EXHIBIT 2.1 ASSET PURCHASE AGREEMENT BETWEEN U-SWIRL, INC. AND ASPEN LEAF YOGURT, LLC DATED JANUARY 14, 2013

 

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This Asset Purchase Agreement (this “Agreement”) is made and entered into as of January 14, 2013, by and between U-Swirl, Inc., a Nevada corporation (“Buyer”), Aspen Leaf Yogurt, LLC, a Colorado limited liability company (“Seller”) and, solely for purposes of Section 3.4, Rocky Mountain Chocolate Factory, Inc., a Colorado corporation (“RMCF”).

 

 

 

 

 

In consideration of the mutual covenants and promises in this Agreement, the parties hereto agree as follows:

 

Capitalized terms used but not otherwise defined in this Agreement have the meanings set forth on attached Exhibit A.

 

 

 

 

 

 

 

 

 

(g)  all tangible and intangible assets relating to the Company Owned Stores; and

 

(h)  the Company Owned Store Working Capital.

 

 

2.3  Assumed Liabilities and Excluded Liabilities.

 

(a)           At Closing, Buyer shall assume only those obligations of Seller scheduled to be performed after Closing under the terms of any Acquired Contract or with respect to the Company Owned Stores, but only to the extent that any such Acquired Contract is set forth on Schedule 2.1(a), and excluding any obligation that arises out of, relates to, or results from, directly or indirectly, any breach, nonperformance, tort, infringement, or violation of applicable law by Seller or any manager, member, employee, or other representative of Seller at or before Closing (such assumed obligations are referred to as the “Assumed Liabilities”).

 

(b)           Except as specifically provided in this Agreement (1) Buyer will not assume any liabilities of Seller, including any liabilities relating to the Excluded Assets, and (2) Seller will be solely liable for, and will pay, discharge and perform when due, all liabilities of Seller that do not constitute Assumed Liabilities, including all liabilities relating to the Excluded Assets; whether or not such liabilities are reflected on Seller’s books and records (collectively, the “Excluded Liabilities”).

 

2.4  Purchase Price.

 

 

(a)  the Share Consideration;

 

(b)  the Recourse Notes; and

 

(c)  the Non-Recourse Notes.

 

 

 

 

 

 

3.4  Intellectual Property License.

 

(a)             RMCF and Seller hereby grant Buyer a non-transferable, world-wide, royalty-free, exclusive, revocable license to use the Marks, and the other intellectual property and intangible assets of the Business, in the Business and to promote the Business (the “License”).  

 

 

(b)             The Marks are those service marks and trademarks listed on Schedule 3.4.  If Seller or RMCF creates any new service marks or trademarks containing the words “Aspen Leaf Yogurt”, the new marks will automatically be subject to this License, and considered to be among the Marks referred to in this Section 3.4, upon written notification from Seller and RMCF to Licensee specifying the new mark(s).

 

(c)             Seller and RMCF agree that if they revoke the License as permitted by Section 3.4(a) above, they will continue to permit any franchisees that have effective Aspen Leaf Yogurt system franchise agreements with Licensee to continue to use the Marks and the other intellectual property and intangible assets of the Business, as permitted by their franchise agreements; provided however, that Licensee agrees to assign the effective franchise agreements to Seller or its successor or assigns, as specified by Seller.

 

(d)             Seller and RMCF agree that during the term of the License, (1) neither they, nor any of their Affiliates, will use any of the Marks on or in connection with yogurt or any frozen dessert products; and (2) it will not grant a license to any person or entity other than Licensee to use the Marks or the intellectual property of the Business.

 

(e)             Licensee will use commercially reasonable efforts to ensure that the goods and services offered under the Marks by it or a franchisee of it (1) generally conform to the material quality standards achieved by Seller in the Company Owned Stores prior to the Closing, to the extent known by Licensee, and (2) are in conformance with all applicable laws.  Licensee will use and display the Marks solely in the general manner in which the Marks were previously used and displayed by Seller.

 

(f)             Licensee will not perform, do, or cause any act to be done, or fail to take any action, which would materially injure or impair: (i) the Marks; (ii) any applications for registration and/or registrations of the Marks; (iii) the goodwill related to the Marks; (iv) Seller’s or RMCF’s rights, title, interest, and/or ownership in and to the Marks; and (vi) the validity and enforceability of any of the foregoing.  Licensee will not attempt to register the Marks or any marks or names confusingly similar to the Marks.  Licensee may, however, request that Seller or RMCF apply to register a mark, and pursue registration of the mark, that is similar to the Marks; and neither Seller nor RMCF will unreasonably refuse to do so if Licensee agrees to pay the filing fee and reasonable attorneys’ fees incurred in registering the mark.

 

(g)             Licensee acknowledges that Seller and RMCF are the owners of the Marks, all applications for, and registrations of, the Marks, all associated common law rights, and all associated goodwill. Licensee’s use of the Marks inures to the benefit of Seller and RMCF.  Licensee will not acquire or claim any title to the Marks adverse to Seller or RMCF by virtue of the license granted herein, or through Licensee’s use of the Marks. Licensee will promptly sign all lawful documents, make lawful declarations and/or provide affidavits, reasonably requested by Seller or RMCF, at Seller’s or RMCF’s expense, in connection with the protection (including the application or maintenance of the Marks), enforcement, or defense of the Marks.

 

(h)             Nothing in this Section 3.4 or elsewhere in this Agreement prohibits or restricts Licensee from applying to register and/or using any service marks or trademarks that are not confusingly similar to the Marks.

 

(i)             Neither Seller nor RMCF will apply to register, register or use (except as specified below) any service mark or trademark that is confusingly similar to any trademark registration containing “U-Swirl,” “Yogurtini,” “Worth the Weight” or “Serve Yo Self” (any of which is referred to as a “Licensee Owned Mark”); nor contest Licensee’s rights, title, and interest in any of the Licensee Owned Marks.  Notwithstanding the foregoing, Seller and RMCF will have the right to use the Licensee Owned Marks to factually describe this transaction, historical information concerning Seller or RMCF, Seller’s and RMCF’s relationship with Buyer, or as otherwise required by law.

 

(j)             The License and the provisions of this Section 3.4 will survive Closing.

 

 

 

Buyer warrants to Seller, as of the date of this Agreement and as of Closing, as follows:

 

 

 

 

4.4  Capitalization.

 

(a)           As of the date hereof, the authorized capital stock of Buyer consists of 100,000,000 shares of Buyer’s Common Stock, of which 5,000,836 shares are issued and outstanding, and 25,000,000 shares of Buyer’s $0.001 par value preferred stock, of which no shares are issued and outstanding.

 

(b)           All shares of Buyer’s capital stock were issued in compliance with applicable Legal Requirements. No shares of capital stock of Buyer were issued in violation of Buyer’s Articles of Incorporation or Bylaws or any other agreement, arrangement or commitment to which Buyer is a party and are not subject to or in violation of any preemptive or similar rights of any Person.  The outstanding shares of capital stock of Buyer have been duly authorized and are validly issued, fully paid and non-assessable.

 

(c)           Except as set forth on Schedule 4.4(c), there are no outstanding or authorized options, warrants, convertible securities or other rights, agreements, arrangements or commitments of any character relating to any capital stock or other equity interests in Buyer or obligating Buyer to issue or sell any equity interests, or any other interest, in Buyer. There are no voting trusts, proxies or other agreements or understandings in effect with respect to the voting or transfer of any of the capital stock of Buyer.

 

(d)           When delivered by Buyer to Seller in accordance with the terms of this Agreement, the shares of Buyer’s Common Stock will be (i) duly and validly issued and fully paid and nonassessable, (ii) will be sold free and clear of any pledge, lien, security interest, encumbrance, claim or equitable interest of any kind, and no preemptive or similar right, co-sale right, registration right, right of first refusal or other similar right of shareholders exists with respect to any of such shares or the issuance and sale thereof other than those that have been expressly waived prior to the date hereof and those that will automatically expire upon the execution hereof, and (iii) issued in compliance with applicable federal and state securities laws. No further approval or authorization of any shareholder, Buyer’s Board of Directors or others is required for the issuance to Seller of the shares of Buyer’s Common Stock pursuant to the terms hereof. The issuance and sale of shares of Buyer’s Common Stock pursuant to the terms hereof will not obligate Buyer to issue any shares of Common Stock or any other securities to any party other than the Seller or adjust any exercise or conversion prices of any outstanding securities convertible into Common Stock.

 

 

4.5  Financial Statements.

 

 

 

 

 

 

 

 

(b)           Other liabilities arising since the date of the Most Recent Buyer Financial Statements and prior to the Closing in the ordinary course of business (which does not arise out of, relate to or result from and which is not in the nature of and was not caused by any breach of contract, breach of warranty, tort, infringement or other violation of applicable law) which are not inconsistent with the warranties of Buyer or any other provision of this Agreement.

 

Without limiting the generality of the foregoing, the amounts set up as provisions for Taxes in the Most Recent Buyer Financial Statements are sufficient for all accrued and unpaid Taxes of Buyer, whether or not due and payable and whether or not disputed, under tax laws, as in effect on the date of the Most Recent Buyer Financial Statements or now in effect, for the period ended on such date and for all fiscal periods prior thereto. The execution, delivery, and performance of the Transaction Agreements by Buyer will not cause any Taxes to be payable by Buyer or any of its subsidiaries or cause any lien, charge, or encumbrance to secure any Taxes to be created either immediately or upon the nonpayment of any Taxes. Buyer and each of its subsidiaries has filed all federal, state, local, and foreign tax returns required to be filed by it; has made available to Seller a true and correct copy of each such return which was filed in the past six years; has paid (or has established on the last balance sheet included in the Most Recent Buyer Financial Statements a reserve for) all Taxes, assessments, and other governmental charges payable or remittable by it or levied upon it or its properties, assets, income, or franchises which are due and payable; and has made available to Buyer a true and correct copy of any report as to adjustments received by it from any taxing authority during the past six years and a statement as to any litigation, governmental or other proceeding (formal or informal), or investigation pending, threatened, or in prospect with respect to any such report or the subject matter of such report.

 

 

4.8  Exchange Act.

 

(a)           The Common Stock is registered under Section 12(g) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), and Buyer is subject to the periodic reporting requirements of Section 13 of the Exchange Act. Buyer has taken no action to terminate such Exchange Act registration. Buyer has made available to Seller true, complete, and correct copies of all documents filed or furnished with the United States Securities and Exchange Commission (the “SEC”) by or on behalf of Buyer (the “SEC Documents”).  The SEC Documents, including, without limitation, any financial statements and schedules included therein, at the time filed or, if subsequently amended, as so amended, (i) did not contain any untrue statement of a material fact required to be stated therein or necessary in order to make the statements therein not misleading and (ii) complied in all material respects with the applicable requirements of the Exchange Act

 

 

(b)           Buyer is in compliance in all material respects with all provisions of the Sarbanes-Oxley Act of 2002 which are applicable to it. Buyer and its subsidiaries maintain a system of internal accounting controls sufficient to provide reasonable assurance that (i) transactions are executed in accordance with management’s general or specific authorizations, (ii) transactions are recorded as necessary to permit preparation of financial statements in conformity with United States generally accepted accounting principles and to maintain asset accountability, (iii) access to assets is permitted only in accordance with management’s general or specific authorization, and (iv) the recorded accountability for assets is compared with the existing assets at reasonable intervals and appropriate action is taken with respect to any differences. Buyer has established disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for Buyer and designed such disclosure controls and procedures to ensure that material information relating to Buyer and its subsidiaries is made known to the certifying officers by others within those entities, particularly during the period in which Buyer’s most recently filed periodic report under the Exchange Act is being prepared. Buyer’s certifying officers have evaluated the effectiveness of Buyer’s controls and procedures as of the date prior to the filing date of the most recently filed periodic report under the Exchange Act (such date, the “Evaluation Date”). Buyer presented in its most recently filed periodic report under the Exchange Act the conclusions of the certifying officers about the effectiveness of the disclosure controls and procedures based on their evaluations as of the Evaluation Date. Since the Evaluation Date, there have been no changes in Buyer’s internal control over financial reporting (as such term is defined in Rule 13a and 15(f) of the Exchange Act) that have materially affected or are reasonably likely to materially affect, Buyer’s internal control over financial reporting.  Buyer has made available to Seller copies of, all written descriptions of, and all policies, manuals and other documents promulgating, such disclosure controls and procedures. The books, records and accounts of Buyer accurately and fairly reflect, in reasonable detail, the transactions in, and dispositions of, the assets of, and the results of operations of, Buyer all to the extent required by GAAP.

 

(c)           Buyer has made available to Seller complete and correct copies of all certifications filed with the SEC pursuant to Sections 302 and 906 of the Sarbanes-Oxley Act of 2002 and hereby reaffirms, warrants to Seller the matters and statements made in such certificates.

 

 

 

4.11  Political Contributions; Bankruptcies and Other Actions; Foreign Corrupt Practices Act.

 

(a)           Neither Buyer nor any of its subsidiaries has, and no person or entity acting on behalf or at the request of Buyer or any of its subsidiaries has, at any time during the last five (5) years (i) made any unlawful contribution to any candidate for public office or failed to disclose fully any contribution in violation of law, or (ii) made any payment to any federal or state governmental officer or official, or other person charged with similar public or quasi-public duties, other than payments required or permitted by the laws of the United States or any other applicable jurisdiction.

 

(b)           Except as set forth on Schedule 4.11(b), no officer, director or subsidiary of Buyer or, to Buyer’s knowledge, any of Buyer’s Affiliates, has been, within the five (5) years ending on the Closing Date, a party to any bankruptcy petition against such person or against any business of which such person was affiliated; convicted in a criminal proceeding or subject to a pending criminal proceeding (excluding traffic violations and other minor offenses); subject to any order, judgment or decree, not subsequently reversed, suspended or vacated, of any court of competent jurisdiction, permanently or temporarily enjoining, barring, suspending or otherwise limiting their involvement in any type of business, securities or banking activities; or found by a court of competent jurisdiction in a civil action, by the SEC or the Commodity Futures Trading Commission, to have violated a federal or state securities or commodities law, and the judgment has not been reversed, suspended or vacated.

 

(c)           Neither Buyer nor any of its subsidiaries, nor, to the best knowledge of Buyer, any director, officer, agent, employee, or other person associated with, or acting on behalf of, Buyer or any of its subsidiaries, has, directly or indirectly: used any corporate funds for unlawful contributions, gifts, entertainment, or other unlawful expenses relating to political activity; made any unlawful payment to foreign or domestic government officials or employees or to foreign or domestic political parties or campaigns from corporate funds; violated any provision of the Foreign Corrupt Practices Act of 1977, as amended; or made any bribe, rebate, payoff, influence payment, kickback, or other unlawful payment. Buyer’s internal accounting controls and procedures are sufficient to cause Buyer and each of the Buyer’s subsidiaries to comply in all respects with the Foreign Corrupt Practices Act of 1977, as amended.

 

 

 

 

 

 

 

 

4.19  Employee Benefit Plans.

 

(a)           Schedule 4.19(a) sets forth a complete and accurate list of all Employee Benefit Plans.  Each Employee Benefit Plan can be amended or terminated by Buyer or any of Buyer’s subsidiaries at any time (whether before or after the Closing) and without any penalty, liability or expense to Buyer or any of its subsidiaries or Affiliates, any Buyer ERISA Affiliate, Seller or any of its Affiliates, or such Employee Benefit Plan (including, without limitation, any surrender charge, market rate adjustment or other early termination charge or penalty).

