KKD » Topics » CONFIDENTIALITY, NON-COMPETITION AND NON-SOLICITATION

These excerpts taken from the KKD 10-K filed Apr 17, 2008.
CONFIDENTIALITY, NON-COMPETITION AND NON-SOLICITATION

     In conjunction with your investment in __________ (“Franchisee”) a ______________, the undersigned _________________ (“Owner”), acknowledges and agrees as follows:

     1. Franchisee owns and operates, or is developing, Krispy Kreme Stores pursuant to a development agreement dated ____________________, _________ (“Development Agreement”) with Krispy Kreme Doughnut Corporation (“Franchisor”), which Development Agreement requires persons with legal or beneficial ownership interests in Franchisee under certain circumstances to be personally bound by the confidentiality and noncompetition covenants contained in the Development Agreement. All capitalized terms contained herein shall have the same meaning set forth in the Development Agreement.

     2. Owner owns or intends to own a ______________ percent (__ %) legal or beneficial ownership interest in Franchisee and acknowledges and agrees that the execution of this Agreement is a condition to such ownership interest and that Owner has received good and valuable consideration for executing this Agreement. Franchisor may enforce this Agreement directly against Owner.

     3. Owner may gain access to information comprising Franchisor’s Confidential Information as a result of investing in Franchisee. The Confidential Information is proprietary and includes Franchisor’s trade secrets. Owner hereby agrees that while Owner has a legal or beneficial ownership interest in Franchisee and thereafter, Owner: (a) will not use the Confidential Information in any other business or capacity; (b) will maintain the confidentiality of the Confidential Information; and (c) will not make unauthorized copies of any portion of the Confidential Information, whether through electronic media, writings, or other tangible or intangible means of expression. Without limiting the foregoing, Owner (i) acknowledges that he/she may have access to Franchisor’s material non-public information and that of its parent, Krispy Kreme Doughnut Inc. (“KKDI”), and that the securities laws prohibit trading in KKDI securities while in possession of such information, and (ii) agrees to refrain from trading in KKDI securities in violation of such laws. If Owner ceases to have an interest in Franchisee, Owner must deliver to Franchisor any such Confidential Information in his/her possession or control.

     4. Notwithstanding anything to the contrary contained herein and provided Owner has obtained Franchisor’s prior written consent, the restrictions on Owner’s disclosure and use of the Confidential Information will not apply to the following:

      (a)       information, methods, procedures, techniques and knowledge which are or become generally known in the food service business, other than through disclosure (whether deliberate or inadvertent) by Franchisee, Franchisee’s Owners, agents, or employees; and
 
(b) the disclosure of the Confidential Information in judicial, arbitration or administrative proceedings to the extent that Owner is legally compelled to disclose such information, provided Owner has notified Franchisor prior to such disclosure and has used its best efforts to obtain, and has afforded Franchisor sufficient opportunity to seek an appropriate protective order and obtain, assurances satisfactory to Franchisor of confidential treatment for the information required to be so disclosed.

F-1


     5. Owner acknowledges and agrees that Franchisor would be unable to (a) protect the Confidential Information against unauthorized use or disclosure; (b) preserve the prestige, integrity, and goodwill of the Products, Marks, and System; or (c) encourage the free exchange of ideas and information among Krispy Kreme Stores and Commissary Facilities if franchisees and owners of Krispy Kreme Stores and Commissary Facilities or their owners were permitted to engage in or benefit from certain competitive activities. Therefore, except as expressly authorized by another written agreement with Franchisor, Owner agrees that during the term of the Development Agreement or during such time as Owner has an Ownership Interest in Franchisee (whichever is shorter), without Franchisor’s prior written consent, Owner shall not directly or indirectly (including through a Restricted Person):

      (i) have any Ownership Interest in a Competitive Business;
 
(ii) perform services as a director, officer, manager, partner, or supervisory or management-level employee, of any Competitive Business;
 
(iii)       perform services as an employee, consultant, representative, agent or otherwise for a Competitive Business, where such services could be reasonably expected to benefit, either directly or indirectly, whether financially or otherwise, from the disclosure of any Confidential Information to such Competitive Business;
 
(iv) recruit or hire any Person who is Franchisor’s employee or the employee of any Krispy Kreme Store or Commissary Facility, or who has been Franchisor’s employee or the employee of any Krispy Kreme Store or Commissary Facility within the past six (6) months without obtaining prior written permission from Franchisor and that Person’s employer. If Franchisor permits Owner to hire any such Person, then Owner agrees to pay Franchisor a non-refundable Management Development Fee in the amount of Twenty-Five Thousand Dollars ($25,000) per hired employee as of the date of hire; or
 
(v) induce or attempt to induce any Person who is Franchisor’s employee or the employee of any Krispy Kreme Store or Commissary Facility to discontinue working for Franchisor or such Krispy Kreme Store or Commissary Facility as the case may be.

