Development Agreement - Krispy Kreme Doughnut Corp.
FORM OF
KRISPY KREME DOUGHNUT CORPORATION
DEVELOPMENT AGREEMENT
________________________________________________________________________________
DEVELOPER
________________________________________________________________________________
DATE OF DEVELOPMENT AGREEMENT
________________________________________________________________________________
DEVELOPMENT AREA
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TABLE OF CONTENTS
SECTION PAGE
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1. PREAMBLES............................................................1
2. CERTAIN DEFINITIONS..................................................2
3. DEVELOPMENT RIGHTS AND OBLIGATIONS...................................4
A. GRANT OF DEVELOPMENT RIGHTS; OWNERS' GUARANTY...............4
B. YOUR TERRITORIAL RIGHTS.....................................4
C. YOUR DEVELOPMENT OBLIGATIONS................................5
D. RIGHTS RETAINED BY US.......................................5
4. GRANT OF FRANCHISES..................................................6
A. SITE AND SITE PLAN REVIEW AND APPROVAL......................6
B. LEASE OR PURCHASE OF APPROVED SITES.........................6
C. EXECUTION OF FRANCHISE AGREEMENTS...........................7
D. FRANCHISE FEES AND ROYALTIES................................7
5. DEVELOPMENT FEE......................................................7
6. CONFIDENTIAL INFORMATION.............................................7
7. EXCLUSIVE RELATIONSHIP..............................................10
8. YOUR OBLIGATIONS....................................................11
A. MANAGING OWNER AND GENERAL MANAGER.........................11
B. MANAGEMENT PERSONNEL TRAINING..............................11
C. BUSINESS AND FINANCING PLAN................................11
D. INSURANCE..................................................12
E. RECORDS AND REPORTS........................................12
F. COMPLIANCE WITH LAWS AND GOOD BUSINESS PRACTICES...........13
9. TRANSFER............................................................13
A. BY US......................................................13
B. YOU AND YOUR OWNERS MAY NOT TRANSFER WITHOUT OUR APPROVAL..14
C. DEATH OF YOU OR AN OWNER OF A CONTROLLING INTEREST.........15
D. EFFECT OF OUR APPROVAL OF A TRANSFER.......................15
E. OUR RIGHT OF FIRST REFUSAL.................................15
F. OWNERSHIP STRUCTURE AND INITIAL CAPITALIZATION.............16
G. DELEGATION BY US...........................................17
10. TERMINATION OF AGREEMENT............................................17
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11. OUR RIGHTS AND OBLIGATIONS UPON TERMINATION OR EXPIRATION OF
THIS AGREEMENT......................................................18
A. CONFIDENTIAL INFORMATION/DE-IDENTIFICATION.................18
B. COVENANT NOT TO COMPETE....................................18
C. OUR RIGHT TO PURCHASE STORES...............................19
D. CONTINUING OBLIGATIONS.....................................19
12. INDEMNIFICATION.....................................................19
13. SEVERABILITY AND SUBSTITUTION OF VALID PROVISIONS...................20
14. WAIVER OF OBLIGATIONS...............................................21
15. RIGHTS OF PARTIES ARE CUMULATIVE....................................22
16. ARBITRATION.........................................................22
17. COSTS AND ATTORNEYS' FEES...........................................24
18. GOVERNING LAW AND JURISDICTION......................................24
19. CONSENT TO JURISDICTION AND VENUE...................................24
20. WAIVER OF PUNITIVE DAMAGES..........................................25
21. WAIVER OF JURY TRIAL................................................25
22. LIMITATIONS OF CLAIMS...............................................25
23. BINDING EFFECT......................................................26
24. CONSTRUCTION........................................................26
25. NOTICES AND PAYMENTS................................................26
EXHIBITS AND ATTACHMENTS
EXHIBIT A - DEVELOPMENT AREA(S)
EXHIBIT B - DEVELOPMENT SCHEDULE
EXHIBIT C - FORM FRANCHISE AGREEMENT
EXHIBIT D - DEVELOPER ACKNOWLEDGEMENTS AND REPRESENTATIONS STATEMENT
EXHIBIT E - GUARANTY AND ASSUMPTION OF YOUR OBLIGATIONS
EXHIBIT F - CONFIDENTIALITY AND NON-COMPETITION AGREEMENT
EXHIBIT G - BUSINESS ORGANIZATION, OWNERS, GENERAL MANAGER AND MANAGING OWNER
EXHIBIT H - COMMISSARY RIDER
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KRISPY KREME DOUGHNUT CORPORATION
DEVELOPMENT AGREEMENT
THIS AGREEMENT is made and entered into this _____ day of ____________,
19___ (the "EFFECTIVE Date"), by and between KRISPY KREME DOUGHNUT CORPORATION,
a North Carolina corporation, with its principal address at P. O. Box 83,
Winston-Salem, North Carolina 27102 (referred to in this Agreement as "we", "us"
or "our"), and _________________________________________________________________
_________________whose principal address is ____________________________________
referred to in this Agreement as "you", "your" or "Developer").
1. PREAMBLES.
We and our subsidiaries have expended considerable time and effort in
developing store facilities that offer and serve a variety of fresh doughnuts
(including among others, yeast raised doughnuts, cake doughnuts, miniature
doughnuts and doughnut holes (some of which have various types and flavors of
fillings, glazes or other coatings), certain other food products and beverages
and food services (collectively referred to in this Agreement as "Products").
The store concept is a building of stick-built construction with a single
drive-thru corridor and an indoor dining facility known as a KRISPY KREME STORE
which operates under distinctive business formats, methods, procedures, designs,
layouts, standards and specifications, all of which we may improve, further
develop or otherwise modify from time to time. Our subsidiary, HDN CORPORATION,
owns and has licensed us and our affiliates to use, promote and sublicense
certain trademarks, service marks and other commercial symbols in the operation
of KRISPY KREME STORES (including the trade and service marks "KRISPY KREME" and
"HOT DOUGHNUTS NOW" and associated logos), which have gained and continue to
gain public acceptance and goodwill, and we may hereafter create, use and
license additional trademarks, service marks and commercial symbols in
conjunction with the operation of a KRISPY KREME STORE (collectively, the
"Marks"). KRISPY KREME STORES sell Products at retail to customers for their
consumption; Deli-Bakery Sales and DSD Sales to food wholesalers, convenience
stores, grocery stores, other institutions and other chain stores for resale
and, to charitable, educational and other nonprofit organizations that resell
Products in various kinds of fund raising activities; and Products and items
bearing the Marks to retail establishments and to national accounts we have
agreed to serve.
We grant to certain qualified persons who meet our qualifications and
who are willing to undertake the investment and effort, the right to develop and
operate KRISPY KREME STORES within a defined geographic area offering the
Products and approved services and utilizing our business formats, methods,
procedures, signs, designs, layouts, equipment, mixes, standards, specifications
and the Marks (the "System"). This Agreement governs your rights and obligations
to develop KRISPY KREME STORES within the Development Area (defined below) in
accordance with the Development Schedule (defined below). The operation of each
KRISPY KREME STORE will be governed by a separate Franchise Agreement (defined
below).
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2. CERTAIN DEFINITIONS.
For purposes of this Agreement, the terms listed below have the
meanings that follow them. Other terms used in this Agreement are defined and
construed in the context in which they occur.
"APPROVED SITE" - A site that we have approved as meeting our minimum
criteria for the development and operation of a KRISPY KREME STORE.
"COMMISSARY" - A facility for the preparation of Products that (1)
procures and receives Products, ingredients and materials used in the
production, preparation and packaging of Products, and other materials and
supplies used in the operation of KRISPY KREME STORES as we may specify from
time to time; (2) prepares and packages Products in accordance with recipes,
methods, procedures, standards and specifications we establish, in our sole
discretion, from time to time; (3) distributes to KRISPY KREME STORES Products
and other materials and supplies used in the operation of KRISPY KREME STORES;
and (4) distributes Deli Bakery Sales and DSD Sales to food wholesalers
convenience stores, grocery stores and other stores and organizations for
resale.
"COMPETITIVE BUSINESS" - A business, other than a KRISPY KREME STORE,
that:
(1) sells yeast raised doughnuts, cake doughnuts, any other
types of customary or large size doughnut, miniature doughnuts,
doughnut holes in any distribution channels to any customer for
consumption or resale and such sales comprise five percent (5%) or more
of such business' revenues; or
(2) grants or has granted franchises or licenses, or
establishes or has established joint ventures, for the development
and/or operation of a business that offers such food products in any
such channel of distribution.
"COMPUTER SYSTEM" - The computer hardware and software designated by us
from time to time for use in the operation of KRISPY KREME STORES.
"CONTROLLING INTEREST" - An Ownership Interest in you equal to or
greater than twenty percent (20%).
"DELI BAKERY SALES" - Sales of unpackaged products which may be
delivered by you or sold on site to food wholesalers, convenience stores,
grocery stores, other institutions and other chain stores for resale by them
under our Marks or the marks of the purchasing entity.
"DSD SALES" - Direct store delivery sales of packaged products which
may be delivered by you or sold on site to food wholesalers, convenience stores,
grocery stores, other institutions and other chain stores for resale by them
under our Marks or the marks of the purchasing entity.
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"DEVELOPMENT AREA" - The geographic area described in EXHIBIT A to this
Agreement.
"DEVELOPMENT PERIOD" - as set forth in EXHIBIT B to this Agreement.
"DEVELOPMENT SCHEDULE" - as set forth in EXHIBIT B.
"DEVELOPMENT TERM" - The period during which you are authorized and
required to develop KRISPY KREME STORES pursuant to this Agreement, which will
commence on the date of this Agreement and will expire, unless terminated
earlier in accordance with the terms of this Agreement, on the last day of the
last Development Period set forth in EXHIBIT B.
"FRANCHISE" - The right to operate a KRISPY KREME STORE at a specific
location within the Development Area and to use the Marks and the System in the
operation thereof.
"FRANCHISE AGREEMENT" - The form of franchise agreement (including all
exhibits, riders, guarantees and other agreements used in connection therewith)
attached hereto as Exhibit C which is and will be used by us in the offer and
sale of franchises to you pursuant to the terms of this Agreement.
"GOOD STANDING" - You are current with all payments due to us, our
Affiliates and suppliers, you have met your Development Schedule, you are not in
default of any Franchise Agreement and you have passed the most recent QSC test.
"IMMEDIATE FAMILY" - (1) The spouse of a person; and (2) the natural
and adoptive parents and natural and adopted children of such person and their
spouses.
"NATIONAL ACCOUNTS" - Supermarket, convenience store and retail store
chains and regional and/or national organizations with whom we may sign
agreements to sell products bearing the Marks or identified by the National
Account's marks.
"OWNER" - Each Person holding a direct or indirect, legal or beneficial
Ownership Interest in you, and each person who has other direct or indirect
property rights in you or this Agreement.
"OWNERSHIP INTERESTS" - In relation to a: (1) corporation, the shares
of capital stock of the corporation; (2) limited liability company, the
memberships or other ownership interests of such company; or (3) partnership,
the general and limited partnership interests in such partnership.
"PERSON" - a natural person and a corporation, limited liability
company and general or limited partnership.
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3. DEVELOPMENT RIGHTS AND OBLIGATIONS.
A. GRANT OF DEVELOPMENT RIGHTS; OWNERS' GUARANTY .
You have applied to us for, and we have agreed to grant to you, the
right to develop and own KRISPY KREME STORES and to develop Deli Bakery
Sales/DSD Sales in the Development Area. Your application has been approved by
us in reliance upon all of the representations and warranties made by you and
your Owners in such application and your Acknowledgements and Representations
Statement, a copy of which is attached to this Agreement as EXHIBIT D and which
is signed by you and your Owners concurrently with this Agreement. Provided that
you are in full compliance with all of the terms and conditions of this
Agreement, including, without limitation, the development obligations described
in Subsection 3.C. and EXHIBIT B and you are in full compliance with all of your
obligations under all Franchise Agreements with us, we will grant to you during
the Development Term and in accordance with Section 4 hereof, Franchises to
develop and operate the number of KRISPY KREME STORES set forth in EXHIBIT B.
This Agreement and our obligation to grant you franchises will expire upon the
expiration of the Development Term. If you are in full compliance with this
Agreement and all Franchise Agreements with us, at your option, commencing not
less than one hundred and eighty (180) days before the expiration of the
Development Term, we agree to negotiate with you in good faith the grant to you
of rights to develop additional KRISPY KREME STORES and to continue to develop
Deli Bakery Sales/DSD Sales in the Development Area and the terms of a successor
development agreement.
You agree to cause all Owners to execute and deliver to us concurrently
with the execution of this Agreement, and all Persons who become Owners
thereafter, to promptly execute and deliver to us, the form of Guaranty and
Assumption of Developer's Obligations ("GUARANTY") attached hereto as EXHIBIT E.
