights in the United States and in foreign countries or in
order to transfer to the Franchisor all right, title, and interest in said property. The
Franchisee shall promptly disclose to the Franchisor all inventions, discoveries, improvements,
recipes, creations, patents, copyrights, trademarks and confidential information relating to the
Store which it or any of its owners, officers or employees has made or may make solely, jointly or
commonly with others and shall promptly create a written record of the same. In addition to the
foregoing, the Franchisee acknowledges and agrees that any improvements or modifications, whether
or not copyrightable, directly or indirectly related to the Store, shall be deemed to be a part of
the Licensed Methods and shall inure to the benefit of the Franchisor.

14.9. Non-Disparagement. The Franchisee agrees that it shall not take any action or make
any statements to any third parties that would constitute a criticism, denigration or disparagement
of the Franchisor or its Licensed Methods or would tend to be injurious to the reputation or
goodwill of the Franchisor or its Marks, or which in any manner may interfere with the business
affairs or business relations of the Franchisor.

15. REPORTS, RECORDS AND FINANCIAL STATEMENTS

15.1. Franchisee Reports. The Franchisee shall establish and maintain at its own expense a
bookkeeping and accounting system which conforms to the specifications which the Franchisor may
prescribe from time to time, including the Franchisor’s current “Standard Code of Accounts” as
described in the Operations Manual. The Franchisee shall supply to the Franchisor such reports in
a manner and form as the Franchisor may from time to time reasonably require, including:

     a. Monthly summary reports, in a form as may be prescribed by the Franchisor, mailed to
the Franchisor postmarked no later than the 15th day of the month and containing information
relative to the previous month’s operations; and

     b. Quarterly financial statements, prepared in accordance with generally accepted
accounting principles (“GAAP”), and consisting of a profit and loss statement and balance
sheet for the ROCKY MOUNTAIN CHOCOLATE FACTORY Store, mailed to the Franchisor postmarked no
later than the 15th day following the end of the calendar quarter, based on operating
results of the prior quarter, which shall be submitted in a form approved by the Franchisor
and shall be certified by the Franchisee to be correct.

The Franchisor reserves the right to disclose data derived from such reports, without identifying
the Franchisee, except to the extent identification of the Franchisee is required by law.

15.2. Annual Financial Statements. The Franchisee shall, within 90 days after the end of
its fiscal year, provide to the Franchisor annual unaudited financial statements, compiled or
reviewed by an independent certified public accountant acceptable to and approved by the Franchisor
and prepared in accordance with GAAP, and state and federal income tax returns prepared by a
certified public accountant. If these financial statements or tax returns show an underpayment of
any amounts owed to the Franchisor, these amounts shall be paid to the Franchisor concurrently with
the submission of the statements or returns.

15.3. Verification. Each report and financial statement to be submitted to the Franchisor
hereunder shall be signed and verified by the Franchisee.

15.4. Books and Records. The Franchisee shall maintain all books and records for its ROCKY
MOUNTAIN CHOCOLATE FACTORY Store in accordance with GAAP, consistently applied, and preserve these
records for at least five years after the fiscal year to which they relate.

FRANCHISE AGREEMENT-17

 

15.5. Audit of Books and Records. The Franchisee shall permit the Franchisor to inspect and
audit the books and records of the ROCKY MOUNTAIN CHOCOLATE FACTORY Store at any reasonable time,
at the Franchisor’s expense. If any audit discloses a deficiency in amounts for payments owed to
the Franchisor pursuant to this Agreement, then such amounts shall become immediately payable to
the Franchisor by the Franchisee, with interest from the date such payments were due at the lesser
of 11/2% per month or the maximum rate allowed by law. In addition, if it is found by such audit
that the Gross Retail Sales of the ROCKY MOUNTAIN CHOCOLATE FACTORY Store have been understated by
five percent (5%) or more during the period audited, the Franchisee shall pay all reasonable costs
and expenses the Franchisor incurred in connection with such audit.

15.6. Failure to Comply with Reporting Requirements. If the Franchisee fails to prepare
and submit any statement or report as required under this Article 15, then the Franchisor
shall have the right to treat the Franchisee’s failure as good cause for termination of this
Agreement. In addition to all other remedies available to the Franchisor, in the event that the
Franchisee fails to prepare and submit any statement or report required under this Article
15 for two consecutive reporting periods, the Franchisor shall be entitled to make an audit, at
the expense of the Franchisee, of the Franchisee’s books, records and accounts, including the
Franchisee’s bank accounts, which in any way pertain to the Gross Retail Sales or the Adjusted
Gross Retail Sales of the ROCKY MOUNTAIN CHOCOLATE FACTORY Store. The statements or reports not
previously submitted shall be prepared by or under the direction and supervision of an independent
certified public accountant selected by the Franchisor.

15.7. Shopping Service. The Franchisor reserves the right to use third party shopping
services from time to time to evaluate the conduct of the Franchisee’s ROCKY MOUNTAIN CHOCOLATE
FACTORY Store, including such things as customer service, cleanliness, merchandising and proper use
of registers. The Franchisor may use such shopping services to inspect the Franchisee’s ROCKY
MOUNTAIN CHOCOLATE FACTORY Store at any time at the Franchisor’s expense, without prior
notification to the Franchisee. The Franchisor may make the results of any such service evaluation
available to the Franchisee, in the Franchisor’s sole discretion.

16. TRANSFER

16.1. Transfer by Franchisee. The franchise granted herein is personal to the Franchisee
and, except as stated below, the Franchisor shall not allow or permit any transfer, assignment,
subfranchise or conveyance of this Agreement or any interest hereunder nor purport to do so without
the Franchisor’s prior written consent which may be withheld in the Franchisor’s reasonable
discretion. The Franchisee acknowledges that prior to approving any transfer, the Franchisor may
impose reasonable conditions on the Franchisee and its purported transferee including but not
limited to those conditions listed in Section 16.2. As used in this Agreement, the term
“transfer” includes the Franchisee’s voluntary, involuntary, direct or indirect assignment, sale,
gift or other disposition of any interest in: (1) this Agreement; (2) the ownership of the
Franchisee entity; (3) the Store governed by this Agreement; or (4) all or a substantial portion of
the assets of the Store. The term “transfer” shall include an assignment, sale, gift or other
disposition, including those transfers described in Sections 16.5 and 16.7 and
those resulting from a divorce, insolvency, corporate or partnership dissolution proceeding,
merger, change of control, operation of law or, in the event of the death of the Franchisee, or an
owner of the Franchisee by will, declaration of or transfer in trust or under the laws of intestate
succession. For the purposes of this Article 16, “change of control” of a Franchisee that
is an entity shall mean a transfer, new issuance or assignment of 25% or more of the Franchisee’s
beneficial equity ownership interests.

16.2. Pre-Conditions to Franchisee’s Transfer. The Franchisee shall not engage in a
transfer unless the Franchisee obtains the Franchisor’s written consent and the Franchisee and the
proposed transferee comply with the following requirements:

FRANCHISE AGREEMENT-18

 

     a. All amounts due and owing pursuant to this Agreement by the Franchisee to the
Franchisor or its affiliates or to third parties whose debts or obligations the Franchisor
has guaranteed on behalf of the Franchisee, if any, are paid in full;

     b. The proposed transferee agrees to operate the Store as a ROCKY MOUNTAIN CHOCOLATE
FACTORY Store and agrees to satisfactorily complete the initial training program described
in this Agreement, which training must be completed to the Franchisor’s satisfaction prior
to the effectiveness of the transfer;

     c. The proposed transferee agrees to execute the then current form of Franchise
Agreement which shall supersede this Agreement in all respects. If a new Franchise
Agreement is signed, the terms thereof may differ from the terms of this Agreement;
provided, however, the transferee will not be required to pay any initial franchise fee;

     d. The Franchisee provides written notice to the Franchisor 30 days’ prior to the
proposed effective date of the transfer, and includes information reasonably detailed to
enable the Franchisor to evaluate the terms and conditions of the proposed transfer and
which at a minimum includes a written offer from the proposed transferee;

     e. The proposed transferee provides information to the Franchisor sufficient for the
Franchisor to assess the proposed transferee’s business experience, aptitude and financial
qualification, and the Franchisor approves the proposed transferee as a franchisee;

     f. The Franchisee executes a general release, in a form satisfactory to the Franchisor,
of any and all claims against the Franchisor, its affiliates and their respective officers,
directors, employees and agents;

     g. The Franchisee or the proposed transferee pay a nonrefundable transfer fee of $5,000
before the proposed transferee attends the initial training program; provided, however, that
no transfer fee will be charged for a transfer by the Franchisee to a corporation
wholly-owned by the Franchisee, between partners of a partnership Franchisee or to a spouse
of a Franchisee upon the death or disability of the Franchisee;

     h. The Franchisee remodels the Store and upgrades equipment, including installing the
Franchisor’s then current System, fixtures, furnishings and signage, if the Franchisor so
requires; and

     i. The Franchisee agrees to abide by all post-termination covenants set forth herein,
including, without limitation, the covenant not to compete in Section 20.2 below.

