Document:

Exhibit 10.2

    

      Exhibit
        10.2

       

      FIRST
        AMENDMENT, dated as of March 6, 2007 (this “Amendment”),
        to
        the Amended and Restated Series 2006-2 Indenture Supplement, dated as of
        December 1, 2006 (the “Indenture
        Supplement”),
        among
        Chesapeake Funding LLC (the “Issuer”),
        PHH
        Vehicle Management Services, LLC, as administrator (the “Administrator”),
        the
        several commercial paper conduits listed on Schedule I thereto (the
“CP
        Conduit Purchasers”),
        the
        banks party thereto with respect to each CP Conduit Purchaser (the “APA
        Banks”),
        the
        agent banks party thereto with respect to each CP Conduit Purchaser (the
        “Funding
        Agents”),
        JPMorgan Chase Bank, N.A., in its capacity as administrative agent (the
“Administrative
        Agent”)
        for
        the CP Conduit Purchasers, the APA Banks and the Funding Agents, and The
        Bank of
        New York, as Indenture Trustee (the “Indenture
        Trustee”),
        to
        the Base Indenture, dated as of March 7, 2006 (the “Base
        Indenture”),
        between the Issuer and the Indenture Trustee pursuant to which the Series
        2006-2
        Investor Notes were issued to the CP Conduit Purchasers.

       

      W
        I T N E
        S S E T H:

       

      WHEREAS,
        the Issuer has requested, and, upon this Amendment becoming effective, the
        Issuer, the Administrator and the Indenture Trustee have agreed and the Series
        2006-2 Required Investor Noteholders have consented, that certain provisions
        of
        the Indenture Supplement be amended in the manner provided for in this
        Amendment.

       

      NOW,
        THEREFORE, the parties hereto hereby agree as follows:

       

      1.  Defined
        Terms.
        All
        capitalized terms defined in Schedule 1 to the Base Indenture or the Indenture
        Supplement and used herein shall have the meanings given to them
        therein.

       

      2.  Amendment
        to Article 4 of the Indenture Supplement.
        Article
        4 of the Indenture Supplement is hereby amended by deleting clause (v) thereof
        and inserting the following new clause (v) in lieu thereof:

       

      “(v)
        the
        failure on the part of the Administrator to (i) deliver to the Indenture
        Trustee, the Administrative Agent and each Funding Agent the financial
        statements of PHH and its consolidated subsidiaries for the fiscal quarters
        ended March 31, 2006, June 30, 2006 and September 30, 2006 and the certificates
        required to be furnished together therewith pursuant to Section 8.3(d) on
        or
        prior to December 29, 2006 or such later date as may be agreed to in writing
        by
        the lenders party to the PHH Credit Agreement for delivery of such financial
        statements and certificates pursuant to Sections 5.1(b) and (c) of the PHH
        Credit Agreement, (ii) deliver to the Indenture Trustee, the Administrative
        Agent and each Funding Agent a letter of independent certified public
        accountants of recognized national standing concerning the results of agreed
        upon procedures pursuant to Section 8.3(e) that is in form and substance
        reasonably satisfactory to the Series 2006-2 Required Investor Noteholders
        or
        (iii) duly to observe or perform in any material respect any other covenants
        or
        agreements of the Administrator set forth in the Base Indenture or this
        Indenture Supplement, which failure continues unremedied for a period of
        30 days
        after there shall have been given to the Administrator by the Indenture Trustee
        or the Administrator and the Indenture Trustee by any Series 2006-2 Investor
        Noteholder, written notice specifying such default and requiring it to be
        remedied;”

      

      
        
           

        

        
          1

          
            

          

        

        
           

        

      

      3.  Amendments
        to Article 8.
        Article
        8 of the Indenture Supplement is hereby amended by deleting subsections (e)
        and
        (f) of Section 8.3 thereof, inserting the following new subsection (e) in
        lieu
        thereof and redesignating existing Sections 8.3(g), (h) and (i) as Sections
        8.3(f), (g) and (h), respectively:

       

      “(e)
        it
        shall provide to the Indenture Trustee, the Administrative Agent and each
        Purchaser Group, no later than March 30, 2007 and, thereafter, in connection
        with the extension of the Scheduled Expiry Date with respect to any Purchaser
        Group, no later than sixty days prior to such Scheduled Expiry Date, a letter
        of
        independent certified public accountants of recognized national standing,
        addressed to the members of such Purchaser Group, and dated a date that is
        reasonably satisfactory to the Series 2006-2 Required Investor Noteholders,
        in
        form and substance reasonably satisfactory to the Series 2006-2 Required
        Investor Noteholders, concerning the agreed upon procedures performed in
        respect
        of the Origination Trust Assets allocated to the Lease SUBI Portfolio described
        on Exhibit D; provided, however, that delivery of any such letter to the
        Indenture Trustee, the Administrative Agent or any member of a Purchaser
        Group
        may be conditioned on receipt by such independent certified public accountants
        of a letter substantially in the form of Exhibit E from the Indenture Trustee,
        the Administrative Agent or such member of a Purchaser Group,
        respectively;”

       

      4.  Replacement
        of Exhibits D and E.
        The
        Indenture Supplement is hereby amended by deleting the existing Exhibits
        D and E
        thereto and replacing them with new Exhibits D and E in the forms of Schedules
        A
        and B to this Amendment.

       

      5.  Conditions
        to Effectiveness.
        This
        Amendment shall become effective on March 6, 2007 (the “Amendment
        Effective Date”),
        if
        each of the following conditions precedent shall have been satisfied on or
        prior
        to such day:

       

      (a)  The
        Administrative Agent shall have received, with a copy for each Funding Agent,
        this Amendment duly executed and delivered by the Issuer, the Administrator
        and
        the Indenture Trustee;

       

      (b)  The
        representations and warranties of the Issuer and VMS contained in the
        Transaction Documents to which each is a party shall be true and correct
        in all
        material respects as of the Amendment Effective Date as if made as of the
        Amendment Effective Date; and

       

      (c)  The
        Indenture Trustee and the Administrative Agent shall have received the Consent
        of Purchaser Groups in the form of Exhibit A to this Amendment, duly executed
        by
        the Issuer, the CP Conduit Purchasers, the APA Banks and the Administrative
        Agent. 

       

      6.  Miscellaneous.

       

      (a)  Payment
        of Expenses.
        The
        Issuer agrees to pay or reimburse the Indenture Trustee, the Administrative
        Agent, the CP Conduit Purchasers, the APA Banks and the Funding Agents for
        all
        of their respective out-of-pocket costs and reasonable expenses incurred
        in
        connection with this Amendment, including, without limitation, the reasonable
        fees and disbursements of their respective counsel.

       

      
        
           

        

        
          2

          
            

          

        

        
           

        

      

      (b)  No
        Other Amendments; Confirmation.
        Except
        as expressly amended, modified and supplemented hereby, the provisions of
        the
        Indenture Supplement are and shall remain in full force and effect.

       

      (c)  Governing
        Law.
        THIS
        AMENDMENT SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS
        OF
        THE STATE OF NEW YORK, AND THE OBLIGATIONS, RIGHTS AND REMEDIES OF THE PARTIES
        HEREUNDER SHALL BE DETERMINED IN ACCORDANCE WITH SUCH LAWS.

       

      (d)
        Counterparts.
        This
        Amendment may be executed in two or more counterparts (and by different parties
        on separate counterparts), each of which shall be an original, but all of
        which
        together shall constitute one and the same instrument. A set of the copies
        of
        this Amendment signed by all the parties shall be lodged with the Indenture
        Trustee. This Amendment may be delivered by facsimile transmission of the
        relevant signature pages hereof.

       

      
        
           

        

        
          3

          
            

          

        

        
           

        

      

      IN
        WITNESS WHEREOF, the Issuer, the Administrator and the Indenture Trustee
        have
        caused this Amendment to be duly executed by their respective officers as
        of the
        day and year first above written.

       

      CHESAPEAKE
        FUNDING LLC

       

      By: /s/
        Mark E. Johnson  

      Name:
        Mark E. Johnson

      Title:
        Vice President & Treasurer

       

      PHH
        VEHICLE MANAGEMENT SERVICES, LLC

       

      By: /s/
        Mark E. Johnson  

      Name:
        Mark E. Johnson

      Title:
        Vice President & Treasurer

       

      

       

      THE
        BANK
        OF NEW YORK, as successor Indenture Trustee

       

      By: /s/
        Gregory K. Weachock  

      Name:
        Gregory K. Weachock

      Title:
        Assistant Treasurer

      
        
          
             

            

          

           

        

        
          4

          
            

          

        

        
           

          
             

            

            

          

        

      

      EXHIBIT
        A

      TO
        FIRST
        AMENDMENT

      TO
        INDENTURE SUPPLEMENT

       

      Consent
        of Purchaser Groups

       

      Reference
        is made to (i) that certain Amended and Restates Series 2006-2 Indenture
        Supplement, dated as of December 1, 2006 (as amended or supplemented, the
        “Indenture
        Supplement”),
        among
        Chesapeake Funding LLC (the “Issuer”),
        PHH
        Vehicle Management Services, LLC, as administrator (the “Administrator”),
        the
        several commercial paper conduits listed on Schedule I thereto (the
“CP
        Conduit Purchasers”),
        the
        banks party thereto with respect to each CP Conduit Purchaser (the “APA
        Banks”),
        the
        agent banks party thereto with respect to each CP Conduit Purchaser (the
        “Funding
        Agents”),
        JPMorgan Chase Bank, N.A., in its capacity as administrative agent (the
“Administrative
        Agent”)
        for
        the CP Conduit Purchasers, the APA Banks and the Funding Agents, and The
        Bank of
        New York, as Indenture Trustee (the “Indenture
        Trustee”),
        to
        the Base Indenture, dated as of March 7, 2006 between the Issuer and the
        Indenture Trustee pursuant to which the Series 2006-2 Investor Notes were
        issued
        to the CP Conduit Purchasers, (ii) that certain First Amendment to the Indenture
        Supplement, dated as of March 6, 2007 (the “First
        Amendment to the Indenture Supplement”),
        among
        the Issuer, the Administrator and the Indenture Trustee and (iii) that certain
        First Amendment to the Amended and Restated Sold SUBI Supplement 1999-1 to
        Amended and Restated Servicing Agreement, dated March 6, 2007 (the “First
        Amendment to the Servicing Supplement”),
        among
        the Origination Trust, the SUBI Trustee, Holdings, VMS and the Servicer,
        in the
        form of Annex A hereto. All capitalized terms defined in the Indenture
        Supplement and used herein shall have the meanings given to them
        therein.

       

      The
        undersigned hereby consent to the execution, delivery and performance of
        the
        First Amendment to the Indenture Supplement and the First Amendment to the
        Servicing Supplement by the parties thereto.