     6. Upon termination of the Development Agreement or Owner’s Ownership Interest in Franchisee (whichever first occurs), Owner shall not directly or indirectly (including through a Restricted Person) for a period of two (2) years commencing on the effective date of such termination:

      (a)       have any Ownership Interest in a Competitive Business within the Development Area or within a radius of ten (10) miles of any Krispy Kreme Store or Commissary Facility then open or under construction;
 
(b) perform services as a director, officer, manager, partner, or supervisory or management-level employee, of any Competitive Business within the Development Area or within a radius of ten (10) miles of any Krispy Kreme Store or Commissary Facility then open or under construction;
 
(c) perform services as an employee, consultant, representative, agent or otherwise for a Competitive Business within the Development Area or within a radius of ten (10) miles of any Krispy Kreme Store or Commissary Facility then open or under construction, where such services could be reasonably expected to benefit, either directly or indirectly, whether financially or otherwise, from the disclosure of any Confidential Information to such Competitive Business;
 
(d) recruit or hire any Person who is Franchisor’s employee or the employee of any Krispy Kreme Store or Commissary Facility, or who has been Franchisor’s employee or the employee of any Krispy Kreme Store or Commissary Facility within the past six (6) months without obtaining prior written permission from Franchisor and that Person’s employer. If Franchisor permits Owner to hire any such Person, then Owner agrees to pay Franchisor a non-refundable Management Development Fee in the amount of Twenty-Five Thousand Dollars ($25,000) per hired employee as of the date of hire; or
 
(e) induce or attempt to induce any Person who is Franchisor’s employee or the employee of any Krispy Kreme Store or Commissary Facility to discontinue working for Franchisor or such Krispy Kreme Store or Commissary Facility as the case may be.

F-2


     7. Owner expressly acknowledges the possession of skills and abilities of a general nature and the opportunity to exploit such skills in other ways, so that enforcement of the covenants contained in Sections 5 and 6 of these covenants will not deprive him/her of his/her personal goodwill or ability to earn a living. If any covenant herein which restricts competitive activity is deemed unenforceable by virtue of its scope or in terms of geographic area, type of business activity prohibited and/or length of time, but could be rendered enforceable by reducing any part or all of it, Owner agrees that it will be enforced to the fullest extent permissible under applicable law and public policy. Franchisor may obtain in any court of competent jurisdiction any injunctive relief, including temporary restraining orders and preliminary injunctions, against conduct or threatened conduct for which no adequate remedy at law may be available or which may cause it irreparable harm. Owner acknowledges that any violation of Sections 4, 5, or 6 of these covenants would result in irreparable injury for which no adequate remedy at law may be available. If Franchisor files a claim to enforce this Agreement and prevails in such proceeding, Owner agrees to reimburse Franchisor for all its costs and expenses, including reasonable attorneys’ fees.

     8. Owner agrees that the U.S. District Court for the Middle District of North Carolina, or if such court lacks jurisdiction, the Superior Court (or its successor) for Forsyth County, North Carolina, shall be the venue and exclusive forum in which to adjudicate any case or controversy arising from or relating to these covenants. In the event a case or controversy is to be heard by the Superior Court (or its successor) for Forsyth County, North Carolina, any party may request that the matter be assigned to the North Carolina Business Court. Owner irrevocably submits to the jurisdiction of such courts and waives any objections to either the jurisdiction of or venue in such courts. Owner irrevocably waives, to the fullest extent he or she may lawfully do so, the defense of an inconvenient forum to the maintenance of such suit, action or proceeding and agrees that service of process for purposes of any such suit, action or proceeding need not be personally served or served within the State of North Carolina but may be served with the same effect as if he or she were served within the State of North Carolina, by certified mail or any other means permitted by law, addressed to Owner at the address set forth herein. Nothing contained herein shall affect Franchisor’s rights to bring a suit, action or proceeding in any other appropriate jurisdiction, including any suit, action or proceeding brought by Franchisor to enforce any judgment against Owner entered by a State or Federal Court.

     9. If Franchisor claims in any judicial proceeding that Owner has breached any of the covenants contained herein, and Franchisor prevails on such claims, then Franchisor shall be awarded its costs and expenses incurred in connection with such proceedings, including reasonable attorneys’ fees.

     IN WITNESS WHEREOF, the undersigned has executed and delivered this Agreement on the ___ day of _________, ______.

