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EXHIBIT 10.1
AMENDED AND RESTATED
LOAN AGREEMENT
AMONG
BRANCH BANKING AND TRUST COMPANY,
KRISPY KREME DOUGHNUT CORPORATION,
▇▇▇▇▇▇▇▇'▇ ▇▇▇▇-▇-▇▇▇▇ BAKERY, INCORPORATED,
KRISPY KREME DISTRIBUTING COMPANY, INCORPORATED,
KRISPY KREME DOUGHNUTS COMPANY,
HD CAPITAL CORPORATION
AND
HDN DEVELOPMENT CORPORATION
$28,000,000.00
REVOLVING LINE OF CREDIT
$12,000,000.00
TERM LOAN
DECEMBER 21, 1998
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ANNEX I - Lender's Commitment dated September 25, 1998
EXHIBITS
Exhibit A - Forms of Conversion Notes
Exhibit A-1 - Conversion Interbank Rate Promissory Note
Exhibit A-2 - Fixed Swap Rate Promissory Note
Exhibit B - Revolving Line of Credit Note
Exhibit C - Term Note
Exhibit D - Disbursement Authorization
Exhibit E - Stock Purchase Agreement
SCHEDULES
Schedule 6.1 - Foreign Qualifications/Subsidiaries
Schedule 6.2 - Litigation; Governmental Regulation
Schedule 6.3 - Taxes
Schedule 6.4 - Defaults
Schedule 6.8 - List of Franchisees
Schedule 6.10 - Employee Benefit Plans
Schedule 6.11 - Financial Statements
Schedule 6.12 - Title to Assets
Schedule 6.15 - List of Patents, Etc.
Schedule 6.17 - Compliance with Laws
Schedule 6.18 - Environmental Matters
Schedule 6.21 - Realty Property Owned
Schedule 6.22 - Real Property Leased
Schedule 7.7 - Insurance
Schedule 8.6 - Borrower's Existing Loans/Obligations and Liabilities
Schedule 8.18 - Management Personnel
AMENDED AND RESTATED
LOAN AGREEMENT
THIS AMENDED AND RESTATED LOAN AGREEMENT, dated effective as of the
21st day of December, 1998 (the "Loan Agreement" or "Agreement"), is by and
among
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BRANCH BANKING AND TRUST COMPANY, a North Carolina banking corporation
(the "Lender"); and
KRISPY KREME DOUGHNUT CORPORATION, a North Carolina corporation
("Krispy Kreme"), ▇▇▇▇▇▇▇▇'▇ ▇▇▇▇-▇-▇▇▇▇ BAKERY, INCORPORATED, a North Carolina
corporation ("▇▇▇▇▇▇▇▇'▇"), KRISPY KREME DISTRIBUTING COMPANY, INCORPORATED, a
North Carolina corporation ("Distributing"), KRISPY KREME DOUGHNUTS COMPANY, a
North Carolina corporation ("Doughnuts"), all with their principal offices in
Winston-Salem, North Carolina, HD CAPITAL CORPORATION, a Delaware corporation
("HD Capital") with its principal office in Wilmington, Delaware, and HDN
DEVELOPMENT CORPORATION, a Kentucky corporation ("HD Development") with its
principal office in Florence, Kentucky.
R E C I T A L S:
A. Krispy Kreme owns all of the issued and outstanding shares of Stock
of ▇▇▇▇▇▇▇▇'▇, Distributing and Doughnuts. ▇▇▇▇▇▇▇▇'▇ owns all of the issued and
outstanding shares of stock of HD Capital and HD Capital owns all of the issued
and outstanding shares of stock of HD Development.
B. The parties entered into that certain Amended and Restated Loan
Agreement dated July 12, 1996 (the "Prior Loan Agreement"), pursuant to which
Lender extended a revolving credit facility in the principal amount of up to
$18,000,000 and a term loan credit facility of $12,000,000.
C. The parties have agreed to restructure the credit facilities
extended pursuant to the Prior Loan Agreement, and Lender has been requested to
increase availability under the Revolving Line of Credit from $18,000,000 to
$28,000,000.
D. The parties desire to amend and restate the Prior Loan Agreement to
evidence the restructuring of the existing credit facilities and the increased
availability under the Revolving Line of Credit.
E. The Borrowers will use the proceeds of the Loans (i) to refinance
certain indebtedness; (ii) to provide working capital; (iii) to provide
financing for expansion of stores; and (iv) for such other corporate purposes as
are permitted hereunder, all as more fully set forth herein.
NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which are acknowledged, the Borrowers and the Lender amend and
restate the Prior Loan Agreement as follows:
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ARTICLE I
DEFINITIONS
1.1 Defined Terms. For purposes of this Loan Agreement, in addition to
the terms defined elsewhere herein, the following terms shall have the meanings
set forth below:
"Affiliate" shall mean, as to any Person, each of the Persons that
directly or indirectly, through one or more intermediaries, owns or controls, or
is controlled by or under common control with, such Person. For the purpose of
this definition, "control" means the possession, directly or indirectly, of the
power to direct or cause the direction of management and policies, whether
through the ownership of voting securities, by contract or otherwise.
"Agreement" or "Loan Agreement" shall mean this Loan Agreement and all
amendments, modifications and supplements hereto, and restatements hereof, and
all schedules and exhibits hereto, and shall refer to this Agreement as the same
may be in effect at the time such reference becomes operative.
"Bankruptcy Code" shall mean 11 U.S.C. ss. 101 et seq., as amended, and
any successor statute or statutes having substantially the same function.
"Borrower" or "Borrowers" shall mean Krispy Kreme, ▇▇▇▇▇▇▇▇'▇,
Distributing, Doughnuts, HD Capital and HD Development, or any or all of them,
and each Subsidiary formed, activated or acquired after the date hereof which
becomes a party hereto pursuant to Section 8.15, and each and all of their
respective successors and assigns.
"Business Day" shall mean any day (excluding Saturday, Sunday and legal
holidays) on which commercial banks in Winston-Salem, North Carolina are open.
"CERCLA" shall mean the Comprehensive Environmental Response,
Compensation and Liability Act of 1980, 42 U.S.C.A. ss. 9601 et seq., as amended
from time to time, and all rules and regulations from time to time promulgated
thereunder.
"Capital Asset" shall mean any asset that would, in accordance with
Generally Accepted Accounting Principles, be required to be classified and
accounted for as a capital asset.
"Capital Lease" shall mean, as applied to any Person, any lease of any
property (whether real, personal or mixed) that would, in accordance with
Generally Accepted Accounting Principles, be required to be classified and
accounted for as a capital lease on a balance sheet of the lessee.
"Capital Lease Obligation" shall mean, with respect to any Capital
Lease, the amount of the obligation of the lessee thereunder that would, in
accordance with Generally Accepted Accounting Principles, appear on a balance
sheet as a liability of such lessee in respect of such Capital Lease.
"Closing" shall mean the execution and delivery of this Agreement and
such of the other Loan Documents, which is to occur at the time and place
specified in Section 5.1.
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"Closing Date" shall mean the date referred to in Section 5.1 hereof.
"Consolidated Tangible Net Worth" shall mean, at any date, the
shareholders' equity of the Borrowers and their Subsidiaries, decreased by all
(i) assets of whatever kind or nature of each Subsidiary (that is not a
Borrower) and (ii) intangible assets of the Borrowers; and increased by all
intercompany receivables to a Borrower from a Subsidiary (which is not a
Borrower) which are subordinated to the rights of Lender pursuant to Section
8.3, as determined in accordance with Generally Accepted Accounting Principles.
"Conversion Loan" shall mean that portion of the principal amount
outstanding under the Revolving Line of Credit which is converted to a term loan
pursuant to Article III.
"Conversion Note" shall mean any promissory note issued by the
Borrowers to the Lender in connection with a Conversion Loan pursuant to Article
III, the forms of which are attached as Exhibits ▇-▇, ▇-▇ and A-3.
"Credit Card Obligations" shall mean all obligations of all or any of
the Borrowers and any Affiliate or Subsidiary of a Borrower to repay Lender all
amounts advanced, or subject to advance, by Lender in connection with any credit
cards or similar arrangements, whether heretofore, now or hereafter issued on
behalf of any Borrower or any of its or their Affiliates or Subsidiaries.
"Current Assets" shall mean, at any date, the aggregate of the current
assets of the Borrowers and their Subsidiaries on a consolidated basis appearing
on the asset side of the Borrowers' consolidated balance sheet, decreased by all
current assets, of whatever kind or nature, of each Subsidiary (that is not a
Borrower), and increased by all intercompany receivables which are subordinated
to the rights of Lender pursuant to Section 8.3, but only to the extent that
such subordinated receivables constitute current assets, as determined in
accordance with Generally Accepted Accounting Principles.
"Current Liabilities" shall mean, at any date, the aggregate of the
current liabilities of the Borrowers and their Subsidiaries on a consolidated
basis appearing on the liability side of Borrowers' consolidated balance sheet,
determined in accordance with Generally Accepted Accounting Principles.
"Debt Service Requirements" shall mean, for any period, the sum of (a)
Interest Expense, (b) such portions of Long-Term Indebtedness which are or were
due and payable during such period, and (c) such portions of Capital Lease
Obligations which are or were due and payable during such period.
"Default" shall mean any of the events specified in Article IX,
regardless of whether there shall have occurred any passage of time or giving of
notice or both that would be necessary in order to constitute such default an
Event of Default.
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"Default Rate" shall mean, with respect to any Loan, the Note Rate
thereof, plus two (2) percentage points.
"Disclosure Statement" shall have the meaning specified in Section 6.8.
"ERISA" shall mean the Employee Retirement Income Security Act of 1974,
as amended from time to time, and all rules and regulations from time to time
promulgated thereunder.
"Employee Plan" shall mean any "employee benefit plan" within the
meaning of Section 3(3) of ERISA maintained by any Borrower or Subsidiary.
"Event of Default" shall have the meaning specified in Article IX.
"Financials" or "Financial Statements" shall mean the audited
consolidated balance sheets and consolidated statements of income, retained
earnings and cash flows of the Borrowers for the fiscal years ended January 30,
1994, January 29, 1995, January 28, 1996, January 26, 1997 and January 25, 1998,
and all interim financial statements of the Borrowers and/or their Subsidiaries
that have previously been delivered by any Borrower or Subsidiary to the Lender.
"Generally Accepted Accounting Principles" shall mean generally
accepted accounting principles, as recognized by the American Institute of
Certified Public Accountants, consistently applied and maintained on a
consistent basis for the Borrowers and each of the Borrowers' Subsidiaries
throughout the period indicated and consistent with the prior financial
practices of the Borrowers and each of their Subsidiaries as reflected on the
Financials so as to properly reflect the financial condition, and the results of
operations and changes in financial position, of the Borrowers and their
Subsidiaries.
"Hazardous Substances" shall have the meaning given in Section 6.18.
"Indebtedness" shall mean all liabilities, obligations and indebtedness
of the Borrowers or any of them or of any of their Subsidiaries of any and every
kind and nature, including, without limitation, the Obligations and all
obligations to trade creditors, whether heretofore, now or hereafter owing,
arising, due or payable from any Borrower or Subsidiary to any Person and
howsoever evidenced, created, incurred, acquired or owing, whether primary,
secondary, direct, contingent, fixed or otherwise, and whether matured or
unmatured. Without in any way limiting the generality of the foregoing,
Indebtedness specifically includes the following:
(a) All obligations or liabilities that are secured by any
lien, claim, encumbrance or security interest upon property owned by
any Borrower or Subsidiary even though such Borrower or Subsidiary has
not assumed or become liable for the payment thereof;
(b) All obligations or liabilities created or arising under
any Capital Lease of real or personal property, or conditional sale or
other title retention agreement with respect to property used or
acquired by any Borrower or Subsidiary, even though the
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rights and remedies of the lessor, seller or lender thereunder are
limited to repossession of such property;
(c) All unfunded pension fund obligations and liabilities; and
(d) Deferred taxes.
"Interbank Rate" (also known as "LIBOR") shall mean the interest rate
as quoted in the Wall Street Journal (Credit Markets Section) or on Bloomberg
Screen MMR2 (or any successor or comparable reporting service) by 9:00 A.M. on
the Business Day of each month which either is or is closest to the tenth day of
such month, for the offering of dollar deposits by leading banks in the London
interbank market for amounts comparable to the maximum amount of the Loans or
the outstanding principal balance of any Conversion Loan, as the case may be. In
the event that the Interbank Rate or the practice of announcing it shall be
abolished or abandoned, or should the same be unascertainable, the Lender and
the Borrowers shall agree in writing on a comparable reference rate, which shall
be deemed to be the Interbank Rate under this Loan Agreement and the other Loan
Documents; provided, if such agreement is not reached within a reasonable period
of time (in Lender's judgment), it shall be a rate reasonably determined by
Lender in its sole discretion as a rate being paid, as of the date of
determination, by first class banking organizations (as determined by Lender) in
the London interbank market for the offering of dollar deposits.
"Interest Expense" shall mean, for any period, total interest expense
of the Borrowers and their Subsidiaries on a consolidated basis (including,
without limitation, interest expense attributable to Capital Leases) determined
in accordance with Generally Accepted Accounting Principles.
"Internal Revenue Code" shall mean the Internal Revenue Code of 1986,
as the same may be amended from time to time.
"Lender" shall mean Branch Banking and Trust Company and its successors
and assigns.
"Letter of Credit Obligations" shall mean all obligations of all or any
of the Borrowers and any Affiliate or Subsidiary of a Borrower to repay Lender
all amounts advanced, or subject to advance, by Lender in connection with any
letter(s) of credit or similar arrangements, whether heretofore, now or
hereafter issued on behalf of any Borrower or any of its or their Affiliates or
Subsidiaries.
"Letter of Credit Reserve" shall mean an undisbursed reserve against
the Revolving Line of Credit in an amount equal to all Letter of Credit
Obligations.
"Loan" or "Loans" shall mean the Revolving Line of Credit, the Term
Loan and/or any Conversion Loan.
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"Loan Documents" shall mean and collectively refer to this Agreement,
the Revolving Line of Credit Note, the Term Note, any Conversion Note and any
and all agreements, instruments and other documents, including, without
limitation, consents, contracts, notices, trust account agreements and all other
written matters (excluding however general correspondence) whether heretofore,
now or hereafter executed by or on behalf of the Borrowers or any of them and
delivered to Lender, which evidence or relate to this Agreement or the
transactions contemplated hereby, and all other documents, instruments and other
written matters required by this Agreement to be delivered by any Borrower or
any third party and any and all amendments, modifications, restatements,
replacements, substitutes and supplements to any of the foregoing documents.
"Long-Term Indebtedness" shall mean all outstanding Indebtedness of the
Borrowers and their Subsidiaries on a consolidated basis that by its terms or by
the terms of any instrument or agreement relating thereto matures more than one
year from, or is renewable or extendable at the option of any Borrower or
Subsidiary to a date more than one year from (including an option of any
Borrower or Subsidiary under a revolving credit or similar arrangement
obligating the lender or lenders to extend credit over a period of one year or
more) the date of creation thereof, and includes current maturities of any such
Indebtedness.
"Multiemployer Plan" shall mean any "multiemployer plan" within the
meaning of Section 4001(a)(3) of ERISA to which any Borrower or Subsidiary is
required to make contributions.
"Net Income" shall mean, for any period, the net income (or loss) of
the Borrowers and their Subsidiaries, on a consolidated basis for such period,
determined in accordance with Generally Accepted Accounting Principles.
"Note Rate" shall mean, at any time, and as the context requires, the
interest rate in effect on the Revolving Line of Credit Note, the Term Note or
any Conversion Note at such time.
"OSHA" shall mean the Occupational Safety and Health Act, as amended
from time to time, and all rules and regulations from time to time promulgated
thereunder.