16.3. Franchisor’s Approval of Transfer. The Franchisor has 30 days from the date of the
written notice to approve or disapprove in writing, of the Franchisee’s proposed transfer, which
approval shall not be unreasonably withheld. The Franchisee acknowledges that the proposed
transferee shall be evaluated for approval by the Franchisor based on the same criteria as is
currently being used to assess new franchisees of the Franchisor and that the Franchisor shall
provide such proposed transferee, if appropriate, with such disclosures as may be required by state
or federal law. If the Franchisee and its proposed transferee comply with all conditions for
transfer set forth herein and the Franchisor has not given the Franchisee notice of its approval or
disapproval within such period, approval is deemed granted.

FRANCHISE AGREEMENT-19

 

16.4. Right of First Refusal. In the event the Franchisee wishes to engage in a transfer, the
Franchisee agrees to grant to the Franchisor a 30 day right of first refusal to purchase such
rights, interest or assets on the same terms and conditions as are contained in the written notice
set forth in Section 16.2.d; provided, however, the following additional terms and
conditions shall apply:

     a. The 30 day right of first refusal period will run concurrently with the period in
which the Franchisor has to approve or disapprove the proposed transferee;

     b. The right of first refusal will be effective for each proposed transfer and any
material change in the terms or conditions of the proposed transfer shall be deemed a
separate offer on which the Franchisor shall have a new 30 day right of first refusal;

     c. If the consideration or manner of payment offered by a proposed transferee is such
that the Franchisor may not reasonably be required to furnish the same, then the Franchisor
may purchase the interest which is proposed to be sold for the reasonable cash equivalent.
If the parties cannot agree within a reasonable time on the cash consideration, each of the
Franchisor and the Franchisee shall designate an independent appraiser who, in turn, shall
designate a third independent appraiser. The third appraiser’s determination will be
binding upon the parties. All expenses of the appraiser shall be paid for equally between
the Franchisor and the Franchisee; and

     d. If the Franchisor chooses not to exercise its right of first refusal, the Franchisee
shall be free to complete the transfer subject to compliance with Sections 16.2 and
16.3 above. Absence of a reply to the Franchisee’s notice of a proposed transfer
within the 30-day period may be deemed a waiver of such right of first refusal.

16.5. Types of Transfers. The Franchisee acknowledges that the Franchisor’s right to
approve or disapprove of a proposed transfer as provided for above, shall apply (1) if the
Franchisee is a partnership, corporation or other business association, (i) to the addition or
deletion of a partner, shareholder or members of the association or the transfer of any ownership
interest among existing partners, shareholders or members; (ii) to any proposed transfer of 25% or
more of the interest (whether stock, partnership interest or membership interest) to a third party,
whether such transfer occurs in a single transaction or several transactions; and (2) if the
Franchisee is an individual, to the transfer from such individual or individuals to a corporation
or other entity controlled by them, in which case the Franchisor’s approval will be conditioned
upon: (i) the continuing personal guarantee of the individual (or individuals) for the performance
of obligations under this Agreement; and (ii) a limitation on the corporation’s or other entity’s
business activity to that of operating the ROCKY MOUNTAIN CHOCOLATE FACTORY Store and related
activities provided that with respect to such transfer, the Franchisor’s right of first refusal to
purchase shall not apply and the Franchisor will not charge any transfer fee.

16.6. Transfer by the Franchisor. This Agreement is fully assignable by the Franchisor and
shall inure to the benefit of any assignee or other legal successor in interest, and the Franchisor
shall in such event be fully released from the same.

16.7. Franchisee’s Death or Disability. Upon the death or permanent disability of the
Franchisee (or individual owning 25% or more of, or controlling the Franchisee entity), the
personal representative of such person shall transfer the Franchisee’s interest in this Agreement
or such interest in the Franchisee entity to an approved third party. Such disposition of this
Agreement or such interest (including, without limitation, transfer by bequest or inheritance)
shall be completed within a reasonable time, not to exceed 120 days from the date of death or
permanent disability (unless extended by probate proceedings), and shall be subject to all terms
and conditions applicable to transfers contained in this Article 16. Provided,

FRANCHISE AGREEMENT-20

 

however, that for purposes of this Section 16.7, there shall be no transfer fee charged by
the Franchisor. Failure to transfer the interest within said period of time shall constitute a
breach of this Agreement. For the purposes hereof, the term “permanent disability” shall mean a
mental or physical disability, impairment or condition that is reasonably expected to prevent or
actually does prevent the Franchisee (or the owner of 25% or more of, or controlling, the
Franchisee entity) from supervising the management and operation of the ROCKY MOUNTAIN CHOCOLATE
FACTORY Store for a period of 120 days from the onset of such disability, impairment or condition.

17. TERM AND EXPIRATION

17.1. Term. The term of this Agreement begins on the date this Agreement is fully executed
and ends ten years later, unless sooner terminated as provided herein.

17.2. Continuation. If, for any reason, the Franchisee continues to operate the Store
beyond the term of this Agreement or any subsequent renewal period, it shall be deemed to be on a
month-to-month basis under the terms of this Agreement and subject to termination upon 30 days
notice or as required by law. If said holdover period exceeds 90 days, this Agreement is subject
to immediate termination unless applicable law requires a longer period. Upon termination after
any holdover period, the Franchisee and those in active concert with the Franchisee, including
family members, officers, directors, partners and managing agents, are subject to the terms of
Articles 20 and 22 and Section 18.5 of this Agreement and all other
applicable post-termination obligations contained in this Agreement.

17.3. Rights Upon Expiration. At the end of the initial term hereof the Franchisee shall
have the option to renew its franchise rights for one additional ten year term, by acquiring
successor franchise rights, if the Franchisor does not exercise its right not to offer a successor
franchise in accordance with Section 17.5 below and if the Franchisee:

     a. At least 30 days prior to expiration of the term, executes the form of Franchise
Agreement then in use by the Franchisor;

     b. Has complied with all provisions of this Agreement during the current term,
including the payment on a timely basis of all Royalties and other fees due hereunder.
“Compliance” shall mean, at a minimum, that the Franchisee has not received any written
notification from the Franchisor of breach hereunder more than four times during the term
hereof;

     c. Upgrades and/or remodels the ROCKY MOUNTAIN CHOCOLATE FACTORY Store and its
operations at the Franchisee’s sole expense (the necessity of which shall be in the sole
discretion of the Franchisor) to conform with the then current Operations Manual;

     d. Executes a general release, in a form satisfactory to the Franchisor, of any and all
claims against the Franchisor and its affiliates, and their respective officers, directors,
employees and agents arising out of or relating to this Agreement; and

     e. Pays a successor franchise fee of (i) $2,500 if a new Franchise Agreement is
executed by the Franchisee within 30 days of receipt of the new Franchise Agreement, or (ii)
$5,000 if the new Franchise Agreement is signed more than 30 days after receipt of the new
Franchise Agreement.