       

      Dated:
        March 6, 2007

       

      

      CHESAPEAKE
        FUNDING LLC

       

      
        	 	
                By:

              	
                        
                                        

              

      

      
        	 	
                Name:

              	 

      

      Title:
         

       

      
        
           

        

        
          5

          
            

          

        

        
           

        

      

      JPMORGAN
        CHASE BANK, N.A., as Administrative Agent 

       

      
        	 	
                By:

              	
                       
                                   

              

      

      
        	 	
                Name:

              	
                 

              

      

      Title:
         

       

      

       

      PARK
        AVENUE RECEIVABLES COMPANY, LLC, as a CP Conduit Purchaser

       

      By:
        JPMorgan Chase Bank, N.A., its attorney-in-fact

      

      

      By:
                
                     

      
        	 	
                Name:

              	
                 

              

      

      Title:  

       

      JPMORGAN
        CHASE BANK, N.A., as an APA Bank

       

      
        	 	
                By:

              	
                       
                                      

              

      

      
        	 	
                Name:

              	
                 

              

      

      Title:
         

       

      

       

      
        
           

        

        
          6

          
            

          

        

        
           

        

      

      VARIABLE
        FUNDING CAPITAL COMPANY LLC, as a CP Conduit Purchaser

       

      By:
        WACHOVIA CAPITAL MARKETS, LLC, 

      As
        Attorney-in-Fact

      

      

      By:
                
                     

      
        	 	
                Name:

              	
                 

              

      

      Title:  

       

      WACHOVIA
        BANK, NATIONAL ASSOCIATION, as an APA Bank 

       

      
        	 	
                By:

              	
                       
                                      

              

      

      
        	 	
                Name:

              	
                 

              

      

      Title:
         

       

       

       

      
        
           

        

        
          7

          
            

          

        

        
           

        

      

      YC
        SUSI
        TRUST, as a CP Conduit Purchaser

       

      By:
        Bank
        of America, National Association, as Administrative Trustee

      

      

      By:
                
                     

      
        	 	
                Name:

              	
                 

              

      

      Title:  

       

      BANK
        OF
        AMERICA, NATIONAL ASSOCIATION, as an APA Bank

       

      
        	 	
                By:

              	
                       
                                      

              

      

      
        	 	
                Name:

              	
                 

              

      

      Title:
         

       

       

       

      
        
           

        

        
          8

          
            

          

        

        
           

        

      

      SARATOGA
        FUNDING CORP. LLC, as a CP Conduit Purchaser

      

      

      By:
        ______________________________________

      Name:

      Title:

      

      DEUTSCHE
        BANK AG, NEW YORK BRANCH,

      As
        an APA
        Bank and a Funding Agent

      

      

      By:
        ______________________________________

      Name:

      Title:

      

      By:
        ______________________________________

      Name:

      Title:

      

      
        
           

        

        
          9

          
            

          

        

        
           

        

      

      LIBERTY
        STREET FUNDING CORPORATION, as a CP Conduit Purchaser

       

      By:
                
                     

      
        	 	
                Name:

              	
                 

              

      

      Title:  

       

      THE
        BANK
        OF NOVA SCOTIA, as an APA Bank

       

      
        	 	
                By:

              	
                       
                                      

              

      

      
        	 	
                Name:

              	
                 

              

      

      Title:
         

       

       

       

      
        
           

        

        
          10

          
            

          

        

        
           

        

      

      

      PARADIGM
        FUNDING, LLC, as a CP Conduit Purchaser

      

      

      By:
        ______________________________________

      Name:

      Title:

      

      WESTLB
        AG, New York Branch, as an APA Bank

       

      
        	 	
                By:

              	
                       
                                      

              

      

      
        	 	
                Name:

              	
                 

              

      

      Title:
         

       

      
        	 	
                By:

              	
                       
                                      

              

      

      
        	 	
                Name:

              	
                 

              

      

      Title:
         

       

      
        
           

        

        
          11

          
            

          

        

        
           

        

      

      CHARTA,
        LLC, as a CP Conduit Purchaser

      By:
        CITICORP NORTH AMERICA, INC.,

      As
        Attorney-in-Fact

       

      By: ____________________________

      Name:
        

      Title:
        

      

      

      CITIBANK,
        N.A., as an APA Bank 

       

      By: ____________________________

      Name:
        

      Title:
        

      

      

      CITICORP
        NORTH AMERICA, INC., as a Funding Agent

       

      
        	 	
                By:

              	
                       
                                      

              

      

      Name:
        

      Title:
        

      
        
           

        

        
          12

          
            

          

        

        
           

        

      

      SHEFFIELD
        RECEIVABLES CORPORATION, as a CP Conduit Purchaser

      

      

      By:
        ______________________________________

      Name:

      Title:

      

      

      BARCLAYS
        BANK PLC, as an APA Bank and as a Funding Agent

      

      

      By:
        ______________________________________

      Name:

      Title:

      

       

      
        
           

        

        
          13

          
            

          

        

        
           

        

      

      ATLANTIC
        ASSET SECURITIZATION LLC, as a CP Conduit Purchaser

       

      By:
                
                     

      
        	 	
                Name:

              	
                 

              

      

      Title:  

       

      By:
                
                     

      
        	 	
                Name:

              	
                 

              

      

      Title:  

       

      CALYON
        New York Branch, as an APA Bank

       

      
        	 	
                By:

              	
                       
                                      

              

      

      
        	 	
                Name:

              	
                 

              

      

      Title:
        

       

      By:
                
                     

      
        	 	
                Name:

              	
                 

              

      

      Title:  

       

      

       

      

       

      

      
        
          
          

           

        

        
          14

          
            

          

        

        
           

          
             

            

            

          

        

      

      ANNEX
        A

      TO
        CONSENT
        OF

      PURCHASER
        GROUPS

      

      AMENDMENT
        NO. 1

       

      DATED
        AS
        OF MARCH 6, 2007

       

      TO

       

      AMENDED
        AND RESTATED SOLD SUBI SUPPLEMENT 1999-1

       

      TO
        SERVICING AGREEMENT

       

      AMONG

       

      D.L.
        PETERSON TRUST,

       

      CHESAPEAKE
        FINANCE HOLDINGS LLC,

       

      WILMINGTON
        TRUST COMPANY,

       

      AS
        SUBI
        TRUSTEE

       

      AND

       

      PHH
        VEHICLE MANAGEMENT SERVICES, LLC, AS SERVICER

       

      DATED
        AS
        OF MARCH 7, 2006

       

      
        
           

        

        
          15

          
            

          

        

        
           

        

      

      AMENDMENT
        NO. 1, dated as of March 6, 2007 (the “Amendment”),
        to
        Amended and Restated Sold SUBI Servicing Supplement 1999-1 to Servicing
        Agreement, dated as of March 7, 2006, among D.L. Peterson Trust, a Delaware
        statutory trust (the “Origination
        Trust”),
        Chesapeake Finance Holdings LLC, a Delaware limited liability company
        (“Holdings”),
        Wilmington Trust Company, a Delaware banking corporation, not in its individual
        capacity but solely as a SUBI Trustee (the “SUBI
        Trustee”),
        and
        PHH Vehicle Management Services, LLC, a Delaware limited liability company
        (“VMS”),
        as
        Servicer.

       

      W
        I T N E
        S S E T H:

       

      WHEREAS,
        Holdings, the Origination Trust, VMS and the SUBI Trustee are parties to
        the
        Amended and Restated Sold SUBI Supplement 1999-1 to Servicing Agreement,
        dated
        as of March 7, 2006 (the “Servicing
        Supplement”);

       

      WHEREAS,
        Holdings, the Origination Trust, VMS and the SUBI Trustee desire to amend
        certain terms of the Servicing Supplement; and

       

      WHEREAS,
        Holdings, the Origination Trust, VMS and the SUBI Trustee have duly authorized
        the execution and delivery of this Amendment.

       

      NOW,
        THEREFORE, for and in consideration of the premises, and other good and valuable
        consideration the receipt and sufficiency of which are acknowledged, it is
        mutually covenanted and agreed, that the Servicing Supplement be amended
        and
        supplemented as follows:

       

      1. Certain
        Defined Terms.
        Certain
        capitalized terms used herein, and not defined herein, shall have the respective
        meanings assigned to such terms in the Servicing Supplement, as the same
        may be
        amended, supplemented or otherwise modified from time to time.

      

      2. Amendment
        to Section 8.2 of the Servicing Supplement  Section
        8.2 of the Servicing Supplement is hereby replaced in its entirety by the
        following:

       

      “The
        Servicer shall cause Deloitte & Touche LLP or another firm of nationally
        recognized independent certified public accountants, who may also render
        other
        services to the Servicer, to deliver to Holdings, the Issuer, the Indenture
        Trustee and each Rating Agency on or before March 31 of each year concerning
        the
        12-month period ended December 31 of the preceding year, beginning March
        31,
        2006, a report to the effect that such firm has examined the assertion of
        the
        Servicer’s management as to its compliance with the servicing requirements set
        forth in Article II of the Servicing Agreement with respect to such 12- month
        (or other) period and that (A) such examination was made in accordance with
        standards established by the American Institute of Certified Public Accountants,
        and (B) except as described in the report, management’s assertion is fairly
        stated in all material respects. The report will also indicate that the firm
        is
        independent of the Servicer within the meaning of the Code of Professional
        Ethics of the American Institute of Certified Public Accountants. 

       

      3. Duplicate
        Originals.
        The
        parties may sign any number of copies of this Amendment. One signed copy
        is
        enough to prove this Amendment.

      

      
        
           

        

        
          16

          
            

          

        

        
           

        

      

      4. Ratification
        and Effect  The
        Servicing Supplement, as amended and supplemented by this Amendment, is in
        all
        respects ratified and confirmed, shall continue to be in full force and effect,
        and shall be read, taken and construed as one and the same
        instrument.

      

      5. GOVERNING
        LAW.
        THIS
        AMENDMENT AND THE RIGHTS AND OBLIGATIONS OF THE PARTIES UNDER THIS AMENDMENT
        SHALL BE GOVERNED BY, AND CONSTRUED AND INTERPRETED IN ACCORDANCE WITH, THE
        LAW
        OF THE STATE OF NEW YORK.

      

      6. Headings.
        The
        various headings in this Amendment are for purposes of reference only and
        shall
        not affect the meaning or interpretation of any provision of this
        Amendment.

      

      7. Counterparts.
        This
        Amendment may be executed in two or more counterparts, and by different parties
        on separate counterparts, each of which shall be an original, but all of
        which
        together shall constitute one and the same instrument.

      

      8. Severability
        of Provisions.
        If any
        one or more of the covenants, agreements, provisions or terms of this Amendment
        shall for any reason whatsoever be held invalid, then such covenants,
        agreements, provisions or terms shall be deemed enforceable to the fullest
        extent permitted, and if not so permitted, shall be deemed severable from
        the
        remaining covenants, agreements, provisions or terms of this Amendment and
        shall
        in no way affect the validity or enforceability of the other provisions of
        this
        Amendment.

      

      IN
        WITNESS WHEREOF, the Origination Trust, Holdings, VMS and the SUBI Trustee
        have
        caused this Amendment to be duly executed by their respective duly authorized
        officers as of the day and year first written above.

       

      D.L.
        PETERSON TRUST

       

      By:
        Wilmington Trust Company, not in its individual capacity but solely as Delaware
        Trustee

       

      By:
                
                     

      
        	 	
                Name:

              	
                 

              

      

      Title:  

       

      WILMINGTON
        TRUST COMPANY, not in its individual capacity but solely as SUBI
        Trustee

       

      
        	 	
                By:

              	
                        
                                        

              

      

      
        	 	
                Name:

              	 

      

      Title:
         

       

      
        
           

        

        
          17

          
            

          

        

        
           

        

      

      PHH
        VEHICLE MANAGEMENT SERVICES, LLC 

       

      
        	 	
                By:

              	
                       
                                   

              

      

      
        	 	
                Name:

              	
                 

              

      

      Title:
         

       

      CHESAPEAKE
        FINANCE HOLDINGS LLC

       

      By:
                
                     

      
        	 	
                Name:

              	
                 

              

      

      Title:  

       

      

       18Exhibit 4.1

     

    Exhibit
      4.1

     

    Krispy
      Kreme Doughnuts, Inc.

