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EXHIBIT 10.10
COLLATERAL REPURCHASE AGREEMENT
THIS COLLATERAL REPURCHASE AGREEMENT (the "Agreement") is made and
entered into this 30th day of January, 1998 by and among KRISPY KREME DOUGHNUT
CORPORATION, a North Carolina corporation, with its principal office and place
of business at 000 Xxxxxxxxx Xxxxxx, Xxxxx 000, Xxxxxxx-Xxxxx, Xxxxx Xxxxxxxx,
00000 ("Krispy Kreme"), MACKK, L.L.C., an Alabama limited liability company (the
"Borrower") and BRANCH BANKING AND TRUST (the "Bank").
R E C I T A L S :
1. The Borrower has requested a loan from the Bank to finance the
purchase of certain land, buildings, equipment, signage, furniture and
fixtures from Krispy Kreme.
2. The Bank has agreed to lend to Borrower One Million Five
Hundred Thousand and 00/100 Dollars ($1,500,000.00) in the form of an
Acquisition and Term Loan and up to Two Hundred Fifty Thousand and
00/100 Dollars ($250,000.00) in the form of a Line of Credit secured in
part by a security interest in the Equipment (as defined below) (the
"Bank Loans") as evidenced by the Notes (as defined below); and
3. Therefore, the parties desire to enter into this Agreement.
NOW THEREFORE, in consideration of the mutual promises and covenants
herein contained, and in further consideration of one Dollar ($1.00) and other
valuable consideration paid by each party hereto to each other party, the
receipt and adequacy of which is acknowledged by each party hereto, the parties
hereto do agree as follows:
1. Copies of the Notes are attached hereto as EXHIBIT A and
incorporated herein by reference (the "Notes")
2. Bank shall provide Krispy Kreme with a copy of any notice to
Borrower declaring a default under either of the Notes and demanding
payment in full and a copy of any notice to Borrower after which Bank
will exercise its remedies under either of the Notes. Such copies shall
be sent to Krispy Kreme within three (3) business days of the sending
of the same to Borrower.
3. In the event of a default under either of the Notes, as long
as Bank has fully complied with the terms of this Agreement, Bank shall
have the right, but not the obligation, to demand by notice to Krispy
Kreme (the "Notification") that Krispy Kreme repurchase the Equipment
at a price equal to the lesser of (i) Three Hundred Twenty Five
Thousand and no/100 Dollars ($325,000.00) or (ii) the unpaid balance of
the applicable portion of the Bank Loans as of the date of the
Notification (the "Unpaid Balance").
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Such lesser amount is sometimes herein referred to as the "Purchase
Price". The parties acknowledge that the Bank Loans are for Borrower's
entire project for the acquisition of three (3) Krispy Kreme Doughnut
Shops and includes, but is not limited to, the purchase of the
Equipment. Consequently, the unpaid balance of the Bank Loans will be
multiplied by a fraction, the numerator of which is $325,000.00 and the
denominator of which is the amount of the Bank Loans ($1,750,000.00),
to determine the "Unpaid Balance" as such term is used in this
Agreement. For example, if the outstanding balance of the Bank Loans is
$1,635,000.00 at the time of the Notification, then the Unpaid Balance,
for purposes of this Agreement, shall be equal to $303,642.71. The
parties agree that the calculations set forth in this Paragraph 3 are
done for the sole reason of determining Krispy Kreme's financial
obligations to the Bank with respect to the matters set forth herein.
4. The parties acknowledge and agree that any default by Borrower
under either of the Notes or any other documents related to the Bank
Loans, whether or not waived by the Bank, shall, at the option of
Krispy Kreme, constitute a default under the Associate's License
Agreement and under any and all other agreements between Borrower and
Krispy Kreme.
5. The liability of Krispy Kreme hereunder shall be subject to,
and conditioned upon, full and complete compliance by Bank with the
following:
(a) Bank shall obtain and perfect a first priority security
interest in the Equipment (the "Security Interest") and shall
continuously maintain such perfected Security Interest from the
moment Borrower acquires any interest in the Equipment. All
filings and indicia of such Security Interest shall state that
they are subject to the terms of this Agreement.
(b) [This Section intentionally left blank.]
(c) [This Section intentionally left blank.]
(d) Any transfer of the Security Interest or any interest
therein to any other party shall provide that it is subject to
the terms of this Agreement and the transferee thereof shall
enter into an agreement with Krispy Kreme agreeing to abide by
the terms hereof.
(e) Bank shall not release the Security Interest in the
Equipment nor shall Bank take any action, or fail to take any
action, which action or failure to act will compromise or
diminish the Security Interest in any way. Provided, however,
Bank may release the Security Interest in portions of the
Equipment if Bank, at Bank's election, either (i) fully releases
Krispy Kreme from liability under this Agreement or (ii)
determines that Borrower reasonably desires to replace the
Equipment with new or different equipment (the "New Equipment")
of value and function comparable to that in which the Security
Interest is to be released and ensures that
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the New Equipment is obtained by Borrower prior to such
release and that the Security Interest applies to such New
Equipment as a first priority Security Interest. Upon such
replacement, the New Equipment shall be deemed to be
"Equipment" under this Agreement. Bank shall provide notice to
Krispy Kreme of any such release and shall provide Krispy
Kreme with a list of the New Equipment and evidence that the
Security Interest applies thereto.
