Associate's License Agreement - Krispy Kreme Doughnut Corp.
FORM OF
ASSOCIATE'S LICENSE AGREEMENT
FOR MAKING AND SELLING
KRISPY KREME
DOUGHNUTS
NORTH CAROLINA )
) ASSOCIATE'S LICENSE AGREEMENT
FORSYTH COUNTY )
THIS AGREEMENT ("Agreement"), made and entered into as of the date and
year set forth below, by and between KRISPY KREME DOUGHNUT CORPORATION ("Krispy
Kreme"), a North Carolina corporation, having its principal office at
Winston-Salem, North Carolina and ________________________ ("Associate").
WHEREAS, Krispy Kreme has established successfully over a period of
years a reputation, demand and goodwill for fresh and distinctive doughnuts and
related products, as set forth in the Krispy Kreme Associates' Manuals as
amended from time to time, under the name "Krispy Kreme," which signifies the
highest standards of management, supervision, merchandising and freshness,
uniformity and quality of products; and
WHEREAS, Krispy Kreme has developed and maintained over a period of
years, by expending time, effort and money, a unique system for the production,
marketing and sale of its products (the "System") and has been and is currently
engaged, among other things, in the business of licensing its System; and
WHEREAS, the System is one unique and highly developed product
consisting of the Krispy Kreme's mixes (the "Mix"), its Production Equipment
System, which consists of equipment manufactured by Krispy Kreme, its federally
registered trademarks and service marks (the "Marks") and the reputation and
goodwill established and associated therewith, its unique doughnut shops with
their distinctive architectural style and motif, properly located to yield the
greatest public acceptance, and high standards and quality of products and
service, and its knowledge, technology and manner of doing business in the field
of production and sales, all of which are designed to produce Krispy Kreme
Doughnuts that are fresh and uniform in taste; and
WHEREAS, Associate recognizes the benefit of being identified with
Krispy Kreme and desires to be licensed to utilize the unique System, to
produce, market, package and sell Krispy Kreme Doughnuts in the manner set forth
in the Krispy Kreme Associates' Manuals as amended from time to time (the
"Manual"), to operate a doughnut shop(s) and a doughnut producing facility or
facilities at the location(s) defined in Exhibit A attached (the "Location"), to
have the only license with Krispy Kreme to utilize the System in an exclusive
geographical area defined in
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Exhibit B attached (the "Area"), and to do all of the foregoing under the Krispy
Kreme name and Marks; and
WHEREAS, Krispy Kreme is willing to grant such license to Associate
upon the terms and conditions herein set forth;
NOW, THEREFORE, it is mutually agreed by Krispy Kreme and Associate as
follows:
ARTICLE I
GRANT OF LICENSE BY KRISPY KREME TO ASSOCIATE
Subject to the continuing good faith performance by Associate in the
use and application of the System and in consideration of payment by Associate
of royalties defined below and purchase of Mix and Production Equipment System,
Krispy Kreme hereby grants a license to Associate strictly limited to the
following:
A. USE OF SYSTEM. To produce and sell Krispy Kreme Doughnuts
using the System in accordance with standards set forth in the
Manual.
B. PACKAGING. To package Krispy Kreme Doughnuts so produced in
containers and boxes of a quality, size, type and design and
strictly in accordance with the instructions set out in the
Manual.
C. LOCATION OF PRODUCTION, PACKAGING AND DOUGHNUT SHOP SALES. To
operate a doughnut producing facility and doughnut shop for
retail sale of Krispy Kreme Doughnuts at the Location, and to
conduct the business of producing, marketing, packaging and
selling at retail or both retail and wholesale, over the
counter and by truck distribution, from the Location. Since
location is vitally important to successful marketing of
Krispy Kreme Doughnuts, if Associate desires to relocate or
establish an additional location within the Area, he shall
obtain prior written approval of Krispy Kreme.
D. SIGNIFICANCE OF FRESHNESS. To sell, at retail or wholesale,
Krispy Kreme Doughnuts only if such doughnuts are "fresh," as
that term is defined in the Manual. Associate acknowledges
that "freshness," as defined in the Manual, is a key element
of the System and essential to maintenance of Krispy Kreme's
high standards of quality and uniformity and covenants to sell
Krispy Kreme Doughnuts only if they are fresh. For purposes of
this Agreement, the words "Krispy Kreme Doughnuts" mean FRESH
doughnuts (but not frozen doughnuts) and related products that
are uniform in taste and that are produced under the System in
accordance with the Manual and this Agreement.
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E. TRADEMARKS. To use Krispy Kreme's Marks in selling of Krispy
Kreme Doughnuts only as authorized in this Agreement and the
Manual.