B. YOUR TERRITORIAL RIGHTS
Except as otherwise provided in Subsection 3.D. of this Section 3, and
provided that you are in full compliance with this Agreement and all Franchise
Agreements with us, we will not during the Development Term own or operate, or
grant franchises for the ownership or operation of, KRISPY KREME STORES located
within the Development Area or sell any products identified by the Marks or made
utilizing the recipes of the products. You are not granted any rights to
develop, own or operate, and you agree that you will not develop, own or
operate, a greater number of KRISPY KREME STORES than is set forth in Schedule B
or any KRISPY KREME STORES outside the Development Area, except pursuant to
rights granted to you under other agreements entered into with us. Upon the
termination or expiration of this Agreement, we will have the right to own and
operate or sell any products identified by the Marks or made utilizing the
recipes of the products, and to grant to others development rights and
franchises to own and operate, KRISPY KREME STORES located within the
Development Area, provided that we agree that we will not own or operate, or
grant to others development rights or franchises to own or operate, a KRISPY
KREME STORE at a location if such KRISPY KREME STORES
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would be prohibited by the franchise agreement to which we and you are parties,
except that these protected areas will not extend beyond the borders of the
Development Area.
C. YOUR DEVELOPMENT OBLIGATIONS
You agree that during the Development Term, you will continuously exert
your best efforts to promote and enhance the development of KRISPY KREME STORES
within the Development Area. Without limiting the foregoing obligation, you
agree to promote Deli Bakery Sales/DSD Sales in the Development Area as we
require and to have open and in operation in the Development Area during the
Development Period and at the end of each Development Period the minimum number
of KRISPY KREME STORES set forth in the Development Schedule in EXHIBIT B. We
may require you at any time to participate in any program we establish to
provide Products to National Accounts. You acknowledge and agree that a KRISPY
KREME STORE that closes for more than five (5) days (not counting holidays on
which food service businesses are generally closed in the Development Area)
during a Development Period (and you have not developed a substitute site which
we have approved) will not be counted as open and in operation as of the last
day of that Development Period for purposes of determining your compliance with
the Development Schedule. If an operating KRISPY KREME STORE is closed during a
Development Period due to casualty, condemnation, loss of lease or other reason,
without your fault, or with our written approval, such KRISPY KREME STORE shall
be deemed open and in operation as of the end of such Development Period, but
not thereafter. You acknowledge that we make no assurances, guarantees,
representations or warranties that the Development Area can support, or there
are sufficient sites for, the number of KRISPY KREME STORES specified in the
Development Schedule. In the event we grant you the right to operate a
Commissary in the Development Area, you will sign a Commissary Rider to this
Agreement, the current form of which is attached as Exhibit H, and will be
obligated to develop and operate such Commissary in accordance with the terms of
the Commissary Rider.
D. RIGHTS RETAINED BY US
Except as expressly limited by Paragraph 3.B., we retain all rights
with respect to KRISPY KREME STORES, the Marks, and the sale of Products,
including, without limitation:
(1) the right to establish STORES, and grant to other franchisees the
right to establish KRISPY KREME STORES at any location, without regard
to proximity to the STORES and, on such terms and conditions as we deem
appropriate provided, however, that we will not own, operate or grant a
franchise for a STORE within the Development Area; and
(2) the right to acquire and operate, or be acquired by, any company,
including, without limitation, a company operating one or more food
service businesses (including food service businesses selling
doughnuts), located or operating within the Development Area.
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4. GRANT OF FRANCHISES.
A. SITE AND SITE PLAN REVIEW AND APPROVAL.
You agree to comply with our specifications and requirements regarding
site selection. You agree to submit to us a complete site approval request
package (a "SITE PACKAGE") on our specified forms (containing such demographic,
commercial, and other information and photographs as we may require from time to
time) for each site in the Development Area at which you propose and intend in
good faith to establish a KRISPY KREME STORE and which you reasonably believe to
conform to the site selection criteria established by us from time to time. In
approving or disapproving a proposed site, we will consider such matters as we
deem material from time to time, including, without limitation, demographic
characteristics, traffic patterns, allowed design and building, parking,
visibility, allowed signage, the predominant character of the neighborhood,
competition from other businesses selling similar products and services within
the area (including other KRISPY KREME STORES), the proximity to other
businesses, the nature of other businesses in proximity to the site, zoning
restrictions, soil and environmental issues, other commercial characteristics
(including the purchase price or rental obligations and other lease terms for
the proposed site), the size, appearance, and other physical characteristics of
the proposed site and the exclusivity granted to other franchisees or developers
of KRISPY KREME STORES.
We will approve or disapprove sites by delivery of written notice to
you. We agree to exert our reasonable best efforts to deliver such notification
to you within thirty (30) days after we receive a complete Site Package and such
other materials requested by us from time to time, containing all information
that we require provided, however, we have no liability to you if the timing of
our response or our failure to respond results in your inability to obtain any
particular site. We will have the right to approve or disapprove a site, and you
acknowledge and agree that we will have no liability therefor. Notwithstanding
any other provision of this Agreement, our failure to provide you with notice of
our approval or disapproval of one or more proposed sites will not constitute a
waiver of our right to approve or disapprove other sites or extend the
Development Schedule.
You must also cause to be prepared and submit for written approval by
us a site plan and any modifications to our basic architectural plans and
specifications for a KRISPY KREME STORE, including requirements for dimensions,
exterior design, materials, interior layout, equipment, fixtures, furniture,
signs and decorating. You understand that you may modify our basic plans and
specifications only to the extent required to comply with applicable ordinances,
building codes and permit requirements and only with our prior written approval.
B. LEASE OR PURCHASE OF APPROVED SITES.
Upon receipt by you of our approval of a site, you agree to promptly
sign a purchase agreement or lease for the Approved Site and to deliver to us a
complete copy thereof within fifteen (15) days after it is signed by you and the
seller or lessor of the Approved Site. If you fail to enter into a binding
purchase agreement or lease for an Approved Site within one hundred
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twenty (120) days after delivery of our approval of the Approved Site, we may
withdraw approval of such site.
C. EXECUTION OF FRANCHISE AGREEMENTS.
Provided that (1) you are then in full compliance with all of the terms
and conditions of this Agreement and with all Franchise Agreements with us and
are otherwise in good standing with us, and (2) you have obtained the right to
develop an Approved Site, we agree to offer to you a Franchise to develop and
operate a KRISPY KREME STORE at such Approved Site by delivering to you a
Franchise Agreement in form for signing by you and your Owners. You agree to
sign and return the Franchise Agreement to us within fifteen (15) days after it
is delivered to you, together with the fees required to be paid at the time of
signing of the Franchise Agreement. If the ownership of a KRISPY KREME STORE
will be different from the ownership of you, we will have the right to approve
such differences in ownership and may decline to grant a Franchise for the
KRISPY KREME STORE if we disapprove of such differences in ownership. Your
Owners agree to guaranty your obligations under each Franchise Agreement entered
into by you. We may withdraw our offer to grant a Franchise for a KRISPY KREME
STORE at an Approved Site and withdraw its approval thereof if you fail to
deliver to us a fully signed Franchise Agreement, together with all required
payments, within such fifteen (15) day period. In no event may a KRISPY KREME
STORE developed hereunder be opened for business prior to your receipt of
written notice from us authorizing its opening.
D. FRANCHISE FEES AND ROYALTIES.
For each Franchise granted to you pursuant to this Agreement during the
Development Term: (1) the Franchise Fee (defined in the Franchise Agreement)
will be Fifteen Thousand Dollars ($15,000) (if the Development Fee has been paid
in accordance with Paragraph 5 of this Agreement); and (2) Royalties (defined in
the Franchise Agreement) will be four and one-half percent (4.5%) of the Gross
Sales of the KRISPY KREME STORE (defined in the Franchise Agreement).
5. DEVELOPMENT FEE.
Concurrently with the signing of this Agreement, you will pay to us a
nonrefundable development fee (the "DEVELOPMENT FEE") in the amount of
_______________ Dollars ($__________). The Development Fee will be deemed fully
earned by us upon execution of this Agreement. The Development Fee will equal
the sum derived by multiplying the number of KRISPY KREME STORES to be developed
under this Agreement, as set forth on EXHIBIT B by Ten Thousand Dollars
($10,000).
6. CONFIDENTIAL INFORMATION.
We possesses and will further develop and acquire certain confidential
and proprietary information and trade secrets, including, but not limited to,
the following categories of information, methods, techniques, procedures and
knowledge developed or to be developed by
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us, our subsidiaries, consultants, contractors, licensees, franchisees and
developers (the "CONFIDENTIAL INFORMATION"):
(1) methods, techniques, equipment, specifications, standards,
policies, procedures, information, concepts and systems relating to and
knowledge of and experience in the development, operation and
franchising of KRISPY KREME STORES;
(2) marketing and promotional programs for KRISPY KREME STORES,
including but not limited to, information regarding our National
Accounts Program;
(3) knowledge concerning the logic, structure and operation of computer
software programs which we authorize for use in connection with the
operation of KRISPY KREME STORES and all additions, modifications and
enhancements, and all data generated from use of such programs;
(4) specifications and standards for, and sources of, store buildings
of modular and "stick built" construction, equipment, furnishings,
fixtures, signs, products, materials, supplies and services utilized in
the development and operation of KRISPY KREME STORES;
(5) ingredients, formulas, mixes, recipes for and methods of
preparation, cooking, serving, packaging, and delivery of, Products
sold at KRISPY KREME STORES;
(6) information concerning Product sales, operating results, financial
performance, consumer preferences, inventory requirements for Products,
materials and supplies and other financial data of KRISPY KREME STORES;
(7) customer lists;
(8) employee selection procedures, training and staffing levels; and
(9) our expansion, growth and development plans and prospects.
We will disclose to you such parts of the Confidential Information as
we deem necessary or advisable from time to time for the development of KRISPY
KREME STORES. You acknowledge and agree that you and Owners will not acquire any
interest in or right to use the Confidential Information, other than the right
to use it in the development and operation of KRISPY KREME STORES pursuant to
this Agreement, and that the use or duplication of the Confidential Information
in any other business would constitute an unfair method of competition with us
and with other developers and franchisees of KRISPY KREME STORES. You agree to
disclose the Confidential Information to Owners and to your employees only to
the extent reasonably necessary for the development of KRISPY KREME STORES
pursuant to this Agreement.
You acknowledge and agree that the Confidential Information is
confidential, is our proprietary and valuable asset, includes trade secrets
owned by us and our affiliates and is disclosed to you solely on the condition
that you, your Owners and employees who have access
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to the Confidential Information agree, and you agree that, during and after the
Agreement Term, you, your Owners and your employees:
(1) will not use the Confidential Information in any other
business or capacity;
(2) will maintain the absolute confidentiality of the
Confidential Information (provided, however, that we will not deem you
in default of this Agreement as a result of isolated incidents of
disclosure of Confidential Information by an employee other than an
Owner, provided you have taken reasonable steps to prevent such
disclosure, including, but not limited to, the steps a reasonable and
prudent owner of confidential and proprietary information would take to
prevent disclosure of such information by his employees, and further
provided that you pursue all reasonable legal and equitable remedies
against such employee for such disclosure of such Confidential
Information);
(3) will not make unauthorized copies of any portion of the
Confidential Information disclosed in written or other tangible form;
and
(4) will adopt and implement all reasonable procedures
prescribed from time to time by us to prevent unauthorized use or
disclosure of the Confidential Information, including, without
limitation, requiring employees and Owners who will have access to such
information to execute non-competition and confidentiality agreements
in the form attached hereto as EXHIBIT F (the "CONFIDENTIALITY AND
NON-COMPETITION AGREEMENT"). You will provide us, at our request,
executed originals of each such Confidentiality and Non-Competition
Agreement.
Notwithstanding anything to the contrary contained in this Agreement
and provided you have obtained our prior written consent, the restrictions on
your disclosure and use of the Confidential Information will not apply to the
following:
(1) information, methods, procedures, techniques and knowledge
which are or become generally known in the food service business within
the Development Area, other than through disclosure (whether deliberate
or inadvertent) by you, your Owners or employees; and
(2) the disclosure of the Confidential Information in
judicial, arbitration or administrative proceedings to the extent that
you are legally compelled to disclose such information, provided you
have notified us prior to disclosure and have used our best efforts to
obtain, and have afforded us the opportunity to obtain assurance
satisfactory to us of confidential treatment for the information
required to be so disclosed.
You agree to disclose to us all ideas, concepts, methods, techniques
and products conceived or developed by you, your Owners, and your employees
relating to the development and operation of KRISPY KREME STORES. You hereby
grant to us and agree to procure from your Owners and employees a perpetual,
exclusive and worldwide right to use such ideas,
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concepts, methods, techniques and products in all food service businesses
operated by us, our subsidiaries, developers and franchisees. We will have no
obligation to make payments to you or any other Person with respect to any such
idea, concept, method, technique or product. You agree that you will not use or
allow any other Person to use any such concept, method, technique or product
without obtaining our prior written approval.
