DIRECTOR INDEMNIFICATION AGREEMENT
This Director Indemnification Agreement, dated as of October 4, 2004 (this
"AGREEMENT"), is made by and between Krispy Kreme Doughnuts, Inc., a North
Carolina corporation (the "COMPANY"), and ______________________ ("INDEMNITEE").
RECITALS:
A. Section 55-8-01 of the North Carolina Business Corporation Act
provides that the business and affairs of a corporation shall be managed by or
under the direction of its board of directors.
B. By virtue of the managerial prerogatives vested in the directors of a
North Carolina corporation, directors act as fiduciaries of the corporation and
its stockholders.
C. Thus, it is critically important to the Company and its stockholders
that the Company be able to attract and retain the most capable persons
reasonably available to serve as directors of the Company.
D. In recognition of the need for corporations to be able to induce
capable and responsible persons to accept positions in corporate management,
North Carolina law authorizes (and in some instances requires) corporations to
indemnify their directors and officers, and further authorizes corporations to
purchase and maintain insurance for the benefit of their directors and officers.
E. The North Carolina courts have recognized that indemnification by a
corporation serves the dual policies of (1) allowing corporate officials to
resist unjustified lawsuits, secure in the knowledge that, if vindicated, the
corporation will bear the expense of litigation and (2) encouraging capable
women and men to serve as corporate directors and officers, secure in the
knowledge that the corporation will absorb the costs of defending their honesty
and integrity.
F. The number of lawsuits challenging the judgment and actions of
directors of North Carolina corporations, the costs of defending those lawsuits,
and the threat to directors' personal assets have all materially increased over
the past several years, chilling the willingness of capable women and men to
undertake the responsibilities imposed on corporate directors.
G. Recent federal legislation and rules adopted by the Securities and
Exchange Commission and the national securities exchanges have imposed
additional disclosure and corporate governance obligations on directors of
public companies and have exposed such directors to new and substantially
broadened civil liabilities.
H. These legislative and regulatory initiatives have also exposed
directors of public companies to a significantly greater risk of criminal
proceedings, with attendant defense costs and potential criminal fines and
penalties.
I. Under North Carolina law, a director's right to be reimbursed for the
costs of defense of criminal actions, whether such claims are asserted under
state or federal law, does not depend upon the merits of the claims asserted
against the director and is separate and distinct from any right to
the director may be able to establish, and indemnification of
the director against criminal fines and penalties is permitted if the director
satisfies the applicable standard of conduct.
J. Indemnitee is a director of the Company and his/her willingness to
serve in such capacity is predicated, in substantial part, upon the Company's
willingness to indemnify him/her in accordance with the principles reflected
above, to the fullest extent permitted by the laws of the State of North
Carolina, and upon the other undertakings set forth in this Agreement.
K. Therefore, in recognition of the need to provide Indemnitee with
substantial protection against personal liability, in order to procure
Indemnitee's continued service as a director of the Company and to enhance
Indemnitee's ability to serve the Company in an effective manner, and in order
to provide such protection pursuant to express contract rights (intended to be
enforceable irrespective of, among other things, any amendment to the Company's
Articles of Incorporation or Amended and Restated Bylaws (collectively, the
"CONSTITUENT DOCUMENTS"), any change in the composition of the Company's Board
of Directors (the "BOARD") or any change-in-control or business combination
transaction relating to the Company), the Company wishes to provide in this
Agreement for the indemnification of and the advancement of Expenses (as defined
in Section 1(e)) to Indemnitee as set forth in this Agreement and for the
continued coverage of Indemnitee under the Company's directors' and officers'
liability insurance policies.
L. In light of the considerations referred to in the preceding recitals,
it is the Company's intention and desire that the provisions of this Agreement
be construed liberally, subject to their express terms, to maximize the
protections to be provided to Indemnitee hereunder.