     

     

     

     

     

     

     

     

     

    Warrant
      Agreement

    

    

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    TABLE
      OF
      CONTENTS

     

    
      	
              Page

            

    

    

     

    ARTICLE
      I

     

    Definitions

     

    
      	
              SECTION
                1.01 Definitions

            	
              1

            
	
              SECTION
                1.02 Other Definitions

            	
              3

            
	
              SECTION
                1.03 Rules of Construction

            	
              3

            

    

     

    ARTICLE
      II

     

    Warrant
      Certificates

     

    
      	
              SECTION
                2.01 Form and Dating

            	
              3

            
	
              SECTION
                2.02 Execution and Countersignature

            	
              4

            
	
              SECTION
                2.03 Certificate Register

            	
              5

            
	
              SECTION
                2.04 Transfer and Exchange

            	
              5

            
	
              SECTION
                2.05 Certificated Warrants

            	
              6

            
	
              SECTION
                2.06 Replacement Certificates

            	
              7

            
	
              SECTION
                2.07 Outstanding Warrants

            	
              7

            
	
              SECTION
                2.08 Cancellation

            	
              7

            
	
              SECTION
                2.09 CUSIP Numbers

            	
              7

            

    

     

    ARTICLE
      III

     

    Exercise
      Terms

     

    
      	
              SECTION
                3.01 Exercise

            	
              8

            
	
              SECTION
                3.02 Exercise Periods

            	
              8

            
	
              SECTION
                3.03 Expiration

            	
              8

            
	
              SECTION
                3.04 Manner of Exercise

            	
              8

            
	
              SECTION
                3.05 Issuance of Warrant Shares

            	
              8

            
	
              SECTION
                3.06 Fractional Warrant Shares

            	
              9

            
	
              SECTION
                3.07 Reservation of Warrant Shares

            	
              9

            
	
              SECTION
                3.08 Compliance with Law

            	
              9

            

    

     

    ARTICLE
      IV

     

    Adjustment
      and Notice Provisions

     

    
      	
              SECTION
                4.01 Adjustment of Exercise Price

            	
              10

            
	
              SECTION
                4.02 No Adjustment to Exercise Price

            	
              10

            
	
              SECTION
                4.03 Adjustment to Number of Shares

            	
              10

            
	
              SECTION
                4.04 Reorganizations

            	
              10

            
	
              SECTION
                4.05 Exercise Price Not Less Than Par Value

            	
              11

            
	
              SECTION
                4.06 Notice of Certain Action

            	
              11

            

    

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    

    
      	
              SECTION
                4.07 Notice of Adjustments

            	
              12

            
	
              SECTION
                4.08 Adjustment to Warrant Certificate

            	
              12

            

    

     

    ARTICLE
      V

     

    Registration
      Rights

     

    
      	
              SECTION
                5.01 Effectiveness of Registration Statement

            	
              12

            
	
              SECTION
                5.02 Suspension

            	
              12

            
	
              SECTION
                5.03 Blue Sky

            	
              12

            
	
              SECTION
                5.04 Additional Acts

            	
              13

            
	
              SECTION
                5.05 Expenses

            	
              13

            

    

     

    ARTICLE
      VI

     

    Warrant
      Agent

     

    
      	
              SECTION
                6.01 Appointment of Warrant Agent

            	
              13

            
	
              SECTION
                6.02 Rights and Duties of Warrant Agent

            	
              13

            
	
              SECTION
                6.03 Individual Rights of Warrant Agent

            	
              14

            
	
              SECTION
                6.04 Warrant Agent’s Disclaimer

            	
              14

            
	
              SECTION
                6.05 Compensation and Indemnity

            	
              14

            
	
              SECTION
                6.06 Successor Warrant Agent

            	
              15

            

    

     

    ARTICLE
      VII

     

    Miscellaneous

     

    
      	
              SECTION
                7.01 Persons Benefiting

            	
              16

            
	
              SECTION
                7.02 Rights of Holders

            	
              16

            
	
              SECTION
                7.03 Amendment

            	
              16

            
	
              SECTION
                7.04 Notices

            	
              16

            
	
              SECTION
                7.05 Governing Law

            	
              17

            
	
              SECTION
                7.06 Successors

            	
              17

            
	
              SECTION
                7.07 Multiple Originals

            	
              17

            
	
              SECTION
                7.08 Table of Contents

            	
              17

            
	
              SECTION
                7.09 Severability

            	
              17

            

    

    

    EXHIBIT
      A Form
      of
      Face of Warrant Certificate

    

    

    
      
        
        

      

      
        -ii-

        
          

        

      

      
        
        

      

    

    SCHEDULE
      OF INCREASES OR DECREASES IN GLOBAL SECURITY1

    The
      following increases or decreases in this Global Security have been
      made

     

    
      	
              Date
                of Exchange

            	
              Decrease
                in

              number
                of

              Warrants
                in this

              Global
                Warrant

              Certificate

            	
              Increase
                in number

              of
                Warrants in this

              Global
                Warrant

              Certificate

            	
              Number
                of

              Warrants
                in this

              Global
                Warrant

              Certificate

              following
                such

              change

            	
              Signature
                of

              authorized
                officer

              of
                Warrant Agent

            
	 	 	 	 	 
	 	 	 	 	 
	 	 	 	 	 
	 	 	 	 	 

    

    

    

    

    

      

      
        1  To
          be
          included only if Warrants are in global form.

         

      

    

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    WARRANT
      AGREEMENT dated as of March 2, 2007 (this “Agreement”), between KRISPY KREME
      DOUGHNUTS, INC., a North Carolina corporation (the “Company”), and AMERICAN
      STOCK TRANSFER & TRUST COMPANY, a New York corporation, as Warrant Agent
      (the “Warrant Agent”)

     

    The
      Company desires to issue the warrants (the “Warrants”) described herein. The
      Warrants will initially entitle the holders thereof (the “Holders”) to purchase
      4,296,523 shares of its common stock, no par value (the “Common Stock”). The
      Warrants are being issued in connection with the settlement of certain
      litigations previously pending against the Company and other defendants in
      the
      United States District Court for the Middle District of North Carolina, in
      accordance with the Stipulation and Settlement Agreement, dated October 30,
      2006
      between the Company and the participants in such settlement.

     

    The
      Company desires the Warrant Agent to act on behalf of the Company in connection
      with the issuance of the Warrants as provided herein and the Warrant Agent
      is
      willing to so act.

     

    Each
      party
      agrees as follows for the benefit of the other party and for the equal and
      ratable benefit of the Holders of Warrants.

     

     

    ARTICLE
      I

     

    Definitions

     

    SECTION
      1.01   Definitions.

     

    “Affiliate”
      of any Person means (i) any other Person which, directly or indirectly, is
      in
      control of, is controlled by or is under common control with such Person, or
      (ii) any other Person who is a director or executive officer (A) of such Person,
      (B) of any subsidiary of such Person or (C) of any Person described in clause
      (i) above. For purposes hereof, (a) “control” of a Person means the power,
      direct or indirect, to direct or cause the direction of the management and
      policies of such Person whether by contract or otherwise and (b) beneficial
      ownership of 10% or more of the voting common equity (on a fully diluted basis)
      or warrants to purchase such equity (whether or not currently exercisable)
      of a
      Person shall be deemed to be in control of such Person, and the terms
“controlling” and “controlled” have meanings correlative to the
      foregoing.

     

    “Board”
      means the Board of Directors of the Company or any committee thereof duly
      authorized to act on behalf of such Board of Directors.

     

    “Business
      Day” means each day that is not a Saturday, a Sunday or a day on which banking
      institutions are not required to be open in the State of New York.

     

    “Capital
      Stock” of any Person means any and all shares, interests, rights to purchase,
      warrants, options, participation or other equivalents of or interests in
      (however designated) equity of such Person, including any Preferred Stock,
      but
      excluding any debt securities convertible into such equity.

     

    “Certificated
      Warrants” means certificated Warrants in fully registered definitive
      form.

     

    “Common
      Stock” means the common stock, no par value, of the Company.

     

    “Current
      Market Value” per share of Common Stock at any date means the average of the
      daily Closing Prices for each Business Day during the period commencing 20
      Business Days before such 

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    date
      and
      ending on the date one day prior to such date. The Closing Price for each day
      (the “Closing Price”) shall be the last reported sales price or, in case no such
      reported sale takes place on such date, the average of the reported closing
      bid
      and asked prices, in either case on the New York Stock Exchange (the “NYSE”) or
      the Nasdaq National Market (the “NNM”), as applicable, or, if the Common Stock
      is not listed or admitted to trading on the NYSE or the NNM, the principal
      national securities exchange or quotation system on which the Common Stock
      is
      quoted or listed or admitted to trading or, if not quoted or listed or admitted
      to trading on any national securities exchange or quotation system, the closing
      sales price or, in case no reported sale takes place, the average of the closing
      bid and asked prices, as furnished by any two members of the National
      Association of Securities Dealers, Inc selected from time to time by the Company
      for that purpose. If no such prices are available, the Current Market Price
      per
      share shall be the fair value of a share of Common Stock as reasonably
      determined in good faith by the Board of Directors of the Company (which shall
      be evidenced by an Officers’ Certificate delivered to the Warrant
      Agent).

     

    “Depository”
      means The Depository Trust Company, its nominees and their respective
      successors.

     

    “Exchange
      Act” means the Securities Exchange Act of 1934, as amended.

     

    “Issue
      Date” means the date on which the Warrants are initially issued.

     

    “Officer”
      means, with respect to any person, the Chairman of the Board, the Chief
      Executive Officer, the President, the Chief Operating Officer, the Chief
      Financial Officer, any Vice President, the Treasurer, any Assistant Treasurer,
      the Controller or the Secretary or an Assistant Secretary of the
      Company.

     

    “Officers’
      Certificate” means a certificate signed by two Officers.

     

    “Opinion
      of Counsel” means a written opinion from legal counsel who is reasonably
      acceptable to the Warrant Agent. Such counsel may be an employee of or counsel
      to the Company or the Warrant Agent.

     

    “Person”
      means any individual, corporation, partnership, joint venture, limited liability
      company, association, joint-stock company, trust, unincorporated organization,
      government or any agency or political subdivision thereof or any other
      entity.

     

    “Preferred
      Stock”, as applied to the Capital Stock of any Person, means Capital Stock of
      any class or classes (however designated) which is preferred as to the payment
      of dividends or distributions, or as to the payment of assets upon any voluntary
      or involuntary liquidation or dissolution of such Person, over shares of Capital
      Stock of any other class of such Person.

     

    “SEC”
      means the Securities and Exchange Commission.

     

    “Securities”
      means the Warrants and the Warrant Shares.

     

    “Securities
      Act” means the Securities Act of 1933, as amended.

     

    “Warrant
      Certificates” mean the Global Warrants or the Certificated Warrants issued by
      the Company under this Agreement representing the Warrants.

     

    
      
        
        

      

      
        -2-

        
          

        

      

      
        
        

      

    

    

     

    “Warrant
      Custodian” means the custodian with respect to a Global Warrant (as appointed by
      the Depository) or any successor person thereto and shall initially be the
      Warrant Agent.

     

    “Warrant
      Shares” mean the shares of Common Stock (and any other securities) for which the
      Warrants are exercisable or which have been issued upon exercise of
      Warrants.

     

    SECTION
      1.02   Other
      Definitions.
      

     

    
      	
               

              Term

            	
              Defined
                in

              Section

            
	
              “Agreement”

            	
              Recitals

            
	
              “Agent
                Members”

            	
              2.01(b)

            
	
              “Certificate
                Register”

            	
              2.03

            
	
              “Common
                Shelf Registration Statement”

            	
              5.01

            
	
              “Common
                Stock”

            	
              Recitals

            
	
              “Company”

            	
              Recitals

            
	
              “Exercise
                Price”

            	
              3.01

            
	
              “Expiration
                Date”

            	
              3.02(b)

            
	
              “Global
                Warrant”

            	
              2.01(a)

            
	
              “Holders”

            	
              Recitals

            
	
              “Stock
                Transfer Agent”

            	
              3.05

            
	
              “Reorganization”

            	
              4.04

            
	
              “Warrant”

            	
              Recitals

            
	
              “Warrant
                Agent”

            	
              Recitals

            
	 	 

    

    

    SECTION
      1.03   Rules
      of Construction.
      Unless
      the text otherwise requires:

     

    (i)  a
      defined
      term has the meaning assigned to it,

     

    (ii)  an
      accounting term not otherwise defined has the meaning assigned to it in
      accordance with generally accepted accounting principles as in effect from
      time
      to time,

     

    (iii)  “or”
is
      not exclusive,

     

    (iv)  “including”
      means including, without limitation, and

     

    (v)  words
      in
      the singular include the plural and words in the plural include the
      singular

     

     

    ARTICLE
      II

     

    Warrant
      Certificates

     

    SECTION
      2.01   Form
      and Dating.
      

     

    (a)  Global
      Warrants.
The
      Warrants shall be issued initially in the form of one or more Certificated
      Warrants. Following the initial issuance, the Company may elect to make Warrants
      available in book-entry form. To the extent the Company so elects, the Company
      shall follow the applicable rules of the Depository and shall issue Global
      Warrants, in definitive, fully registered form with the 

     

    
      
        
        

      

      
        -3-

        
          

        

      

      
        
        

      

    

     

     

    

      global
        securities legend set forth in Exhibit A hereto (each, a "Global Warrant"),
        which shall be deposited on behalf of the Holders with the Warrant Agent,
        as
        custodian for the Depository (or with such other custodian as the Depository
        may
        direct), and registered in the name of the Depository or a nominee of the
        Depository, duly executed by the Company and countersigned by the Warrant
        Agent
        as hereinafter provided.

