EMPLOYMENT AGREEMENT
Exhibit
10.1
EMPLOYMENT
AGREEMENT (“Agreement”)
dated
as of March 6, 2006 among Krispy Kreme Doughnut Corporation, a North
Carolina corporation (“KKDC”),
Krispy Kreme Doughnuts, Inc., a North Carolina corporation (the “Company”
and,
together with KKDC, the “Companies”), and
Xxxxx
X. Xxxxxxxx (the “Executive”).
The
parties hereto agree as follows:
ARTICLE
1
DEFINITIONS
SECTION
1.01. Definitions.
For
purposes of this Agreement, the following terms have the meanings set forth
below:
“Base
Salary” has
the
meaning set forth in Section 4.01.
“Board”
means
the Board of Directors of the Company.
“Cause” shall
mean (i) the Executive’s failure or refusal to perform the Executive’s
lawful and proper duties hereunder (other than as a result of total or partial
incapacity due to physical or mental illness), (ii) the Executive’s
conviction of or plea of nolo
contendere
to any
felony (other than a traffic infraction), (iii) an act or acts on the
Executive’s part constituting fraud, theft or embezzlement or that otherwise
constitutes a felony under the laws of the United States or any state thereof
which results or was intended to result directly or indirectly in gain or
personal enrichment by the Executive at the expense of the Companies, or
(iv) the Executive’s willful violation of any material provision of the
code of ethics of the Companies applicable to the Executive. In the case of
any
item described in the previous sentence, the Executive shall be given written
notice of the alleged act or omission constituting Cause, which notice shall
set
forth in reasonable detail the reason or reasons that the Board believes the
Executive is to be terminated for Cause, including any act or omission that
is
the basis for the decision to terminate the Executive. In the case of an act
or
omission described in clause (i) or (iv) of the definition of Cause, (A) if
reasonably capable of being cured, the Executive shall be given 30 days from
the
date of such notice to effect a cure of such alleged act or omission
constituting “Cause” which, upon such cure to the reasonable satisfaction of the
Board, shall no longer constitute a basis for Cause, and (B) the Executive
shall be given an opportunity to make a presentation to the Board (accompanied
by counsel or other representative, if the Executive so desires) at a meeting
of
the Board held promptly following such 30-day cure period if the Board intends
to determine that no cure has occurred. At or following such meeting, the Board
shall determine whether or not to terminate the Executive for “Cause” and shall
notify the Executive in writing of its determination and the effective date
of
such termination (which date may be no earlier than the date of the
aforementioned Board meeting).
“Change
in Control”
means
any of the following events:
(a)
the
acquisition (other than from the Company) by any Person of “beneficial
ownership” (within the meaning of Rule 13d-3 promulgated under the Exchange Act)
of fifty percent (50%) or more of the combined voting power of the Company’s
then outstanding voting securities; provided,
however,
that a
Change in Control shall not be deemed to occur solely because fifty percent
(50%) or more of the combined voting power of the Company’s then outstanding
securities is acquired by (i) a trustee or other fiduciary holding securities
under one or more employee benefit plans maintained by the Company or any of
its
Subsidiaries, or (ii) any Person, which, immediately prior to such acquisition,
is owned directly or indirectly by the shareholders of the Company in the same
proportion as their ownership of stock in the Company immediately prior to
such
acquisition;
(b)
consummation of (i) a merger or consolidation involving the Company if the
shareholders of the Company, immediately before such merger or consolidation
do
not, as a result of such merger or consolidation, own, directly or indirectly,
more than fifty percent (50%) of the combined voting power of the then
outstanding voting securities of the corporation resulting from such merger
or
consolidation in substantially the same proportion as their ownership of the
combined voting power of the voting securities of the Company outstanding
immediately before such merger or consolidation, or (ii) a sale or other
disposition of all or substantially all of the assets of the Company other
than
to a Person which is owned directly or indirectly by the shareholders of the
Company in the same proportion as their ownership of stock in the
Company;
(c)
a
change in the composition of the Board such that the individuals who, as of
the
Effective Date, constitute the Board (such Board shall be hereinafter referred
to as the “Incumbent Board”) cease for any reason to constitute at least a
majority of the Board; provided,
however,
for
purposes of this definition, that any individual who becomes a member of the
Board subsequent to the Effective Date whose election, or nomination for
election by the Company’s shareholders, was approved by a vote of at least a
majority of those individuals who are members of the Board and who were also
members of the Incumbent Board (or deemed to be such pursuant to this proviso)
shall be considered as though such individual were a member of the Incumbent
Board; provided
further, however,
that
any such individual whose initial assumption of office occurs as a result of
either an actual or threatened election contest (as such terms are used in
Rule
14a-11 of Regulation 14A promulgated under the Exchange Act, including any
successor to such Rule), or other actual or threatened solicitation or proxies
or consents by or on behalf of a Person other than the Board, shall not be
so
considered as a member of the Incumbent Board; or
(d)
approval by shareholders of the Company of a complete liquidation or dissolution
of the Company.
“Code”
means
the Internal Revenue Code of 1986, as amended.
“Confidential
Information”
means
information that is not generally known to the public and that was
or is
used,
developed or obtained by the Company or its Subsidiaries in connection with
the
business of the Company and its Subsidiaries and which constitutes trade secrets
or information which they have attempted to protect, which may include, but
is
not limited to, trade “know-how”, customer information, supplier information,
cost and pricing information, marketing and sales techniques, strategies and
programs, computer programs and software
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and
financial information. It shall not include information (a) required to be
disclosed by court or administrative order; (b) lawfully obtainable from other
sources or which is in the public domain through no fault of the Executive;
or
(c) the disclosure of which is consented to in writing by the
Company.
“Confidentiality
Agreement” has
the
meaning set forth in Section 6.01.
“Date
of Termination” has
the
meaning set forth in Section 5.07.
“Effective
Date”
has the
meaning set forth in Section 2.01.
“Employment
Period” has
the
meaning set forth in Section 2.01.
“Exchange
Act”
means
the Securities Exchange Act of 1934, as amended.