6. Upon election by Bank to require repurchase of the Equipment
by Krispy Kreme hereunder, Bank shall assign and transfer the Security
Interest together with an interest in the Notes equal to the Purchase
Price to Krispy Kreme or such entity as Krispy Kreme may designate in
writing, and shall authorize foreclosure by Krispy Kreme or such entity
of the Security Interest in the Equipment. Borrower shall transfer all
of its right, title and interest in the Equipment to Krispy Kreme at
the same time. The Security Interest is agreed by the parties to also
secure all of Borrower's obligations under this Agreement and Borrower
hereby grants to Bank and to Krispy Kreme a security interest (which is
agreed to be a part of the Security Interest) in the Equipment to
secure Borrower's obligations under this Agreement. In no event shall
the Security Interest be permitted to merge with ownership of the
Equipment.
7. Except as permitted under subparagraph 5(e) hereof, Borrower
shall not sell or transfer, and Bank shall not consent to the sale or
transfer, whether by gift or with or without consideration, of all or
any part of the Equipment. Bank shall not sell or transfer the
Equipment or any portion thereof through exercise of its rights under
the Bank Loan and any documents executed in connection therewith, or
otherwise, without first giving Krispy Kreme the option to purchase the
Equipment in an amount equal to the Purchase Price. Bank shall provide
notice to Krispy Kreme of its proposed transfer and thirty (30) days in
which to exercise its right to purchase said Equipment. At the time
Krispy Kreme purchases the Equipment, Bank shall also transfer the
Security Interest as provided under Paragraph 6 above. In no event
shall the Security Interest be permitted to merge with ownership of the
Equipment.
8. As used herein, the term Equipment shall mean all furniture,
fixtures, equipment, doughnut making equipment and signage purchased by
Borrower and reasonably necessary for the operation of the Krispy Kreme
Doughnut Shops located at 0000 Xxxxxxxxxx Xxxxxx or 0000-X Xxxxxxx
Xxxxxxxxx or 0000 Xxxxxxxxxx Xxxxxxxxx, Xxxxxx, Xxxxxxx, and as to
which the Security Interest is effective. Krispy Kreme must approve the
purchase of each item of Equipment.
9. Borrower consents and agrees to the terms of this Agreement
and agrees to transfer the Equipment to Krispy Kreme immediately and at
the same time as Krispy Kreme makes a payment of the Purchase Price to
Bank or at the time Krispy Kreme elects to purchase the Equipment under
Paragraph 7 hereof or as otherwise provided herein. Any such transfer
shall be free and clear of all liens, claims or interests other than
the Security Interest. In no event shall the Security Interest be
permitted to merge with ownership of the Equipment.
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10. A partial list of the Equipment is attached as EXHIBIT B
hereto and incorporated herein by reference. The parties agree to amend
such list as each item of Equipment is purchased, upon the completion
of the purchase of the Equipment, and again upon the purchase of any
New Equipment. No New Equipment shall be considered a part of the
Equipment until added to this EXHIBIT B.
11. All notices required or desired to be sent hereunder shall be
sent by certified mail, return receipt requested, postage prepaid, or
by a recognized overnight courier such as Airborne Express, FedEx, etc.
and shall be effective on receipt. Any party may change the address for
notices to it by notice sent in accordance herewith. Notices shall be
sent the parties hereto at their respective addresses set forth below
(or as such address may be changed as permitted herein):
IF TO KRISPY KREME: Krispy Kreme Doughnut Corporation
By Mail: X.X. Xxx 00
Xxxxxxx-Xxxxx, XX 00000-0000
Attention: Xxxxxxx X. Xxxxxxx
By Overnight: 000 Xxxxxxxxx Xxxxxx
Xxxxx 000
Xxxxxxx-Xxxxx, XX 00000
Attention: Xxxxxxx X. Xxxxxxx
IF TO BORROWER: MACKK, L.L.C.
000 Xxxxxxxxxx Xxxxx
Xxxxxxx-Xxxxx, XX 00000
IF TO BANK: BB&T
000 X. Xxxxxxxxx Xxxx
Xxxxxxx-Xxxxx, XX 00000
Attention: Xxxxx Xxxxxxx
12. No failure of Bank to provide Krispy Kreme with a copy of any
notice sent to Borrower shall relieve Krispy Kreme of its liability
hereunder.
13. This Agreement shall be binding upon, and inure to the
benefit of, the parties hereto and to the successors and assigns of
Bank and Krispy Kreme. Borrower shall not have any right to assign this
Agreement or any interest herein without the prior written consent of
Bank and Krispy Kreme. Bank and Krispy Kreme shall each provide the
other with a copy of any assignment of this Agreement. Any such
assignment by Bank may be whole or partial, shall only be to a holder
of an interest in the Notes, and shall contain an agreement by the
assignee to abide by the terms hereof. No assignment hereof by Krispy
Kreme shall relieve it of its obligations hereunder without Bank's
consent to such release.
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement
effective the day and year first above written.
KRISPY KREME DOUGHNUT CORPORATION
BY: /s/ Xxxxx X. Xxxxxxxxxx
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XXXXX X. XXXXXXXXXX, VICE PRESIDENT
BORROWER:
MACKK, L.L.C.
BY: /s/ X.X. XxXxxxx
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X.X. XXXXXXX, XX., MANAGER
BANK:
BRANCH BANKING AND TRUST
BY: /s/ Xxxxxx X. Xxxxxxx
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PRINTED NAME: Xxxxxx X. Xxxxxxx
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PRINTED TITLE: Vice President
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