"Obligations" shall mean and include the Revolving Line of Credit, the
Term Loan, each Conversion Loan and all other loans, advances, indebtedness,
liabilities, obligations, covenants and duties (including post-petition interest
on the foregoing, to the extent lawful) owing, arising, due or payable from any
Borrower or Subsidiary to the Lender of any kind or nature, present or future,
arising under this Agreement, the Revolving Line of Credit Note, the Term Note,
any Conversion Note or any of the other Loan Documents or otherwise (including
all Letter of Credit Obligations), whether direct or indirect (including those
acquired by assignment), absolute or contingent, primary or secondary, due or to
become due, now existing or hereafter arising, as the same may be modified,
extended or renewed from time to time. The term includes, without limitation,
all interest, charges, expenses, fees, attorneys' fees and any other sums
chargeable to any Borrower or Subsidiary by the Lender under this Agreement or
any of the other Loan Documents.
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"Operating Cash Flow" shall mean, for any period, the Borrowers'
consolidated Net Income for such period, after deduction of income taxes and all
amounts paid or payable to a Subsidiary (that is not a Borrower) for or during
such period, plus depreciation expense, amortization of intangibles, Interest
Expense, all intercompany receivables arising during such period which are
subordinated to the rights of Lender pursuant to Section 8.3 and dividends paid
or payable from any Subsidiary (which is not a Borrower) for or during such
period, all as determined in accordance with Generally Accepted Accounting
Principles, less all dividends, distributions and advances to shareholders of
Krispy Kreme.
"Pension Plan" shall mean any employee pension benefit plan within the
meaning of Section 3(2) of ERISA which is maintained by any Borrower or
Subsidiary, except that Pension Plan shall not include any Multiemployer Plan
that is subject to the provisions of Title IV of ERISA.
"Permitted Liens" shall mean any of the following liens securing any
Indebtedness of any Borrower or Subsidiary with the property of any Borrower or
Subsidiary, whether real or personal, and whether now owned or hereafter
acquired:
(a) Liens of carriers, warehousemen, mechanics, materialmen
and vendors imposed by mandatory provisions of law and incurred in the
ordinary course of business for sums not yet due and payable;
(b) Liens with respect to personal property only incurred in
the ordinary course of business in connection with worker's
compensation, unemployment insurance or other forms of governmental
insurance or benefits, or liens arising from good faith deposits in
connection with bids, tenders, statutory obligations and contracts
(other than for borrowed funds) entered into in the ordinary course of
business or to secure obligations on surety or appeal bonds;
(c) Liens for current taxes, assessments or other governmental
charges that are not delinquent or remain payable without any penalty
or that are being contested in good faith and with due diligence by
appropriate proceedings and against which the Borrowers will establish
and maintain such reserves as may be required, and in such amounts, as
provided for in Section 11.15;
(d) Liens upon personal property leased under a Capital Lease
(which is currently existing) or any other lease and placed upon such
leased property in connection with such lease to secure the lease
payments of such lease, provided (i) any such lien shall not encumber
any other property of a Borrower or a Subsidiary, and (ii) Lender shall
have been notified in advance of such lease.
(e) Liens, if any, securing the Obligations in favor of the
Lender;
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(f) Applicable statutory and contractual liens in favor of
lessors of real property leased by any Borrower or Subsidiary; provided
that any such contractual liens (i) are granted in connection with such
lease to secure only the lease payments and other obligations to the
Lessor of such lease, (ii) any such liens shall encumber only leasehold
improvements and tangible personal property physically located upon
such leased real property, and in the case of multiple properties
leased from the same lessor or an Affiliate of such lessor, shall not
serve as cross-collateral for any other lease or lease payments with
respect to any other property; (iii) Lender shall be notified of each
such lien within thirty (30) days after the grant thereof (except for
any such liens that presently exist or have arisen by operation of
law), and (iv) that the aggregate book value of all tangible assets and
properties subject to all such liens shall not exceed 2.5% of the
aggregate book value of all tangible assets and properties, before
accumulated depreciation and amortization, owned by the Borrowers and
their Subsidiaries;
(g) Liens, if any, securing Letter of Credit #4910034192-00013
issued by the Lender for the benefit of Lumbermens Mutual Casualty
Company et al or pursuant to the Automated Clearing House Customer
Participation Agreement by and between the Lender and the Borrower, or
other credit or contractual arrangements with Lender; and
(h) The liens set forth on item 1 of Schedule 6.12.
"Person" shall mean a corporation, an association, a joint venture, a
partnership, an organization, a business, an individual, a trust or a government
or political subdivision thereof or any government agency or any other legal
entity.
"Prime Rate" shall mean the per annum interest rate publicly announced
from time to time by Lender, from its office in Winston-Salem, North Carolina,
to be its prime rate, which may not necessarily be its best lending rate, as
adjusted to conform to changes as of the opening of business on the date of any
such change in the Prime Rate. The Prime Rate pertains to an internal index or
reference rate which is used by the Lender as a basis for both commercial and
consumer lending rates. This rate is recorded and maintained by the Lender and
changed by Lender from time-to-time in accordance with money market conditions,
loan demand and various other factors. Loans to other customers of Lender may
bear interest rates at, above or below the Prime Rate, which is but one of
several interest indices used by Lender. In the event Lender shall abolish or
abandon the practice of announcing its prime rate or should the same be
unascertainable, the Lender and Borrower shall agree in writing on a comparable
reference rate, which shall be deemed to be the Prime Rate under this Loan
Agreement and the other Loan Documents.
"Prohibited Transaction" shall mean any transaction described in (i)
Section 406 of ERISA that is not exempt by reason of Section 408 of ERISA or
(ii) Section 4975(c) of the Internal Revenue Code that is not exempt by reason
of Section 4975(c)(2) or 4975(d), or in any successor statute or regulation or
in any statute or regulation having substantially the same function.
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"RCRA" shall mean the Resource Conservation and Recovery Act, 42
▇.▇.▇.▇.▇▇. 6901 et seq., as amended from time to time, and all rules and
regulations from time to time promulgated thereunder.
"Realty" shall mean all of those certain tracts or parcels of land
currently owned or leased by any Borrower or Subsidiary, and hereafter acquired
or leased by any Borrower or Subsidiary.
"Regulation U" shall mean Regulation U promulgated by the Board of
Governors of the Federal Reserve System, 12 C.F.R. Part 221, or any successor or
other regulation hereafter promulgated by said Board to replace the prior
Regulation U and having substantially the same function.
"Regulation X" shall mean Regulation X promulgated by the Board of
Governors of the Federal Reserve System, 12 C.F.R. Part 224, or any successor or
other regulation hereafter promulgated by said Board to replace the prior
Regulation X and having substantially the same function.
"Reportable Event" shall mean a reportable event as defined in Section
4043(b) of ERISA and the regulations thereunder.
"Revolving Line of Credit" shall mean and refer to the revolving credit
facility from Lender to the Borrowers in the aggregate principal amount of up to
$28,000,000.00 as contemplated by this Agreement.
"Revolving Line of Credit Note" shall mean the promissory note dated
the date hereof and issued by the Borrowers to the Lender in the principal
amount of up to $28,000,000.00, a copy of which is attached as Exhibit B.
"Stock" shall mean all shares, options, interests or other equivalents
(howsoever designated) of or in a corporation, whether voting or non-voting,
including, without limitation, common stock, warrants, preferred stock,
convertible debentures and all agreements, instruments and documents
convertible, in whole or in part, into any one or more or all of the foregoing,
except for phantom share units allocable to participants under Borrowers'
Long-Term Incentive Plan.
"Subsidiary" shall mean any corporation, domestic or foreign, whether
now existing or hereafter formed or acquired, of which more than fifty percent
(50%) of the outstanding Stock having ordinary voting power to elect a majority
of the board of directors is at the time, directly or indirectly, owned by a
Borrower, Subsidiary or Affiliate of any Borrower or Subsidiary or any
combination thereof (irrespective of whether, at the time, Stock of any other
class or classes of such corporation shall have or might have voting power by
reason of the happening of any contingency) and specifically includes, without
limitation, the Subsidiaries of Krispy Kreme and ▇▇▇▇▇▇▇▇'▇ listed on Schedule
6.1.
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"Swap Rate" shall mean the five (5)-year, seven (7)-year or ten (10)-
year Interbank interest rate swap rate that Lender is able to obtain from
Lender's third party dealer at the time of the making of a Conversion Loan or
any other relevant time.
"Termination Date" shall mean the earliest of: (i) July 10, 2002; (ii)
the date of termination of the Revolving Line of Credit by the Lender after the
occurrence of an Event of Default; (iii) such date of termination of the
Revolving Line of Credit as is mutually agreed upon by the Lender and the
Borrowers; or (iv) the date after all Obligations have been paid in full and
Lender is no longer obligated to make advances hereunder.
"Term Loan" shall mean and refer to the term loan from Lender to the
Borrowers in the original principal amount of $12,000,000.00, dated July 12,
1996, the approximate current outstanding principal balance of which is
$6,600,000.00.
"Term Note" shall mean the promissory note dated July 12, 1996 and
issued by the Borrowers to the Lender in the principal amount of $12,000,000.00,
a copy of which is attached as Exhibit C, as amended of even date herewith.
"Total Liabilities" shall mean, at any date, the aggregate of all
liabilities of the Borrowers and their Subsidiaries on a consolidated basis
appearing on the liability side of their consolidated balance sheet, determined
in accordance with Generally Accepted Accounting Principles.
1.2 Accounting Terms. Any accounting terms used in this Agreement that
are not specifically defined shall have the meanings customarily given them in
accordance with Generally Accepted Accounting Principles; provided, however,
that, in the event that changes in Generally Accepted Accounting Principles
shall be mandated by the Financial Accounting Standards Board, or any similar
accounting body of comparable standing, or shall be recommended by the
Borrowers' certified public accountants and accepted by the Borrowers and
Lender, to the extent that such changes would modify or could modify such
accounting terms or the interpretation or computation thereof, such changes
shall be followed in defining such accounting terms only from and after the date
the Borrowers and the Lender shall have amended this Agreement to the extent
necessary to reflect any such changes in the financial covenants and other terms
and conditions of this Agreement.
1.3 Singular/Plural. Unless the context otherwise requires, words used
herein in the singular include the plural and words in the plural include the
singular. Reference to "Borrower" or "Borrowers" shall be deemed to refer to
each Borrower, both collectively and individually, as the context requires.
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ARTICLE II
REVOLVING CREDIT FACILITY
2.1 Revolving Loan.
(a) The Lender hereby establishes, subject to the terms and conditions
of this Agreement and in reliance upon the representations and warranties made
herein by the Borrowers, a revolving line of credit in favor of the Borrowers,
as a group and not individually, in the aggregate principal amount of up to
TWENTY-EIGHT MILLION AND 00/100 DOLLARS ($28,000,000.00); provided, however,
Lender shall retain as a non-disbursed reserve from the Revolving Line of Credit
an amount equal to the sum of the Letter of Credit Reserve and Credit Card
Obligations, and agrees to make and remake advances thereunder to the Borrowers,
upon the terms and conditions set forth in this Agreement, from time to time on
any Business Day during the period from the date hereof through the Termination
Date. Subject to Section 2.6 and Article III, the Borrowers may borrow, repay
and reborrow any amount of the Revolving Line of Credit at any time prior to the
Termination Date. The Borrowers shall give the Lender prior notice of the amount
of any desired advance and the date the funds are to be received by any
Borrower. In the event that the Borrowers desire to receive the proceeds of an
advance of the Revolving Line of Credit on the same banking day of its request
therefor, the Borrowers must give the Lender notice of such advance not later
than 12:00 noon, North Carolina time. Notwithstanding the foregoing, the Lender
shall have no obligation to lend funds at any time when (i) a Default has
occurred and the Borrowers have not commenced with diligence all efforts to
remedy such Default; (ii) an Event of Default exists, or (iii) the making of
such advance would or could result in the occurrence of a Default or an Event of
Default.
(b) Requests for an advance under the Revolving Line of Credit may be
oral or written. The Borrowers hereby irrevocably authorize the Lender to
disburse the proceeds of each draw under this Agreement in accordance with the
terms of any (i) written instructions received by the Lender from any duly
authorized officer of any Borrower, or (ii) telephone instructions from any
Borrower's duly authorized officers or other authorized persons. The Borrowers
shall designate from time to time in writing to Lender which of its officers or
other representatives shall be duly authorized to request advances pursuant to
this Agreement. Such notification shall be pursuant to the disbursement
authorization attached as Exhibit D.
(c) The Lender shall not charge any interest, fee or other charge for
the unadvanced portion of the Revolving Line of Credit.
2.2 Term.
The term of the Revolving Line of Credit will be from the date hereof
to and including the Termination Date, unless terminated sooner in accordance
with the terms and conditions of this Agreement.
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2.3 Interest.
(a) The Borrowers, jointly and severally, covenant and agree to pay to
the Lender interest on the unpaid principal amount of the advances under the
Revolving Line of Credit outstanding from time to time at the Note Rate,
determined as described below. Provided no Default shall have occurred and be
continuing or no Event of Default shall have occurred which has not been
expressly waived in writing by Lender, the Borrowers, acting jointly, shall have
the right, on a monthly basis during the term of the Revolving Line of Credit,
to designate the computation of the Note Rate from the following two
alternatives:
(i) Prime Rate Based. The Lender's Prime Rate less 110 basis
points. As the Prime Rate increases or decreases, the Note Rate shall
increase (up to but never in excess of the maximum amount allowed by
law) or decrease, as of the opening of business on the effective date
of such change, by an amount equal to the change in the Prime Rate.
(ii) Interbank Rate Based. The one-month Interbank Rate plus
100 basis points. As the Interbank Rate increases or decreases, the
Note Rate shall increase (up to but never in excess of the maximum
amount allowed by law) or decrease, by an amount equal to the change in
the Interbank Rate as of the opening of business on the Business Day
which is or is closest to the tenth day of each month from the
Interbank Rate effective for the immediately preceding month. The
Interbank Rate shall change only once each month, if at all. The
parties may modify the one-month Interbank Rate plus 100 basis points
to the three, six or twelve-month Interbank Rate plus such number of
basis points added thereto as the parties shall mutually agree to in
writing.
The Borrowers, acting jointly, shall provide written or oral notice of their
election as to the computation of interest on the Revolving Line of Credit on
the Business Day which is or is closest to the tenth day of each month. Any
notice given after the Business Day which is or is closest to the tenth day of
each month shall only be effective as of the tenth day of the following month.
Following the Borrowers' election concerning the computation of the Note Rate,
the Note Rate shall continue to be computed upon the same basis until the
Borrowers give written or oral notice of any election to change.
(b) All interest accrued on the Revolving Line of Credit shall be due
and payable on the tenth day of each month or the Business Day which is or is
closest to the tenth day of each calendar month, in arrears.
(c) Interest on the Revolving Line of Credit shall be computed on the
basis of the actual days elapsed in a year consisting of 360 days.
2.4 Repayment. The Borrowers shall repay the Revolving Line of Credit:
(a) In full, on the Termination Date;
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(b) In full, upon the occurrence of any Event of Default and
acceleration of the Revolving Line of Credit by the Lender pursuant to Article
X; and
(c) In part, immediately in the event that the total principal amount
outstanding at any time under the Revolving Line of Credit exceeds the maximum
amount permitted under Section 2.1 (taking into consideration the Letter of
Credit Reserve, the reserve for the Credit Card Obligations and as adjusted
pursuant to Article III) at such time, in the amount of such excess.
2.5 The Revolving Line of Credit Note. At the Closing, each of the
Borrowers shall execute and deliver to the Lender the Revolving Line of Credit
Note payable to the order of the Lender. The Revolving Line of Credit Note shall
be in the form of Exhibit B attached hereto and dated as of the Closing Date.
The amount of principal owing on the Revolving Line of Credit Note at any given
time shall be the aggregate amount of all advances made under the Revolving Line
of Credit, less all payments of principal theretofore paid by the Borrowers,
less any principal amount thereof which has been converted to a Conversion Loan.
2.6 Voluntary Commitment Reductions. Upon at least five (5) Business
Days' prior notice, the Borrowers, acting jointly, may cause the Lender to
ratably reduce the unutilized portion of the Revolving Line of Credit in part in
amounts of $100,000.00. After any such reduction, the Revolving Line of Credit
may not thereafter be increased without the prior written consent of the Lender.