17.4. Exercise of Option for Successor Franchise. The Franchisee may exercise its option
for a successor franchise by giving written notice of such exercise to the Franchisor not less than
90 days prior to the scheduled expiration of this Agreement. If the Franchisee fails to provide
such notice to the Franchisor within the time frame set forth in the preceding sentence, but
notifies the Franchisor of its

FRANCHISE AGREEMENT-21

 

desire to obtain a successor franchise prior to the expiration of the then-current term of this
Agreement, the Franchisee shall pay the Franchisor a penalty of $1,000 for every 30-day period that
the Franchisee was late, plus attorneys’ and administrative fees and expenses attributable to such
late renewal. The Franchisee’s successor franchise rights shall become effective by signing the
Franchise Agreement then currently being offered to new franchisees of the Franchisor.

17.5. Conditions of Refusal. The Franchisor shall not be obligated to offer the Franchisee
a successor franchise upon the expiration of this Agreement if the Franchisee fails to comply with
any of the above conditions of renewal. In such event, except for failure to execute the then
current Franchise Agreement or pay the successor franchise fee, the Franchisor shall give notice of
expiration at least 180 days prior to the expiration of the term, and such notice shall set forth
the reasons for such refusal to offer successor franchise rights. Upon the expiration of this
Agreement, the Franchisee shall comply with the provisions of Section 18.5 below.

18. DEFAULT AND TERMINATION

18.1. Termination by Franchisor — Effective Upon Notice. The Franchisor shall have the
right, at its option, to terminate this Agreement and all rights granted the Franchisee hereunder,
without affording the Franchisee any opportunity to cure any default (subject to any state laws to
the contrary, where state law shall prevail), effective upon receipt of notice by the Franchisee,
addressed as provided in Section 22.13, upon the occurrence of any of the following events:

     a. Abandonment. If the Franchisee ceases to operate the ROCKY MOUNTAIN
CHOCOLATE FACTORY Store or otherwise abandons the ROCKY MOUNTAIN CHOCOLATE FACTORY Store for
a period of five consecutive days, or any shorter period that indicates an intent by the
Franchisee to discontinue operation of the ROCKY MOUNTAIN CHOCOLATE FACTORY Store, unless
and only to the extent that full operation of the ROCKY MOUNTAIN CHOCOLATE FACTORY Store is
suspended or terminated due to fire, flood, earthquake or other similar causes beyond the
Franchisee’s control and not related to the availability of funds to the Franchisee;

     b. Insolvency; Assignments. If the Franchisee becomes insolvent or is
adjudicated a bankrupt; or any action is taken by the Franchisee, or by others against the
Franchisee under any insolvency, bankruptcy or reorganization act, (this provision may not
be enforceable under federal bankruptcy law, 11 U.S.C. §§ 101 et seq.), or if the Franchisee
makes an assignment for the benefit of creditors, or a receiver is appointed by the
Franchisee;

     c. Unsatisfied Judgments; Levy; Foreclosure. If any material judgment (or
several judgments which in the aggregate are material) is obtained against the Franchisee
and remains unsatisfied or of record for 30 days or longer (unless a supersedeas or other
appeal bond has been filed); or if execution is levied against the Franchisee’s business or
any of the property used in the operation of the ROCKY MOUNTAIN CHOCOLATE FACTORY Store and
is not discharged within five days; or if the real or personal property of the Franchisee’s
business shall be sold after levy thereupon by any sheriff, marshal or constable;

     d. Criminal Conviction. If the Franchisee is convicted of a felony, a crime
involving moral turpitude, or any crime or offense that is reasonably likely, in the sole
opinion of the Franchisor, to materially and unfavorably affect the Licensed Methods, Marks,
goodwill or reputation thereof;

     e. Failure to Make Payments. If the Franchisee fails to pay any amounts due
the Franchisor or affiliates, including any amounts which may be due as a result of any
subleases or

FRANCHISE AGREEMENT-22

 

lease assignments between the Franchisee and the Franchisor, within 10 days after
receiving notice that such fees or amounts are overdue;

     f. Misuse of Marks. If the Franchisee misuses or fails to follow the
Franchisor’s directions and guidelines concerning use of the Franchisor’s Marks and fails to
correct the misuse or failure within ten days after notification from the Franchisor;

     g. Unauthorized Disclosure. If the Franchisee intentionally or negligently
discloses to any unauthorized person the contents of or any part of the Franchisor’s
Operations Manual or any other trade secrets or confidential information of the Franchisor;

     h. Repeated Noncompliance. If the Franchisee has received two previous notices
of default from the Franchisor and is again in default of this Agreement at any time during
the term of this Agreement, regardless of whether the previous defaults were cured by the
Franchisee, provided, however, that following the Franchisee’s receipt of three notices of
default, the Franchisor reserves the right to assess a penalty in the amount of the then
current initial franchise fee payable within 10 days of receipt of notice related thereto,
in lieu of immediately terminating the Franchise Agreement, on the condition that a fourth
notice of default may result in immediate termination of the Franchise Agreement; or

     i. Unauthorized Transfer. If the Franchisee sells, transfers or otherwise
assigns the Franchise, an interest in the Franchise or the Franchisee entity, this
Agreement, the ROCKY MOUNTAIN CHOCOLATE FACTORY Store or a substantial portion of the assets
of the ROCKY MOUNTAIN CHOCOLATE FACTORY Store owned by the Franchisee without complying with
the provisions of Article 16 above.

18.2. Termination by Franchisor — Thirty Days Notice. The Franchisor shall have the right
to terminate this Agreement (subject to any state laws to the contrary, where state law shall
prevail), effective upon 30 days written notice to the Franchisee, if the Franchisee breaches any
other provision of this Agreement and fails to cure the default during such 30-day period. In that
event, this Agreement will terminate without further notice to the Franchisee, effective upon
expiration of the 30-day period. Defaults shall include, but not be limited to, the following:

     a. Failure to Maintain Standards. The Franchisee fails to maintain the
then-current operating procedures and adhere to the specifications and standards established
by the Franchisor as set forth herein or in the Operations Manual or otherwise communicated
to the Franchisee;

     b. Deceptive Practices. The Franchisee engages in any unauthorized business or
practice or sells any unauthorized product or service under the Franchisor’s Marks or under
a name or mark which is confusingly similar to the Franchisor’s Marks;

     c. Failure to Obtain Consent. The Franchisee fails, refuses or neglects to
obtain the Franchisor’s prior written approval or consent as required by this Agreement;

     d. Failure to Comply with Manual. The Franchisee fails or refuses to comply
with the then-current requirements of the Operations Manual; or

     e. Breach of Related Agreement. The Franchisee defaults under any term of the
lease, sublease or lease assignment for the Franchised Location, any equipment lease or any
other agreement material to the ROCKY MOUNTAIN CHOCOLATE FACTORY Store or any other
Franchise Agreement between the Franchisor and the Franchisee and such default is not cured

FRANCHISE AGREEMENT-23

 

within the time specified in such lease, sublease, other agreement or other Franchise
Agreement. Provided, however, so long as financing from the United States Small Business
Administration remains outstanding, the Franchisee will be given the same opportunity to
cure defaults under any agreement between the Franchisor or its affiliates and the
Franchisee, as the Franchisee is given under this Agreement

Notwithstanding the foregoing, if the breach is curable, but is of a nature which cannot be
reasonably cured within such 30-day period and the Franchisee has commenced and is continuing to
make good faith efforts to cure the breach during such 30-day period, the Franchisee shall be given
an additional reasonable period of time to cure the same, and this Agreement shall not
automatically terminate without written notice from the Franchisor.

