Exhibit 10.15
EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT (THE "AGREEMENT") is made this 6th day of
January, 2004, and is effective the 6th day of January, 2004, by and between
KRISPY KREME DOUGHNUTS, INC., a North Carolina corporation (the "Company"), and
XXXXXXX XXXXXX (the "Executive").
RECITAL
The Executive is being hired as Chief Financial Officer, and the
parties have negotiated this Agreement in consideration of the Executive's
valuable services and leadership.
NOW THEREFORE, in consideration of the mutual promises and covenants
herein contained, the parties do hereby agree as follow:
1. EFFECTIVE DATE. This Agreement shall be effective upon, and from and
after, the date set forth above.
2. DEFINITIONS. As used herein, the following terms shall have the
following meanings:
(a) "Disability" shall mean the Executive becoming disabled
and unable to continue his employment with the Company as
defined in the Company's then applicable disability policy for
the Senior Management of the Company.
(b) "Discharge" shall mean the termination by the Company of
the Executive's employment during the Period of Employment for
any reason other than (i) Good Cause, (ii) death of the
Executive, (iii) Disability of the Executive, or (iv)
Retirement of the Executive.
(c) "Expiration Date" means the date that the Period of
Employment (as it may have been extended) expires.
(d) "Good Cause" has its meaning as defined in Section 6
hereof.
(e) "Period of Employment" shall be for a term of three years
beginning January 6, 2004 and ending January 6, 2007;
provided, however, that commencing January 6, 2005, the
Executive's Period of Employment shall automatically be
extended for successive one-year periods each year as of
January 6, of each year unless the Company gives Executive
written notice of nonextension on or before that date.
(f) "Retirement" shall mean a time when the sum of the
Executive's age and employment with the Company equals or
exceeds 65.
(g) "Senior Management" shall mean the senior executive
management of the Company currently consisting of the chief
executive officer, the president, and the executive vice
presidents.
(h) "Stock Option Plan" shall mean the Krispy Kreme Doughnut
Corporation 1998 Stock Option Plan and/or the Krispy Kreme
Doughnuts, Inc. 2000 Stock Incentive Plan or any successor
plan.
(i) "Termination Date" shall mean:
(i) If the Executive's employment is terminated by
reason of death, the Executive's date of death;
(ii) If the Executive's employment is terminated by
reason of Retirement, the date of his Retirement;
(iii) If the Executive's employment is terminated by
reason of Disability, the date of his Disability;
(iv) If the Executive's employment is terminated for
Good Cause, the date specified in the written notice
of termination given by the Company pursuant to
Section 6(a);
(v) If the Executive's employment is terminated by
reason of a Discharge, the effective date of
Discharge;
(vi) If the Executive's employment is terminated by
reason of non-extension of the Period of Employment,
the Expiration Date; and
(vii) If the Executive voluntarily terminates his
employment as permitted by Section 6(b), the
effective date of his termination of employment.
3. EMPLOYMENT; PERIOD OF EMPLOYMENT.
The Company hereby employs the Executive, and the Executive hereby
accepts employment by the Company, for the Period of Employment, in the position
and with the duties and responsibilities set forth in Section 4, upon the terms
and subject to the conditions of this Agreement.
4. POSITION, DUTIES AND RESPONSIBILITIES. During the Period of
Employment, the Executive shall
(a) serve as Chief Financial Officer, reporting to the CEO, of
the Company and its subsidiaries or in such other Senior
Management position as may be assigned to him by mutual
agreement with the Board of Directors. The Executive shall be
employed hereunder in Forsyth County, North Carolina and he
shall not be required to relocate
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his residence or principal office to any place outside Forsyth
County, North Carolina without his consent; and
(b) devote his best efforts to the furtherance of the interest
of the Company and the performance of his duties hereunder and
agrees not to engage in any competition whatsoever, either
directly or indirectly, with the Company or any of its
subsidiaries or affiliates. The Executive shall be allowed
holiday and vacation periods, leaves for periods of illness or
incapacity and personal leaves in accordance with the
Company's regular practices for members of Senior Management.
5. COMPENSATION, COMPENSATION PLANS AND BENEFITS. During the Period of
Employment, the Executive shall be compensated as follows:
(a) He shall receive an annual base salary equal to $300,000,
with annual increases in accordance with the Company's regular
practices for members of Senior Management. In addition, he
shall receive certain non-incentive compensation (including a
monthly automobile allowance of $3,000). Such compensation
shall be paid in accordance with the Company's regular
schedule for payment of salaried employees.