2.7 Letter of Credit and Credit Card Obligations. The Borrowers
authorize Lender to effect reimbursement of all amounts due and payable to
Lender with regard to the Letter of Credit Obligations and/or the Credit Card
Obligations by drawing an amount equal to all such amounts from the Revolving
Line of Credit, in which event Lender shall provide written notice thereof to
the Borrowers within thirty (30) days thereafter. This right shall be in
addition to any other rights available to Lender for reimbursement of such
amounts.
ARTICLE II
THE TERM LOAN
2A.1 Term Loan.
(a) Loan Amount. The Lender established, subject to the terms
and conditions of the Prior Loan Agreement, a term loan in favor of the
Borrowers, as a group and not individually, in the principal amount of
TWELVE MILLION AND 00/100 DOLLARS ($12,000,000.00). The Term Loan shall
remain outstanding and be governed by the terms of this Agreement from
and after the date hereof.
2A.2 Interest.
(a) The Borrowers, jointly and severally, covenant and agree
to pay to Lender interest on the unpaid principal amount of the Term
Loan at the Note Rate, determined in
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the same fashion as described in Section 2.3, including the right to
designate the computation of the Note Rate from the two alternatives
specified therein. Notwithstanding anything to the contrary set forth
in this Agreement, the Note Rate with respect to the Term Loan shall
not exceed 8.125%, nor be less than 5.5%, regardless of the alternative
computation of the Note Rate chosen by the Borrowers.
(b) All interest accrued on the Term Loan shall be due and
payable on the twentieth (20th) day of each month or the Business Day
which is or is closest to the twentieth (20th) day of each calendar
month, in arrears.
(c) Interest on the Term Loan shall be computed on the basis
of the actual days elapsed in a year consisting of 360 days.
2A.3 Repayment. The Borrowers shall repay the principal balance of the
Term Loan in fifty-nine (59) equal monthly installments of TWO HUNDRED THOUSAND
AND 00/100 DOLLARS ($200,000.00), which installments commenced on July 20, 1996,
or the Business Day which was or was closest to the twentieth (20th) day of
July, 1996, with succeeding installments continuing thereafter and being due on
the twentieth (20th) day of each such month, with one final payment of all
remaining principal and accrued, but unpaid, interest due on June 20, 2001 (or
the Business Day which is or is closest to the twentieth (20th) day of such
month).
2A.4 Prepayment. The Borrowers may prepay the Term Loan at anytime,
without penalty or premium.
2A.5 Term Note. The Term Note is in the form of Exhibit C attached
hereto and dated as of July 12, 1996, and shall be amended of even date by the
form of Amendment attached as Exhibit C.
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ARTICLE III
CONVERSION OF REVOLVING LINE OF CREDIT TO TERM LOAN(S)
3.1 Conversion Privilege. At any time or times on or before the
Termination Date, provided no Default shall have occurred and be continuing or
no Event of Default shall have occurred which has not been expressly waived in
writing by Lender, the Borrowers, acting jointly, shall have the right to
convert all or any portion of the outstanding principal balance of the Revolving
Line of Credit to a term loan or loans for a period or periods of 60, 84 or 120
months from the date of conversion pursuant to the provisions of this Article.
Each Borrower shall be jointly and severally liable on each Conversion Loan.
Upon the conversion of any portion of the principal balance outstanding under
the Revolving Line of Credit and the Revolving Line of Credit Note, the maximum
amount available under the Revolving Line of Credit and the outstanding
principal sum of the Revolving Line of Credit Note shall be decreased by an
amount equal to the principal sum of such Conversion Loan. Notwithstanding any
other provision of this Agreement to the contrary, in the event a Conversion
Loan is outstanding as of the Termination Date, and such Conversion Loan shall
continue following the Termination Date, then with respect to each such
outstanding and continuing Conversion Loan, this Agreement shall remain in full
force and effect as to the Borrowers until all Obligations of the Borrowers to
Lender have been paid in full, but, except with respect to such outstanding
Conversion Loans, Lender shall have no further obligations hereunder.
Notwithstanding the foregoing, in the event the parties desire to extend or
renew the Revolving Line of Credit, and a new loan agreement or an amendment to
this Agreement is entered into between the parties in connection with such
extension or renewal, the parties agree that such new loan agreement or this
Agreement as amended, rather than this Agreement, shall control each such
outstanding and continuing Conversion Loan. Upon the conversion of all or any
portion of the outstanding principal balance of the Revolving Line of Credit to
any Conversion Loan, the Borrowers shall either pay all accrued, but unpaid,
interest on such portion of the Revolving Line of Credit subject to such
Conversion Loan, or Borrower may roll such accrued, but unpaid, interest into
the principal balance of such Conversion Loan.
3.2 Interest Rate. The Borrowers, acting jointly, at the time of
conversion, shall select either an Interbank Rate based or Swap Rate based
method for the computation of the Note Rate on any such Conversion Loan, which
election shall continue for the term of such Conversion Loan. Interest on each
Conversion Loan shall be computed on the basis of the actual number of days
elapsed in a year consisting of 360 days. The interest rate options are as
follows:
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Fixed Interbank
Term Interbank Rate Swap Rate
---- -------------- ---------
60 months The one-month Interbank Swap Rate plus 125 basis points
Rate plus 100 basis points
84 months The one-month Interbank Swap Rate plus 135 basis points
Rate plus 110 basis points
120 months The one-month Interbank Swap Rate plus 155 basis points
Rate plus 130 basis points
As the Interbank Rate increases or decreases, the Note Rate shall increase (up
to but never in excess of the maximum amount allowed by law) or decrease on the
Business Day of each month which is or is closest to the tenth day of such
month, by an amount equal to the change in the Interbank Rate from that
effective for the immediately preceding month. The parties may modify the
interest rate based on the one-month Interbank Rate plus applicable basis points
to an interest rate based on the three, six or twelve-month Interbank Rate plus
such number of basis points added thereto as the parties shall mutually agree to
in writing. If the Swap Rate is chosen, the Note Rate shall be fixed for the
term of such Conversion Loan. Lender recommends a minimum block of TWO MILLION
FIVE HUNDRED THOUSAND AND 00/100 DOLLARS ($2,500,000.00) for pricing purposes
when selecting the fixed Swap Rate option described above; provided, however,
the Borrowers may enter into a Conversion Loan of more or less than the
foregoing amount if they so choose. The Borrowers acknowledge that Lender's
recommendation is based on the fact that a Conversion Loan of less than the
recommended minimum will incur a higher Swap Rate based on pricing practices in
the marketplace for interest rate swap arrangements on such smaller amounts.
3.3 Payment. All interest accrued on any Conversion Loan shall be due
and payable on the Business Day of each calendar month which is or is closest to
the tenth day of such month, in arrears. The principal sum of each Conversion
Loan shall be paid in equal monthly installments in an amount sufficient to
amortize the principal sum thereof over the term of such Conversion Loan, and
payments of principal shall be due and payable with payments of interest on the
Business Day of each month which is or is most closest to the tenth day of each
month. The Borrowers shall have no right to re-amortize the principal sum of any
Conversion Loan. The Lender shall submit a statement to the Borrowers each month
as to the payment of interest due for such month. Except as set forth below, any
Conversion Loan may be prepaid at any time without penalty or premium. Any
prepayment of the principal amount of any Conversion Loan shall be applied to
principal in the inverse order of maturity. In the event the Borrowers select
the fixed Swap Rate for a Conversion Loan, the Borrowers acknowledge that Lender
will be entering into either an interest rate swap or matched funds agreement
with a third party dealer, and the Borrowers agree to execute such additional
documentation as Lender shall reasonably request in connection with such
Conversion Loan, including a rate lock agreement. In the event of any prepayment
on any such Conversion Loan, Borrowers shall be subject to a termination
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fee/prepayment penalty equal to Lender's cost to terminate the interest rate
swap or matched funds agreement or other similar agreement with its third party
dealer.
3.4 Conversion Note. Upon the closing of each Conversion Loan, the
Borrowers shall execute and deliver to the Lender a Conversion Note payable to
the order of the Lender for the full amount of the Conversion Loan. The
Conversion Note shall be in substantially the form of either Exhibit A-1
(Conversion Interbank Rate Promissory Note) or Exhibit A-2 (Fixed Swap Rate
Promissory Note), as appropriate, and shall be dated as of the effective date of
such conversion, subject to such necessary modifications as are required due to
changes in the law.
ARTICLE IV
PROVISIONS APPLICABLE TO THE REVOLVING LINE OF CREDIT,
THE TERM LOAN AND ANY CONVERSION LOAN
4.1 Default Rate; Post Petition Interest. Notwithstanding any other
provision of this Agreement, following the occurrence of any Event of Default
which has not been expressly waived in writing by Lender, all outstanding
principal amounts under any Loan shall bear interest at the Default Rate, and
shall be payable on demand. To the fullest extent permitted by applicable law,
interest shall continue to accrue on any Loan after the filing by or against any
Borrower of a petition seeking relief in bankruptcy or under any act or law
pertaining to insolvency or debtor relief, whether state, federal or foreign.
4.2 Maximum Interest Rate. Nothing contained in this Agreement, in the
Revolving Line of Credit Note, the Term Note or any Conversion Note shall be
deemed to establish or require the payment of interest to Lender at a rate in
excess of the maximum rate permitted in the jurisdiction of enforcement of this
Agreement, the Revolving Line of Credit Note, the Term Note or any Conversion
Note. In the event that the rate of interest required to be paid under the
provisions of this Agreement, the Revolving Line of Credit Note, the Term Note
or any Conversion Note exceeds the maximum rate permitted in such jurisdiction,
the rate of interest required to be paid hereunder and thereunder shall be
automatically reduced to the maximum rate permitted in such jurisdiction and any
amounts collected in excess of the permissible amount shall be deemed a
prepayment of principal thereon.
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4.3 Payment.
(a) All payments (including prepayments) by the Borrowers on
account of principal, interest, costs and expenses on each Loan shall
be made in immediately available funds to the Lender, at its principal
office at Winston-Salem, North Carolina, prior to 2:00 P.M., North
Carolina time on the date payment is due, or at such other place as is
designated in writing by the Lender. Any payments received by the
Lender later than 2:00 P.M. shall be deemed to have been made on the
next banking day. If any payment of principal or interest falls due on
a day that is not a Business Day, then such due date shall be extended
to the next succeeding Business Day, and interest shall continue to
accrue on the outstanding principal for such period of extension, but
interest for the period of extension shall not be due or payable until
the next payment date.
(b) The Borrower hereby irrevocably authorizes the Lender to
pay all interest and principal, and after the occurrence of an Event of
Default all costs and expenses, payable by the Borrowers or any of them
pursuant to this Loan Agreement by drafting such amounts from any
Borrower's accounts with Lender (other than fiduciary accounts) if such
funds are available or by drawing such amounts under the Revolving Line
of Credit as of the respective due dates of such interest, principal,
costs and expenses, but the failure of the Lender to so draft or draw
will not affect the Borrowers' obligation to pay such interest,
principal, costs and expenses.
(c) All payments made by the Borrowers shall be applied (i)
first, to the payment of accrued and unpaid fees, if applicable, and
interest on the Revolving Line of Credit Note, the Term Note and each
Conversion Note, as applicable and (ii) second, to the payment of
unpaid principal on the Revolving Line of Credit Note, the Term Note or
the Conversion Note(s), as applicable; provided, however, that,
following the occurrence of an Event of Default which has not been
expressly waived in writing by Lender, the Lender may apply all such
payments to the Obligations in any amounts and in any fashion or
priority as the Lender in its sole discretion may determine.
4.4 Use of Proceeds. The proceeds of the Loans will be used by the
Borrowers solely (i) to retire Borrowers' existing credit facilities with Lender
except for the Term Loan; (ii) to provide financing for the expansion of stores;
(iii) to provide working capital for the Borrowers; (iv) to provide financing
for the acquisition of Capital Assets of the Borrowers; and (v) for any other
lawful corporate purpose; provided, however, that no proceeds of any Loan shall
be loaned, distributed or advanced to Subsidiaries which are not Borrowers.
4.5 Disbursement of Loan Proceeds. The Borrowers hereby authorize and
direct the Lender to disburse, for and on behalf of the Borrowers and for each
of the Borrowers' accounts, the proceeds of any Loan made by the Lender pursuant
to this Agreement to such Person or Persons as the President, Chief Executive
Officer, Executive Vice President - Corporate Development, Finance and
Administration or Senior Vice President - Finance of Krispy Kreme shall direct
in writing.
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4.6 [Intentionally Omitted]
4.7 Taxes.
(a) The Borrowers agree to pay any present or future stamp or
documentary taxes or any other excise or property taxes, charges or
similar levies of the United States or any state or political
subdivision thereof or any applicable foreign jurisdiction that may
arise from any payment made hereunder or from the execution, delivery
or registration of, or otherwise with respect to, this Agreement
(hereinafter referred to as "Taxes").
(b) The Borrowers hereby agree, jointly and severally, to
indemnify the Lender for the full amount of Taxes (including without
limitation, any Taxes imposed by any jurisdiction on amounts payable
under this Section) paid by the Lender and any liability (including
penalties, interest and expenses) arising therefrom or with respect
thereto. This indemnification shall be made within thirty (30) days
from the date the Lender makes written demand therefor.
4.8 Register. The Lender may maintain a register on which it may record
the advances made by it to the Borrowers from time to time, and each payment in
respect thereof. If Lender maintains such a register, such recordation shall be
conclusive, absent error therein. Failure to make any such recordation, or any
error in such recordation, shall not affect the Borrowers' obligations with
respect to the Loans.
4.9 Release of Collateral, Parties Liable, etc. Each Borrower agrees
that the whole or any part of the security, if any, now or hereafter held for
the Obligations, or any part thereof, may be exchanged, compromised or
surrendered from time to time; that Lender shall have no obligation to protect,
perfect, secure or insure any such security interest, liens or encumbrances now
or hereafter held for the Obligations, or any part thereof, or the properties
subject thereto; that the time or place of payment of the Obligations, or any
part thereof, may be changed or extended, in whole or in part, to a time certain
or otherwise, and may be renewed or accelerated by agreement among Lender and
any Borrower, in whole or in part; any Borrower may be granted indulgences
generally; that any of the provisions of any of the Obligations may be modified,
amended or waived; that any party liable for the payment thereof, including,
without limitation, any co-obligor and guarantors, may be granted indulgences or
released; all without notice to or further assent by any other Borrower, and
each of the other Borrower(s) shall remain bound thereon, notwithstanding any
such exchange, compromise, surrender, extension, renewal, acceleration,
modification, indulgence or release.
4.10 Waiver of Rights. Each Borrower expressly waives: (a) notice of
extensions of credit to any other Borrower by Lender; (b) presentment and demand
for payment of any of the Obligations; (c) protest and notice of dishonor or of
default to such Borrower or to any other party with respect to the Obligations
or with respect to any security therefor; (d) notice of Lender obtaining,
amending, substituting for, releasing, waiving or modifying any security
interest, liens
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or encumbrances now or hereafter securing the Obligations or any part thereof,
or Lender's subordinating, compromising, discharging or releasing any such
security interests, liens or encumbrances; (e) all other notices to which each
such Borrower might otherwise be entitled; (f) demand for payment hereunder and
under the other Loan Documents; and (g) any right to assert against Lender, as a
defense, counterclaim (excluding mandatory counterclaims), set-off or
cross-claim, any defense (legal or equitable), set-off, counterclaim or claim
which each such Borrower may now or hereafter have against Lender or any other
Borrower, but such waiver shall not prevent such Borrower from asserting against
Lender in a separate action, any claim, action, cause of action or demand that
such Borrower might have, whether or not arising out of this Agreement; the
Borrowers acknowledging and agreeing that their obligations to pay and perform
under and pursuant to the Loans and each of the Loan Documents are obligations
independent of any and all claims and defenses which any Borrower may now or
hereafter have against Lender or any other Borrower.