F. NAME. To use the words "Produced under the Authority of Krispy
Kreme Doughnut Corporation" on containers and packages for
Krispy Kreme Doughnuts produced by Associate.
G. TERM. Unless terminated under the provisions of Article VIII
hereof, the term of this Agreement shall be for a period of 15
years commencing upon the date hereof and ending on _____,
____ ("Original Term"), such Original Term (or any subsequent
five (5) year renewal term) to be automatically extended for a
five (5) year period thereafter, subject to the right of
either party to terminate the Agreement upon giving written
notice to the other party not less than six (6) months prior
to date of termination of the Original Term (or any subsequent
five (5) year renewal term).
ARTICLE II
KRISPY KREME'S COVENANTS
A. EXCLUSIVE AREA. Notwithstanding anything else in the Agreement
to the contrary, during the term hereof, Krispy Kreme shall
not grant to any other person a license to utilize the System
in the Area to make wholesale, retail, special order and fund
raising sales. During such term, Krispy Kreme shall not itself
produce, package, distribute or sell fresh Krispy Kreme
Doughnuts in the Area through retail, wholesale and special
order and fund raising sales. Krispy Kreme may produce and
sell products not sold under Krispy Kreme Marks, within the
Area regardless of whether or not such products shall be
deemed to be competitive with Associate.
Associate shall not sell Krispy Kreme Doughnuts or
utilize the System to sell any products outside the Area.
Associate shall not deliver or solicit orders for sales of
Krispy Kreme Doughnuts or other products outside the Area.
B. FOOD, DRUG AND COSMETIC ACT AND OTHER GUARANTEES. Krispy Kreme
guarantees that all articles and goods shipped or delivered to
Associate shall be properly branded and labeled at the time of
delivery and shall comply with the provisions of the Federal
Food, Drug and Cosmetic Act. Krispy Kreme shall use its best
efforts to see that all said articles and goods comply with
and are produced and shipped under and in accordance with all
other applicable federal, state and local laws, rules and
regulations.
C. INDEMNIFICATION. Krispy Kreme hereby agrees to indemnify and
save harmless Associate from and against any loss, claim or
damage, including reasonable attorneys' fees, resulting from
any impurity, adulteration, or misbranding of the Mix and
other products produced by Krispy Kreme and delivered to
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Associate which may be due to negligence of Krispy Kreme or
breach by Krispy Kreme of any provision of this Agreement.
D. TRADEMARKS AND SERVICE MARKS.
1. Krispy Kreme warrants:
(a) that it or one of its subsidiary
corporations is owner of the Marks set forth
in the Manual;
(b) that said Marks are duly registered in the
United States Patent Office as trademarks
and service marks for goods and services set
forth in the Manual; and
(c) that Krispy Kreme has the right to grant
this license.
2. Krispy Kreme agrees that, in respect of all actions
or claims by third parties, it will indemnify and
hold Associate harmless from all costs (including
reasonable attorneys' fees), losses and liabilities
arising out of or resulting from the use by Associate
of Krispy Kreme's Marks, distinctive markings,
designs, labels and other marks pursuant to this
Agreement. Both parties agree that Krispy Kreme shall
have the exclusive right to defend any such claim,
suit, action or proceeding by any third party against
Associate arising out of or resulting from such use
and that Associate shall promptly and timely notify
Krispy Kreme of all such claims, actions, suits and
proceedings.
E. PURPOSE OF LICENSE. Krispy Kreme covenants, and Associate
agrees, that the purpose of this Agreement is to generate
revenue for Associate through his active participation in the
licensed business and for Krispy Kreme as compensation for its
licensing of the System; and they further agree that the
purpose of such compensation and revenue is not to raise
capital for Krispy Kreme or to provide Associate with a
monetary return on his investment solely from the efforts of
others.
F. TECHNICAL ASSISTANCE. Krispy Kreme shall make available to
Associate such technical assistance and services as it may be
providing Associates from time to time upon such terms and
conditions as may be established by Krispy Kreme.
G. FINANCIAL ASSISTANCE. If Krispy Kreme provides financial
assistance of any kind to Associate, it will charge Associate
a service fee and interest, or either, for such financial
assistance.
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ARTICLE III
ASSOCIATE'S COVENANTS
A. BEST EFFORTS IN AREA. Associate shall exert his best efforts
to maximize the permitted sales potential for Krispy Kreme
Doughnuts in the Area.
B. TERM. Associate shall have the right to utilize the System and
to produce, distribute, market and sell, at such price or
prices as Associate in his sole discretion shall determine,
Krispy Kreme Doughnuts under Krispy Kreme's Marks for so long
as this Agreement remains in full force and effect and no
longer.