 

(b)           With respect to each Employee Benefit Plan: (i) such Employee Benefit Plan was properly and legally established; (ii) such Employee Benefit Plan is, and at all times since inception has been, established, maintained, administered, operated and funded in all material respects in accordance with its terms and in compliance with all applicable Legal Requirements, including, without limitation, ERISA and the Code; (iii) Buyer, each subsidiary of Buyer, each Buyer ERISA Affiliate and each other Person (including each fiduciary of such Employee Benefit Plan) has properly performed all of its duties and obligations (whether arising by operation of any Legal Requirement, by contract or otherwise) under or with respect to such Employee Benefit Plan, including all fiduciary, reporting, disclosure, and notification duties and obligations; (iv) no transaction or event has occurred or is threatened or about to occur (including any of the transactions contemplated in or by this Agreement) that constitutes or could constitute a prohibited transaction under Section 406 or 407 of ERISA or under Section 4975 of the Code for which an exemption is not available; (v) all contributions, premiums and other payments due or required to be paid to (or with respect to) such Employee Benefit Plan have been paid on or before their respective due dates, or, if not yet due, have been accrued as a liability on Buyer’s balance sheet; and (vi) none of Buyer, any of its subsidiaries, or any Buyer ERISA Affiliate has incurred, and there exists no condition or set of circumstances in connection with which Buyer, any of its subsidiaries or Affiliates, any Buyer ERISA Affiliate, Seller or any Affiliate or subsidiary of Seller could incur, directly or indirectly, any liability or expense under ERISA, the Code or any other Legal Requirement, or pursuant to any indemnification or similar agreement, with respect to such Employee Benefit Plan.

 

(d)           Each Employee Benefit Plan that is intended to be qualified under Section 401(a) of the Code is so qualified and its related trust and/or group annuity contract is exempt from taxation under Section 501(a) of the Code. Each such Employee Benefit Plan (i) is the subject of an unrevoked favorable determination letter from the IRS with respect to such Employee Benefit Plan's qualified status under the Code, which letter takes into account those Legal Requirements commonly referred to as “EGTRRA,” and all subsequent Legal Requirements, (ii) has remaining a period of time under the Code or applicable Treasury Regulations or IRS pronouncements in

 

 

(e)           Each Employee Benefit Plan that provides deferred compensation subject to Section 409A of the Code satisfies in form and operation the requirements of Sections 409A(a)(2), 409A(a)(3) and 409A(a)(4) of the Code and the guidance thereunder (and has satisfied such requirements for the entire period during which Section 409A of the Code has applied to such Employee Benefit Plan).  Neither Buyer nor any of its subsidiaries has any agreement or obligation to indemnify or "gross-up" any individual for any taxes or interest imposed on such individual pursuant to Section 409A of the Code.

 

(f)           None of Buyer, any subsidiary of Buyer, or any Buyer ERISA Affiliate sponsors, maintains or contributes to or has ever sponsored, maintained or contributed to (or been obligated to sponsor, maintain or contribute to), or has any direct, indirect or contingent liability with respect to, any (i) "multiemployer plan," as defined in Section 3(37) or 4001(a)(4) of ERISA or Section 414(f) of the Code, (ii) multiple employer plan within the meaning of Section 210(a), 4063 or 4064 of ERISA or Section 413(c) of the Code, (iii) employee benefit plan that is subject to Section 302 of ERISA, Title IV of ERISA or Section 412 of the Code, (iv) "multiple employer welfare arrangement," as defined in Section 3(40) of ERISA, (v) self-funded (or self-insured) health plan, or (vi) employee benefit plan, policy, program or arrangement that is (or at any time was) subject to the laws of a jurisdiction other than the United States.

 

(g)           No Employee Benefit Plan provides severance, life insurance, medical or other welfare benefits (within the meaning of Section 3(1) of ERISA) to any current or former employee of Buyer, any subsidiary of Buyer, or any Buyer ERISA Affiliate, or to any other Person, after his or her retirement or other termination of employment or service, and none of Buyer, any subsidiary of Buyer, or any Buyer ERISA Affiliate has ever represented, promised or contracted (whether in written or oral form) to any such employee or former employee, or to any other Person, that such benefits would be provided, except to the extent required by (i) Section 4980B of the Code and Part 6 of Subtitle B of Title I of ERISA, or (ii) state law concerning conversion of group medical insurance coverage to individual medical insurance coverage.

 

(h)           There are no actions, suits or claims (other than routine claims for benefits or proceedings with respect to qualified domestic relations orders) pending or, to Buyer’s knowledge, threatened with respect to (or against the assets of) any Employee Benefit Plan, nor, to Buyer’s knowledge, is there any basis for any such action, suit or claim.  No Employee Benefit Plan is currently under investigation, audit or review, directly or indirectly, by any Governmental Authority, and, to Buyer’s knowledge, no such action is contemplated or under consideration by any Governmental Authority.

 

(i)           Neither the execution and delivery of this Agreement nor the consummation of the transactions contemplated by this Agreement (either alone or upon the occurrence of any

 

 

 

 

 

Seller warrants to Buyer, as of the date of this Agreement and as of Closing, as follows:

 

 

 

 

5.4  Assets; Title, Condition, and Sufficiency.

 

 

 

 

 

5.5  Acquired Contracts.

 

 

(b)  Seller has delivered to Buyer true and complete copies of each of the Acquired Contracts to which Seller is a party, including any amendments thereto (or, in the case of oral

 

 

 

 

 

 

 

5.11  Compliance with Legal Requirements.

 

 

 

 

5.13  Securities Matters.

 

 

(b)           In the transaction subject to this Agreement, Seller is acquiring the Common Stock for its own account for investment purposes, and not with a view to distribution.

 

(c)           Seller acknowledges that Buyer has not registered with the SEC or any state agency any of the Common Stock that will be issued to Seller as part of the Purchase Price.  As such, it constitutes restricted securities.

 

(d)           Seller acknowledges (1) that Buyer has sustained losses in the past; (2) that there can be no assurance that net income will be realized by Buyer or its affiliates; and (3) as such, there can be no assurance that Seller will receive any return on its investment.

 

(e)           Seller understands that there is no assurance that the Company will achieve any net income that is passed on to Seller.  Seller is an entity that is able to bear the economic risk of an investment in the Common Stock Buyer.  In making this statement, Seller has considered

 

 

(f)           Seller understands and acknowledges that although the Common Stock it receives as part of the Purchase Price might be able to be transferred without registration under the Act, any such transfer may be subject to registration under applicable state securities laws. Seller agrees that it will not sell or otherwise transfer that Common Stock unless it is registered, or unless an exemption from any federal and state registration requirements are available to the satisfaction of Buyer.   Seller agrees that the certificate(s) evidencing that Common Stock can contain a restrictive legend, in a form the same as or similar to the following:

 

“The shares represented by this certificate have not been registered under the Securities Act of 1933, as amended (the “Act”), or under the comparable provisions of the securities laws of any state or other jurisdiction; and are therefore “restricted securities” as defined in Rule 144 under the Act.  The shares may not be offered for sale, sold, or otherwise transferred except pursuant to an effective registration statement under the Act and other applicable laws, or pursuant to an exemption from registration under the Act and other applicable laws, the availability of which is to be established to the satisfaction of the corporation.”

 

(g)           Seller agrees that the Common Stock acquired by Seller as part of the Purchase Price will not be resold, or offered for resale, or otherwise transferred by Seller for a period of at least six months after the Closing Date.

 

(h)           SELLER ACKNOWLEDGES AND AGREES THAT NEITHER BUYER, NOR ANY OF ITS DIRECTORS, OFFICERS, EMPLOYEES, REPRESENTATIVES, OR AGENTS MAKES ANY REPRESENTATIONS OR WARRANTIES (1) CONCERNING THE PAST  PERFORMANCE OF BUYER OR ITS AFFILIATES AND THEIR RESPECTIVE BUSINESSES, EXCEPT AS EXPRESSLY STATED IN THIS AGREEMENT; OR (2) CONCERNING THE FUTURE PERFORMANCE OF BUYER OR ITS AFFILIATES AND THEIR RESPECTIVE BUSINESSES.

 

5.13           Disclosure.  No warranty by Seller in this Agreement or in any Schedule or Exhibit of this Agreement, or any statement, list or certificate furnished or to be furnished by Seller pursuant to this Agreement, contains or will contain any untrue statement of material fact, or omits or will omit to state a material fact required to be stated therein or necessary to make the statements contained therein not misleading in light of the circumstances in which made.

 

 

 

 

 

 

6.4      Post-Closing Operation and Conversion of Retained Stores; Rebates.

 

(a)           Buyer and Seller hereby acknowledge that following Closing Seller will use its commercially reasonable efforts to find buyers to purchase the Aspen Leaf Yogurt stores located in Farmington, New Mexico and Boise, Idaho (the “Retained Stores”) which are currently owned and operated by Seller and which are not included in the Acquired Assets.  The purchasers of such Retained Stores will be required to enter into franchise agreements with Buyer as a condition to such purchase.  Buyer and Seller shall cooperate with each other and shall take all commercially reasonable actions to facilitate the sale of the Retained Stores.  Buyer shall enter into a franchise agreement with each purchaser of a Retained Store.

 

(b)           In the event that a Retained Store has not been sold by Seller to a third party by March 1, 2013, Buyer and Seller will negotiate in good faith to agree upon a purchase price for such Retained Store and Buyer will purchase such Retained Store from Seller.  The Retained Store will be transferred via bill of sale and the agreed upon purchase price will be reflected in a recourse or non-recourse note, substantially identical to the Recourse Notes or the Non-Recourse Notes, as applicable.  The methodology used by Buyer and Seller in determining the purchase price for the Company Owned Stores, and whether the notes given with respect to each such Company Owned Store will be recourse or non-recourse, will be utilized in complying with this Section 6.4(b).

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(f)  Membership Interest Purchase Agreement. The Membership Interest Purchase Agreement, executed by Buyer.

 

(g)  Voting Agreement.  The Voting Agreement, executed by the shareholders of Buyer that are party thereto.

 

(h)  Security Agreement.  The executed Security Agreement.

 

(i)  Board Resignations.  The resignations of Sam D. Dewar and Jimmy D. Sims from Buyer’s board of directors.

 

 

 

 

 

 

 

(c)  the activities and operations of Seller prior to Closing;

 

(e)  any Excluded Assets or Excluded Liabilities; and

 

(f)  Taxes of Seller.

 

 

 

 

 

 

(d)  the Assumed Liabilities; and

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

To Seller or RMCF:

 

Aspen Leaf Yogurt, LLC

c/o Rocky Mountain Chocolate Factory, Inc.

265 Turner Drive

Durango, Colorado 81303

Attention:  Bryan Merryman, Chief Operating Officer

Facsimile:   ###-###-####

 

Copies (which shall not constitute notice):

 

Perkins Coie LLP

1900 Sixteenth Street, Suite 1400

Denver, Colorado 80202

Attention:  Sonny Allison

Facsimile:   ###-###-####

 

To Buyer:

 

Ulderico Conte

U-Swirl, Inc.

1175 American Pacific Suite C

Henderson, NV 89074

Facsimile: 702 ###-###-####

 

Copies (which shall not constitute notice):

 

Daniel J. Block

Robinson Waters & O’Dorisio, P. C.

1099 18th Street, Suite 2600

Denver, CO  80202

Facsimile:   ###-###-####

 

 

 

 

 

 

 

 

 

 

 

 

[Signature Page Follows]

Buyer and Seller have executed this Agreement as of the date first written above.

 

ASPEN LEAF YOGURT, LLC

By: /s/ Bryan J. Merryman                   

Name: Bryan J. Merryman

Title:  Managing Member

U-SWIRL, INC.

By: /s/ Ulderico Conte                         

Name:  Ulderico Conte

Title:  Chief Executive Officer

 

 

With respect to Section 3.4 of the Agreement only, RMCF has executed this Agreement as of the date first written above.

 

ROCKY MOUNTAIN CHOCOLATE FACTORY, INC.

By: /s/ Bryan J. Merryman                            

Name: Bryan J. Merryman

Title: Chief Financial Officer

 

 

 

Unless the context otherwise requires, the terms defined in this Exhibit A shall have the meanings herein specified for all purposes of this Agreement, applicable to both the singular and plural forms of any of the terms herein defined.

 

“Acquired Assets” has the meaning given in Section 2.1.

 

“Acquired Contracts” has the meaning given in Section 2.1(a).

 

“Acquired Governmental Permits” has the meaning given in Section 2.1(b).

 

“Affiliate” means with respect to any Person, any other Person controlling, controlled by or under common control with such Person, with “control” for such purpose meaning the possession, directly or indirectly, of the power to direct or cause the direction of the management and policies of a Person, whether through the ownership of voting securities or voting interests, by contract or otherwise.

 

“Applicable Survival Period” has the meaning given in Section 8.5.

 

“Assumed Liabilities” has the meaning given in Section 2.3.

 

“Business Day” means any day other than Saturday, Sunday or a day on which banking institutions in Denver, Colorado or New York, New York are required or authorized to be closed.

 

“Buyer ERISA Affiliate” means any corporation, partnership, limited liability company, sole proprietorship, trade, business or other Person that, together with the Buyer or any of its subsidiaries, is (or, at any time, was) treated as a single employer under Section 414(b), (c), (m) or (o) of the Code or Section 4001(a)(14) or 4001(b)(1) of ERISA.

 

“Buyer Indemnitee” has the meaning given in Section 8.1.

 

“Closing” has the meaning given in Section 7.1.

 

“Closing Date” has the meaning given in Section 7.1.

 

“Code” means the Internal Revenue Code of 1986, as amended, and the regulations promulgated thereunder.

 

“Common Stock” means the Buyer’s $0.001 par value common stock.

 

“Company Owned Stores” means the Aspen Leaf Yogurt stores located in Greeley, Colorado, Ames, Iowa, Murfreesboro, Tennessee, San Antonio, Texas, DeKalb, Illinois and Gilbert, Arizona.

 

“Company Owned Store Working Capital” means $79,784 in cash.

 

“Contract” means any written contract, mortgage, deed of trust, bond, indenture, lease, license, note, franchise, certificate, option, warrant, or agreement, and any enforceable oral agreement.

 

“Employee Benefit Plan” means any retirement, pension, profit sharing, deferred compensation, equity interest bonus, savings, bonus, incentive, cafeteria, medical, dental, vision, hospitalization, life insurance, accidental death and dismemberment, medical expense reimbursement, dependent care assistance, tuition reimbursement, disability, sick pay, holiday, vacation, severance, change of control, equity interest purchase, equity interest option, restricted equity interest, phantom equity interest or unit, equity interest appreciation rights, fringe benefit or other employee benefit plan, fund, policy, program, arrangement, contract or payroll practice of any kind (including any "employee benefit plan," as defined in Section 3(3) of ERISA) or any employment, consulting or personal services contract, qualified or nonqualified, or funded or unfunded, (a) sponsored, maintained or contributed to by Buyer or any of its subsidiaries, or to which Buyer or any of its subsidiaries is a party, (b) covering or benefiting any current or former officer, employee, agent, director or independent contractor of Buyer or any of its subsidiaries (or any dependent or beneficiary of any such individual), or (c) with respect to which Buyer or any of its subsidiaries has (or could have) any obligation or liability.

 

“Encumbrance” means any security agreement, financing statement filed with any Governmental Authority, conditional sale or other title retention agreement, any lease, consignment or bailment given for purposes of security, any lien, mortgage, indenture, pledge, option, encumbrance, adverse interest, constructive trust or other trust, claim, attachment, exception to or defect in title or other ownership interest (including but not limited to reservations, rights of entry, possibilities of reverter, encroachments, easement, rights-of-way, restrictive covenants leases, and licenses) of any kind, which otherwise constitutes an interest in or claim against property, whether arising pursuant to any Legal Requirement, Contract, or otherwise.

 

“Environmental Claim” means any action, order from any Governmental Authority, lien, fine, penalty, or, as to each, any settlement or judgment arising therefrom, by or from any Person alleging liability of whatever kind or nature (including liability or responsibility for the costs of enforcement proceedings, investigations, cleanup, governmental response, removal or remediation, natural resources damages, property damages, personal injuries, medical monitoring, penalties, contribution, indemnification and injunctive relief) arising out of, based on or resulting from: (a) the presence, Release of, or exposure to, any Hazardous Materials; or (b) any actual or alleged non-compliance with any Environmental Law or term or condition of any Environmental Permit.