7. EXCLUSIVE RELATIONSHIP.
You acknowledge and agree that we would be unable to protect
confidential information against unauthorized use or disclosure or to encourage
a free exchange of ideas and information among KRISPY KREME STORES if developers
of KRISPY KREME STORES were permitted to hold interests in or perform services
for a Competitive Business. You also acknowledge that we have granted the
development rights to you in consideration of and reliance upon your agreement
that you and your Owners will deal exclusively with us. You therefore agree
that, during the term of this Agreement, neither you, any of your Owners or any
member of the Immediate Family of you or your Owners will:
(1) have any direct or indirect interest as a disclosed or beneficial
owner in a Competitive Business, located or operating:
(a) within 25 miles of the Development Area;
(b) within 5 miles of any other KRISPY KREME STORE in
operation or under construction during the term of this
Agreement; or
(c) within the United States of America;
(2) perform services as a director, officer, manager, employee,
consultant, representative, agent or otherwise for a Competitive
Business, wherever located or operating; or
(3) recruit or hire any person who is our employee or the employee of
any KRISPY KREME STORE or who has been our employee or the employee of
any KRISPY KREME STORE within the past six (6) months without obtaining
the prior written permission by us or that person's employer. If we
permit you to hire any person who is our employee, then you agree to
pay us a non-refundable Management Development Fee in the amount of
$25,000 as of the date of hire.
The restrictions of this section will not be applicable to the
ownership of publicly traded Ownership Interests that constitute less than three
percent (3%) of a class of Ownership Interests issued and outstanding.
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8. YOUR OBLIGATIONS.
A. MANAGING OWNER AND GENERAL MANAGER.
Concurrently with the execution of this Agreement, you will designate a
Managing Owner (the "MANAGING OWNER") and General Manager (the "GENERAL
MANAGER") of your business pursuant to this Agreement. The Managing Owner and
General Manager may be the same person. The General Manager and Managing Owner
will be identified in EXHIBIT G of this Agreement. You agree that you, the
Managing Owner or General Manager will exert full-time efforts to fulfill your
obligations under this Agreement and will not engage in any other business or
other activity, directly or indirectly, that requires any significant management
responsibility or time commitments, or that may otherwise conflict with your
obligations under this Agreement. If the relationship of the Managing Owner or
General Manager to you terminates or materially changes, you agree to promptly
designate replacements. If you have designated a Managing Owner or a General
Manager, the Managing Owner or the General Manager will work with us to develop
KRISPY KREME STORES in the Development Area. You agree to vest the Managing
Owner or the General Manager with sufficient decision making authority to
expedite the determinations and decisions that are essential to effective and
efficient development of KRISPY KREME STORES in the Development Area.
B. MANAGEMENT PERSONNEL TRAINING.
A management training program will be available at no charge to your
Managing Owner and/or your General Manager who will be required to complete our
management training program to our satisfaction. You shall be responsible for
all travel and living expenses and compensation of its personnel who attend our
training programs.
C. BUSINESS AND FINANCING PLAN.
You must maintain sufficient financial resources to fulfill your
obligations under this Agreement and under Franchise Agreements executed
pursuant to this Agreement. You agree to submit for review and approval by us, a
written business plan for the development and financing of KRISPY KREME STORES
in the Development Area in accordance with the Development Schedule, including
details of the sources and terms of financing and such other information or
documents required by us. Your business plan and financing plan are subject to
our approval and if we do not approve them both, you agree that you will revise
them both as necessary to meet our requirements for approval. Among other
factors, we will consider your proposed debt/equity ratio, cash flow and your
debt service. If not already submitted, the first business plan is due within
sixty (60) days after the signing of this Agreement. The business plan for each
fiscal year thereafter must be submitted to us for annual review prior to the
end of the previous fiscal year. You agree to consider modifications to your
business plan recommended by us, to implement the business plan approved by us
and to advise us of any material modifications to your business plan.
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D. INSURANCE.
During the Development Term, in addition to insurance required to be
maintained in connection with the development and operation of each KRISPY KREME
STORE, you agree to maintain commercial general liability insurance and
automobile liability insurance against claims for bodily and personal injury,
death and property damage caused by or occurring in conjunction with the conduct
of business by you pursuant to this Agreement, under one or more policies of
insurance acceptable to us and containing minimum liability coverage prescribed
by us from time to time. Each such commercial general liability and automobile
liability insurance policy will name us as an additional insured and provide for
thirty (30) days' prior written notice to us of any material modification,
cancellation, or expiration of such policy. Within thirty (30) days after the
execution of this Agreement, you will provide us with evidence of such
insurance; thereafter, you will furnish to us annually and upon the replacement
or material modification of any insurance policy providing coverage required
under this Agreement, a copy of the certificate of insurance or other evidence
requested by us that such insurance coverage is in force. The maintenance of
sufficient insurance coverage (both as to the type and limits of coverage) for
your business is your responsibility.
E. RECORDS AND REPORTS.
You agree to install, use and transmit information to, or allow the
electronic collection of information by us through the Computer System, in such
form as is specified by us from time to time in accordance with and subject to
the limitations set forth in any Franchise Agreement between you or your
affiliates and us. You agree to maintain and preserve at your principal office,
full, complete and accurate records and reports and, if required by us, computer
diskettes and databases in the form specified by us from time to time pertaining
to the development and operation of KRISPY KREME STORES and the performance by
you of your obligations under this Agreement. We will have the right, at any
reasonable time to inspect, audit and copy any books, records, reports, computer
data bases and documents pertaining to your obligations hereunder and to
determine whether you are in Good Standing. You agree to cooperate fully with us
in connection with any such inspection or audit.
You agree to furnish to us in the form from time to time prescribed by
us (including, without limitation, via computer diskette) and restated in
accordance with our financial reporting periods:
(1) within thirty (30) days after the end of each month, an operating
income statement for such month and fiscal year to date;
(2) within forty-five (45) days after the end of each quarter, a
balance sheet and income statement for such quarter and fiscal year to
date;
(3) within one hundred twenty (120) days after the end of your fiscal
year, a consolidated fiscal year end balance sheet of all KRISPY KREME
STORES owned by you, a consolidated income statement for such fiscal
year, and a consolidated statement of
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changes in cash flow, reflecting all year-end adjustments, prepared in
accordance with generally accepted accounting principles, and in the
format prescribed by us from time to time; and
(4) upon request by us, such other data, reports, information and
supporting records as we may from time to time prescribe.
You will immediately report to us any events or developments that may
have a material adverse impact on the operation of any KRISPY KREME STORE, your
performance under this Agreement, or the goodwill associated with the Marks and
KRISPY KREME STORES. Each such report and financial statement submitted by you
will be signed by you and verified as correct in the manner prescribed by us.
F. COMPLIANCE WITH LAWS AND GOOD BUSINESS PRACTICES.
You will secure and maintain in force in your name all required
licenses, permits, and certificates relating to the conduct of its business
pursuant to this Agreement. You will remain in Good Standing during the term of
this Agreement. You will comply with all applicable laws, ordinances and
regulations, including, without limitation, laws and regulations relating to the
preparation, purchase and handling of food products, occupational hazards,
health, safety and sanitation, labor, and withholding and payment of all taxes.
All advertising by you will be subject to approval by us, completely factual, in
good taste in our judgment, and conform to high standards of ethical
advertising. You will in all dealings with sellers and lessors of real property,
customers, suppliers, employees, us and public officials adhere to high
standards of honesty, integrity, fair dealing and ethical conduct. You agree to
refrain from any business or advertising practice that may be injurious to our
business and the goodwill associated with the Marks and KRISPY KREME STORES. You
agree to notify us in writing:
(1) within three (3) business days after the commencement of any
administrative, judicial or arbitration proceeding, and of the issuance
of any order, writ, injunction, award, or decree of any court, agency,
or other governmental instrumentality, which may adversely affect your
operation or your financial condition or the business or operation of
any KRISPY KREME STORE; or
(2) immediately after receipt of any notice of violation of any law,
ordinance or regulation relating to the health, sanitation or safety of
or the operation of any KRISPY KREME STORE.
9. TRANSFER.
A. BY US.
This Agreement is fully transferable by us and will inure to the
benefit of any assignee or other legal successor to our interests.
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B. YOU AND YOUR OWNERS MAY NOT TRANSFER WITHOUT OUR APPROVAL.
You understand and acknowledge (and hereby represent and warrant that
your Owners understand) that the rights and duties created by this Agreement are
personal to you and your Owners and that we have entered into this Agreement in
reliance upon the individual or collective character, skill, aptitude, attitude,
business ability, and financial capacity of you and your Owners. Therefore, your
obligations under this Agreement and any Ownership Interest or other interest in
(1) you, (2) this Agreement, (3) a Franchise Agreement executed pursuant to this
Agreement, (4) a KRISPY KREME STORE, or (5) the lease for or ownership of the
site of a KRISPY KREME STORE, may not be transferred without our prior approval
which approval shall not be unreasonably withheld. We will not approve a
transfer of this Agreement except in conjunction with a transfer of all
Franchise Agreements for KRISPY KREME STORES located in the Development Area to
which we and you are parties. If we approve a transfer, we will have the right
to charge a transfer fee in the amount of Five Thousand Dollars ($5,000.00)
(increased from time to time to reflect increases in the Metropolitan Area
Consumer Index for Urban Consumers--All Items (1982-1984 = 100) from the date of
this Agreement, as published by the U.S. Department of Labor or in a successor
index) to cover our expenses. Any transfer in violation of this Section will
constitute a breach of this Agreement and convey no rights to or interests in
this Agreement or any Franchise Agreement.
As used in this Agreement, the term "TRANSFER" will include, without
limitation, the following, whether voluntary or involuntary, direct or indirect:
(1) an assignment, sale, gift or pledge;
(2) the grant of a mortgage, lien or security interest in this
Agreement, including, without limitation, the grant of a collateral
assignment;
(3) a merger or consolidation, or issuance of additional Ownership
Interests or interests convertible to Ownership Interests;
(4) a sale of voting Ownership Interests or any interest that is
convertible to voting Ownership Interests, or an agreement granting the
right to exercise or control the exercise of voting rights of any
holder of an Ownership Interest or to control your operation or
affairs; and
(5) a transfer that occurs as a result of your insolvency or
dissolution or upon death of you or an Owner, by will, trust or other
transfer by operation of law.
The term "transfer" shall not include the grant of a lien or security
interest in the equipment, fixtures or supplies of one or more KRISPY KREME
STORES.
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If the proposed transfer is among your Owners or Immediate Family or to
us pursuant to an exercise of our right of First Refusal, the transfer fee in
Section 9.B will not apply, although the transferee is required to reimburse us
for any administrative costs we incur in connection with the transfer; provided
that this amount will not exceed Five Hundred Dollars ($500.00).
C. DEATH OF YOU OR AN OWNER OF A CONTROLLING INTEREST.
Upon your death or the death of an Owner, all of such Person's interest
in this Agreement, or such interest in you will be transferred to a transferee
approved by us. Such disposition of this Agreement or such interest in you
(including, without limitation, transfer by bequest or inheritance), will be
completed within a reasonable time, not to exceed nine (9) months from the date
of death and will be subject to all the terms and conditions applicable to
transfers contained in this Section.
D. EFFECT OF OUR APPROVAL OF A TRANSFER.
Our consent to a transfer of this Agreement or any interest subject to
the restrictions of this Section will not constitute a waiver of any claims we
may have against you (or your Owners), nor will it be deemed a waiver of our
right to demand full compliance with any of the terms or conditions of this
Agreement by the transferee.
E. OUR RIGHT OF FIRST REFUSAL.
If you or any of your Owner(s) determine to make a transfer of an
interest that is permitted under this Agreement, you or your Owner(s) will
obtain a bona fide, arms length executed written offer (and any proposed
ancillary agreements) in complete and definitive form and not subject to any
financing or other material, substantive contingency and an earnest money
deposit (in the amount of five percent (5%) or more of the purchase price) from
a qualified, responsible, bona fide and fully disclosed offeror. A true and
complete copy of such offer (conditioned on our first refusal rights) and any
proposed ancillary agreements will immediately be submitted to us by you, your
Owner(s), or both. The offer may apply only to an interest that is permitted to
be transferred under this Agreement, may not include the purchase of any other
property or rights of you (or your Owner(s) other than incident to the operation
of Krispy Kreme Stores) and the price and terms of purchase offered to you (or
your Owner(s)) in the offer for such interests will reflect the bona fide price
offered therefor and will not reflect any value for any other property or
rights.
We will have the right, exercisable by written notice delivered to you
(or your Owner(s)) within thirty (30) days from the date of receipt by us of an
exact copy of such offer (and any ancillary agreements) and a completed executed
application for our approval of the transfer, to purchase such interest for the
price and on the terms and conditions contained in such offer, provided that:
(1) we may substitute cash for any other form of payment proposed in such offer;
(2) our credit will be deemed equal to the credit of any proposed purchaser; (3)
we will have not less than ninety (90) days after giving notice to prepare for
closing; and (4) we will be entitled to all customary representations and
warranties given by the seller of a business, including, without
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limitation, representations and warranties as to: (a) ownership, condition and
title to Ownership Interests and/or assets; (b) liens and encumbrances relating
to the Ownership Interests and/or assets; and (c) validity of contracts and
liabilities, contingent or otherwise, of any corporation, limited liability
company or partnership whose Ownership Interests are purchased.
If we do not exercise our right of first refusal, you (or your
Owner(s)) may complete the sale to such offerer pursuant to and on the exact
terms of the offer, subject to approval by us and subject to your payment of the
applicable transfer fee, provided that if the sale to such offeror is not
completed within one hundred twenty (120) days after receipt of such offer by
us, or there is a change in the terms of the sale (in which case you will
promptly furnish copies of the modified offer and ancillary documents to us), we
will again have an additional right of first refusal for thirty (30) days as set
forth in this Agreement on the modified or initial terms and conditions of sale.