AGREEMENT:
NOW, THEREFORE, the parties hereby agree as follows:
1. CERTAIN DEFINITIONS. In addition to terms defined elsewhere herein,
the following terms have the following meanings when used in this Agreement with
initial capital letters:
(a) "CHANGE IN CONTROL" means the occurrence after the date of this
Agreement of any of the following events:
(i) the acquisition by any individual, entity or group (within
the meaning of Section 13(d)(3) or 14(d)(2) of the Exchange Act) (a "PERSON") of
beneficial ownership (within the meaning of Rule 13d-3 promulgated under the
Exchange Act) of 20% or more of the combined voting power of the
then-outstanding Voting Stock of the Company; provided, however, that:
(A) for purposes of this Section 1(a)(i), the following
acquisitions shall not constitute a Change in Control: (1) any acquisition of
Voting Stock of the Company directly from the Company that is approved by a
majority of the Incumbent Directors, (2) any acquisition of Voting Stock of the
Company by the Company or any Subsidiary, (3) any acquisition of Voting Stock of
the Company by any employee benefit plan (or related trust) sponsored or
maintained by the Company or any Subsidiary, and (4) any acquisition of Voting
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Stock of the Company by any Person pursuant to a Business Combination that
complies with clauses (A), (B) and (C) of Section 1(a)(iii) below;
(B) if any Person acquires beneficial ownership of 20% or
more of the combined voting power of the then-outstanding Voting Stock of the
Company as a result of a transaction described in clause (A)(1) of Section
1(a)(i) and such Person thereafter becomes the beneficial owner of any
additional shares of Voting Stock of the Company representing 1% or more of the
then-outstanding Voting Stock of the Company, other than in an acquisition
directly from the Company that is approved by a majority of the Incumbent
Directors or other than as a result of a stock dividend, stock split or similar
transaction effected by the Company in which all holders of Voting Stock are
treated equally, such subsequent acquisition shall be deemed to constitute a
Change in Control;
(C) a Change in Control will not be deemed to have occurred
if a Person acquires beneficial ownership of 20% or more of the Voting Stock of
the Company as a result of a reduction in the number of shares of Voting Stock
of the Company outstanding unless and until such Person thereafter becomes the
beneficial owner of any additional shares of Voting Stock of the Company
representing 1% or more of the then-outstanding Voting Stock of the Company,
other than in an acquisition directly from the Company that is approved by a
majority of the Incumbent Directors or other than as a result of a stock
dividend, stock split or similar transaction effected by the Company in which
all holders of Voting Stock are treated equally; and
(D) if at least a majority of the Incumbent Directors
determine in good faith that a Person has acquired beneficial ownership of 20%
or more of the Voting Stock of the Company inadvertently, and such Person
divests as promptly as practicable a sufficient number of shares so that such
Person beneficially owns less than 20% of the Voting Stock of the Company, then
no Change in Control shall have occurred as a result of such Person's
acquisition; or
(ii) a majority of the Directors are not Incumbent Directors; or
(iii) the consummation of a reorganization, merger or
consolidation, or sale or other disposition of all or substantially all of the
assets of the Company or the acquisition of assets of another corporation, or
other transaction (each, a "BUSINESS COMBINATION"), unless, in each case,
immediately following such Business Combination (A) all or substantially all of
the individuals and entities who were the beneficial owners of Voting Stock of
the Company immediately prior to such Business Combination beneficially own,
directly or indirectly, more than 60% of the combined voting power of the then
outstanding shares of Voting Stock of the entity resulting from such Business
Combination (including, without limitation, an entity which as a result of such
transaction owns the Company or all or substantially all of the Company's assets
either directly or through one or more subsidiaries), (B) no Person (other than
the Company, such entity resulting from such Business Combination, or any
employee benefit plan (or related trust) sponsored or maintained by the Company,
any Subsidiary or such entity resulting from such Business Combination)
beneficially owns, directly or indirectly, 20% or more of the combined voting
power of the then outstanding shares of Voting Stock of the entity resulting
from such Business Combination, and (C) at least a majority of the members of
the Board of Directors of the entity resulting from such Business Combination
were Incumbent
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Directors at the time of the execution of the initial agreement or of the action
of the Board providing for such Business Combination; or
(iv) approval by the stockholders of the Company of a complete
liquidation or dissolution of the Company, except pursuant to a Business
Combination that complies with clauses (A), (B) and (C) of Section 1(a)(iii).
(v) For purposes of this Section 1(a) and as used elsewhere in
this Agreement, the following terms shall have the following meanings:
(A) "EXCHANGE ACT" shall mean the Securities Exchange Act
of 1934, as amended.
(B) "INCUMBENT DIRECTORS" means the individuals who, as of
the date hereof, are Directors of the Company and any individual becoming a
Director subsequent to the date hereof whose election, nomination for election
by the Company's stockholders, or appointment, was approved by a vote of at
least two-thirds of the then Incumbent Directors (either by a specific vote or
by approval of the proxy statement of the Company in which such person is named
as a nominee for director, without objection to such nomination); provided,
however, that an individual shall not be an Incumbent Director if such
individual's election or appointment to the Board occurs as a result of an
actual or threatened election contest (as described in Rule 14a-12(c) of the
Exchange Act) with respect to the election or removal of Directors or other
actual or threatened solicitation of proxies or consents by or on behalf of a
Person other than the Board.
(C) "SUBSIDIARY" means an entity in which the Company
directly or indirectly beneficially owns 50% or more of the outstanding Voting
Stock.
(D) "VOTING STOCK" means securities entitled to vote
generally in the election of directors (or similar governing bodies).
(b) "CLAIM" means (i) any threatened, asserted, pending or completed
claim, demand, action, suit or proceeding, whether civil, criminal,
administrative, arbitrative, investigative or other, and whether made pursuant
to federal, state or other law; and (ii) any threatened, pending or completed
inquiry or investigation, whether made, instituted or conducted by the Company
or any other person, including without limitation any federal, state or other
governmental entity, that Indemnitee determines might lead to the institution of
any such claim, demand, action, suit or proceeding.