OWNER 
 
(Signature)   
 
(Print Name) 
 
 
(Address) 

F-3


CONFIDENTIALITY, NON-COMPETITION AND NON-SOLICITATION


     In
conjunction with your investment in __________ (“Franchisee”) a ______________,
the undersigned _________________ (“Owner”), acknowledges and agrees as
follows:


     1.
Franchisee owns and operates, or is developing, Krispy Kreme Stores pursuant to
a development agreement dated ____________________, _________ (“Development
Agreement”) with Krispy Kreme Doughnut Corporation (“Franchisor”), which
Development Agreement requires persons with legal or beneficial ownership
interests in Franchisee under certain circumstances to be personally bound by
the confidentiality and noncompetition covenants contained in the Development
Agreement. All capitalized terms contained herein shall have the same meaning
set forth in the Development Agreement.


     2. Owner
owns or intends to own a ______________ percent (__ %) legal or beneficial
ownership interest in Franchisee and acknowledges and agrees that the execution
of this Agreement is a condition to such ownership interest and that Owner has
received good and valuable consideration for executing this Agreement.
Franchisor may enforce this Agreement directly against Owner.


     3. Owner may
gain access to information comprising Franchisor’s Confidential Information as a
result of investing in Franchisee. The Confidential Information is proprietary
and includes Franchisor’s trade secrets. Owner hereby agrees that while Owner
has a legal or beneficial ownership interest in Franchisee and thereafter,
Owner: (a) will not use the Confidential Information in any other business or
capacity; (b) will maintain the confidentiality of the Confidential Information;
and (c) will not make unauthorized copies of any portion of the Confidential
Information, whether through electronic media, writings, or other tangible or
intangible means of expression. Without limiting the foregoing, Owner (i)
acknowledges that he/she may have access to Franchisor’s material non-public
information and that of its parent, Krispy Kreme Doughnut Inc. (“KKDI”), and
that the securities laws prohibit trading in KKDI securities while in possession
of such information, and (ii) agrees to refrain from trading in KKDI securities
in violation of such laws. If Owner ceases to have an interest in Franchisee,
Owner must deliver to Franchisor any such Confidential Information in his/her
possession or control.


     4. Notwithstanding anything to the
contrary contained herein and provided Owner has obtained
Franchisor’s prior written consent, the restrictions on
Owner’s disclosure and use of the Confidential Information will not apply to the
following:
















      (a)       information, methods,
procedures, techniques and knowledge which are or become generally known
in the food service business, other than through disclosure (whether
deliberate or inadvertent) by Franchisee, Franchisee’s Owners, agents, or
employees; and
 
(b) the disclosure of the
Confidential Information in judicial, arbitration or administrative
proceedings to the extent that Owner is legally compelled to disclose such
information, provided Owner has notified Franchisor prior to such
disclosure and has used its best efforts to obtain, and has afforded
Franchisor sufficient opportunity to seek an appropriate protective order
and obtain, assurances satisfactory to Franchisor of confidential
treatment for the information required to be so
disclosed.

F-1





     5. Owner acknowledges and agrees
that Franchisor would be unable to (a) protect the Confidential
Information against unauthorized use or disclosure; (b)
preserve the prestige, integrity, and goodwill of the Products, Marks, and
System; or (c) encourage the free exchange of ideas and information among Krispy
Kreme Stores and Commissary Facilities if franchisees and owners of Krispy Kreme
Stores and Commissary Facilities or their owners were permitted to engage in or
benefit from certain competitive activities. Therefore, except as expressly
authorized by another written agreement with Franchisor, Owner agrees that
during the term of the Development Agreement or during such time as Owner has an
Ownership Interest in Franchisee (whichever is shorter), without Franchisor’s
prior written consent, Owner shall not directly or indirectly (including through
a Restricted Person):








































      (i) have any
Ownership Interest in a Competitive Business;
 
(ii) perform
services as a director, officer, manager, partner, or supervisory or
management-level employee, of any Competitive
Business;
 
(iii)       perform
services as an employee, consultant, representative, agent or otherwise
for a Competitive Business, where such services could be reasonably
expected to benefit, either directly or indirectly, whether financially or
otherwise, from the disclosure of any Confidential Information to such
Competitive Business;
 
(iv) recruit
or hire any Person who is Franchisor’s employee or the employee of any
Krispy Kreme Store or Commissary Facility, or who has been Franchisor’s
employee or the employee of any Krispy Kreme Store or Commissary Facility
within the past six (6) months without obtaining prior written permission
from Franchisor and that Person’s employer. If Franchisor permits Owner to
hire any such Person, then Owner agrees to pay Franchisor a non-refundable
Management Development Fee in the amount of Twenty-Five Thousand Dollars
($25,000) per hired employee as of the date of hire;
or
 
(v) induce or
attempt to induce any Person who is Franchisor’s employee or the employee
of any Krispy Kreme Store or Commissary Facility to discontinue working
for Franchisor or such Krispy Kreme Store or Commissary Facility as the
case may be.