Notwithstanding the foregoing, if you determine to make a transfer of
an interest of this Agreement, you may submit an offer to us to purchase your
interest in the Agreement. The purchase price may apply only to an interest that
is permitted to be transferred under this Agreement, may not include the
purchase of any other property or rights of you (or your Owner(s)) and the price
and terms of purchase offered to us must reflect a bona fide price and may not
reflect any value for any other property or rights. We will have the right,
exercisable by written notice delivered to you (or your Owner(s)) within sixty
(60) days from the date of receipt by us of your written offer, to purchase such
interest for the price and on the terms and conditions contained in such offer
and we will have not less than sixty (60) days to prepare for closing. We shall
also be entitled to all customary representations and warranties described in
this Section 9.E. If we do not exercise our right to purchase, you (or your
Owner(s)) may make this offer to a third party, subject to approval by us,
provided that the sale must be on comparable terms as those offered to us but at
a price equal or greater to the price offered to us and provided that if the
sale to such purchaser is not completed within one hundred twenty (120) days
after receipt of such offer by us or there is a change in the terms of sale, we
will again have a right to purchase for thirty (30) days as set forth in this
Agreement on the modified or initial terms and conditions of a sale.
Section E above will not apply if the transfer is among your Owners,
employees or Immediate Family members of your Owners; or constitutes a transfer
of less than ten percent (10%) interest in you as long as such transfer in
conjunction with transfers during the Development Term and then-contemplated
transfers does not constitute a transfer equal to or greater than twenty percent
(20%) interest in you.
F. OWNERSHIP STRUCTURE AND INITIAL CAPITALIZATION.
You represent and warrant that your Owners are as set forth on EXHIBIT
G and covenant that you will not vary from that ownership structure without our
prior written approval.
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G. DELEGATION BY US.
You agree that we will have the right, from time to time, to delegate
the performance of any portion or all of our obligations and duties under this
Agreement to designees, whether the same are our agents or independent
contractors with which we have contracted to provide these services.
10. TERMINATION OF AGREEMENT.
We may terminate this Agreement, effective upon delivery of notice of
termination to you or, where expressly applicable, upon failure to cure to our
satisfaction any breach of this Agreement before the expiration of any period of
time within which such breach may be cured in accordance with the provisions set
forth below, if:
(1) you (or any of your Owners) have made any material
misrepresentation or omission in your application for this Agreement or
in connection with any transfer of this Agreement or are convicted by a
trial court of, plead guilty to or do not contest the charge of a
felony, or of any other crime or offense that may adversely affect the
reputation of KRISPY KREME STORES, or the goodwill associated with the
Marks, or engage in any misconduct that may adversely affect the
reputation of KRISPY KREME STORES or the goodwill associated with the
Marks;
(2) you fail on three (3) or more occasions, or on two (2) or more
consecutive occasions to satisfy the development obligations (either
for the development period and/or cumulatively), or you fail at the end
of the first, second or third development period to satisfy your
cumulative development obligations as set forth in Paragraph 3.C. of
this Agreement and EXHIBIT B;
(3) you or any other Person makes an assignment or transfer in
violation of this Agreement;
(4) you (or any of your Owners) makes any unauthorized use of the
Marks, (including, but not limited to, unauthorized use of the Marks as
part of a website domain name or electronic address or as part of
information available on such website) or unauthorized use, disclosure
or duplication of the Confidential Information, or challenges or seeks
to challenge the validity of the Marks. For purposes of this Agreement,
a "website" is an interactive electronic document contained in a
network of computers linked by communications software;
(5) you, any of your Owners, or members of your or any of your Owners'
Immediate Families violate the restrictions on holding interests in or
performing services for Competitive Businesses set forth in Section 7
of this Agreement or Owners who have access to the Confidential
Information violate the covenants concerning competition and
confidentiality contained in the form of Confidentiality and
Non-Competition Agreement
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attached hereto as EXHIBIT F (notwithstanding that such Person has not
signed this Agreement or a Confidentiality and Non-Competition
Agreement);
(6) you (or any of your Owners) fail to: (a) comply with any other
provision of this Agreement, and do not correct such failure within
thirty (30) days after your receipt of our written notice of such
failure to comply; or (b) if such failure cannot reasonably be
corrected within the thirty (30) day period but can be corrected within
a reasonably short time (not to exceed an additional thirty (30) days),
undertake within ten (10) days after your receipt of our written
notice, and continue until completion, best efforts to correct such
failure within such reasonably short time (not to exceed an additional
thirty (30) days) and furnish proof acceptable to us, upon our request,
of such efforts and the date full compliance will be achieved;
(7) you (or any of your Owners) fail on three (3) or more separate
occasions within any period of twenty four (24) consecutive months to
comply with this Agreement, whether or not such failures to comply are
corrected after written notice thereof are delivered to you; or
(8) we have delivered a notice of termination of a Franchise Agreement
executed pursuant to this Agreement in accordance with its terms and
conditions or you have terminated a Franchise Agreement with us without
cause.
11. OUR RIGHTS AND OBLIGATIONS UPON TERMINATION OR EXPIRATION OF THIS AGREEMENT
A. CONFIDENTIAL INFORMATION/DE-IDENTIFICATION.
You agree that upon termination or expiration of this Agreement, you,
your Owners and your employees, will immediately cease to use and will maintain
the absolute confidentiality of any Confidential Information disclosed to or
otherwise learned or acquired by you or your Owners or employees, will refrain
from using such Confidential Information in any business or otherwise and will
return to us all copies of confidential materials that have been loaned or made
available to you by us pursuant to this Agreement. You must cease using the
Marks and identifying yourself directly or indirectly with KRISPY KREME STORES,
including, but not limited to, cancelling any website, electronic address and/or
domain name which displays any Mark or that identifies you with KRISPY KREME
STORES.
B. COVENANT NOT TO COMPETE.
Upon termination of this Agreement in accordance with its terms and
conditions or your termination of this Agreement without cause, neither you nor
any of your Owners will directly or indirectly (through a member of the
Immediate Family of you or an Owner of you, or otherwise) for a period of two
(2) years commencing on the effective date of such termination or the date on
which you cease to conduct your activities under this Agreement, whichever is
later:
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(1) have any interest as a disclosed or beneficial owner in any
Competitive Business located or operating in the Development Area on
the effective date of termination of this Agreement;
(2) perform services as a director, officer, manager, employee,
consultant, representative, agent or otherwise for any Competitive
Business located or operating or under development in the Development
Area on the effective date of termination of this Agreement; or
(3) employ or seek to employ any Person who is employed (as an employee
or independent contractor) by us, our subsidiaries or by any other
developer or franchisee of KRISPY KREME STORES, nor induce nor attempt
to induce any such Person to leave his or her employment without the
prior written consent of that Person's employer.
The restrictions of Subparagraph (1) of this Paragraph 11.B. will not
be applicable to the ownership of publicly traded Ownership Interests that
constitute less than three percent (3%) of a class of Ownership Interests issued
and outstanding, nor will they be construed to prohibit you, any of your Owners
or any member of your Immediate Family or member of the Immediate Family or any
Owner from having a direct or indirect Ownership Interest in KRISPY KREME
STORES, development agreement or franchise agreement for the development or
operation of KRISPY KREME STORES or from providing services to KRISPY KREME
STORES pursuant to other agreements with us.
C. OUR RIGHT TO PURCHASE STORES.
Upon our termination of this Agreement in accordance with its terms and
conditions or your termination of this Agreement without cause, we have the
option, exercisable by giving written notice thereof to you within sixty (60)
days from the date of such termination, to purchase any or all of the KRISPY
KREME STORES operated by you or other Persons under Franchises granted by us
pursuant to this Agreement. Our right to purchase includes the leasehold rights
to or ownership of sites, in accordance with the terms set forth in the
Franchise Agreements for your KRISPY KREME STORES.
D. CONTINUING OBLIGATIONS.
All obligations under this Agreement of us and you, your Owners, or
members of your Immediate Family or members of the Immediate Family of an Owner,
which expressly or by their nature survive or are intended to survive the
termination or expiration of this Agreement, will continue in full force and
effect subsequent to and notwithstanding its termination or expiration and until
they are satisfied in full or by their nature expire.
12. INDEMNIFICATION.
We are independent contractors. We will not be obligated by or have any
liability under any agreements, representations, or warranties made by you that
are not expressly authorized un-
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der this Agreement, nor will we be obligated for any damages to any person or
property directly or indirectly arising out of the operation of your business
conducted pursuant to this Agreement or the development or operation of KRISPY
KREME STORES by you, whether or not caused by your negligent or willful action
or failure to act. We will have no liability for any value added, sales,
service, excise, income, gross receipts, property, payroll or other taxes levied
upon you or your property, or upon us, in connection with your business. You
agree to defend and hold us, our subsidiaries and our respective owners,
directors, officers, employees, agents and assignees harmless against and to
reimburse them for:
(1) all claims, losses, obligations and damages described in this
Section, any and all claims and liabilities of your customers and
others with whom you deal directly or indirectly arising out of this
Agreement, the development or operation of any KRISPY KREME STORES
pursuant to this Agreement, including, without limitation, your breach
or violation of any representation, warranty, agreement, contract or
commitment resulting from your signing of this Agreement or performance
of any of your obligations under this Agreement, unauthorized
activities conducted in association with the Marks, or the transfer of
any interest in this Agreement or a KRISPY KREME STORE, to the extent
that such claims, obligations, damages, losses or liabilities do not
arise solely from our gross negligence or wrongful conduct; and
(2) all value added, sales, service, occupation, excise, gross
receipts, income, property, payroll or other taxes, whether levied upon
you, a KRISPY KREME STORE, your property or upon us (except any taxes
we are required by law to collect from you with respect to purchases
from us).
For purposes of this indemnification, "claims" will mean and include all
obligations, actual, consequential, special, and punitive damages and costs
reasonably incurred in the defense of any such claim against us, including,
without limitation, legal and accounting fees, arbitrators' and expert witness
fees, cost of investigation and proof of facts, court costs, other litigation
expenses, and travel and living expenses. We will have the right to defend any
such claim against us. This indemnity will continue in full force and effect
subsequent to and notwithstanding the termination or expiration of this
Agreement.
Notwithstanding the foregoing, your indemnification obligation under
this Section 12 shall not extend to claims arising from proprietary products and
proprietary equipment manufactured by us and sold by us to you, provided that
such products are used in accordance with the standard operating procedures and
all applicable manuals and instructions provided to you from time to time.
13. SEVERABILITY AND SUBSTITUTION OF VALID PROVISIONS.
Except as expressly provided to the contrary herein, each section,
subsection, paragraph, term and provision of this Agreement, and any portion
thereof, will be considered severable, and if, for any reason, any such
provision is held to be invalid or contrary to or in conflict with any
applicable present or future law or regulation in a final, unappealable ruling
issued by any court,
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agency or tribunal with competent jurisdiction in a proceeding to which we are a
party, that ruling will not impair the operation of, or have any other effect
upon, such other portions of this Agreement as may remain otherwise
intelligible, which will continue to be given full force and effect and bind the
parties hereto, although any portion held to be invalid will be deemed not to be
a part of this Agreement from the date the time for appeal expires, if you are a
party thereto, otherwise upon your receipt from us of a notice of
non-enforcement thereof.
If any covenant herein which restricts competitive activity is deemed
unenforceable by virtue of its scope in terms of area, business activity
prohibited and/or length of time, but would be enforceable by reducing any part
or all thereof, you and we agree that such covenant will be enforced to the
fullest extent permissible under the laws and public policies applied in the
jurisdiction whose law is applicable to the validity of such covenant.
If any applicable and binding law or rule of any jurisdiction requires
a greater prior notice than is required hereunder of the termination of this
Agreement or the taking of some other action not required hereunder, or if,
under any applicable and binding law or rule of any jurisdiction, any provision
of this Agreement is invalid or unenforceable, the prior notice and/or other
action required by such law or rule will be substituted for the comparable
provisions hereof, and we will have the right to modify such invalid or
unenforceable provision to the extent required to be valid and enforceable. You
agree to be bound by any promise or covenant imposing the maximum duty permitted
by law which is subsumed within the terms of any provision hereof, as though it
were separately articulated in and made a part of this Agreement, that may
result from striking any of the provisions hereof, or any portion or portions
which a court or arbitrator may hold to be unenforceable in a final decision to
which we are a party, or from reducing the scope of any promise or covenant to
the extent required to comply with such a court order or arbitration award. Such
modifications to this Agreement will be effective only in such jurisdiction,
unless we elect to give them greater applicability, and will be enforced as
originally made and entered into in all other jurisdictions.
14. WAIVER OF OBLIGATIONS.
We and you may by written instrument unilaterally waive or reduce any
obligation of or restriction upon the other under this Agreement, effective upon
delivery of written notice thereof to the other or such other effective date
stated in the notice of waiver. Any waiver we grant will be without prejudice to
any other rights we may have, will be subject to our continuing review and may
be revoked, in our sole discretion, at any time and for any reason, effective
upon delivery to you of ten (10) days' prior written notice.