(c) "CONTROLLED AFFILIATE" means any corporation, limited liability
company, partnership, joint venture, trust or other entity or enterprise,
whether or not for profit, that is directly or indirectly controlled by the
Company. For purposes of this definition, "control" means the possession,
directly or indirectly, of the power to direct or cause the direction of the
management or policies of an entity or enterprise, whether through the ownership
of voting securities, through other voting rights, by contract or otherwise;
provided that direct or indirect beneficial ownership of capital stock or other
interests in an entity or enterprise entitling the holder to cast 20% or more of
the total number of votes generally entitled to be cast in the election of
directors (or persons performing comparable functions) of such entity or
enterprise shall be deemed to constitute control for purposes of this
definition.
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(d) "DISINTERESTED DIRECTOR" means a director of the Company who is
not and was not a party to the Claim in respect of which indemnification is
sought by Indemnitee.
(e) "EXPENSES" means attorneys' and experts' fees and expenses and all
other costs and expenses paid or payable in connection with investigating,
defending, being a witness in or participating in (including on appeal), or
preparing to investigate, defend, be a witness in or participate in (including
on appeal), any Claim.
(f) "INDEMNIFIABLE CLAIM" means any Claim based upon, arising out of
or resulting from (i) any actual, alleged or suspected act or failure to act by
Indemnitee in his or her capacity as a director, officer, employee or agent of
the Company or as a director, officer, employee, member, manager, trustee or
agent of any other corporation, limited liability company, partnership, joint
venture, trust or other entity or enterprise, whether or not for profit, as to
which Indemnitee is or was serving at the request of the Company as a director,
officer, employee, member, manager, trustee or agent, (ii) any actual, alleged
or suspected act or failure to act by Indemnitee in respect of any business,
transaction, communication, filing, disclosure or other activity of the Company
or any other entity or enterprise referred to in clause (i) of this sentence, or
(iii) Indemnitee's status as a current or former director, officer, employee or
agent of the Company or as a current or former director, officer, employee,
member, manager, trustee or agent of the Company or any other entity or
enterprise referred to in clause (i) of this sentence or any actual, alleged or
suspected act or failure to act by Indemnitee in connection with any obligation
or restriction imposed upon Indemnitee by reason of such status. In addition to
any service at the actual request of the Company, for purposes of this
Agreement, Indemnitee shall be deemed to be serving or to have served at the
request of the Company as a director, officer, employee, member, manager,
trustee or agent of another entity or enterprise if Indemnitee is or was serving
as a director, officer, employee, member, manager, trustee or agent of such
entity or enterprise and (i) such entity or enterprise is or at the time of such
service was a Controlled Affiliate, (ii) such entity or enterprise is or at the
time of such service was an employee benefit plan (or related trust) sponsored
or maintained by the Company or a Controlled Affiliate, or (iii) the Company or
a Controlled Affiliate directly or indirectly caused or authorized Indemnitee to
be nominated, elected, appointed, designated, employed, engaged or selected to
serve in such capacity.
(g) "INDEMNIFIABLE LOSSES" means any and all Losses relating to,
arising out of or resulting from any Indemnifiable Claim.
(h) "INDEPENDENT COUNSEL" means a law firm, or a member of a law firm,
that is experienced in matters of corporation law and neither presently is, nor
in the past five years has been, retained to represent: (i) the Company (or any
Subsidiary) or Indemnitee in any matter material to either such party (other
than with respect to matters concerning the Indemnitee under this Agreement, or
of other indemnitees under similar indemnification agreements), or (ii) any
other named (or, as to a threatened matter, reasonably likely to be named) party
to the Indemnifiable Claim giving rise to a claim for indemnification hereunder.
Notwithstanding the foregoing, the term "Independent Counsel" shall not include
any person who, under the applicable standards of professional conduct then
prevailing, would have a conflict of interest in representing either the Company
or Indemnitee in an action to determine Indemnitee's rights under this
Agreement.
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(i) "LOSSES" means any and all Expenses, damages, losses, liabilities,
judgments, fines, penalties (whether civil, criminal or other) and amounts paid
in settlement, including without limitation all interest, assessments and other
charges paid or payable in connection with or in respect of any of the
foregoing.
2. INDEMNIFICATION OBLIGATION. Subject to Section 7, the Company shall
indemnify, defend and hold harmless Indemnitee, to the fullest extent permitted
or required by the laws of the State of North Carolina in effect on the date
hereof or as such laws may from time to time hereafter be amended to increase
the scope of such permitted indemnification, against any and all Indemnifiable
Claims and Indemnifiable Losses; provided, however, that, except as provided in
Sections 4 and 20, Indemnitee shall not be entitled to indemnification pursuant
to this Agreement in connection with any Claim initiated by Indemnitee against
the Company or any director or officer of the Company unless the Company has
joined in or consented to the initiation of such Claim.
3. ADVANCEMENT OF EXPENSES. Indemnitee shall have the right to
advancement by the Company prior to the final disposition of any Indemnifiable
Claim of any and all Expenses relating to, arising out of or resulting from any
Indemnifiable Claim paid or incurred by Indemnitee or which Indemnitee
determines are reasonably likely to be paid or incurred by Indemnitee.