C. DOUGHNUT PRODUCING FACILITY. Associate shall maintain and
operate a doughnut producing facility, where all production
shall be done, at the Location with delivery and production
equipment adequate to supply Krispy Kreme Doughnuts through
both wholesale and retail sales in the Area, and he shall
comply with all applicable laws, regulations and ordinances
pertaining to its operation and shall at all times maintain
the doughnut producing facility in a clean, wholesome and
sanitary condition.
D. PRODUCTION. Associate shall comply with all instructions,
formulae, specifications and quality control guidelines for
the production of, and the procedures for packaging of, Krispy
Kreme Doughnuts as set forth in the Manual. If Associate fails
to comply with these provisions of the Manual, (or has not
received written approval for deviation from Manual standards)
after written notice thereof by Krispy Kreme, Associate shall
immediately cease all further production, distribution and
sale of Krispy Kreme Doughnuts or such portions thereof as
Krispy Kreme shall direct until such failure is corrected (or
until such deviation from Manual standards is approved in
writing by Krispy Kreme).
E. USE OF MIX AND PRODUCTION EQUIPMENT SYSTEM. Associate
recognizes the importance of the Krispy Kreme name and agrees
to use his best efforts to maintain the high standards of the
System. In connection with the license of the System,
Associate recognizes that the Mix is an essential ingredient
of the Krispy Kreme Doughnut and a key element and important
factor in the uniqueness and uniformity of the System.
Associate also recognizes that the Mix (1) is distinctive, (2)
is made from a secret formula, (3) has been developed after
many years of experimentation, (4) is considered a trade
secret by Krispy Kreme and (5) is the result of careful
blending of the ingredients under strict quality control to
produce its unique texture and taste. Associate also
recognizes that Krispy Kreme will make a profit on the sale of
Mix to Associate and that the price of the Mix may be changed
upon written notification of Krispy Kreme.
Associate shall purchase from Krispy Kreme and from
no other source and Krispy Kreme shall sell to Associate, such
quantities of Krispy Kreme's Mix as shall be needed to produce
and sell Krispy Kreme Doughnuts under this Agreement.
Associate shall order and pay for all shipments of Mix on
terms and prices currently
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in effect at the time of the sale. Each shipment by Krispy
Kreme to Associate shall constitute a separate sale.
Associate recognizes that the use of Krispy Kreme's
Production Equipment System is essential to the uniqueness and
uniformity of the System and is a key element in the
production of Krispy Kreme Doughnuts; that the Production
Equipment System (1) is the product of years of research and
development by Krispy Kreme, (2) is being continually improved
and (3) is considered a trade secret by Krispy Kreme; and that
Krispy Kreme will make a profit or return from the sale or
lease of the Production Equipment System to Associate.
Associate shall purchase or lease, as shall be
determined by Krispy Kreme, from Krispy Kreme and from no
other source, and Krispy Kreme shall sell or lease to
Associate, such numbers and components of its Production
Equipment System of such size and capacity as in the opinion
of Krispy Kreme shall be needed by Associate to produce and
sell Krispy Kreme Doughnuts under this Agreement. If the
Production Equipment System is sold to Associate, Associate
shall order and pay for it on terms, conditions (which
conditions include Krispy Kreme's right or option to
repurchase on the termination of this Agreement) and prices as
specified by Krispy Kreme. If the Production Equipment System
is leased to Associate, the monthly rental therefor shall be
the current rate then being charged to Krispy Kreme associates
on similar new equipment leases at the time of the inception
of Associate's lease. The Associate shall maintain the
Production Equipment System in proper working order so that he
can fulfill all obligations under this Agreement. The lease of
the Production Equipment System shall terminate upon
termination of this Agreement for any reason, and Associate
shall surrender it to Krispy Kreme immediately upon
termination.
F. QUALITY CONTROL SAMPLING. Associate shall promptly comply with
the sampling and reporting procedures required by Krispy
Kreme.
G. PROHIBITIONS. Associate shall not:
1. Produce a substandard product of Krispy Kreme
Doughnuts which do not fully comply with standards
set forth in this Agreement and the Manual.
2. Produce Krispy Kreme Doughnuts other than in
accordance with the formulae and standards set forth
in this Agreement and the Manual.
3. Use Krispy Kreme's System or its Mix or its
Production Equipment System to produce and sell any
product other than Krispy Kreme Doughnuts, including
but not limited to private label product, without
prior written approval of Krispy Kreme.
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4. Use Krispy Kreme's Marks or name on any doughnut or
other product of any kind other than Krispy Kreme
Doughnuts.