       

    

    (b)  Book-Entry
      Provisions.
      (i)  This Section 2.01(b) shall apply only to a Global Warrant
      deposited with or on behalf of the Depository.

     

    The
      Company shall execute and the Warrant Agent shall, in accordance with
      Section 2.02, countersign and deliver initially one or more Global Warrants
      that (a) shall be registered in the name of the Depository for such Global
      Warrant or Global Warrants or the nominee of the Depository and (b) shall be
      delivered by the Warrant Agent to the Depository or pursuant to the Depository’s
      instructions or held by the Warrant Agent as custodian for the
      Depository.

     

    (ii)  Members
      of, or participants in, the Depository (“Agent Members”) shall have no rights
      under this Agreement with respect to any Global Warrant held on their behalf
      by
      the Depository or by the Warrant Agent as the custodian of the Depository or
      under such Global Warrant, and the Depository may be treated by the Company,
      the
      Warrant Agent and any agent of the Company or the Warrant Agent as the absolute
      owner of such Global Warrant for all purposes whatsoever. Notwithstanding the
      foregoing, nothing herein shall prevent the Company, the Warrant Agent or any
      agent of the Company or the Warrant Agent from giving effect to any written
      certification, proxy or other authorization furnished by the Depository or
      impair, as between the Depository and its Agent Members, the operation of
      customary practices of the
      Depository governing the exercise of the tights of a
      holder
      of a beneficial interest in any Global Warrant.

     

    (c)  Certificated
      Securities.
      Except
      as provided in Section 2.04 or 2.05, owners of beneficial interests in
      Global Warrants will not be entitled to receive physical delivery of
      Certificated
      Warrants.

     

    SECTION
      2.02   Execution
      and Countersignature.
      Two
      Officers shall sign the Warrant Certificates for the Company by manual or
      facsimile signature.

     

    If
      an
      Officer whose signature is on a Warrant Certificate no longer holds that office
      at the time the Warrant Agent countersigns the Warrant Certificate, the Warrants
      evidenced by such Warrant Certificate shall be valid nevertheless.

     

    The
      Warrant Agent shall initially countersign and deliver Warrant Certificates
      entitling the Holders thereof to purchase in the aggregate not more than
      4,296,523 Warrant Shares upon a written order of the Company signed by two
      Officers of the Company.

     

    The
      Warrant Agent may appoint an agent reasonably acceptable to the Company to
      countersign the Warrant Certificates. Unless limited by the terms of such
      appointment, such agent may countersign Warrant Certificates whenever the
      Warrant Agent may do so. Each reference in this Agreement to countersignature
      by
      the Warrant Agent includes countersignature by such agent. Such agent will
      have
      the same rights as the Warrant Agent for service of notices and
      demands.

     

    At
      any
      time and from time to time after the execution of this Agreement, the Warrant
      Agent or an agent reasonably acceptable to the Company shall upon receipt of
      a
      written order of the Company signed by two Officers of the Company countersign
      for original issue a Warrant Certificate evidencing the number of Warrants
      specified in such order, provided,
      however,
      that the
      Warrant Agent shall be entitled to receive an Officers’ Certificate and an
      Opinion of Counsel of the Company that it may reasonably request in connection
      with such countersignature of Warrants. Such order shall specify the

     

    
      
        
        

      

      
        -4-

        
          

        

      

      
        
        

      

    

    number
      of
      Warrants to be evidenced on the Warrant Certificate to be countersigned, the
      date on which such Warrant Certificate is to be countersigned and the number
      of
      Warrants then authorized.

     

    The
      Warrants evidenced by a Warrant Certificate shall not be valid until an
      authorized signatory of the Warrant Agent or its agent as provided above
      countersigns the Warrant Certificate. The signature shall be conclusive evidence
      that the Warrant Certificate has been countersigned under this
      Agreement.

     

    SECTION
      2.03   Certificate
      Register.
      The
      Warrant Agent shall keep a register (the “Certificate Register”) of the Warrant
      Certificates and of their transfer and exchange. The Certificate Register shall
      show the names and addresses of the respective Holders and the date and number
      of Warrants evidenced on the face of each of the Warrant Certificates. The
      Company and the Warrant Agent may deem and treat the Person in whose name a
      Warrant Certificate is registered as the absolute owner of such Warrant
      Certificate for all purposes whatsoever and neither the Company nor the Warrant
      Agent shall be affected by notice to the contrary.

     

    SECTION
      2.04   Transfer
      and Exchange.
      

     

    (a)  Transfer
      and Exchange of Global Warrants.

     

    (i)  The
      transfer and exchange of Global Warrants or beneficial interests therein shall
      be effected through the Depository, in accordance with this Agreement (including
      applicable restrictions on transfer set forth herein) and the procedures of
      the
      Depository therefor. A transferor of a beneficial interest in a Global Warrant
      shall deliver to the Warrant Agent a written order given in accordance with
      the
      Depository’s procedures containing information regarding the participant account
      of the Depository to be credited with a beneficial interest in the Global
      Warrant. The Warrant Agent shall, in accordance with such instructions, instruct
      the Depository to credit to the account of the Person specified in such
      instructions a beneficial interest in the Global Warrant and to debit the
      account of the Person making the transfer of the beneficial interest in the
      Global Warrant being transferred.

     

    (ii)  Notwithstanding
      any other provisions of this Agreement (other than the provisions set forth
      in
      Section 2.05), a Global Warrant may not be transferred as a whole except by
      the Depository to a nominee of the Depository or by a nominee of the Depository
      to the Depository or another nominee of the Depository or by the Depository
      or
      any such nominee to a successor Depository or a nominee of such successor
      Depository.

     

    (iii)  In
      the
      event that a Global Warrant is exchanged and transferred for Warrants in
      definitive registered form pursuant to Section 2.05, such Warrants may be
      exchanged only in accordance with such procedures as are substantially
      consistent with the provisions of this Section 2.04 and such other
      procedures as may from time to time be adopted by the Company.

     

    (b)  Cancellation
      or Adjustment of Global Warrant.
      At such
      time as all beneficial interests in a Global Warrant have been exchanged for
      Certificated Warrants, redeemed, repurchased or canceled, such Global Warrant
      shall be returned to the Depository for cancellation or retained and canceled
      by
      the Warrant Agent. At any time prior to such cancellation, if any beneficial
      interest in a Global Warrant is exchanged for Certificated Warrants, redeemed,
      repurchased or canceled, the number of Warrants represented by such Global
      Warrant shall be reduced and an adjustment shall be made on the books and
      records of the Warrant Agent (if it is then the Warrant Custodian for such
      Global Warrant) with respect to such Global Warrant, by the Warrant Agent,
      to
      reflect such reduction.

     

    (c)  Obligations
      with Respect to Transfers and Exchanges of Warrants.

     

    
      
        
        

      

      
        -5-

        
          

        

      

      
        
        

      

    

    

     

    (i)  To
      permit
      registrations of transfers and exchanges, the Company shall execute and the
      Warrant Agent shall countersign Certificated Warrants and Global Warrants as
      required pursuant to the provisions of Section 2.02 and this
      Section 2.04.

     

    (ii)  Any
      service charge for any registration of transfer or exchange, or any transfer
      tax, assessments or similar governmental charge payable in connection therewith,
      shall be paid by the Holder.

     

    (iii)  Prior
      to
      the due presentation for registration of transfer of any Warrant, the Company
      and the Warrant Agent may deem and treat the Person in whose name a Warrant
      is
      registered as the absolute owner of such Warrant, and neither the Company nor
      the Warrant Agent shall be affected by notice to the contrary.

     

    (iv)  All
      Warrants issued upon any transfer or exchange pursuant to the terms of this
      Agreement shall be the valid obligations of the Company, entitled to the same
      benefits under this Agreement as the Warrants surrendered upon such transfer
      or
      exchange.

     

    (d)  No
      Obligation of the Warrant Agent.
      (i)  The Warrant Agent shall have no responsibility or obligation to
      any beneficial owner of a Global Warrant, a member of, or a participant in,
      the
      Depository or other Person with respect to the accuracy of the records of the
      Depository or its nominee or of any participant or member thereof, with respect
      to any ownership interest in the Warrants or with respect to the delivery to
      any
      participant, member, beneficial owner or other Person (other than the
      Depository) of any notice or the payment of any amount under or with respect
      to
      such Warrants. All notices and communications to be given to the Holders and
      all
      payments to be made to Holders under the Warrants shall be given or made only
      to
      or upon the order of the registered Holders (which shall be the Depository
      or
      its nominee in the case of a Global Warrant). The rights of beneficial owners
      in
      any Global Warrant shall be exercised only through the Depository subject to
      the
      applicable rules and procedures of the Depository. The Warrant Agent may rely
      and shall be fully protected in relying upon information furnished by the
      Depository with respect to its members, participants and any beneficial
      owners.

     

    (ii)  The
      Warrant Agent shall have no obligation or duty to monitor, determine or inquire
      as to compliance with any restrictions on transfer imposed under this Agreement
      or under applicable law with respect to any transfer of any interest in any
      Warrant (including any transfers between or among the Depository participants,
      members or beneficial owners in any Global Warrant) other than to require
      delivery of such certificates and other documentation or evidence as are
      expressly required by, and to do so if and when expressly required by, the
      terms
      of this Agreement, and to examine the same to determine substantial compliance
      as to form with the express requirements hereof.

     

    SECTION
      2.05   Certificated
      Warrants.
      

     

    (a)  A
      Global
      Warrant deposited with the Depository or with the Warrant Agent as custodian
      for
      the Depository pursuant to Section 2.01 shall be transferred to the
      beneficial owners thereof in the form of Certificated Warrants in a number
      equal
      to the number of Warrants represented by such Global Warrant, in exchange for
      such Global Warrant, only if such transfer complies with Section 2.04 and
      (i) the Depository notifies the Company that it is unwilling or unable to
      continue as depositary for such Global Warrant or if at any time the Depository
      ceases to be a “clearing agency” registered under the Exchange Act and, in each
      such case, a successor depositary is not appointed by the Company within 90
      days
      of such notice or (ii) the Company, in its sole discretion, notifies the
      Warrant Agent in writing that it elects to cause the issuance of Certificated
      Warrants under this Agreement.

     

    
      
        
        

      

      
        -6-

        
          

        

      

      
        
        

      

    

    

     

    (b)  Any
      Global
      Warrant that is transferable to the beneficial owners thereof pursuant to this
      Section shall be surrendered by the Depository to the Warrant Agent, to be
      so
      transferred, in whole or from time to time in part, without charge, and the
      Warrant Agent shall countersign and deliver, upon such transfer of each portion
      of such Global Warrant, an equal number of Certificated Warrants.

     

    (c)  Subject
      to
      the provisions of Section 2.05(b), the registered Holder of a Global
      Warrant may grant proxies and otherwise authorize any Person, including Agent
      Members and Persons that may hold interests through Agent Members, to take
      any
      action which a Holder is entitled to take under this Agreement or the
      Warrants.

     

    (d)  In
      the
      event of the occurrence of either of the events specified in
      Section 2.05(a), the Company will promptly make available to the Warrant
      Agent a reasonable supply of Certificated Warrants in definitive, fully
      registered form.

     

    SECTION
      2.06   Replacement
      Certificates.
      If a
      mutilated Warrant Certificate is surrendered to the Warrant Agent or if the
      Holder of a Warrant Certificate claims that the Warrant Certificate has been
      lost, destroyed or wrongfully taken, the Company shall issue and the Warrant
      Agent shall countersign a replacement Warrant Certificate if the reasonable
      requirements of the Warrant Agent and of Section 8-405 of the Uniform
      Commercial Code as in effect in the State of New York are met. If required
      by
      the Warrant Agent or the Company, such Holder shall furnish an indemnity bond
      sufficient in the judgment of the Company and the Warrant Agent to protect
      the
      Company and the Warrant Agent from any loss which either of them may suffer
      if a
      Warrant Certificate is replaced. The Company and the Warrant Agent may charge
      the Holder for their expenses in replacing a Warrant Certificate. Every
      replacement Warrant Certificate evidences an additional obligation of the
      Company.