“Good
Reason”
shall
mean (i) the failure of the Companies to pay any material amount of
compensation to the Executive when due hereunder, (ii) the Executive is no
longer the most senior executive officer of (A) the Company or (B) in
the event of a merger, consolidation or other business combination involving
the
Company, the successor to the Company’s business or assets or (C) if all or
substantially all of the voting stock of the Company is held by another public
company, such public company (it being understood that it shall not be an event
of Good Reason for the applicable entity described in this clause (ii) to
appoint an individual other than the Executive as the non-executive chairman
of
its board of directors), (iii) the assignment to the Executive of any
duties or responsibilities materially inconsistent with the Executive’s status
under clause (ii) of this sentence or his failure at any time to report
directly to the board of directors of the applicable company described in such
clause (ii), (iv) the failure of the Executive to be appointed or elected
(or reelected) to the Board, other than due to the Executive’s decision not to
stand for election or reelection, or his removal from the Board not for Cause
and not due to his Permanent Disability or death, (v) any failure by the
Companies to maintain the Executive’s principal place of employment and the
executive offices of the Companies within 25 miles of the Winston-Salem, North
Carolina area, (vi) any material breach by the Companies of this Agreement,
or (vii) the term of the Employment Period ending as a result of the Companies
giving the Executive notice of nonextension of the term of this Agreement in
accordance with Section 5.01 solely at either the end of the initial term or
the
end of the first, second or third one year extensions of the term under Section
5.01 (but, for the avoidance of doubt, not at the end of any further extension
of the term); provided,
however,
that
for any of the foregoing to constitute Good Reason, the Executive must provide
written notification of his intention to resign within 60 days after the
Executive knows or has reason to know of the occurrence of any such event,
and
the Companies shall have 30 days (10 days in the case of a material breach
related to payment of any amounts due hereunder) from the date of receipt of
such notice to effect a cure of the condition constituting Good Reason, and,
upon cure thereof by the Companies, such event shall no longer constitute Good
Reason.
“Notice
of Termination” has
the
meaning set forth in Section 5.06.
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“Permanent
Disability” means
the
Executive becomes permanently disabled within the meaning of the long-term
disability plan of the Companies applicable to the Executive, and the Executive
commences to receive benefits under such plan.
“Person”
means
an individual, a partnership, a corporation, a limited liability company, an
association, a joint stock company, an estate, a trust, a joint venture, an
unincorporated organization or a governmental entity or any department, agency
or political subdivision thereof.
“Reimbursable
Expenses” has
the
meaning set forth in Section 4.04.
“Securities
Act”
means
the Securities Act of 1933, as amended.
“Subsidiary”
or
“Subsidiaries”
means,
with respect to any Person, any corporation, partnership, limited liability
company, association or other business entity of which (a) if a
corporation, 50 percent or more of the total voting power of shares of stock
entitled (without regard to the occurrence of any contingency) to vote in the
election of directors, managers or trustees thereof is at the time owned or
controlled, directly or indirectly, by that Person or one or more of the other
Subsidiaries of that Person or combination thereof; or (b) if a
partnership, limited liability company, association or other business entity,
50
percent or more of the partnership or other similar ownership interests thereof
are at the time owned or controlled, directly or indirectly, by any Person
or
one or more Subsidiaries of that Person or a combination thereof. For purposes
of this definition, a Person or Persons will be deemed to have a 50 percent
or
more ownership interest in a partnership, limited liability company, association
or other business entity if such Person or Persons are allocated 50 percent
or
more of partnership, limited liability company, association or other business
entity gains or losses or control the managing director or member or general
partner of such partnership, limited liability company, association or other
business entity.
ARTICLE
2
EMPLOYMENT
SECTION
2.01. Employment.
The
Companies shall employ the Executive, and the Executive shall accept employment
with the Companies, upon the terms and conditions set forth in this Agreement
for the period beginning on the date set forth in the first paragraph of this
Agreement (the “Effective
Date”)
and
ending as provided in Section 5.01 (the “Employment
Period”).
ARTICLE
3
POSITION
AND DUTIES
SECTION
3.01. Position
and Duties.
During
the Employment Period, the Executive shall serve as Chief Executive Officer
of
the Company reporting directly to the Board and shall be the Company’s most
senior executive officer. During the Employment Period, the Executive also
shall
serve as Chief Executive Officer of KKDC and shall be KKDC’s most
sen-
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ior
executive officer. The Executive shall have such responsibilities, powers and
duties as may from time to time be prescribed by the Board; provided
that
such
responsibilities, powers and duties are substantially consistent with those
customarily assigned to individuals serving in such position at comparable
companies or as may be reasonably required for the proper conduct of the
business of the Companies. As soon as practicable following the Effective Date,
the Executive shall be appointed as a member of the Board. During the Employment
Period, the Executive shall devote substantially all of his working time and
efforts to the business and affairs of the Company and its Subsidiaries. The
Executive shall not directly or indirectly render any services of a business,
commercial or professional nature to any other person or organization not
related to the business of the Company or its Subsidiaries, whether for
compensation or otherwise, without the prior approval of the Board; provided,
however,
the
Executive may serve on the board of directors of one for-profit corporation
with
the prior approval of the Board, which will not be unreasonably withheld (and
his service on the board of directors of E*trade Financial Corporation has
such
prior approval), and the Executive may serve as a director of not-for-profit
organizations or engage in other charitable, civic or educational activities,
so
long as the activities described in this proviso do not interfere with the
Executive’s performance of his duties hereunder or result in any conflict of
interest with the Companies.
ARTICLE
4
BASE
SALARY AND BENEFITS
SECTION
4.01. Base
Salary.
During
the Employment Period, the Executive will receive base salary from the Companies
equal to $700,000 per annum (the “Base
Salary”).
The
Base Salary will be payable in accordance with the normal payroll practices
of
the Companies. Annually during the Employment Period the Board and/or its
Compensation Committee shall review with the Executive his job performance
and
compensation, and if deemed appropriate by the Board, in its discretion, the
Executive’s Base Salary may be increased but not decreased. After any such
increase, the term “Base Salary” as used in this Agreement will thereafter refer
to the increased amount.
SECTION
4.02. Bonuses.
In
addition to Base Salary, the Executive shall be eligible to be considered for
an
annual bonus, and the Executive’s annual target bonus shall be equal to 70% of
Base Salary. The Executive’s annual target bonus for the fiscal year of the
Company including the Effective Date shall be $490,000. Annual bonus performance
goals shall be reasonably set by the Board in good faith after consultation
by
the Board and/or its Compensation Committee with the Executive. The annual
bonus
plan shall include a matrix providing for an increase in annual bonus for
performance above target.
SECTION
4.03. Benefits.
During
the Employment Term, the Executive shall be entitled to participate in all
employee benefit, perquisite and fringe benefit plans and arrangements made
available by the Companies to their executives and key management employees
upon
the terms and subject to the conditions set forth in the applicable plan or
arrangement. Such benefits shall include medical, life and disability insurance
provided in accordance with the policies of the Companies. The Executive also
shall be provided an executive allowance of
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$2,000
per month, and the Executive shall be entitled to five weeks of paid vacation
annually during the Employment Term.