18.3. Franchisor’s Remedies.

     a. Failure to Pay. In addition to all other remedies that may be exercised by
the Franchisor upon a default by the Franchisee under the terms of this Agreement, the
Franchisor reserves the right to collect amounts due from the Franchisee to any third party
and to pay the third party directly. If the Franchisor collects any such amounts, the
Franchisor may, in its sole discretion, charge the Franchisee an administrative fee to
reimburse the Franchisor for its costs of collecting and paying such amounts. Any
administrative fee charged would not exceed 15% of the total amount of money collected.
Additionally, in the event this Agreement is terminated by the Franchisor prior to its
expiration as set forth in Sections 18.1 or 18.2 above, the Franchisee
acknowledges and agrees that in addition to all other available remedies, the Franchisor
shall have the right to recover lost future Royalties during any period in which the
Franchisee fails to pay such Royalties through and including the remainder of the then
current term of this Agreement.

     b. Liquidated Damages. Franchisee acknowledges that, if there is any act in
violation of Sections 18.1 or 18.2 of this Agreement, it will be impossible
to determine with specificity the damage to Franchisor. Therefore, for purposes of this
Agreement, as liquidated damages and not as a penalty, for each day that Franchisee is in
violation of Sections 18.1 or 18.2 of this Agreement, Franchisee shall pay
to Franchisor the sum of $500.

18.4. Right to Purchase. Upon termination or expiration of this Agreement for any reason,
the Franchisor shall have the option to purchase some or all of the assets of the ROCKY MOUNTAIN
CHOCOLATE FACTORY Store, which may include, at the Franchisor’s option, all of the Franchisee’s
interest, if any, in and to the real estate upon which the ROCKY MOUNTAIN CHOCOLATE FACTORY Store
is located, and all buildings and other improvements thereon, including leasehold interests, at
fair market value, less any amount apportioned to the goodwill of the ROCKY MOUNTAIN CHOCOLATE
FACTORY Store which is attributable to the Franchisor’s Marks and Licensed Methods, and less any
amounts owed to the Franchisor by the Franchisee. The following additional terms shall apply to
the Franchisor’s exercise of this option:

     a. The Franchisor’s option hereunder shall be exercisable by providing the Franchisee
with written notice of its intention to exercise the option given to the Franchisee no later
than the effective date of termination, in the case of termination, or at least 90 days
prior to the expiration of the term of the franchise, in the case of non renewal. Such
notice shall include a description of the assets the Franchisor will purchase.

     b. In the event that the Franchisor and the Franchisee cannot agree to a fair market
value for the assets of the ROCKY MOUNTAIN CHOCOLATE FACTORY Store, then the fair market
value shall be determined by an independent third party appraisal. The Franchisor and the

FRANCHISE AGREEMENT-24

 

Franchisee shall each select one independent, qualified appraiser, and the two so
selected shall select a third appraiser, all three to determine the fair market value of the
ROCKY MOUNTAIN CHOCOLATE FACTORY Store. The purchase price shall be the median of the fair
market values as determined by the three appraisers.

     c. The Franchisor and the Franchisee agree that the terms and conditions of this right
and option to purchase may be recorded, if deemed appropriate by the Franchisor, in the real
property records and the Franchisor and the Franchisee further agree to execute such
additional documentation as may be necessary and appropriate to effectuate such recording.

     The closing for the purchase of the assets of the ROCKY MOUNTAIN CHOCOLATE FACTORY Store will
take place no later than 60 days after the termination or nonrenewal date. The Franchisor will pay
the purchase price in full at the closing, or, at its option, in five equal consecutive monthly
installments with interest at a rate of 10% per annum. The Franchisee must sign all documents of
assignment and transfer as are reasonably necessary for purchase of the ROCKY MOUNTAIN CHOCOLATE
FACTORY Store by the Franchisor.

     In the event that the Franchisor does not exercise the Franchisor’s right to purchase the
assets of the Franchisee’s ROCKY MOUNTAIN CHOCOLATE FACTORY Store as set forth above, the
Franchisee will be free to keep or to sell, after such termination or expiration, to any third
party, all of the assets of its ROCKY MOUNTAIN CHOCOLATE FACTORY Store; provided, however, that all
appearances of the Marks are first removed in a manner approved in writing by the Franchisor. The
Franchisor will only be obligated to purchase any assets of the ROCKY MOUNTAIN CHOCOLATE FACTORY
Store in the event and to the extent it is required by applicable state or federal law.

18.5. Obligations of Franchisee Upon Termination or Expiration. The Franchisee is
obligated upon termination or expiration of this Agreement to immediately:

     a. Pay to the Franchisor all Royalties, other fees, and any and all amounts or accounts
payable then owed the Franchisor or its affiliates pursuant to this Agreement, or pursuant
to any other agreement, whether written or oral, including subleases and lease assignments,
between the parties;

     b. Cease to identify itself as a ROCKY MOUNTAIN CHOCOLATE FACTORY Franchisee or
publicly identify itself as a former Franchisee or use any of the Franchisor’s trade
secrets, signs, symbols, devices, trade names, trademarks, or other materials.

     c. Cease to identify the Franchised Location as being, or having been, associated with
the Franchisor, and, if deemed necessary by the Franchisor, paint or otherwise change the
interior and exterior of the Franchisee’s former Store to distinguish it from a ROCKY
MOUNTAIN CHOCOLATE FACTORY Store, and immediately cease using any proprietary mark of the
Franchisor or any mark in any way associated with the ROCKY MOUNTAIN CHOCOLATE FACTORY Marks
and Licensed Methods;

     d. Deliver to the Franchisor all Factory Candy, Store Candy and Items of inventory that
bear the ROCKY MOUNTAIN CHOCOLATE FACTORY trade name or logo, signs, sign-faces, advertising
materials, forms and other materials bearing any of the Marks or otherwise identified with
the Franchisor and obtained by and in connection with this Agreement;

     e. Deliver to the Franchisor the Operations Manual and all other information, documents
and copies thereof which are proprietary to the Franchisor;

FRANCHISE AGREEMENT-25

 

     f. Promptly take such action as may be required to cancel all fictitious or assumed
names or equivalent registrations relating to the Franchisee’s use of any Marks which are
under the exclusive control of the Franchisor or, at the option of the Franchisor, assign
the same to the Franchisor;

     g. Notify the telephone company and all telephone directory publishers of the
termination or expiration of the Franchisee’s right to use any telephone number and any
regular, classified or other telephone directory listings associated with any Mark and to
authorize transfer thereof to the Franchisor or its designee. The Franchisee acknowledges
that, as between the Franchisee and the Franchisor, the Franchisor has the sole rights to
and interest in all telephone, telecopy or facsimile machine numbers and directory listings
associated with any Mark. The Franchisee authorizes the Franchisor, and hereby appoints the
Franchisor and any of its officers as the Franchisee’s attorney-in-fact, to direct the
telephone company and all telephone directory publishers to transfer any telephone, telecopy
or facsimile machine numbers and directory listings relating to the ROCKY MOUNTAIN CHOCOLATE
FACTORY Store to the Franchisor or its designee, should the Franchisee fail or refuse to do
so, and the telephone company and all telephone directory publishers may accept such
direction or this Agreement as conclusive of the Franchisor’s exclusive rights in such
telephone numbers and directory listings and the Franchisor’s authority to direct their
transfer;

     h. Abide by all restrictive covenants set forth in Article 20 of this
Agreement;

     i. Sign a general release, in a form satisfactory to the Franchisor, of any and all
claims against the Franchisor, its affiliates and their respective officers, directors,
employees and agents; and

     j. If applicable, take such action as may be required to remove from the Internet all
sites referring to the Franchisee’s former ROCKY MOUNTAIN CHOCOLATE FACTORY Store or any of
the Marks and to cancel or assign to the Franchisor, in the Franchisor’s sole discretion,
all rights to any domain names for any sites on the Internet that refer to the Franchisee’s
former ROCKY MOUNTAIN CHOCOLATE FACTORY Store or any of the Marks.

18.6. State and Federal Law. THE PARTIES ACKNOWLEDGE THAT IN THE EVENT THE TERMS OF THIS
AGREEMENT REGARDING TERMINATION OR EXPIRATION ARE INCONSISTENT WITH APPLICABLE STATE OR FEDERAL
LAW, SUCH LAW SHALL GOVERN THE FRANCHISEE’S RIGHTS REGARDING TERMINATION OR EXPIRATION OF THIS
AGREEMENT.

