FORM OF] OFFICER INDEMNIFICATION AGREEMENT
Exhibit
10.1
[FORM
OF]
This
Officer Indemnification Agreement, dated as of Date (this
“Agreement”), is made by and between
Krispy Kreme
Doughnuts, Inc., a North Carolina corporation (the
“Company”), and Indemnitee Name
(“Indemnitee”).
RECITALS:
A.
The day-to-day business and affairs of the Company are managed by or under
the
direction of its officers.
B. Thus,
it is critically important to the Company and its stockholders that the Company
be able to attract and retain capable persons to serve as officers of the
Company.
C. 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.
D. 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
men
and women to serve as corporate directors and officers, secure in the knowledge
that the corporation will absorb the costs of defending their honesty and
integrity.
E. The
number of lawsuits challenging the judgment and actions of officers of North
Carolina corporations, the costs of defending those lawsuits, and the threat
to
officers’ personal assets have all materially increased over the past several
years, chilling the willingness of capable men and women to undertake the
responsibilities imposed on corporate officers.
F. 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 officers of public companies and have
exposed such officers to new and substantially broadened civil
liabilities.
G. These
legislative and regulatory initiatives have also exposed officers of public
companies to a significantly greater risk of criminal proceedings, with
attendant defense costs and potential criminal fines and penalties.
H. Under
North Carolina law, an officer’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 officer
and is separate and distinct from any right to indemnification the officer
may
be able to establish, and indemnification of the officer against criminal fines
and penalties is permitted if the officer satisfies the applicable standard
of
conduct.
I. Indemnitee
is an officer 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.
J. Section
55-8-57(b) of the North Carolina Business Corporation Act provides that the
authorization, adoption, approval, and favorable recommendation of this
Agreement by the Company’s Board of Directors will not be deemed an act or
corporate transaction in which the Indemnitee has a conflict of interest and
this Agreement will not be void or voidable on such grounds, provided that
this
Agreement does not apply to claims made or liabilities asserted against the
officer prior to the date of 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 an officer 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
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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 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
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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 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, except as stated below, (i) any threatened or asserted (of which the
Company or the Indemnitee has received notice), and any 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 (of which the
Company or Indemnitee has received notice), 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. Notwithstanding the
foregoing, in no event will the term “Claim” be deemed to include any Claim
existing against Indemnitee prior to the date of this Agreement.
(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
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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.
(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 an 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
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
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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.
(i) “Losses”
means, except as stated below, 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. Notwithstanding the foregoing, in no event
will the term “Losses” be deemed to include any Losses incurred by the
Indemnitee prior to the date of this Agreement or relating to any Claim existing
against Indemnitee prior to the date of this Agreement.
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
6
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 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
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“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 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.
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(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 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
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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, 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).
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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.
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.
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(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.
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.
12
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.
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.
13
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.
23. Prospective
Effect. Notwithstanding anything to the contrary contained
anywhere in this Agreement, in no event will this Agreement be deemed to apply
to any Claim existing against Indemnitee prior to the date of this Agreement,
any Losses incurred by Indemnitee prior to the date of this Agreement, or any
Losses relating to any Claim existing against Indemnitee prior to the date
of
this Agreement.
[Signatures
Appear On Following Page]
14
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:
___________________________________
|
|
Address
|
| ___________________________________________________________ |
15