SECTION
4.04. Expenses.
The
Companies shall reimburse the Executive for all reasonable expenses incurred
by
him in the course of performing his duties under this Agreement which are
consistent with the Companies’ policies in effect from time to time with respect
to travel, entertainment and other business expenses (“Reimbursable
Expenses”), subject
to the Companies’ requirements with respect to reporting and documentation of
expenses. In addition, the Companies shall reimburse the Executive for
reasonable attorney’s fees and expenses incurred by him in connection with
negotiating and entering into this Agreement and in representing the Company
in
assisting the Executive to understand his obligations under this Agreement
as
well as the release requirement described below (not to exceed $17,500), subject
to the Companies’ requirements with respect to recording and documentation of
expenses.
SECTION
4.05. Stock
Options.
The
Company shall grant to the Executive options to purchase 500,000 shares of
its
common stock (the “Option
Shares”)
at an
exercise price per share equal to the fair market value per share on the date
of
grant which is expected to be March 6, 2006. The options will vest and
become exercisable in three equal installments, the first two of which shall
be
on the first and second anniversaries of the Effective Date, and the third
shall
be on February 1, 2009, so long as, except as otherwise set forth herein, the
Executive’s employment continues through such vesting dates. The term of the
options will be ten years from the date of grant, subject to earlier termination
in the event the Executive’s employment terminates. To the extent the options
are, or become, vested at the time of termination of his employment, if such
termination of employment is (i) by the Executive without Good Reason, the
vested portion of the option will remain exercisable for 90 days following
such
termination (but not beyond the ten-year option term); (ii) by the Executive
for
Good Reason or by the Companies not for Cause, the vested portion of the option
will remain exercisable for three years following such termination (but not
beyond the ten-year option term); (iii) due to the death or Permanent Disability
of the Executive or at the end of the Employment Period due to notice of
nonrenewal given by the Companies (after the sixth anniversary of the Effective
Date) or the Executive pursuant to Section 5.01, the vested portion of the
option will remain exercisable for two years following such termination (but
not
beyond the ten-year option term), or (iv) by the Companies for Cause, the option
(whether or not vested) shall be immediately forfeited. The Option Shares will
be registered as soon as practicable on Form S-8 under the Securities Act.
The
Executive agrees that, without the prior written consent of the Board, he will
not sell or otherwise transfer the Option Shares or the economic benefit thereof
prior to the first anniversary of his termination of employment with the
Companies, except that this Agreement shall not prevent the Executive from
selling a number of Option Shares required to fund the exercise price of the
option and his tax liability resulting from such exercise.
SECTION
4.06. Restricted
Shares.
The
Company shall grant to the Executive 300,000 restricted shares of the Company’s
common stock (the “Restricted
Shares”);
provided,
however,
that
the grant of Restricted Shares hereunder is based on his representation to
the
Companies that the awards from his prior employer which he is irrevocably
forfeiting have a value that is at least $2 million. Except as otherwise
provided below, the Restricted Shares will vest, provided that the Executive’s
employment continues through the applicable vesting dates, in
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twelve
equal installments, beginning three months following the Effective Date and
continuing on each of the following ten three-month anniversaries of the
Effective Date, with the final installment vesting on February 1, 2009. The
Executive hereby agrees to appropriate legends and transfer restrictions on
the
Restricted Shares in order to reflect such vesting provisions. The Restricted
Shares will be registered as soon as practicable on Form S-8 under the
Securities Act. The Executive agrees that, without the prior written consent
of
the Board, he will not sell or otherwise transfer any of the shares received
under this Section 4.06 or the economic benefit thereof prior to the first
anniversary of his termination of employment with the Companies, except that
this Agreement shall not prevent the Executive from selling a number of such
shares required to fund his tax liability resulting from the vesting of the
Restricted Shares.
SECTION
4.07. Relocation.
The
Companies shall reimburse the Executive for all reasonable expenses incurred
by
him in relocating his and his immediate family’s household items to
Winston-Salem, North Carolina, subject to the Companies’ requirements with
respect to reporting and documentation of such expenses, such relocation
reimbursements to include all normal expenses of moving, packing and unpacking,
home hunting, temporary housing, buying and selling brokerage fees, transfer
taxes, origination fees (not to exceed 1% of the loan amount) and mortgage
points (not to exceed 1% of the loan amount).
SECTION
4.08. Pension
Plan.
The
Companies will credit, as of the Effective Date, the Executive’s account under
the Krispy Kreme Doughnut Corporation NonQualified Deferred Compensation Plan
with an amount having a present value (determined using an interest rate of
5%,
compounded annually) equal to the excess of (i) $1,374,631 on November 30,
2011
over (ii) the actuarial present value on November 30, 2011 of the Executive’s
vested accrued benefit under the qualified and non-qualified defined benefit
pension plans of Kraft Foods, Inc. and its affiliates (determined using the
actuarial assumptions set forth in such plans). The Executive’s account into
which such credit is made will vest in equal monthly installments, beginning
April 1, 2006 and continuing on the first day of each month thereafter through
November 1, 2011, so long as the Executive remains employed by the Companies
through each monthly vesting date. Notwithstanding the foregoing, in the event
the Executive’s employment is terminated by the Company not for Cause or by the
Executive for Good Reason or the Executive’s employment terminates due to his
death or Permanent Disability, an additional portion of the Executive’s account
will become vested at the time of such termination of employment equal to the
percentage that would have vested if the Executive had remained employed for
an
additional two years.
ARTICLE
5
TERM
AND
TERMINATION
SECTION
5.01. Term.
The
Employment Period will terminate on February 1, 2009, unless sooner terminated
as hereinafter provided; provided,
however,
that
the Employment Period will be automatically extended for successive one-year
periods following the original term ending February 1, 2009 until either the
Companies, on the one hand, or the Executive, on the other hand, at least 180
days prior to the expiration of the original term or any extended term, shall
give written notice to the other of their intention not to so extend the
Employment Period.
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SECTION
5.02. Termination
Due to Death or Permanent Disability.
If the
Employment Period shall be terminated due to death or Permanent Disability
of
the Executive, the Executive (or his estate or legal representative) shall
be
entitled solely to the following: (i) Base Salary through the Date of
Termination; (ii) any stock options and restricted shares that would have
vested and/or become exercisable if the Executive’s employment had continued for
two additional years will become vested and/or exercisable on the Date of
Termination; and (iii) medical benefits as provided in Section 5.05 below.