We and you will not be deemed to have waived or impaired any right,
power or option reserved by this Agreement (including, without limitation, the
right to demand exact compliance with every term, condition and covenant herein
or to declare any breach thereof to be a default and to terminate this Agreement
prior to the expiration of its term) by virtue of any custom or practice at
variance with the terms hereof; our or your failure, refusal or neglect to
exercise any right under this Agreement or to insist upon exact compliance by
the other with our and your
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obligations under this Agreement; our waiver, forbearance, delay, failure or
omission to exercise any right, power or option, whether of the same, similar or
different nature, with respect to KRISPY KREME STORES operated by others or with
respect to other developers or franchisees of KRISPY KREME STORES; the existence
of other franchise agreements or development agreements for KRISPY KREME STORES
which contain different provisions from those contained herein; or our
acceptance of any payments due from you after any breach of this Agreement. No
special or restrictive legend or endorsement on any check or similar item given
to us will constitute a waiver, compromise, settlement or accord and
satisfaction. We are authorized to remove or obliterate any legend or
endorsement, and such legend or endorsement will have no effect.
Neither we nor you will be liable for loss or damage or deemed to be in
breach of this Agreement if our or your failure to perform our or your
obligations results from:
(1) transportation shortages, inadequate supply of equipment, products,
supplies, labor, material or energy or the voluntary foregoing of the
right to acquire or use any of the foregoing in order to accommodate or
comply with the orders, requests, regulations, recommendations or
instructions of any federal, state or municipal government or any
department or agency thereof;
(2) acts of God;
(3) fires, strikes, embargoes, war or riot; or
(4) any other similar event or cause.
15. RIGHTS OF PARTIES ARE CUMULATIVE.
Our and your rights hereunder are cumulative and no exercise or
enforcement by us or you of any right or remedy hereunder will preclude the
exercise or enforcement by us or you of any other right or remedy hereunder or
to which we or you are entitled by law.
16. ARBITRATION.
ALL CONTROVERSIES, DISPUTES OR CLAIMS BETWEEN US AND OUR SUBSIDIARIES,
SHAREHOLDERS, OFFICERS, DIRECTORS, AGENTS AND EMPLOYEES AND YOU (YOUR OWNERS,
GUARANTORS, SUBSIDIARIES, AFFILIATES AND EMPLOYEES, IF APPLICABLE) ARISING OUT
OF OR RELATED TO:
(1) THIS AGREEMENT OR ANY OTHER AGREEMENT BETWEEN YOU AND US
OR ANY PROVISION OF ANY SUCH AGREEMENT;
(2) OUR RELATIONSHIP WITH YOU; OR
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<PAGE> 26
(3) THE VALIDITY OF THIS AGREEMENT OR ANY OTHER AGREEMENT
BETWEEN YOU AND US OR ANY PROVISION OF ANY SUCH AGREEMENT;
WILL BE SUBMITTED FOR BINDING ARBITRATION TO THE CHARLOTTE, NORTH CAROLINA
OFFICE OF THE AMERICAN ARBITRATION ASSOCIATION ON DEMAND OF EITHER PARTY. SUCH
ARBITRATION PROCEEDING WILL BE CONDUCTED IN WINSTON SALEM, NORTH CAROLINA AND,
EXCEPT AS OTHERWISE PROVIDED IN THIS AGREEMENT, WILL BE HEARD BY ONE ARBITRATOR
IN ACCORDANCE WITH THE THEN CURRENT FRANCHISING ARBITRATION RULES, IF ANY,
OTHERWISE THE THEN CURRENT COMMERCIAL ARBITRATION RULES OF THE AMERICAN
ARBITRATION ASSOCIATION. ALL MATTERS RELATING TO ARBITRATION WILL BE GOVERNED BY
THE FEDERAL ARBITRATION ACT (9 U.S.C. SS.SS. 1 ET SEQ.) AND NOT BY ANY STATE
ARBITRATION LAW.
THE ARBITRATOR WILL HAVE THE RIGHT TO AWARD OR INCLUDE IN HIS AWARD ANY
RELIEF WHICH HE DEEMS PROPER IN THE CIRCUMSTANCES, INCLUDING, WITHOUT
LIMITATION, MONEY DAMAGES (WITH INTEREST ON UNPAID AMOUNTS FROM THE DATE DUE),
SPECIFIC PERFORMANCE, INJUNCTIVE RELIEF AND ATTORNEYS' FEES AND COSTS, PROVIDED
THAT THE ARBITRATOR WILL NOT HAVE THE RIGHT TO DECLARE ANY MARK GENERIC OR
OTHERWISE INVALID OR, EXCEPT AS OTHERWISE PROVIDED IN THIS SECTION, TO AWARD
EXEMPLARY OR PUNITIVE DAMAGES. THE AWARD AND DECISION OF THE ARBITRATOR WILL BE
CONCLUSIVE AND BINDING UPON ALL PARTIES HERETO, AND JUDGMENT UPON THE AWARD MAY
BE ENTERED IN ANY COURT OF COMPETENT JURISDICTION.
WE AND YOU AGREE TO BE BOUND BY THE PROVISIONS OF ANY LIMITATION ON THE
PERIOD OF TIME IN WHICH CLAIMS MUST BE BROUGHT UNDER APPLICABLE LAW OR THIS
AGREEMENT, WHICHEVER EXPIRES EARLIER. WE AND YOU FURTHER AGREE THAT, IN
CONNECTION WITH ANY SUCH ARBITRATION PROCEEDING, EACH MUST SUBMIT OR FILE ANY
CLAIM WHICH WOULD CONSTITUTE A COMPULSORY COUNTERCLAIM (AS DEFINED BY RULE 13 OF
THE FEDERAL RULES OF CIVIL PROCEDURE) WITHIN THE SAME PROCEEDING AS THE CLAIM TO
WHICH IT RELATES. ANY SUCH CLAIM WHICH IS NOT SUBMITTED OR FILED AS DESCRIBED
ABOVE WILL BE FOREVER BARRED.
WE AND YOU AGREE THAT ARBITRATION WILL BE CONDUCTED ON AN INDIVIDUAL,
NOT A CLASS-WIDE, BASIS, AND THAT AN ARBITRATION PROCEEDING BETWEEN US AND OUR
SUBSIDIARIES, SHAREHOLDERS, OFFICERS, DIRECTORS, AGENTS AND EMPLOYEES AND YOU
(AND/OR YOUR
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<PAGE> 27
OWNERS, GUARANTORS, SUBSIDIARIES AND EMPLOYEES, IF APPLICABLE) MAY NOT BE
CONSOLIDATED WITH ANY OTHER ARBITRATION PROCEEDING BETWEEN US AND ANY OTHER
PERSON, CORPORATION, LIMITED LIABILITY COMPANY OR PARTNERSHIP.
NOTWITHSTANDING ANYTHING TO THE CONTRARY CONTAINED IN THIS SECTION, WE
AND YOU EACH HAVE THE RIGHT IN A PROPER CASE TO OBTAIN TEMPORARY RESTRAINING
ORDERS AND TEMPORARY OR PRELIMINARY INJUNCTIVE RELIEF FROM A COURT OF COMPETENT
JURISDICTION; PROVIDED, HOWEVER, THAT WE AND YOU MUST CONTEMPORANEOUSLY SUBMIT
OUR DISPUTE FOR ARBITRATION ON THE MERITS AS PROVIDED HEREIN.
THE PROVISIONS OF THIS SECTION ARE INTENDED TO BENEFIT AND BIND CERTAIN
THIRD PARTY NON-SIGNATORIES AND WILL CONTINUE IN FULL FORCE AND EFFECT
SUBSEQUENT TO AND NOTWITHSTANDING THE EXPIRATION OR TERMINATION OF THIS
AGREEMENT.
17. COSTS AND ATTORNEYS' FEES.
If we incur expenses in connection with your failure to pay when due
amounts owed to us, to submit when due any reports, information or supporting
records or otherwise to comply with this Agreement, you agree to reimburse us
for costs and expenses incurred by us, including, without limitation,
accounting, attorneys', arbitrators' and related fees.
18. GOVERNING LAW AND JURISDICTION.
ALL MATTERS RELATING TO ARBITRATION WILL BE GOVERNED BY THE FEDERAL
ARBITRATION ACT (9 U.S.C. SS.SS. 1 ET SEQ.). EXCEPT TO THE EXTENT GOVERNED BY
THE FEDERAL ARBITRATION ACT AS REQUIRED HEREBY, THE UNITED STATES TRADEMARK ACT
OF 1946 (LANHAM ACT, 15 U.S.C. SECTIONS 1051 ET SEQ.) OR OTHER FEDERAL LAW, THIS
AGREEMENT AND ALL CLAIMS ARISING FROM THE RELATIONSHIP BETWEEN US AND YOU WILL
BE GOVERNED BY THE LAWS OF THE STATE OF NORTH CAROLINA, WITHOUT REGARD TO ITS
CONFLICT OF LAWS PRINCIPLES, EXCEPT THAT ANY NORTH CAROLINA LAW REGULATING THE
SALE OF FRANCHISES OR BUSINESS OPPORTUNITIES OR GOVERNING THE RELATIONSHIP OF A
FRANCHISOR AND ITS FRANCHISEE WILL NOT APPLY UNLESS ITS JURISDICTIONAL
REQUIREMENTS ARE MET INDEPENDENTLY WITHOUT REFERENCE TO THIS SECTION.
19. CONSENT TO JURISDICTION AND VENUE.
YOU AND YOUR OWNERS AGREE THAT ALL JUDICIAL ACTIONS BROUGHT BY US
AGAINST YOU OR YOUR OWNERS OR BY YOU OR YOUR
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<PAGE> 28
OWNERS AGAINST US OR OUR SUBSIDIARIES, SHAREHOLDERS, OFFICERS, DIRECTORS, AGENTS
OR EMPLOYEES MUST BE BROUGHT IN THE SUPERIOR COURT OF FORSYTH COUNTY, NORTH
CAROLINA OR FEDERAL DISTRICT COURT OF THE MIDDLE DISTRICT OF NORTH CAROLINA,
WINSTON SALEM, DIVISION AND YOU (AND EACH OWNER) IRREVOCABLY SUBMIT TO THE
JURISDICTION OF SUCH COURTS AND WAIVE ANY OBJECTION YOU, HE OR SHE MAY HAVE TO
EITHER THE JURISDICTION OF OR VENUE IN SUCH COURTS. NOTWITHSTANDING THE
FOREGOING, WE MAY BRING AN ACTION TO OBTAIN A RESTRAINING ORDER OR TEMPORARY OR
PRELIMINARY INJUNCTION, OR ENFORCE AN ARBITRATION AWARD, IN ANY FEDERAL OR STATE
COURT OF GENERAL JURISDICTION IN THE STATE IN WHICH YOU RESIDE OR IN WHICH THE
DEVELOPMENT AREA IS LOCATED.
20. WAIVER OF PUNITIVE DAMAGES.
EXCEPT WITH RESPECT TO YOUR OBLIGATION TO INDEMNIFY US PURSUANT TO
SECTION 12 AND CLAIMS WE BRING AGAINST YOU FOR YOUR UNAUTHORIZED USE OR
DISCLOSURE OF ANY CONFIDENTIAL INFORMATION, WE AND YOU AND YOUR OWNERS WAIVE TO
THE FULLEST EXTENT PERMITTED BY LAW ANY RIGHT TO OR CLAIM FOR ANY PUNITIVE OR
EXEMPLARY DAMAGES AGAINST THE OTHER AND AGREE THAT, IN THE EVENT OF A DISPUTE
BETWEEN US, THE PARTY MAKING A CLAIM WILL BE LIMITED TO EQUITABLE RELIEF AND TO
RECOVERY OF ANY ACTUAL DAMAGES IT SUSTAINS.
21. WAIVER OF JURY TRIAL.
WE AND YOU IRREVOCABLY WAIVE TRIAL BY JURY IN ANY ACTION, PROCEEDING OR
COUNTERCLAIM, WHETHER AT LAW OR IN EQUITY, BROUGHT BY EITHER OF US.
22. LIMITATIONS OF CLAIMS.
EXCEPT FOR CLAIMS BROUGHT BY US WITH REGARD TO YOUR OBLIGATIONS TO
INDEMNIFY US PURSUANT TO SECTION 12, ANY AND ALL CLAIMS ARISING OUT OF OR
RELATING TO THIS AGREEMENT OR THE RELATIONSHIP OF YOU AND US PURSUANT TO THIS
AGREEMENT WILL BE BARRED UNLESS AN ACTION IS COMMENCED WITHIN ONE (1) YEAR FROM
THE DATE ON WHICH THE ACT OR EVENT GIVING RISE TO THE CLAIM OCCURRED, OR ONE (1)
YEAR FROM THE DATE ON WHICH YOU OR WE KNEW OR SHOULD HAVE KNOWN, IN THE EXERCISE
OF REASONABLE DILIGENCE, OF THE FACTS GIVING RISE TO SUCH CLAIMS, WHICHEVER
OCCURS FIRST.
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<PAGE> 29
23. BINDING EFFECT.
This Agreement is binding upon us and you and our respective executors,
administrators, heirs, beneficiaries, assigns, and successors in interest and
may not be modified except by written agreement signed by both you and us.