Indemnitee's right to such advancement is not subject to the satisfaction of any
standard of conduct. Without limiting the generality or effect of the foregoing,
within five business days after any request by Indemnitee, the Company shall, in
accordance with such request (but without duplication), (a) pay such Expenses on
behalf of Indemnitee, (b) advance to Indemnitee funds in an amount sufficient to
pay such Expenses, or (c) reimburse Indemnitee for such Expenses; provided that
Indemnitee shall repay, without interest any amounts actually advanced to
Indemnitee that, at the final disposition of the Indemnifiable Claim to which
the advance related, were in excess of amounts paid or payable by Indemnitee in
respect of Expenses relating to, arising out of or resulting from such
Indemnifiable Claim. In connection with any such payment, advancement or
reimbursement, Indemnitee shall execute and deliver to the Company an
undertaking, which need not be secured and shall be accepted without reference
to Indemnitee's ability to repay the Expenses, by or on behalf of the
Indemnitee, to repay any amounts paid, advanced or reimbursed by the Company in
respect of Expenses relating to, arising out of or resulting from any
Indemnifiable Claim in respect of which it shall have been determined, following
the final disposition of such Indemnifiable Claim and in accordance with Section
7, that Indemnitee is not entitled to indemnification hereunder.
4. INDEMNIFICATION FOR ADDITIONAL EXPENSES. Without limiting the
generality or effect of the foregoing, the Company shall indemnify and hold
harmless Indemnitee against and, if requested by Indemnitee, shall reimburse
Indemnitee for, or advance to Indemnitee, within five business days of such
request, any and all Expenses paid or incurred by Indemnitee or which Indemnitee
determines are reasonably likely to be paid or incurred by Indemnitee in
connection with any Claim made, instituted or conducted by Indemnitee for (a)
indemnification or reimbursement or advance payment of Expenses by the Company
under any provision of this Agreement, or under any other agreement or provision
of the Constituent Documents now or hereafter in effect relating to
Indemnifiable Claims, and/or (b) recovery under any directors' and officers'
liability insurance policies maintained by the Company, regardless in each case
of whether Indemnitee ultimately is determined to be entitled to such
indemnification, reimbursement, advance or insurance recovery, as the case may
be; provided, however, that
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Indemnitee shall return, without interest, any such advance of Expenses (or
portion thereof) which remains unspent at the final disposition of the Claim to
which the advance related.
5. PARTIAL INDEMNITY. If Indemnitee is entitled under any provision of
this Agreement to indemnification by the Company for some or a portion of any
Indemnifiable Loss, but not for all of the total amount thereof, the Company
shall nevertheless indemnify Indemnitee for the portion thereof to which
Indemnitee is entitled.
6. PROCEDURE FOR NOTIFICATION. To obtain indemnification under this
Agreement in respect of an Indemnifiable Claim or Indemnifiable Loss, Indemnitee
shall submit to the Company a written request therefor, including a brief
description (based upon information then available to Indemnitee) of such
Indemnifiable Claim or Indemnifiable Loss. If, at the time of the receipt of
such request, the Company has directors' and officers' liability insurance in
effect under which coverage for such Indemnifiable Claim or Indemnifiable Loss
is potentially available, the Company shall give prompt written notice of such
Indemnifiable Claim or Indemnifiable Loss to the applicable insurers in
accordance with the procedures set forth in the applicable policies. The Company
shall provide to Indemnitee a copy of such notice delivered to the applicable
insurers, and copies of all subsequent correspondence between the Company and
such insurers regarding the Indemnifiable Claim or Indemnifiable Loss, in each
case substantially concurrently with the delivery or receipt thereof by the
Company. The failure by Indemnitee to timely notify the Company of any
Indemnifiable Claim or Indemnifiable Loss shall not relieve the Company from any
liability hereunder unless, and only to the extent that, the Company did not
otherwise learn of such Indemnifiable Claim or Indemnifiable Loss and such
failure results in forfeiture by the Company of substantial defenses, rights or
insurance coverage.
7. DETERMINATION OF RIGHT TO INDEMNIFICATION.
(a) To the extent that Indemnitee shall have been successful on the
merits or otherwise in defense of any Indemnifiable Claim or any portion thereof
or in defense of any issue or matter therein, including without limitation
dismissal without prejudice, Indemnitee shall be indemnified against all
Indemnifiable Losses relating to, arising out of or resulting from such
Indemnifiable Claim in accordance with Section 2 and no Standard of Conduct
Determination (as defined in Section 7(b)) shall be required.