 

“Environmental Law” means any applicable Legal Requirement, and any order from a Governmental Authority or binding agreement with any Governmental Authority: (a) relating to pollution (or the cleanup thereof) or the protection of natural resources, endangered or threatened species, human health or safety, or the environment (including ambient air, soil, surface water or groundwater, or subsurface strata); or (b) concerning the presence of, exposure to, or the management, manufacture, use, containment, storage, recycling, reclamation, reuse, treatment, generation, discharge, transportation, processing, production, disposal or remediation of any Hazardous Materials. The term “Environmental Law” includes, without limitation, the following

 

 

“Environmental Notice” means any written directive, notice of violation or infraction, or notice respecting any Environmental Claim relating to actual or alleged non-compliance with any Environmental Law or any term or condition of any Environmental Permit.

 

“Environmental Permit” means any permit, clearance, consent, waiver, closure, exemption, decision or other action required under or issued, granted, given, authorized by or made to Buyer pursuant to any Environmental Law.

 

“ERISA” means the U.S. Employee Retirement Income Security Act of 1974, as amended.

 

“Evaluation Date” has the meaning given in Section 4.8(b).

 

“Exchange Act” has the meaning given in Section 4.8(a).

 

“Excluded Assets” has the meaning given in Section 2.2.

 

“Excluded Liabilities” has the meaning given in Section 2.3.

 

“GAAP” means United States generally accepted accounting principles consistently applied.

 

“Governing Documents” means Seller’s articles of formation and operating or limited liability company agreement in effect as of the Closing Date.

 

“Governmental Authority” means the United States of America, any state, commonwealth, territory, or possession thereof and any political subdivision or quasi-governmental authority of any of the same, including but not limited to courts, tribunals, departments, commissions, self-regulatory organizations and stock exchanges, boards, bureaus, agencies, counties, municipalities, provinces, parishes, and other instrumentalities.

 

“Hazardous Materials” means: (a) any material, substance, chemical, waste, product, derivative, compound, mixture, solid, liquid, mineral or gas, in each case, whether naturally occurring or manmade, that is hazardous, acutely hazardous, toxic, or words of similar import or regulatory effect under Environmental Laws; and (b) any petroleum or petroleum-derived

 

 

“Indemnifying Party” has the meaning given in Section 8.3.

 

“Indemnitee” has the meaning given in Section 8.3.

 

“Intellectual Property” means all (i) trademarks, trademark applications, service marks, service mark applications, trade and other marks and names (either registered, common law or registration applied for); (ii) copyright registrations and applications; (iii) patents, patent applications and patent rights; (iv) copyrights; (v) software and computer programs; (vi) domain names and URL’s; and (vii) other technology or intellectual property rights of any kind or nature.

 

“Investor Rights Agreement” has the meaning given in Section 7.2(b).

 

“Invoices” has the meaning given in Section 2.5.

 

“Judgment” means any judgment, writ, order, injunction, award, or decree of any court, judge, justice, or magistrate, including any bankruptcy court or judge, and any order of or by any Governmental Authority.

 

“Knowledge” of any Person of or with respect to any matter means the actual awareness or knowledge of such matter that (1) such Person, if a natural person, or (2) any of the officers or directors of Person that is a corporation, or (3) the officers, managers, or members of a Person that is a limited liability company, has or would have after due inquiry and investigation.

 

“Legal Requirements” means applicable common law and any statute, ordinance, code or other law, rule, regulation, order, technical or other standard, requirement, or procedure enacted, adopted, promulgated, applied, or followed by any Governmental Authority, including Judgments.

 

“Litigation” means any claim, action, suit, proceeding, arbitration, investigation, hearing, or other activity or procedure that could result in a Judgment.

 

“Losses” means any claims, losses, liabilities, damages, Encumbrances, penalties, costs, and expenses, including but not limited to interest which may be imposed in connection therewith, expenses of investigation, reasonable fees and disbursements of counsel and other experts, and the cost to any Person making a claim or seeking indemnification under this Agreement with respect to funds expended by such Person by reason of the occurrence of any event with respect to which indemnification is sought.

 

“Marks” means all trademarks and service marks (either registered, common law or for which registrations have been applied for) incorporating the term “Aspen Leaf Yogurt” or used exclusively in the operation of Aspen Leaf Yogurt stores, but excluding the term “Rocky Mountain Chocolate Factory” or any composite mark that includes such term.

 

“Membership Interest Purchase Agreement” means the Membership Interest Purchase Agreement dated as of the date hereof between Buyer and Rocky Mountain Chocolate Factory, Inc.

 

“Most Recent Buyer Financial Statements” has the meaning given in Section 4.6(a).

 

“Non-Recourse Notes” means a non-recourse promissory note in the original principal amount of $100,000, for each of the Company Owned Stores located in Greeley, Colorado, Ames, Iowa, Murfreesboro, Tennessee and Gilbert, Arizona, each in the form attached hereto as Exhibit B.

 

“Permitted Encumbrances” means (a) Encumbrances for water, sewage and similar charges and Taxes and assessments not yet due and payable; (b) mechanics’, workers’, and other similar liens arising or incurred in the ordinary course of business for amounts which are not delinquent; and (c) easements and rights of way for streets, alleys, highways, telephone lines, gas pipelines, power lines, railways and other easements and rights-of-way on, over or in respect of any real property, and servitudes, permits, licenses, surface leases, ground leases to utilities, municipal agreements, railway siding agreements and other similar matters of record.

 

“Person” means any natural person, Governmental Authority, corporation, general or limited partnership, joint venture, limited liability company, trust, association, or unincorporated entity of any kind.

 

“Prime Rate” means the rate announced from time to time by Citibank as its prime rate for loans to commercial customers.

 

“Purchase Price” has the meaning given in Section 2.4.

 

“Recourse Notes” means (i) a full recourse promissory note in the original principal amount of $150,000 relating to the Company Owned Store located in San Antonio, Texas, and (ii) a full recourse promissory note in the original principal amount of $350,000 relating to the Company Owned Store located in DeKalb, Illinois, each in the form attached hereto as Exhibit C.

 

“Retained Stores” has the meaning given in Section 6.4.

 

“SEC” has the meaning given in Section 4.8(a).

 

“SEC Documents” has the meaning given in Section 4.8(a).

 

“Securities Act” means the Securities Act of 1933, as amended.

 

“Security Agreement” has the meaning given in Section 7.2(i).

 

“Seller ERISA Affiliate” means any corporation, partnership, limited liability company, sole proprietorship, trade, business or other Person that, together with the Seller, is treated as a single employer under Section 414(b), (c), (m) or (o) of the Code or Section 4001(a)(14) or 4001(b)(1) of ERISA.

 

“Seller Indemnitee” has the meaning given in Section 8.2.

 

“Share Consideration” means 1,382,600 shares of the Buyer’s Common Stock.

 

“Sublease” has the meaning given in Section 3.5.

 

“Tax Returns” means any return, report, information return or other document (including any related or supporting information) filed or required to be filed with or maintained or required to be maintained with any Governmental Authority with respect to Taxes.

 

“Taxes” means all levies and assessments of any kind or nature imposed by any Governmental Authority, including but not limited to all income, sales, use, ad valorem, value added, franchise, severance, net or gross proceeds, withholding, payroll, employment, excise, or property taxes, together with any interest thereon and any penalties, additions to tax, or additional amounts applicable thereto.

 

“Transaction Documents” means all instruments, schedules, exhibits and documents executed or delivered by Buyer or Seller or any officer, director, or Affiliate of either of them in connection with this Agreement or the transactions contemplated hereby.

 

“Voting Agreement” has the meaning given in Section 7.2(h).

 

 

 

 

 

NON-RECOURSE SECURED PROMISSORY NOTE

 

 

FOR VALUE RECEIVED, U-Swirl, Inc., a Nevada corporation (“Maker”), whose address is 1175 American Pacific Suite C, Henderson, NV 89074, promises to pay to the order of Aspen Leaf Yogurt, LLC, a Colorado limited liability company (“Payee”), at Payee’s principal place of business, 265 Turner Drive, Durango, CO 81303, the principal sum of $100,000.00.  This Note (i) is issued pursuant to Section 2.4 of the Asset Purchase Agreement dated as of January __, 2013 and entered into by and between Maker and Payee (as in effect from time to time, the “Purchase Agreement”), and (ii) is intended to be the “Non-Recourse Note” relating to the Company Owned Store located in [NOTE # 1: Greeley, Colorado][NOTE # 2: Ames, Iowa] [NOTE # 3: Murfreesboro, Tennessee][NOTE #4: Gilbert, Arizona] referred to therein.  Each capitalized term that is used and not otherwise defined in this Note has the meaning assigned to that term in the Purchase Agreement.

Interest shall accrue on this Note at the rate of 6% per annum, compounded annually.  This Note shall be paid in monthly installments of $1,666.67 plus all accrued interest through the date of payment, with the first payment of principal plus accrued interest due January __, 2015 and subsequent payments of principal plus accrued interest due on the __ day of each month thereafter until paid in full (each a “Payment Date”).  In the event that the amount due under this Note is not paid in full on or before each Payment Date, default interest shall accrue as set forth below.

All payments on this Note shall be applied first to the payment of accrued interest and, after all such interest has been paid, any remainder shall be applied to reduction of the principal balance.  All amounts payable hereunder are payable in lawful money of the United States of America.

 

The indebtedness evidenced by this Note may be prepaid by Maker in whole or in part without notice, penalty, or premium at any time; provided that any principal prepayment shall be accompanied by all interest then accrued, if any.   Unless the outstanding balance is paid in full, no prepayment will delay or postpone the next consecutive payment when that payment becomes due.

 

Upon the occurrence of any one or more of the following events of default (each an “Event of Default”), Payee may send a written notice to Maker specifying the Event of Default.  In that situation, if Maker does not cure the Event of Default within the time period specified below for that Event of Default (if any) then, at the option of Payee, the entire unpaid principal sum and all accrued interest shall become immediately due and payable upon notice by Payee to Maker:

 

(a)           Failure of Maker to pay any part of the principal or interest when due, which failure is not cured within 10 days.

 

(b)           Any default in the performance of any obligation of Maker hereunder or under any instrument or agreement executed and delivered to secure payment of this Note, including under the Security Agreement (as defined below), which default is not cured within 10 days.

 

(c)           Maker is unable, or admits in writing its inability, to pay its debts, or shall not pay its debts generally as they come due, or shall make any assignment for the benefit of creditors.

 

(d)           Any of the following events occurs with respect to Maker: liquidation or dissolution; merger, consolidation, or other corporate reorganization of Maker or any of its subsidiaries; sale of all or any material portion of Maker’s or any of its subsidiaries’ assets; termination of Maker’s or any subsidiary’s existence; insolvency; business failure; or cessation of the conduct of any substantial part of Maker’s or any of its subsidiaries’ business in the ordinary course.

 

(e)           Maker commences, or there is commenced against Maker, any case, proceeding, or other action seeking to have an order for relief entered with respect to Maker, or to adjudicate Maker as a bankrupt or insolvent, or seeking reorganization, arrangement, adjustment, liquidation, dissolution, or composition under any law relating to bankruptcy, insolvency, reorganization, or relief of debtors or seeking appointment of a receiver, trustee, custodian, or other similar fiduciary, with respect to any part of Maker’s business or property.

 

(f)           Maker defaults on any other debts, obligations, or liabilities to Payee.

 

Maker’s obligations on this Note shall be secured by a “Security Agreement” of even date herewith executed by Maker as Debtor and naming Payee as Secured Party.  Notwithstanding anything to the contrary contained herein, the Payee agrees that the Maker shall have no personal liability hereunder and that the Payee shall seek recourse only to the collateral described in the Security Agreement and any such substitute or additional collateral which may be granted to the Payee from time-to-time.  However, nothing contained in this Note shall limit Payee’s rights to institute or prosecute a legal action or proceeding or otherwise make a claim personally against Maker for damages and losses to the extent arising directly or indirectly from any of the following, or against the person or persons committing any of the following:

 

(a)           fraud or intentional misrepresentation by Maker,

 

(b)           physical damage to the Company Owned Store to which this Note relates from intentional waste or other action taken or committed by Maker, or

 

(c)           a breach of the Security Agreement.

 

In the event any payment on this Note is not paid in full on or before the Payment Date, or in the event of any other Event of Default, all of the outstanding principal sum and any

 

 

This Note shall be governed as to validity, interpretation, construction, effect and in all other respects by the laws and decisions of the State of Colorado.  Maker, and any endorsers, sureties and guarantors, agree that the federal and state courts located in the State of Colorado shall have subject matter jurisdiction to entertain any action brought to enforce or collect upon this Note and, by execution hereof, voluntarily submit to personal jurisdiction of such courts; provided, however, such jurisdiction shall not be exclusive and, at its option, Payee may com­mence such action in any other court which otherwise has jurisdiction.

 

Maker, and any endorsers, sureties and guarantors, of this Note, jointly and severally waive presentment for payment; and it/they (as applicable) agree to any extension of time of payment and partial payments before, at, or after maturity.  No renewal or extension of this Note, no release or surrender of any security for this Note, no release of any person liable hereon, no delay in the enforcement hereof, and no delay or omission in exercising any right or power here under, shall affect the liability of Maker.  No delay or omission by Payee in exercising any power or right hereunder shall impair such right or power or be construed to be a waiver of any default, nor shall any single or partial exercise of any power or right hereunder preclude any or full exercise thereof or the exercise of any other right or power.  Each legal holder hereof shall have and may exercise all the rights and powers given to Payee herein.

 

[Signature Page Follows]

 

IN WITNESS WHEREOF, this Note is executed as of the date first written above.

 

U-Swirl, Inc., a Nevada corporation

 

By:                                                                          

Name:                                                                    

Title:                                                                      

 

 

 

FULL RECOURSE SECURED PROMISSORY NOTE

 

 

[NOTE #1:  $150,000.00] [NOTE #2:  $350,000.00]	Denver, Colorado
Principal Sum	January __, 2013

 

FOR VALUE RECEIVED, U-Swirl, Inc., a Nevada corporation (“Maker”), whose address is 1175 American Pacific Suite C, Henderson, NV 89074, promises to pay to the order of Aspen Leaf Yogurt, LLC, a Colorado limited liability company (“Payee”), at Payee’s principal place of business, 265 Turner Drive, Durango, CO 81303, the principal sum of $[NOTE 1: $150,000.00][NOTE 2: $350,000.00].  This Note (i) is issued pursuant to Section 2.4 of the Asset Purchase Agreement dated as of January __, 2013 and entered into by and between Maker and Payee (as in effect from time to time, the “Purchase Agreement”), and (ii) is intended to be the “Recourse Note” relating to the Company Owned Store located in [NOTE #1: San Antonio, Texas][NOTE #2: DeKalb, Illinois] referred to therein.  Each capitalized term that is used and not otherwise defined in this Note has the meaning assigned to that term in the Purchase Agreement.

Interest shall accrue on this Note at the rate of 6% per annum, compounded annually.  This Note shall be paid in monthly installments of [NOTE #1 $2,500.00][NOTE #2: $5,833.34] plus all accrued interest through the date of payment, with the first payment of principal plus accrued interest due January __, 2014 and subsequent payments of principal plus accrued interest due on the __ day of each month thereafter until paid in full (each a “Payment Date”).  In the event that the amount due under this Note is not paid in full on or before each Payment Date, default interest shall accrue as set forth below.

All payments on this Note shall be applied first to the payment of accrued interest and, after all such interest has been paid, any remainder shall be applied to reduction of the principal balance.  All amounts payable hereunder are payable in lawful money of the United States of America.

 

The indebtedness evidenced by this Note may be prepaid by Maker in whole or in part without notice, penalty, or premium at any time; provided that any principal prepayment shall be accompanied by all interest then accrued, if any.   Unless the outstanding balance is paid in full, no prepayment will delay or postpone the next consecutive payment when that payment becomes due.