The Executive’s entitlements under any other benefit plan or program shall be as
determined thereunder. In addition, promptly following any such termination,
the
Executive (or his estate or legal representative) shall be reimbursed for all
Reimbursable Expenses incurred by the Executive prior to such
termination.
SECTION
5.03. Termination
for Good Reason or Without Cause.
If the
Employment Period shall be terminated (a) by the Executive for Good Reason,
or
(b) by the Companies not for Cause, provided the Executive has executed an
irrevocable (except to the extent required by law, and to the extent required
by
law to be revocable, has not revoked) general release of claims, in the form
attached hereto as Exhibit
A,
the
Executive shall be entitled solely to the following: (i) Base Salary through
the
Date of Termination; (ii) an amount equal to two times the sum of the Base
Salary and the Executive’s target annual bonus amount for the year of
termination (or the Base Salary or target annual bonus for the prior year if
reduction of the Executive’s Base Salary or target annual bonus, or both, was
the event giving rise to Good Reason), provided that, the Executive shall be
entitled to any unpaid amounts only if the Executive has not breached and does
not breach the provisions of Sections 6.01, 7.01, 8.01 or 9 below; (iii) a
bonus for the year of termination of employment equal to the Executive’s target
annual bonus for such year pro rated for the number of full months during the
bonus year prior to such termination of employment, payable as soon as
practicable following such termination of employment; (iv) all of the
restricted shares and stock options held by the Executive shall vest and/or
become exercisable on the Date of Termination; and (v) medical benefits as
provided in Section 5.05 below. If the Companies do not also execute (and not
revoke) the release, the Executive’s release shall be null, void and without
effect, and the Executive shall still receive all of the payments and benefits
described in this Section. The Executive’s entitlements under any other benefit
plan or program shall be as determined thereunder, except that severance
benefits shall not be payable under any other plan or program. Amounts described
in clause (ii) above will be payable in equal monthly installments for a period
of 24 months commencing on the first month anniversary of the Date of
Termination, except (i) if such termination of employment is within two
years after a Change in Control, such payments shall be made in a lump sum
upon
such termination of employment, and (ii) to the extent required by Section
409A of the Code, amounts otherwise payable under clause (ii) within six months
after the Executive’s termination of employment shall be deferred to and paid on
the day following the six month anniversary of such termination of employment.
In addition, promptly following any such termination, the Executive shall be
reimbursed for all Reimbursable Expenses incurred by the Executive prior to
such
termination.
SECTION
5.04. Termination
for Cause or Other Than Good Reason.
If the
Employment Period shall be terminated (a) by the Companies for Cause, or (b)
as
a result of the Executive’s resignation or leaving of his employment other than
for Good Reason, the
Executive shall be entitled to receive solely Base Salary through the Date
of
Termination and reimbursement of all Reimbursable Expenses incurred by the
Executive prior to such termination. In addi-
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tion,
the
Executive’s entitlements to unvested restricted shares and unvested stock
options shall be forfeited, and if such termination is by the Companies for
Cause, all vested stock options shall be immediately forfeited. Otherwise,
the
Executive’s rights under the benefit plans and programs shall be as determined
thereunder. A voluntary resignation by the Executive shall not be deemed to
be a
breach of this Agreement.
SECTION
5.05. Benefits.
If the
Employment Period is terminated as a result of a termination of employment
as
specified in Section 5.02 or 5.03, the Executive and his covered dependents
shall continue to receive medical insurance coverage benefits from the
Companies, with the same contribution toward such coverage from the Executive
or
his estate, for a period equal to the lesser of (x) eighteen months
following the Date of Termination, or (y) until the Executive is provided
by another employer with benefits substantially comparable to the benefits
provided by the Companies’ medical plan.
SECTION
5.06. Notice
of Termination.
Any
termination by the Companies for Permanent Disability or Cause or without Cause
or by the Executive with or without Good Reason shall be communicated by written
Notice of Termination to the other party hereto. For purposes of this Agreement,
a “Notice
of Termination”
shall
mean a notice which shall indicate the specific termination provision in this
Agreement relied upon and shall set forth in reasonable detail the facts and
circumstances claimed to provide a basis for termination of employment under
the
provision indicated.
SECTION
5.07. Date
of Termination.
“Date
of Termination” shall
mean (a) if the Employment Period is terminated as a result of a Permanent
Disability, five days after a Notice of Termination is given, (b) if the
Employment Period is terminated as a result of his death, on the date of his
death, and (c) if the Employment Period is terminated for any other reason,
the later of the date of the Notice of Termination and the end of any applicable
correction period.
SECTION
5.08. No
Duty to Mitigate.
The
Executive shall have no duty to seek new employment or other duty to mitigate
following a termination of employment as described in this Article 5, and no
compensation or benefits described in this Article 5 shall be subject to
reduction or offset on account of any subsequent compensation, other than as
provided in Sections 5.05.
SECTION
5.09. Change
in Control.
All
stock options and restricted shares held by the Executive will become vested
in
full upon a Change in Control; provided,
however,
that
the vesting of the restricted shares and stock options held by the Executive
shall not be accelerated where the Executive continues as chief executive
officer of a publicly
traded parent corporation of the parent/subsidiary affiliated group that
includes the Companies (the “Surviving
Entity”)
and
either
the Company’s common stock remains outstanding or replacement equity awards are
granted by the Surviving Entity so long as the terms of this Agreement are
expressly assumed and continued by the Surviving Entity.
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ARTICLE
6
CONFIDENTIAL
INFORMATION
SECTION
6.01. Nondisclosure
and Nonuse of Confidential Information.
The
Executive will not disclose or use at any time during or after the Employment
Period any Confidential Information of which the Executive is or becomes aware,
whether or not such information is developed by him, except to the extent he
reasonably believes that such disclosure or use is directly related to and
appropriate in connection with the Executive’s performance of duties assigned to
the Executive pursuant to this Agreement. Under all circumstances and at all
times, the Executive will take all appropriate steps to safeguard Confidential
Information in his possession and to protect it against disclosure, misuse,
espionage, loss and theft. In addition, the obligations of the Executive under
the confidentiality agreement dated January 24, 2006 between the Executive
and
the Companies (the “Confidentiality
Agreement”)
shall
remain in full force and effect.
ARTICLE
7
INTELLECTUAL
PROPERTY
SECTION
7.01. Ownership
of Intellectual Property.