19. BUSINESS RELATIONSHIP

19.1. Independent Businesspersons. The parties agree that each of them are independent
businesspersons, that their only relationship is by virtue of this Agreement and that no fiduciary
relationship is created hereunder. Neither party is liable or responsible for the other’s debts or
obligations, nor shall either party be obligated for any damages to any person or property directly
or indirectly arising out of the operation of the other party’s business authorized by or conducted
pursuant to this Agreement. The Franchisor and the Franchisee agree that neither of them will hold
themselves out to be the agent, employer or partner of the other and that neither of them has the
authority to bind or incur liability on behalf of the other.

19.2. Payment of Third Party Obligations. The Franchisor shall have no liability for the
Franchisee’s obligations to pay any third parties, including without limitation, any product
vendors, or

FRANCHISE AGREEMENT-26

 

any sales, use, service, occupation, excise, gross receipts, income, property or other tax levied
upon the Franchisee, the Franchisee’s property, the ROCKY MOUNTAIN CHOCOLATE FACTORY Store or upon
the Franchisor in connection with the sales made or business conducted by the Franchisee (except
any taxes the Franchisor is required by law to collect from the Franchisee with respect to
purchases from the Franchisor).

19.3. Indemnification. The Franchisee agrees to indemnify, defend and hold harmless the
Franchisor, its subsidiaries and affiliates, and their respective shareholders, directors,
officers, employees, agents, successors and assignees, (the “Indemnified Parties”) against, and to
reimburse them for all claims, obligations and damages described in this Section 19.3, any
and all third party obligations described in Section 19.2 and any and all claims and
liabilities directly or indirectly arising out of the operation of the ROCKY MOUNTAIN CHOCOLATE
FACTORY Store or arising out of the use of the Marks and Licensed Methods in any manner not in
accordance with this Agreement. For purposes of this indemnification, claims shall mean and
include all obligations, actual and consequential damages and costs reasonably incurred in the
defense of any claim against the Indemnified Parties, including, without limitation, reasonable
accountants’, attorneys’ and expert witness fees, costs of investigation and proof of facts, court
costs, other litigation expenses and travel and living expenses. The Franchisor shall have the
right to defend any such claim against it. This indemnity shall continue in full force and effect
subsequent to and notwithstanding the expiration or termination of this Agreement.

20. RESTRICTIVE COVENANTS

20.1. Non-Competition During Term. The Franchisee acknowledges that, in addition to the
license of the Marks hereunder, the Franchisor has also licensed commercially valuable information
which comprises and is a part of the Licensed Methods, including without limitation, recipes,
operations, marketing, advertising and related information and materials and that the value of this
information derives not only from the time, effort and money which went into its compilation, but
from the usage of the same by all the franchisees of the Franchisor using the Marks and Licensed
Methods. The Franchisee therefore agrees that other than the ROCKY MOUNTAIN CHOCOLATE FACTORY
Store licensed herein, neither the Franchisee nor any of the Franchisee’s officers, directors,
shareholders, members, managers or partners, nor any member of his or their immediate families,
shall during the term of this Agreement:

     a. have any direct or indirect controlling interest as a disclosed or beneficial owner
in a “Competitive Business” as defined below;

     b. perform services as a director, officer, manager, employee, consultant,
representative, agent or otherwise for a Competitive Business; or

     c. divert or attempt to divert any business related to, or any customer or account of
the ROCKY MOUNTAIN CHOCOLATE FACTORY Store, the Franchisor’s business or any other ROCKY
MOUNTAIN CHOCOLATE FACTORY franchisee’s business, by direct inducement or otherwise, or
divert or attempt to divert the employment of any employee of the Franchisor or another
franchisee licensed by the Franchisor to use the Marks and Licensed Methods, to any
Competitive Business by any direct inducement or otherwise.

The term “Competitive Business” as used in this Agreement shall mean any business operating, or
granting franchises or licenses to others to operate, a retail, wholesale, distribution or
manufacturing business with either of the following attributes: (i) a business deriving a total of
10% or more of its gross receipts from the sale, processing or manufacturing of one or a
combination of any of the following: boxed chocolate candies; or products which are the same as or
substantially similar to Store Candy; or products made with recipes, or processes, included in the
Operations Manual; or (ii) a business devoting a total of 10% or more of its retail display space
to one or a combination of the following: boxed chocolate

FRANCHISE AGREEMENT-27

 

candies; or products which are the same as or substantially similar to Store Candy; or products
made with recipes, or processes, included in the Operations Manual; provided, however, the
Franchisee shall not be prohibited from owning securities in a Competitive Business if such
securities are listed on a stock exchange or traded on the over-the-counter market and represent 5%
or less of that class of securities issued and outstanding.

20.2. Post-Termination Covenant Not to Compete. Upon termination or expiration of this
Agreement for any reason, the Franchisee and its officers, directors, shareholders, members,
managers and/or partners agree that, for a period of two years commencing on the effective date of
termination or expiration, or the date on which the Franchisee ceases to conduct business,
whichever is later, neither Franchisee nor its officers, directors, shareholders, members,
managers, and/or partners shall have any direct or indirect interest (through a member of any
immediate family of the Franchisee or its Owners or otherwise) as a disclosed or beneficial owner,
investor, partner, director, officer, member, manager, employee, consultant, representative or
agent or in any other capacity in any Competitive Business, defined in Section 20.1 above,
located or operating within a 10-mile radius of the Franchised Location or within a 10-mile radius
of any other franchised or company-owned ROCKY MOUNTAIN CHOCOLATE FACTORY Store. The restrictions
of this Section shall not be applicable to the ownership of shares of a class of securities listed
on a stock exchange or traded on the over-the-counter market that represent 5% or less of the
number of shares of that class of securities issued and outstanding. The Franchisee and its
officers, directors, shareholders, members, managers, and/or partners expressly acknowledge that
they possess skills and abilities of a general nature and have other opportunities for exploiting
such skills. Consequently, enforcement of the covenants made in this Section will not deprive them
of their personal goodwill or ability to earn a living.

20.3. Confidentiality of Proprietary Information. The Franchisee shall treat all
information it receives which comprises or is a part of the Licensed Methods licensed hereunder as
proprietary and confidential and will not use such information in an unauthorized manner or
disclose the same to any unauthorized person without first obtaining the Franchisor’s written
consent. The Franchisee acknowledges that the Marks and the Licensed Methods have valuable
goodwill attached to them, that the protection and maintenance thereof is essential to the
Franchisor and that any unauthorized use or disclosure of the Marks and Licensed Methods will
result in irreparable harm to the Franchisor.

20.4. Confidentiality Agreement. The Franchisor requires that the Franchisee cause each of
its officers, directors, partners, shareholders, members, managers, and General Manager, and, if
the Franchisee is an individual, immediate family members, to execute a confidentiality and
noncompetition agreement containing the above restrictions, in the form attached hereto as
Exhibit VI and incorporated herein by reference.

21. INSURANCE

21.1. Insurance Coverage. The Franchisee shall procure, maintain and provide evidence of
(i) comprehensive general liability insurance for the Franchised Location and its operations with a
limit of not less than $1,000,000 combined single limit, or such greater limit as may be required
as part of any lease agreement for the Franchised Location; (ii) automobile liability insurance
covering all employees of the ROCKY MOUNTAIN CHOCOLATE FACTORY Store with authority to operate a
motor vehicle in an amount not less than $1,000,000 or, with the prior written consent of the
Franchisor, such lesser amount as may be available at a commercially reasonable rate, but in no
event less than any statutorily imposed minimum coverage; (iii) unemployment and worker’s
compensation insurance with a broad form all-states endorsement coverage sufficient to meet the
requirements of the law; and (iv) all-risk personal property insurance in an amount equal to at
least 100% of the replacement costs of the contents and tenant improvements located at the ROCKY
MOUNTAIN CHOCOLATE FACTORY Store. All of the required

FRANCHISE AGREEMENT-28

 

policies of insurance shall name the Franchisor as an additional insured and shall provide for a
30-day advance written notice to the Franchisor of cancellation.