 

Upon the occurrence of any one or more of the following events of default (each an “Event of Default”), Payee may send a written notice to Maker specifying the Event of Default.  In that situation, if Maker does not cure the Event of Default within the time period specified below for that Event of Default (if any) then, at the option of Payee, the entire unpaid principal sum and all accrued interest shall become immediately due and payable upon notice by Payee to Maker:

 

 

(a)           Failure of Maker to pay any part of the principal or interest when due, which failure is not cured within 10 days.

 

(b)           Any default in the performance of any obligation of Maker hereunder or under any instrument or agreement executed and delivered to secure payment of this Note, including under the Security Agreement (as defined below), which default is not cured within 10 days.

 

(c)           Maker is unable, or admits in writing its inability, to pay its debts, or shall not pay its debts generally as they come due, or shall make any assignment for the benefit of creditors.

 

(d)           Any of the following events occurs with respect to Maker: liquidation or dissolution; merger, consolidation, or other corporate reorganization of Maker or any of its subsidiaries; sale of all or any material portion of Maker’s or any of its subsidiaries’ assets; termination of Maker’s or any subsidiary’s existence; insolvency; business failure; or cessation of the conduct of any substantial part of Maker’s or any of its subsidiaries’ business in the ordinary course.

 

(e)           Maker commences, or there is commenced against Maker, any case, proceeding, or other action seeking to have an order for relief entered with respect to Maker, or to adjudicate Maker as a bankrupt or insolvent, or seeking reorganization, arrangement, adjustment, liquidation, dissolution, or composition under any law relating to bankruptcy, insolvency, reorganization, or relief of debtors or seeking appointment of a receiver, trustee, custodian, or other similar fiduciary, with respect to any part of Maker’s business or property.

 

(f)           Maker defaults on any other debts, obligations, or liabilities to Payee.

 

Maker’s obligations on this Note, which is full recourse, shall be secured by a “Security Agreement” of even date herewith executed by Maker as Debtor and naming Payee as Secured Party.  Notwithstanding anything to the contrary contained herein, the Maker agrees that it shall have full personal liability hereunder and that the Payee may seek recourse from the collateral described in the Security Agreement and any such substitute or additional collateral which may be granted to the Payee from time-to-time, plus any and all other assets of the Maker.

 

In the event any payment on this Note is not paid in full on or before the Payment Date, or in the event of any other Event of Default, all of the outstanding principal sum and any accrued interest then due shall, retroactively from and after the date of this Note, bear interest at the rate of twelve percent (12%) per annum or the maximum amount permitted by applicable law, whichever is greater, thereafter compounded annually at December 31 until paid in full.  Maker hereby agrees to pay reasonable attorneys’ fees and all other reasonable costs and expenses incurred, after an Event of Default, in the enforcement of this Note, the enforcement of any security interest with respect to this Note, and the collection of amounts due here under, whether such enforcement or collection is by court action or otherwise.

 

This Note shall be governed as to validity, interpretation, construction, effect and in all other respects by the laws and decisions of the State of Colorado.  Maker, and any endorsers,

 

 

Maker, and any endorsers, sureties and guarantors, of this Note, jointly and severally waive presentment for payment; and it/they (as applicable) agree to any extension of time of payment and partial payments before, at, or after maturity.  No renewal or extension of this Note, no release or surrender of any security for this Note, no release of any person liable hereon, no delay in the enforcement hereof, and no delay or omission in exercising any right or power here under, shall affect the liability of Maker.  No delay or omission by Payee in exercising any power or right hereunder shall impair such right or power or be construed to be a waiver of any default, nor shall any single or partial exercise of any power or right hereunder preclude any or full exercise thereof or the exercise of any other right or power.  Each legal holder hereof shall have and may exercise all the rights and powers given to Payee herein.

 

[Signature Page Follows]

 

 

 

 

 

 

 

IN WITNESS WHEREOF, this Note is executed as of the date first written above.

 

U-Swirl, Inc., a Nevada corporation

 

By:                                                                          

Name:                                                                    

Title:                                                                      

 

 

 

This Employment Agreement (“Agreement”) is entered into and effective this ___ day of ________, 2013 (the “Effective Date”) between _______________, an individual residing at _______ ____________________________________ (“Employee”); U-Swirl, Inc., a Nevada corporation, located at 1175 American Pacific Suite C, Henderson, Nevada 89074 (“USI”) and U-Swirl, International Inc., a Nevada corporation, located at 1175 American Pacific Suite C, Henderson, Nevada 89074 (“International”).  USI and International may be referred to collectively below as the “Company.”

A.           International is wholly owned by USI.

B.           Employee is currently employed, without an employment agreement, (1) by USI as its Chief Executive Officer and Interim Chief Financial Officer; and (2) by International as its Executive Vice President – Franchise Development. Employee is also a shareholder and director of USI.

C.           USI is negotiating the terms of transactions with two wholly-owned subsidiaries of Rocky Mountain Chocolate Factory, Inc. in which (1) USI will purchase one such subsidiary and the assets of the other subsidiary, and (2) the current shareholders of USI will have their ownership percentage reduced from 100% to 40% (the “RMCF Transactions”).

D.           USI desires to have Employee agree to remain as an employee of the Company for the period of time specified in this Agreement; and as consideration for that commitment by Employee, the Company is willing to commit to paying a severance amount to Employee if his employment is terminated by the Company without Cause (as defined below) or by Employee with Good Reason (as defined below).

5.   Base Salary.

a.           Employee will receive a “Base Salary” as follows:

 

 

__________________________

 

6.   Annual Bonus.

a.           Employee will be entitled to receive an “Annual Bonus” as follows:

1.           For the first Employment Agreement Year, $30,000.00, if the Goal (as defined below) for that year is achieved;

2.           For the second Employment Agreement Year, $33,000.00, if the Goal for that year is achieved; and

b.           If Employee qualifies for an Annual Bonus for an Employment Agreement Year, the Annual Bonus will be paid to Employee within 30 days after completion of the Company’s audit for the applicable fiscal year.  Except as set forth in Section 15 below, in order to be eligible to receive any Annual Bonus Employee must be employed by the Company through the close of business on the date such Annual Bonus is paid.

Fiscal year beginning 3/1/2013 and ending 2/28/2014:                         $712,900.00

Fiscal year beginning 3/1/2014 and ending 2/28/2015:                         $1,120,400.00

8.   Stock Compensation.

a.           Subject to approval by the Board of USI, Employee will receive grants of restricted USI common stock as follows:

1.           Within thirty (30) days following the date of the consummation of the RMCF Transactions, USI will grant to Employee 253,333 unvested shares of USI restricted common stock.  That stock will vest at a rate of 20% per year on each anniversary of the date of consummation the RMCF Transaction in accordance with the Restricted Stock Agreement (as defined below).

2.           If the Goal is achieved for the second Employment Agreement Year, Employee will be granted unvested shares of USI restricted common stock in an amount equal to (a) Employee’s Base Salary payable for the second Employment Agreement Year, divided by (b) the Fair Market Value (as defined below) of a share of common stock of USI on the date of the grant.  That stock will vest at a rate of 20% per year on each anniversary of the date of such grant in accordance with the Restricted Stock Agreement.

b.           For purposes of this Section 8, “Fair Market Value” shall mean: (a) if USI’s common stock is not publicly traded on a national stock exchange on the date of the grant of any such restricted stock in accordance with Section 8(a), fair market value of a share of common stock determined by the USI Board in its reasonable discretion, or (b) if USI’s common

 

c.           Each of the grants of unvested shares of USI restricted common stock under this Section, as applicable, will be made pursuant  and subject to a restricted stock agreement (a “Restricted Stock Agreement”) by and between USI and Employee, which agreement will provide, among other things, that the grants of stock, other than the grant made within thirty (30) days following the consummation of the RMCF Transactions, will be made within 30 days after the end of the applicable fiscal year, in the form of agreement that is attached to this Agreement as Exhibit A.  Except as set forth in Section 15 below, any unvested restricted stock that is outstanding upon termination of Employee’s employment, whether by the Company, the Employee or by reason of the expiration of the Employment Term, will be cancelled without any consideration.

9.   Vacation; Sick Leave; Holidays.

a.           Vacation.   Employee will be entitled to take up to three weeks (120 hours) of paid vacation per Employment Agreement Year.  Up to one week (40 hours) of earned vacation time not used in any Employment Agreement Year can be carried over to the next year.  However, Employee can never have more than four weeks (160) of earned but unused vacation time.  Employee will use his reasonable efforts to schedule vacation periods to minimize disruption of the Company’s business.  Unused vacation days are lost and are not paid upon termination of the Employee’s employment with the Company.

b.           Sick Leave.  Employee will be entitled to 10 days (80 hours) of paid sick leave per Employment Agreement Year for illnesses.  Unused paid sick leave cannot be carried over from one year to the next; and thus, Employee can never have more than 10 days (80 hours) of paid sick leave available.  Unused sick leave days/hours are not paid upon termination of the Employee’s employment with the Company.

c.           Holidays.  Employee will be entitled to the following paid holidays:  New Year’s Day, Memorial Day, July 4th, Labor Day, Thanksgiving Day, and Christmas Day; plus any other days designated by the Company in any year as paid holidays for management-level employees based at the Company’s headquarters.

13.   Confidentiality and Non-Competition.

a.           Confidential Information.  Employee acknowledges that his position with the Company has given and will continue to give him access to Confidential Information that constitutes a valuable asset of the Company. For purposes of this Agreement, “Confidential Information” means confidential or proprietary information and/or techniques of the Company or its subsidiaries or affiliates entrusted to, developed by, or made available to Employee, whether in writing, in computer form, reduced to a tangible form in any medium, or conveyed orally.  Examples of Confidential Information include, without limitation, customers, prospective customers and customer records; trade secrets; methods of operation of stores owned and/or franchised by USI, International, or any other affiliate of USI; information about products, services, or procedures sold in or used in stores owned and/or franchised by USI, International, or any other affiliate of USI; marketing and/or sales plans of USI, International, or any other affiliate of USI; and information regarding the present or future business plans, financial information, or intellectual property of USI, International, or any other affiliate of USI.  Confidential Information does not include information generally known to the public or in the food-service industry through no disclosure or fault of Employee.  Employee acknowledges that the Confidential Information is unique and novel to Employee.

b.           Nondisclosure; No Unauthorized Use.  At all times both during employment of Employee with the Company, and after the employment relationship with the Company has ended for any reason, Employee agrees that he will not, either directly or indirectly, and Employee will not permit any Covered Entity which is controlled by Employee to, either directly or indirectly, (i) divulge, use, disclose (in any way or in any manner, including by posting on the Internet), reproduce, distribute, or reverse engineer or otherwise provide the Confidential Information to any person, firm, corporation, reporter, author, producer or similar person or entity; (ii) take any action that would make available Confidential Information to the general public in any form; (iii) take any action that uses Confidential Information to solicit any customer or prospective customer; or (iv) take any action that uses Confidential Information for solicitation or marketing for any service or product or on Employee’s behalf or on behalf of any entity other than the Company or its subsidiaries or affiliates with which Employee may become associated, except (A) as required in connection with the performance of such Employee’s duties to the Company, (B) as required to be included in any report, statement or testimony requested by any municipal, state or national regulatory body having jurisdiction over Employee or any Covered Entity which is controlled by Employee, (C) as required in response to any summons or subpoena or in connection with any litigation, (D) to the extent necessary in order to comply with any law, order, regulation, ruling or governmental request applicable to Employee or any Covered Entity which is controlled by Employee, (E) as required in connection with an audit by any taxing authority, or (F) as permitted by the express written consent of the Board of Directors.  In the event that Employee or any such Covered Entity which is controlled by Employee is required to disclose Confidential Information pursuant to the foregoing exceptions, Employee shall promptly notify the Company of such pending disclosure and assist the Company (at the Company’s expense) in seeking a protective order or in objecting to such request, summons or subpoena with regard to the Confidential Information.  If the Company does not obtain such relief prior to the time that Employee (or such

 

b.           Unauthorized Disclosure or Use.   Employee will promptly advise the Company of any unauthorized disclosure or use, or suspected unauthorized disclosure or use, of the Confidential Information by Employee or any other person or entity that is known to Employee.

c.           Delivery of Information to the Company.  If Employee ceases to work for the Company for any reason, Employee shall (i) return to the Company all Confidential Information (and will not keep in his possession, recreate or deliver to anyone else) in any form or media and all copies thereof, (ii) return all Confidential Information from any computers Employee owns or uses outside the Company and delete all Confidential Information after returning such information to the Company from any computers Employee owns or uses outside the Company, and (iii) participate in an exit interview for the purpose of ensuring that the Confidential Information and business relationships will not be put at risk in any new position Employee may assume.

d.           Non-Competition.

1.           Covenant Not to Compete.  During the Employment Term and for a period of two years following the termination of Employee’s employment with the Company, for whatever reason, whether by Employee or the Company, Employee agrees that he will not either directly or indirectly, individually or by or through any Covered Entity, whether for consideration or otherwise:  (A) form or assist others in forming, be employed by, perform services for, become a consultant or independent contractor for, invest in (whether through equity or debt securities), assist (financially or otherwise), or lend Employee’s name, counsel or assistance to any entity that is In Competition (as defined below) with the Company, or (B) own, directly or indirectly, any interest in or become an employee, officer, director, member or partner of, or participant in or consultant or independent contractor to any entity that is In Competition with the Company.  Despite the language above, this provision does not restrict Employee from owning securities in business In Competition with the Company if the securities are listed on a stock exchange or publicly traded on the over-the-counter market and represent not more than 2% of the total securities of that entity issued and outstanding.

3.           “In Competition” Defined.  In this Agreement, “In Competition” means the franchising or operation of a business offering primarily yogurt or any kind of frozen dessert products for sale or any other business in which the Company or any of its subsidiaries or affiliates is engaged during the Employment Term, anywhere in the United States or any other jurisdiction where there is a store or other outlet owned and/or operated, or franchised, by USI,

 

e.           Non-Diversion of Business.  For a period of two years after the Effective Date of this Agreement, Employee hereby covenants and agrees that Employee shall not either directly or indirectly, individually or by or through any Covered Entity, whether for consideration or otherwise:  (A) solicit or accept business from any customer or prospective customer, in each case, for the purpose of providing goods or services In Competition with the Company or any subsidiary or affiliate of the Company or solicit or induce any customer to terminate, reduce or alter in a manner adverse to the business of the Company or any subsidiary or affiliate, any existing business arrangement or agreement with the Company or any subsidiary or affiliate.

f.           Non-Solicitation of Employees.  Employee agrees that Employee will not solicit, induce, or attempt to induce, either directly or indirectly, individually or by or through any Covered Entity, any employee or independent contractor of USI, International, or any other affiliate of USI (if any) to terminate his or her employment with USI, International, or any other affiliate of USI, or to be employed or engaged as an independent contractor by any individual or entity other than USI, International, or any other affiliate of USI, either (1) during the term of Employee’s employment with the Company; or (2) or for a period of one year after the termination of Employee’s employment with the Company for any reason.  During that same time period, Employee will not, either directly or indirectly, individually or by or through any Covered Entity, hire as an employee or engage as an independent contractor any person who was an employee or independent contractor of USI, International, or any other affiliate of USI during the prior twelve months.

g.           Acknowledgements; “Blue Pencil” Provision.  Employee acknowledges that the time period of the noncompetition and non-diversion covenants in this Section 13 are limited, that the prohibited actions are reasonably limited, and that geographic area of the noncompetition restrictions are reasonable and necessary to protect the Company, and not inconsistent with Nevada law.  Despite the language above, the parties agree that in the event that any provision or term of Section 13, or any word, phrase, clause, sentence or other portion thereof (including, without limitation, the geographic and temporal restrictions and provisions contained in Section 13) is held to be unenforceable or invalid for any reason, such provision or portion thereof will be modified or deleted in such a manner as to be effective for the maximum period of time for which it/they may be enforceable and over the maximum geographical area as to which it/they may be enforceable and to the maximum extent in all other respects as to which it/they may be enforceable.  Such modified restriction(s) shall be enforced by the court or adjudicator.  In the event that modification is not possible, because each of Employee’s obligations in Section 13 is a separate and independent covenant, any unenforceable obligation shall be severed and all remaining obligations shall be enforced..

h.           Remedies.  Employee acknowledges that Employee’s expertise is of a special and unique character which gives this expertise a particular value, and that a breach of Section 13 by Employee will cause serious and potentially irreparable harm to the Company and its subsidiaries and affiliates.  Employee therefore acknowledges that a breach of Section 13 by Employee cannot be adequately compensated in an action for damages at law, and equitable relief would be necessary to protect the Company and its subsidiaries and affiliates from a violation of this Agreement and from the harm which this Agreement is intended to prevent.  By reason thereof, Employee acknowledges that the Company and its subsidiaries and affiliates are entitled, in addition to any other remedies it may have under this Agreement or otherwise, to

 

14.   Ownership of Intellectual Property.

a.           References to the Company.  In this Section 14, references to the “Company” mean the entity that is the owner of the particular item of intellectual property, or the entity to which Employee’s rights are being transferred; which is either USI or International, as applicable, unless joint ownership occurs, in which case the “Company” means both entities.

b.           The Company is Sole Owner.  Employee understands and agrees that the Company, and not Employee, will be the owner of any idea, invention, technique, modification, process, or improvement (whether patentable or not), any trademark or service mark (whether registerable or not), and any work of authorship (whether copyrightable or not) created, conceived, or developed by Employee, either solely or in conjunction with others: (1) during the Employment Term as part of Employee’s duties for the Company, on Company time, and/or using equipment, supplies, or systems owned by the Company; (2) during a period that includes a portion of the Employment Term and that relates in any way to, or is useful in any manner in, the business then being conducted or proposed to be conducted by the Company, and/or (3) following termination of Employee's employment with the Company, that is based upon or uses any confidential information of the Company (collectively, “Employee’s Creations”).