In the
event that the Executive as part of his activities on behalf of the Companies
generates, authors or contributes to any invention, design, new development,
device, product, method of process (whether or not patentable or reduced to
practice or comprising Confidential Information), any copyrightable work
(whether or not comprising Confidential Information) or any other form of
Confidential Information relating directly or indirectly to the business of
the
Company or its Subsidiaries as now or hereafter conducted (collectively,
“Intellectual
Property”),
the
Executive acknowledges that such Intellectual Property is the sole and exclusive
property of the Company and its Subsidiaries and hereby assigns all right,
title
and interest in and to such Intellectual Property to the Company or its
designated Subsidiary. Any copyrightable work prepared in whole or in part
by
the Executive during the Employment Period will be deemed “a work made for hire”
under Section 201(b) of the Copyright Act of 1976, as amended, and the Company
or its designated Subsidiary will own all of the rights comprised in the
copyright therein. The Executive will promptly and fully disclose all
Intellectual Property and will cooperate with the Companies to protect their
interests in and rights to such Intellectual Property (including providing
reasonable assistance in securing patent protection and copyright registrations
and executing all documents as reasonably requested by the Companies, whether
such requests occur prior to or after termination of Executive’s employment
hereunder).
ARTICLE
8
DELIVERY
OF MATERIALS UPON TERMINATION OF EMPLOYMENT
SECTION
8.01. Delivery
of Materials upon Termination of Employment.
As
requested by the Companies from time to time, and upon the termination of the
Executive’s employment with the Companies for any reason, the Executive will
promptly deliver to the Companies all property of the Company or its
Subsidiaries, including, without limitation, all copies and
-10-
embodiments,
in whatever form or medium, of all Confidential Information in the Executive’s
possession or within his control (including written records, notes, photographs,
manuals, notebooks, documentation, program listings, flow charts, magnetic
media, disks, diskettes, tapes and all other materials containing any
Confidential Information) irrespective of the location or form of such material
and, if requested by the Companies, will provide the Companies with written
confirmation that to the best of his knowledge all such materials have been
delivered to the Companies or destroyed.
ARTICLE
9
NON-COMPETITION
AND NONSOLICITATION
SECTION
9.01. Noncompetition.
The
Executive acknowledges that, during his employment with the Companies, he will
become familiar with trade secrets and other Confidential Information concerning
the Company and its Subsidiaries and his services will be of special, unique
and
extraordinary value to the Companies. In addition, the Executive hereby agrees
that at any time during the Noncompetition Period (as defined below), he will
not directly or indirectly own, manage, control, participate in, consult with,
become employed by or otherwise render services to any business listed on
Exhibit B hereto in the Territory. During the Noncompetition Period, the Company
shall have the right to, in good faith, add other entities which are in
substantial competition with the Companies to the list of businesses on Exhibit
B, subject to the consent of the Executive which shall not be unreasonably
withheld. Notwithstanding the foregoing, if the Executive’s termination of
employment occurs at the end of the Employment Period due to the Companies
giving written notice after the fifth anniversary of the Effective Date pursuant
to Section 5.01 of its intention not to extend the Employment Period, this
Section 9.01 will only apply if the Companies elect and agree in writing to
pay the Executive his Base Salary and his annual target bonus in effect for
the
year during which his employment is terminated for an additional one-year period
following the termination of employment, such amount to be payable in monthly
installments over the additional one-year period, except that, to the extent
required by Section 409A of the Code, amounts otherwise payable under this
sentence within six months after the Executive’s termination of employment shall
be deferred to and paid on the day following the six month anniversary of such
termination of employment. It shall not be considered a violation of this
Section 9.01 for the Executive to be a passive owner of not more than 2% of
the
outstanding stock of any class of any corporation which is publicly traded,
so
long as the Executive has no active participation in the business of such
corporation.
SECTION
9.02. Nonsolicitation.
The
Executive hereby agrees that (a) during the Nonsolicitation Period (as defined
below), the Executive will not, directly or indirectly through another Person,
induce or attempt to induce any employee of the Company or its Subsidiaries
to
leave the employ of the Company or its Subsidiaries, or in any way interfere
with the relationship between the Company or its Subsidiaries and any person
employed by them at any time during such Nonsolicitation Period, and
(b) during the Nonsolicitation Period, the Executive will not induce or
attempt to induce any customer, supplier, client or other business relation
of
the Company or its Subsidiaries to cease doing business with the Company or
its
Subsidiaries.
-11-
SECTION
9.03. Definitions.
It is
agreed that then “Territory,”
for
purposes of this Article 9, shall mean:
(i)
The
entire United States and any other country where the Company or any of its
Subsidiaries, joint venturers, franchisees or affiliates has operated a retail
facility at which the Company’s products have been sold at any time in the
one-year period ending on the last day of the Executive’s employment with the
Companies;
(ii) In
the
event that the preceding clause shall be determined by judicial action to define
too broad a territory to be enforceable, then “Territory” shall mean the entire
United States;
(iii) In
the
event that the preceding clauses shall be determined by judicial action to
define too broad a territory to be enforceable, then “Territory” shall mean the
states in the United States where the Company or any of its Subsidiaries, joint
venturers, franchisees or affiliates has operated a retail facility at which
the
Company’s products have been sold at any time in the one-year period ending on
the last day of Executive’s employment with the Companies;
(iv) In
the
event that the preceding clauses shall be determined by judicial action to
define too broad a territory to be enforceable, then “Territory” shall mean the
area that includes all of the areas that are within a 50-mile radius of any
retail store location in the United States at which the Company’s products have
been sold at any time in the one-year period ending on the last day of the
Executive’s employment with the Companies; and
(v) In
the
event that the preceding clauses shall be determined by judicial action to
define too broad a territory to be enforceable, then “Territory” shall mean the
entire state of North Carolina.
It
is
also agreed that “Noncompetition
Period,”
for
purposes hereof, shall mean:
(i) the
Employment Period and a period ending one year after the Date of Termination;
and
(ii) In
the
event that the preceding clause shall be determined by judicial action to define
too long a period to be enforceable, “Noncompetition Period” shall mean the
Employment Period and a period ending six months after the Date of
Termination.
It
is
also agreed that “Nonsolicitation
Period,”
for
purposes hereof, shall mean:
(i) the
Employment Period and a period ending two years after the Date of Termination;
(ii) In
the
event that the preceding clause shall be determined by judicial action to define
too long a period to be enforceable, “Nonsolicitation Period” shall mean the
Employment Period and a period ending eighteen months after the Date of
Termination;
-12-
(iii) In
the
event that the preceding clauses shall be determined by judicial action to
define too long a period to be enforceable, “Nonsolicitation Period” shall mean
the Employment Period and a period ending one year after the Date of
Termination; and
(iv) In
the
event that the preceding clauses shall be determined by judicial action to
define too long a period to be enforceable, “Nonsolicitation Period” shall mean
the Employment Period and a period ending six months after the Date of
Termination.