24. CONSTRUCTION.
The preambles and exhibits are a part of this Agreement, which
constitutes the entire agreement of the parties, and there are no other oral or
written understandings or agreements between us and you relating to the subject
matter of this Agreement. Except as otherwise set forth herein, nothing in this
Agreement is intended, nor will be deemed, to confer any rights or remedies upon
any Person not a party hereto. The headings of the several sections and
subsections hereof are for convenience only and do not define, limit, or
construe the contents of such sections or subsections. The term "you" as used in
this Agreement is applicable to one or more Persons. The singular usage includes
the plural and the masculine and neuter usages include each other and the
feminine. If you are two or more Persons at any time, whether or not as partners
or joint venturers, your obligations and liabilities to us will be joint and
several. This Agreement will be executed in multiple copies, each of which will
be deemed an original.
25. NOTICES AND PAYMENTS.
All written notices and reports permitted or required to be delivered
by the provisions of this Agreement will be deemed so delivered:
(1) at the time delivered by hand;
(2) one (1) business day after transmission by electronic mail, by
facsimile or other electronic system;
(3) one (1) business day after being placed in the hands of a
commercial courier service for next business day delivery, or;
(4) three (3) business days after placement the United States Mail by
Registered or Certified Mail, Return Receipt Requested, postage
prepaid,
and addressed to the party to be notified at its most current principal business
address of which the notifying party has been notified. All payments and reports
required by this Agreement will be directed to us at such address, or to such
other Persons and places, as we may direct from time to time. Any required
payment or report not actually received by us during regular business hours on
the date due (or postmarked by postal authorities at least two (2) business days
prior thereto) will be deemed delinquent.
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<PAGE> 30
IN WITNESS WHEREOF, the parties hereto have executed and delivered this
Agreement in on the date dated on the first page hereof.
KRISPY KREME DOUGHNUT CORPORATION
By: _______________________________________
Title: Senior Vice President of Franchising
Dated: ____________________________________
IF OWNER IS A [CORPORATION] IF OWNER IS ONE OR MORE INDIVIDUALS:
LIMITED LIABILITY COMPANY]
[PARTNERSHIP]
By: ____________________________ ___________________________________________
Title: _________________________ Print Name
Dated: _________________________
___________________________________________
Signature
Dated: ____________________________________
___________________________________________
Print Name
___________________________________________
Signature
Dated: ____________________________________
27
<PAGE> 31
EXHIBIT A
TO THE DEVELOPMENT AGREEMENT
BY AND BETWEEN KRISPY KREME DOUGHNUT CORPORATION
AND ____________________________
DATED ___________________________________________
DEVELOPMENT AREA
The Development Area referred to in Section 2 and other applicable
sections of this Agreement is:
A-1
<PAGE> 32
KRISPY KREME DOUGHNUT COMPANY
CORPORATION
By: ______________________________________ By: _____________________________
Title:Senior Vice President of Franchising Title: __________________________
A-2
<PAGE> 33
EXHIBIT B
TO THE DEVELOPMENT AGREEMENT
BY AND BETWEEN KRISPY KREME DOUGHNUT CORPORATION
AND _________________________________________
DATED ___________________________________________
DEVELOPMENT SCHEDULE
1. KRISPY KREME STORE DEVELOPMENT. We have granted to you the right to
develop and operate and you agree to develop and operate a total of ____________
(___) KRISPY KREME STORES in accordance with the terms of the Agreement.
2. DEVELOPMENT OBLIGATIONS. You agree to have the minimum number of
KRISPY KREME STORES open in the Development Area during the Development Periods
and in operation at the end of each of the Development Periods listed below:
DEVELOPMENT MARKET/LOCATION NUMBER OF STORES CUMULATIVE
PERIOD --------------- TO BE OPENED NUMBER OF STORES
ENDING ON: DURING THE OPEN AND IN
---------- DEVELOPMENT PERIOD OPERATION
------------------ -----------------
__________ __________ __________ __________
__________ __________ __________ __________
__________ __________ __________ __________
__________ __________ __________ __________
__________ __________ __________ __________
__________ __________ __________ __________
__________ __________ __________ __________
__________ __________ __________ __________
__________ __________ __________ __________
__________ __________ __________ __________
__________ __________ __________ __________
__________ __________ __________ __________
KRISPY KREME DOUGHNUT COMPANY
CORPORATION
By: ______________________________________ By: _____________________________
Title:Senior Vice President of Franchising Title: __________________________
B-1
<PAGE> 34
EXHIBIT C
TO THE DEVELOPMENT AGREEMENT
BY AND BETWEEN KRISPY KREME DEVELOPMENT CORPORATION
AND __________________________________
DATED ___________________________________________
FORM FRANCHISE AGREEMENT
Attached hereto is the current form of Franchise Agreement used by us
in the offer and grant of franchises for the ownership and operation of KRISPY
KREME STORES. This will be the form of Franchise Agreement that you will sign
for all KRISPY KREME STORES to be developed under this Agreement.
KRISPY KREME DOUGHNUT COMPANY
CORPORATION
By: ______________________________________ By: _____________________________
Title:Senior Vice President of Franchising Title: __________________________
C-1
<PAGE> 35
EXHIBIT D
TO THE DEVELOPMENT AGREEMENT
BY AND BETWEEN KRISPY KREME DOUGHNUT CORPORATION
AND __________________________________
DATED ___________________________________________
ACKNOWLEDGMENTS AND REPRESENTATIONS STATEMENT
1. You acknowledge that you have read the Development Agreement (the
"AGREEMENT") between you and us dated as of the date hereof in its entirety and
that you understand and accept the terms, conditions and covenants contained in
the Agreement as being reasonably necessary to maintain our high standards of
quality and service and the uniformity of those standards at all KRISPY KREME
STORES in order to protect and preserve the goodwill of the Marks. (Capitalized
terms not defined herein will have the respective meanings set forth in the
Agreement.)
2. Attached to the Agreement as Exhibit C is a copy of the current form
of Franchise Agreement. You acknowledge that the Franchise Agreement attached to
the Agreement as Exhibit C is the current form of Franchise Agreement and that
you will sign for each KRISPY KREME STORE that you develop.
3. You acknowledge that the food service business is a competitive
industry, with constantly changing market conditions. You acknowledge that you
have conducted an independent investigation of the business contemplated by the
Agreement and recognize that, like any other business, the nature of the
business conducted by KRISPY KREME STORES may change over time and that an
investment in a KRISPY KREME STORE involves business risks.
4. We recommend that each applicant for development rights be
represented by legal counsel. You acknowledge that you have had ample
opportunity to consult with legal counsel and other professional advisors. You
acknowledge that you have not received or relied on any representations about
the development rights granted in the Agreement made by us, or our officers,
directors, employees or agents, that are contrary to the terms and conditions of
the Agreement.
5. You acknowledge and agree that our approval of a proposed site for a
KRISPY KREME STORE does not constitute an assurance, guarantee, representation
or warranty of any kind, express or implied, as to the suitability of the
proposed site for a KRISPY KREME STORE or the successful operation or
profitability of a KRISPY KREME STORE operated at such site. Our approval of any
such site indicates only that we believe that such site falls within acceptable
D-1
<PAGE> 36
minimum criteria established by us at the time of our approval. Both you and we
acknowledge that application of criteria that have been effective with respect
to other sites may not be predictive of potential for all sites and that,
subsequent to our approval of a proposed site, demographic and/or economic
factors, such as competition from other similar businesses, included in or
excluded from our criteria could change, thereby altering the potential of a
proposed site. Such factors are unpredictable and are beyond our control. We
will not be responsible for the failure of a site approved by us to meet your
expectations as to revenue or operational criteria. You further acknowledge and
agree that your acceptance of a Franchise for the operation of a KRISPY KREME
STORE at any such site is based on your own independent investigation of the
suitability of the site.
6. You acknowledge that our approval of a business and financing plan
for your development and operation of KRISPY KREME STORES under the Agreement
does not constitute any assurance, guaranty, representation or warranty that
such business and financing plan is sufficient or not unduly burdensome, or that
such KRISPY KREME STORES will be successful if the business or financing plan is
implemented by you. Our approval of the business and financing plan indicates
only that such plan meets or that we have waived our then-current minimum
standards established by us solely for our own purposes at the time of approval.
7. You acknowledge that in all of our dealings with you, our officers,
directors, employees and agents act only in a representative capacity and not in
an individual capacity. You further acknowledge that the Agreement, and all
business dealings between you and such individuals as a result of the Agreement,
are solely between you and us. You further represent to us, as an inducement to
our entry into this Agreement, that neither you nor your Owners has made any
misrepresentations in obtaining the rights granted under the Agreement.
8. If you are a corporation, limited liability company or partnership,
you:
A. represent that you are duly organized and validly existing
in good standing under the laws of the jurisdiction of your
organization, are qualified to do business in all jurisdictions in
which your business activities or the nature of properties owned by you
requires such qualification, and have the authority to execute and
deliver the Agreement and perform all of your obligations under the
Agreement; and
B. agree that all certificates representing your Ownership
Interests of you now outstanding or hereafter issued will be endorsed
with a legend in form approved by us reciting that the transfer of your
Ownership Interests are subject to restrictions contained in the
Agreement.
9. You represent and warrant that you are not subject to any
restriction, agreement, contract, commitment, law, judgment or decree which
would prohibit or be breached or violated by your execution and delivery of the
Agreement or performance of your obligations thereunder. At our request, you
will furnish us with an opinion of counsel, in form and substance satisfactory
to us, to the effect that the Agreement is your valid and binding agreement,
enforceable against you in accordance with its terms, and that you are not
subject to any restriction, agreement, law,
D-2
<PAGE> 37
judgment or decree which would prohibit or be breached or violated by your
execution and delivery of the Agreement and performance of your obligations
thereunder.
10. You further represent and warrant that all of your Owners and their
interests in you are completely and accurately listed in EXHIBIT G to the
Agreement and that you will make, sign and deliver to us such revisions thereto
as may be necessary during the term of the Agreement to reflect any changes in
the information contained therein.
11. You represent and warrant that you are a ________________ organized
under the laws of _________________and that your domicile is as set forth below:
________________________________________
Address
________________________________________
City and State
Dated: ____________________________
COMPANY
By: ____________________________________
Title: _________________________________
D-3
<PAGE> 38
EXHIBIT E
TO THE DEVELOPMENT AGREEMENT
BY AND BETWEEN KRISPY KREME DOUGHNUT CORPORATION
AND __________________________________
DATED ___________________________________________
GUARANTY AND ASSUMPTION OF YOUR OBLIGATIONS
THIS GUARANTY AND ASSUMPTION OF YOUR OBLIGATIONS (the "Guaranty") is
given this ________ day of ______________ of 19___, by the undersigned.
DEVELOPER: _________________________________ ("DEVELOPER")
(NAME)
DATE OF DEVELOPMENT AGREEMENT: ___________________________
In consideration of, and as an inducement to, the execution of the
Development Agreement (the "Agreement") by KRISPY KREME DOUGHNUT CORPORATION
("WE" "US" or "OUR"), each of the undersigned and any other parties who sign
counterparts of this Guaranty (referred to herein individually as a "GUARANTOR"
and collectively as "GUARANTORS") hereby personally and unconditionally
guarantees to us and our successors and assigns, that Developer will punctually
pay its monthly obligations for development fees, royalties, marketing and
promotion fund contributions and purchases of equipment, mixes and other amounts
due under this Agreement and under all franchise agreements entered into
pursuant to the development of Krispy Kreme Stores under this Agreement
Each Guarantor waives:
1. acceptance and notice of acceptance by us of the foregoing
undertakings; and
2. notice of demand for payment of any indebtedness or
nonperformance of any obligations hereby guaranteed; and
3. protest and notice of default to any party with respect to
the indebtedness or nonperformance of any obligations hereby
guaranteed; and
4. any right he or she may have to require that an action be
brought against DEVELOPER or any other person as a condition of
liability; and
E-1
<PAGE> 39
5. all rights to payments and claims for reimbursement or subrogation
which he or she may have against DEVELOPER arising as a result of his or her
execution of and performance under this guaranty by the undersigned (including
by way of counterparts); and
6. any and all other notices and legal or equitable defenses to which
he or she may be entitled; and
7. the provisions of N.C. Gen. Stat. ss. 26-7 et seq.
Each Guarantor consents and agrees that:
(A) his or her direct and immediate liability under this
Guaranty will be joint and several not only with DEVELOPER, but also
among the Guarantors; and
(B) he or she will render any payment or performance required
under the Agreement upon demand if DEVELOPER fails or refuses
punctually to do so; and
(C) such liability will not be contingent or conditioned upon
pursuit by us of any remedies against DEVELOPER or any other person;
and
(D) such liability will not be diminished, relieved or
otherwise affected by any subsequent rider or amendment to the
Agreement or by any extension of time, credit or other indulgence that
we may from time to time grant to DEVELOPER or to any other person,
including, without limitation, the acceptance of any partial payment or
performance, or the compromise or release of any claims, none of which
will in any way modify or amend this Guaranty, which will be continuing
and irrevocable throughout the term of the Agreement and for so long
thereafter as there are any monies or obligations owing by DEVELOPER to
us under the Agreement; and
(E) your written acknowledgment, accepted in writing by us, or
the judgment of any court or arbitration panel of competent
jurisdiction establishing the amount due from you will be conclusive
and binding on the undersigned as Guarantors.