4.11 Primary Liability of Borrowers. Each Borrower agrees that this
Agreement and the other Loan Documents may be enforced by Lender without the
necessity at any time of resorting to or exhausting any security and without the
necessity at any time of having recourse to the Revolving Line of Credit Note,
the Term Note, any Conversion Note, any other Loan Document or any co-obligor,
guarantor or any security, if any, held with respect to the Obligations. Each
Borrower waives the right to require Lender to proceed against any co-obligor or
guarantor or to require Lender to pursue any other remedy or enforce any other
right. Each Borrower further agrees that it shall not exercise any right of
subrogation, reimbursement or indemnity whatsoever, nor any right of recourse to
security, if any, for the Obligations of any Borrower to Lender, unless and
until all of the Obligations of the Borrowers and their respective Subsidiaries
to Lender have been paid in full. Each Borrower further agrees that nothing
contained herein shall prevent Lender from suing on or proceeding under this
Agreement, the Revolving Line of Credit Note, the Term Note or any Conversion
Note, or exercising any other rights available to it under any other Loan
Document if the Borrowers do not timely perform their obligations hereunder and
thereunder, and the exercise of any of the aforesaid rights and the completion
of any proceedings thereunder shall not constitute a discharge of any Borrower's
obligations hereunder; it being the purpose and intent of each Borrower that its
obligations hereunder and thereunder shall be primary, absolute, independent and
unconditional under any and all circumstances. The Borrowers' obligations under
this Agreement, the Revolving Line of Credit, the Term Loan, any Conversion Loan
or any Loan Document, or any remedy for the enforcement thereof, shall not be
impaired, modified, changed or released in any manner whatsoever by an
impairment, modification, change, release or limitation of the liability of any
Borrower or any other co-obligor or guarantor or by reason of any Borrower's or
any co-obligor's or guarantor's bankruptcy or insolvency. Each Borrower
acknowledges that the term "Obligations" as used herein includes any payments
made by it or any other Borrower or other co-obligor or guarantor to Lender and
subsequently recovered by such Borrower, any other Borrower, co-obligor or
guarantor or a trustee for any of them pursuant to any bankruptcy, insolvency or
other proceedings. Lender may, in its sole and reasonable discretion, elect to
demand payment or performance at any time Lender is entitled to exercise such
remedies hereunder or under any other Loan Documents. In the event Lender elects
to demand performance, it shall at all times thereafter have the right to demand
payment until all of the
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Obligations have been paid in full. In the event Lender elects to demand
payment, it shall at all times thereafter have the right to demand performance
until all of the Obligations have been paid in full.
4.12 Subrogation and Subordinating. Nothing herein contained shall
operate as a release or discharge, in whole or in part, of any claim of any
Borrower against any other Borrower, by subrogation or otherwise, by reason of
any act done or payment made by any Borrower pursuant to the provisions of this
Agreement; but all such claims shall be subordinate to the Obligations of the
Borrowers or any of them to Lender.
ARTICLE V
CLOSING; CONDITIONS OF CLOSING AND BORROWING
5.1 Closing. The Closing of this transaction shall take place at the
offices of Krispy Kreme, Winston-Salem, North Carolina at 10:00 p.m. on December
17, 1998, or at such other time as the parties shall mutually agree.
5.2 Conditions of Loans and Advances at Closing. The obligations of the
Lender to make the Loans available to the Borrowers and to make advances
thereunder at the Closing, are subject to the: (a) accuracy and correctness of
the representations and warranties of the Borrowers contained herein and in the
other Loan Documents and in any certificate delivered pursuant to this Agreement
or the other Loan Documents, in all respects as if made on the date of such Loan
or advance; and (b) satisfaction of each of the following conditions:
5.2.1 Executed Loan Documents. This Agreement and all Loan Documents
required by this Agreement by the Lender shall have been duly authorized,
executed and delivered to the Lender by the Borrowers and shall be in full force
and effect and no Default or Event of Default shall exist hereunder or
thereunder.
5.2.2 Closing Certificates, etc.
(a) Certificate of the Borrowers. The Lender shall have
received a certificate at Closing from the Presidents of the Borrowers
and the Executive Vice President - Corporate Development, Finance and
Administration of Krispy Kreme and the Vice President or Treasurer of
each other Borrower, in form and substance satisfactory to the Lender,
to the effect that, to the best of their knowledge: (i) all
representations and warranties of the Borrowers contained in this
Agreement and the other Loan Documents are true, correct and complete;
(ii) neither the Borrowers nor their Subsidiaries are in violation of
any of the covenants contained in this Agreement or the other Loan
Documents; (iii) after giving effect to the transactions contemplated
by this Agreement, no Default or Event of Default has occurred; and
(iv) the Borrowers and their Subsidiaries, if applicable, have
satisfied each of the other closing conditions set forth in this
Agreement.
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(b) Certificates of Secretaries of the Borrowers. The Lender
shall have received, at Closing, a certificate in form and substance
satisfactory to the Lender, from the Secretary or Assistant Secretary
of each of the Borrowers, certifying: (1) that attached thereto is a
true and complete copy of the bylaws of the Borrowers as in effect on
the date of such certification; (2) that attached thereto is a true and
complete copy of resolutions adopted by the Board of Directors of the
Borrowers authorizing the execution, delivery and performance of this
Agreement and the other Loan Documents, as applicable; (3) as to the
incumbency and genuineness of the signature of each officer of the
Borrowers executing this Agreement or any of the other Loan Documents;
and (4) that, to the best of the Borrowers' knowledge as of the time
delivered, all written information, copies of documents, agreements and
contracts, and any other written material furnished or made available
to Lender in connection with the making of any Loan or the negotiation,
preparation or execution of this Agreement and the other Loan Documents
are true, correct and complete and did not or do not contain any untrue
statement of a material fact or omit a material fact necessary to make
the statements contained therein not misleading, and with respect to
each agreement or contract, a copy of which was provided to Lender,
each such contract and agreement is in full force and effect, no party
thereto has delivered any notice of default thereunder which remains
uncured and to the best of the Borrowers' knowledge, there exists no
default or event of default which, with the giving of notice or the
passage of time or both, would constitute a default of any of the
terms, conditions or provisions of any such contract or agreement, and
no other agreements relate thereto, whether oral, written, expressed or
implied, between the parties thereto or any other Person which could
materially adversely affect the rights, duties and obligations of any
Borrower.
(c) Articles of Incorporation. The Lender shall have received,
at Closing, a copy of the articles or certificate of incorporation and
all amendments thereto (excluding statements of change of registered
office and/or agent) of each Borrower and Subsidiary, certified as of a
recent date by the Secretary of State of the state of incorporation of
each such Borrower and Subsidiary, together with a certification by the
Secretary or Assistant Secretary of each Borrower and Subsidiary that
such articles or certificate of incorporation have not been amended
since such date.
(d) Certificates of Good Standing. The Lender shall have
received, at Closing, long-form (or short form if long forms are not
provided by the certifying authority) certificates as of a recent date
of either the good standing, existence or authorization (as may be
provided by the certifying authority) of each Borrower and each of its
Subsidiaries under the laws of each such corporation's state of
incorporation, which certificates shall be in form and content
reasonably satisfactory to Lender.
(e) Opinions of Counsel to the Borrower and the Borrower. The
Lender shall have received, at Closing, favorable legal opinion(s) as
to such matters as Lender may require.
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5.2.3 Consents; No Adverse Change.
(a) Governmental Approvals. All necessary approvals,
authorizations and consents, if any, which are required, of all
governmental bodies (including courts) having jurisdiction with respect
to the transactions contemplated by this Agreement shall have been
obtained.
(b) No Injunction, Etc. No action, proceeding, investigation,
regulation or legislation shall have been instituted, threatened or
proposed before any court, governmental agency or legislative body to
enjoin, restrain or prohibit, or to obtain substantial damages in
respect of, or which is related to or arises out of this Agreement or
the consummation of the transactions contemplated hereby or which, in
the Lender's sole and reasonable discretion, would make it inadvisable
to consummate the transactions contemplated by this Agreement.
(c) No Material Adverse Change. There shall not have occurred,
in the reasonable judgment of the Lender, any material adverse change
in the business, business prospects, condition (financial or otherwise)
or results of operations of any Borrower or Subsidiary, or any event,
condition or state of facts that could materially and adversely affect
the business, business prospects, financial condition or results of
operations of any Borrower or any Subsidiary.
(d) Event of Default. No Event of Default nor any Default
shall have occurred which has not been expressly waived in writing by
Lender.
5.2.4 Financial Matters. The Borrowers shall have delivered to the
Lender the Financial Statements specifically described in the definition of
"Financial Statements" appearing in Section 1.1 and, with respect to the
Financial Statements that have been audited by independent certified public
accountants, the Financial Statements shall be accompanied by a report thereon
containing an opinion that is not qualified, and such Financial Statements shall
be in a form satisfactory to the Lender in its sole and reasonable discretion.
5.2.5 Miscellaneous.
(a) Disbursement Instructions. The Lender shall have received
written or oral instructions from the Borrower directing the payment of
any proceeds of the Revolving Line of Credit made under this Agreement.
(b) Proceedings and Documents. All opinions, certificates and
other instruments and all proceedings in connection with the
transactions contemplated by this Agreement shall be satisfactory in
form and substance to the Lender. The Lender shall have received copies
of all other documents, instruments and opinions as the Lender may
reasonably request, in form and substance satisfactory to the Lender,
with respect to the transactions contemplated by this Agreement and the
taking of all actions in connection therewith.
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(c) Litigation Review. There shall not be any material pending
or threatened litigation against any Borrower or Subsidiary, and the
Borrowers shall have provided the Lender with access to all
documentation relating to any litigation involving any Borrower or
Subsidiary.
5.3 Loan Payoffs. Except as set forth on Schedule 8.6, all Indebtedness
not permitted by this Agreement shall be paid and satisfied in full prior to
Closing or shall be paid with a draw on the Revolving Line of Credit on the
Closing Date. In addition, each Borrower shall, and shall cause each of its
Subsidiaries to, terminate and cancel all arrangements and agreements with
respect to money borrowed (by which any Borrower or Subsidiary is a debtor) with
any Persons other than Lender, except as set forth on Schedule 8.6.
5.4 Conditions of Closing Conversion Loans. The obligations of the
Lender to close any Conversion Loan are subject to: (a) the condition that no
representation or warranty of the Borrowers contained herein or in the other
Loan Documents or in any certificate or Schedule delivered pursuant to this
Agreement or the other Loan Documents has become incorrect or inaccurate in any
respect which would have a material adverse effect on the Borrowers and their
Subsidiaries considered together; (b) all Loan Documents required by this
Agreement by the Lender shall have been duly authorized, executed and delivered
to the Lender by the Borrowers and shall be in full force and effect and no
Default shall have occurred and be continuing or no Event of Default shall have
occurred hereunder or thereunder which has not been expressly waived in writing
by Lender; and (c) the satisfaction of each of the following conditions: (i) the
Lender shall have received the certificate called for in Section 5.2.2(a)(i)
(subject to the standard of Section 5.4(a) above), (ii), (iii) and (iv) above
and the certificates called for in Section 5.2.2(d) above, (ii) the conditions
set forth in Sections 5.2.3, 5.2.4 and 5.2.5, and (iii) Lender shall have
received a certificate in form and substance satisfactory to Lender, from the
Secretary or Assistant Secretary of each of the Borrowers, certifying: (1) that
attached thereto is a true and complete copy of resolutions adopted by the Board
of Directors of the Borrowers authorizing the execution, delivery and
performance of the Loan Documents with respect to such Conversion Loan and that
such resolutions have not been altered, amended or rescinded; and (2) as to the
incumbency and genuineness of the signature of each officer of the Borrowers
executing any of the Loan Documents to be executed in connection with such
Conversion Loan.
5.5 Conditions of Making the Revolving Line of Credit Available to the
Borrowers and Making Advances Thereunder. The obligations of the Lender to make
the Revolving Line of Credit available to the Borrowers and to make advances
(other than any advance made at Closing) thereunder are subject to: (a) the
condition that no representation or warranty of the Borrowers contained herein
or in the other Loan Documents or in any certificate or Schedule delivered
pursuant to this Agreement or the other Loan Documents has become incorrect or
inaccurate in any respect which would have a material adverse effect on the
Borrowers and their Subsidiaries considered together; (b) all Loan Documents
required by this Agreement by the Lender shall have been duly authorized,
executed and delivered to the Lender by the Borrowers and shall be in full force
and effect and no Default shall have occurred and be continuing or no Event of
Default shall have occurred hereunder or thereunder which has not been expressly
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waived in writing by Lender; and (c) the satisfaction of each of the following
conditions: (i) the Lender shall have received the certificate called for in
5.2.2(a)(i) (subject to the standard of Section 5.5(a) above), and (ii) the
conditions set forth in Sections 5.2.3, 5.2.4 and 5.2.5. Each request for an
advance under the Revolving Line of Credit and each advance made by Lender to
the Borrowers pursuant to this Agreement shall constitute the certification
under Section 5.5(c)(i) above as of the date of such request or advance.
5.6 Waiver of Conditions Precedent. If the Lender makes any advance
hereunder prior to the fulfillment of any of the conditions precedent set forth
in this Article, the making of such advance shall constitute only an extension
of time for the fulfillment of such condition and not a waiver thereof, and the
Borrowers shall thereafter use their best efforts to fulfill each such condition
promptly unless the Lender otherwise indicates in writing.
ARTICLE VI
REPRESENTATIONS AND WARRANTIES
In order to induce the Lender to enter into this Loan Agreement and to
make available (or continue to make available) to Borrowers the Revolving Line
of Credit, the Term Loan and any Conversion Loan, the Borrowers, jointly and
severally, make the following representations, warranties and covenants to the
Lender, each of which shall be true and correct as of the Closing Date, and as
of the date of each advance under the Revolving Line of Credit and as of the
date of any Conversion Loan (in which case the standard for advances under the
Revolving Line of Credit [other than the advance thereof made at Closing] and
Conversion Loans shall be as set forth in Sections 5.4(a) and 5.5(a)), and each
of which shall survive the execution of this Agreement and the making of the
initial or any other advance or loan hereunder.
6.1 Corporate Organization and Power. Each of the Borrowers and each of
their Subsidiaries (i) is a corporation duly organized, validly existing and in
good standing under the laws of the state of its incorporation as set forth on
Schedule 6.1; (ii) is qualified to do business and is in good standing in every
jurisdiction as set forth on Schedule 6.1; and (iii) has no Subsidiaries and is
not a partner or joint venturer in any partnership or joint venture except as
set forth on Schedule 6.1. Each of the Borrowers and each of their Subsidiaries
has the power to own its properties and to engage in the transactions
contemplated hereby; and each Borrower has the full power, authority and legal
right to execute and deliver this Agreement and the Loan Documents executed by
it and to perform and observe the terms and provisions hereof and thereof. No
Borrower or Subsidiary has, during the preceding five (5) years, been known as
or used any other corporate, fictitious or trade names (which was material to
its business) in the United States except as set forth on Schedule 6.15.
6.2 Litigation; Government Regulation. Except as set forth on Schedule
6.2, there are no material actions, suits, investigations or proceedings pending
or, to the knowledge of the Borrowers, threatened against or affecting any
Borrower or Subsidiary, or that question the validity of this Agreement or any
of the Loan Documents, at law or in equity before any court or administrative
officer or agency and, to their knowledge, neither the Borrowers nor any of
their
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Subsidiaries is in violation of or in default under any applicable statute,
rule, order, decree, writ, injunction or regulation of any governmental body
(including any court) where such violation may have a material adverse effect
upon the business, property, assets, operations or condition, financial or
otherwise, of any Borrower or Subsidiary.
6.3 Taxes. Except as set forth on Schedule 6.3, no Borrower or
Subsidiary is delinquent in the payment of any taxes in an aggregate amount that
would have a material adverse effect upon the business, property, assets,
operations or condition, financial or otherwise of any Borrower or Subsidiary
that have been levied or assessed by any governmental authority against it or
its assets. Except as set forth on Schedule 6.3, each Borrower and Subsidiary
has timely filed all tax returns that are required by law to be filed prior to
the date hereof where failure to file would have a material adverse affect upon
any Borrower or Subsidiary, and they have paid all taxes shown on said returns
and all other assessments or fees levied upon any Borrower or Subsidiary or upon
any of their respective properties to the extent that such taxes, assessments or
fees have become due and, if not due, such taxes have been adequately provided
for and sufficient reserves therefor have been established on such Borrower's or
Subsidiary's books of account. No material controversy in respect of income
taxes of any Borrower or Subsidiary is pending, or to the knowledge of the
Borrowers, threatened.