H. INDEMNIFICATION. Associate shall indemnify and save harmless
Krispy Kreme from any loss, claim or damage, including
reasonable attorney's fees, resulting from any impurity,
adulteration or misbranding of Krispy Kreme Doughnuts due to
negligence of Associate or any breach by Associate of any
provisions of this Agreement.
I. INSURANCE. Associate will maintain for the benefit of both
parties product liability insurance covering bodily injury and
property damage with such limits as may be prescribed in the
Manual from time to time. Associate shall furnish Krispy Kreme
a Certificate of Insurance indicating that such insurance is
in effect and that such insurance shall not be cancelled or
modified on less than ten (10) days' written notice to Krispy
Kreme.
J. ADVICE OF INDEPENDENT COUNSEL. Associate covenants that he
has sought advice of independent counsel (attorney, accountant
or financial advisor) in connection with the review and
execution of this Agreement.
K. ACTIVE PARTICIPATION. Associate covenants that he will
actively participate in the management and operation of the
licensed business by devoting a substantial amount of time and
will not be a passive investor.
L. FINANCIAL STATUS AND RECORDS. Associate shall operate his
business on a sound financial basis and shall have sufficient
funds in the business (not making excessive withdrawals
therefrom) for Associate to meet his current obligations to
Krispy Kreme under this Agreement and to others, to produce
and sell Krispy Kreme Doughnuts in sufficient quantity to meet
the demand therefor in the Area and to conduct his business in
a proper manner. Associate shall submit to Krispy Kreme such
financial reports as may be stipulated in the Manual from time
to time and shall permit Krispy Kreme to examine his financial
books and records to assure Krispy Kreme that Associate is
complying with this Agreement and provisions of the Manual.
M. TRADEMARKS, TRADE NAMES AND TRADE SECRETS. Associate agrees
that
1. Krispy Kreme has the sole and exclusive right (except
for certain rights granted under existing and future
license agreements) to use the Marks, trade names and
trade secrets set forth herein and Associate
represents, warrants and agrees that, neither during
the term of this Agreement nor after the expiration
or other termination hereof, shall Associate directly
or indirectly
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contest or aid in contesting the validity or
ownership of the Marks, trade names or trade secrets
or take any action whatsoever in derogation of Krispy
Kreme's claimed rights therein.
2. Nothing contained in this Agreement shall be
construed to vest in Associate any right, title or
interest in or to Krispy Kreme's Marks, the goodwill
now or hereafter associated therewith, or any right
in the design of the doughnut producing facility,
doughnut shop, signs and other distinctive equipment,
other than the rights and license expressly granted
herein. Any and all goodwill associated with the use
of Krispy Kreme's Marks and name shall inure directly
and exclusively to the benefit and is the property of
Krispy Kreme.
3. Associate shall advertise and promote the licensed
business only under Krispy Kreme Marks; and his
advertising or other use of Krispy Kreme's Marks
shall not contain any statement or material which, in
the judgment of Krispy Kreme, may be in bad taste or
inconsistent with Krispy Kreme's public image. Krispy
Kreme reserves the right to preview and edit any of
Associate's television and radio advertisements prior
to Associate's commitment thereto.
4. Associate shall use the business name "Krispy Kreme
Doughnut Company" during the term of this Agreement
and no longer. Such business name may be changed upon
prior written approval by Krispy Kreme. Associate
shall not use the words "Krispy Kreme" or similar
words in any corporate name.
5. Krispy Kreme is the owner of all proprietary rights
in and to the System and all material pertaining to
the use of the System which are described in the
Manual. The System and the contents of the Manual
constitute trade secrets of Krispy Kreme which are
revealed to the Associate in confidence, and no right
is given to or shall be acquired by Associate to
disclose, duplicate, license, sell or reveal any
portion thereof to any person other than an employee
of Associate required by his work to be familiar with
relevant portions thereof. Associate agrees to keep
and respect the confidence extended hereby and that
the Manual and other similar materials furnished to
Associate hereunder are and will remain the property
of Krispy Kreme and must be returned to Krispy Kreme
immediately upon termination of this Agreement.