 

c.           Work Made for Hire.  Employee acknowledges and agrees that all of Employee's Creations constituting writing, works of authorship, specially commissioned works, and any other works created, conceived, or developed by Employee that are copyrightable are each a “work made for hire” as that term is defined under U. S. copyright law; and are the sole property of the Company. If, however, it is determined that any such works are not a work made for hire, Employee hereby sells, assigns, and transfers to the Company, its successors, and assigns, for no additional consideration, all of Employee’s right, title, and interest in any copyrights in the works or any portion thereof; and all the profit, benefit, and advantage that arises or may arise from publishing, copying, printing, playing, performing, selling, renting, or otherwise vending the works during the entire term of any such copyright.

d.           Transfer of Other Rights.  Employee hereby sells, assigns, and transfers to the Company, its successors, and assigns, for no additional consideration, all of Employee’s right, title, and interest in any of Employee’s Creations that are an idea, invention, technique, modification, process, or improvement (whether patentable or not), or a trademark or service mark (whether registerable or not).

e.           Obligations of Employee.  Without limiting the generality of the foregoing, Employee agrees to do all of the following:

1.           Disclose to the Company in writing any Employee’s Creation.

2.           Assign to the Company or to a party designated by the Company, at the Company's request and without additional compensation, all of Employee's rights (including all

 

3.           Execute and deliver to the Company such applications, assignments, and other documents as the Company may request in order to apply for and obtain in the United States and any foreign jurisdictions patents, copyright registrations, trademark registrations, or other registrations with respect to any Employee’s Creation.

4.           Sign all other papers necessary to carry out the above obligations.

5.           Give testimony and render any other assistance, but without expense to Employee, in support of the Company's rights to any Employee’s Creation.

15.   Termination.

a.           Termination of Employee’s employment with Company terminates the Employment Term, and termination of the Employment Term terminates this Agreement.  All vested and determinable compensation earned by Employee as of the date of termination of employment will be paid to Employee in accordance with Nevada law.

b.           Either the Company or Employee may terminate Employee’s employment with the Company prior to the expiration of the Employment Term as follows:

1.           With Cause.  The Company may terminate Employee’s employment at any time with Cause (as defined below).  If the Company terminates Employee’s employment with Cause, Employee will have no right to receive compensation or other benefits for any period after termination, except as may be required by law.  Termination with “Cause” means termination for any one or more of the following: (a) Employee’s fraud, dishonesty, illegal conduct, or theft or embezzlement of the Company’s property; (b) Employees willful or reckless misconduct; (c) breach of this Agreement, which if the breach is curable is not cured by Employee within 30 days; (d) breach of fiduciary duties involving personal benefit; (e) willful misfeasance or nonfeasance by Employee of his assigned duties, which includes not following the reasonable written direction of a Board or Employee’s direct supervisor, or repeated intentional refusal by Employee to perform his assigned duties; and/or (f) conviction of a felony or conduct of any action of moral turpitude.  In that situation, the Company will notify Employee in writing, which will specify in reasonable detail the basis for such termination.  At the time of termination with Cause any unvested USI stock granted to Employee will be forfeited by Employee.

2.           Without Cause.  The Company will have the right at any time to terminate Employee’s employment without Cause by providing Employee with written notice of the termination, specifying the date of termination.  If the Company terminates Employee’s employment without Cause and subject to Section 15.e., Employee will receive severance pay (in addition to the payments contemplated by Section 15.a.) in an amount equal to two (2) years of Employee’s Base Salary as of the date of termination; except that if less than two (2) years is remaining in the term of this Agreement, the severance pay will be Base Salary payable through the end of the term of this Agreement (as determined on the date of termination).  In addition, if the Goal to qualify for an Annual Bonus for the current Employment Agreement Year has not been achieved, but as of the date of termination of employment the Goal is projected to be achieved based on the financial performance of the Company for the complete months that have elapsed in the current Employment Agreement Year (the “Prorated Goal”), Employee will

 

3.           Good Reason.  Employee may terminate his employment with “Good Reason” upon written notice to the Company if any of the following events occur (i) the Company materially breaches this Agreement or (ii) Employee’s job duties with USI and/or International are materially reduced from Employee’s duties as of the Effective Date of this Agreement.   Subject to Section 15.e., f Employee terminates his employment with the Company for Good Reason, the Company will be obligated to pay severance to Employee in the amount as determined if, and at the same time as if, a termination by the Company without Cause had occurred.  Additionally, all unvested USI stock granted to Employee pursuant to Section 8 of this Agreement will ivest on the first business day immediately following the Release Effective Date.  Notwithstanding the foregoing, termination of employment by Employee will not be for Good Reason unless (x) Employee notifies the Company in writing of the existence of the condition which Employee believes constitutes Good Reason within thirty (30) days of the initial existence of such condition (which notice specifically identifies such condition), (y) the Company fails to remedy such condition within thirty (30) days after the date on which it receives such notice (the "Remedial Period"), and (z) Employee actually terminates employment within thirty (30) days after the expiration of the Remedial Period and before the Company remedies such condition.  If Employee terminates employment before the expiration of the Remedial Period or after the Company remedies the condition, then Employee 's termination will not be considered to be for Good Reason.

4.           Without Good Reason.  Employee may terminate his employment without Good Reason at any time.  Employee agrees, however, that he will give the Boards at least three weeks prior notice of a termination without Good Reason.  If Employee terminates his employment without Good Reason, (1) he will not receive any severance payment or benefits, and (2) any unvested USI stock granted to Employee will be cancelled without any consideration.

c.           Disability of Employee.  Except if prohibited by any applicable laws, the Company may terminate Employee’s employment if Employee is unable substantially to perform his duties and responsibilities under this Agreement to the full extent required by the Boards by reason of illness, injury, or incapacity for three consecutive months, or for more than six months in the aggregate during any period of 12 calendar months.  In addition to his earned compensation as of the date of termination of his employment, subject to Section 15.e., the Company will continue to pay Employee his Base Salary through the end of the month in which the Employee’s employment is terminated, but the amount the Company will be required to pay Employee for the period after termination of his employment will be reduced by the amount of (1) any disability payments received by him under any employee benefits plan, and (2) any amounts owed by him to the Company.  In addition, the Company will pay to Employee, on the first business day immediately following the Release Effective Date, the prorated Annual Bonus if Employee has achieved the Prorated Goal for the current fiscal year; and all unvested USI

 

d.           Death of Employee.  This Agreement and Employment Term will automatically terminate in the event of Employee’s death.  In that situation, subject to Section 15.e., the Company will pay to Employee’s executors, legal representatives or administrators, as applicable, an amount equal to the installment of his Base Salary for the month in which he dies, and the prorated Annual Bonus if Employee had achieved the Prorated Goal for the relevant fiscal year on the first business day immediately following the Release Effective Date.  All unvested USI stock granted to Employee pursuant to Section 8 of this Agreement will vest on the first business day immediately following the Release Effective Date.  In addition, Employee’s estate will be entitled to any other employee benefits of Employee in accordance with applicable plans and programs of the Company.  The Company will have no further liability or obligation under this Agreement to his executors, legal representatives, administrators, heirs or assigns or any other person claiming under or through him, except as otherwise specifically provided in this Agreement.

e.           Employee’s receipt of any payments or other benefits in connection with Employee’s termination of employment pursuant to Section 15.b.2., 15.b.3., 15.c., or 15.d., as the case may be, is subject to Employee (or in the case of Employee’s death, Employee’s executor) signing, and allowing to become effective and not revoking thereafter, a general release and waiver of claims, which release and waiver shall be in a form acceptable to the Company, within sixty (60) days following the date of termination of employment (the "Release Effective Date").  In the event that Employee does not sign and allow to become effective such a release and waiver of claims by the Release Effective Date, Employee will not be entitled to receive any payments or other benefits contemplated by this Section 15 (other than those payments and benefits contemplated in Section 15.a.).

 

a.           if at the time Employee's employment hereunder terminates, Employee is a "specified employee," as defined in Treasury Regulation Section 1.409A-1(i), then to the extent necessary to avoid subjecting Employee to the imposition of any additional tax under Section 409A, any and all amounts payable under this Agreement on account of such termination of employment that would (but for this provision) be payable within six (6) months following the date of termination, shall instead be paid in a lump sum on the first day of the seventh month following the date on which Executive's employment terminates or, if earlier, upon Executive's death;

 

b.           a termination of employment shall not be deemed to have occurred for purposes of any provision of this Agreement providing for the payment of amounts or benefits upon or following a termination of employment unless such termination is also a "separation from service," as defined in Treasury Regulation Section 1.409A-1(h) after giving effect to the presumptions contained therein, and, for purposes of any such provision of this Agreement, references to "terminate," "termination," "termination of employment" and like terms shall mean separation from service; and

 

c.           each payment made under this Agreement shall be treated as a separate payment and the right to a series of installment payments under this Agreement shall be treated as a right to a series of separate payments.

 

Notwithstanding anything to the contrary herein, the Company makes no representations or warranties to Employee with respect to any tax, economic or legal consequences of this Agreement or any payments or other benefits provided hereunder, including without limitation under Section 409A, and no provision of the Agreement shall be interpreted or construed to transfer any liability for failure to comply with Section 409A or any other legal requirement from Employee or any other individual to the Company or any of its subsidiaries or affiliates.  Employee, by executing this Agreement, shall be deemed to have waived any claim against the Company and its affiliates and subsidiaries and affiliates with respect to any such tax, economic or legal consequences.

18.   Miscellaneous.

a.           Survival.  The confidentiality covenant, the post termination covenant of non-competition, the non-solicitation covenant, and the covenants concerning Employee’s Creations in this Agreement, and any obligations of the Company that are to be fulfilled after termination of this Agreement, will survive termination of this Agreement.

b.           Waiver.  The waiver by the Company or Employee of any breach of any provision of this Agreement will not operate or be construed as a waiver by the Company or Employee of any subsequent breach by the Company or Employee, respectively.

c.           Entire Agreement.  All prior negotiations and agreements between the parties to this Agreement with respect its subject matter are superseded by this Agreement; and there are

 

d.           Amendment.  This Agreement may be modified only by written instrument signed by Employee and on behalf of the Company.

e.           Attorneys’ Fees; Costs.  The prevailing party in any suit or action arising out of or related to this Agreement will be entitled to recover from the other party its attorney fees, costs, and expenses in the amount that the court determines reasonable in both the trial court and appellate courts (as applicable).

f.           Governing Law; Forum; Waiver of Jury Trial.  This Agreement is governed by the laws of the State of Nevada.  The parties agree that any appropriate state or federal court located in Nevada has exclusive jurisdiction over any case or controversy arising under or in connection with this Agreement and is the proper forum in which to adjudicate the case or controversy.  EXCEPT IF PROHIBITED BY APPLICABLE LAW, EMPLOYEE AND THE COMPANY EACH KNOWINGLY, VOLUNTARILY, AND WILLINGLY WAIVE THE RIGHT TO TRIAL BY JURY IN ANY ACTION OR PROCEEDING ARISING OUT OF, OR RELATED TO, THIS AGREEMENT.

g.           Counsel; No Reliance.   Employee and the Company each represent that he/it has consulted with its own legal counsel concerning this Agreement; or that he/it had an opportunity to consult with its own legal counsel concerning this Agreement, but voluntarily declined to do so.  Each party represents that he/it has not relied upon statements or representations of the other party except as set forth in this Agreement.

h.           Interpretation.  Employee and the Company each agree that this Agreement may not be construed or interpreted against any party on the grounds of authorship.

i.           Partial Invalidity.  If a court of competent jurisdiction makes a final determination that any provision of this Agreement is invalid or unenforceable, that provision will be modified by the court so as to best continue to carry out the intent of the parties, or severed from this Agreement if it cannot be so modified; and the remaining terms and provisions remain unimpaired.

j.           Headings.  The headings in this Agreement are for purposes of identification only and will not be considered in construing this Agreement.

k.           Counterparts. This Agreement may be executed in counterparts, each of which will be deemed to be an original and all of which when taken together will constitute a single agreement.

U-Swirl, Inc.

EMPLOYEE:

By:

Print Name:                                                                               

Title:                                                                                         

By:                                                                                           

Print Name:                                                                           

Title:                                                                                      

 

This Bill of Sale and Assignment (this “Bill of Sale”) is entered into as of January [__], 2013, and pursuant to that certain Asset Purchase Agreement (the “Purchase Agreement”), dated as the date hereof, by and between U-Swirl, Inc., a Nevada corporation (“Buyer”), and Aspen Leaf Yogurt, LLC, a Colorado limited liability company (“Seller”), for and in consideration of good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, Seller does hereby grant, bargain, sell, convey, transfer, assign, set over and deliver to Buyer, and its successors and assigns, all of their right, title, and interest in and to all of the Acquired Assets.

 

Nothing contained in this Bill of Sale is intended to provide any rights to Buyer or Seller beyond those rights expressly provided to Buyer or Seller in the Purchase Agreement.  Nothing contained in this Bill of Sale is intended to impose any obligations or liabilities on Buyer or Seller beyond those obligations and liabilities expressly imposed on Buyer or Seller in the Purchase Agreement.  Nothing contained in this Bill of Sale is intended to expand or limit any of the rights or remedies available to Buyer or Seller under the Purchase Agreement.

 

Buyer and Seller hereby agree to execute and deliver to the other such further instruments of transfer, assignment, delegation and assumption, and take such other action as either Buyer or Seller may reasonably request, to more effectively transfer to, assign to, and vest in Buyer each of the Acquired Assets.

 

This Bill of Sale may be executed in one or more counterparts, all of which shall be considered one and the same agreement and shall become effective when one or more counterparts have been signed by each of the parties hereto and delivered to the other parties hereto, it being understood that all parties hereto need not sign the same counterpart. The parties hereto may sign this Bill of Sale in the original, by facsimile, by .PDF, or by any other generally acceptable electronic means.

 

This Bill of Sale (i) shall not be assigned by operation of law or otherwise except as otherwise specifically provided, except Buyer may assign this Bill of Sale to any affiliate by operation of law or otherwise, and (ii) shall be binding upon and inure to the benefit of the parties hereto and their respective successors and permitted assigns.

 

Capitalized terms used herein and not otherwise defined herein shall have the respective meanings assigned to such terms in the Purchase Agreement.