21.2. Proof of Insurance Coverage. The Franchisee will provide proof of insurance to the
Franchisor prior to commencement of operations at its ROCKY MOUNTAIN CHOCOLATE FACTORY Store. This
proof will show that the insurer has been authorized to inform the Franchisor in the event any
policies lapse or are cancelled. The Franchisor has the right to change the minimum amount of
insurance the Franchisee is required to maintain by giving the Franchisee prior reasonable notice,
giving due consideration to what is reasonable and customary in the similar business. The
Franchisee’s failure to comply with the insurance provisions set forth herein shall be deemed a
material breach of this Agreement. In the event of any lapse in insurance coverage, in addition to
all other remedies, the Franchisor shall have the right to demand that the Franchisee cease
operations of the ROCKY MOUNTAIN CHOCOLATE FACTORY Store until coverage is reinstated, or, in the
alternative, pay any delinquencies in premium payments and charge the same back to the Franchisee.

22. MISCELLANEOUS PROVISIONS

22.1. Governing Law/Consent to Venue and Jurisdiction. Except to the extent governed by
the United States Trademark Act of 1946 (Lanham Act, 15 U.S.C. §§1051 et seq.) or other
federal law, this Agreement shall be interpreted under the laws of the state of Colorado and any
disputes between the parties shall be governed by and determined in accordance with the substantive
laws of the state of Colorado, which laws shall prevail in the event of any conflict of law. The
Franchisee and the Franchisor have negotiated regarding a forum in which to resolve any disputes
that may arise between them and have agreed to select a forum in order to promote stability in
their relationship. Therefore, if a claim is asserted in a legal proceeding involving the
Franchisee, its officers, directors, partners or managers (collectively, “Franchisee Affiliates”)
and the Franchisor, its officers, directors or sales employees (collectively, “Franchisor
Affiliates”), all parties agree that the exclusive venue for disputes between them shall be in the
state courts in La Plata County, Colorado and federal courts located in Colorado and each waive any
objections they may have to the personal jurisdiction of or venue in the state courts in La Plata
County and federal courts located in Colorado. The Franchisor, the Franchisor Affiliates, the
Franchisee and the Franchisee Affiliates each waive their rights to a trial by jury.

22.2. Cumulative Rights. The rights and remedies of the Franchisor and the Franchisee
hereunder are cumulative and no exercise or enforcement by either of them of any right or remedy
hereunder shall preclude the exercise or enforcement by either of them of any other right or remedy
hereunder which they are entitled by law to enforce.

22.3. Modification. The Franchisor and/or the Franchisee may modify this Agreement only
upon execution of a written agreement between the two parties. The Franchisee acknowledges that
the Franchisor may modify its standards and specifications and operating and marketing techniques
set forth in the Operations Manual unilaterally under any conditions and to the extent in which the
Franchisor, in its sole discretion, deems necessary to protect, promote, or improve the Marks and
the quality of the Licensed Methods, but under no circumstances will such modifications be made
arbitrarily without such determination.

22.4. Entire Agreement. This Agreement, including all exhibits and addenda hereto,
contains the entire agreement between the parties and supersedes any and all prior agreements
concerning the subject matter hereof. The Franchisee agrees and understands that the Franchisor
shall not be liable or obligated for any oral representations or commitments made prior to the
execution hereof or for claims of negligent or fraudulent misrepresentation based on any such oral
representations or commitments and that no modifications of this Agreement shall be effective
except those in writing and signed by both parties. The Franchisor does not authorize and will not
be bound by any representation of any nature other than those

FRANCHISE AGREEMENT-29

 

expressed in this Agreement and in the most recent franchise disclosure document provided by the
Franchisor or its representatives. The Franchisee further acknowledges and agrees that no
representations have been made to it by the Franchisor regarding projected sales volumes, market
potential, revenues, profits of the Franchisee’s ROCKY MOUNTAIN CHOCOLATE FACTORY Store, or
operational assistance other than as stated in this Agreement or in the most recent franchise
disclosure document provided by the Franchisor or its representatives.

22.5. Delegation by the Franchisor. From time to time, the Franchisor shall have the right
to delegate the performance of any portion or all of its obligations and duties hereunder to third
parties, whether the same are agents of the Franchisor or independent contractors which the
Franchisor has contracted with to provide such services. The Franchisee agrees in advance to any
such delegation by the Franchisor of any portion or all of its obligations and duties hereunder.

22.6. Effective Date. This Agreement shall not be effective until accepted by the
Franchisor as evidenced by dating and signing by an officer of the Franchisor.

22.7. Review of Agreement. The Franchisee acknowledges that it had a copy of this
Agreement in its possession for a period of time not fewer than 10 full business days, or 14
calendar days, whichever is applicable, during which time the Franchisee has had the opportunity to
submit same for professional review and advice of the Franchisee’s choosing prior to freely
executing this Agreement.

22.8. Attorneys’ Fees. In the event of any dispute between the parties to this Agreement,
including any dispute involving an officer, director, employee or managing agent of a party to this
Agreement, in addition to all other remedies, the non-prevailing party will pay the prevailing
party all costs and expenses, including reasonable attorneys’ fees, incurred by the prevailing
party in any legal action, arbitration or other proceeding as a result of such dispute.

22.9. Injunctive Relief. Nothing herein shall prevent the Franchisor or the Franchisee
from seeking injunctive relief to prevent irreparable harm, in addition to all other remedies. If
the Franchisor seeks an injunction, the Franchisor will not be required to post a bond in excess of
$500.

22.10. No Waiver. No waiver of any condition or covenant contained in this Agreement or
failure to exercise a right or remedy by the Franchisor or the Franchisee shall be considered to
imply or constitute a further waiver by the Franchisor or the Franchisee of the same or any other
condition, covenant, right, or remedy.

22.11. No Right to Set Off. The Franchisee shall not be allowed to set off amounts owed to
the Franchisor for Royalties, fees or other amounts due hereunder, against any monies owed to
Franchisee, nor shall the Franchisee in any event withhold such amounts due to any alleged
nonperformance by the Franchisor hereunder, which right of set off is hereby expressly waived by
the Franchisee.

22.12. Invalidity. If any provision of this Agreement is held invalid by any tribunal in a
final decision from which no appeal is or can be taken, such provision shall be deemed modified to
eliminate the invalid element and, as so modified, such provision shall be deemed a part of this
Agreement as though originally included. The remaining provisions of this Agreement shall not be
affected by such modification.

22.13. Notices. All notices required to be given under this Agreement shall be given in
writing, by certified mail, return receipt requested, or by an overnight delivery service providing
documentation of receipt, at the address set forth in the first paragraph of this Agreement or at
such other addresses as the Franchisor or the Franchisee may designate from time to time, and shall
be effectively given when deposited in the United States mail, postage prepaid, or when received
via overnight delivery, as may be applicable.

FRANCHISE AGREEMENT-30

 

22.14. Payment of Taxes. The Franchisee shall reimburse the Franchisor, or its affiliates
and designees, promptly and when due, the amount of all sales taxes, use taxes, personal property
taxes and similar taxes imposed upon, required to be collected or paid by the Franchisor, or its
affiliates or designees, on account of services or goods furnished by the Franchisor, its
affiliates or designees, to the Franchisee through sale, lease or otherwise, or on account of
collection by the Franchisor, its affiliates or designees, of the initial franchise fee, Royalties,
Marketing and Promotion Fees or any other payments made by the Franchisee to the Franchisor
required under the terms of this Agreement.