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ARTICLE IV
STANDARDS OF UNIFORMITY AND OPERATION OF
DOUGHNUT PRODUCING FACILITY AND DOUGHNUT SHOP
Associate agrees that Krispy Kreme's special architectural design,
color and decor of doughnut producing facility and doughnut shop buildings,
uniformity of layout, equipment, supplies, and containers, and adherence to the
Manual are essential to the System. In recognition of the mutual benefits
accruing from maintaining uniformity of appearance, service, products and
marketing procedures, it is mutually covenanted and agreed:
A. BUILDINGS AND PREMISES. Except as specifically authorized by
Krispy Kreme, the exterior and interior of the doughnut
producing facility and doughnut shop building shall conform to
the architectural style and motif and layout previously,
currently or hereafter approved by Krispy Kreme. Associate
shall not alter the appearance of the doughnut producing
facility or doughnut shop as approved. If Krispy Kreme shall
determine that the doughnut shop and doughnut producing
facility do not meet Krispy Kreme standards as to sanitation,
cleanliness, maintenance, painting and general state of
repair, Associate will, within a reasonable period of time not
exceeding 45 days, make, or make arrangements for, all such
repairs, maintenance, cleaning and painting as may be required
by Krispy Kreme.
B. SIGNS. Associate agrees to display Krispy Kreme's name and
Marks at the Location and to maintain and display signs
reflecting current image of Krispy Kreme in accordance with
standards established by Krispy Kreme.
C. LAYOUT AND USE OF VENDING MACHINE, ETC. The standards for the
exterior and interior layout of the doughnut producing
facility and doughnut shop and use or nonuse of items such as
telephone booths, newspaper and magazine racks, jukeboxes, gum
machines, games, rides or coin vending machines shall be
established by Krispy Kreme.
D. MENU AND SERVICE AT DOUGHNUT SHOP. The limited menu of Krispy
Kreme doughnut shop is an essential and necessary element of
the System, having been designed to contribute to the fine
public image of Krispy Kreme and the uniformity of all the
Krispy Kreme doughnut shops. Associate agrees that he will
operate his doughnut shop in accordance with the standards,
specifications and procedures set forth in the Manual, will
serve at the doughnut shop only items of food and drink
specified in the Manual and will follow all specifications and
formulae in the Manual as to quality of products produced at
the plant and served in the doughnut shop. Associate agrees
that all food and drink items will be served in containers
bearing accurate reproductions of Krispy Kreme's Marks.
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E. ALTERNATE SUPPLIERS. Except for the Mix and Production
Equipment System, Associate may purchase through Krispy Kreme
or any other source (1) any other ingredients for Krispy Kreme
Doughnuts and other products permitted to be sold in the
doughnut shop; (2) any other doughnut plant equipment; (3)
packages and containers for his products; and (4) other
supplies, if the items supplied meet specifications set forth
in the Manual. Krispy Kreme will not unreasonably withhold
prompt approval of such purchases provided sufficient notice
is given by Associate for Krispy Kreme to determine that such
items conform to the standards and specifications set forth in
the Manual. In return for services and expertise provided by
Krispy Kreme, it will charge a service fee in the form of a
markup for any purchase of supplies made through the
Purchasing Department of Krispy Kreme.
F. RIGHT OF ENTRY AND INSPECTION. To ensure that Associate is
complying with the provisions of this Agreement and the Manual
in his utilization of the System, any officer of Krispy Kreme
Doughnut Corporation or a representative designated by the
President or Vice President - Associate Division of Krispy
Kreme Doughnut Corporation shall have the right to enter and
inspect the doughnut producing facility and doughnut shop at
any time and test the Associate's finished products and
ingredients thereof, his Product Equipment System and other
equipment, packages and supplies. Associate shall diligently
correct any such deficiencies detected during such
inspections. If written notice of such deficiency is given,
Associate shall immediately desist and refrain from a
continuation of any deficiency set forth in the notification.
ARTICLE V
ROYALTY
A. ROYALTY. As part of the total consideration for Krispy Kreme's
licensing of its System to Associate, Associate agrees to pay
weekly a royalty of three percent (3%) of Associate's gross
retail sales and one percent (1%) of all other sales (not
including sales tax) or as otherwise set forth in the Manual
as it may be changed from time to time. Associate's check
covering the royalty for the preceding seven days shall be
mailed to Krispy Kreme on Friday of each week.
B. ACCOUNTING PROCEDURES AND RIGHT TO AUDIT. Associate agrees to
keep complete records of his business, maintain such records
for the same period of time as required by federal and local
income tax laws, and submit to Krispy Kreme such financial
reports as prescribed in the Manual. Associate agrees that
Krispy Kreme or its agents shall have the right to examine or
audit the books and accounts of Associate.
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ARTICLE VI
COVENANTS OF BOTH PARTIES
A. FORCE MAJEURE. Neither Krispy Kreme nor Associate shall be
held liable for the failure of either to comply with any terms
of this Agreement if such failure is caused solely by fire,
strike, union or other labor problems, war (whether or not
declared), riots, insurrection, government restrictions, acts
of God, or other causes beyond its or his control and without
its or his fault; provided, however, that Associate shall
continue to be obligated to pay to Krispy Kreme all amounts on
which he shall have duly become obligated prior to the
occurrence of any event referred to in this section.