 

[Signature Page Follows]

 

IN WITNESS WHEREOF, the undersigned have caused this Bill of Sale to be duly executed and delivered as of the day and year first written above.

 

BUYER:

 

U-SWIRL, INC.

 

By:                                                               

Name:                                                         

Title:                                                          

 

SELLER:

 

ASPEN LEAF YOGURT, LLC

 

By:                                                               

Name: Bryan J. Merryman

Title: Managing Member

 

 

 

 

THIS INVESTOR RIGHTS AGREEMENT is made as of the [__] day of _____, 201_, by and between U-Swirl, Inc., a Nevada corporation (the “Company”), and  [Rocky Mountain Chocolate Factory, Inc., a Colorado corporation][Aspen Leaf Yogurt, LLC, a Colorado limited liability company] (the “Investor”).

 

 

WHEREAS, the Investor is party to that certain [Membership Interest Purchase Agreement][Asset Purchase Agreement] of even date herewith between the Company and the Investor (the “Purchase Agreement”), under which certain of the Company’s and the Investor’s obligations are conditioned upon the execution and delivery of this Agreement by the Investor and the Company.

 

NOW, THEREFORE, the Investor and the Company hereby agree as follows:

 

Definitions.  Capitalized terms used herein but not otherwise defined herein shall have the meanings ascribed to such terms in the Purchase Agreement.  For purposes of this Agreement:

 

 

 

 

 

 

 

 

 

1.9.  “Holder” means any holder of Registrable Securities.

 

 

1.11.  “Liquidation Event” means each of the following events:

 

(a)           a merger or consolidation in which

 

                           (i)           the Company is a constituent party or

 

                           (ii)         a subsidiary of the Company is a constituent party and the Company issues shares of its capital stock pursuant to such merger or consolidation,

 

except any such merger or consolidation involving the Company or a subsidiary in which the shares of capital stock of the Company outstanding immediately prior to such merger or consolidation continue to represent, or are converted into or exchanged for shares of capital stock that represent, immediately following such merger or consolidation, at least a majority, by voting power, of the capital stock of (1) the surviving or resulting corporation or (2) if the surviving or resulting corporation is a wholly owned subsidiary of another corporation immediately following such merger or consolidation, the parent corporation of such surviving or resulting corporation; or

 

(b)                      the sale, lease, transfer, exclusive license or other disposition, in a single transaction or series of related transactions, by the Company or any subsidiary of the Company of all or substantially all the assets of the Company and its subsidiaries taken as a whole, or the sale or disposition (whether by merger or otherwise) of one or more subsidiaries of the Company if substantially all of the assets of the Company and its subsidiaries taken as a whole are held by such subsidiary or subsidiaries, except where such sale, lease, transfer, exclusive license or other disposition is to a wholly owned subsidiary of the Company.

 

 

 

 

 

1.16.  “Restricted Securities” means the securities of the Company required to bear the legend set forth in Subsection 2.11(a) hereof.

 

1.17.  “SEC” means the Securities and Exchange Commission.

 

 

 

 

 

 

Registration Rights.  The Company covenants and agrees as follows:

 

Demand Registration.

 

Form S-1 Demand.  If at any time the Company receives a request from the Investor, then the Company shall as soon as practicable, and in any event within sixty (60) days after the date such request is given by the Investor, file a Form S-1 registration statement under the Securities Act covering all Registrable Securities that the Investor requested to be registered, subject to the limitations of Subsection 2.1(c), Subsection 2.1(d) and Subsection 2.3.

 

Form S-3 Demand.  If at any time when it is eligible to use a Form S-3 registration statement, the Company receives a request from the Investor, the Company shall as soon as practicable, and in any event within thirty (30) days after the date such request is given by the Investor, file a Form S-3 registration statement under the Securities Act covering all Registrable Securities requested to be included by the Investor, subject to the limitations of Subsection 2.1(c), Subsection 2.1(d) and Subsection 2.3.

 

Notwithstanding the foregoing obligations, if the Company furnishes to the Investor a certificate signed by the Company’s chief executive officer stating that in the good faith judgment of the Company’s Board of Directors it would be materially detrimental to the Company and its stockholders for such registration statement to either become effective or remain effective for as long as such registration statement otherwise would be required to remain effective, because such action would (i) materially interfere with a significant acquisition, corporate reorganization, or other similar transaction involving the Company; (ii) require premature disclosure of material information that the Company has a bona fide business purpose for preserving as confidential; or (iii) render the Company unable to comply with requirements under the Securities Act or Exchange Act, then the Company shall have the right to defer taking action with respect to such filing for a period of not more than sixty (60) days after the request of the Investor is given; provided, however, that the Company may not invoke this right more than once in any twelve (12) month period; and provided further that the Company shall not register any securities for its own account or that of any other stockholder during such thirty (30) day period other than an Excluded Registration.

 

The Company shall not be obligated to effect, or to take any action to effect, any registration pursuant to Subsection 2.1(a); (i) during the period that is sixty (60) days before the Company’s good faith estimate of the date of filing of, and ending on a date that is one hundred eighty (180) days after the effective date of, a Company-initiated registration, provided, that the Company is actively employing in good faith commercially reasonable efforts to cause such registration statement to become effective; or (ii) if the Investor proposes to dispose of

 

 

Company Registration.  If the Company proposes to register (including, for this purpose, a registration effected by the Company for stockholders other than the Investor) any of its securities under the Securities Act in connection with the public offering of such securities solely for cash (other than in an Excluded Registration), the Company shall, at such time, promptly give the Investor notice of such registration.  Upon the request of the Investor given within ten (10) days after such notice is given by the Company, the Company shall, subject to the provisions of Subsection 2.3, cause to be registered all of the Registrable Securities that the Investor has requested to be included in such registration.  The Company shall have the right to terminate or withdraw any registration initiated by it under this Subsection 2.2 before the effective date of such registration, whether or not any Holder has elected to include Registrable Securities in such registration.  The expenses (other than Selling Expenses) of such withdrawn registration shall be borne by the Company in accordance with Subsection 2.6.

 

Underwriting Requirements.

 

If, pursuant to Subsection 2.1, the Investor intends to distribute the Registrable Securities covered by its request by means of an underwriting, it shall so advise the Company as a part of its request made pursuant to Subsection 2.1.  The underwriter(s) will be selected by the Investor, subject only to the reasonable approval of the Company.

 

In connection with any offering involving an underwriting of shares of the Company’s capital stock pursuant to Subsection 2.2, the Company shall not be required to include any of the Investor’s Registrable Securities in such underwriting unless the Investor accepts the terms of the underwriting as agreed upon between the Company and its underwriters, and then only in such quantity as the underwriters in their sole discretion determine will not jeopardize the success of the offering by the Company.  If the total number of securities, including Registrable Securities, requested by stockholders to be included in such offering exceeds the number of securities to be sold (other than by the Company) that the underwriters in their reasonable discretion determine is compatible with the success of the offering, then the Company shall be required to include in the offering only that number of such securities, including Registrable Securities, which the underwriters and the Company in their sole discretion determine will not jeopardize the success of the offering.  Notwithstanding the foregoing, in no event shall (i) the number of Registrable Securities included in the offering be reduced unless all other securities (other than securities to be sold by the Company) are first entirely excluded from

 

 

For purposes of Subsection 2.1, a registration shall not be counted as “effected” if fewer than fifty percent (50%) of the total number of Registrable Securities that the Investor has requested to be included in such registration statement are actually included.

 

Obligations of the Company.  Whenever required under this Section 2 to effect the registration of any Registrable Securities, the Company shall, as expeditiously as reasonably possible:

 

prepare and file with the SEC a registration statement with respect to such Registrable Securities and use its commercially reasonable efforts to cause such registration statement to become effective and, upon the request of the Investor, keep such registration statement effective for a period of up to one hundred twenty (120) days or, if earlier, until the distribution contemplated in the registration statement has been completed; provided, however, that (i) such one hundred twenty (120) day period shall be extended for a period of time equal to the period the Investor refrains, at the request of an underwriter of Common Stock (or other securities) of the Company, from selling any securities included in such registration, and (ii) in the case of any registration of Registrable Securities on Form S-3 that are intended to be offered on a continuous or delayed basis, subject to compliance with applicable SEC rules, such one hundred twenty (120) day period shall be extended for up to three hundred sixty-five (365) days, if necessary, to keep the registration statement effective until all such Registrable Securities are sold;

 

prepare and file with the SEC such amendments and supplements to such registration statement, and the prospectus used in connection with such registration statement, as may be necessary to comply with the Securities Act in order to enable the disposition of all securities covered by such registration statement;

 

furnish to the Investor such numbers of copies of a prospectus, including a preliminary prospectus, as required by the Securities Act, and such other documents as the Investor may reasonably request in order to facilitate their disposition of their Registrable Securities;

 

use its commercially reasonable efforts to register and qualify the securities covered by such registration statement under such other securities or blue-sky laws of such jurisdictions as shall be reasonably requested by the Investor; provided that the Company shall not be required to qualify to do business or to file a general consent to service of process in any such states or jurisdictions, unless the Company is already subject to service in such jurisdiction and except as may be required by the Securities Act;

 

in the event of any underwritten public offering, enter into and perform its obligations under an underwriting agreement, in usual and customary form, with the underwriter(s) of such offering;

 

use its commercially reasonable efforts to cause all such Registrable Securities covered by such registration statement to be listed on a national securities exchange or trading system and each securities exchange and trading system (if any) on which similar securities issued by the Company are then listed;

 

provide a transfer agent and registrar for all Registrable Securities registered pursuant to this Agreement and provide a CUSIP number for all such Registrable Securities, in each case not later than the effective date of such registration;

 

promptly make available for inspection by the Investor, any underwriter(s) participating in any disposition pursuant to such registration statement, and any attorney or accountant or other agent retained by any such underwriter or selected by the Investor, all financial and other records, pertinent corporate documents, and properties of the Company, and cause the Company’s officers, directors, employees, and independent accountants to supply all information reasonably requested by any such seller, underwriter, attorney, accountant, or agent, in each case, as necessary or advisable to verify the accuracy of the information in such registration statement and to conduct appropriate due diligence in connection therewith;

 

notify the Investor, promptly after the Company receives notice thereof, of the time when such registration statement has been declared effective or a supplement to any prospectus forming a part of such registration statement has been filed; and

 

after such registration statement becomes effective, notify the Investor of any request by the SEC that the Company amend or supplement such registration statement or prospectus.

 

In addition, the Company shall ensure that, at all times after any registration statement covering a public offering of securities of the Company under the Securities Act shall have become effective, its insider trading policy shall provide that the Company’s directors may implement a trading program under Rule 10b5-1 of the Exchange Act.

 

Furnish Information.  It shall be a condition precedent to the obligations of the Company to take any action pursuant to this Section 2 with respect to the Registrable Securities of the Investor that the Investor shall furnish to the Company such information regarding itself, the Registrable Securities held by it, and the intended method of disposition of such securities as is reasonably required to effect the registration of the Investor’s Registrable Securities.

 

Expenses of Registration.  All expenses (other than Selling Expenses) incurred in connection with registrations, filings, or qualifications pursuant to Section 2, including all registration, filing, and qualification fees; printers’ and accounting fees; fees and disbursements of counsel for the Company; and the reasonable fees and disbursements of one counsel for the Investor (“Investor Counsel”), shall be borne and paid by the Company; provided, however, that the Company shall not be required to pay for any expenses of any registration proceeding begun pursuant to Subsection 2.1 if the registration request is subsequently withdrawn at the request of the Investor of the Registrable Securities to be registered; provided further that if, at the time of such withdrawal, the Investor shall have learned of a material adverse change in the condition, business, or prospects of the Company from that known to the Investor at the time of its request

 

 

Delay of Registration.  The Investor shall not have any right to obtain or seek an injunction restraining or otherwise delaying any registration pursuant to this Agreement as the result of any controversy that might arise with respect to the interpretation or implementation of this Section 2.

 

Indemnification.  If any Registrable Securities are included in a registration statement under this Section 2:

 

To the extent permitted by law, the Company will indemnify and hold harmless the Investor, and the partners, members, officers, directors, and stockholders of the Investor; legal counsel and accountants for the Investor; any underwriter (as defined in the Securities Act) for the Investor; and each Person, if any, who controls the Investor or underwriter within the meaning of the Securities Act or the Exchange Act, against any Damages, and the Company will pay to the Investor, underwriter, controlling Person, or other aforementioned Person any legal or other expenses reasonably incurred thereby in connection with investigating or defending any claim or proceeding from which Damages may result, as such expenses are incurred; provided, however, that the indemnity agreement contained in this Subsection 2.8(a) shall not apply to amounts paid in settlement of any such claim or proceeding if such settlement is effected without the consent of the Company, which consent shall not be unreasonably withheld, nor shall the Company be liable for any Damages to the extent that they arise out of or are based upon actions or omissions made in reliance upon and in conformity with written information furnished by or on behalf of the Investor, underwriter, controlling Person, or other aforementioned Person expressly for use in connection with such registration.

 

To the extent permitted by law, the Investor will indemnify and hold harmless the Company, and each of its directors, each of its officers who has signed the registration statement, each Person (if any), who controls the Company within the meaning of the Securities Act, legal counsel and accountants for the Company, and any underwriter (as defined in the Securities Act), against any Damages, in each case only to the extent that such Damages arise out of or are based upon actions or omissions made in reliance upon and in conformity with written information furnished by or on behalf of the Investor expressly for use in connection with such registration; and the Investor will pay to the Company and each other aforementioned Person any legal or other expenses reasonably incurred thereby in connection with investigating or defending any claim or proceeding from which Damages may result, as such expenses are incurred; provided, however, that the indemnity agreement contained in this Subsection 2.8(b) shall not apply to amounts paid in settlement of any such claim or proceeding if such settlement is effected without the consent of the Investor, which consent shall not be unreasonably withheld; and provided further that in no event shall the aggregate amounts payable by the Investor by way of indemnity or contribution under Subsections 2.8(b) and 2.8(d) exceed the proceeds from the offering received by the Investor (net of any Selling Expenses paid by the Investor), except in the case of fraud or willful misconduct by the Investor.

 

Promptly after receipt by an indemnified party under this Subsection 2.8 of notice of the commencement of any action (including any governmental action) for which a

 

 

To provide for just and equitable contribution to joint liability under the Securities Act in any case in which either (i) any party otherwise entitled to indemnification hereunder makes a claim for indemnification pursuant to this Subsection 2.8 but it is judicially determined (by the entry of a final judgment or decree by a court of competent jurisdiction and the expiration of time to appeal or the denial of the last right of appeal) that such indemnification may not be enforced in such case, notwithstanding the fact that this Subsection 2.8 provides for indemnification in such case, or (ii) contribution under the Securities Act may be required on the part of any party hereto for which indemnification is provided under this Subsection 2.8, then, and in each such case, such parties will contribute to the aggregate losses, claims, damages, liabilities, or expenses to which they may be subject (after contribution from others) in such proportion as is appropriate to reflect the relative fault of each of the indemnifying party and the indemnified party in connection with the statements, omissions, or other actions that resulted in such loss, claim, damage, liability, or expense, as well as to reflect any other relevant equitable considerations.  The relative fault of the indemnifying party and of the indemnified party shall be determined by reference to, among other things, whether the untrue or allegedly untrue statement of a material fact, or the omission or alleged omission of a material fact, relates to information supplied by the indemnifying party or by the indemnified party and the parties’ relative intent, knowledge, access to information, and opportunity to correct or prevent such statement or omission; provided, however, that, in any such case, (x) no Holder will be required to contribute any amount in excess of the public offering price of all such Registrable Securities offered and sold by such Holder pursuant to such registration statement, and (y) no Person guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of the Securities Act) will be entitled to contribution from any Person who was not guilty of such fraudulent misrepresentation; and provided further that in no event shall the Investor’s liability pursuant to this Subsection 2.8(d), when combined with the amounts paid or payable by the Investor pursuant to Subsection 2.8(b), exceed the proceeds from the offering received by the Investor (net of any Selling Expenses paid by the Investor), except in the case of willful misconduct or fraud by the Investor.