     

    SECTION
      2.07   Outstanding
      Warrants.
      Warrants
      outstanding at any time are all Warrants evidenced by all Warrant Certificates
      authenticated by the Warrant Agent except for those canceled by it and those
      delivered to it for cancellation. A Warrant does not cease to be outstanding
      because an Affiliate of the Company holds the Warrant. A Warrant ceases to
      be
      outstanding if the Company holds the Warrant.

     

    If
      a
      Warrant Certificate is replaced pursuant to Section 2.06, the Warrants
      evidenced thereby cease to be outstanding unless the Warrant Agent and the
      Company receive proof satisfactory to them that the replaced Warrant Certificate
      is held by a bona fide purchaser.

     

    SECTION
      2.08   Cancellation.
      (a)  In the event the Company shall purchase or otherwise acquire
      Certificated Warrants, the same shall thereupon be delivered to the Warrant
      Agent for cancellation.

     

    (b)  The
      Warrant Agent and no one else shall cancel all Warrant Certificates surrendered
      for transfer, exchange, replacement, exercise or cancellation. Such canceled
      Warrant Certificates shall then be disposed of by the Warrant Agent in a manner
      permitted by applicable law and satisfactory to the Company in accordance with
      its written instructions to the Warrant Agent. The Company may not issue new
      Warrant Certificates to replace Warrant Certificates to the extent they evidence
      Warrants which have been exercised or Warrants which the Company has purchased
      or otherwise acquired.

     

    SECTION
      2.09   CUSIP
      Numbers.
      The
      Company in issuing the Warrants may use “CUSIP” numbers (if then generally in
      use) and, if so, the Warrant Agent shall use “CUSIP” numbers in notices as a
      convenience to Holders, provided,
      however,
      that any
      such notice may state that no representation is made as to the correctness
      of
      such numbers either as printed on the Warrant Certificates or as
      con-

     

    
      
        
        

      

      
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    tained
      in
      any notice and that reliance may be placed only on the other identification
      numbers printed on the Warrant Certificates.

     

     

    ARTICLE
      III

     

    Exercise
      Terms

     

    SECTION
      3.01   Exercise.
      Each
      Warrant shall initially entitle the Holder thereof, subject to adjustment
      pursuant to the terms of this Agreement, to purchase one share of Common Stock
      for each Warrant evidenced thereby, at an exercise price (the “Exercise Price”)
      of $12.21 per share.

     

    SECTION
      3.02   Exercise
      Periods.
      (a)  Subject to the terms and conditions set forth herein, the
      Warrants shall be exercisable at any time and from time to time on any Business
      Day after the Common Shelf Registration Statement is declared effective by
      the
      SEC; provided,
      however,
      that
      holders of Warrants will be able to exercise their Warrants only if (i) the
      Common Shelf Registration Statement relating to the Warrant Shares is effective
      and (ii) the Warrant Shares are qualified for sale or exempt from qualification
      under the applicable securities laws of the states or other jurisdictions in
      which such holders reside.

     

    (b)  No
      Warrant
      shall be exercisable after the fifth anniversary of the Issue Date (the
“Expiration Date”).

     

    SECTION
      3.03   Expiration.
      If not
      previously exercised, a Warrant shall terminate and become void as of the close
      of business on the Expiration Date.

     

    SECTION
      3.04   Manner
      of Exercise.
      Warrants
      may be exercised upon (i) surrender to the Warrant Agent at the office of the
      Warrant Agent of the related Warrant Certificate, together with the form of
      election attached thereto to purchase Common Stock on the reverse thereof duly
      filled in and signed by the Holder thereof, (ii) payment to the Warrant Agent,
      for the account of the Company, of the Exercise Price for each Warrant Share
      issuable upon the exercise of such Warrants then exercised and (iii) payment
      by
      the Holder to the Warrant Agent of any exercise fee associated with the exercise
      of such Warrants. Such payments shall be made by certified or official bank
      check payable to the order of the Company or by wire transfer of funds to an
      account designated by the Company for such purpose. Subject to
      Section 3.02, the rights represented by the Warrants shall be exercisable
      at the election of the Holders thereof either in full at any time or from time
      to time in part, and in the event that a Warrant Certificate is surrendered
      for
      exercise of less than all the Warrants represented by such Warrant Certificate
      at any time prior to the Expiration Date, a new Warrant Certificate representing
      the remaining Warrants shall be issued. The Warrant Agent shall countersign
      and
      deliver the required new Warrant Certificates, and the Company, at the Warrant
      Agent’s request, shall supply the Warrant Agent with Warrant Certificates duly
      signed on behalf of the Company for such purpose.

     

    SECTION
      3.05   Issuance
      of Warrant Shares.
      Subject
      to Section 2.05, upon the surrender of Warrant Certificates and payment of
      the per share Exercise Price, as set forth in Section 3.04, the Company
      shall issue and cause the Warrant Agent or, if appointed, a transfer agent
      for
      the Common Stock (“Stock Transfer Agent”) to countersign and deliver to or upon
      the written order of the Holder and in such name or names as the Holder may
      designate, a certificate or certificates for the number of full shares of Common
      Stock constituting Warrant Shares so purchased upon the exercise of such
      Warrants or other securities to which it is entitled, registered or otherwise,
      to the Person or Persons entitled to receive the same (including any depositary
      institution so designated by a Holder), together with cash as provided in
      Section 3.06 in respect of any fractional Warrant Shares otherwise issuable
      upon such exercise. Such certificate or certificates shall be deemed to have
      been issued, and any Person so designated to be named 

     

    
      
        
        

      

      
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    therein
      shall be deemed to have become a holder of record of such Warrant Shares as
      of
      the date of the surrender of such Warrant Certificates and payment of the per
      share Exercise Price, as aforesaid; provided,
      however,
      that if,
      at such date, the transfer books for the Warrant Shares shall be closed, the
      certificates for the Warrant Shares in respect of which such Warrants are then
      exercised shall be issuable as of the date on which such books shall next be
      opened, and until such date the Company shall be under no duty to deliver any
      certificates for such Warrant Shares; provided further,
      however,
      that
      such transfer books, unless otherwise required by law, shall not be closed
      at
      any one time for a period longer than 20 calendar days.

     

    SECTION
      3.06   Fractional
      Warrant Shares.
      The
      Company shall not be required to issue fractional Warrant Shares on the exercise
      of Warrants. If more than one Warrant shall be exercised in full at the same
      time by the same Holder, the number of full Warrant Shares which shall be
      issuable upon such exercise shall be computed on the basis of the aggregate
      number of Warrant Shares which may be purchasable pursuant thereto. If any
      fraction of a Warrant Share would, except for the provisions of this
      Section 3.06, be issuable upon the exercise of any Warrant (or specified
      portion thereof), the Company shall pay an amount in cash equal to the Current
      Market Value per Warrant Share, as determined on the day immediately preceding
      the date the Warrant is presented for exercise, multiplied by such fraction,
      computed to the nearest whole cent.

     

    SECTION
      3.07   Reservation
      of Warrant Shares.
      The
      Company shall at all times keep reserved out of its authorized shares of Common
      Stock a number of shares of Common Stock sufficient to provide for the exercise
      of all outstanding Warrants. The registrar for the Common Stock shall at all
      times until the Expiration Date reserve such number of authorized shares as
      shall be required for such purpose. The Company will keep a copy of this
      Agreement on file with the Stock Transfer Agent. The Company will supply such
      Stock Transfer Agent with duly executed stock certificates for such purpose
      and
      will itself provide or otherwise make available any cash which may be payable
      as
      provided in Section 3.06. The Company will furnish to such Stock Transfer
      Agent a copy of all notices of adjustments (and certificates related thereto)
      transmitted to each Holder.

     

    Before
      taking any action which would cause an adjustment pursuant to Article IV to
      reduce the Exercise Price below the then par value (if any) of the Common Stock,
      the Company shall take any and all corporate action which may, in the opinion
      of
      its counsel, be necessary in order that the Company may validly and legally
      issue fully paid and nonassessable shares of Common Stock at the Exercise Price
      as so adjusted.

     

    The
      Company covenants that all Warrant Shares which may be issued upon exercise
      of
      Warrants shall, upon issue, be fully paid, nonassessable, free of preemptive
      rights, free from all taxes and free from all liens, charges and security
      interests with respect to the issue thereof.

     

    SECTION
      3.08   Compliance
      with Law.
      (a)  Notwithstanding anything in this Agreement to the contrary, in no
      event shall a Holder be entitled to exercise a Warrant unless (i) a registration
      statement filed under the Securities Act in respect of the issuance of the
      Warrant Shares is then effective or (ii) in the opinion of counsel to the
      Company addressed to the Warrant Agent the exercise of such Warrants is exempt
      from the registration requirements of the Securities Act and such securities
      are
      qualified for sale or exempt from qualification under the applicable securities
      laws of the states or other jurisdictions in which such Holders
      reside.

     

    (b)  If
      any
      shares of Common Stock required to be reserved for purposes of the exercise
      of
      Warrants require, under any other federal or state law or applicable governing
      rule or regulation of any national securities exchange, registration with or
      approval of any governmental authority, or listing on any such national
      securities exchange, before such shares may be issued upon exercise, the Company
      

     

    
      
        
        

      

      
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    will
      cause
      such shares to be duly registered or approved by such governmental authority
      or
      listed on the relevant national securities exchange, as the case may
      be.

     

     

    ARTICLE
      IV

     

    Adjustment
      and Notice Provisions

     

    SECTION
      4.01   Adjustment
      of Exercise Price.
      Subject
      to the provisions of this Article IV, the Exercise Price in effect from
      time to time shall be subject to adjustment as follows:

     

    (a)  In
      case
      the Company shall (i) declare a dividend payable in stock or make some other
      distribution on the outstanding shares of its Common Stock in shares of its
      Common Stock, (ii) subdivide or reclassify the outstanding shares of its Common
      Stock into a greater number of shares or (iii) combine or reclassify the
      outstanding shares of its Common Stock into a smaller number of shares, the
      Exercise Price, in effect immediately after the record date for such dividend
      or
      distribution or the effective date of such division, reclassification or
      combination shall be proportionately adjusted by multiplying the then Exercise
      Price by a fraction, the numerator of which shall be the number of shares of
      Common Stock outstanding immediately prior to such event and the denominator
      of
      which shall be the number of shares of Common Stock outstanding immediately
      after such event, and the product so obtained shall thereafter be the Exercise
      Price then in effect. Such adjustment shall be made successively whenever any
      event specified above shall occur.

     

    (b)  All
      calculations under this Section 4.01 shall be made to the nearest
      thousandth of a cent.

     

    SECTION
      4.02   No
      Adjustment to Exercise Price.
      No
      adjustment in the Exercise Price in accordance with the provisions of paragraph
      (a) of Section 4.01 hereof need be made if such adjustment would amount to
      a change in such Exercise Price of less than ten cents; provided,
      however,
      that the
      amount by which any adjustment is not made by reason of the provision of this
      Section 4.02 shall be carried forward and taken into account at the time of
      any subsequent adjustment in the Exercise Price.

     

    SECTION
      4.03   Adjustment
      to Number of Shares.
      Upon
      each adjustment of the Exercise Price pursuant to paragraph (a) of
      Section 4.01, each Warrant shall thereupon evidence the right to purchase
      that number of shares of Common Stock (calculated to the nearest hundredth
      of a
      share) obtained by multiplying the number of shares of Common Stock purchasable
      immediately prior to such adjustment upon exercise of the Warrant by the
      Exercise Price in effect immediately prior to such adjustment and dividing
      the
      product so obtained by the Exercise Price in effect immediately after such
      adjustment.

     

    SECTION
      4.04   Reorganizations.
      