ARTICLE
10
EQUITABLE
RELIEF
SECTION
10.01. Equitable
Relief.
The
Executive acknowledges that (a) the covenants contained herein are reasonable,
(b) the Executive’s services are unique, and (c) a breach or threatened breach
by him of any of his covenants and agreements with the Companies contained
in
Sections 6.01, 7.01, 8.01 or Article 9 could cause irreparable harm to the
Companies for which they would have no adequate remedy at law. Accordingly,
and
in addition to any remedies which the Companies may have at law, in the event
of
an actual or threatened breach by the Executive of his covenants and agreements
contained in Sections 6.01, 7.01, 8.01 or Article 9, the Companies shall have
the absolute right to apply to any court of competent jurisdiction for such
injunctive or other equitable relief, without the necessity to post bond, as
such court may deem necessary or appropriate in the circumstances.
ARTICLE
11
EXECUTIVE
REPRESENTATION AND INDEMNIFICATION
SECTION
11.01. Executive
Representation.
The
Executive hereby represents and warrants to the Companies that (a) the
execution, delivery and performance of this Agreement by the Executive does
not
and will not conflict with, breach, violate or cause a default under any
contract, agreement, instrument, order, judgment or decree to which the
Executive is a party or by which he is bound, (b) except for agreements provided
to the Companies by the Executive, the Executive is not a party to or bound
by
any employment agreement, noncompetition agreement or confidentiality agreement
with any other Person, and (c) upon the execution and delivery of this Agreement
by the Companies, this Agreement will be the valid and binding obligation of
the
Executive, enforceable in accordance with its terms. Notwithstanding Section
11.02 below, in the event that any action is brought against Executive involving
any breach of any employment agreement, noncompetition agreement or
confidentiality agreement with any other Person, the Executive shall bear his
own costs incurred in defending such action, including but not limited to court
fees, arbitration costs, mediation costs, attorneys’ fees and
disbursements.
SECTION
11.02. General
Indemnification.
The
Companies agree that if the Executive is made a party, or is threatened to
be
made a party, to any action, suit or proceeding, whether civil, criminal,
administrative or investigative (each, a “Proceeding”),
by
reason of the fact that he is or was a director, officer or employee of the
Company or any of its Subsidiaries or
-13-
is
or was
serving at the request of the Company or any of its Subsidiaries as a director,
officer, member, employee or agent of another corporation, partnership, joint
venture, trust or other enterprise, including service with respect to employee
benefit plans, whether or not the basis of such Proceeding is the Executive’s
alleged action in an official capacity while serving as a director, officer,
member, employee or agent, the Executive shall be indemnified and held harmless
by the Companies to the fullest extent permitted or authorized by applicable
law
and their bylaws, against all cost, expense, liability and loss (including,
without limitation, advancement of attorneys’ and other fees and expenses)
reasonably incurred or suffered by the Executive in connection therewith. The
Companies agree to use their best efforts to maintain a directors’ and officers’
liability insurance policy covering the Executive during the Employment Period
and for at least four years thereafter to the extent available on commercially
reasonable terms.
ARTICLE
12
CERTAIN
ADDITIONAL PAYMENTS
SECTION
12.01. Anything
in this Agreement to the contrary notwithstanding, in the event it shall
be determined
that any payment, award, benefit or distribution (including, without limitation,
the acceleration of any payment, award, distribution or benefit) by the Company
or its Subsidiaries to or for the benefit of the Executive (whether pursuant
to
the terms of this Agreement or otherwise, but determined without regard to
any
additional payments required under this Article 12) (a “Payment”)
would
be subject to the excise tax imposed by Section 4999 of the Code or any
corresponding provisions of state or local tax law, or any interest or penalties
are incurred by the Executive with respect to such excise tax (such excise
tax,
together with any such interest and penalties, are hereinafter collectively
referred to as the “Excise
Tax”),
then
the Executive shall be entitled to receive an additional payment (a
“Gross-Up
Payment”)
in an
amount such that after payment by the Executive of all taxes (including any
Excise Tax, income tax or employment tax) imposed upon the Gross-Up Payment
and
any interest or penalties imposed with respect to such taxes, the Executive
retains from the Gross-Up Payment an amount equal to the Excise Tax imposed
upon
the Payments. The payment of a Gross-Up Payment under this Section 12.01 shall
not be conditioned upon the Executive’s termination of employment.
Notwithstanding the foregoing provisions of this Section 12.01, if it shall
be determined that the Executive is entitled to a Gross-Up Payment, but that
the
portion of the Payments that would be treated as “parachute payments” under
Section 280G of the Code does not exceed the lesser of 110% of the Safe
Harbor Amount (as defined in the following sentence) or $200,000, then no
Gross-Up Payment shall be made to the Executive and the amounts payable under
this Agreement shall be reduced so that the Payments, in the aggregate, are
reduced to the Safe Harbor Amount. The “Safe Harbor Amount” is the greatest
amount of payments in the nature of compensation that are contingent on a Change
in Control for purposes of Section 280G of the Code that could be paid to the
Executive without giving rise to any Excise Tax. The reduction of the amounts
payable hereunder, if applicable, shall be made by first reducing the cash
payments under Section 5.03. For purposes of reducing the payments to the
Safe Harbor Amount, only amounts payable under this Agreement (and no other
Payments) shall be reduced. If the reduction of the amounts payable under this
Agreement would not result in a reduction of the Payments to the Safe Harbor
Amount, no amounts payable under this Agreement shall be reduced pursuant to
this Section 12.01.