 

Notwithstanding the foregoing, to the extent that the provisions on indemnification and contribution contained in the underwriting agreement entered into in connection with the underwritten public offering are in conflict with the foregoing provisions, the provisions in the underwriting agreement shall control.

 

Unless otherwise superseded by an underwriting agreement entered into in connection with the underwritten public offering, the obligations of the Company and the Investor under this Subsection 2.8 shall survive the completion of any offering of Registrable Securities in a registration under this Section 2, and otherwise shall survive the termination of this Agreement.

 

Reports Under Exchange Act.  With a view to making available to the Holders the benefits of SEC Rule 144 and any other rule or regulation of the SEC that may at any time permit the Investor to sell securities of the Company to the public without registration or pursuant to a registration on Form S-3, the Company shall:

 

make and keep available adequate current public information, as those terms are understood and defined in SEC Rule 144;

 

use commercially reasonable efforts to file with the SEC in a timely manner all reports and other documents required of the Company under the Securities Act and the Exchange Act (at any time after the Company has become subject to such reporting requirements); and

 

furnish to the Investor, so long as the Investor owns any Registrable Securities, forthwith upon request (i) to the extent accurate, a written statement by the Company that it has complied with the reporting requirements of SEC Rule 144, the Securities Act, and the Exchange Act (at any time after the Company has become subject to such reporting requirements), or that it qualifies as a registrant whose securities may be resold pursuant to Form S 3 (at any time after the Company so qualifies); (ii) a copy of the most recent annual or quarterly report of the Company and such other reports and documents so filed by the Company; and (iii) such other information as may be reasonably requested in availing the Investor of any rule or regulation of the SEC that permits the selling of any such securities without registration (at any time after the Company has become subject to the reporting requirements under the Exchange Act) or pursuant to Form S 3 (at any time after the Company so qualifies to use such form).

 

Limitations on Subsequent Registration Rights.  From and after the date of this Agreement, the Company shall not, without the prior written consent of the Investor, enter into any agreement with any holder or prospective holder of any securities of the Company that (i) would provide to such holder the right to include securities in any registration on other than a subordinate basis after the Investor has had the opportunity to include in the registration and offering all shares of Registrable Securities that it wishes to so include or (ii) allow such holder or prospective holder to initiate a demand for registration of any securities held by such holder or prospective holder.

 

Legends.

 

Each certificate or instrument representing (i) the Registrable Securities and (ii) any other securities issued in respect of the securities referenced in clause (i) upon any stock split, stock dividend, recapitalization, merger, consolidation, or similar event, shall be stamped or otherwise imprinted with a legend substantially in the following form:

 

THE SECURITIES REPRESENTED HEREBY HAVE BEEN ACQUIRED FOR INVESTMENT AND HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933.  SUCH SHARES MAY NOT BE SOLD, PLEDGED, OR TRANSFERRED IN THE ABSENCE OF SUCH REGISTRATION OR A VALID EXEMPTION FROM THE REGISTRATION AND PROSPECTUS DELIVERY REQUIREMENTS OF SAID ACT.

 

THE SECURITIES REPRESENTED HEREBY MAY BE TRANSFERRED ONLY IN ACCORDANCE WITH THE TERMS OF AN AGREEMENT BETWEEN THE COMPANY AND THE STOCKHOLDER, A COPY OF WHICH IS ON FILE WITH THE SECRETARY OF THE COMPANY.

 

The Investor consents to the Company making a notation in its records and giving instructions to any transfer agent of the Restricted Securities in order to implement the restrictions on transfer set forth in this Subsection 2.11.

 

The holder of each certificate representing Restricted Securities, by acceptance thereof, agrees to comply in all respects with the provisions of this Section 2.

 

Information and Observer Rights.

 

Delivery of Financial Statements.  The Company shall deliver to the Investor:

 

as soon as practicable, but in any event within sixty (60) days after the end of each fiscal year of the Company, (i) a balance sheet as of the end of such year, (ii) statements of income and of cash flows for such year, and a comparison between (x) the actual amounts as of and for such fiscal year and (y) the comparable amounts for the prior year and as included in the Budget (as defined in Subsection 3.1(e)) for such year, with an explanation of any material differences between such amounts and a schedule as to the sources and applications of funds for such year, and (iii) a statement of stockholders’ equity as of the end of such year, all such financial statements audited and certified by independent public accountants of nationally recognized standing selected by the Company;

 

as soon as practicable, but in any event within twenty-five (25) days after the end of each of the first three (3) quarters of each fiscal year of the Company, unaudited statements of income and of cash flows for such fiscal quarter, and an unaudited balance sheet and a statement of stockholders’ equity as of the end of such fiscal quarter, all prepared in accordance with GAAP (except that such financial statements may (i) be subject to normal year-end audit adjustments and (ii) not contain all notes thereto that may be required in accordance with GAAP);

 

as soon as practicable, but in any event within twenty-five (25) days after the end of each of the first three (3) quarters of each fiscal year of the Company, a statement showing the number of shares of each class and series of capital stock and securities convertible into or exercisable for shares of capital stock outstanding at the end of the period, the Common Stock issuable upon conversion or exercise of any outstanding securities convertible or exercisable for Common Stock and the exchange ratio or exercise price applicable thereto, and the number of shares of issued stock options and stock options not yet issued but reserved for issuance, if any, all in sufficient detail as to permit the Investor to calculate its respective percentage equity ownership in the Company, and certified by the chief financial officer or chief executive officer of the Company as being true, complete, and correct;

 

as soon as practicable, but in any event within thirty (30) days of the end of each month, an unaudited income statement and statement of cash flows for such month, and an unaudited balance sheet and statement of stockholders’ equity as of the end of such month, all prepared in accordance with GAAP (except that such financial statements may (i) be subject to normal year-end audit adjustments and (ii) not contain all notes thereto that may be required in accordance with GAAP);

 

as soon as practicable, but in any event thirty (30) days before the end of each fiscal year, a budget and business plan for the next fiscal year (collectively, the “Budget”), approved by the Board of Directors and prepared on a monthly basis, including balance sheets, income statements, and statements of cash flow for such months and, promptly after prepared, any other budgets or revised budgets prepared by the Company;

 

with respect to the financial statements called for in Subsection 3.1(a), Subsection 3.1(b) and Subsection 3.1(d), an instrument executed by the chief financial officer and chief executive officer of the Company certifying that such financial statements were prepared in accordance with GAAP consistently applied with prior practice for earlier periods (except as otherwise set forth in Subsection 3.1(b) and Subsection 3.1(d)) and fairly present the financial condition of the Company and its results of operation for the periods specified therein; and

 

such other information relating to the financial condition, business, prospects, or corporate affairs of the Company as the Investor may from time to time reasonably request.

 

If, for any period, the Company has any subsidiary whose accounts are consolidated with those of the Company, then in respect of such period the financial statements delivered pursuant to the foregoing sections shall be the consolidated and consolidating financial statements of the Company and all such consolidated subsidiaries.

 

Inspection.  The Company shall permit the Investor, at the Company’s expense, to visit and inspect the Company’s properties; examine its books of account and records; and discuss the Company’s affairs, finances, and accounts with its officers, during normal business hours of the Company as may be reasonably requested by the Investor.

 

Board Nominees.  The Investor shall have the right to designate Investor Designees to be nominated to the Board of Directors.  The Company shall nominate the Investor Designees for a vote of the shareholders at any meeting or action by written consent involving the election of directors to the Board of Directors.  In the event that any duly elected Investor Designee is removed from the Board of Directors, the Investor shall be entitled to designate another of Investor’s designees for nomination for election to the Board of Directors. “Investor Designees” means those persons designated for nomination to the Board of Directors by the Investor, the number of which shall not be less than a majority of the Board of Directors when aggregated with any director nominees who are nominated by any of the Investor’s subsidiaries or parent company.

 

Miscellaneous.

 

Successors and Assigns.  The rights under this Agreement may be assigned (but only with all related obligations) by the Investor to a transferee of Registrable Securities that (i) is an Affiliate of the Investor or (ii) after such transfer, the transferee holds at least 25% of the shares of Registrable Securities that were previously held by the Investor (subject to appropriate adjustment for stock splits, stock dividends, combinations, and other recapitalizations); provided, however, that (x) the Company is, within a reasonable time after such transfer, furnished with written notice of the name and address of such transferee and the Registrable Securities with respect to which such rights are being transferred; and (y) such transferee agrees in a written instrument delivered to the Company to be bound by and subject to the terms and conditions of this Agreement, including the provisions of Subsection 2.11.  For the purposes of determining the number of shares of Registrable Securities held by a transferee, the holdings of a transferee (1) that is an Affiliate or stockholder of a Holder; (2) who is a Holder’s Immediate Family Member; or (3) that is a trust for the benefit of an individual Holder or such Holder’s Immediate Family Member shall be aggregated together and with those of the transferring Holder; provided further that all transferees who would not qualify individually for assignment of rights shall have a single attorney-in-fact for the purpose of exercising any rights, receiving notices, or taking any action under this Agreement.  The terms and conditions of this Agreement inure to the benefit of and are binding upon the respective successors and permitted assignees of the parties.  Nothing in this Agreement, express or implied, is intended to confer upon any party other than the parties hereto or their respective successors and permitted assignees any rights, remedies, obligations or liabilities under or by reason of this Agreement, except as expressly provided herein.

 

Counterparts.  This Agreement may be executed in one or more counterparts, all of which shall be considered one and the same agreement and shall become effective when one or more counterparts have been signed by each of the parties hereto and delivered to the other parties hereto, it being understood that all parties hereto need not sign the same counterpart.  Any such counterpart shall be effective as a counterpart signature page hereto without regard to page, document or version numbers or other identifying information thereon, which are for convenience of reference only.  The parties hereto may sign this Agreement in the original, by facsimile, by .PDF, or by any other generally acceptable electronic means.

 

Construction.  The headings herein are for convenience only, do not constitute a part of this Agreement and shall not be deemed to limit or affect any of the provisions hereof.  

 

 

Notices.  All notices and other communications given or made pursuant to this Agreement shall be in writing and shall be deemed effectively given upon the earlier of actual receipt or: (i) personal delivery to the party to be notified; (ii) when sent, if sent by  electronic mail or facsimile during the recipient’s normal business hours, and if not sent during normal business hours, then on the recipient’s next business day; (iii) five (5) days after having been sent by registered or certified mail, return receipt requested, postage prepaid; or (iv) one (1) business day after the business day of deposit with a nationally recognized overnight courier, freight prepaid, specifying next-day delivery, with written verification of receipt.  All communications shall be sent to the respective parties at their addresses as set forth on the signature page hereto, or to such email address, facsimile number, or address as subsequently modified by written notice given in accordance with this Subsection 4.4.

 

Amendments and Waivers.  Any term of this Agreement may be amended and the observance of any term of this Agreement may be waived (either generally or in a particular instance, and either retroactively or prospectively) only with the written consent of the Company and the holders of a majority of the Registrable Securities then outstanding; provided that any provision hereof may be waived by any waiving party on such party’s own behalf, without the consent of any other party.  The Company shall give prompt notice of any amendment or termination hereof or waiver hereunder to any party hereto that did not consent in writing to such amendment, termination, or waiver.  Any amendment, termination, or waiver effected in accordance with this Subsection 4.5 shall be binding on all parties hereto, regardless of whether any such party has consented thereto.  No waivers of or exceptions to any term, condition, or provision of this Agreement, in any one or more instances, shall be deemed to be or construed as a further or continuing waiver of any such term, condition, or provision.

 

Severability.  If any provision of this Agreement is held to be invalid or unenforceable in any respect, the validity and enforceability of the remaining terms and provisions of this Agreement shall not in any way be affected or impaired thereby and the parties will attempt to agree upon a valid and enforceable provision that is a reasonable substitute therefor, and upon so agreeing, shall incorporate such substitute provision in this Agreement.

 

Aggregation of Stock.  All shares of Registrable Securities held or acquired by Affiliates shall be aggregated together for the purpose of determining the availability of any rights under this Agreement and such Affiliated persons may apportion such rights as among themselves in any manner they deem appropriate.

 

Entire Agreement.  This Agreement, together with the Schedules hereto, the Purchase Agreement and the Voting Agreement, contain the entire understanding of the parties with respect to the subject matter hereof and supersede all prior agreements and understandings, oral or written, with respect to such matters, which the parties acknowledge have been merged into such documents, exhibits and schedules.

 

Governing Law; Venue; Waiver Of Jury Trial.  ALL QUESTIONS CONCERNING THE CONSTRUCTION, VALIDITY, ENFORCEMENT AND

 

 

Delays or Omissions.  No delay or omission to exercise any right, power, or remedy accruing to any party under this Agreement, upon any breach or default of any other party under this Agreement, shall impair any such right, power, or remedy of such nonbreaching or nondefaulting party, nor shall it be construed to be a waiver of or acquiescence to any such breach or default, or to any similar breach or default thereafter occurring, nor shall any waiver of any single breach or default be deemed a waiver of any other breach or default theretofore or thereafter occurring.  All remedies, whether under this Agreement or by law or otherwise afforded to any party, shall be cumulative and not alternative.

 

 [Remainder of Page Intentionally Left Blank.]

 

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

 

COMPANY:
U-SWIRL, INC.
By:____________________________
	Name:_____________________
	Title:  _____________________
	Address for Notice:   ____________________________ ____________________________ ____________________________   Fax:_________________________ Email:_______________________ Attn:  ________________________
	with copy to (which shall not constitute notice): _____________________________ _____________________________ _____________________________   Fax: _________________________ Email: _______________________ Attn: ________________________

 

INVESTOR:
[ROCKY MOUNTAIN CHOCOLATE FACTORY, INC.] [ASPEN LEAF YOGURT, LLC]
By:_____________________________________
	Name:_______________________________
	Title: _______________________________

 

 

 

THIS VOTING AGREEMENT is made and entered into as of this __ day of January, 2013, by and among U-Swirl, Inc., a Nevada corporation (the “Company”), Henry Cartwright, an individual residing in Nevada (“H. Cartwright”); Ulderico Conte, an individual residing in Nevada (“Conte”); Terry Cartwright, an individual residing in Nevada (“T. Cartwright”), Rocky Mountain Chocolate Factory, Inc., a Colorado corporation; (“Rocky Mountain”) and Aspen Leaf Yogurt, LLC, a Colorado limited liability company (“Aspen Leaf”).  Rocky Mountain and Aspen Leaf may be referred to collectively below as “RMCF.”

 

 

A.           The Company and Rocky Mountain are parties to a Membership Interest Purchase Agreement, and the Company and Aspen Leaf are parties to an Asset Purchase Agreement (collectively, the “Purchase Agreement”), each of even date herewith and pursuant to which, concurrently with the execution of this Agreement, the Company is issuing to RMCF 8,641,253 shares of the Company’s Common Stock, $0.001 par value per share (“Common Stock”).

 

B.           Rocky Mountain’s and the Company’s obligations under the Purchase Agreement are conditioned on the execution by the parties of this Agreement pursuant to which, among other rights, RMCF will have the right to designate the election of certain members of the board of directors of the Company (the “Board”), and refrain from making certain changes to the Board, in accordance with the terms of this Agreement.

 

C.           H. Cartwright, Conte and T. Cartwright are shareholders of the Company’s common stock, immediately prior the Effective Date of this Agreement.

 

D           Rocky Mountain, Aspen Leaf, H. Cartwright, Conte and T. Cartwright may be referred to below individually as a “Shareholder” and collectively as the “Shareholders”; provided, however, that if any of those entities or individuals ceases to own any Shares (as defined below), it or he will cease to be a Shareholder.

 

NOW, THEREFORE, the parties agree as follows:

 

 

1.   Voting Provisions Regarding Board of Directors.

(a)            For the first full year after the Effective Date of this Agreement (i) the size of the Board shall be eight (8) directors, unless H. Cartwright, Conte, T. Cartwright and RMCF each agree, in writing, otherwise.

(b)           After the first full year after the Effective Date of this Agreement the Board cannot be increased to more than eight (8) directors, unless otherwise consented to in writing by RMCF.

