Sample Business Contracts

Collateral Repurchase Agreement - Krispy Kreme Doughnut Corp., Midwest Doughnuts LLC and Bank of Blue Valley

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         THIS COLLATERAL REPURCHASE AGREEMENT (the "Agreement") is made and
entered into this 15th day of October, 1997 by and among KRISPY KREME DOUGHNUT
CORPORATION, a North Carolina corporation, with its principal office and place
of business at 370 Knollwood Street, Suite 500, Winston-Salem, North Carolina,
27103 ("Krispy Kreme"), MIDWEST DOUGHNUTS, L.L.C., a North Carolina limited
liability company (the "Borrower") and BANK OF BLUE VALLEY (the "Bank").

                                R E C I T A L S :

                  1. The Borrower has requested a loan from the Bank to finance
         the purchase of certain equipment, signage, furniture and fixtures for
         use at the Krispy Kreme Doughnut Shop to be established by Borrower at
         Indian Creek Shopping Center, Overland Park, Kansas.

                  2. The Bank has agreed to lend to Borrower Seven Hundred
         Sixty-Five Thousand and 00/100 Dollars ($765,000) secured in part by a
         security interest in the Equipment (as defined below) (the "Bank Loan")
         as evidenced by the Note (as defined below); and

                  3. Therefore, the parties desire to enter into this Agreement.

         NOW THEREFORE, in consideration of the mutual promises and covenants
herein contained, the parties hereto do agree as follows:

                  1. A copy of the Note is attached hereto as EXHIBIT A and
         incorporated herein by reference (the "Note").

                  2. Bank shall provide Krispy Kreme with a copy of any notice
         to Borrower declaring a default under the Note and demanding payment in
         full and a copy of any notice to Borrower after which Bank will
         exercise its remedies under the Note. Such copies shall be sent to
         Krispy Kreme within three (3) business days of the sending of the same
         to Borrower.

                  3. In the event of a default under the Note, as long as Bank
         has fully complied with the terms of this Agreement, Bank shall have
         the right, but not the obligation, to demand by notice to Krispy Kreme
         (the "Notification") that Krispy Kreme repurchase the Equipment at a
         price equal to the lesser of (i) Two Hundred Five Thousand and 00/100
         Dollars ($205,000.00) or (ii) the unpaid balance of the applicable
         portion of the Bank Loan (the "Unpaid Balance"). Such lesser amount is
         sometimes herein referred to as the "Purchase Price." The parties
         acknowledge that the Bank Loan is for Borrower's entire project for the
         construction, equipping and fixturing of a Krispy Kreme Doughnut

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         Shop and includes, but is not limited to, the purchase of the
         Equipment. Consequently, the unpaid Bank Loan balance will be prorated
         in relationship to the amount of the Loan for the purchase of the
         Equipment to determine the Unpaid Balance as such term is used in this
         Agreement. For example, purchase price of the Equipment is $205,000 and
         the Bank Loan is $765,000, then the Unpaid Balance, for purposes of
         this Agreement, shall be equal to 26.8% of the actual unpaid balance of
         the Bank Loan at the time of the Notification.

                  4. The parties acknowledge and agree that any default by
         Borrower under the Note or any other documents related to the Bank
         Loan, whether or not waived by the Bank, shall, at the option of Krispy
         Kreme, constitute a default under the Franchise Agreement, Development
         Agreement and any and all other agreements between Borrower and Krispy

                  5. The liability of Krispy Kreme hereunder shall be subject
         to, and conditioned upon, full and complete compliance by Bank with the

                           (a) Bank shall obtain and perfect a first priority
                  security interest in the Equipment (the "Security Interest")
                  and shall continuously maintain such perfected Security
                  Interest from the moment Borrower acquires any interest in the
                  Equipment. All filings and indicia of such Security Interest
                  shall state that they are subject to the terms of this

                           (b) Bank shall notify Krispy Kreme of each advance
                  under the Bank Loan for any purchase of Equipment not from
                  Krispy Kreme within thirty (30) days after such advance is
                  made and Krispy Kreme's obligations to Bank hereunder shall be
                  reduced by the amount of any advances for which Krispy Kreme
                  does not receive such notice.

                           (c) The Security Interest shall be perfected separate
                  and apart from any other security interest of Bank in and to
                  any and all other property of Borrower.

                           (d) Any transfer of the Security Interest or any
                  interest therein to any other party shall provide that it is
                  subject to the terms of this Agreement and the transferee
                  thereof shall enter into an agreement with Krispy Kreme
                  agreeing to abide by the terms hereof.

                           (e) Bank shall not release the Security Interest in
                  the Equipment nor shall Bank take any action, or fail to take
                  any action, which action or failure to act will compromise or
                  diminish the Security Interest in any way. Provided, however,
                  Bank may release the Security Interest in portions of the
                  Equipment if Bank, at Bank's election, either (i) releases
                  Krispy Kreme from liability under this Agreement or (ii)
                  determines that Borrower reasonably desires to replace the
                  Equipment with new or different equipment (the "New
                  Equipment") of value and function comparable to that in which
                  the Security Interest is to be released and


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                  ensures that the New Equipment is obtained by Borrower prior
                  to such release and that the Security Interest applies to such
                  New Equipment as a first priority Security Interest. Upon such
                  replacement, the New Equipment shall be deemed to be
                  "Equipment" under this Agreement. Bank shall provide notice to
                  Krispy Kreme of any such release and shall provide Krispy
                  Kreme with a list of the New Equipment and evidence that the
                  Security Interest applies thereto.