     6. Upon termination of the
Development Agreement or Owner’s Ownership Interest in Franchisee
(whichever first occurs), Owner shall not directly or
indirectly (including through a Restricted Person) for a period of two (2) years
commencing on the effective date of such termination:








































      (a)       have any
Ownership Interest in a Competitive Business within the Development Area
or within a radius of ten (10) miles of any Krispy Kreme Store or
Commissary Facility then open or under construction;
 
(b) perform
services as a director, officer, manager, partner, or supervisory or
management-level employee, of any Competitive Business within the
Development Area or within a radius of ten (10) miles of any Krispy Kreme
Store or Commissary Facility then open or under construction;

 
(c) perform
services as an employee, consultant, representative, agent or otherwise
for a Competitive Business within the Development Area or within a radius
of ten (10) miles of any Krispy Kreme Store or Commissary Facility then
open or under construction, where such services could be reasonably
expected to benefit, either directly or indirectly, whether financially or
otherwise, from the disclosure of any Confidential Information to such
Competitive Business;
 
(d) recruit
or hire any Person who is Franchisor’s employee or the employee of any
Krispy Kreme Store or Commissary Facility, or who has been Franchisor’s
employee or the employee of any Krispy Kreme Store or Commissary Facility
within the past six (6) months without obtaining prior written permission
from Franchisor and that Person’s employer. If Franchisor permits Owner to
hire any such Person, then Owner agrees to pay Franchisor a non-refundable
Management Development Fee in the amount of Twenty-Five Thousand Dollars
($25,000) per hired employee as of the date of hire; or

 
(e) induce or
attempt to induce any Person who is Franchisor’s employee or the employee
of any Krispy Kreme Store or Commissary Facility to discontinue working
for Franchisor or such Krispy Kreme Store or Commissary Facility as the
case may be.

F-2





     7. Owner
expressly acknowledges the possession of skills and abilities of a general
nature and the opportunity to exploit such skills in other ways, so that
enforcement of the covenants contained in Sections 5 and 6 of
these covenants will not deprive him/her of his/her personal goodwill or ability
to earn a living. If any covenant herein which restricts competitive activity is
deemed unenforceable by virtue of its scope or in terms of geographic area, type
of business activity prohibited and/or length of time, but could be rendered
enforceable by reducing any part or all of it, Owner agrees that it will be
enforced to the fullest extent permissible under applicable law and public
policy. Franchisor may obtain in any court of competent jurisdiction any
injunctive relief, including temporary restraining orders and preliminary
injunctions, against conduct or threatened conduct for which no adequate remedy
at law may be available or which may cause it irreparable harm. Owner
acknowledges that any violation of Sections 4, 5, or 6 of
these covenants would result in irreparable injury for which no adequate remedy
at law may be available. If Franchisor files a claim to enforce this Agreement
and prevails in such proceeding, Owner agrees to reimburse Franchisor for all
its costs and expenses, including reasonable attorneys’ fees.


     8. Owner
agrees that the U.S. District Court for the Middle District of North Carolina,
or if such court lacks jurisdiction, the Superior Court (or its successor) for
Forsyth County, North Carolina, shall be the venue and exclusive forum in which
to adjudicate any case or controversy arising from or relating to these
covenants. In the event a case or controversy is to be heard by the Superior
Court (or its successor) for Forsyth County, North Carolina, any party may
request that the matter be assigned to the North Carolina Business Court. Owner
irrevocably submits to the jurisdiction of such courts and waives any objections
to either the jurisdiction of or venue in such courts. Owner irrevocably waives,
to the fullest extent he or she may lawfully do so, the defense of an
inconvenient forum to the maintenance of such suit, action or proceeding and
agrees that service of process for purposes of any such suit, action or
proceeding need not be personally served or served within the State of North
Carolina but may be served with the same effect as if he or she were served
within the State of North Carolina, by certified mail or any other means
permitted by law, addressed to Owner at the address set forth herein. Nothing
contained herein shall affect Franchisor’s rights to bring a suit, action or
proceeding in any other appropriate jurisdiction, including any suit, action or
proceeding brought by Franchisor to enforce any judgment against Owner entered
by a State or Federal Court.


     9. If
Franchisor claims in any judicial proceeding that Owner has breached any of the
covenants contained herein, and Franchisor prevails on such claims, then
Franchisor shall be awarded its costs and expenses incurred in connection with
such proceedings, including reasonable attorneys’ fees.


     IN WITNESS
WHEREOF, the undersigned has executed and delivered this Agreement on the ___
day of _________, ______.



























OWNER 
 
(Signature)   
 
(Print
Name)
 
 
 
(Address) 


F-3












EX-10.3
4
exhibit10-3.htm
FORM OF FRANCHISE AGREEMENT









EXCERPTS ON THIS PAGE:

10-K (2 sections)
Apr 17, 2008
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