6.4 Enforceability of Loan Documents; Compliance With Other
Instruments. Each of the Loan Documents is the legal, valid and binding
obligation of each Borrower, enforceable against each Borrower in accordance
with its terms assuming the exercise by the Lender of commercial reasonableness
in the exercise of the remedies thereunder and except as enforceability may be
limited by bankruptcy, insolvency and other similar laws affecting creditor's
rights generally or by general equitable principles. Except as set forth on
Schedule 6.4, no Borrower or Subsidiary is in default in any material respect
with respect to any indenture, loan agreement, mortgage, lease, deed or similar
agreement related to the borrowing of monies to which any Borrower or Subsidiary
is a party or by which it, or any of its property, is bound. Neither the
execution, delivery or performance of this Agreement and of the Loan Documents
by the Borrowers, nor compliance by the Borrowers herewith or therewith (a)
conflicts or will conflict with or results or will result in any breach of, or
constitutes or will constitute with the passage of time or the giving of notice
or both, a default under, (i) the articles or certificate of incorporation or
bylaws of any Borrower or Subsidiary, (ii) except as set forth on Schedule 6.4,
any indenture, loan agreement, mortgage, lease or similar agreement, or (iii)
any law, order, writ, injunction or decree of any court or governmental
authority, or (b) results or will result in the creation or imposition of any
lien, charge or encumbrance upon the properties of any Borrower or Subsidiary
pursuant to any such agreement or instrument.
6.5 Governmental Authorization. No authorization, consent or approval
of, or declaration or filing with, any governmental authority is required for
the valid execution, delivery and performance by the Borrowers of this Agreement
and the Loan Documents or the consummation by the Borrowers of the transactions
contemplated hereby and thereby. Each of the Borrowers and Subsidiaries has, and
is in good standing with respect to, all material governmental approvals,
permits, certificates, inspections, consents and franchises necessary to
continue to conduct business as heretofore conducted and to own or lease and
operate its
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respective properties as now owned or leased by it. To their knowledge, none of
such approvals, permits, certificates, consents or franchises contain any term,
provision, condition or limitation more burdensome than such as are generally
applicable to Persons engaged in the same or similar business as any Borrower or
Subsidiary.
6.6 Event of Default. No Default shall have occurred and be continuing
or no Event of Default shall have occurred which has not been expressly waived
in writing by Lender.
6.7 Margin Securities. No Borrower or Subsidiary owns any "margin
stock" as such term is defined in Regulation U. None of the proceeds of the
Loans will be used, directly or indirectly, for the purpose of purchasing or
carrying any margin stock or for the purposes of maintaining, reducing or
retiring any Indebtedness that was originally incurred to purchase or carry
margin stock or for any other purpose that might constitute the transactions
contemplated hereby as a "purpose credit" within the meaning of Regulation U,
Regulation X or Regulation G or any other regulations of the Board of Governors
of the Federal Reserve System.
6.8 Franchise Matters. To the Borrowers' knowledge, Krispy Kreme is the
exclusive franchisor of the "Krispy Kreme" concept for the operation of retail
doughnut and coffee shops utilizing certain of the trademarks and service marks
listed on Schedule 6.15. Attached as Schedule 6.8 is a listing of each of Krispy
Kreme's franchisees, together with their mailing address and the address of the
physical location of their franchise(s). Also attached as a part of Schedule 6.8
is a copy of Krispy Kreme's most recently prepared Uniform Franchise Offering
Circular or other disclosure statement of similar import (the "Disclosure
Statement"). To the Borrowers' knowledge, neither the Disclosure Statement nor
any statements (whether oral or written) furnished by the Borrowers or by any
Person acting on the Borrowers' behalf in connection with the sale, management,
administration or termination of a franchise contains or contained any untrue
statement of a material fact or omits or omitted a material fact necessary to
make the statements made or contained therein or made in connection therewith
not misleading. None of the Borrowers are aware of any fact, circumstance or
condition related to franchising activities which might materially adversely
affect any Borrower or Subsidiary, their assets, business, prospects or
condition (financial or otherwise), or the ability of any Borrower to perform
any of its obligations hereunder or under any of the Loan Documents. Each
agreement between Krispy Kreme and its franchisees is valid, subsisting and in
full force and effect, and, to the Borrowers' knowledge, Krispy Kreme is not in
default with respect to any material term or condition thereof, nor has any
event occurred which, through the passage of time or the giving of notice, or
both, would constitute a default by Krispy Kreme thereunder.
6.9 Principal Places of Business. The chief executive office and
principal place of business of each Borrower (with the exception of HD Capital
and HD Development) is currently ▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇., ▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇▇-▇▇▇▇▇,
▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇. The chief executive office and principal place of business
of HD Capital is ▇▇▇▇▇ ▇▇, ▇▇▇▇▇▇ ▇▇. ▇▇▇▇▇, ▇▇▇▇ ▇. ▇▇▇▇▇▇ ▇▇., ▇▇▇▇▇▇▇▇▇▇,
▇▇▇▇▇▇▇▇ ▇▇▇▇▇. The chief executive office and principal place of business of HD
Development is ▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇., ▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇. The Borrowers shall
promptly notify Lender of the relocation thereof by a party hereto.
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6.10 ERISA.
(a) None of the Borrowers maintains or has ever maintained a
defined benefit plan subject to ERISA. Except as set forth on Schedule
6.10, the present value of all accrued benefits under each Employee
Plan (based on those assumptions used to fund such Employee Plan) did
not, as of the most recent valuation date, exceed the then current
value of the assets of such Employee Plan allocable to such benefits.
Except as set forth on Schedule 6.10, full payment has been made on or
before the due date thereof of all amounts that any Borrower or
Subsidiary is required under the terms of each Employee Plan to have
paid as contributions to such plan.
(b) Borrowers' Profit-Sharing and 401(k) plan is tax qualified
pursuant to a currently effective determination letter issued by the
Internal Revenue Service (the "Service"), and is not under
investigation by either the Service or the United States Department of
Labor.
(c) No Borrower or Subsidiary has participated in any
Prohibited Transaction, which has subjected, or may subject, it to any
material civil penalty or tax imposed by Section 502(i) of ERISA or
Section 4975 of the Internal Revenue Code, respectively.
(d) To the knowledge of the Borrowers and based on actuarial
reports, the present value (determined using actuarial and other
assumptions that are reasonable in respect of the benefits provided and
the employees participating) of the liability of any Borrower or
Subsidiary for post-retirement benefits to be provided to its current
and former employees under all welfare benefit plans (as defined in
Section 3(1) of ERISA) does not, in the aggregate, exceed the assets
under all such plans allocable to such benefits by an amount which
would materially and adversely affect the financial condition of any
Borrower or Subsidiary or its ability to perform its obligations
hereunder.
(e) The execution and delivery of this Agreement will not
involve any transaction that is subject to the prohibitions of Section
406 of ERISA or in connection with which a tax could be imposed
pursuant to Section 4975 of the Internal Revenue Code.
(f) Neither the Borrowers nor any Subsidiary is making or has
ever made or been required to make any contributions to a Multiemployer
Plan.
(g) All of the Employee Plans of each of the Borrowers and
their Subsidiaries are listed on Schedule 6.10.
6.11 Financial Statements. The Financial Statements delivered to the
Lender have been prepared in accordance with Generally Accepted Accounting
Principles by the Borrowers and, in the case of the annual Financial Statements,
audited by independent certified public accountants. The Financial Statements
contain no material misstatement or omission and fairly
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present the financial condition, assets and liabilities of the Borrowers and
their Subsidiaries on a consolidated basis, as of the respective dates thereof
and the results of operations of the Borrowers and their Subsidiaries on a
consolidated basis, as of the respective dates thereof and the results of
operations of the Borrowers and their Subsidiaries on a consolidated basis, for
the respective periods then ended. Except as disclosed on Schedule 6.11, since
the date of the most recent of the Financial Statements, there has been no
material adverse change in the assets, liabilities or financial condition of any
Borrower or Subsidiary or in the results of the operations of any Borrower or
Subsidiary, and no Borrower or Subsidiary has incurred any obligation or
liability that could materially and adversely affect its financial condition,
business operations or properties, or has entered into any material contracts
not contemplated by this Agreement and not in the ordinary course of business
consistent with past practice.
6.12 Title to Assets. Except as set forth on Schedule 6.12, the
Borrowers and their Subsidiaries have good, indefeasible and merchantable title
in fee simple (or its equivalent under applicable law) to, and ownership of, the
assets reflected in the most recent Financial Statements, and all of their other
assets, free and clear of all liens, claims, security interests and
encumbrances. Except as set forth on Schedule 6.12, to the Borrowers' knowledge,
no financing statement that names any Borrower or any Subsidiary as debtor has
been filed and is still in effect, other than those evidencing any of the
Permitted Liens, and no Borrower or Subsidiary has signed any financing
statement or any security agreement authorizing any secured party thereunder to
file any such financing statement.
6.13 Solvency. The Borrowers and each of their Subsidiaries is solvent.
6.14 Use of Proceeds. Subject to Section 4.4, the Borrowers' use of the
proceeds of the Revolving Line of Credit, the Term Loan and any Conversion Loan
made by the Lender to the Borrowers pursuant to this Agreement are, and will
continue to be, legal and proper corporate uses and such uses are and will be
consistent with all applicable laws and statutes, as in effect from time to
time.
6.15 Assets for Conduct of Business. The Borrowers and each of their
Subsidiaries possess adequate assets, licenses, patents, patent applications,
copyrights, trademarks, service marks and trade names to continue to conduct
their respective businesses as heretofore conducted, without any material
conflict with the rights of others. Schedule 6.15 lists all patents, copyrights,
trademarks, service marks and trade names, registrations thereof or any
applications therefor, owned by any Borrower or Subsidiary and lists the owner
thereof.
6.16 Trade Relations. There exists no actual or, to the Borrowers'
knowledge, threatened termination, cancellation or limitation of, or any
modification or change in, the business relationship of any Borrower or
Subsidiary with any customer or any group of customers whose purchases
individually or in the aggregate are material to the business of a Borrower or
Subsidiary, or with any material supplier, and there exists no present condition
or state of facts or circumstances that would materially adversely affect any
Borrower or Subsidiary or prevent any Borrower or Subsidiary from conducting
such business after the consummation of
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the transactions contemplated by this Agreement in substantially the same manner
in which it has heretofore been conducted.
6.17 Compliance With Laws. Except as set forth on Schedules 6.17 and
6.18, each Borrower and Subsidiary has duly complied in all material respects
with, and their assets, properties, business operations and leaseholds are in
compliance in all material respects with, the provisions of all federal, state
and local laws, rules and regulations applicable to such Borrower or Subsidiary,
their assets and properties or the conduct of their businesses, including,
without limitation, all federal and state securities laws, business opportunity
and franchise laws, ERISA and OSHA, the violation of which would have a material
adverse impact on a Borrower or Subsidiary and there have been no material
citations, notices or orders of noncompliance issued to any Borrower or
Subsidiary under any such law, rule or regulation.
6.18 Environmental Matters. To the Borrowers' knowledge, and except as
may be set forth on Schedule 6.18:
(a) (i) No dangerous, hazardous or toxic substances,
pollutants, contaminants, chemicals, wastes or materials, within the
meaning of any applicable federal, state or local laws, regulations or
orders (collectively "Hazardous Substances"), and including without
limitation urea-formaldehyde, polychlorinated byphenyls (PCB's),
nuclear fuel or waste, and petroleum, including but not limited to
crude oil, natural gas, natural gas liquids, gasoline and synthetic
gas, are unlawfully stored or located on the Realty, and no part of the
Realty, including the groundwater located thereon and thereunder, is
presently contaminated by any such substance; (ii) no improvements on
the Realty contain any friable asbestos or substances containing
asbestos and deemed hazardous by any federal, state or local laws,
regulations or orders respecting such material; and (iii) there were no
releases of any Hazardous Substances, materials or wastes on any Realty
previously owned by any Borrower or any Subsidiary.
(b) The Realty has never been used during the period of
ownership or lease by any Borrower or Subsidiary as or for a mine, a
landfill, a dump or other disposal facility, industrial or
agricultural, a gasoline service station or a petroleum products
storage facility and has never been used for such purposes prior to the
period of ownership or lease by any Borrower or Subsidiary; and none of
the Realty is located on a site which, pursuant to CERCLA or any
similar state law, has been placed on the "National Priorities List" or
"CERCLIS List" (or any similar state list) of hazardous wastes;
(c) There are no underground storage tanks situated on any of
the Realty and no underground storage tanks have ever been situated on
any of the Realty;
(d) All activities and operations of the Borrowers and each of
their Subsidiaries meet the requirements of all applicable
environmental laws and regulations of all federal, state and local
governmental or regulatory bodies having jurisdiction over any Borrower
or Subsidiary or their properties, including without limitation, RCRA
and CERCLA;
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(e) No Borrower or Subsidiary has ever sent a Hazardous
Substance to a site which, pursuant to CERCLA or any similar state law,
(i) has been placed on the "National Priorities List" or "CERCLIS List"
of hazardous wastes (or any similar state list) and (ii) is subject to
a pending claim, administrative order or other request to take
"removal" or "remedial" action (as defined under CERCLA) or to pay for
the costs of cleaning up such a site;
(f) No Borrower or Subsidiary is involved in any suit or
proceeding or has received any notice from any governmental agency with
respect to a release of Hazardous Substances or has received notice of
any claims from any Person relating to personal injuries from exposure
to Hazardous Substances; and
(g) Each Borrower and Subsidiary has timely filed all reports
required to be filed, has acquired all necessary certificates,
approvals and permits and has generated and maintained in all material
respects all required data, documentation and records under any
applicable state, federal or local environmental laws, regulations or
rules.
For purposes of this Section 6.18, "knowledge" means the knowledge of ▇▇▇▇▇
▇▇▇▇▇▇▇, Director of Safety and Environmental Services, for Krispy Kreme.
6.19 Authorization. The execution, performance and delivery of this
Agreement and the Loan Documents by the Borrowers are within the corporate
powers of each of the Borrowers and have been duly authorized by all necessary
and appropriate corporate action and validly executed and delivered.
6.20 Withholding Taxes. The Borrowers and each of their Subsidiaries
are, and at all times shall remain, current in respect to payment of all federal
and state withholding taxes, social security taxes and other payroll taxes in an
aggregate amount that, if were unpaid, would have a material adverse effect upon
a Borrower or Subsidiary and, upon the Lender's request, the Borrowers shall
promptly deliver to the Lender satisfactory evidence of such payments. The
Borrowers and each of their Subsidiaries currently accrue, and will continue to
accrue, their respective payroll tax obligations and maintain sufficient
available funds (which may include available funds under the Revolving Line of
Credit), to satisfy their payroll tax liabilities.
6.21 Realty. Schedule 6.21 lists all real property owned by any
Borrower as of the Closing Date, and gives the address thereof.
6.22 Leased Property. Schedule 6.22 lists, as of the Closing Date, all
real property leased by any Borrower and lists the name of the lessors of such
property. The Borrowers enjoy peaceful and undisturbed possession of all of
their leased property and all such leases are valid and subsisting and in full
force and effect.
6.23 Contracts; Labor Disputes. No Borrower or Subsidiary is a party to
any collective bargaining contract or agreement with its employees. No Borrower
or Subsidiary is a party to,
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and there is not pending or, to their knowledge, threatened, any labor dispute,
strikes, lock-out, grievance, work stoppage or walkouts relating to any labor
contracts to which any Borrower or Subsidiary is a party. The Borrowers and each
of their Subsidiaries have, to their knowledge, complied with, and will continue
to comply with, the provisions of the Fair Labor Standards Act of 1938, as
amended, and no Borrower or Subsidiary, or any of their officers, directors or
employees, has committed any unfair labor practice, as defined in the National
Labor Relations Act of 1947, as amended.