                  6. Upon election by Bank to require repurchase of the
         Equipment by Krispy Kreme hereunder, Bank shall assign and transfer the
         Security Interest together with an interest in the Note equal to the
         Purchase Price to Krispy Kreme or such entity as Krispy Kreme may
         designate in writing. Borrower shall transfer all of its right, title
         and interest in the Equipment to Krispy Kreme at the same time. The
         Security Interest is agreed by the parties to also secure all of
         Borrower's obligations under this Agreement and Borrower hereby grants
         to Bank and to Krispy Kreme a security interest (which is agreed to be
         a part of the Security Interest) in the Equipment to secure Borrower's
         obligations under this Agreement. In no event shall the Security
         Interest be permitted to merge with ownership of the Equipment.

                  7. Except as permitted under subparagraph 5(e) hereof,
         Borrower shall not sell or transfer, and bank shall not consent to the
         sale or transfer, whether by gift or with or without consideration, of
         all or any part of the Equipment. Bank shall not sell or transfer the
         Equipment or any portion thereof through exercise of its rights under
         the Bank Loan and any documents executed in connection therewith, or
         otherwise, without first giving Krispy Kreme the option to purchase the
         Equipment in an amount equal to the Purchase Price. bank shall provide
         notice to Krispy Kreme of its proposed transfer and thirty (30) days in
         which to exercise its right to purchase said Equipment. At the time
         Krispy Kreme purchases the Equipment, Bank shall also transfer the
         Security Interest as provided under Paragraph 6 above. In no event
         shall the Security Interest be permitted to merge with ownership of the

                  8. As used herein, the term Equipment shall mean all
         furniture, fixtures, equipment, doughnut making equipment and signage
         purchased by Borrower and reasonably necessary for the operation of a
         Krispy Kreme Doughnut Shop to be located at Indian Creek Shopping
         Center, Overland Park, Kansas, and as to which the Security Interest is
         effective. Krispy Kreme must approve the purchase of each item of

                  9. Borrower consents and agrees to the terms of this Agreement
         and agrees to transfer the Equipment to Krispy Kreme immediately and at
         the same time as Krispy Kreme makes a payment of the Purchase Price to
         Bank or at the time Krispy Kreme elects to purchase the Equipment under
         Paragraph 7 hereof or as otherwise provided herein. Any such transfer
         shall be free and clear of all liens, claims or interests other than
         the Security Interest. In no event shall the Security Interest be
         permitted to merge with ownership of the Equipment.


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                  10. A partial list of the Equipment is attached as EXHIBIT B
         hereto and incorporated herein by reference. The parties agree to amend
         such list as each item of Equipment is purchased, upon the completion
         of the purchase of the Equipment, and again upon the purchase of any
         New Equipment. No New Equipment shall be considered a part of the
         Equipment until added to this EXHIBIT B.

                  11. All notices required or desired to be sent hereunder shall
         be sent by certified mail, return receipt requested, postage prepaid,
         or by a recognized overnight courier such as Airborne Express, FedEx,
         etc. and shall be effective on receipt. Any party may change the
         address for notices to it by notice sent in accordance herewith.
         Notices shall be sent the parties hereto at their respective addresses
         set forth below (or at such address may be changed as permitted

                  IF TO KRISPY KREME:       Krispy Kreme Doughnut Corporation
                           By Mail:         P.O. Box 83
                                            Winston-Salem, NC 27102-0083
                                            Attention: Stephen A. Johnson
                           By Overnight:    370 Knollwood Street
                                            Suite 500
                                            Winston-Salem, NC 27103
                                            Attention: Stephen A. Johnson

                  IF TO BORROWER:           MIDWEST DOUGHNUTS, L.L.C.
                                            620 Staffordshire Road
                                            Winston-Salem, NC 27104
                                            Attention: Philip R.S. Waugh, Jr.

                  IF TO BANK:               Bank of Blue Valley
                           By Mail:         P.O. Box 26128
                                            Overland Park, KS 66225
                                            Attention: Lanny Drummond
                           By Overnight:    11935 Riley
                                            Overland Park, KS 66225
                                            Attention: Lanny Drummond

                  12. No failure of Bank to provide Krispy Kreme with a copy of
         any notice sent to Borrower shall relieve Krispy Kreme of its liability

                  13. This Agreement shall be binding upon, and inure to the
         benefit of, the parties hereto and to the successors and assigns of
         Bank and Krispy Kreme. Borrower shall not have any right to assign this
         Agreement or any interest herein without the prior written consent of
         Bank and Krispy Kreme. Bank and Krispy Kreme shall each provide the
         other with a copy of any assignment of this Agreement. Any such
         assignment by Bank may be whole or partial, shall only be to a holder
         of an interest in the Note, and shall contain an agreement by the
         assignee to abide by the terms hereof. No assignment


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         hereof by Krispy Kreme shall relieve it of its obligations hereunder
         without Bank's consent to such release.

         IN WITNESS WHEREOF, the parties hereto have executed this Agreement
effective the day and year first above written.

                                       KRISPY KREME DOUGHNUT CORPORATION

                                       By:  /s/  Scott A. Livengood
                                       Printed Name:  Scott A. Livengood
                                       Printed Title: President


                                       MIDWEST DOUGHNUTS, L.L.C.

                                       By:  /s/  Jimmy B. Strickland
                                            Jimmy B. Strickland, Managing Member


                                       BANK OF BLUE VALLEY

                                       By:  /s/  Lanny Drummond
                                       Printed Name:  Lanny Drummond
                                       Printed Title: Vice President