B. INDEPENDENT CONTRACTOR. Associate is an independent contractor
and neither party shall have the power to incur or be liable
for any debts, accounts, obligations or other liabilities of
the other party or its or his agents or employees except as
specifically authorized in writing.
C. NO AGENCY. Associate shall not represent or hold himself out
as an agent, legal representative, partner, subsidiary, joint
venturer or employee of Krispy Kreme and he shall exhibit on
his premises in a place designated by Krispy Kreme, a
notification that he is an Associate of Krispy Kreme. In all
public records, in his relationship with other persons and on
letterheads, calling cards and business forms, he shall
indicate his independent ownership of said business and that
he is an Associate of Krispy Kreme.
ARTICLE VII
TRANSFER OF LICENSE
A. ASSIGNABILITY. Except as provided in Sections B, C and D of
this Article, Associate acknowledges that this Agreement is
personal to him and made with him as an individual; and he
shall neither sell, assign, transfer, sublicense, pledge,
mortgage, hypothecate, encumber nor otherwise dispose of this
Agreement or any right or interest therein, nor suffer or
permit any such assignment, transfer or disposition to occur
by operation of law unless the prior written consent of Krispy
Kreme be first had and obtained. Assignment of any interest,
other than as provided in this Article, shall constitute a
material breach of this Agreement; and, upon such assignment,
Krispy Kreme shall have the right to terminate this Agreement
immediately upon written notice to Associate.
B. TRANSFER OF LICENSE IN EVENT OF ASSOCIATE'S DEATH, DISABILITY
AND RETIREMENT. Upon the death or disability of Associate or
if Associate desires to retire, Krispy Kreme shall give
consideration to the transfer of his interest herein to the
Associate's spouse, issue or any other person so designated by
Associate to assume operation of the licensed business if in
the sole discretion and judgment of Krispy Kreme, such person
obtaining said interest is in all respects acceptable to
Krispy Kreme and shall be capable of conducting said
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business in a manner satisfactory to Krispy Kreme, shall
satisfy the requirements of Section D of this Article and
shall assume in writing all obligations under this Agreement.
Krispy Kreme agrees to exert its best efforts to assist
Associate in planning the transfer of the license granted
hereunder upon his retirement, death or disability, including
counseling with the Associate at Associate's expense, training
the designated successor to the license and satisfying the
requirements of Section D below. Upon the death of Associate,
Krispy Kreme shall have the right to continue the operation of
the System at Associate's Location and assist his heirs or
personal representatives in the transfer of the license as
provided herein.
C. ASSOCIATE RECEIVES OFFERS TO PURCHASE FROM UNRELATED THIRD
PARTIES. If Associate, his heirs or personal representatives
receive a bona fide acceptable offer to purchase his business
or any portion thereof, the real property which is the situs
of the Location or any portion thereof, or any offer to
acquire his license granted hereunder or any portion thereof,
he or they shall within forty-eight (48) hours of such offer
notify Krispy Kreme in writing. Krispy Kreme shall have for a
period of sixty (60) days the first refusal to purchase upon
the same terms and conditions as offered by the prospective
buyer. If Krispy Kreme does not accept the offer within sixty
(60) days, Associate may conclude the sale to the prospective
purchaser at the price and upon such terms and conditions as
offered to Krispy Kreme; provided that the requirements of
Section D of this Article must be met if the license granted
herein is to be transferred.
D. TRANSFER REQUIREMENTS. Krispy Kreme may impose reasonable
conditions on any assignment of the license granted hereunder
which may include, without limitation, the following:
1. Associate must satisfy fully all obligations to
Krispy Kreme and others arising out of this Agreement
and the operation of the licensed business unless
Krispy Kreme otherwise agrees in writing.
2. Assignee must satisfactorily (a) demonstrate to
Krispy Kreme's sole and complete satisfaction that he
meets the financial and managerial criteria required
by Krispy Kreme, (b) agree to avail himself of such
training as Krispy Kreme shall, in its sole
discretion, specify, and (c) shall pay to Krispy
Kreme One Hundred Dollars ($100) as an assignment
fee. If more than one doughnut producing facility and
doughnut shop location granted under this Agreement
is assigned, there shall be a charge of Fifty Dollars
($50) for each additional location included in the
same transaction.