(b) He shall receive such other bonuses as are afforded the
Company's Senior Management and be eligible to participate in
all of the Company's executive compensation plans provided to
members of Senior Management of the Company from time to time.
He shall be eligible for a bonus target of 60%. For FY 2005,
he shall have a minimum bonus guarantee of $300,000.
(c) He shall be eligible to receive 75,000 options of Krispy
Kreme Doughnuts, Inc. common stock on date of hire. These
options will vest at 25% per year over a four year period. The
strike price will be the closing price of the stock at the end
of the normal trading hours on the first day of his
employment.
(d) He shall be entitled to participate in and receive other
employee benefits, which may include, but are not limited to,
benefits under any life, health, accident, disability,
medical, dental and hospitalization insurance plans, use of a
Company automobile or an automobile allowance, and other
perquisites and benefits, as are provided to members of Senior
Management of the Company from time to time.
(e) He shall be entitled to be reimbursed for the reasonable
and necessary out-of-pocket expenses, including entertainment,
travel and similar items, and all expenses necessary to
maintain his CPA license and professional memberships,
incurred by him in performing his duties hereunder upon
presentation of such documentation thereof as the Company may
normally and customarily require of the members of Senior
Management.
(e) The Company agrees to pay the Executive's dues and
assessments for membership in Forsyth Country Club.
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6. TERMINATION OF EMPLOYMENT. During the Period of Employment,
Executive's employment may be terminated in the following manner:
(a) Termination for Good Cause.
(i) The Company may terminate the Executive's
employment for Good Cause. Termination of employment shall be
deemed to have been for Good Cause if (i) the Executive
habitually neglects or refuses to do his duties and fails to
cure such neglect after written notice and within a reasonable
period of time as established by the CEO in such written
notice, or (ii) the Executive commits (a) acts resulting in a
conviction of a felony or (b) acts of gross negligence or
willful misconduct to the material detriment of the Company.
(ii) Termination by the Company for Good Cause may be
made only by written notice of termination from the Company to
the Executive that has been specifically approved in advance
by the Board of Directors. Such notice shall set forth all
acts constituting such neglect or refusal to do duties or
gross negligence or willful misconduct as is applicable.
(b) Voluntary Termination.
The Executive may voluntarily terminate his
employment with the Company upon 30 days prior written notice.
(c) Termination by Reason of Death, Disability, or Retirement.
The employment of the Executive shall be terminated
by death, Disability or Retirement of the Executive.
7. EFFECT OF TERMINATION.
(a) If the Executive's employment is terminated by reason of
death, Retirement or voluntary termination of employment, the
Company shall pay the Executive (or his estate in the case of
his death) his base salary, non-incentive compensation
(including automobile allowance), bonuses and benefits as
provided in Section 5 through the Termination Date and (in the
case of his death) a death benefit of $5,000. Any payments and
benefits due to the Executive under employee benefit plans and
programs of the Company, including the Stock Option Plan,
shall be determined in accordance with the terms of such
benefit plans and programs; provided, however, that all
options held by the Executive under the Stock Option Plan
shall become 100% vested if the Executive's employment is
terminated by reason of death or Retirement.
(b) If the Executive's employment is terminated by reason of
Disability, the Company shall pay the Executive his base
salary, non-incentive compensation, bonuses and benefits for a
period of six months following the date of Disability.
Thereafter, this Agreement terminates and the Executive shall
receive those benefits payable to him under the applicable
disability insurance plan provided by the
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Company. Any payments and benefits due to the Executive under
employee benefit plans and programs of the Company, including
the Stock Option Plan, shall be determined in accordance with
the terms of such benefit plans and programs; provided,
however, that all options held by the Executive under the
Stock Option Plan shall become 100% vested as of the
Executive's termination of employment by reason of Disability.
(c) In the event of the Executive's Discharge by the Company,
(i) the Company shall pay the Executive
A. his then current annual base salary and
non-incentive compensation (including
automobile allowance) and provide the
Executive with his then current benefits (as
provided in Section 5) through the
Expiration Date pursuant to Section 2(e) to
the extent permitted by law and unless
Executive elects a lump sum payment pursuant
to subparagraph (f); and
B. within thirty (30) days from the
Termination Date (1) a lump sum equal to
Executive's then current monthly base salary
amount multiplied by the number of months
that have elapsed between the month of
Discharge and the preceding January 6, and
(2) a lump sum amount equal to three times
the Executive's bonus calculated at 50% of
his annualized base salary for the then
current fiscal year, discounted at the rate
of six percent (6%) per annum. The latter
payment is full and final satisfaction of
all the Company's obligations for bonus
and/or other incentive payments.