22.15. Acknowledgement. BEFORE SIGNING THIS AGREEMENT, THE FRANCHISEE SHOULD READ IT
CAREFULLY WITH THE ASSISTANCE OF LEGAL COUNSEL. THE FRANCHISEE ACKNOWLEDGES THAT:

     (A) THE SUCCESS OF THE BUSINESS VENTURE CONTEMPLATED HEREIN INVOLVES SUBSTANTIAL RISKS AND
DEPENDS UPON THE FRANCHISEE’S ABILITY AS AN INDEPENDENT BUSINESS PERSON AND ITS ACTIVE
PARTICIPATION IN THE DAILY AFFAIRS OF THE BUSINESS; AND

     (B) NO ASSURANCE OR WARRANTY, EXPRESS OR IMPLIED, HAS BEEN GIVEN AS TO THE POTENTIAL SUCCESS
OF SUCH BUSINESS VENTURE OR THE EARNINGS LIKELY TO BE ACHIEVED; AND

     (C) NO STATEMENT, REPRESENTATION OR OTHER ACT, EVENT OR COMMUNICATION, EXCEPT AS SET FORTH IN
THIS AGREEMENT, AND IN THE MOST RECENT FRANCHISE DISCLOSURE DOCUMENT SUPPLIED TO THE FRANCHISEE, IS
BINDING ON THE FRANCHISOR IN CONNECTION WITH THE SUBJECT MATTER OF THIS AGREEMENT.

     IN WITNESS WHEREOF, the parties have executed this Agreement as of the date first above set
forth.

	 	 	 	 	 
	 	ROCKY MOUNTAIN CHOCOLATE
FACTORY, INC.

 	 
	Date:                           	By:  	 	 
	 	 	Title: 	 
	 	 	 	 
	 
	 	FRANCHISEE:

 	 
	Date:                           	
 	 
	 	Individually 	 
	 
	 	AND:

(if a corporation or partnership)

 	 
	 	
 	 
	 	Company Name 	 
	 
	 	 	 
	Date:                           	By:  	 	 
	 	 	Title: 	 
	 	 	 	 
	 

FRANCHISE AGREEMENT-31

 

EXHIBIT I

TO FRANCHISE AGREEMENT

ADDENDUM TO ROCKY MOUNTAIN CHOCOLATE FACTORY, INC.

FRANCHISE AGREEMENT

     1. Franchised Location. The Franchised Location, set forth in Section 3.1 of
the Agreement shall be:             
                 
                  
                                     
        
         and the Store
configuration shall be:            
                 
                  
              .

     2. Initial Franchise Fee. The amount of the initial franchise fee, set forth in
Section 4.1 of the Agreement, shall be: $                    .

     Fully executed this       day of                     , 20     .

	 	 	 	 	 
	 	ROCKY MOUNTAIN CHOCOLATE
FACTORY, INC.

 	 
	 	By:  	 	 
	 	 	Title: 	 
	 	 	 	 
	 
	 	FRANCHISEE:

 	 
	 	
 	 
	 	Individually
 	 
	 	AND: 	 
	 
	 	(if a corporation or partnership)

 	 
	 	
 	 
	 	Company Name
 	 
	 	 	 
	 	By:  	
 	 
	 	 	Title: 	 
	 	 	 	 
	 

FRANCHISE AGREEMENT

 

EXHIBIT II

TO FRANCHISE AGREEMENT

GUARANTY AND ASSUMPTION OF FRANCHISEE’S OBLIGATIONS

     In consideration of, and as an inducement to, the execution of the above Franchise Agreement
(the “Agreement”) by Rocky Mountain Chocolate Factory, Inc. (“the Franchisor”), each of the
undersigned hereby personally and unconditionally:

     Guarantees to the Franchisor and its successors and assigns, for the term of the Agreement,
including renewals thereof, that the franchisee, as that term is defined in the Agreement
(“Franchisee”), shall punctually pay and perform each and every undertaking, agreement and covenant
set forth in the Agreement; and

     Agrees to be personally bound by, and personally liable for the breach of, each and every
provision in the Agreement.

Each of the undersigned waives the following:

     1. Acceptance and notice of acceptance by the Franchisor of the foregoing undertaking;

     2. Notice of demand for payment of any indebtedness or nonperformance of any obligations
hereby guaranteed;

     3. Protest and notice of default to any party with respect to the indebtedness or
nonperformance of any obligations hereby guaranteed;

     4. Any right he or she may have to require that any action be brought against Franchisee or
any other person as a condition of liability; and

     5. Any and all other notices and legal or equitable defenses to which he or she may be
entitled.

Each of the undersigned consents and agrees that:

     1. His or her direct and immediate liability under this guaranty shall be joint and several;

     2. He or she shall render any payment or performance required under the Agreement upon demand
if Franchisee fails or refuses punctually to do so;

     3. Such liability shall not be contingent or conditioned upon pursuit by the Franchisor of any
remedies against Franchisee or any other person; and

     4. Such liability shall not be diminished, relieved or otherwise affected by any extension of
time, credit or other indulgence which the Franchisor may from time to time grant to Franchisee or
to any other person, including without limitation the acceptance of any partial payment or
performance, or the compromise or release of any claims, none of which shall in any way modify or
amend this guaranty, which shall be continuing and irrevocable during the term of the Agreement,
including renewals thereof.

FRANCHISE AGREEMENT

 

     5. His or her obligation and liability hereunder shall not be affected by any amendment or
modification of the Agreement and he or she has no right to approve or consent to any such
amendment or modification.

     6. Except to the extent governed by the United States Trademark Act of 1946 (Lanham Act, 15
U.S.C. §§1051 et seq.) or other federal law, this guaranty shall be interpreted under the
laws of the state of Colorado and any disputes between the Franchisor and any party hereto shall be
governed by and determined in accordance with the substantive laws of the state of Colorado, which
laws shall prevail in the event of any conflict of law. The Franchisor and all guarantors agree
that the exclusive venue for disputes between them shall be in the state courts in La Plata County,
Colorado and federal courts located in Colorado and each waive any objections they may have to the
personal jurisdiction of or venue in the state courts in La Plata County and federal courts located
in Colorado. The Franchisor and each guarantor waive their rights to a trial by jury.

     IN WITNESS WHEREOF, each of the undersigned has affixed his or her signature effective on the
same day and year as the Agreement was executed.

	 	 	 	 	 	 	 
	WITNESS

	 	 
	 	GUARANTOR(S)
	 	 
	 
	 	 	 	 	 	 
	 
	 	 	 	 	 	 
	 

	 	 	 	 	 	 
	 
	 	 	 	 	 	 
	 

	 	 	 	 	 	 
	 
	 	 	 	 	 	 
	 

	 	 	 	 	 	 
	 
	 	 	 	 	 	 
	 

	 	 	 	 	 	 

FRANCHISE AGREEMENT-2

 

EXHIBIT III

TO FRANCHISE AGREEMENT

STATEMENT OF OWNERSHIP

	Franchisee:  	 

	Trade Name (if different from above):  	 

Form of Ownership

(Check One)

	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	Limited
	______

	 	Individual
	 	______
	 	Partnership
	 	______
	 	Corporation
	 	______
	 	Liability

Company

If a Partnership, provide name and address of each partner showing percentage owned, whether active
in management, and indicate the state in which the partnership was formed.

If a Limited Liability Company, provide name and address of each member and each manager showing
percentage owned and indicate the state in which the Limited Liability Company was formed.

If a Corporation, give the state and date of incorporation, the names and addresses of each officer
and director, and list the names and addresses of every shareholder showing what percentage of
stock is owned by each.

 

 

 

 

 

 

Franchisee acknowledges that this Statement of Ownership applies to the ROCKY MOUNTAIN CHOCOLATE
FACTORY Store authorized under the Franchise Agreement.

Use additional sheets if necessary. Any and all changes to the above information must be reported
to the Franchisor in writing.

	 	 	 
	 
	 

	 	 
	Date

	 	Signature
	 
	 	 
	 

	 	Print Name

FRANCHISE AGREEMENT

 

 

EXHIBIT IV

TO FRANCHISE AGREEMENT

ADDENDUM TO

ROCKY MOUNTAIN CHOCOLATE FACTORY, INC.