     

    (a)  Except
      as
      provided in Section 4.04(b), in case of any capital reorganization,
      consolidation or merger of the Company (other than in the cases referred to
      in
      Section 4.01 hereof or the consolidation or merger of the Company with or
      into another corporation in which the Company is the continuing corporation
      and
      which does not result in any reclassification of the outstanding shares of
      Common Stock or the conversion of such outstanding shares of Common Stock into
      shares of other stock or other securities or property), or the sale of all
      or
      substantially all of the Company’s assets (a “Reorganization”), the Holders of
      Warrants which have not been exercised (or otherwise expired or been terminated)
      shall have the
      right
      to receive, upon exercise of the Warrants and payment of the Exercise Price,
      the
      kind and amount of shares of stock and other securities and property receivable
      upon such Reorganization by a 

     

    
      
        
        

      

      
        -10-

        
          

        

      

      
        
        

      

    

    Holder
      of
      the number of shares of Common Stock into which such Warrants so exercised
      might
      have been exercised immediately prior to such Reorganization. Unless
      paragraph (b) is applicable to a Reorganization, the Company shall provide
      that the surviving or acquiring Person in such Reorganization will enter into
      an
      agreement with the Warrant Agent confirming the Holders’ rights pursuant to this
      Section 4.04(a) and providing for adjustments, which shall be as nearly
      equivalent as may be practicable to the adjustments provided for in the
      Article IV.

     

    (b)  In
      the
      event of a Reorganization where consideration to the holders of Common Stock
      in
      exchange for their shares is payable solely in cash in an amount per share
      greater than the Exercise Price, the Holders of the Warrants shall be entitled
      to receive, upon surrender of their Warrant Certificates, such cash
      distributions on an equal basis with the holders of Common Stock or other
      securities issuable upon exercise of the Warrants, as if the Warrants had been
      exercised immediately prior to such event, less the Exercise Price.

     

    (c)  In
      the
      event of sale or conveyance or other transfer of all or substantially all of
      the
      assets of the Company as a part of a plan for liquidation of the Company, all
      rights to exercise any Warrant shall terminate 30 days after the Company gives
      written notice to each Holder that such sale or conveyance or other transfer
      has
      been consummated in the manner specified in Section 7.04
      hereof.

     

    SECTION
      4.05   Exercise
      Price Not Less Than Par Value.
      In no
      event shall the Exercise Price be adjusted below the par value per share of
      the
      Common Stock (if any).

     

    SECTION
      4.06   Notice
      of Certain Action.
      In the
      event the Company shall:

     

    (a)  declare
      any dividend payable in stock to the holders of its Common Stock or make any
      other distribution in property other than cash to the holders of its Common
      Stock, or

     

    (b)  offer
      to
      the holders of its Common Stock as such rights to subscribe for or purchase
      any
      shares of any class of stock or any other rights or opinions, or

     

    (c)  effect
      any
      reclassification of its Common Stock (other than a reclassification involving
      merely the subdivision or combination of outstanding shares of Common Stock),
      Reorganization or the liquidation, dissolution or winding up of the
      Company,

     

    then,
      in
      each such case, the Company shall cause notice of such proposed action to be
      given to the Warrant Agent. Such notice shall specify the date on which the
      books of the Company shall close, or a record be taken, for determining holders
      of Common Stock entitled to receive such stock dividend or other distribution
      or
      such rights or options, or the date on which such reclassification,
      reorganization, consolidation, merger, sale, transfer, other disposition,
      liquidation, dissolution or winding up shall take place or commence, as the
      case
      may be, and the date as of which it is expected that holders shall be entitled
      to receive securities or other property deliverable upon such action, if any
      such date has been fixed. The Company shall also cause the Warrant Agent to
      mail
      copies of such notice to each Holder of a Warrant Certificate in the manner
      specified in Section 7.04 hereof unless such notice is otherwise available
      on the SEC’s Electronic Data Gathering, Analysis and Retrieval System or similar
      system. Such notice shall be mailed, in the case of any action covered by
      Subsection 4.06(a) or 4.06(b) above, at least ten days poor to the record
      date for determining holders of the Common Stock for purposes of receiving
      such
      payment or offer, and in the case of any action covered by
      Subsection 4.06(c) above, at least ten days prior to the earlier of the
      date upon which such action is to take place or any record date to determine
      holders of Common Stock entitled to receive such securities or other
      property.

     

    
      
        
        

      

      
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    SECTION
      4.07   Notice
      of Adjustments.
      Whenever
      any adjustment is made pursuant to this Article IV, the Company shall cause
      notice of such adjustment to be mailed to the Warrant Agent within 15 days
      thereafter, such notice to include in reasonable detail (i) the events
      precipitating the adjustment, (ii) the computation of any adjustments, and
      (iii) the Exercise Price, the number of shares or the securities or other
      property purchasable upon exercise of each Warrant after giving effect to such
      adjustment. The Warrant Agent shall be entitled to rely on such notice and
      any
      adjustment therein contained and shall not be deemed to have knowledge of any
      such adjustment unless and until it shall have received such notice. The Warrant
      Agent shall within 15 days after receipt of such notice from the Company cause
      a
      similar notice to be mailed to each Holder.

     

    SECTION
      4.08   Adjustment
      to Warrant Certificate.
      The form
      of Warrant Certificate need not be changed because of any adjustment made
      pursuant to this Article IV, and Warrant Certificates issued after such
      adjustment may state the same Exercise Price and the same number of shares
      of
      Common Stock issuable upon exercise of the Warrants as are stated in the Warrant
      Certificates initially issued pursuant to this Agreement. The Company, however,
      may at any time in its sole discretion make any change in the form of Warrant
      Certificate that it may deem appropriate to give effect to such adjustments and
      that does not affect the substance of the Warrant Certificate, and any Warrant
      Certificate thereafter issued or countersigned, whether in exchange or
      substitution for an outstanding Warrant Certificate or otherwise, may be in
      the
      form as so changed.

     

     

    ARTICLE
      V

     

    Registration
      Rights

     

    SECTION
      5.01   Effectiveness
      of Registration Statement.
      Subject
      to Section 5.02, the Company shall use its reasonable best efforts to cause
      to be filed with the SEC pursuant to Rule 415 (or any successor provision)
      of the Securities Act, and shall use its reasonable best efforts to cause to
      become effective, a shelf registration statement covering the issuance of
      Warrant Shares to the Holders upon exercise of the Warrants by the Holders
      thereof (the “Common Shelf Registration Statement”), such filing to occur no
      later than 30 days following the date the Company is eligible to file the Common
      Shelf Registration Statement on Form S-3 (or such successor form as may be
      in
      effect at the time). The Company shall use its reasonable best efforts to cause
      the Common Shelf Registration Statement to remain effective until the earlier
      of
      (i) such time as all Warrants have been exercised and (ii) the
      Expiration Date. The Company shall promptly inform the Warrant Agent of any
      change in the status of the effectiveness or availability of the Common Shelf
      Registration Statement.

     

    SECTION
      5.02   Suspension.
      The
      Company shall be entitled to suspend the availability of the Common Shelf
      Registration Statement from time to time during any consecutive 365-day period
      for a total not to exceed 90 days during such consecutive 365-day period (except
      for the 45 consecutive-day period immediately prior to the Expiration Date)
      if
      the Company’s Board determines in the exercise of its reasonable judgment that
      such suspension is necessary in order to comply with applicable laws and
      provides notice that such determination was made to the Holders of the Warrants;
      provided,
      however,
      that in
      no event shall the Company be required to disclose the business purpose for
      such
      suspension if the Company determines in good faith that such business purpose
      must remain confidential.

     

    SECTION
      5.03   Blue
      Sky.
      The
      Company shall use its best efforts to register or qualify the Warrant Shares
      under all applicable securities laws, blue sky laws or similar laws of all
      jurisdictions in the United States in which any holder of Warrants may or may
      be
      deemed to purchase Warrant Shares upon the exercise of Warrants and shall use
      its best efforts to maintain such registration or qualification for so long
      as
      it is required to cause the Common Shelf Registration Statement to remain
      effective under the Securities Act pursuant to Section 5.01; provided,
      however,
      that the
      Company shall not be required to 

     

    
      
        
        

      

      
        -12-

        
          

        

      

      
        
        

      

    

    qualify
      generally to do business in any jurisdiction where it would not otherwise be
      required to qualify but for this Section 5.03 or to take any action which
      would subject it to general service of process or to taxation in any such
      jurisdiction where it is not then so subject.

     

    SECTION
      5.04   Additional
      Acts.
      If the
      issuance or sale of any Common Stock issuable upon the exercise of the Warrants
      requires registration or approval of any governmental authority (other than
      the
      registration requirements under the Securities Act), or the taking of any other
      action under the laws of the United States or any political subdivision thereof
      before such securities may be validly offered or sold in compliance with such
      laws, then the Company covenants that it will, in good faith and as
      expeditiously as reasonably possible, use its reasonable best efforts to secure
      and maintain such registration or approval or to take such other action, as
      the
      case may be. The Company shall promptly notify the Warrant Agent in writing
      when
      (i) the Company has obtained all such governmental approvals and authorizations
      and (ii) such approvals and authorizations thereafter cease to be in
      effect.

     

    SECTION
      5.05   Expenses.
      All
      expenses incident to the Company’s performance of or compliance with its
      obligations under this Article V relating to the issuance of the Warrant
      Shares will be borne by the Company, including without limitation (i) all SEC,
      stock exchange or National Association of Securities Dealers, Inc. registration
      and filing fees, (ii) all reasonable fees and expenses incurred in connection
      with the compliance with state securities or blue sky laws, (iii) all expenses
      of any Persons incurred by or on behalf of the Company in preparing or assisting
      in preparing, printing and distributing the Common Shelf Registration Statement
      or any other registration statement, prospectus, any amendments or supplements
      thereto and other documents relating to the performance of and compliance with
      this Article V, (iv) the fees and disbursements of counsel for the Company
      and the Warrant Agent as agreed and (v) the fees and disbursements of the
      independent public accountants of the Company.

     

     

    ARTICLE
      VI

     

    Warrant
      Agent

     

    SECTION
      6.01   Appointment
      of Warrant Agent.
      The
      Company hereby appoints the Warrant Agent to act as agent for the Company in
      accordance with the provisions of this Agreement, and the Warrant Agent hereby
      accepts such appointment.

     

    SECTION
      6.02   Rights
      and Duties of Warrant Agent.
      

     

    (a)  Agent
      for the Company.
      In
      acting under this Warrant Agreement and in connection with the Warrant
      Certificates, the Warrant Agent is acting solely as agent of the Company and
      does not assume any obligation or relationship or agency or trust for or with
      any of the holders of Warrant Certificates or beneficial owners of
      Warrants.

     

    (b)  Counsel.
      The
      Warrant Agent may consult with counsel satisfactory to it (who may be counsel
      to
      the Company), and the advice of such counsel shall be full and complete
      authorization and protection in respect of any action taken, suffered or omitted
      by it hereunder in good faith and in accordance with the advice of such
      counsel.

     

    (c)  Documents.
      The
      Warrant Agent shall be protected and shall incur no liability for or in respect
      of any action taken or thing suffered by it in reliance upon any Warrant
      Certificate, notice, direction, consent, certificate, affidavit, statement
      or
      other paper or document reasonably believed by it to be genuine and to have
      been
      presented or signed by the proper parties.

     

    
      
        
        

      

      
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    (d)  No
      Implied Obligations.
      The
      Warrant Agent shall be obligated to perform only such duties as are specifically
      set forth herein and in the Warrant Certificates, and no implied duties or
      obligations of the Warrant Agent shall be read into this Agreement or the
      Warrant Certificates against the Warrant Agent. The Warrant Agent shall not
      be
      under any obligation to take any action hereunder which may tend to involve
      it
      in any expense or liability for which it does not receive indemnity if such
      indemnity is reasonably requested. The Warrant Agent shall not be accountable
      or
      under any duty or responsibility for the use by the Company of any of the
      Warrant Certificates countersigned by the Warrant Agent and delivered by it
      to
      the Holders or on behalf of the Holders pursuant to this Agreement or for the
      application by the Company of the proceeds of the Warrants. The Warrant Agent
      shall have no duty or responsibility in case of any default by the Company
      in
      the performance of its covenants or agreements contained herein or in the
      Warrant Certificates or in the case of the receipt of any written demand from
      a
      Holder with respect to such default, including any duty or responsibility to
      initiate or attempt to initiate any proceedings at law or
      otherwise.