6.24 Full Disclosure. Neither this Agreement nor any of the Loan
Documents, nor any statements furnished to the Lender by or on behalf of any
Borrower or Subsidiary in connection with the Revolving Line of Credit, the Term
Loan, any Conversion Loan or the Loan Documents, contain any untrue statement of
a material fact or omit a material fact necessary to make the statements
contained therein or herein not misleading. To the knowledge of the Borrowers,
there is no fact (as opposed to hypothetical situations based on current facts)
that the Borrowers have not disclosed to the Lender in writing that materially
adversely affects or will materially adversely affect the assets, business,
profits, prospects or conditions (financial or otherwise) of the Borrowers and
any of their Subsidiaries, considered together, or the ability of the Borrowers
to perform their obligations hereunder or under any of the Loan Documents.
ARTICLE VII
AFFIRMATIVE COVENANTS
Until payment in full of all the Obligations, each Borrower covenants
and agrees that, unless the Lender otherwise consents in writing:
7.1 Repayment of Obligations. The Borrowers will, jointly and
severally, promptly repay the Obligations when due, including without limitation
the amounts due under the Revolving Line of Credit Note, the Term Note and each
Conversion Note according to their respective terms and the terms of this
Agreement and the other Loan Documents.
7.2 Performance Under Loan Documents. The Borrowers will perform, or
cause their Subsidiaries to perform, all obligations required to be performed by
them, or any of them under the terms of this Agreement and the other Loan
Documents.
7.3 Financial and Business Information about the Borrower. The
Borrowers shall deliver to the Lender:
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(a) As soon as practicable and in any event within thirty (30)
days after the end of each fiscal month, beginning with the close of
the current month, a consolidated and consolidating balance sheet of
the Borrowers and their Subsidiaries as of the close of such fiscal
month and statements of income, retained earnings and cash flows for
the fiscal month then ended and for that portion of the fiscal year
then ended, prepared on a basis consistent with that of the preceding
month or containing disclosure of the effect on the results of
operations of any change in the application of accounting principles
and practices during the month, and certified by the President or
Senior Vice President- Finance of Krispy Kreme to present fairly in all
material respects the financial condition of the Borrowers and their
Subsidiaries as of their respective dates and the results of operations
of the Borrowers and their Subsidiaries for the respective periods then
ended, subject to normal year-end adjustments;
(b) As soon as practicable and in any event within 120 days
after the close of each fiscal year of the Borrowers, beginning with
the close of the current fiscal year, an audited consolidated and
consolidating balance sheet of the Borrowers and their Subsidiaries as
of the close of such fiscal year and audited statements of income,
retained earnings and cash flows for the fiscal year then ended,
audited by Price Waterhouse or another independent certified public
accountant acceptable to the Lender in accordance with Generally
Accepted Accounting Principles applied on a basis consistent with those
of the preceding year or containing disclosure of the effect on the
financial position or results of operation of any change in the
application of accounting principles and practices during the year, and
accompanied by a report thereon by such certified public accountants,
containing an opinion that is not qualified with respect to scope
limitations imposed by the Borrowers or with respect to accounting
principles followed by the Borrowers not in accordance with Generally
Accepted Accounting Principles;
(c) Concurrently with the delivery of the financial statements
described in subsection (b) above, a certificate from the independent
certified public accountants that, in making their examination of the
financial statements of the Borrowers and their Subsidiaries, they
obtained no knowledge of the occurrence or existence of any Default or
any Event of Default, or a statement specifying the nature and period
of existence of any such condition or event disclosed by their
examination, in a form satisfactory to the Lender;
(d) Concurrently with the delivery of the financial statements
described in subsection (b) above, a certificate from the President or
Senior Vice President - Finance of Krispy Kreme certifying to the
Lender, that to such officer's knowledge after such inquiry as such
officer deems appropriate, the Borrowers have kept, observed, performed
and fulfilled in all material respects each and every covenant,
obligation and agreement binding upon them that is contained in this
Agreement or the other Loan Documents, and that no Default or Event of
Default has occurred or specifying any such Default or Event of
Default, together with a financial covenant compliance worksheet, in a
form satisfactory to the Lender, reflecting the computation of the
financial covenants set forth
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in Sections 8.9 through 8.13 as of the end of the period covered by
such financial statements;
(e) If prepared and promptly upon completion, an annual
operating budget and cash flow projections for the current fiscal year,
indicating projected earnings and significant cash sources and uses for
the Borrowers and their Subsidiaries on a consolidated basis, in the
form presently prepared and utilized by the Borrowers, accompanied by a
certificate from the President or Senior Vice President - Finance of
Krispy Kreme to the effect that the financial projections are good
faith estimates of the financial condition and operations of the
Borrowers and their Subsidiaries for such periods;
(f) Written notice at the end of each fiscal quarter of the
Borrowers, beginning with the close of the current fiscal quarter, of
the preparation or modification of any material strategic business,
operational or financial plan, not addressed in subsection (e) above,
and Lender shall have the right, in accordance with the provisions of
Section 7.8, to review and examine any such plan; and
(g) Promptly upon completion or modification, the Disclosure
Statement if it involves any material change thereto or in the content
thereof.
7.4 Notice of Certain Events. The Borrowers shall promptly, but in no
event later than five (5) Business Days after any Borrower obtains knowledge
thereof, give written notice to the Lender of any:
(a) Default or Event of Default; or
(b) Matter, including litigation or any investigation,
government regulation or enforcement, that has resulted in, or might
reasonably be expected to result in, a material adverse change in the
financial condition, prospects, operations or business affairs of any
Borrower or Subsidiary.
7.5 Corporate Existence and Maintenance of Properties.
(a) The Borrowers shall, and shall cause each of their
Subsidiaries to, maintain and preserve their corporate existence and
all rights, privileges and franchises now enjoyed.
(b) The Borrowers shall, and shall cause each of their
Subsidiaries to, conduct their business in an orderly, efficient and
customary manner, and keep their assets and properties in good working
order and condition (normal wear and tear excepted).
(c) The Borrowers shall, and shall cause each of their
Subsidiaries to, file or cause to be filed in a timely manner, all
reports, applications and licenses that shall be
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required by any governmental authority and that, if not timely filed,
might have a material adverse effect on any Borrower or Subsidiary.
7.6 Payment of Indebtedness; Performance of Other Obligations. The
Borrowers shall, and shall cause each of their Subsidiaries to, pay all
Indebtedness when due and all other obligations in accordance with customary
trade practices, and to comply with all acts, rules, regulations and orders of
any legislative, administrative or judicial body or official applicable to any
Borrower or Subsidiary, or their assets or properties, or any part thereof or to
the operation of any Borrower's or Subsidiary's business; provided, however,
that the Borrowers or any Subsidiary may, in good faith, by appropriate
proceedings and with due diligence contest any such Indebtedness, rules,
regulations, orders and directions, and against which the Borrowers will
establish and maintain such reserves as may be required, and in such amounts, as
provided for in Section 11.15. The Borrowers shall, and shall cause each of
their Subsidiaries to, observe and remain in compliance with all laws,
ordinances, governmental rules and regulations to which they are subject and
obtain all licenses, permits, franchises or other governmental authorizations
necessary to the ownership of their properties or the conduct of their
businesses, and all covenants and conditions of all agreements and instruments
to which any Borrower or Subsidiary is a party.
7.7 Maintenance of Insurance. The Borrowers currently maintain the
policies of insurance (which include deductibles and levels of self insurance)
set forth on Schedule 7.7 which are satisfactory to the Lender and the Borrowers
agree to, and shall cause each of their Subsidiaries to, maintain in the future
worker's compensation insurance, liability insurance and insurance on their
properties, assets and business, now owned or hereafter acquired against such
casualties, risks and contingencies and in such types and amounts and with such
insurance companies as are comparable to that set forth on Schedule 7.7 and
satisfactory to the Lender, and shall deliver to the Lender, upon its request
therefor, a certificate from the President or Senior Vice President - Finance of
Krispy Kreme certifying to the Lender the existence of all of such policies and
which summarizes all of such policies. Each policy of insurance shall contain a
clause requiring the insurer to give not less than thirty (30) days prior
written notice to the Lender before any cancellation of any of such policies for
any reason whatsoever, except for nonpayment in which case there shall be ten
(10) days prior written notice. If any Borrower or Subsidiary fails to obtain
and maintain any of the policies of insurance required to be maintained
hereunder or to pay any premium in whole or in part, then the Lender may, at the
Borrowers' expense, without waiving or releasing any obligation or default by
the Borrowers hereunder, procure the same, but the Lender shall have no
obligation to do so. All sums so disbursed by the Lender, including reasonable
attorney's fees, court costs, expenses and other charges related hereto, shall
be payable, jointly and severally, by the Borrowers to the Lender on demand and
shall be additional Obligations hereunder.
7.8 Maintenance of Books and Records; Inspection. The Borrowers shall,
and shall cause each of their Subsidiaries to, maintain adequate books, accounts
and records, and prepare all financial statements required under this Agreement
in accordance with Generally Accepted Accounting Principles and in compliance,
in all material respects, with the regulations of any governmental regulatory
body having jurisdiction over any Borrower or Subsidiary. The
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Borrowers shall permit employees or agents of the Lender, upon reasonable notice
and during normal business hours, to inspect the properties of any Borrower or
Subsidiary and to examine or audit the books, records and accounts of any
Borrower or Subsidiary and make copies of and memoranda of the same in
connection with the administration of the Loans and this Agreement and the other
Loan Documents and to monitor compliance herewith and therewith, and to discuss
the affairs, finances and accounts of any Borrower or Subsidiary with its
officers and employees and, upon notice to such Borrower or Subsidiary, the
independent public accountants of the Borrowers or any Subsidiary (and by this
provision the Borrowers authorize, and shall cause each of their Subsidiaries to
authorize, such accountants to discuss the finances and affairs of any such
Borrower or Subsidiary), all at such reasonable times and as often as may be
reasonably requested. Any confidential information made available to the Lender
shall be kept confidential by the Lender, its employees and agents; provided,
however, that the Lender may disclose any such information (i) to the extent
deemed necessary by Lender in connection with the enforcement by Lender of this
Loan Agreement or any of the other Loan Documents, which disclosure may only be
made in appropriate proceedings and not otherwise publicly, (ii) if it is
otherwise publicly available, or (iii) if Lender is required by law to make
disclosure thereof.
7.9 Compliance with ERISA. The Borrowers shall, and shall cause each of
their Subsidiaries to: (i) make timely payment of contributions required to meet
the minimum funding standards set forth in ERISA with respect to any Employee
Plan; and (ii) promptly after the filing thereof, furnish to the Lender, upon
its request, copies of any annual report required to be filed under ERISA in
connection with each Employee Plan. The Borrowers shall not, nor shall they
permit any of their Subsidiaries to, participate in any Prohibited Transaction
that could subject any Borrower or Subsidiary to any material civil penalty
under ERISA or material tax under the Internal Revenue Code. The Borrowers shall
furnish to the Lender, upon the Lender's request, such additional information
about any Employee Plan or other employee benefit plan as may be reasonably
requested by the Lender.
7.10 COBRA. The Employee Plans of each Borrower and Subsidiary shall be
operated in such a manner that no Borrower or Subsidiary will incur any material
tax liability under Section 4980B of the Internal Revenue Code or any material
liability to any qualified beneficiary as defined in Section 4980B of the
Internal Revenue Code.
7.11 Payment of Taxes. The Borrowers shall, and shall cause each of
their Subsidiaries to, pay and discharge all taxes, assessments and governmental
charges or levies imposed upon them or upon their income or profits, or upon any
properties belonging to any of them, prior to the date on which penalties attach
thereto, and all lawful claims which, if unpaid, might become a lien or charge
upon any assets or properties of any Borrower or Subsidiary; provided, however,
that the Borrowers or any Subsidiary may, in good faith and with due diligence
in appropriate proceedings contest any such tax, assessment, charge, levy or
claim, and against which the Borrowers will establish and maintain such reserves
as may be required, and in such amounts, as provided for in Section 11.15.
7.12 Compliance with Statutes, etc. The Borrowers shall, and shall
cause each of their Subsidiaries to, comply in all material respects with all
applicable statutes, regulations and orders
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of, and all applicable restrictions imposed by, all governmental bodies,
domestic or foreign, the noncompliance with which would be materially adverse to
the conduct of their business and the ownership of their property (including
applicable statutes, regulations, orders and restrictions relating to
environmental standards and controls and Krispy Kreme's franchising activities)
except where any Borrower contests such compliance in good faith and with due
diligence in appropriate proceedings, and against which the Borrowers will
establish and maintain such reserves as may be required, and in such amounts, as
provided for in Section 11.15.
7.13 Assets in Borrowers. Except as otherwise permitted herein, all
assets relating to the business of the Borrowers shall continue to be owned by
the Borrowers during the term hereof as presently owned.
7.14 Primary Deposit Relationship. Each Borrower shall, and shall cause
each of its Subsidiaries to, maintain its primary deposit relationship with
Lender. Notwithstanding the foregoing, neither ▇▇▇▇▇▇▇▇'▇, HD Capital nor HD
Development shall be required to maintain its primary deposit relationship with
Lender.
ARTICLE VIII
NEGATIVE COVENANTS
Until payment in full of all the Obligations, the Borrowers covenant
and agree that, unless the Lender otherwise consents in writing, the Borrowers
will not, and the Borrowers will not permit any of their Subsidiaries to,
individually or in the aggregate:
8.1 Merger and Dissolution. (a) Wind-up, liquidate or dissolve;
provided, however, that a Subsidiary may wind-up, liquidate or dissolve into the
corporation owning and controlling such Subsidiary, (b) except with respect to a
merger, consolidation or reorganization in which a Borrower or Subsidiary is the
surviving corporation, enter into any consolidation, merger, syndicate or other
combination, provided that the number of voting shares of capital stock of such
Borrower or Subsidiary, outstanding immediately after any such consolidation,
merger, syndicate or other combination, plus the number of voting shares of
capital stock issuable as a result of such transaction by such Borrower or
Subsidiary, will not exceed by more than twenty percent (20%) the total number
of voting shares of capital stock of such Borrower or Subsidiary outstanding
immediately prior to such transaction, or (c) sell, lease or dispose of, in a
single transaction or a series of related transactions, its business or assets
as a whole or such part as in the opinion of the Lender constitutes a
substantial portion of a Borrower's or Subsidiary's business or assets.
8.2 Acquisitions. Acquire the business or all or a substantial portion
of the assets of any Person, whether by purchase of stock, assets or otherwise,
except for acquisitions of bakery and franchise operations.
8.3 Indebtedness. Be liable, directly or indirectly, contingently
(whether or not pursuant to any suretyship arrangement, endorsement or guaranty)
or otherwise, in respect of any
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obligation for money borrowed or owed, including Capital Lease Obligations,
except for: (a) the Obligations owed under this Agreement, the other Loan
Documents and other credit arrangements with the Lender; (b) business expenses
and current trade accounts payable incurred or accrued by a Borrower or a
Subsidiary in the ordinary course of its business, including liabilities under
operating leases (but not Capital Leases) of real or personal property, and
non-extraordinary expenses and payables; provided that the same shall be paid
when due in accordance with customary trade terms unless contested by
appropriate proceedings and against which the Borrowers will establish and
maintain such reserves as may be required, and in such amounts, as provided for
in Section 11.15, (c) indebtedness secured by Permitted Liens; (d) vehicle
financing; (e) the liabilities and obligations set forth on Schedule 8.6; (f)
unsecured obligations for money borrowed after the Termination Date, except for
intercompany obligations between the Borrowers and Subsidiaries as addressed in
(g) below; and (g) unsecured obligations for money borrowed from a Subsidiary
(which is not a Borrower) in connection with which the rights of such Subsidiary
with respect to such obligations are subordinated in full to Lender and Lender's
rights to receive payment in full of all of the Obligations.
8.4 Liens and Encumbrances. Except for Permitted Liens, create, assume
or suffer to exist any deed of trust, mortgage, encumbrance or other lien
(including a lien of attachment, judgment or execution) or security interest
(including the interest of a conditional seller of goods), securing a charge or
obligation on any of its property, real or personal, whether now owned or
hereafter acquired.