FRANCHISE AGREEMENT RELATED TO AUTHORIZATION

OF PREARRANGED PAYMENTS

(DIRECT DEBITS)

     1. Prearranged Payments. Under the terms of Section 11.4 of the Agreement,
the Franchisee authorizes the Franchisor to initiate debit entries and/or credit correction entries
to the Franchisee’s checking and/or savings account identified below and authorizes the depository
identified below (“Depository”) to debit such account pursuant to the Franchisor’s instructions.

	 	 	 	 	 
	 
	 

	 	 
	 	 
	Depository

	 	Branch
	 	 
	 
	 	 	 	 
	 
	 

	 	 
	 	 
	City

	 	State
	 	Zip Code

			
	 
	 	 	 
	 
	Bank Transit/ABA Number
	 	Account Number

	 	 	 	 	 
	 	ROCKY MOUNTAIN CHOCOLATE FACTORY, INC.

 	 
	Date:  __________________	By:  	 	 
	 	 	Title: 	 	 
	 
	 	FRANCHISEE:

 	 
	Date:  __________________	
 	 
	 	Individually 	 
	 
	 	AND:

(if a corporation or partnership)
 	 
	 
	 	 	 
	 	Company Name

 	 
	 
	Date:  __________________	By:  	 	 
	 	 	Title: 	 

FRANCHISE AGREEMENT

 

 

EXHIBIT V

TO THE FRANCHISE AGREEMENT

PERMIT, LICENSE AND CONSTRUCTION CERTIFICATE

     Franchisor and Franchisee are parties to a Franchise Agreement dated _________, 20___ for
the development and operation of ROCKY MOUNTAIN CHOCOLATE FACTORY Store located at
_________________________________________________ (the “Franchised Location”). In accordance with Section 5.6
of the Franchise Agreement, Franchisee certifies to Franchisor that the Franchised Location
complies with all applicable federal, state and local laws, statutes, codes, rules, regulations and
standards including, but not limited to, the federal Americans with Disabilities Act and any
similar state or local laws. The Franchisee has obtained all such permits and certifications as
may be required for the lawful construction and operation of the ROCKY MOUNTAIN CHOCOLATE FACTORY
Store, together with all certifications from government authorities having jurisdiction over the
site that all requirements for construction and operation have been met, including without
limitation, zoning, access, sign, health, safety requirements, building and other required
construction permits, licenses to do business, sales tax permits, health and sanitation permits and
ratings and fire clearances. The Franchisee has obtained all customary contractors’ sworn
statements and partial and final lien waivers for construction, remodeling, decorating and
installation of equipment at the Franchised Location. The Franchisee acknowledges that it is an
independent contractor and that the requirement of this certification does not constitute
ownership, control, leasing or operation of the Store or the Franchised Location by the Franchisor,
but rather provides notice to Franchisor that the Franchisee has complied with all applicable laws.
The Franchisee asserts that Franchisor may justifiably rely on the information contained in this
certificate.

	 	 	 	 	 
	 	FRANCHISEE:

 	 
	 	
 	 
	 	Individually 	 
	 
	 	AND:

(if a corporation or partnership)

 	 
	 	
 	 
	 	Company Name 	 
	 	 	 
	 	By:  	
 	 
	 	 	Title: 	 

FRANCHISE AGREEMENT

 

 

EXHIBIT VI

TO FRANCHISE AGREEMENT

CONFIDENTIALITY AND NONCOMPETITION AGREEMENT

     AGREEMENT, dated _________, 20___, by and between Rocky Mountain Chocolate Factory,
Inc. (“Franchisor”) and ______________________________________, a(n) [directors, officer, partner, principal,
employee, agent or stockholder] of _________ (the “Franchisee”). All capitalized terms not
otherwise defined herein shall have the meanings set forth in the Franchise Agreement, defined
below.

     The Franchisor has granted to the Franchisee, pursuant to that certain Franchise Agreement
dated _________, 20___, (the “Franchise Agreement”), the right to operate a ROCKY MOUNTAIN
CHOCOLATE FACTORY Store. The undersigned, in consideration of the receipt and/or use of the
Operations Manual and other information proprietary to the Franchisor, including but not limited to
methods, strategies and techniques developed by the Franchisor relating to operations, marketing,
training, advertising, trade secrets, recipes and other confidential data (collectively referred to
as “Proprietary Information”), agrees with the Franchisor as follows:

     (1) The undersigned acknowledges that the Operations Manual and other Proprietary Information
now or hereafter provided to Franchisee by the Franchisor is proprietary to the Franchisor and must
be held in the utmost and strictest confidence.

     (2) The undersigned represents and agrees that the undersigned will not, without the prior
written consent of the Franchisor, either:

     (i) Duplicate or otherwise reproduce the Operations Manual or other Proprietary
Information;

     (ii) Deliver or make available the Operations Manual or other Proprietary Information to
any person other than an authorized representative of the Franchisor;

     (iii) Discuss or otherwise disclose the contents of the Operations Manual or other
Proprietary Information to any person other than an authorized representative of the
Franchisor; or

     (iv) Use the Operations Manual or other Proprietary Information to his, her or its
commercial advantage other than in connection with the operation of the franchise created and
granted by the Franchise Agreement.

     (3) While the Franchise Agreement is in effect, neither the undersigned, nor any member of his
or her immediate family, shall engage in, or participate as an owner, officer, partner, director,
agent, employee, shareholder, member, manager, or otherwise in any other Competitive Business
without having first obtained the Franchisor’s written consent. For the purposes of this
Agreement, “Competitive Business” shall mean any business operating, or granting franchises or
licenses to others to operate, a retail, wholesale, distribution or manufacturing business with
either of the following attributes: (i) a business deriving a total of 10% or more of its gross
receipts from the sale, processing or manufacturing of one or a combination of any of the
following: boxed chocolate candies; or products which are the same as or substantially similar to
Store Candy; or products made with recipes, or processes, included in the

FRANCHISE AGREEMENT

 

 

Operations Manual; or
(ii) a business devoting a total of 10% or more of its retail display space to one or a combination
of the following: boxed chocolate candies; or products which are the same as or substantially
similar to Store Candy; or products made with recipes, or processes, included in the Operations
Manual.

     (4) The undersigned has acquired from the Franchisor confidential information regarding
Franchisor’s trade secrets and franchised methods which, in the event of a termination of the
Franchise Agreement, could be used to injure the Franchisor. As a result, neither the undersigned,
nor any member of his or her immediate family, shall, for a period of 2 years from the date of
termination, transfer or expiration of the Franchise Agreement, without having first obtained the
Franchisor’s written consent, engage in or participate as an owner, officer, partner, director,
agent, employee, shareholder, member, manager, or otherwise in any Competitive Business which is
located or operating, as of the date of such termination, transfer or expiration, within a 10-mile
radius of the Franchisee’s former Franchised Location as defined in the Franchise Agreement, or
within a 10-mile radius of any other franchised or company-owned ROCKY MOUNTAIN CHOCOLATE FACTORY
Store, unless such right is granted pursuant to a separate agreement with the Franchisor.

     (5) The undersigned agrees that during the term of the Franchise Agreement, and for a period
of 2 years thereafter, it shall in no way divert or attempt to divert the business of customers, or
interfere with the business relationship established with customers of the Franchisee’s ROCKY
MOUNTAIN CHOCOLATE FACTORY Store or of any Competitive Business.

     IN WITNESS WHEREOF, this Agreement has been executed by the undersigned as of the date set
forth above.

	 	 	 	 	 
	 	AGREED TO BY:
 	 
	 
	 	
 	 
	 	
 	 
	 	Print Name 	 
	 	 	 
	 	ROCKY MOUNTAIN CHOCOLATE FACTORY, INC.

 	 
	 	By:  	 	 
	 	 	Title: 	 

FRANCHISE
AGREEMENT - 2

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00144-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00144-of-00352.parquet"}]]