     

    (e)  Not
      Responsible for Adjustments or Validity of Stock.
      The
      Warrant Agent shall not at any time be under any duty or responsibility to
      any
      Holder to determine whether any facts exist that may require an adjustment
      of
      the number of shares of Common Stock issuable upon exercise of each Warrant
      or
      the Exercise Price, or with respect to the nature or extent of any adjustment
      when made, or with respect to the method employed, or herein or in any
      supplemental agreement provided to be employed, in making the same. The Warrant
      Agent shall not be accountable with respect to the validity or value of any
      shares of Common Stock or of any securities or property which may at any time
      be
      issued or delivered upon the exercise of any Warrant or upon any adjustment
      pursuant to Article IV, and it makes no representation with respect
      thereto. The Warrant Agent shall not be responsible for any failure of the
      Company to make any cash payment or to issue, transfer or deliver any shares
      of
      Common Stock or stock certificates upon the surrender of any Warrant Certificate
      for the purpose of exercise or upon any adjustment pursuant to Article IV,
      or to comply with any of the covenants of the Company contained in
      Article IV.

     

    SECTION
      6.03   Individual
      Rights of Warrant Agent.
      The
      Warrant Agent and any stockholder, director, officer or employee of the Warrant
      Agent may buy, sell or deal in any of the Warrants or other securities of the
      Company or its Affiliates or become pecuniarily interested in transactions
      in
      which the Company or its Affiliates may be interested, or contract with or
      lend
      money to the Company or its Affiliates or otherwise act as fully and freely
      as
      though it were not the Warrant Agent under this Agreement. Nothing herein shall
      preclude the Warrant Agent from acting in any other capacity for the Company
      or
      for any other legal entity.

     

    SECTION
      6.04   Warrant
      Agent’s Disclaimer.
      The
      Warrant Agent shall not be responsible for and makes no representation as to
      the
      validity or adequacy of this Agreement or the Warrant Certificates and it shall
      not be responsible for any statement in this Agreement or the Warrant
      Certificates other than its countersignature thereon.

     

    SECTION
      6.05   Compensation
      and Indemnity.
      The
      Company agrees that the Warrant Agent is entitled, from time to time, reasonable
      compensation for its
      services
      as agreed and to reimbursement for all reasonable out-of-pocket expenses
      incurred by it, including the reasonable compensation and expenses of the
      Warrant Agent’s agents and counsel as agreed. The Company shall indemnify the
      Warrant Agent, its officers, directors, agents and counsel against any loss,
      liability or expense (including reasonable agents’ and attorneys’ fees and
      expenses) incurred by it without negligence or bad faith on its part arising
      out
      of or in connection with the acceptance or performance of its duties under
      this
      Agreement. The Warrant Agent shall notify the Company promptly of any claim
      for
      which it may seek indemnity. The Company need not reimburse any expense or
      indemnify against any loss or liability incurred by the 

     

    
      
        
        

      

      
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    Warrant
      Agent through willful misconduct, negligence or bad faith. The Company’s payment
      obligations pursuant to this Section 6.05 shall survive the termination of
      this
      Agreement.

     

    To
      secure
      the Company’s payment obligations under this Agreement, the Warrant Agent shall
      have a lien prior to the Holders on all money or property held or collected
      by
      the Warrant Agent.

     

    SECTION
      6.06   Successor
      Warrant Agent.
      

     

    (a)  The
      Company To Provide and Maintain Warrant Agent.
      The
      Company agrees for the benefit of the Holders that there shall at all times
      be a
      Warrant Agent hereunder until all the Warrants have been exercised or are no
      longer exercisable.

     

    (b)  Resignation
      and Removal.
      The
      Warrant Agent may at any time resign by giving written notice to the Company
      of
      such intention on its part, specifying the date on which its desired resignation
      shall become effective; provided,
      however,
      that
      such date shall not be less than 60 days after the date on which such notice
      is
      given unless the Company otherwise agrees. The Warrant Agent hereunder may
      be
      removed at any time by the filing with it of an instrument in writing signed
      by
      or on behalf of the Company and specifying such removal and the date when it
      shall become effective, which date shall not be less than 60 days after such
      notice is given unless the Warrant Agent otherwise agrees. Any removal under
      this Section 6.06 shall take effect upon the appointment by the Company as
      hereinafter provided of a successor Warrant Agent (which shall be a bank or
      trust company authorized under the laws of the jurisdiction of its organization
      to exercise corporate trust powers) and the acceptance of such appointment
      by
      such successor Warrant Agent.

     

    (c)  The
      Company To Appoint Successor.
      In the
      event that at any time the Warrant Agent shall resign, or shall be removed,
      or
      shall become incapable of acting, or shall be adjudged a bankrupt or insolvent,
      or shall commence a voluntary case under the Federal bankruptcy laws, as now
      or
      hereafter constituted, or under any other applicable U.S. federal or state
      bankruptcy, insolvency or similar law or shall consent to the appointment of
      or
      taking possession by a receiver, custodian, liquidator, assignee, trustee,
      sequestrator (or other similar official) of the Warrant Agent or its property
      or
      affairs, or shall make an assignment for the benefit of creditors, or shall
      admit in writing its inability to pay its debts generally as they become due,
      or
      shall take corporate action in furtherance of any such action, or a decree
      or
      order for relief by a court having jurisdiction in the premises shall have
      been
      entered in respect of the Warrant Agent in an involuntary case under the federal
      bankruptcy laws, as now or hereafter constituted, or any other applicable
      federal or state bankruptcy, insolvency or similar law, or a decree or order by
      a court having jurisdiction in the premises shall have been entered for the
      appointment of a receiver, custodian, liquidator, assignee, trustee,
      sequestrator (or similar official) of the Warrant Agent or of its property
      or
      affairs, or any public officer shall take charge or control of the Warrant
      Agent
      or of its property or affairs for the purpose of rehabilitation, conservation,
      winding up or liquidation, a successor Warrant Agent, qualified as aforesaid,
      shall be appointed by the Company by an instrument in writing, filed with the
      successor Warrant Agent. Upon the appointment as aforesaid of a successor
      Warrant Agent and acceptance by the successor Warrant Agent of such appointment,
      the Warrant Agent shall cease to be Warrant Agent hereunder; provided,
      however,
      that in
      the event of the resignation of the Warrant Agent under this subsection (c),
      such resignation shall be effective on the earlier of (i) the date specified
      in
      the Warrant Agent’s notice of resignation and (ii) the appointment and
      acceptance of a successor Warrant Agent hereunder.

     

    (d)  Successor
      To Expressly Assume Duties.
      Any
      successor Warrant Agent appointed hereunder shall execute, acknowledge and
      deliver to its predecessor and to the Company an instrument accepting such
      appointment hereunder, and thereupon such successor Warrant Agent, without
      any
      further act, deed or conveyance, shall become vested with all the rights and
      obligations of such predecessor with like effect as if originally named as
      Warrant Agent hereunder, and such predecessor, 

     

    
      
        
        

      

      
        -15-

        
          

        

      

      
        
        

      

    

    upon
      payment of its charges and disbursements then unpaid, shall thereupon become
      obligated to transfer, deliver and pay over, and such successor Warrant Agent
      shall be entitled to receive, all monies, securities and other property on
      deposit with or held by such predecessor, as Warrant Agent
      hereunder.

     

    (e)  Successor
      by Merger.
      Any
      corporation into which the Warrant Agent hereunder may be merged or
      consolidated, or any corporation resulting from any merger or consolidation
      to
      which the Warrant Agent shall be a party, or any corporation to which the
      Warrant Agent shall sell or otherwise transfer all or substantially all of
      its
      assets and business; provided,
      however,
      that it
      shall be qualified as aforesaid, shall be the successor Warrant Agent under
      this
      Agreement without the execution or filing of any paper or any further act on
      the
      part of any of the parties hereto.

     

     

    ARTICLE
      VII

     

    Miscellaneous

     

    SECTION
      7.01   Persons
      Benefiting.
      Nothing
      in this Agreement is intended or shall be construed to confer upon any Person
      other than the Company, the Warrant Agent and the Holders any right, remedy
      or
      claim under or by reason of this Agreement or any part hereof.

     

    SECTION
      7.02   Rights
      of Holders.
      Holders
      of unexercised Warrants are not entitled to (i) receive dividends or other
      distributions, (ii) receive notice of or vote at any meeting of the
      stockholders, (iii) consent to any action of the stockholders, (iv) receive
      notice of any other proceedings of the Company, (v) exercise any preemptive
      right or (vi) exercise any other rights whatsoever as stockholders of the
      Company.

     

    SECTION
      7.03   Amendment.
      This
      Agreement may be amended by the parties hereto without the consent of any Holder
      for the purpose of curing any ambiguity, or of curing, correcting or
      supplementing any defective provision contained herein or adding or changing
      any
      other provisions with respect to matters or questions arising under this
      Agreement as the Company and the Warrant Agent may deem necessary or desirable
      (including without limitation any addition or modification to provide for
      compliance with the transfer restrictions set forth herein); provided,
      however,
      that
      such action shall not adversely affect the rights of any of the Holders. Any
      amendment or supplement to this Agreement that has an adverse effect on the
      interests of the Holders shall require the written consent of the Holders of
      a
      majority of the then outstanding Warrants. The consent of each Holder affected
      shall be required for any amendment pursuant to which the Exercise Price would
      be increased or the number of Warrant Shares issuable upon exercise of Warrants
      would be decreased (other than pursuant to adjustments provided herein). In
      determining whether the Holders of the required number of Warrants have
      concurred in any direction, waiver or consent, Warrants owned by the Company
      shall be disregarded and deemed not to be outstanding, except that, for the
      purpose of determining whether the Warrant Agent shall be protected in relying
      on any such direction, waiver or consent, only Warrants which the Warrant Agent
      knows are so owned shall be so disregarded. Also, subject to the foregoing,
      only
      Warrants outstanding at the time shall be considered in any such
      determination.

     

    SECTION
      7.04   Notices.
      Any
      notice or communication shall be in writing and delivered in Person or mailed
      by
      first-class mail addressed as follows:

     

    
      
        
        

      

      
        -16-

        
          

        

      

      
        
        

      

    

    if
      to the
      Company

     

    Krispy
      Kreme Doughnuts, Inc.

    370
      Knollwood Street

    Winston-Salem,
      NC 27103

    Telephone: (336)
      725-2981

    Facsimile: (336)
      499-4682

     

    Attention: General
      Counsel

     

    if
      to the
      Warrant Agent

     

    American
      Stock Transfer & Trust Company

    59
      Maiden
      Lane

    New
      York,
      NY 10038

    Telephone: (718)
      331-1852

    Facsimile: (718)
      921-8209

     

    Attention: Herbert
      J.
      Lemmer

     

    The
      Company or the Warrant Agent by notice to the other may designate additional
      or
      different addresses for subsequent notices or communications.

     

    Any
      notice
      or communication mailed to a Holder shall be mailed to the Holder at the
      Holder’s address as it appears on the Certificate Register and shall be
      sufficiently given if so mailed within the time prescribed.

     

    Failure
      to
      mail a notice or communication to a Holder or any defect in it shall not affect
      its sufficiency with respect to other Holders. If a notice or communication
      is
      mailed in the manner provided above, it is duly given, whether or not the
      addressee receives it.

     

    SECTION
      7.05   Governing
      Law.
      The laws
      of the State of New York shall govern this Agreement and the Warrant
      Certificates.

     

    SECTION
      7.06   Successors.
      All
      agreements of the Company in this Agreement and the Warrant Certificates shall
      bind its successors All agreements of the Warrant Agent in this Agreement shall
      bind its successors.

     

    SECTION
      7.07   Multiple
      Originals.
      The
      parties may sign any number of copies of this Agreement. Each signed copy shall
      be an original, but all of them together represent the same agreement One signed
      copy is enough to prove this Agreement.

     

    SECTION
      7.08   Table
      of Contents.
      The
      table of contents and headings of the Articles and Sections of this Agreement
      have been inserted for convenience of reference only, are not intended to be
      considered a part hereof and shall not modify or restrict any of the terms
      or
      provisions hereof.