(ii) Any payments and benefits due to executive under
the employee benefit plans and programs of the
Company, including the Stock Option Plan, shall be
determined in accordance with the terms of such
benefit plans and programs; provided, however, that
all options held by the Executive under the Stock
Option Plan shall become 100% vested as of the
Termination Date.
(d) In the event of the Company's nonextension of the
Employment Period, Executive shall continue to be employed by
the Company pursuant to this Agreement through the Expiration
Date, and his employment shall be terminated as of the
Expiration Date. Then, the following provisions shall apply:
(i) within thirty (30) days from the Termination
Date, the Company shall pay Executive (1) a lump sum
equal to Executive's then current annual base salary,
and (2) a lump sum amount equal to three times the
Executive's bonus calculated at 50% of his base
salary for the then current fiscal year discounted at
the rate of six percent (6) per annum. The latter
payment is full and final satisfaction of all the
company's obligations for bonus and/or other
incentive payments.
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(ii) Any payments and benefits due to Executive under
employee benefit plans and programs of the Company,
including the Stock Option Plan, shall be determined
in accordance with the terms of such benefit plans
and programs; provided, however, that all options
held by the Executive under the Stock Option Plan
shall become 100% vested as of the Expiration Date.
It is further provided, however, that within sixty (60) days
of the date of notification by the Company to the Executive of
its intention not to extend the Period of Employment, the
Executive may, at his option, elect to have the non-extension
treated as a Discharge with an effective date thirty (30) days
after the Executive's notification to the Company of his
election.
(e) In the event of the Executive's Termination For Good Cause
by the Company, the Company shall pay the Executive his then
current base salary and non-incentive compensation (including
automobile allowance) and provide the Executive with his then
current benefits (as provided in Section 5) through the
Termination Date. Any payments and benefits due the Executive
under employee benefit plans and programs of the Company,
including the Stock Option Plan, shall be determined in
accordance with the terms of such benefit plans and programs.
(f) In the event the Executive's employment is terminated by
reason of Discharge or nonextension of the Employment Period,
the Executive may, at his option, in lieu of amounts otherwise
payable pursuant to Section 7(c)(i)(A), elect to receive a
lump sum amount equal to the base salary and non-incentive
compensation due, discounted at a rate of six percent (6%) per
annum.
(g) In the event the Executive's employment is terminated by
reason of Discharge, the Company shall furnish the Executive,
for a period of six (6) months subsequent to the Termination
Date, outplacement services, reasonable office space, and
secretarial assistance.
(h) If any of the payments provided for in this Agreement,
together with any other payments which the Executive has the
right to receive from the Company or any corporation which is
a member of an "affiliated group" as defined in Section
1504(a) of the Code (without regard to Section 1504(b) of the
Code) of which the Company is a member, would constitute an
"excess parachute payment" as defined in Section 280G(b)(1) of
the Code as it presently exists, such that any portion of such
payments are subject to the excise tax imposed by Section 4999
of the Code, or any interest or penalty with respect to such
excise tax (such excise tax, together with any such interest
or penalty, are collectively referred to as the "Excise Tax"),
then the Executive shall be entitled to receive an additional
payment (an "Excise Tax Restoration Payment"). The amount of
the Excise Tax Restoration Payment shall be the amount
necessary to fund the payment by the Executive of any Excise
Tax on the total payments, as well as all income taxes imposed
on the Excise Tax Restoration Payment, any excise tax imposed
on the Excise Tax Restoration Payment, and any interest or
penalties imposed with respect to taxes on the Excise Tax
Restoration Payment or any Excise Tax.
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(i) Notwithstanding anything in this Agreement to the
contrary, to the extent not previously paid, the minimum
guaranteed bonus for FY 2005 specified in Section 5(b) of this
Agreement shall be paid to the Executive (or his estate, as
applicable) in full, without discount, in a lump sum payment
within thirty (30) days after the Termination Date, the
payment of which shall not reduce or offset any other amount
due the Executive pursuant to this Section 7.
8. Termination For Good Reason. In the event of a "Change in Control"
of the Company (as hereinafter defined), the Executive may terminate his
employment for Good Reason. For purposes of this Agreement, "Good Reason" shall
mean the occurrence of any of the following events during the twelve (12) months
immediately preceding or following the effective date of a Change in Control of
the Company:
(a) a material change in the scope of the Executive's assigned
duties and responsibilities from those in effect immediately prior to a Change
in Control of the Company or the assignment of duties or responsibilities that
are inconsistent with the duties and responsibilities of a Chief Financial
Officer of a public company; ;
(b) a reduction by the Company in the Executive's base salary
or incentive compensation as in effect on the date of a Change in Control;
(c) the Company's requirement that the Executive be based
anywhere other than the Company's office in Forsyth County, North Carolina, at
which he was based prior to the Change in Control of the Company; or
(d) the failure by the Company to continue to provide the
Executive with benefits substantially similar to those specified in Section 5 of
this Agreement.