(b) To the extent that the provisions of Section 7(a) are inapplicable
to an Indemnifiable Claim that shall have been finally disposed of, any
determination of whether Indemnitee has satisfied any applicable standard of
conduct under North Carolina law that is a legally required condition precedent
to indemnification of Indemnitee hereunder against Indemnifiable Losses relating
to, arising out of or resulting from such Indemnifiable Claim (a "STANDARD OF
CONDUCT DETERMINATION") shall be made as follows: (i) if a Change in Control
shall not have occurred, or if a Change in Control shall have occurred but
Indemnitee shall have requested that the Standard of Conduct Determination be
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made pursuant to this clause (i), (A) by a majority vote of the Disinterested
Directors, even if less than a quorum of the Board, (B) if such Disinterested
Directors so direct, by a majority vote of a committee of Disinterested
Directors designated by a majority vote of all Disinterested Directors, or (C)
if there are no such Disinterested Directors, by Independent Counsel in a
written opinion addressed to the Board, a copy of which shall be delivered to
Indemnitee; and (ii) if a Change in Control shall have occurred and Indemnitee
shall not have requested that the Standard of Conduct Determination be made
pursuant to clause (i), by Independent Counsel in a written opinion addressed to
the Board, a copy of which shall be delivered to Indemnitee. Indemnitee will
cooperate with the person or persons making such Standard of Conduct
Determination, including providing to such person or persons, upon reasonable
advance request, any documentation or information which is not privileged or
otherwise protected from disclosure and which is reasonably available to
Indemnitee and reasonably necessary to such determination. The Company shall
indemnify and hold harmless Indemnitee against and, if requested by Indemnitee,
shall reimburse Indemnitee for, or advance to Indemnitee, within five business
days of such request, any and all costs and expenses (including attorneys' and
experts' fees and expenses) incurred by Indemnitee in so cooperating with the
person or persons making such Standard of Conduct Determination.
(c) The Company shall use its reasonable best efforts to cause any
Standard of Conduct Determination required under Section 7(b) to be made as
promptly as practicable. If (i) the person or persons empowered or selected
under Section 7 to make the Standard of Conduct Determination shall not have
made a determination within 30 days after the later of (A) receipt by the
Company of written notice from Indemnitee advising the Company of the final
disposition of the applicable Indemnifiable Claim (the date of such receipt
being the "NOTIFICATION DATE") and (B) the selection of an Independent Counsel,
if such determination is to be made by Independent Counsel, that is permitted
under the provisions of Section 7(e) to make such determination and (ii)
Indemnitee shall have fulfilled his/her obligations set forth in the second
sentence of Section 7(b), then Indemnitee shall be deemed to have satisfied the
applicable standard of conduct; provided that such 30-day period may be extended
for a reasonable time, not to exceed an additional 30 days, if the person or
persons making such determination in good faith requires such additional time
for the obtaining or evaluation or documentation and/or information relating
thereto.
(d) If (i) Indemnitee shall be entitled to indemnification hereunder
against any Indemnifiable Losses pursuant to Section 7(a), (ii) no determination
of whether Indemnitee has satisfied any applicable standard of conduct under
North Carolina law is a legally required condition precedent to indemnification
of Indemnitee hereunder against any Indemnifiable Losses, or (iii) Indemnitee
has been determined or deemed pursuant to Section 7(b) or (c) to have satisfied
any applicable standard of conduct under North Carolina law which is a legally
required condition precedent to indemnification of Indemnitee hereunder against
any Indemnifiable Losses, then the Company shall pay to Indemnitee, within five
business days after the later of (x) the Notification Date in respect of the
Indemnifiable Claim or portion thereof to which such Indemnifiable Losses are
related, out of which such Indemnifiable Losses arose or from which such
Indemnifiable Losses resulted and (y) the earliest date on which the applicable
criterion specified in clause (i), (ii) or (iii) above shall have been
satisfied, an amount equal to the amount of such Indemnifiable Losses.
(e) If a Standard of Conduct Determination is to be made by
Independent Counsel pursuant to Section 7(b)(i), the Independent Counsel shall
be selected by the Board of Directors, and the Company shall give written notice
to Indemnitee advising him or her of the identity of the Independent Counsel so
selected. If a Standard of Conduct Determination is to be made by Independent
Counsel pursuant to Section 7(b)(ii), the Independent Counsel shall be selected
by Indemnitee, and Indemnitee shall give written notice to the Company advising
it of the identity of the Independent Counsel so selected. In either case,
Indemnitee or the Company, as applicable, may, within five business days after
receiving written notice of selection from the
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other, deliver to the other a written objection to such selection; provided,
however, that such objection may be asserted only on the ground that the
Independent Counsel so selected does not satisfy the criteria set forth in the
definition of "Independent Counsel" in Section 1(h), and the objection shall set
forth with particularity the factual basis of such assertion. Absent a proper
and timely objection, the person or firm so selected shall act as Independent
Counsel. If such written objection is properly and timely made and
substantiated, (i) the Independent Counsel so selected may not serve as
Independent Counsel unless and until such objection is withdrawn or a court has
determined that such objection is without merit and (ii) the non-objecting party
may, at its option, select an alternative Independent Counsel and give written
notice to the other party advising such other party of the identity of the
alternative Independent Counsel so selected, in which case the provisions of the
two immediately preceding sentences and clause (i) of this sentence shall apply
to such subsequent selection and notice. If applicable, the provisions of clause
(ii) of the immediately preceding sentence shall apply to successive alternative
selections. If no Independent Counsel that is permitted under the foregoing
provisions of this Section 7(e) to make the Standard of Conduct Determination
shall have been selected within 30 days after the Company gives its initial
notice pursuant to the first sentence of this Section 7(e) or Indemnitee gives
its initial notice pursuant to the second sentence of this Section 7(e), as the
case may be, either the Company or Indemnitee may petition the courts of the
State of North Carolina for resolution of any objection which shall have been
made by the Company or Indemnitee to the other's selection of Independent
Counsel and/or for the appointment as Independent Counsel of a person or firm
selected by the Court or by such other person as the Court shall designate, and
the person or firm with respect to whom all objections are so resolved or the
person or firm so appointed will act as Independent Counsel. In all events, the
Company shall pay all of the reasonable fees and expenses of the Independent
Counsel incurred in connection with the Independent Counsel's determination
pursuant to Section 7(b).
