Promissory Note and Security Agreement - Krispy Kreme Doughnut Corp.
SATISFACTION: The Debt evidenced by
this Note has been satisfied in full this
_______ day of _____________, 19__
Signed: __________________________
PROMISSORY NOTE
AND SECURITY AGREEMENT
Winston-Salem, NC
$"AMOUNT" AUGUST 31, 1998
FOR VALUE RECEIVED the undersigned promises to pay to KRISPY KREME DOUGHNUT
CORPORATION or order, the principal sum of "PAYMENT" and 00/100 DOLLARS
($"AMOUNT") with interest from the date hereof at the rate of six percent (6%)
per annum on the unpaid balance until paid or until default, both principal and
interest payable in lawful money of the United States of America, at the office
of KRISPY KREME DOUGHNUT CORPORATION, P O BOX 83, WINSTON-SALEM, NORTH CAROLINA
27102-0083 (ATTENTION: RANDY S. CASSTEVENS) or at such place as the legal holder
hereof may designate in writing. The principal and interest shall be due and
payable in 10 equal consecutive annual payments of principal and interest in the
amount of $"ANNUAL" each, such installments to be paid on AUGUST 31 of each
year during the term hereof, the first such payment being due and payable on
AUGUST 31, 1999 with a final payment of all unpaid principal and all accrued and
unpaid interest herein due and payable on AUGUST 31, 2008. Payee has advanced
Maker $"M_1stPay" of the total principal owed hereunder on the date hereof and
Maker acknowledges receipt thereof. An additional amount of $"M_2ndPay" shall
be advanced by Payee to maker on or before February 26, 1999.
If not sooner paid, the entire remaining indebtedness (including, but not
limited to, all unpaid principal and all accrued and unpaid interest and all
other sums due hereunder) shall be due and payable on AUGUST 31, 2008.
Notwithstanding the foregoing, in the event the undersigned for any reason
ceases to be a full-time employee of Krispy Kreme Doughnut Corporation, Payee
may declare all sums due under this Note to be immediately due and payable.
If payable in installments, each such installment shall, unless otherwise
provided, be applied first to payment of interest then accrued and due on the
unpaid principal balance, with the remainder applied to the unpaid principal.
Unless otherwise provided, this Note may be prepaid in full or in part at any
time without penalty or premium. Partial prepayments shall be applied to
installments due in reverse order of their maturity.
In the event of (a) default in payment of any installment of principal or
interest hereof or under any other note from Maker to Payee as the same becomes
due and such default is not cured within ten (10) days from the due date, or (b)
default under the terms of any instrument securing this Note, or under the terms
of the security agreement made in, and/or security interest given under, this
Note and such default is not cured within fifteen (15) days after written notice
to Maker, then in either such event the holder may without further notice,
declare the remainder of the principal sum, together with all interest accrued
thereon at once due and payable. Failure to exercise this option shall not
constitute a waiver of the right to exercise the same at any other time. The
unpaid principal of this Note and any part thereof, accrued interest and all
other sums due under this Note and any instrument securing this Note shall bear
interest at the rate of twelve percent (12%) per annum after default until paid.
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In the event this Note is not paid when due (whether on the due date set
forth above or on such earlier date as provided upon default or the happening of
other events set forth in this Note) then Payee shall have the right to exercise
all rights granted under this Note to it and shall have the following additional
rights as well: (i) the right to treat such non-payment as an offer to sell the
shares to a third party under subparagraph 2(a) of the Stock Purchase Agreement
by and between Payee and its shareholders dated July 1, 1984, as amended, (the
terms of which are incorporated herein by reference) and the consequent right to
purchase the Shares (as defined below) under the terms of said Agreement and
(ii) the right to deduct from the proceeds of such sale to Payee all amounts
owed under this Note, paying to Maker only the balance of the proceeds of such
sale remaining after payment of all sums due under this Note and all expenses
incurred by Payee in connection with such sale. In the event the Stock Purchase
Agreement is no longer in effect at the time Payee exercises such rights, then,
between Maker and Payee, Payee shall retain the right under subparagraph 2(a) of
the Stock Purchase Agreement to purchase such Shares as if Maker had determined
to sell such Shares to a third party and the purchase price shall be the average
of the closing price on the five (5) trading days preceding the purchase by
Payee, or, if shares of Krispy Kreme Doughnut Corporation are not then publicly
traded, then the purchase price shall be the then most recent appraised value of
the class of shares of Krispy Kreme Doughnut Corporation of which the Shares are
a part.
All parties to this Note, including maker and any sureties, endorsers, or
guarantors hereby waive protest, presentment, notice of dishonor, and notice of
acceleration of maturity and agree to continue to remain bound for the payment
of principal, interest and all other sums due under this Note and any instrument
securing this Note notwithstanding any change or changes by way of release,
surrender, exchange, modification or substitution of any security for this Note
or by way of any extension or extensions of time for the payment of principal
and interest; and all such parties waive all and every kind of notice of such
change or changes and agree that the same may be made without notice or consent
of any of them.