For purposes of Section 8(c) above, the Company shall be deemed to have
required the Executive to be based somewhere other than the Company's office at
which he was based prior to the Change in Control if the Executive is required
to spend more than two days per week on a regular basis at a business location
not within 50 miles of the Executive's primary business location as of the
effective date of a Change in Control.
If the Executive terminates his employment for Good Reason, this shall
be treated as the Discharge of the Executive by the Company. Accordingly, the
Company shall pay the amounts and provide the benefits to the Executive
specified in Section 7 above, applicable in the event of Discharge. The
Executive shall not be obligated in any way to mitigate the Company's
obligations to him under this Section 8 or under Section 7 and any amounts
earned by the Executive subsequent to his termination of employment shall not
serve as an offset to the payments due him by the Company under this Section or
under Section 7.
For purposes of this Agreement, a "Change in Control" means the date on
which the earlier of the following events occur:
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(a) the acquisition by any entity, person or group of
beneficial ownership, as that term is defined in Rule 13d-3 under the Securities
Exchange Act of 1934, of more than 30% of the outstanding capital stock of the
Company entitled to vote for the election of directors ("Voting Stock");
(b) the merger or consolidation of the Company with one or
more corporations as a result of which the holders of outstanding Voting Stock
of the Company immediately prior to such a merger or consolidation hold less
than 60% of the Voting Stock of the surviving or resulting corporation;
(c) the transfer of substantially all of the property of the
Company other than to an entity of which the Company owns at least 80% of the
Voting Stock; or
(d) the election to the Board of Directors of the Company of
three or more directors during any twelve (12) month period without the
recommendation or approval of the incumbent Board of Directors of the Company.
Upon a Change in Control, as defined above in this Section 8, all
outstanding stock options shall become 100% vested and immediately exercisable,
regardless of whether the Executive terminates employment or not.
If the Executive terminates employment with Good Reason within twelve
(12) months of a Change in Control, to the extent permitted by law, the Company
shall continue to pay the medical, disability and life insurance benefits which
Executive was receiving at the time of termination for a period of 36 months
after termination of employment or, if earlier, until Executive has commenced
employment elsewhere and becomes eligible for participation in the medical,
disability and life insurance programs, if any, of his successor employer.
Coverage under Employer's medical, disability and life insurance programs shall
cease with respect to each such program as Executive becomes eligible for the
medical, disability and life insurance programs, if any, of his successor
employer.
9. CONFIDENTIALITY. During the Period of Employment and following
termination for any reason, the Executive covenants and agrees that he will not
divulge any trade secrets or other confidential information pertaining to the
business of the Company. It is understood that the term "trade secrets" as used
in this Agreement is deemed to include any information which gives the Company a
material and substantial advantage over its competitors but that such term does
not include knowledge, skills or information which is otherwise publicly
disclosed.
10. NON-COMPETITION. In the event of Termination For Good Cause, or
Voluntary Termination of the Executive, the Executive agrees that for a period
of two years following the Termination Date, Executive shall not directly or
indirectly, personally or with other employees, agents or otherwise, or on
behalf of any other person, firm, or corporation, engage in the business of
making and selling doughnuts and complementary products
(a) within a 100 mile radius of any place of business of the
Company (including franchised operations) or of any place
where the Company (or one of its franchised operations) has
done business since the Effective Date of this Agreement,
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(b) in any county where the Company is doing business or has
done business since the Effective Date, or
(c) in any state where the Company is doing business or has
done business since the Effective Date.
Notwithstanding the above, ownership by Executive of an interest in any
licensed franchisee of the Company shall not be deemed to be in violation of
this Section 10. In the event of an actual or threatened breach of this
provision, the Company shall be entitled to an injunction restraining Executive
from such action and the Company shall not be prohibited in obtaining such
equitable relief or from pursuing any other available remedies for such breach
or threatened breach, including recovery of damages from Executive.
11. SUCCESSORS; BINDING AGREEMENT.
(a) This Agreement shall be binding upon, and inure to the
benefit of, the parties hereto, their heirs, personal
representatives, successors and assigns.