(c)           For purposes of this Agreement, the term “Shares” shall mean and include any securities of the Company the holders of which are entitled to vote for members of the Board, including without limitation, all shares of Common Stock, by whatever name called, now owned or subsequently acquired by, a Shareholder, however acquired, whether through stock splits, stock dividends, reclassifications, recapitalizations, similar events or otherwise.

1.2.  Board Composition.

 

 

 

 

 

1.4.  Removal of Board Members.  In the event that the Shareholders are requested to vote on any matter with respect to Board composition, each Shareholder also agrees

 

 

 

 

 

 

 

2.   Remedies.

 

 

 

 

(a)           H. Cartwright, Conte and T. Cartwright will be irreparably damaged in the event the provisions of Sections 1.1 or 1.2 of this Agreement, and/or Section 1.5 if related to Section 1.2, are not performed by the parties in accordance with their specific terms or are otherwise breached.  Accordingly, it is agreed that H. Cartwright, Conte and T. Cartwright shall be entitled to an injunction to prevent breaches of Sections 1.1 or 1.2, and/or Section 1.5 if related to Section 1.2, of this Agreement, and to specific enforcement of those provisions of this Agreement in any action instituted in any court of the United States or any state having subject matter jurisdiction.

 

(b)           RMCF will be irreparably damaged in the event any of the provisions of Sections 1.1 through 1.4 this Agreement, and/or Section 1.5 if related to Sections 1.1 through 1.4, are not performed by the parties in accordance with their specific terms or are otherwise breached.  Accordingly, it is agreed that RMCF shall be entitled to an injunction to prevent breaches of Sections 1.1 through 1.4 this Agreement, and/or Section 1.5 if related to Sections 1.1 through 1.4 of this Agreement, and to specific enforcement of those provisions of this Agreement in any action instituted in any court of the United States or any state having subject matter jurisdiction.

 

 

 

4.   Miscellaneous.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

The Company, by its execution of this Agreement, agrees that it will cause the certificates evidencing the Shares transferred pursuant to Section 4.1 above after the Effective Date of this Agreement to bear the legend required by this Section 4.12 of this Agreement, and it shall supply, free of charge, a copy of this Agreement to any holder of a certificate evidencing Shares upon written request from such holder to the Company at its principal office.  The parties to this Agreement do hereby agree that the failure to cause the certificates evidencing the Shares to bear the legend required by this Section 4.12 herein and/or the failure of the Company to supply, free of charge, a copy of this Agreement as provided hereunder shall not affect the validity or enforcement of this Agreement.

 

 

 

 

 

 

 

 

 

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

U-SWIRL, INC.

By:  _____________________________

Name: ___________________________

Title:   ___________________________

Address for Notice:

Ulderico Conte

U-Swirl, Inc.

1175 American Pacific Suite C

Henderson, NV 89074

Facsimile: 702 ###-###-####

E-mail:   ***@***

with a copy to (which shall not constitute notice):

Daniel J. Block

Robinson Waters & O’Dorisio, P. C.

1099 18th Street, Suite 2600

Denver, CO  80202

Facsimile:   ###-###-####

E- mail:   ***@***

ROCKY MOUNTAIN CHOCOLATE FACTORY, INC.

By: ___________________________________

Name: Bryan J. Merryman                                                      

Title: Chief Financial Officer

ASPEN LEAF YOGURT, LLC

By: ___________________________________

Name: Bryan J. Merryman                                                      

Title: Managing Member

 

Address for Notice:

Rocky Mountain Chocolate Factory, Inc.

265 Turner Drive

Durango, CO 81303

Fax No.: (970) 382-2218

Email: ***@***

Attention:  Bryan J. Merryman, COO/CFO

with copy to (which shall not constitute notice):

Perkins Coie LLP

1900 Sixteenth Street, Suite 1400

Denver, CO 80202

Fax:   ###-###-####

Email:   ***@***

Attn:  Sonny Allison

SHAREHOLDERS:

_________________________________

Henry Cartwright

_________________________________

Ulderico Conte

_________________________________

Terry Cartwright

 

 

 

This Security Agreement is made as of January __, 2013 by and between U-Swirl, Inc., a Nevada corporation (“Debtor”), and Aspen Leaf Yogurt, LLC, a Colorado limited liability company (“Secured Party”).

A.           Debtor and Secured Party have entered into an Asset Purchase Agreement (the “Purchase Agreement”) dated as of the date of this Security Agreement pursuant to which Debtor is purchasing certain Acquired Assets from Secured Party.  Capitalized terms used herein but not otherwise defined shall have the meanings given to them in the Purchase Agreement.

B.           As part of the purchase price for the Acquired Assets, Debtor has executed and delivered to Secured Party a [Non-Recourse][Full Recourse] Secured Promissory Note dated as of the date of this Security Agreement (the “Note”), in the principal amount of [SECURITY AGREEMENT #1: $100,000][SECURITY AGREEMENT #2: $150,000][SECURITY AGREEMENT # 3: $350,000], evidencing Debtor’s obligation to repay that principal amount borrowed by Debtor from Secured Party plus accrued interest (the “Loan”).

C.           Secured Party has required, as a condition to the making of the Loan, that Debtor grant to Secured Party a security interest in all of the assets of the Company Owned Store located [SECURITY AGREEMENT # 1: in Greeley, Colorado, in Ames, Iowa, and in Murfreesboro, Tennessee] [SECURITY AGREEMENT #2: in San Antonio, Texas][SECURITY AGREEMENT #3: in DeKalb, Illinois] (the “Store Assets”), and Debtor is willing to do so as an inducement to Secured Party to make the Loan.

In consideration of the mutual covenants and agreements herein contained and other good and valuable consideration, the receipt and adequacy of which are hereby acknowledged, Debtor and Secured Party agree as follows:

1.           Certain Definitions.

As used in this Security Agreement, the following capitalized terms shall have the following meanings:

“Loan Documents” shall mean the Note, this Security Agreement, and all other instruments and documents executed and delivered in connection with, or to secure Debtor’s obligations under, the Loan, as the same may be amended from time to time.

“Secured Indebtedness” shall mean (i) all principal and interest under the Note, and (ii) all fees, expenses, and charges (including but not limited to indemnification and reimbursement obligations and attorneys’ fees) payable under the Loan Documents.

2.           Creation of Security Interest.

2.1           Grant of Security Interest.  As security for the payment when due of the Secured Indebtedness and the prompt and complete performance by Debtor of its obligations under the Loan Documents, Debtor hereby assigns and pledges to Secured Party, and grants to Secured Party a security interest in, the Store Assets [ADD THIS CLAUSE FOR SECURITY AGREEMENTS #2 AND #3 ONLY: and all tangible and intangible assets held by Debtor relating to the Store Assets,] and all products and proceeds therefrom (the “Collateral”).

3.           Certain Rights of Secured Party.

3.1           Secured Party as Attorney-in-Fact.  Debtor hereby irrevocably appoints Secured Party as Debtor’s attorney-in-fact, such appointment coupled with an interest, with full authority in the place and stead of Debtor and in the name of Debtor, Secured Party or otherwise, upon an Event of Default by Debtor under this Security Agreement, to take any action and to execute any instrument which the Secured Party may deem necessary or advisable to accomplish the purposes of this Security Agreement, including but not limited to the following:

(a)           to ask, demand, collect, sue for, recover, compromise, receive and give acquittance and receipts for moneys due and to become due under or in respect of any of the Collateral;

(b)           to receive, indorse, and collect any drafts or other instruments, documents and chattel paper, in connection with the clause (a) above; and

(c)           to file any claims or take any action or institute any proceedings which Secured Party may deem necessary or desirable for the collection of any of the Collateral or otherwise to enforce the rights of the Secured Party with respect to any of the Collateral.

3.2           No Duty of Secured Party.  The powers and rights conferred on Secured Party under this Security Agreement are conferred solely to permit Secured Party to protect its interest in the Collateral, and shall not impose any duty upon it to exercise any such powers.  Except for the safe custody of any Collateral in its possession and the accounting for moneys actually received by it hereunder, Secured Party shall have no duty whatsoever as to any Collateral, and no duty to take any steps to preserve its rights as against prior parties or any other rights with respect to the Collateral.

4.           Events of Default.  An “Event of Default” shall occur under this Agreement if (i) there is an Event of Default under the Note or (ii)  Debtor does not promptly make or cause to made repairs to the Collateral, and Debtor does not arrange for the repairs after Debtor receives written notice from Secured Party to do so.

5.           Remedies.

5.1           Remedies.  Upon the occurrence of an Event of Default, Secured Party may exercise in respect of the Collateral, in addition to other rights and remedies provided for herein or otherwise available to it, all of the rights and remedies of a secured party under the Uniform Commercial Code as adopted in the State of Colorado (the “Code”) (whether or not the Code applies to the affected Collateral), and, without limiting the generality of the foregoing, may also (i) require Debtor to, and Debtor shall at its expense and upon request of Secured Party forthwith, assemble all or part of the Collateral as directed by Secured Party and make it available to Secured Party at a place to be designated by the Secured Party which is reasonably convenient to both parties, and (ii) without notice except as specified below, sell the Collateral or any part thereof in one or more parcels at public or private sale, at any of Secured Party’s offices or elsewhere, for cash, on credit, or for future delivery, and upon such other terms as Secured Party may deem commercially reasonable.  To the extent notice of sale shall be required by law, at least ten days’ notice to Debtor of the time and place of any public sale or the time after which any private sale is to be made shall constitute reasonable notification.  Secured Party shall not be obligated to make any sale of Collateral regardless of notice of sale having been given.  Secured Party may adjourn any public or private sale from time to time by announcement at the time and place fixed therefor, and such sale may, without further notice, be made at the time and place to which it was so adjourned.  [SECURITY AGREEMENTS # 2 AND #3 ONLY: Debtor shall remain liable for any deficiency.]

5.2           Proceeds.  All cash proceeds received by Secured Party in respect of any sale of, collection from, or other realization upon all or any part of the Collateral may, in the discretion of Secured Party, be held by Secured Party as collateral for, and/or then or at any time thereafter applied (after payment of any amounts to Secured Party pursuant to Section 8.02) in whole or in part by Secured Party against, all or any part of the Secured Indebtedness in such order as Secured Party shall elect.  Any surplus of such cash or cash proceeds held by Secured Party and remaining after payment in full of all the Secured Indebtedness shall be paid over to Debtor or to whomsoever may be lawfully entitled to receive such surplus.

5.3           Waiver.  Debtor hereby waives presentment, demand, protest or any notice (to the extent permitted by applicable law) of any kind in connection with this Security Agreement or any Collateral, unless otherwise specified herein.

6.           Indemnity and Expenses.

6.1           Indemnification.  Debtor shall indemnify Secured Party from and against any and all claims, losses and liabilities incurred by Secured Party growing out of or resulting from this Security Agreement or the Loan Documents (including but not limited to enforcement of this Security Agreement), except claims, losses or liabilities resulting from Secured Party’s gross negligence or willful misconduct.

6.2           Expenses.  Debtor shall upon demand pay to Secured Party the amount of any and all reasonable expenses, including but not limited to the reasonable fees and disbursements of its counsel and of any experts and agents, which Secured Party may incur in connection with (i) the

 

7.           Miscellaneous.

7.1           Waivers and Consents.  No amendment or waiver by Secured Party of any provision of this Security Agreement nor consent by it to any departure by Debtor herefrom shall in any event be effective unless the same shall be in writing and signed by Secured Party, and then such waiver or consent shall be effective only in the specific instance and for the specific purpose for which given.

7.2           Continuing Security Interest; Transfer of Note.  This Security Agreement shall create a continuing security interest in the Collateral and shall (i) remain in full force and effect until payment in full of the Secured Indebtedness, (ii) bind Debtor, its successors and assigns, and (iii) inure to the benefit of Secured Party and its successors, transferees and assigns.  Upon the payment in full of the Secured Indebtedness, the security interest granted hereby shall terminate and all rights of Secured Party in and to the Collateral shall revert to Debtor.  Upon any such termination, Secured Party shall execute and deliver to Debtor such documents as Debtor shall reasonably request to evidence such termination.  This Security Agreement shall continue to be effective or be reinstated, as the case may be, if at any time any payment of any of the Secured Indebtedness is rescinded or must otherwise be returned by Secured Party upon the insolvency, bankruptcy or reorganization of Debtor or otherwise, all as though such payment had not been made.

7.3           Headings.  All headings herein are included for reference purposes only and shall not be construed as affecting the terms of this Security Agreement or any part hereof.

7.4           Governing Law; Terms.  This Security Agreement shall be governed by and construed in accordance with the laws of the State of Colorado without regard to that State’s choice of law principles, except to the extent that the validity or perfection of the security interest hereunder, or remedies hereunder, in respect of any particular Collateral are governed by the laws of a jurisdiction other than the State of Colorado.

7.5           Severability.  If a court of competent jurisdiction makes a final determination that any provision of this Security Agreement is invalid or unenforceable, that provision will be modified by the court so as to best continue to carry out the intent of the parties, or severed from this Sublease if it cannot be so modified; and the remaining terms and provisions remain unimpaired.

7.6           Terms.  Unless the context otherwise requires, all terms used herein which are defined in the Code shall have the meaning therein stated.

7.7           Counterparts; Signatures.  This Security Agreement may be executed in counterparts, all of which together shall constitute one and the same Agreement. Facsimile signatures will be valid to the same extent as original signatures.

The parties have executed this Security Agreement as of the date first written above.

DEBTOR:

U-Swirl, Inc.,

a Nevada corporation

By: __________________________

Name: ________________________

Title: _________________________

SECURED PARTY:

Aspen Leaf Yogurt, LLC,

a Colorado limited liability company

By: _____________________________

Name:  Bryan J. Merryman

Title:  Managing Member

This Assumption Agreement (this “Assumption Agreement”) is entered into as of January [__], 2013, and pursuant to that certain Asset Purchase Agreement (the “Purchase Agreement”), dated as the date hereof, by and between U-Swirl, Inc., a Nevada corporation (“Buyer”), and Aspen Leaf Yogurt, LLC, a Colorado limited liability company (“Seller”), for and in consideration of good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, Seller does hereby assign all of the Assumed Liabilities to Buyer, and Buyer does hereby assume from Seller all of the Assumed Liabilities.

 

Nothing contained in this Assumption Agreement is intended to provide any rights to Buyer or Seller beyond those rights expressly provided to Buyer or Seller in the Purchase Agreement.  Nothing contained in this Assumption Agreement is intended to impose any obligations or liabilities on Buyer or Seller beyond those obligations and liabilities expressly imposed on Buyer or Seller in the Purchase Agreement.  Nothing contained in this Assumption Agreement is intended to expand or limit any of the rights or remedies available to Buyer or Seller under the Purchase Agreement.

 

This Assumption Agreement may be executed in one or more counterparts, all of which shall be considered one and the same agreement and shall become effective when one or more counterparts have been signed by each of the parties hereto and delivered to the other parties hereto, it being understood that all parties hereto need not sign the same counterpart. The parties hereto may sign this Assumption Agreement in the original, by facsimile, by .PDF, or by any other generally acceptable electronic means.

 

This Assumption Agreement (i) shall not be assigned by operation of law or otherwise except as otherwise specifically provided, except Buyer may assign this Assumption Agreement to any affiliate by operation of law or otherwise, and (ii) shall be binding upon and inure to the benefit of the parties hereto and their respective successors and permitted assigns.

 

Capitalized terms used herein and not otherwise defined herein shall have the respective meanings assigned to such terms in the Purchase Agreement.

 

 

IN WITNESS WHEREOF, the undersigned have caused this Assumption Agreement to be duly executed and delivered as of the day and year first written above.

 

 

BUYER:

 

U-SWIRL, INC.

 

By: _______________________________

Name: _____________________________

Title:   _____________________________

 

SELLER:

 

ASPEN LEAF YOGURT, LLC

 

By:________________________________

Name: Bryan J. Merryman

Title: Managing Member

 

 

 

 

 

 

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