Upon default the holder of this Note may employ an attorney to enforce the
holder's rights and remedies and the maker, principal, surety, guarantor and
endorsers of this Note hereby agree to pay to the holder reasonable attorneys
fees not exceeding a sum equal to fifteen percent (15%) of the outstanding
balance owing on said Note, plus all other reasonable expenses incurred by the
holder in exercising any of the holder's rights and remedies upon default. The
rights and remedies of the holder as provided in this Note and any instrument
securing this Note shall be cumulative and may be pursued singly, successively,
or together against the property described herein and/or in any instrument
securing this Note or any other funds, property or security held by the holder
for payment or security, in the sole discretion of the holder. The failure to
exercise any such right or remedy shall not be a waiver or release or such
rights or remedies or the right to exercise any of them at another time.
This Note is to be governed and construed in accordance with the laws of the
State of North Carolina. As used herein, the term "Note" shall include the
security agreement contained herein.
This Note is given for money owed. To further secure this Note, Maker(s)
grants Payee a first priority security interest under Chapter 25 of the North
Carolina General Statutes (the "UCC") in those shares of Krispy Kreme Doughnut
Corporation represented by certificate number "Cert" together with all
certificates, shares, options, rights or other distributions issued as an
addition to, in substitution or in exchange for, or on account of, any such
shares, and all proceeds of the foregoing, now or hereafter owned or acquired by
Maker (the "Shares") and agrees that such certificate or other documents
representing the Shares shall remain in the possession of Payee until this Note
is paid in full. Payee shall have all rights of a secured party applicable under
the UCC and under this Note, such rights being cumulative. The undersigned
agrees not to transfer or convey (by sale, gift, devise or otherwise), grant a
security interest in, pledge or otherwise encumber the Shares or any interest
therein without the prior written consent of the Payee, which consent Payee may
grant or withhold in its sole discretion. In addition to, and not in limitation
of the foregoing, in the event of any attempted transfer, pledge or encumbrance
of the Shares or any interest therein, whether or not consented to by Payee (and
whether by sale, gift,
<PAGE> 3
devise or otherwise), Payee may declare all sums due under this Note immediately
due and payable. The Shares shall bear a legend in form satisfactory to Payee
stating they are subject to this Note and Security Agreement. The undersigned
agrees to execute such further instruments, security agreements and financing
statements, and to take such other actions, as Payee may from time to time
request to evidence and/or perfect such security interest. In the event such
security interest ever constitutes a lower than first priority security
interest, Payee may declare this Note in default and no cure period for such
default shall exist unless required by applicable law, in which event such cure
period shall be the minimum required by applicable law.
In the event that during the term of this Note, any additional shares,
options, or warrants issued in connection with the Shares shall be issued to the
Maker, such additional shares, option or warrants shall be immediately assigned
and delivered to Payee, endorsed in blank, to be held under the terms of this
Note in the same manner as the Shares. Furthermore, Maker agrees to execute and
deliver to Payee any necessary endorsement and/or appropriate stock power duly
executed in blank to be held by Payee and to be used to effect Payee's rights
under this Note.
Upon the occurrence and during the continuance of any event of default, any
and all dividends and distributions paid or payable in respect of the Shares
shall be delivered to Payee, together with any necessary endorsement and/or
appropriate stock powers duly executed in blank, to be (i) if cash, applied
against amounts owing by Maker under this Note and (ii) if not cash, held by
Payee in the same manner as the Shares, subject to Payee's rights and remedies
as provided herein.
The Maker hereby irrevocably appoints Payee and any officer thereof the
Maker's Attorney In Fact, with full power of substitution for and on behalf and
in the name of Maker, during the existence and continuance of any default, in
the Payee's sole discretion, to take any action and to execute any instrument
which the Payee may deem necessary or advisable to accomplish the purposes of
this Note, including, without limitation, the right to sell the Shares or
exercise any and all of its rights and remedies under this Note and applicable
law. This Power of Attorney is a Power coupled with an interest and shall be
irrevocable and is conferred on the Payee solely to protect, preserve and
realize on its security interest in the Shares. This Power of Attorney shall be
durable.
IN TESTIMONY WHEREOF, THE MAKER HAS SET HIS
HAND TO THIS INSTRUMENT AND ADOPTED AS HIS SEAL THE
WORD "SEAL" APPEARING BESIDE HIS SIGNATURE THE
DAY AND YEAR FIRST ABOVE WRITTEN.
____________________________________________ (SEAL)
"FIRSTNAME" "LASTNAME"