(b) The Company shall require any successor (whether direct or
indirect and whether by purchase, merger, consolidation or
otherwise) to all or substantially all of the business or
assets of the Company expressly to assume and agree to perform
this Agreement in the same manner and to the same extent that
the Company would be required to perform if no such succession
had taken place. As used herein, "Company" shall mean the
Company as defined in the preamble to this Agreement and any
successor to its business or assets which executes and
delivers (or is required to execute and deliver) the agreement
provided for in this Section 11(b), or which otherwise becomes
bound by the terms and provisions of this Agreement or by
operation of law.
12. ARBITRATION. Except as hereinafter provided, any controversy or
claim arising out of or relating to this Agreement of any alleged breach thereof
shall be settled by arbitration in the City of Winston-Salem, North Carolina in
accordance with the rules then obtaining of the American Arbitration Association
and any judgment upon any award, which may include an award of damages, may be
entered in the highest State or Federal court having jurisdiction. Nothing
contained herein shall in any way deprive the Company of its claim to obtain an
injunction or other equitable relief arising out of the Executive's breach of
the provisions of Paragraphs 9 and 10 of this Agreement. In the event of the
termination of Executive's employment, Executive's sole remedy shall be
arbitration as herein provided and any award of damages shall be limited to
recovery of lost compensation and benefits provided for in this Agreement.
13. NOTICES. For the purposes of this Agreement, notices and all other
communications provided for herein shall be in writing and shall be deemed to
have been duly given when delivered or mailed by United States registered or
certified mail, return receipt requested, postage prepaid, addressed as follows:
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IF TO THE EXECUTIVE: Xxxxxxx Xxxxxx
0000 Xxxxxxxx Xxxx
Xxxxxxx Xxxx, XX 00000
IF TO THE COMPANY: Krispy Kreme Doughnut Corporation
X.X. Xxx 00
Xxxxxxx-Xxxxx, XX 00000-0000
(for mail)
000 Xxxxxxxxx Xxxxxx
Xxxxx 000
Xxxxxxx-Xxxxx, XX 00000
(for delivery)
Attn: R. Xxxxx Xxxxxx, Corporate Secretary
14. GOVERNING LAW. The validity, interpretation, construction and
performance of this Agreement shall be governed by the laws of the State of
North Carolina.
15. MISCELLANEOUS. No provisions of this Agreement may be modified,
waived or discharged unless such waiver, modification or discharge is agreed to
in writing signed by the Executive and the Company. No waiver by either party
hereto at any time of any breach by the other party hereto of, or compliance
with, any condition or provision of this Agreement to be performed by such other
party shall be deemed a waiver of other provisions or conditions at the same or
at any prior or subsequent time. No agreements or representations, oral or
otherwise, express or implied, with respect to the subject matter hereof have
been made by either party which are not set forth expressly in this Agreement.
16. SEPARABILITY. The invalidity or lack of enforceability of a
provision of this Agreement shall not affect the validity of any other provision
hereof, which shall remain in full force and effect.
17. WITHHOLDING OF TAXES. The Company may withhold from any benefits
payable under this Agreement all federal, state and other taxes as shall be
required pursuant to any law or governmental regulation or ruling.
18. SURVIVAL. The provisions of Sections 9 and 10 of the Agreement
shall survive the termination of this Agreement and shall continue for the terms
set forth in Sections 9 and 10.
19. CAPTIONS. Captions to the sections of this Agreement are inserted
solely for the convenience of the parties, are not a part of this Agreement, and
in no way define, limit, extend or describe the scope hereof or the intent of
any of the provisions.
20. NON-ASSIGNABILITY. This Agreement is personal in nature and neither
of the parties hereto shall, without the consent of the other, assign or
transfer this Agreement or any rights or obligations hereunder. Without limiting
the foregoing, the Executive's right to receive payments hereunder shall not be
assignable or transferable, whether by pledge, creation of a security interest
or otherwise, other than a transfer by will or by the laws of descent or
distribution. In the event of any
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attempted assignment or transfer contrary to this section, the Company shall
have no liability to pay any amount so attempted to be assigned or transferred.
IN WITNESS WHEREOF, the Company has caused this Agreement to be
executed and delivered under its seal pursuant to the specific authorization of
its board of directors and the Executive has hereunto set his hand and seal on
the day and year first above written.
KRISPY KREME DOUGHNUTS, INC.
By: /s/ Xxxxx X. Xxxxxxxxx
-------------------------------------
Xxxxx X. Xxxxxxxxx, CEO and President
[CORPORATE SEAL]
EXECUTIVE
/s/ Xxxxxxx Xxxxxx (Seal)
-------------------------------------
Xxxxxxx Xxxxxx
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