If we are required to enforce this Guaranty in an administrative,
judicial or arbitration proceeding, and prevail in such proceeding, we will be
entitled to reimbursement of our costs and expenses, including, but not limited
to, legal and accounting fees, administrative, arbitrators' and expert witness
fees, costs of investigation and proof of facts, court costs, other expenses of
an administrative, judicial or arbitration proceeding and travel and living
expenses, whether incurred prior to, in preparation for or in contemplation of
the filing of any such proceeding. If we are required to engage legal counsel in
connection with any failure by the undersigned to comply with this Guaranty, the
Guarantors will reimburse us for any of the above-listed costs and expenses
incurred by it.
E-2
<PAGE> 40
IN WITNESS WHEREOF, each Guarantor has hereunto affixed his signature
on the same day and year as the Agreement was executed.
GUARANTOR(S):
Name: _______________________________ Name: __________________________________
Signature: __________________________ Signature: _____________________________
Name: _______________________________ Name: __________________________________
Signature: __________________________ Signature: _____________________________
Name: _______________________________ Name: __________________________________
Signature: __________________________ Signature: _____________________________
Name: _______________________________ Name: __________________________________
Signature: __________________________ Signature: _____________________________
E-3
<PAGE> 41
EXHIBIT F
TO THE DEVELOPMENT AGREEMENT BY AND BETWEEN
KRISPY KREME DOUGHNUT CORPORATION
AND _______________________________
DATED _________________________________
CONFIDENTIALITY AND NON-COMPETITION AGREEMENT
THIS AGREEMENT (the "CNC AGREEMENT") is made and entered into as of
this ______ day of ______________, 19__, by and among KRISPY KREME DOUGHNUT
CORPORATION, ("WE" US" or "OUR"), ______________________________________________
_______________________________________(" DEVELOPER")
Address: ______________________________________________________
______________________________________________________
______________________________________________________
and ____________________________________________________________________________
_________________________________________________________ ("COVENANTOR").
Address: ______________________________________________________
______________________________________________________
______________________________________________________
W I T N E S S E T H:
WHEREAS, pursuant to the terms of the Development Agreement entered
into by and between us and DEVELOPER (the "AGREEMENT"), we have granted to
DEVELOPER the right to develop and own one or more "KRISPY KREME STORES" (the
"KRISPY KREME STORE(S)") (all capitalized terms not defined herein will have the
respective meanings set forth in the Agreement); and
WHEREAS, COVENANTOR is either a member of the Immediate Family of an
Owner of DEVELOPER, a holder of an Ownership Interest in DEVELOPER or an
officer, partner, director, or employee of DEVELOPER who may have access to the
Confidential Information in connection with the development and operation of the
KRISPY KREME STORE(S); and
F-1
<PAGE> 42
WHEREAS, as a condition precedent to allowing COVENANTOR to have access
to the Confidential Information, and as a material term of the Agreement
necessary to protect the System and our proprietary rights in and right to use
the Confidential Information, we and DEVELOPER require that COVENANTOR enter
into this CNC Agreement; and
WHEREAS, to induce us to enter into the Agreement and/or to avoid a
material breach thereof, as the case may be, we, DEVELOPER and COVENANTOR,
desire and deem it to be in COVENANTOR's best interests, that COVENANTOR enter
into this CNC Agreement; and
WHEREAS, due to the nature of our business, any use or disclosure of
the Confidential Information other than in accordance with this CNC Agreement
will cause us and DEVELOPER substantial harm.
NOW, THEREFORE, in consideration of the foregoing and of the covenants
and mutual agreements contained herein and other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, the
parties hereto agree as follows:
1. RECITALS. The recitals set forth above will be deemed to be
incorporated herein as if fully set forth in this CNC Agreement, and this CNC
Agreement will be interpreted in light of such recitals.
2. DEFINITIONS.
a. "CONFIDENTIAL INFORMATION" - Certain of our confidential
and proprietary information and trade secrets including, without
limitation, the following:
(1) methods, techniques, equipment, specifications,
standards, policies, procedures, information, concepts and
systems relating to and knowledge of and experience in the
development, operation and franchising of KRISPY KREME STORES;
(2) marketing and promotional programs for KRISPY
KREME STORES, including but not limited to, information
regarding our National Accounts Program;
(3) knowledge concerning the logic, structure and
operation of computer software programs which we authorize for
use in connection with the operation of KRISPY KREME STORES
and all additions, modifications and enhancements, and all
data generated from use of such programs;
(4) specifications and standards for, and sources of,
store buildings of modular and "stick built" construction,
equipment, furnishings, fixtures, signs, products, materials,
supplies and services utilized in the development and
operation of KRISPY KREME STORES;
F-2
<PAGE> 43
(5) ingredients, formulas, mixes, recipes for and
methods of preparation, cooking, serving, packaging, and
delivery of, Products sold at KRISPY KREME STORES;
(6) information concerning Product sales, operating
results, financial performance, consumer preferences,
inventory requirements for Products, materials and supplies
and other financial data of KRISPY KREME STORES;
(7) customer lists;
(8) employee selection procedures, training and
staffing levels; and
(9) our expansion, growth and development plans and
prospects.
b. "COMPETITIVE BUSINESS" - a business or enterprise, other
than a KRISPY KREME STORE, that:
(1) sells yeast raised doughnuts, cake doughnuts, any
other types of customary or large size doughnut, miniature
doughnuts or doughnut holes in any distribution channels to
any customer for consumption or resale and such sales comprise
five percent (5%) or more of such business' revenues; or
(2) grants or has granted franchises or licenses, or
establishes or has established joint ventures, for the
development and/or operation of a business that offers such
food products in any such channel of distribution.
c. "DEVELOPMENT AREA" - as defined in the Agreement, a copy of
the relevant portions of which may be obtained from DEVELOPER or us.
3. PROTECTION OF CONFIDENTIAL INFORMATION. We have disclosed and will
disclose to DEVELOPER such parts of the Confidential Information as we deem
necessary or advisable from time to time in our sole discretion for the
development of KRISPY KREME STORES pursuant to the Agreement. DEVELOPER will
disclose certain parts of the Confidential Information to COVENANTOR to the
extent that DEVELOPER deems such disclosure reasonably necessary for the
development and operation of KRISPY KREME STORES owned by DEVELOPER, taking into
consideration the confidential nature of the Confidential Information.
COVENANTOR agrees to use the Confidential Information only to the extent
reasonably necessary to perform his or her duties to or on behalf of DEVELOPER,
taking into consideration the confidential nature of the Confidential
Information. COVENANTOR may disclose the Confidential Information only as agent
for DEVELOPER and only on the terms and conditions, and to the extent, DEVELOPER
is permitted to do so under the Agreement. COVENANTOR acknowledges and agrees
that neither COVENANTOR nor any other Person will acquire any interest in or
right to use the Confidential Information under this
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CNC Agreement, the Agreement or otherwise other than the right to utilize it as
authorized in such agreements, and that the unauthorized use or duplication of
the Confidential Information, including, without limitation, in connection with
any other business, would be detrimental to us and would constitute a breach of
COVENANTOR's obligations of confidentiality and an unfair method of competition
with us, DEVELOPER and other KRISPY KREME STORES owned by us or its franchisees.
COVENANTOR acknowledges and agrees that the Confidential Information is
confidential to and a valuable asset of ours, is proprietary to and includes our
trade secrets and is disclosed to COVENANTOR solely on the condition that
COVENANTOR agrees, and COVENANTOR does hereby agree, that COVENANTOR: (a) will
not use the Confidential Information in any other business or capacity; (b) will
maintain the absolute secrecy and confidentiality of the Confidential
Information during and after the term of this CNC Agreement (provided, however,
that we will not deem COVENANTOR in default of this Agreement as a result of
isolated incidents of disclosure of Confidential Information by an employee
other than an Owner, provided COVENANTOR has taken reasonable steps to prevent
such disclosure, including, but not limited to the steps a reasonable and
prudent owner of confidential and proprietary information would take to prevent
disclosure of such information by his employees, and further provided that
COVENANTOR pursues all reasonable legal and equitable remedies against such
employee for such disclosure of such Confidential Information); (c) will not
make unauthorized copies of any portion of the Confidential Information
disclosed or recorded in written or other tangible form; and (d) will adopt and
implement all reasonable procedures prescribed from time to time by us and
DEVELOPER to prevent unauthorized use or disclosure of or access to the
Confidential Information. Nothing contained herein will be construed to prohibit
COVENANTOR from using the Confidential Information in connection with the
development and ownership of KRISPY KREME STORES, where, and to the extent
authorized in other development or franchise agreements with us.
Notwithstanding anything to the contrary contained in this CNC
Agreement, the restrictions on COVENANTOR's disclosure and use of the
Confidential Information will not apply to the following: (a) information,
methods, procedures, techniques and knowledge which are or become generally
known in the food service business, other than through disclosure (whether
deliberate or inadvertent) by COVENANTOR; and (b) the disclosure of the
Confidential Information in judicial, arbitration or administrative proceedings
to the extent that COVENANTOR is legally compelled to disclose such information,
provided COVENANTOR has notified us and DEVELOPER prior to disclosure and has
used its best efforts to obtain, and will have afforded us and DEVELOPER the
opportunity to obtain, assurance satisfactory to us of confidential treatment
for the information required to be so disclosed.
To the extent COVENANTOR is permitted, COVENANTOR agrees to disclose to
us all ideas, concepts, methods, techniques and products which it proposes to
use in relation to the development and operation of KRISPY KREME STORES
conceived or developed by COVENANTOR and COVENANTOR acknowledges and agrees that
we and our subsidiaries will have a perpetual, world-wide, exclusive right
(except that you shall be entitled to use such
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ideas, concepts, techniques or materials without charge by us) to incorporate
same in the System for use in KRISPY KREME STORES owned and operated by us or
our subsidiaries and to authorize our developers and franchisees to use them in
their KRISPY KREME STORES. We will have no obligation to make payments to
COVENANTOR, DEVELOPER or any other Person with respect to any such idea,
concept, method, technique or product developed or suggested by COVENANTOR which
we incorporate into the System. COVENANTOR agrees that COVENANTOR will not use
any such idea, concept, method, technique or product in relation to a KRISPY
KREME STORE without obtaining DEVELOPER'S and our prior written approval.
4. IN-TERM RESTRICTIVE COVENANT. COVENANTOR acknowledges and agrees
that we would be unable to protect the Confidential Information against
unauthorized use or disclosure and would be unable to achieve a free exchange of
ideas and information among franchisees and developers of KRISPY KREME STORES if
persons or entities authorized to use the Confidential Information were
permitted to hold interests in or perform services for a Competitive Business.
COVENANTOR further acknowledges and agrees that the restrictions contained in
this Paragraph 4 will not hinder COVENANTOR's activities in connection with
DEVELOPER'S performance under the Agreement or in general. COVENANTOR therefore
agrees that for as long as COVENANTOR holds an Ownership Interest in DEVELOPER;
is an employee, officer, partner, or director of DEVELOPER; or is a member of
the Immediate Family of an Owner of DEVELOPER, COVENANTOR will not directly or
indirectly (through a member of COVENANTOR's Immediate Family or otherwise):
(a) have any interest as a record or beneficial owner of
Ownership Interests of any Competitive Business (this restriction will
not be applicable to the ownership of publicly traded Ownership
Interests that represent less than three percent (3%) of a class of
Ownership Interests issued and outstanding); or
(b) perform services as a director, officer, manager,
employee, consultant, representative, agent or otherwise for any
Competitive Business.
COVENANTOR furthermore agrees that during the term of the Agreement, neither
COVENANTOR nor a member of COVENANTOR's Immediate Family will directly or
indirectly employ or seek to employ any person who is employed by us, our
subsidiaries or by any other developer or franchisee of KRISPY KREME STORES, nor
induce any such person to leave said employment without the prior written
consent of such person's employer.
If COVENANTOR is an Owner of DEVELOPER or is a member of the Immediate
Family of DEVELOPER or an Owner, the restrictions of this CNC Agreement will not
be construed to prohibit COVENANTOR from having a direct or indirect Ownership
Interest in any KRISPY KREME STORES, development agreements or franchise
agreements for the development or operation of KRISPY KREME STORES, or any
Person owning, controlling or operating KRISPY KREME STORES, or from providing
services to any such KRISPY KREME STORES pursuant to other agreements with us.
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<PAGE> 46
DEVELOPER and COVENANTOR acknowledge and agree that the failure of
COVENANTOR to comply with this Paragraph 4 or Paragraphs 5 or 6 below will, in
addition to giving rise to any remedies under this CNC Agreement, constitute a
breach of the Agreement without regard to whether COVENANTOR has executed the
Agreement on behalf of DEVELOPER.