8.5 Disposition of Assets. Sell, lease, transfer, convey or otherwise
dispose of any of its assets or properties, including, without limitation, the
Realty, except for (a) sales of inventory and other assets in the ordinary
course of business; (b) the trade-in or disposition of used equipment for
replacement equipment or the disposition of obsolete equipment, regardless of
its replacement; (c) sales or leases of surplus Realty and other surplus assets
from time to time, in connection with the closing and/or relocation of doughnut
shops and other facilities or otherwise; (d) sales or leases of Realty and other
assets to franchisees in connection with its franchising practices in effect
from time to time; and (e) sales of Realty, signage, equipment, fixtures and
other assets in connection with the immediate leaseback of each such item so
sold from the party to whom such items were sold, but only if each such lease
shall be treated under Generally Accepted Accounting Principles as an operating
lease rather than a Capital Lease; provided, however, that the sales or other
dispositions permitted in subparts (a) through (e) above shall not be a part of
or related to (1) a plan or a series of related plans by which any Borrower is
closing, in the opinion of Lender, a substantial portion of its doughnut shops
or other facilities, or transferring such to another Person, or (2) the
cessation of business operations by such Borrower or Subsidiary. Lender reserves
the right, with respect to the sale/leaseback transactions referred to in
subpart (e) above, to review all such transactions from the standpoint of the
asset base of the Borrowers and the overall leverage of each such Borrower, and
to modify or eliminate subpart (e) above.
8.6 Restricted Loans. Make loans or advances to, or guaranty or
otherwise become liable for the obligations of, any Person except for: (i) loans
or advances to employees, directors or franchisees not exceeding $3,000,000.00
in the aggregate amount outstanding which loans are
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contemporaneously properly documented and are reflected in such Borrower's or
Subsidiary's records, or for reasonable travel and business expenses incurred in
the ordinary course of business; (ii) deposits and prepaid expenses incurred in
the ordinary course of business; (iii) equipment and stock repurchase agreements
not exceeding $10,000,000.00 in the aggregate amount outstanding, without the
consent of Lender, with respect to which the Borrowers' shall provide monthly
detailed reporting as to such matters related thereto as Lender shall require;
and (iv) in addition to the repurchase agreements described in (iii), other
guaranties not exceeding $7,000,000.00 in the aggregate amount outstanding,
without the consent of Lender, with respect to which the Borrowers' shall
provide monthly detailed reporting as to such matters related thereto as Lender
shall require. Notwithstanding the foregoing, the $10,000,000.00 limitation
described in subpart (iii) above may be increased by the amount by which the
$7,000,000.00 limitation described in subpart (iv) above exceeds the actual
amount of all such guaranties described in such subpart outstanding from time to
time, in which event the amount over $10,000,000.00 shall be used in determining
compliance with the $7,000,000.00 limitation in (iv). The limitations described
in subparts (iii) and (iv) above shall apply to any and all loans or other
advances made by Lender (other than pursuant to this Agreement), in addition to
loans and advances by third parties. The amounts of permitted loans, advances or
guaranties described in this Section shall not serve to reduce availability
under the Revolving Line of Credit. Schedule 8.6 sets forth a detailed listing
of all such loans, advances, guaranties and other obligations as of the date
thereof.
8.7 Restrictions on Dividends. Except as set forth below, declare or
pay any dividends (other than dividends payable solely in its own Stock) upon
any of its Stock, except that annual cash dividends in the aggregate amount of
up to fifty percent (50%) of the Borrowers' Net Income (after tax) for the
immediate preceding fiscal year may be distributed annually to Krispy Kreme's
shareholders.
8.8 Restrictions on Redemptions. Purchase, redeem, retire or otherwise
acquire, directly or indirectly, any shares of its Stock or, except as provided
in Section 8.7, make any distribution of cash, property or assets among the
holders of shares of its Stock or make any material change in its capital
structure except that Krispy Kreme may redeem, retire, purchase or otherwise
acquire any shares of its Stock pursuant to (i) the Stock Purchase Agreement
dated July 1, 1984, as amended, by and among Krispy Kreme and all of its current
shareholders, a copy of which is attached as Exhibit E, or (ii) any similar
agreement by and among Krispy Kreme and any permitted transferee of shares of
Stock of Krispy Kreme which was or will be entered into after the execution of
the Stock Purchase Agreement described in subpart (i), so long as such
additional agreements or arrangements serve the same principal purpose as the
Stock Purchase Agreement described above.
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8.9 Capital Expenditures. Until the Termination Date, make any
expenditure for Capital Assets during any fiscal year if, after giving effect to
such expenditures, the aggregate amount of all such expenditures on a
consolidated basis during such fiscal year shall exceed the sum of
$12,000,000.00; provided however, that any such expenditures financed
exclusively with the proceeds of the Revolving Line of Credit, the Term Loan or
a Conversion Loan shall be unrestricted; and, after the Termination Date, make
any expenditure for Capital Assets in any fiscal year in an amount in excess of
175% of the amount of charges to operations during the immediately preceding
fiscal year for depreciation of fixed assets and amortization of improvements.
8.10 Consolidated Tangible Net Worth. Permit Consolidated Tangible Net
Worth as of the last day of any fiscal month of the Borrowers during the
following periods to be less than the following amounts:
Period Amount
------ ------
As of Closing $36,000,000
As of 1/31/1999 - 1/29/2000 $41,000,000
As of 1/30/2000 - 1/27/2001 $48,000,000
As of 1/28/2001 - 1/26/2002 $54,000,000
As of 1/27/2002 and through $60,000.000
the term of this Agreement
8.11 Cash Flow. Permit the ratio of Operating Cash Flow to Debt Service
Requirements at the end of any fiscal year to be less than 1.5 to 1.0.
8.12 Current Ratio. Permit the ratio of Current Assets to Current
Liabilities as of the last day of any fiscal month to be less than 1.25 to 1.0.
8.13 Total Liabilities to Net Worth. Permit the ratio of Total
Liabilities to Consolidated Tangible Net Worth as of the last day of any fiscal
month to be greater than 1.25 to 1.0.
8.14 New Business. Except for the development and sale of new products
and the sale and leasing of doughnut shops and equipment to franchisees and
others, engage in any business other than the business in which the Borrowers
are currently engaged or a business reasonably related thereto, change its name
or do business under any other name other than its corporate name except for
those set forth on Schedule 6.15 and new tradenames, trademarks and service
marks adopted by the Borrowers or any of them.
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8.15 Subsidiaries or Partnerships. Except as set forth below, become a
partner or joint venturer in any partnership or joint venture or create or
acquire any Subsidiary or transfer any assets to a Subsidiary which does not
become a party to this Agreement and the other Loan Documents as a joint and
several co-obligor with the Borrowers. The foregoing restriction shall not apply
to (i) any partnership, joint venture or other similar arrangement pursuant to
which new doughnut shops are developed or alliances are made with either
existing or future franchisees, or (ii) ▇▇▇▇▇▇▇ Enterprises, Inc. The Borrowers
shall promptly notify Lender of the formation or acquisition of any Subsidiary.
At the time any new Subsidiary becomes a party to this Agreement and the other
Loan Documents, the Subsidiary's liability hereunder shall be primary and
unconditional (as described in Section 4.11) as to all Obligations, whether such
Obligations were incurred prior to the formation or acquisition of such
Subsidiary and it becoming a party to this Agreement and the other Loan
Documents or thereafter, as if such Subsidiary was an original party to this
Agreement and the other Loan Documents. All representations and warranties made
in this Agreement and in any other Loan Document shall be deemed to refer to any
such new Subsidiary as if it were an original party hereto and to the other Loan
Documents.
8.16 Material Adverse Transactions. Enter into any transaction that
materially and adversely affects or would or could materially adversely affect
the ability of any Borrower to repay any Indebtedness or the Obligations.
8.17 Hazardous Wastes. Permit any Hazardous Substances, the removal of
which is required or the maintenance of which is restricted, prohibited or
penalized by any federal, state or local agency, authority or governmental unit,
to be brought on to or located on the Realty or any other real property owned or
leased by any Borrower or Subsidiary, except in full compliance with all
applicable laws; and if any such material is brought or found located thereon in
violation of any applicable law, it shall be immediately removed, with proper
disposal, and all required environmental cleanup procedures shall be diligently
undertaken pursuant to all such laws, ordinances and regulations except where
contested in good faith and with due diligence in appropriate proceedings, and
against which the Borrowers will establish and maintain such reserves as may be
required, and in such amounts, as provided for in Section 11.15; provided,
however, nothing in the Loan Documents shall require any Borrower to undertake
remediation activities with respect thereto unless required by applicable law.
8.18 Change in Management. Allow any material change to occur in the
composition of the executive management personnel of Krispy Kreme as set forth
on Schedule 8.18.
8.19 Share Ownership of Subsidiaries. Allow the issued and outstanding
Stock of any Borrower (other than Krispy Kreme) to be owned by any Person other
than a Borrower.
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ARTICLE IX
EVENTS OF DEFAULT
9.1 Events of Default. The occurrence of any one or more of the
following events shall constitute an "Event of Default":
(a) Any Borrower fails to pay when due any principal of,
interest on or any other costs or fees relating to the Obligations as
and when the same become due and payable and the same is not cured
within ten (10) Business Days after written notice from the Lender of
such failure;
(b) Any Borrower or Subsidiary fails or neglects to observe,
perform or comply with any term, provision, condition or covenant
contained in Section 7.4 or Article VIII (with the exception of Section
8.4) of this Agreement upon written notice from the Lender;
(c) Any Borrower or Subsidiary fails or neglects to observe,
perform or comply, in any material respect, with any other term,
provision, condition or covenant contained in this Agreement or the
Loan Documents, and the same is not cured to the Lender's satisfaction
within thirty (30) days after written notice from the Lender;
(d) If any representation or warranty made in writing by or on
behalf of the Borrowers in this Agreement, the other Loan Documents or
any certificate, financial statement or instrument or document
delivered in connection therewith, or in any other agreement now
existing or hereafter executed between any Borrower and the Lender, or
in connection with the transactions contemplated hereby or thereby,
shall prove to have been false or incorrect in any material respect;
(e) The occurrence of any default or event of default on the
part of any Borrower or Subsidiary under the terms of any agreement or
contract that is material to the affairs, financial or otherwise, of
such Borrower or Subsidiary and such agreement or contract is
terminated as a result of such default or event of default;
(f) The occurrence of a default under any of the Loan
Documents or in any other agreement between Lender and any Borrower or
Subsidiary, now existing or hereafter executed;
(g) The filing by any Borrower or Subsidiary of any voluntary
petition seeking liquidation, reorganization, arrangement, readjustment
of debts or for any other relief under the Bankruptcy Code or under any
other act or law pertaining to insolvency or debtor relief, whether
state, federal or foreign, now or hereafter existing;
(h) The filing against any Borrower or Subsidiary of any
involuntary petition seeking liquidation, reorganization, arrangement,
readjustment of debts or for any other
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relief under the Bankruptcy Code or under any other act or law
pertaining to insolvency or debtor relief, whether state, federal or
foreign, now or hereafter existing, which petition is not dismissed
within sixty (60) days of the date of filing;
(i) Any Borrower or Subsidiary is enjoined, restrained or in
any way prevented by court order from conducting all or any material
part of its business affairs;
(j) A notice of lien, levy or assessment is filed of record
against any material portion of the assets of any Borrower or
Subsidiary by the United States, or any department, agency or
instrumentality thereof, or by any state, county, municipal or other
governmental agency, and such lien, levy or assessment is not
dismissed, released or discharged within seventy-five (75) days, or if
any taxes (in the amount of $100,000 or greater) or debts owing at any
time or times hereafter by any one of them becomes a lien or
encumbrance upon any asset of any Borrower or Subsidiary and the same
is not dismissed, released or discharged within thirty (30) days after
the same becomes a lien or encumbrance or, in the case of ad valorem
taxes, prior to the last day when payment may be made without penalty,
except with respect to liens, levies, assessments, taxes or debts being
contested in good faith and with due diligence, and with respect
thereto the Borrowers have established such reserves, if any, as may be
required by this Agreement;
(k) The entry of a judgment or the issuance of a warrant of
attachment, execution or similar process against any Borrower or
Subsidiary or involving or respecting any material asset or material
portion of the assets of any Borrower or Subsidiary, which shall not be
dismissed, discharged or bonded within forty-five (45) days;
(l) A custodian, trustee, receiver or assignee for the benefit
of creditors is appointed or takes possession of any material asset or
material portion of the assets of any Borrower or Subsidiary;
(m) The transfer, pledge or other disposition of any of the
Stock of any Subsidiary by Krispy Kreme or any Subsidiary which is the
owner thereof after the Closing;
(n) Any Borrower or Subsidiary shall be required under
applicable federal, state or local laws, rules, regulations or orders
to clean-up or cause to be cleaned up or bear the cost of cleaning up,
any Hazardous Substance, the cost of which may reasonably be expected
to exceed five percent (5%) of Consolidated Tangible Net Worth; or
(o) Except as set forth below, the occurrence of any "change
of control" of Krispy Kreme. For purposes of this provision, the term
"change of control" shall mean the occurrence of a change in the power
to direct the voting rights of greater than fifty percent (50%) of any
class of outstanding voting shares of Stock of Krispy Kreme, which
includes a sale, exchange, transfer or other disposition of the Stock
of Krispy Kreme. Excluded from the foregoing definition shall be (i)
inter vivos and testamentary transfers
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to lineal decedents of existing shareholders, and (ii) any change of
control which results solely by virtue of a public distribution of
Stock by Krispy Kreme in compliance with the Securities Act of 1933, as
amended, and all applicable state "blue sky" laws, the primary purpose
of which is to increase Krispy Kreme's working capital and to provide
liquidity to its shareholders, provided that the Borrowers remain in
compliance with all other terms and conditions of this Agreement
following any such change of control.
ARTICLE X
RIGHTS AND REMEDIES AFTER EVENT OF DEFAULT
10.1 Rights and Remedies. Following the occurrence of any Event of
Default which has not been expressly waived in writing by Lender:
(a) Termination of Commitment. The Lender may terminate its
obligation to make continued credit available to the Borrowers
hereunder; and upon the occurrence of an Event of Default pursuant to
Sections 9.1(g), (h) or (l), the Lender's obligation to make Loans or
advances hereunder shall automatically be deemed terminated.
(b) Acceleration of Indebtedness. The Lender may declare all
or any part of the Obligations immediately due and payable, whereupon
such Obligations shall become immediately due and payable without
presentment, demand, protest, notice or legal process of any kind, all
of which are hereby expressly waived by the Borrowers; provided,
however, that all Obligations shall automatically become due and
payable upon the occurrence of an Event of Default pursuant to Sections
9.1(g), (h) or (l).
(c) Rights of Collection. The Lender shall have the right to
exercise all of its rights and remedies under this Agreement, the other
Loan Documents and applicable law, in order to satisfy the Obligations.
(d) Right of Set-Off. The Lender may, and is hereby authorized
by the Borrowers, and the Borrowers shall cause each of their
Subsidiaries to authorize the Lender to, at any time and from time to
time, to the fullest extent permitted by applicable laws, without
advance notice to any Borrower or Subsidiary (any such notice being
expressly waived by each Borrower and Subsidiary), set-off and apply
any and all deposits (general or special, time or demand, provisional
or final) at any time held in other than a fiduciary account and any
other indebtedness at any time owing by Lender to or for the credit or
the account of any Borrower or Subsidiary against any or all of the
Obligations of any Borrower or Subsidiary now or hereafter existing,
whether or not such Obligations have matured. The Lender agrees
promptly to notify the applicable Borrower or Subsidiary after the
occurrence of any such setoff, provided that the failure to give such
notice shall not affect the validity of such setoff.
10.2 Rights and Remedies Cumulative; Non-Waiver, etc. The enumeration
of the Lender's rights and remedies set forth in this Agreement is not intended
to be exhaustive and the
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exercise by the Lender of any right or remedy shall not preclude the exercise of
any other rights or remedies, all of which shall be cumulative, and shall be in
addition to any other right or remedy given hereunder, under the Loan Documents
or under any other agreement between any Borrower and the Lender, which may now
or hereafter exist, or at law or in equity or by suit or otherwise. No delay or
failure to take action on the part of the Lender in exercising any right, power
or privilege shall operate as a waiver thereof, nor shall any single or partial
exercise of any such right, power or privilege preclude any other or further
exercise thereof or the exercise of any other right, power or privilege or shall
be construed to be a waiver of any Event of Default. No course of dealing
between any Borrower and the Lender or their agents or employees shall be
effective to change, modify or discharge any provision of this Agreement or to
constitute a waiver of any Event of Default.