8. PRESUMPTION OF ENTITLEMENT. In making any Standard of Conduct
Determination, the person or persons making such determination shall presume
that Indemnitee has satisfied the applicable standard of conduct, and the
Company may overcome such presumption only by its adducing clear and convincing
evidence to the contrary. Any Standard of Conduct Determination that is adverse
to Indemnitee may be challenged by the Indemnitee in the courts of the State of
North Carolina. No determination by the Company (including by its directors or
any Independent Counsel) that Indemnitee has not satisfied any applicable
standard of conduct shall be a defense to any Claim by Indemnitee for
indemnification or reimbursement or advance payment of Expenses by the Company
hereunder or create a presumption that Indemnitee has not met any applicable
standard of conduct.
9. NO OTHER PRESUMPTION. For purposes of this Agreement, the termination
of any Claim by judgment, order, settlement (whether with or without court
approval) or conviction, or upon a plea of nolo contendere or its equivalent,
will not create a presumption that Indemnitee did not meet any applicable
standard of conduct or that indemnification hereunder is otherwise not
permitted.
10. NON-EXCLUSIVITY. The rights of Indemnitee hereunder will be in
addition to any other rights Indemnitee may have under the Constituent
Documents, or the substantive laws of the Company's jurisdiction of
incorporation, any other contract or otherwise (collectively, "OTHER INDEMNITY
PROVISIONS"); provided, however, that (a) to the extent that Indemnitee
otherwise would have any greater right to indemnification under any Other
Indemnity Provision,
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Indemnitee will be deemed to have such greater right hereunder and (b) to the
extent that any change is made to any Other Indemnity Provision which permits
any greater right to indemnification than that provided under this Agreement as
of the date hereof, Indemnitee will be deemed to have such greater right
hereunder. The Company will not adopt any amendment to any of the Constituent
Documents the effect of which would be to deny, diminish or encumber
Indemnitee's right to indemnification under this Agreement or any Other
Indemnity Provision.
11. LIABILITY INSURANCE AND FUNDING. For the duration of Indemnitee's
service as a director and/or officer of the Company, and thereafter for so long
as Indemnitee shall be subject to any pending or possible Indemnifiable Claim,
the Company shall use commercially reasonable efforts (taking into account the
scope and amount of coverage available relative to the cost thereof) to cause to
be maintained in effect policies of directors' and officers' liability insurance
providing coverage for directors and/or officers of the Company that is at least
substantially comparable in scope and amount to that provided by the Company's
current policies of directors' and officers' liability insurance. The Company
shall provide Indemnitee with a copy of all directors' and officers' liability
insurance applications, binders, policies, declarations, endorsements and other
related materials, and shall provide Indemnitee with a reasonable opportunity to
review and comment on the same. Without limiting the generality or effect of the
two immediately preceding sentences, the Company shall not discontinue or
significantly reduce the scope or amount of coverage from one policy period to
the next (i) without the prior approval thereof by a majority vote of the
Incumbent Directors, even if less than a quorum, or (ii) if at the time that any
such discontinuation or significant reduction in the scope or amount of coverage
is proposed there are no Incumbent Directors, without the prior written consent
of Indemnitee (which consent shall not be unreasonably withheld or delayed). In
all policies of directors' and officers' liability insurance obtained by the
Company, Indemnitee shall be named as an insured in such a manner as to provide
Indemnitee the same rights and benefits, subject to the same limitations, as are
accorded to the Company's directors and officers most favorably insured by such
policy. The Company may, but shall not be required to, create a trust fund,
grant a security interest or use other means, including without limitation a
letter of credit, to ensure the payment of such amounts as may be necessary to
satisfy its obligations to indemnify and advance expenses pursuant to this
Agreement.
12. SUBROGATION. In the event of payment under this Agreement, the Company
shall be subrogated to the extent of such payment to all of the related rights
of recovery of Indemnitee against other persons or entities (other than
Indemnitee's successors), including any entity or enterprise referred to in
clause (i) of the definition of "Indemnifiable Claim" in Section 1(f).
Indemnitee shall execute all papers reasonably required to evidence such rights
(all of Indemnitee's reasonable Expenses, including attorneys' fees and charges,
related thereto to be reimbursed by or, at the option of Indemnitee, advanced by
the Company).