-14-
SECTION
12.02. Subject
to the provisions of Section 12.03, all determinations required to be made
under
this Article 12, including the determination of whether a Gross-Up Payment
is required and of the amount of any such Gross-up Payment, shall be made by
the
Company’s independent auditors or such other accounting firm agreed by the
parties hereto (the “Accounting
Firm”),
which
shall provide detailed supporting calculations to the Companies within 15
business days after the receipt of notice from the Companies that the Executive
has received a Payment, or such earlier time as is requested by the Companies,
provided that any determination that an Excise Tax is payable by the Executive
shall be made on the basis of substantial authority. The Companies will promptly
provide copies of such supporting calculations to the Executive on which the
Executive may rely. The initial Gross-Up Payment, if any, as determined pursuant
to this Section 12.02, shall be paid to the Executive (or for the benefit of
the
Executive to the extent of the Companies’ withholding obligation with respect to
applicable taxes) no later than one day prior to the due date for the payment
of
any Excise Tax. If the Accounting Firm determines that no Excise Tax is payable
by the Executive, it shall furnish the Companies with a written opinion that
substantial authority exists for the Executive not to report any Excise Tax
on
his Federal income tax return and, as a result, the Companies are not required
to withhold Excise Tax from payments to the Executive. The Companies will
promptly provide a copy of any such opinion to the Executive on which the
Executive may rely. Any determination by the Accounting Firm meeting the
requirements of this Section 12.02 shall be binding upon the Companies and
the
Executive. As a result of the uncertainty in the application of
Section 4999 of the Code at the time of the initial determination by the
Accounting Firm hereunder, it is possible that Gross-Up Payments which will
not
have been made by the Companies should have been made (“Underpayment”),
consistent with the calculations required to be made hereunder. In the event
that the Companies exhausts their remedies pursuant to Section 12.03 and the
Executive thereafter is required to make a payment of any Excise Tax, the
Accounting Firm shall determine the amount of the Underpayment that has
occurred, and any such Underpayment shall be promptly paid by the Companies
to
or for the benefit of the Executive. The fees and disbursements of the
Accounting Firm shall be paid by the Companies.
SECTION
12.03. The
Executive shall notify
the Companies in writing of any claim by the Internal Revenue Service that,
if
successful, would require the payment by the Companies of a Gross-Up Payment.
Such notification shall be given as soon as practicable but not later than
ten
business days after the Executive receives written notice of such claim and
shall apprise the Companies of the nature of such claim and the date on which
such Claim is requested to be paid. The Executive shall not pay such claim
prior
to the expiration of the 30-day period following the date on which it gives
such
notice to the Companies (or such shorter period ending on the date that any
payment of taxes with respect to such claim is due). If the Companies notify
the
Executive in writing prior to the expiration of such period that they desire
to
contest such claim, the Executive shall:
(i) give
the
Companies any information reasonably requested by the Companies relating to
such
claim,
(ii) take
such
action in connection with contesting such claim as the Companies shall
reasonably request in writing from time to time, including, without limitation,
-15-
accepting
legal representation with respect to such claim by an attorney reasonably
selected by the Companies,
(iii) cooperate
with the Companies in good faith in order effectively to contest such claim,
and
(iv) permit
the Companies to participate in any proceedings relating to such claim;
provided,
however,
that
the Companies shall bear and pay directly all costs and expenses (including
additional interest and penalties) incurred in connection with such contest
and
shall indemnify and hold the Executive harmless, on an after-tax basis, for
any
Excise Tax, income tax or employment tax, including interest and penalties
with
respect thereto, imposed as a result of such representation and payment of
costs
and expenses. Without limitation on the foregoing provisions of this
Section 12.03, the Companies shall control all proceedings taken in
connection with such contest and, at its sole option, may pursue or forgo any
and all administrative appeals, proceedings, hearings and conferences with
the
taxing authority in respect of such claim and may, at its sole option, either
direct the Executive to pay the tax claimed and xxx for a refund or contest
the
claim in any permissible manner, and the Executive agrees to prosecute such
contest to a
determination before any administrative tribunal, in a court of initial
jurisdiction and in one or more appellate courts, as the Companies shall
determine; provided,
however,
that if
the Companies direct the Executive to pay such claim and xxx for a refund,
the
Companies shall advance the amount of such payment to the Executive on an
interest-free basis and shall indemnify and hold the Executive harmless, on
an
after-tax basis, from any Excise Tax, income tax or employment tax, including
interest or penalties with respect thereto, imposed with respect to such advance
(except that if such a loan would not be permitted under applicable law, the
Companies may not direct the Executive to pay the claim and xxx for a refund);
and further provided
that any
extension of the statute of limitations relating to the payment of taxes for
the
taxable year of the Executive with respect to which such contested amount is
claimed to be due is limited solely to such contested amount. Furthermore,
the
Companies’ control of the contest shall be limited to issues with respect to
which a Gross-Up Payment would be payable hereunder and the Executive shall
be
entitled to settle or contest, as the case may be, any other issue raised by
the
Internal Revenue Service or any other taxing authority.
SECTION
12.04. If,
after
the receipt by the Executive of an amount advanced by the Companies pursuant
to
Section 12.03, the Executive becomes entitled to receive any refund with respect
to such claim, the Executive shall (subject to the compliance by the Companies
with the requirements of Section 12.03) promptly pay to the Companies the
amount of such refund (together with any interest paid or credited thereon
after
taxes applicable thereto). If, after the receipt by the Executive of an amount
advanced by the Companies pursuant to Section 12.03, a determination is
made that the Executive shall not be entitled to any refund with respect to
such
claim and the Companies do not notify the Executive in writing of their intent
to contest such denial of refund prior to the expiration of 30 days after such
determination, then such advance shall be forgiven and shall not be required
to
be repaid and the amount of such advance shall offset, to the extent thereof,
the amount of the Gross-Up Payment required to be paid.
-16-
ARTICLE
13
MISCELLANEOUS
SECTION
13.01. Binding
Arbitration.
The
parties agree that, except as provided in Articles 9 and 10 above, any
disputes under this Agreement shall be settled exclusively by arbitration
conducted in Winston-Salem, North Carolina. Except to the extent inconsistent
with this Agreement, such arbitration shall be conducted in accordance with
the
National Rules for the Resolution of Employment Disputes of the American
Arbitration Association then in effect at the time of the arbitration and
otherwise in accordance with principles which would be applied by a court of
law
or equity. The arbitrator shall be acceptable to both the Companies and the
Executive. If the parties cannot agree on an acceptable arbitrator, the dispute
shall be decided by a panel of three arbitrators, one appointed by each of
the
parties and the third appointed by the other two arbitrators or if the two
arbitrators do not agree, appointed by the American Arbitration Association.
The
costs of arbitration incurred by the Executive (or his beneficiaries) will
be
borne by the Companies (including, without limitation, reasonable attorneys’
fees and other reasonable charges of counsel) (i) if the arbitration occurs
prior to a Change in Control, if the Executive prevails on a majority of the
material issues in the dispute, and (ii) if the arbitration occurs after a
Change in Control, if the Executive prevails on at least one material issue
in
the dispute. Judgment upon the final award rendered by such arbitrator(s) may
be
entered in any court having jurisdiction thereof.
SECTION
13.02. Consent
to Amendments; No Waivers.