E. CONDUCT OF BUSINESS IN CORPORATE FORM. If Associate desires to
conduct business as a corporation, Krispy Kreme will consent
to the sublicensing of this Agreement to a corporation
approved by Krispy Kreme provided Associate shall remain the
primary licensee, guaranteeing all obligations of such
corporation
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to Krispy Kreme under this Agreement and shall comply with the
provisions hereinafter specified and any other condition that
Krispy Kreme may require, including a limitation on the number
of stockholders of the sublicensee corporation. Such
corporation shall be closely held and shall not engage in any
business activity other than those directly related to the
production, marketing, distribution and sale of Krispy Kreme
Doughnuts pursuant to the terms and conditions of Associate's
Agreement with Krispy Kreme. There shall be no sublicensing
fee imposed by Krispy Kreme if such sublicense is made within
ninety (90) days after the execution of this Agreement.
Associate shall be and remain the legal and
beneficial owner of the stock in such corporation and shall
act as such corporation's principal officer. Provided
Associate retains in excess of fifty percent (50%) ownership
of the voting stock ("controlling interest") of the
corporation, he may transfer or assign stock in such
corporation only to his spouse, issue or operating managers.
If Associate ceases to act as principal officer or own
controlling interest through death or otherwise, the
sublicense to such corporation shall terminate immediately.
Associate may not otherwise transfer, assign, bequeath,
pledge, hypothecate, encumber or mortgage his stock without
the prior written consent of Krispy Kreme. The transfer or
assignment of any stock interest of such corporation, other
than as herein provided, without the prior written consent of
Krispy Kreme, shall constitute a material breach of this
Agreement permitting Krispy Kreme, at its sole option, to
terminate same immediately upon written notice.
The corporation shall have sufficient equity capital
in the business to result in a debt-to-equity ratio of one (1)
to one and a half (1-1/2), or such other debt-to-equity as may
be approved in writing by Krispy Kreme.
Associate agrees to furnish to Krispy Kreme certified
copies of its Articles of Incorporation, By-Laws, a specimen
stock certificate and any other documents required by Krispy
Kreme to enable it to determine if Associate and his
corporation are meeting the requirements of this Section E,
and further agrees that Krispy Kreme or its agents shall have
the right to examine the Articles of Incorporation, By-Laws,
Minute Book, Stock Ledger and other Corporate records of such
Corporation to verify compliance with this Article.
ARTICLE VIII
TERMINATION OF LICENSE
A. TERMINATION WITHOUT NOTICE. In the event of any of the
following:
1. The cessation by Associate of his business; or
2. The insolvency of Associate; or
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3. The filing by or against Associate of a voluntary or
involuntary petition pursuant to any present or
future act of the Federal Congress on the subject of
bankruptcy, including the Federal Wage Earner Plan,
which petition has not been dismissed within thirty
(30) days after such filing;
4. The institution of any proceeding by or against
Associate arising from any insolvency, bankruptcy or
assignment for the benefit of creditors, which
proceeding has not been dismissed within thirty (30)
days after the institution of such proceeding; the
foreclosure by a creditor of the Associate on any
obligation due such creditor, or attempt of any
governmental agency to collect taxes owed by or money
due from the Associate;
5. The making of any assignment for the benefit of
creditors or the appointment of a receiver of
Associate or of substantially all of the property of
Associate;
6. Death or any declaration of incompetency of
Associate, regardless of whether Associate has
sublicensed this Agreement to a sublicensee
Corporation under ARTICLE VIII, Section E in which
event, this Agreement shall automatically and
immediately be terminated.
B. TERMINATION FOR VIOLATION OF ARTICLE VII. Termination of this
Agreement for Associate's violation of ARTICLE VII above is
governed by the provisions of that Article.
C. TERMINATION UPON NOTICE FOR CAUSE. This Agreement may be
terminated at any time by either party, if the other party
shall fail to perform ("for cause") any of the covenants
herein contained to be performed by the other party (except as
provided in ARTICLES VI-A and VII hereof), by written notice
of the failure, stating the nature and character thereof and
allowing the other party sixty (60) consecutive days from the
date of the notice to correct the failure. If the failure is
not corrected within the period of sixty (60) consecutive
days, the party who shall have given the notice may terminate
this Agreement forthwith without need of any additional notice
to that effect.
D. WAIVER. The failure of either party to give notice of
performance or of termination shall not constitute a waiver of
the covenants, terms or conditions herein, or of the rights of
either party thereafter to enforce such covenants, terms or
conditions or to terminate this Agreement for any subsequent
breach thereof.
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ARTICLE IX
POST TERMINATION
A. TERMINATION OF GRANT. Upon the termination of this Agreement,
except as may otherwise be provided herein, all rights and
privileges granted under this Agreement shall immediately
cease and terminate and Associate shall thereupon discontinue
forever the use of Krispy Kreme's Marks in connection with
Associate's business except the right to sell its inventory of
finished product.