5. RESTRICTIVE COVENANT UPON TRANSFER OF COVENANTOR'S OWNERSHIP
INTEREST IN DEVELOPER. If (a) COVENANTOR transfers his/her entire Ownership
Interest in DEVELOPER, if any, or (b) DEVELOPER transfers the Agreement (a
transfer described in subparagraph (a) or (b) is referred to herein as a "
DEVELOPER TRANSFER"), COVENANTOR agrees that for a period of two (2) years
commencing on the effective date of the transfer COVENANTOR will not directly or
indirectly (through a member of the Immediate Family of COVENANTOR or
otherwise):
(1) have any interest as a disclosed or beneficial owner in
any Competitive Business located or operating in the Development Area
on the effective date of termination of this Agreement;
(2) perform services as a director, officer, manager,
employee, consultant, representative, agent or otherwise for any
Competitive Business located or operating or under development in the
Development Area on the effective date of termination of this
Agreement; or
(3) employ or seek to employ any Person who is employed (as an
employee or independent contractor) by us, our subsidiaries or by any
other developer or franchisee of KRISPY KREME STORES, nor induce nor
attempt to induce any such Person to leave his or her employment
without the prior written consent of that Person's employer.
(4) own or hold the right to vote any record or beneficial
Ownership Interest of a Competitive Business located or operating:
(a) within five (5) miles of a KRISPY KREME STORE in
operation or under development in the Development Area on the
effective date of a Transfer hereunder; or
(b) within five (5) miles of any other KRISPY KREME
STORE in operation or under development on the effective date
of a Transfer;
(5) perform services as a director, officer, manager,
employee, consultant, representative, agent or otherwise for a
Competitive Business located or operating:
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(a) within five (5) miles of a KRISPY KREME STORE in
operation or under development in the Development Area on the
effective date of a Transfer hereunder; or
(b) within five (5) miles of any other KRISPY KREME
STORE in operation or under development on the effective date
of a Transfer; or
(6) employ or seek to employ any person who is employed by us,
our subsidiaries or by any other developer or franchisee of KRISPY
KREME STORES, nor induce nor attempt to induce any such person to leave
said employment without the prior written consent of such person's
employer.
The restrictions of clause (1) of this Paragraph 5 will not be applicable to the
ownership of publicly traded Ownership Interests that represent less than three
percent (3%) of a class of Ownership Interests issued and outstanding.
COVENANTOR expressly acknowledges and agrees that COVENANTOR possesses
skills and abilities of a general nature and has opportunities for exploiting
such skills. Consequently, enforcement of the covenants made in this Paragraph 5
will not deprive COVENANTOR of an ability to earn a living.
6. RESTRICTIVE COVENANT UPON TERMINATION OR EXPIRATION OF THE AGREEMENT
OR COVENANTOR'S ASSOCIATION WITH DEVELOPER. Upon the first to occur of: (a)
termination or expiration of the Agreement; or (b) the date as of which
COVENANTOR is neither the holder of an Ownership Interest in DEVELOPER, a member
of the Immediate Family or DEVELOPER'S or of an Owner of DEVELOPER, or an
employee, officer or director of DEVELOPER (an event described in subparagraph
(a) or (b) is referred to herein as a "TERMINATION EVENT"), COVENANTOR agrees
that for a period of two (2) years commencing on the effective date of a
Termination Event, COVENANTOR will not directly or indirectly (through an
Immediate Family member of COVENANTOR or otherwise):
(1) have any interest as a disclosed or beneficial owner in
any Competitive Business located or operating in the Development Area
on the effective date of termination of this Agreement;
(2) perform services as a director, officer, manager,
employee, consultant, representative, agent or otherwise for any
Competitive Business located or operating or under development in the
Development Area on the effective date of termination of this
Agreement; or
(3) employ or seek to employ any Person who is employed (as an
employee or independent contractor) by us, our subsidiaries or by any
other developer or franchisee of KRISPY KREME STORES, nor induce nor
attempt to induce any such Person to leave his or her employment
without the prior written consent of that Person's employer.
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(4) own or hold the right to vote any record or beneficial
Ownership Interest of a Competitive Business located or operating:
(a) within five (5) miles of any KRISPY KREME STORE
in operation or under development in the Development Area on
the effective date of a Termination Event; or
(b) within five (5) miles of any other KRISPY KREME
STORE in operation or under development on the effective date
of a Termination Event;
(5) perform services as a director, officer, manager,
employee, consultant, representative, agent or otherwise for a
Competitive Business located or operating:
(a) within five (5) miles of any KRISPY KREME STORE
in operation or under development in the Development Area on
the effective date of a Termination Event; or
(b) within five (5) miles of any other KRISPY KREME
STORE in operation or under development on the effective date
of a Termination Event; or
(6) employ or seek to employ any person who is employed by us,
our subsidiaries or by any other developer or franchisee of KRISPY
KREME STORES, nor induce nor attempt to induce any such person to leave
said employment without the prior written consent of such person's
employer.
The restrictions of clause (1) of this Paragraph 6 will not be applicable to the
ownership of publicly traded Ownership Interests that represent less than three
percent (3%) of a class of Ownership Interests issued and outstanding.
COVENANTOR expressly acknowledges and agrees that COVENANTOR possesses
skills and abilities of a general nature and has opportunities for exploiting
such skills. Consequently, enforcement of the covenants made in Paragraph 5 or
this Paragraph 6 will not deprive COVENANTOR of an ability to earn a living.
7. SURRENDER OF CONFIDENTIAL INFORMATION. COVENANTOR agrees that, as of
the effective date of a Transfer or a Termination Event, as applicable,
COVENANTOR will immediately cease to use the Confidential Information disclosed
to or otherwise learned or acquired by COVENANTOR and return to DEVELOPER (or us
if directed by us) all copies of the Confidential Information loaned or made
available to COVENANTOR.
8. INDEMNIFICATION. COVENANTOR agrees to indemnify and hold us and
DEVELOPER harmless from and against any and all claims, liabilities, obligations
and damages suffered, sustained or incurred by us or DEVELOPER as a result of,
arising out of, or in
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connection with any failure of performance under or breach of this CNC Agreement
by COVENANTOR.
9. COSTS AND LEGAL AND ACCOUNTING FEES. If we and/or DEVELOPER engage
counsel in connection with any failure by COVENANTOR to comply with this CNC
Agreement, COVENANTOR will reimburse us and/or DEVELOPER, as applicable, for
costs and expenses incurred by us and/or DEVELOPER, including, without
limitation, legal fees and accounting, arbitrators' and expert witness fees,
cost of investigation and proof of facts, court costs, other expenses of an
administrative, judicial or arbitration proceeding and travel and living
expenses, whether incurred prior to, in preparation for, in contemplation of or
in connection with the filing of any judicial or arbitration proceeding to
enforce this CNC Agreement.
10. WAIVER. Failure to insist upon strict compliance with any of the
terms, covenants or conditions hereof will not be deemed a waiver of such term,
covenant or condition, nor will any waiver or relinquishment of any right or
remedy hereunder at any one or more times be deemed a waiver or relinquishment
of such right or remedy at any other time or times.
11. SEVERABILITY. The invalidity or unenforceability of any provision
hereof will in no way affect the validity or enforceability of any other
provision of this CNC Agreement and any such provision which is adjudicated to
be invalid or unenforceable will be severed from this CNC Agreement, provided
that such severance is to apply only with respect to the operation of such
provision in the particular jurisdiction in which such adjudication is made. To
the extent any restriction herein is deemed unenforceable by virtue of its scope
in terms of time, geography or business activity prohibited, but may be made
enforceable by modifying, amending or reducing any or all thereof, the parties
agree that any court, judicial or administrative agency or arbitrator may, and
is hereby directed to, revise such language in order to make such restrictions
enforceable to the fullest extent permissible under the laws and public policies
applied in the jurisdiction where enforcement is sought.
12. RIGHTS OF PARTIES ARE CUMULATIVE. The rights of the parties
hereunder are cumulative and no exercise or enforcement by a party hereto of any
right or remedy hereunder will preclude the exercise or enforcement by them of
any other right or remedy hereunder or which they are entitled by law to
enforce.
13. BENEFIT. This CNC Agreement will inure to the benefit of and be
binding upon the parties hereto and their respective successors and assigns. In
the event we do not execute this CNC Agreement (regardless of the reason), we
will be deemed a third party beneficiary hereunder and will have the right to
enforce this Agreement.
14. AMENDMENT. This CNC Agreement may not be modified or rescinded
except by a written agreement to such effect signed by the party against whom
enforcement is sought.
15. GOVERNING LAW AND JURISDICTION. This CNC Agreement and the rights
and obligations of the parties hereunder will be governed by and construed in
accordance with the
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<PAGE> 50
laws of the State of North Carolina and all disputes relating to the
interpretation and enforcement of this CNC Agreement will be adjudicated or
arbitrated in Winston-Salem, North Carolina.
16. COUNTERPARTS. This CNC Agreement may be executed in counterparts,
each of which will be deemed an original.
17. EFFECTIVENESS. This CNC Agreement will be enforceable and effective
when executed by COVENANTOR and DEVELOPER, regardless of whether and when we
execute this CNC Agreement.
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<PAGE> 51
IN WITNESS WHEREOF, the parties hereto have executed this CNC Agreement
as of the day and year first above written.
__________________________________ COMPANY
Name
__________________________________ ______________________________________
Name By: __________________________________
Its: _________________________________
__________________________________
Name
KRISPY KREME DOUGHNUT CORPORATION
__________________________________
Name
By: __________________________________
Its: Senior Vice President of Franchising
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EXHIBIT G
TO THE DEVELOPMENT AGREEMENT
BY AND BETWEEN KRISPY KREME DOUGHNUT CORPORATION
AND ______________________________
DATED ______________________________
BUSINESS ORGANIZATION, OWNERS, GENERAL MANAGER
AND MANAGING OWNER
1. You are a __________________________________________________________
established under the laws of _________________________________.
2. OWNERS: Listed below are the full name and mailing address of each
Person who is an Owner of you and a description of the nature of such Owner's
direct or indirect Ownership Interest in you (attach an additional page if
required):
Name: _____________________________ Number of Ownership Interests owned: ____
Address: __________________________ % of total Ownership Interests: _________
___________________________________ Number of Ownership Interests Owner
___________________________________ is entitled to vote: __________________
___________________________________ Other Ownership Interests (describe):
___________________________________ _________________________________________
Name: _____________________________ Number of Ownership Interests owned: ____
Address: __________________________ % of total Ownership Interests: _________
___________________________________ Number of Ownership Interests Owner
___________________________________ is entitled to vote: __________________
___________________________________ Other Ownership Interests (describe):
___________________________________ _________________________________________
Name: _____________________________ Number of Ownership Interests owned: ____
Address: __________________________ % of total Ownership Interests: _________
___________________________________ Number of Ownership Interests Owner
___________________________________ is entitled to vote: __________________
___________________________________ Other Ownership Interests (describe):
___________________________________ _________________________________________
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<PAGE> 53
Name: _____________________________ Number of Ownership Interests owned: ____
Address: __________________________ % of total Ownership Interests: _________
___________________________________ Number of Ownership Interests Owner
___________________________________ is entitled to vote: __________________
___________________________________ Other Ownership Interests (describe):
___________________________________ _________________________________________
Name: _____________________________ Number of Ownership Interests owned: ____
Address: __________________________ % of total Ownership Interests: _________
___________________________________ Number of Ownership Interests Owner
___________________________________ is entitled to vote: __________________
___________________________________ Other Ownership Interests (describe):
___________________________________ _________________________________________
Name: _____________________________ Number of Ownership Interests owned: ____
Address: __________________________ % of total Ownership Interests: _________
___________________________________ Number of Ownership Interests Owner
___________________________________ is entitled to vote: __________________
___________________________________ Other Ownership Interests (describe):
___________________________________ _________________________________________
Name: _____________________________ Number of Ownership Interests owned: ____
Address: __________________________ % of total Ownership Interests: _________
___________________________________ Number of Ownership Interests Owner
___________________________________ is entitled to vote: __________________
___________________________________ Other Ownership Interests (describe):
___________________________________ _________________________________________
3. MANAGEMENT: The following Person(s) is (are) the Managing Owner and
General Manager who will exert full-time efforts to fulfill the obligations of
you under this Agreement:
MANAGING OWNER:
Name: _____________________________ Number of Ownership Interests owned: ____
Address: __________________________ % of total Ownership Interests: _________
___________________________________ Number of Ownership Interests Owner
___________________________________ is entitled to vote: __________________
___________________________________ Other Ownership Interests (describe):
___________________________________ _________________________________________
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<PAGE> 54
GENERAL MANAGER:
Name: _____________________________ Number of Ownership Interests owned: ____
Address: __________________________ % of total Ownership Interests: _________
___________________________________ Number of Ownership Interests Owner
___________________________________ is entitled to vote: __________________
___________________________________ Other Ownership Interests (describe):
___________________________________ _________________________________________
4. INITIAL CAPITALIZATION. You: (a) represent and warrant that you have
developed and previously furnished to us, a description of your initial capital
structure which is a true, correct, complete and detailed description of your
capital structure; (b) covenant that you will not deviate from your initial
capital structure without our prior written consent; and (c) acknowledge that we
have relied on your initial capital structure in entering into this Agreement.
KRISPY KREME DOUGHNUT CORPORATION COMPANY
By: _______________________________________ By: _____________________________
Title: Senior Vice President of Franchising Title: __________________________
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<PAGE> 55
EXHIBIT H
TO THE DEVELOPMENT AGREEMENT
BY AND BETWEEN KRISPY KREME DOUGHNUT CORPORATION
AND ______________________________
DATED ______________________________
COMMISSARY RIDER
H-1