     

    SECTION
      7.09   Severability.
      The
      provisions of this Agreement are severable, and if any clause or provision
      shall
      be held invalid, illegal or unenforceable in whole or in part in any
      jurisdiction, then such invalidity or unenforceability shall affect in that
      jurisdiction only such clause or provision, or part thereof, and shall not
      in
      any manner affect such clause or provision in any other jurisdiction or any
      other clause or provision of this Agreement in any jurisdiction.

     

    

    
      
        
        

      

      
        -17-

        
          

        

      

      
        
        

      

    

    IN
      WITNESS
      WHEREOF, the parties have caused this Warrant Agreement to be duly executed
      as
      of the date first written above.

     

     

    KRISPY
      KREME DOUGHNUTS, INC.

     

    By: 
      /s/
      Michael C. Phalen

           
      Name: Michael C. Phalen

           
      Title: CFO

     

     

    AMERICAN
      STOCK TRANSFER & TRUST 
COMPANY, as Warrant Agent

     

    By: 
      /s/
      Yehuda L. Newberger

         
Name:
      Yehuda L. Newberger

          Title:
      Senior Vice President

    

    

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    EXHIBIT
      A

     

    [FORM
      OF
      FACE OF WARRANT CERTIFICATE]

     

    [Global
      Securities Legend]

     

    UNLESS
      THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY
      TRUST COMPANY, A NEW YORK CORPORATION (“DTC”), NEW YORK, NEW YORK, TO THE
      COMPANY OR ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT, AND
      ANY
      CERTIFICATE ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR SUCH OTHER
      NAME AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT
      IS
      MADE TO CEDE & CO. OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED
      REPRESENTATIVE OF DTC), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE
      OR
      OTHERWISE BY OR TO ANY PERSON IS WRONGFUL INASMUCH AS THE REGISTERED OWNER
      HEREOF, CEDE & CO. HAS AN INTEREST HEREIN.

     

    TRANSFERS
      OF THIS GLOBAL SECURITY SHALL BE LIMITED TO TRANSFERS IN WHOLE, BUT NOT IN
      PART,
      TO NOMINEES OF DTC OR TO A SUCCESSOR THEREOF OR SUCH SUCCESSOR’S NOMINEE AND
      TRANSFERS OF PORTIONS OF THIS GLOBAL SECURITY SHALL BE LIMITED TO TRANSFERS
      MADE
      IN ACCORDANCE WITH THE RESTRICTIONS SET FORTH IN THE WARRANT AGREEMENT REFERRED
      TO ON THE REVERSE HEREOF.

     

    

    

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    No [      ]                                                                                                                                                                                 
      Certificate
      for [        ] Warrants

     

    WARRANTS
      TO PURCHASE COMMON STOCK OF

     

    KRISPY
      KREME DOUGHNUTS, INC.

     

    THIS
      CERTIFIES THAT
      [                    ],
      or registered assigns, is the registered holder of the number of Warrants set
      forth above (the “Warrants”). Each Warrant entitles the holder thereof (the
“Holder”), at the option of the Holder and subject to the provisions contained
      herein and in the Warrant Agreement referred to below, to purchase from KRISPY
      KREME DOUGHNUTS, INC., a North Carolina corporation (“the Company”),
      [            ]
      shares of common stock, no par value, of the Company (the “Common Stock”) at the
      per share exercise price of $12.21 (the “Exercise Price”). This Warrant
      Certificate shall terminate and become void as of the close of business on
      March
      2, 2012 (the “Expiration Date”) or upon the
      exercise hereof as to all the shares of Common Stock subject hereto. The number
      of shares issuable upon exercise of the Warrants and the Exercise Price per
      share shall be subject to adjustment from time to time as set forth in the
      Warrant Agreement.

     

    This
      Warrant Certificate is issued under and in accordance with a Warrant Agreement
      dated as of March 2, 2007 (the “Warrant Agreement”), between the Company and
      American Stock Transfer & Trust Company (the “Warrant Agent”, which term
      includes any successor Warrant Agent under the Warrant Agreement), and is
      subject to the terms and provisions contained in the Warrant Agreement, to
      all
      of which terms and provisions the Holder of this Warrant Certificate consents
      by
      acceptance hereof. The Warrant Agreement is hereby incorporated herein by
      reference and made a part hereof. Reference is hereby made to the Warrant
      Agreement for a full statement of the respective rights, limitations of rights,
      duties and obligations of the Company, the Warrant Agent and the Holders of
      the
      Warrants. Capitalized terms used but not defined herein shall have the meanings
      ascribed thereto in the Warrant Agreement. A copy of the Warrant Agreement
      may
      be obtained for inspection by the Holder hereof upon written request to the
      Warrant Agent American Stock Transfer & Trust Company, 59 Maiden Lane, New
      York, NY 10038, Attention: Herbert J. Lemmer.

     

    Subject
      to
      the terms of the Warrant Agreement, the Warrants may be exercised in whole
      or in
      part by presentation of this Warrant Certificate with the Election to Purchase
      attached hereto duly executed and with the simultaneous payment of the Exercise
      Price in cash (subject to adjustment) to the Warrant Agent for the account
      of
      the Company at the office of the Warrant Agent and payment by the Holder to
      the
      Warrant Agent of any exercise fee associated with the exercise of such Warrants.
      Payment of the Exercise Price in cash shall be made by certified or official
      bank check payable to the order of the Company or by wire transfer of funds
      to
      an account designated by the Company for such purpose.

     

    As
      provided in the Warrant Agreement and subject to the terms and conditions
      therein set forth, the Warrants shall be exercisable at any time and from time
      to time on any Business Day after
      the
      Issue Date; provided,
      however,
      that
      Holders of Warrants will be able to exercise their Warrants only if the Common
      Shelf Registration Statement relating to the Common Stock underlying the
      Warrants is effective or the exercise of such Warrants is exempt from the
      registration requirements of the Securities Act of 1933 and such securities
      are
      qualified for sale or exempt from qualification under the applicable securities
      laws of the states or other jurisdictions in which such Holders reside;
provided further,
      however,
      that no
      Warrant shall be exercisable after March [2], 2012.

     

    As
      provided in the Warrant Agreement, the number of shares of Common Stock issuable
      upon the exercise of the Warrants and the Exercise Price are subject to
      adjustment upon the happening of certain events.

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    

     

    Any
      service charge for any registration of transfer or exchange, or any transfer
      tax, assessments, or similar governmental charge payable in connection
      therewith, shall be paid by the Holder.

     

    Upon
      any
      partial exercise of the Warrants, there shall be countersigned and issued to
      the
      Holder hereof a new Warrant Certificate representing those Warrants which were
      not exercised. This Warrant Certificate may be exchanged at the office of the
      Warrant Agent by presenting this Warrant Certificate properly endorsed with
      a
      request to exchange this Warrant Certificate for other Warrant Certificates
      evidencing an equal number of Warrants. No fractional Warrant Shares will be
      issued upon the exercise of the Warrants, but the Company shall pay an amount
      in
      cash equal to the Current Market Value per Warrant Share on the day immediately
      preceding the date the Warrant is exercised, multiplied by the fraction of
      a
      Warrant Share that would be issuable on the exercise of any
      Warrant.

     

    All
      shares
      of Common Stock issuable by the Company upon the exercise of the Warrants shall,
      upon such issue, be duly and validly issued and fully paid and
      non-assessable.

     

    The
      holder
      in whose name the Warrant Certificate is registered may be deemed and treated
      by
      the Company and the Warrant Agent as the absolute owner of the Warrant
      Certificate for all purposes whatsoever and neither the Company nor the Warrant
      Agent shall be affected by notice to the contrary.

     

    The
      Warrants do not entitle any Holder hereof to any of the rights of a stockholder
      of the Company.

     

    

    

    
      
        
        

      

      
        -2-

        
          

        

      

      
        
        

      

    

    This
      Warrant Certificate shall not be valid or obligatory for any purpose until
      it
      shall have been
      countersigned by the Warrant Agent.

     

     

    KRISPY
      KREME DOUGHNUTS, INC.

     

    By: 
      ______________________________________

           
      Name:

           
      Title:

     

    DATED

     

    Countersigned

     

    AMERICAN
      STOCK TRANSFER & TRUST COMPANY,

    as
      Warrant
      Agent,

     

    By:
      ____________________________________

                            
      Authorized Signatory

     

    

    

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    FORM
      OF
      ELECTION TO PURCHASE WARRANT SHARES

    (to
      be
      executed only upon exercise of Warrants)

     

    KRISPY
      KREME DOUGHNUTS, INC.

     

    The
      undersigned hereby irrevocably elects to exercise _________________ Warrants
      to
      acquire shares of Common Stock, no par value, of KRISPY KREME DOUGHNUTS, INC.
      at
      an exercise price per share of Common Stock of $12.21 and otherwise on the
      terms
      and conditions specified in the within Warrant Certificate and the Warrant
      Agreement therein refereed to, surrenders this Warrant Certificate and all
      right, title and interest therein to KRISPY KREME DOUGHNUTS, INC. and directs
      that the shares of Common Stock deliverable upon the exercise of such Warrants
      be registered or placed in the name and at the address specified below and
      delivered thereto.

     

    Dated ____________________,
      ________

     

     

    __________________________________________2

    (Signature
      of Owner)

     

     

    ___________________________________________

    (Street
      Address)

     

     

    ___________________________________________

    (City)
      (State) (Zip Code)

     

     

    Signature
      Guaranteed by

     

    ____________________________________________

     

    

    

    

      

      
        2 
          The signature must correspond with the name as written upon the face of
          the
          within Warrant Certificate in every particular, without alteration or
          enlargement or any change whatever, and must be guaranteed by an eligible
          guarantor institution (a bank, stockbroker, savings and loan association
          or
          credit union with membership in an approved signature guarantee medallion
          program) pursuant to Rule 17Ad-15 of the Securities Exchange Act of
          1934.

         

      

    

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    Securities
      and/or check to be issued to

     

    Please
      insert social security or identifying number

     

    Name

     

    Street
      Address

     

    City,
      State and Zip Code

     

    A
      new
      Warrant Certificate evidencing any unexercised Warrants evidenced by the within
      Warrant Certificate is to be issued to

     

    Please
      insert social security or identifying number

     

    Name

     

    Street
      Address

     

    City,
      State and Zip Code

     

    

    

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    FORM
      OF
      WARRANT TRANSFER

     

    For
      value
      received, the undersigned hereby sells, assigns and transfers unto
      ___________________ the right to purchase ___________________ (__________)
      Warrant Shares representing shares of common stock, no par value, of Krispy
      Kreme Doughnuts, Inc. (the “Company”) pursuant to the attached Warrant
      Certificate and does hereby irrevocably constitute and appoint
      ___________________ attorney to transfer the Warrant, or such portion as is
      transferred hereby, on the books of the Company with full power of substitution
      in the premises. The undersigned requests said attorney to issue to the
      transferee a Warrant Certificate evidencing
      such transfer and to issue to the undersigned a new Warrant Certificate
      evidencing the right to purchase Warrant Shares for the balance not so
      transferred, if any.

     

    Date _______________,
      ______

    __________________________________________3

    (Signature
      of Owner)

     

     

    ___________________________________________

    (Street
      Address)

     

     

    ___________________________________________

    (City)
      (State) (Zip Code)

     

     

    Signature
      Guaranteed by

     

    ____________________________________________

     

    Name
      in
      which new Warrant(s) should

     

    be
      registered

     

    ___________________________________

     

    (Name)

     

    ___________________________________

     

    (Street
      Address)

     

    ___________________________________

     

    (City)
      (State) (Zip Code)

     

    ___________________________________

     

    (social
      security or identifying number)

     

    

    

      

      
        3 
          The
          signature must correspond with the name as written upon the face of the
          within
          Warrant Certificate in every particular, without alteration or enlargement
          or
          any change whatever, and
          must
          be guaranteed by an eligible guarantor institution (a bank, stockbroker,
          savings
          and loan association or credit union with membership in an approved signature
          guarantee medallion program) pursuant to Rule 17Ad-15 of the Securities
          Exchange
          Act of 1934.

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