B. USE OF KRISPY KREME MATERIALS. Upon the termination of this
Agreement for any reason, Associate shall cease his use of
Krispy Kreme's System. Associate shall deliver to Krispy
Kreme, and Krispy Kreme shall repurchase from Associate, the
following items which in Krispy Kreme's opinion are in usable
condition and in current use at Associate's depreciated cost
or fair market value whichever is less but in no event less
than 20% of Associate's original cost: all of the Mix,
Production Equipment System, packaging materials, and supplies
which bear the Krispy Kreme Marks. With respect to Krispy
Kreme's signs, menu boards and other items of tangible
personal property which bear Krispy Kreme's Marks or are
representative of Krispy Kreme's public image, Associate shall
either sell such items to Krispy Kreme at Associate's
depreciated cost value or fair market value whichever is less
but in no event less than 20% of Associate's original cost, or
alter and remodel such items in such way so that they shall no
longer be representative of Krispy Kreme's public image or be
deemed a use of Krispy Kreme's Marks, as shall be determined
solely by Krispy Kreme. Associate shall remove all Krispy
Kreme Marks from his motor vehicles.
C. INJUNCTION AND OTHER LEGAL AND EQUITABLE REMEDIES. The
provisions of this Article may be enforced by injunction, but
the use of such injunction by Krispy Kreme shall not prevent
it from seeking any other legal or equitable remedy available.
ARTICLE X
MISCELLANEOUS
A. NOTICE. Any notice to be given pursuant to the provisions of
this Agreement shall be in writing and shall be sent by
registered mail addressed in the case of Krispy Kreme to:
Krispy Kreme Doughnut Corporation
Attention: Vice President - Associate's Division
P O Box 83
Winston-Salem, North Carolina 27102-0083
and in the case of notice to Associate, to:
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or to such other place as the receiving party shall have given
in writing to the sending party.
B. ONLY AGREEMENT. Except as otherwise stated herein, this
Agreement contains the complete agreement between the parties
in respect of the subject matter of the licensing of the
System, and all other prior agreements are superseded. Except
for the Manual, this Agreement (together with its Exhibits)
shall not be amended or supplemented except in writing signed
by Associate and Krispy Kreme.
C. GOVERNING LAW. This Agreement shall be interpreted and
governed by the laws of the State of North Carolina.
D. INVALIDITY. If any term or provision of this Agreement shall
be or become invalid under any applicable law; then the
remainder of this Agreement shall not be affected thereby, and
the remaining terms and provisions hereof shall remain in
effect as if the invalid portion were not a part hereof.
E. NON-WAIVER. The failure of Krispy Kreme to exercise any right,
power or option given to it hereunder, or to insist upon
strict compliance with the terms hereof by Associate shall not
constitute a waiver of the terms and conditions of this
Agreement with respect to any other or subsequent breach
thereof, nor a waiver by Krispy Kreme of its right at any time
thereafter to require exact and strict compliance with all the
terms hereof. The rights and remedies hereunder are cumulative
to any other rights or remedies which may be granted by law.
F. RIGHT OF KRISPY KREME TO HAVE OTHER PARTIES FULFILL ITS
OBLIGATIONS. Krispy Kreme shall have the right to have the
services it provides to Associate or its obligations to
Associate hereunder performed or fulfilled by Krispy Kreme,
its subsidiary corporations or such agents, employees and
representatives as it shall designate.
G. MERGER OR CONSOLIDATION. If Krispy Kreme shall at any time be
merged or consolidated into or with another corporation or if
substantially all of its assets are transferred to another
corporation or business entity, the provisions of this
Agreement shall be binding upon and inure to the benefit of
the corporation or business entity resulting from such merger
or consolidation or to which such assets shall be transferred,
and this provision shall apply in the event of any subsequent
merger, consolidation or transfer.
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H. THE WORD "ASSOCIATE." The word "Associate" and all pronouns
relative thereto as used in this Agreement include the
masculine, feminine and neuter gender as the case may be and
shall mean the Associate, his Assignee, his sublicensee or
successors in interest where the context so indicates.
I. HEADINGS TO ARTICLES AND SECTIONS. The headings or captions of
Articles and Sections of this Agreement are merely descriptive
and not substantive and have no meaning in the interpretation
of this Agreement.
IN WITNESS WHEREOF, the parties hereto have executed this License
Agreement as of the ____ day of __________________, _____.
KRISPY KREME DOUGHNUT CORPORATION
By
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President
ATTEST:
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Secretary
[CORPORATE SEAL]
ASSOCIATE
By (SEAL)
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