The
provisions of this Agreement may be amended or waived only by a written
agreement executed and delivered by the Companies and the Executive. No other
course of dealing between the parties to this Agreement or any delay in
exercising any rights hereunder will operate as a waiver of any rights of any
such parties.
SECTION
13.03. Successors
and Assigns.
All
covenants and agreements contained in this Agreement by or on behalf of any
of
the parties hereto will bind and inure to the benefit of the respective
successors and assigns of the parties hereto whether so expressed or not,
provided
that the
Executive may not assign his rights or delegate his obligations under this
Agreement without the written consent of the Companies and the Company may
assign this Agreement only to a successor to all or substantially all of the
assets of the Company.
SECTION
13.04. Severability.
Whenever possible, each provision of this Agreement will be interpreted in
such
manner as to be effective and valid under applicable law, but if any provision
of this Agreement is held to be prohibited by or invalid under applicable law,
such provision will be ineffective only to the extent of such prohibition or
invalidity, without invalidating the remainder of this Agreement.
SECTION
13.05. Counterparts.
This
Agreement may be executed simultaneously in two or more counterparts, any one
of
which need not contain the signatures of more than one party, but all of which
counterparts taken together will constitute one and the same
agreement.
-17-
SECTION
13.06. Descriptive
Headings.
The
descriptive headings of this Agreement are inserted for convenience only and
do
not constitute a part of this Agreement.
SECTION
13.07. Notices.
All
notices, demands or other communications to be given or delivered under or
by
reason of the provisions of this Agreement will be in writing and will be deemed
to have been given when delivered personally to the recipient, two business
days
after the date when sent to the recipient by reputable express courier service
(charges prepaid) or four business days after the date when mailed to the
recipient by certified or registered mail, return receipt requested and postage
prepaid. Such notices, demands and other communications will be sent to the
Executive and to the Companies at the addresses set forth below.
|
If
to the Executive:
|
To
the last address delivered to the Companies by the
Executive in the manner set forth herein. |
|
Copies
(which shall not constitute notice) of notices to the Executive shall
also
be sent to:
|
|
|
Xxxxxx,
Xxxxx & Xxxxxxx LLP
0000
Xxxxxx Xxxxxx
Xxxxxxxxxxxx,
XX 00000-0000
Attn:
Xxxxxx X. Xxxxxxxxxxxx
|
|
|
If
to the Companies:
|
Krispy
Kreme Doughnuts, Inc.
Krispy
Kreme Doughnut Corporation
Suite
500
000
Xxxxxxxxx Xxxxxx
Xxxxxxx-Xxxxx,
XX 00000
Attn:
Senior Vice President-Human Resources
|
|
Copies
(which shall not constitute notice) of notices to the Companies shall
also
be sent to:
|
|
|
Xxxxxx
Xxxxxx & Xxxxxxx LLP
00
Xxxx Xxxxxx
Xxx
Xxxx, XX 00000
Attn:
Xxxxxx X. Xxxxxxxxx, Esq.
|
|
or
to
such other address or to the attention of such other person as the recipient
party has specified by prior written notice to the sending party.
SECTION
13.08. Withholding.
The
Companies may withhold from any amounts payable under this Agreement such
federal, state, local or foreign taxes as shall be required to be withheld
pursuant to any applicable law or regulation.
SECTION
13.09. No
Third-Party Beneficiary.
This
Agreement will not confer any rights or remedies upon any person other than
the
Companies, the Executive and their respective heirs, executors, successors
and
assigns.
-18-
SECTION
13.10. Entire
Agreement.
This
Agreement (including the Confidentiality Agreement and the other documents
referred to herein) constitutes the entire agreement among the parties and
supersedes any prior understandings, agreements or representations by or among
the parties, written or oral, that may have related in any way to the subject
matter hereof.
SECTION
13.11. Construction.
The
language used in this Agreement will be deemed to be the language chosen by
the
parties to express their mutual intent, and no rule of strict construction
will
be applied against any party. Any reference to any federal, state, local or
foreign statute or law will be deemed also to refer to all rules and regulations
promulgated thereunder, unless the context requires otherwise.
SECTION
13.12. Survival.
Sections 6.01, 7.01, 8.01 and Articles 9, 11, 12 and 13 will survive and
continue in full force in accordance with their terms notwithstanding any
termination of the Employment Period, and the Agreement shall otherwise remain
in full force to the extent necessary to enforce any rights and obligations
arising hereunder during the Employment Period.
SECTION
13.13. GOVERNING
LAW.
ALL
QUESTIONS CONCERNING THE CONSTRUCTION, VALIDITY AND INTERPRETATION OF THIS
AGREEMENT WILL BE GOVERNED BY THE INTERNAL LAW OF NORTH CAROLINA, WITHOUT REGARD
TO PRINCIPLES OF CONFLICT OF LAWS.
SECTION
13.14. Section
409A.
It is
intended that this Agreement will comply with Section 409A of the Code (and
any
regulations and guidelines issued thereunder) to the extent the Agreement is
subject thereto, and the Agreement shall be interpreted on a basis consistent
with such intent. If an amendment of the Agreement is necessary in order for
it
to comply with Section 409A, the parties hereto will negotiate in good faith
to
amend the Agreement in a manner that preserves the original intent of the
parties to the extent reasonably possible.
SECTION
13.15. Representations
of the Companies.
The
Companies represent and warrant that (i) the execution, delivery and performance
of this Agreement by the Companies has been fully and validly authorized by
all
necessary corporate action, (ii) the officer(s) signing this Agreement on behalf
of the Companies is duly authorized to do so, (iii) the execution, delivery
and
performance of this Agreement does not violate any applicable law, regulation,
order, judgment or decree or any agreement, plan or corporate governance
document to which the Companies are a party or by which they are bound, and
(iv)
upon execution and delivery of this Agreement by the parties hereto, it will
be
a valid and binding obligation of the Companies enforceable against the
Companies in accordance with its terms, except to the extent that enforceability
may be limited by applicable bankruptcy, insolvency or similar laws affecting
the enforcement of creditors’ rights generally.
-19-
IN
WITNESS WHEREOF, the parties hereto have executed this Agreement as of the
date
and year first above written.
KRISPY
KREME DOUGHNUTS, INC.
By:
/s/
Xxxxx X. Xxxxxx
Xxxxx
X.
Xxxxxx
Chairman
of the Board
KRISPY
KREME DOUGHNUT CORPORATION
By:
/s/
Xxxxxxx X. Xxxxxx
Xxxxxxx X. Xxxxxx
Chief
Financial Officer
/s/ Xxxxx X. Xxxxxxxx
XXXXX X. XXXXXXXX
-20-