13. NO DUPLICATION OF PAYMENTS. The Company shall not be liable under this
Agreement to make any payment to Indemnitee in respect of any Indemnifiable
Losses to the extent Indemnitee has otherwise actually received payment (net of
Expenses incurred in connection therewith) under any insurance policy, the
Constituent Documents and Other Indemnity Provisions or otherwise (including
from any entity or enterprise referred to in clause (i) of the definition of
"Indemnifiable Claim" in Section 1(f)) in respect of such Indemnifiable Losses
otherwise indemnifiable hereunder.
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14. DEFENSE OF CLAIMS. The Company shall be entitled to participate in the
defense of any Indemnifiable Claim or to assume the defense thereof, with
counsel reasonably satisfactory to the Indemnitee; provided that if Indemnitee
believes, after consultation with counsel selected by Indemnitee, that (a) the
use of counsel chosen by the Company to represent Indemnitee would present such
counsel with an actual or potential conflict, (b) the named parties in any such
Indemnifiable Claim (including any impleaded parties) include both the Company
and Indemnitee and Indemnitee shall conclude that there may be one or more legal
defenses available to him or her that are different from or in addition to those
available to the Company, or (c) any such representation by such counsel would
be precluded under the applicable standards of professional conduct then
prevailing, then Indemnitee shall be entitled to retain separate counsel (but
not more than one law firm plus, if applicable, local counsel in respect of any
particular Indemnifiable Claim) at the Company's expense. The Company shall not
be liable to Indemnitee under this Agreement for any amounts paid in settlement
of any threatened or pending Indemnifiable Claim effected without the Company's
prior written consent. The Company shall not, without the prior written consent
of the Indemnitee, effect any settlement of any threatened or pending
Indemnifiable Claim to which the Indemnitee is, or could have been, a party
unless such settlement solely involves the payment of money and includes a
complete and unconditional release of the Indemnitee from all liability on any
claims that are the subject matter of such Indemnifiable Claim. Neither the
Company nor Indemnitee shall unreasonably withhold its consent to any proposed
settlement; provided that Indemnitee may withhold consent to any settlement that
does not provide a complete and unconditional release of Indemnitee.
15. SUCCESSORS AND BINDING AGREEMENT. (a) The Company shall require any
successor (whether direct or indirect, by purchase, merger, consolidation,
reorganization or otherwise) to all or substantially all of the business or
assets of the Company, by agreement in form and substance satisfactory to
Indemnitee and his or her counsel, expressly to assume and agree to perform this
Agreement in the same manner and to the same extent the Company would be
required to perform if no such succession had taken place. This Agreement shall
be binding upon and inure to the benefit of the Company and any successor to the
Company, including without limitation any person acquiring directly or
indirectly all or substantially all of the business or assets of the Company
whether by purchase, merger, consolidation, reorganization or otherwise (and
such successor will thereafter be deemed the "COMPANY" for purposes of this
Agreement), but shall not otherwise be assignable or delegatable by the Company.
(b) This Agreement shall inure to the benefit of and be enforceable by
the Indemnitee's personal or legal representatives, executors, administrators,
heirs, distributees, legatees and other successors.
(c) This Agreement is personal in nature and neither of the parties
hereto shall, without the consent of the other, assign or delegate this
Agreement or any rights or obligations hereunder except as expressly provided in
Sections 15(a) and 15(b). Without limiting the generality or effect of the
foregoing, Indemnitee's right to receive payments hereunder shall not be
assignable, whether by pledge, creation of a security interest or otherwise,
other than by a transfer by the Indemnitee's will or by the laws of descent and
distribution, and, in the event of any attempted assignment or transfer contrary
to this Section 15(c), the Company shall have no liability to pay any amount so
attempted to be assigned or transferred.
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16. NOTICES. For all purposes of this Agreement, all communications,
including without limitation notices, consents, requests or approvals, required
or permitted to be given hereunder shall be in writing and shall be deemed to
have been duly given when hand delivered or dispatched by electronic facsimile
transmission (with receipt thereof electronically confirmed), or five business
days after having been mailed by United States registered or certified mail,
return receipt requested, postage prepaid or one business day after having been
sent for next-day delivery by a nationally recognized overnight courier service,
addressed to the Company (to the attention of the Secretary of the Company) and
to Indemnitee at the applicable address shown on the signature page hereto, or
to such other address as any party may have furnished to the other in writing
and in accordance herewith, except that notices of changes of address will be
effective only upon receipt.
17. GOVERNING LAW. The validity, interpretation, construction and
performance of this Agreement shall be governed by and construed in accordance
with the substantive laws of the State of North Carolina, without giving effect
to the principles of conflict of laws of such State. The Company and Indemnitee
each hereby irrevocably consent to the jurisdiction of the courts of the State
of North Carolina for all purposes in connection with any action or proceeding
which arises out of or relates to this Agreement and agree that any action
instituted under this Agreement shall be brought only in the courts of the State
of North Carolina. As used in this Agreement, references to "the courts of the
State of North Carolina" will mean the North Carolina Business Court or such
other North Carolina court as may succeed the North Carolina Business Court as a
forum for cases involving issues of corporate and commercial law. In the event
that the North Carolina Business Court is abolished without a successor,
references to "the courts of the State of North Carolina" will mean either the
Superior Court of Forsyth County, North Carolina or the United States District
Court for the Middle District of North Carolina.