ARTICLE XI
MISCELLANEOUS
11.1 Survival of Agreements. All agreements, representations and
warranties contained herein or made in writing by or on behalf of the parties in
connection with the transactions contemplated hereby shall survive the execution
and delivery of this Agreement and the other Loan Documents. No termination or
cancellation (regardless of cause or procedure) of this Agreement shall in any
way affect or impair the powers, obligations, duties, rights and liabilities of
the parties hereto in any way with respect to (a) any transaction or event
occurring prior to such termination or cancellation, or (b) the Borrowers' (on
their own behalf and on behalf of their Subsidiaries) undertakings, agreements,
covenants, warranties and representations contained in this Agreement and the
other Loan Documents and all such undertakings, agreements, covenants,
warranties and representations shall survive such termination or cancellation
until payment in full of the Obligations. Each Borrower further agrees that to
the extent any Borrower makes a payment or payments to the Lender, which payment
or payments or any part thereof are subsequently invalidated, declared to be
fraudulent or preferential, set aside or required to be repaid to a trustee,
receiver or any other party under any bankruptcy, insolvency or similar state or
federal law, common law or equitable cause, then, to the extent of such payment
or repayment, the Obligation or part thereof intended to be satisfied shall be
revived and continued in full force and effect as if such payment had not been
received by the Lender. Notwithstanding any other provision of this Agreement to
the contrary, in the event any Letter of Credit Obligation or Credit Card
Obligation is outstanding as of the Termination Date, and such Letter of Credit
Obligation or Credit Card Obligation shall remain outstanding, then with respect
to each such outstanding and continuing Letter of Credit Obligation or Credit
Card Obligation, this Agreement shall remain in full force and effect as to the
Borrowers until all such Letter of Credit Obligations, Credit Card Obligations
and other Obligations of the Borrowers to Lender have been paid in full, and in
the event that there are no other Obligations of the Borrowers to Lender
remaining outstanding as of such time except for the Letter of Credit
Obligations or Credit Card Obligations, Lender shall have no further obligations
hereunder. All Letter of Credit Obligations and Credit Card Obligations shall be
subject to the terms and conditions of this Agreement, in addition to the terms
and conditions of any other agreement, document or instrument entered into
between Lender and any such Borrower with respect thereto.
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11.2 Governing Law; Jurisdiction. THIS AGREEMENT HAS BEEN EXECUTED,
DELIVERED AND ACCEPTED AT, AND SHALL BE DEEMED TO HAVE BEEN MADE IN, NORTH
CAROLINA AND SHALL BE INTERPRETED, AND THE RIGHTS AND LIABILITIES OF THE PARTIES
HERETO DETERMINED, IN ACCORDANCE WITH THE INTERNAL LAWS (AS OPPOSED TO CONFLICTS
OF LAW PROVISIONS) OF THE STATE OF NORTH CAROLINA. AS PART OF THE CONSIDERATION
FOR NEW VALUE THIS DAY RECEIVED, THE BORROWERS CONSENT TO THE JURISDICTION OF
ANY STATE COURT WITHIN FORSYTH COUNTY, NORTH CAROLINA OR ANY FEDERAL COURT
LOCATED WITHIN THE MIDDLE DISTRICT OF THE STATE OF NORTH CAROLINA, FOR ANY
PROCEEDING TO WHICH THE LENDER IS A PARTY, AND CONSENTS THAT ALL SERVICE OF
PROCESS BE MADE BY REGISTERED OR CERTIFIED MAIL DIRECTED TO THE BORROWERS OR ANY
OF THEM AT THE ADDRESS STATED IN SECTION 11.3 BELOW AND SERVICE SO MADE SHALL BE
DEEMED TO BE COMPLETED UPON THE ACTUAL RECEIPT THEREOF. NOTHING IN THIS SECTION
SHALL AFFECT THE RIGHT OF THE LENDER TO SERVE LEGAL PROCESS IN ANY OTHER MANNER
PERMITTED BY LAW OR AFFECT THE RIGHT OF THE LENDER TO BRING ANY ACTION OR
PROCEEDING AGAINST ANY BORROWER OR ANY BORROWER'S PROPERTY IN THE COURTS OF ANY
OTHER JURISDICTION THAT HAS JURISDICTION OVER ANY BORROWER OR ITS PROPERTY OR
THE RIGHT OF ANY SUCH BORROWER TO CONTEST SUCH JURISDICTION.
11.3 Notice. All notices and other communications hereunder shall be in
writing and shall be deemed to have been validly served, given or delivered
three (3) Business Days after deposit in the United States mail, certified mail,
return receipt requested, with postage prepaid, and addressed to the party to be
notified as follows:
To Any Borrower: ▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇., ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇-▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: President
With Copies To: Krispy Kreme Doughnut Corporation (if Krispy
Kreme is not the Borrower to whom the
original notice was intended)
▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇., ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇-▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇, ▇▇. Vice-President - Finance
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To Lender: Branch Banking and Trust Company
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇-▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
or to such other address as each party may designate for itself by like notice,
or shall be deemed to have been validly served, given or delivered on the date
of delivery to such party at such address if notice is given or delivered by
overnight delivery service or by hand delivery.
11.4 Indemnification of the Lender. From and at all times after the
date of this Agreement, and in addition to all of the Lender's other rights and
remedies against the Borrowers or any Subsidiary, the Borrowers, jointly and
severally, agree to indemnify and hold harmless the Lender and each director,
officer, employee, agent and Affiliate of the Lender against any and all claims,
losses, damages, liabilities, costs, and expenses of any kind or nature
whatsoever (including without limitation attorneys' fees, costs and expenses)
incurred by or asserted against the Lender or any such director, officer,
employee, agent or Affiliate of the Lender, from and after the date hereof, as a
result of or arising from or any way relating to (a) any breach or violation of
this Agreement or any other Loan Document by any Borrower or Subsidiary; (b) any
breach of any of the representations, warranties or covenants made in this
Agreement or any other Loan Document by any Borrower; (c) any breach of any of
the representations, warranties or covenants made in this Agreement or any other
Loan Document by any Borrower in connection with the closing of any Conversion
Loan or the making of any advance, other than any advances to be made at Closing
under the Revolving Line of Credit, subject to the standards set forth in
Sections 5.4(a) and 5.5(a); or (d) any inaccuracy or misrepresentation in any of
the Schedules attached to this Agreement or in any other Loan Document delivered
in connection with this Agreement (whether delivered at Closing or thereafter).
11.5 Fees and Expenses. Whether or not the transactions contemplated by
this Agreement shall be consummated, the Borrowers shall, jointly and severally,
be obligated:
(a) Fees and Expenses. As provided below, to pay or reimburse
the Lender upon demand for all expenses (including, without limitation,
attorneys' fees) incurred or paid by the Lender (except salaries of the
Lender's regularly employed personnel) in connection with: (i) the
preparation, execution, delivery, modification or amendment of this
Agreement or the other Loan Documents; (ii) following an Event of
Default, charges for appraisers, examiners, environmental consultants,
auditors or similar Persons whom the Lender may engage with respect to
rendering opinions concerning the financial condition of the Borrowers
and their Subsidiaries or the condition of any of their assets; (iii)
any attempt to enforce, or the enforcement of, any rights of the Lender
against any Borrower or any other Person that may be obligated to the
Lender by virtue of this Agreement or the other Loan Documents; and (v)
any refinancing or restructuring of the credit arrangements provided
under this Loan Agreement in the nature of a "work-out" or in any
insolvency or bankruptcy proceeding. Lender will submit invoices to
Borrowers for all such fees and expenses which will be mutually agreed
upon and paid by the Borrowers.
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(b) Brokerage Fees. To hold the Lender harmless from and
against any and all finder's or brokerage fees and commissions that may
be payable in connection with the transactions contemplated by this
Agreement other than any fees or commissions of finders or brokers
engaged by the Lender.
11.6 Waivers by the Borrower. Except as otherwise provided for in this
Agreement or the other Loan Documents, each Borrower hereby waives (a)
presentment, demand and protest and notice of presentment, protest, default,
non-payment, maturity, intent to accelerate and all other notices; and (b) the
benefit of all valuation, appraisement and exemption laws.
11.7 Assignment and Sale. No Borrower may sell, assign or transfer this
Agreement, or the other Loan Documents or any portion thereof, including without
limitation, any Borrower's rights, title, interests, remedies, powers and duties
hereunder or thereunder.
11.8 Amendment. This Agreement and the other Loan Documents may only be
amended, changed, discharged or terminated, by an instrument in writing signed
by the Lender and each of the Borrowers. Any provision hereof or thereof may be
waived by an instrument signed by the party to be charged.
11.9 Severability. To the extent any provision of this Agreement is
prohibited by or invalid under applicable law, such provision shall be
ineffective to the extent of such prohibition or invalidity, without
invalidating the remainder of such provision or the remaining provisions of this
Agreement.
11.10 Entire Agreement. This Agreement and the other documents,
certificates and instruments referred to herein constitute the entire
understanding and agreement between the parties and supersede and rescind any
prior agreements relating to the subject matter hereof.
11.11 Binding Effect. All of the terms of this Agreement and the other
Loan Documents, as the same may from time to time be amended, shall be binding
upon, inure to the benefit of and be enforceable by the successors and assigns
of the Lender and the successors and permitted assigns of the Borrowers.
11.12 Captions. The captions to the various sections and subsections of
this Agreement have been inserted for convenience only and shall not limit or
affect any of the terms hereof.
11.13 Conflicts of Terms. The provisions of the Exhibits and Schedules
hereto and the other Loan Documents are incorporated in this Agreement by this
reference thereto. Except as otherwise provided in this Agreement and except as
otherwise provided in the other Loan Documents, if any provision contained in
this Agreement is in conflict with, or inconsistent with, any provision of the
other Loan Documents, the provisions contained in this Agreement shall control.
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11.14 Injunctive Relief. The Borrowers recognize that in the event any
of them fail to perform, observe or discharge any of their obligations or
liabilities under this Agreement, any remedy at law may prove to be inadequate
relief to the Lender. Each Borrower therefore agrees that Lender, if the Lender
so requests, shall be entitled to temporary and permanent injunctive relief in
any case where a remedy at law may prove to be inadequate relief.
11.15 Reserves. Whenever this Agreement requires the establishment and
maintenance of reserves by a Borrower or Subsidiary, such reserves shall be
reasonable and adequate under the circumstances and may, at the Borrower's
option, include available funds under the Revolving Line of Credit.
11.16 Third Parties Not Benefited. All conditions to the obligations of
Lender, including the obligation to make advances, are imposed solely and
exclusively for the benefit of the Borrowers and no other person or entity shall
have standing to require satisfaction of such conditions in accordance with
their terms or be entitled to assume that Lender will refuse to make advances in
the absence of strict compliance with any or all thereof, and no other person or
entity shall, under any circumstances, be deemed to be a beneficiary of such
conditions, any and all of which may be freely waived in whole or in part by
Lender at any time if in its sole discretion it deems it desirable to do so.
11.17 No Agency. Lender is not the agent or representative of any
Borrower or Subsidiary, and no Borrower or Subsidiary is the agent or
representative of Lender, and nothing in this Agreement shall be construed to
make Lender liable to anyone with whom any Borrower or Subsidiary deals.
11.18 No Partnership or Joint Venture. Nothing herein nor the acts of
the parties hereto shall be construed to create a partnership or joint venture
between any Borrower or Subsidiary and Lender.
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IN WITNESS WHEREOF, the parties have caused this Agreement to be
executed in their corporate names by their duly authorized corporate officers as
of the date first above written.
LENDER:
BRANCH BANKING AND TRUST COMPANY
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
-------------------------------------------
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Vice President
BORROWERS:
KRISPY KREME DOUGHNUT CORPORATION
By: /s/ J. ▇▇▇▇ ▇▇▇▇▇▇▇▇▇
-------------------------------------------
Name: J. ▇▇▇▇ ▇▇▇▇▇▇▇▇▇
Title: Executive Vice President - Corporate
Development, Finance and Administration
▇▇▇▇▇▇▇▇'▇ ▇▇▇▇-▇-▇▇▇▇ BAKERY,
INCORPORATED
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
-------------------------------------------
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: Vice President
KRISPY KREME DISTRIBUTING COMPANY,
INCORPORATED
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
-------------------------------------------
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: Vice President
KRISPY KREME DOUGHNUTS COMPANY
By: /s/ ▇▇▇▇ ▇▇▇▇▇
-------------------------------------------
Name: ▇▇▇▇ ▇▇▇▇▇
Title: President
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HD CAPITAL CORPORATION
By: /s/ ▇▇▇▇ ▇▇▇▇▇
-------------------------------------------
Name: ▇▇▇▇ ▇▇▇▇▇
Title: President
HDN DEVELOPMENT CORPORATION
By: /s/ ▇▇▇▇ ▇▇▇▇▇
-------------------------------------------
Name: ▇▇▇▇ ▇▇▇▇▇
Title: President
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FIRST AMENDMENT
TO
AMENDED AND RESTATED LOAN AGREEMENT
THIS AMENDMENT is made effective as of the 28th day of April, 1999, by
and among BRANCH BANKING AND TRUST COMPANY, a North Carolina banking corporation
("Lender"), KRISPY KREME DOUGHNUT CORPORATION, a North Carolina corporation,
▇▇▇▇▇▇▇▇'▇ ▇▇▇▇-▇-▇▇▇▇ BAKERY, INCORPORATED, a North Carolina corporation,
KRISPY KREME DISTRIBUTING COMPANY, INCORPORATED, a North Carolina corporation,
KRISPY KREME DOUGHNUTS COMPANY, a North Carolina corporation, HD CAPITAL
CORPORATION, a Delaware corporation, and HDN DEVELOPMENT CORPORATION, a Kentucky
corporation (collectively, the "Borrowers").
R E C I T A L S:
A. Lender has extended to the Borrowers certain credit facilities as
described in and governed by that certain Amended and Restated Loan Agreement by
and among the parties dated December 21, 1998 (the "Loan Agreement").
B. The parties desire to amend the Loan Agreement as set forth below.
NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which are acknowledged, the parties amend the Loan Agreement as
follows:
1. Section 8.6 of the Loan Agreement, entitled "Restricted Loans," is
amended by deleting the reference to $3,000,000 in subclause (i) and
substituting in lieu thereof the sum of $5,000,000.
2. Except as otherwise specifically set forth herein, all of the other
terms and conditions of the Loan Agreement shall remain in full force and
effect, as amended hereby, and are ratified and affirmed by the parties.
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IN WITNESS WHEREOF, the parties have executed this Amendment as of the
date written above.
LENDER:
BRANCH BANKING AND TRUST COMPANY
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
-------------------------------------------
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Vice President
BORROWERS:
KRISPY KREME DOUGHNUT CORPORATION
By: /s/ J. ▇▇▇▇ ▇▇▇▇▇▇▇▇▇
-------------------------------------------
Name: J. ▇▇▇▇ ▇▇▇▇▇▇▇▇▇
Title: Executive Vice President - Corporate
Development, Finance and Administration
▇▇▇▇▇▇▇▇'▇ ▇▇▇▇-▇-▇▇▇▇ BAKERY,
INCORPORATED
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
-------------------------------------------
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: Vice President
KRISPY KREME DISTRIBUTING COMPANY,
INCORPORATED
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
-------------------------------------------
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: Vice President
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KRISPY KREME DOUGHNUTS COMPANY
By: /s/ ▇▇▇▇ ▇▇▇▇▇
-------------------------------------------
Name: ▇▇▇▇ ▇▇▇▇▇
Title: President
HD CAPITAL CORPORATION
By: /s/ ▇▇▇▇ ▇▇▇▇▇
-------------------------------------------
Name: ▇▇▇▇ ▇▇▇▇▇
Title: President
HDN DEVELOPMENT CORPORATION
By: /s/ ▇▇▇▇ ▇▇▇▇▇
-------------------------------------------
Name: ▇▇▇▇ ▇▇▇▇▇
Title: President
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