18. VALIDITY. If any provision of this Agreement or the application of any
provision hereof to any person or circumstance is held invalid, unenforceable or
otherwise illegal, the remainder of this Agreement and the application of such
provision to any other person or circumstance shall not be affected, and the
provision so held to be invalid, unenforceable or otherwise illegal shall be
reformed to the extent, and only to the extent, necessary to make it
enforceable, valid or legal. In the event that any court or other adjudicative
body shall decline to reform any provision of this Agreement held to be invalid,
unenforceable or otherwise illegal as contemplated by the immediately preceding
sentence, the parties thereto shall take all such action as may be necessary or
appropriate to replace the provision so held to be invalid, unenforceable or
otherwise illegal with one or more alternative provisions that effectuate the
purpose and intent of the original provisions of this Agreement as fully as
possible without being invalid, unenforceable or otherwise illegal.
19. MISCELLANEOUS. No provision of this Agreement may be waived, modified
or discharged unless such waiver, modification or discharge is agreed to in
writing signed by Indemnitee and the Company. No waiver by either party hereto
at any time of any breach by the other party hereto or compliance with any
condition or provision of this Agreement to be performed by such other party
shall be deemed a waiver of similar or dissimilar provisions or conditions at
the same or at any prior or subsequent time. No agreements or representations,
oral or otherwise, expressed or implied with respect to the subject matter
hereof have been made by either party that are not set forth expressly in this
Agreement. References to Sections are to references to Sections of this
Agreement.
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20. LEGAL FEES AND EXPENSES. It is the intent of the Company that
Indemnitee not be required to incur legal fees and or other Expenses associated
with the interpretation, enforcement or defense of Indemnitee's rights under
this Agreement by litigation or otherwise because the cost and expense thereof
would substantially detract from the benefits intended to be extended to
Indemnitee hereunder. Accordingly, without limiting the generality or effect of
any other provision hereof, if it should appear to Indemnitee that the Company
has failed to comply with any of its obligations under this Agreement or in the
event that the Company or any other person takes or threatens to take any action
to declare this Agreement void or unenforceable, or institutes any litigation or
other action or proceeding designed to deny, or to recover from, Indemnitee the
benefits provided or intended to be provided to Indemnitee hereunder, the
Company irrevocably authorizes the Indemnitee from time to time to retain
counsel of Indemnitee's choice, at the expense of the Company as hereafter
provided, to advise and represent Indemnitee in connection with any such
interpretation, enforcement or defense, including without limitation the
initiation or defense of any litigation or other legal action, whether by or
against the Company or any director, officer, stockholder or other person
affiliated with the Company, in any jurisdiction. Notwithstanding any existing
or prior attorney-client relationship between the Company and such counsel, the
Company irrevocably consents to Indemnitee's entering into an attorney-client
relationship with such counsel, and in that connection the Company and
Indemnitee agree that a confidential relationship shall exist between Indemnitee
and such counsel. Without respect to whether Indemnitee prevails, in whole or in
part, in connection with any of the foregoing, the Company will pay and be
solely financially responsible for any and all attorneys' and related fees and
expenses incurred by Indemnitee in connection with any of the foregoing.
21. CERTAIN INTERPRETIVE MATTERS. Unless the context of this Agreement
otherwise requires, (a) "it" or "its" or words of any gender include each other
gender, (b) words using the singular or plural number also include the plural or
singular number, respectively, (c) the terms "hereof," "herein," "hereby" and
derivative or similar words refer to this entire Agreement, (d) the terms
"Article," "Section," "Annex" or "Exhibit" refer to the specified Article,
Section, Annex or Exhibit of or to this Agreement, (e) the terms "include,"
"includes" and "including" will be deemed to be followed by the words "without
limitation" (whether or not so expressed), and (f) the word "or" is disjunctive
but not exclusive. Whenever this Agreement refers to a number of days, such
number will refer to calendar days unless business days are specified and
whenever action must be taken (including the giving of notice or the delivery of
documents) under this Agreement during a certain period of time or by a
particular date that ends or occurs on a non-business day, then such period or
date will be extended until the immediately following business day. As used
herein, "business day" means any day other than Saturday, Sunday or a United
States federal holiday.
22. COUNTERPARTS. This Agreement may be executed in one or more
counterparts, each of which will be deemed to be an original but all of which
together shall constitute one and the same agreement.
[SIGNATURES APPEAR ON FOLLOWING PAGE]
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IN WITNESS WHEREOF, Indemnitee has executed and the Company has caused its
duly authorized representative to execute this Agreement as of the date first
above written.
KRISPY KREME DOUGHNUTS, INC.
000 XXXXXXXXX XXXXXX, XXXXX 000
XXXXXXX-XXXXX, XX 00000
By:
------------------------------------------
Name:
----------------------------------------
Title:
---------------------------------------
[INDEMNITEE]
[Address]
---------------------------------------------
[Indemnitee]
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