Exhibit 10.1
 

EMPLOYMENT AGREEMENT
 
EMPLOYMENT AGREEMENT (“Agreement”) dated as of February 27, 2008 among Krispy
Kreme Doughnut Corporation, a North Carolina corporation (“KKDC”), Krispy Kreme
Doughnuts, Inc., a North Carolina corporation (the “Company” and, together with
KKDC, the “Companies”), and James H. Morgan (the “Executive”).
 
The parties hereto agree as follows:
 
ARTICLE 1
 
DEFINITIONS
 
SECTION 1.01. Definitions. For purposes of this Agreement, the following terms
have the meanings set forth below:
 
“Base Salary” has the meaning set forth in Section 4.01.
 
“Board” means the Board of Directors of the Company.
 
“Cause” shall mean (i) the Executive’s failure or refusal to perform the
Executive’s lawful and proper duties hereunder (other than as a result of total
or partial incapacity due to physical or mental illness or a court or
governmental order), (ii) the Executive’s conviction of or plea of nolo
contendere to any felony (other than a traffic infraction), (iii) an act or acts
on the Executive’s part constituting fraud, theft or embezzlement or that
otherwise constitutes a felony under the laws of the United States or any state
thereof which results or was intended to result directly or indirectly in gain
or personal enrichment by the Executive at the expense of the Companies, or (iv)
the Executive’s willful violation of any material provision of the code of
ethics of the Companies applicable to the Executive. In the case of any item
described in the previous sentence, the Executive shall be given written notice
of the alleged act or omission constituting Cause, which notice shall set forth
in reasonable detail the reason or reasons that the Board believes the Executive
is to be terminated for Cause, including any act or omission that is the basis
for the decision to terminate the Executive. In the case of an act or omission
described in clause (i) or (iv) of the definition of Cause, (A) if reasonably
capable of being cured, the Executive shall be given 30 days from the date of
such notice to effect a cure of such alleged act or omission constituting
“Cause” which, upon such cure to the reasonable satisfaction of the Board, shall
no longer constitute a basis for Cause, and (B) the Executive shall be given an
opportunity to make a presentation to the Board (accompanied by counsel or other
representative, if the Executive so desires) at a meeting of the Board held
promptly following such 30-day cure period if the Board intends to determine
that no cure has occurred. At or following such meeting, the Board shall
determine whether or not to terminate the Executive for “Cause” and shall notify
the Executive in writing of its determination and the effective date of such
termination (which date may be no earlier than the date of the aforementioned
Board meeting).
 
“Change in Control” means any of the following events:
 

 
 

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(a) the acquisition by any Person of “beneficial ownership” (within the meaning
of Rule 13d-3 promulgated under the Exchange Act) of fifty percent (50%) or more
of the combined voting power of the Company’s then outstanding voting
securities; provided, however, that a Change in Control shall not be deemed to
occur solely because fifty percent (50%) or more of the combined voting power of
the Company’s then outstanding securities is acquired by (i) a trustee or other
fiduciary holding securities under one or more employee benefit plans maintained
by the Company or any of its Subsidiaries, or (ii) any Person, which,
immediately prior to such acquisition, is owned directly or indirectly by the
shareholders of the Company in the same proportion as their ownership of stock
in the Company immediately prior to such acquisition;
 
(b) consummation of (i) a merger or consolidation involving the Company if the
shareholders of the Company, immediately before such merger or consolidation do
not, as a result of such merger or consolidation, own, directly or indirectly,
more than fifty percent (50%) of the combined voting power of the then
outstanding voting securities of the corporation resulting from such merger or
consolidation in substantially the same proportion as their ownership of the
combined voting power of the voting securities of the Company outstanding
immediately before such merger or consolidation, or (ii) a sale or other
disposition of all or substantially all of the assets of the Company other than
to a Person which is owned directly or indirectly by the shareholders of the
Company in the same proportion as their ownership of stock in the Company;
 
(c) a change in the composition of the Board such that the individuals who, as
of the Effective Date, constitute the Board (such Board shall be hereinafter
referred to as the “Incumbent Board”) cease for any reason to constitute at
least a majority of the Board; provided, however, for purposes of this
definition, that any individual who becomes a member of the Board subsequent to
the Effective Date whose election, or nomination for election by the Company’s
shareholders, was approved by a vote of at least a majority of those individuals
who are members of the Board and who were also members of the Incumbent Board
(or deemed to be such pursuant to this proviso) shall be considered as though
such individual were a member of the Incumbent Board; provided further, however,
that any such individual whose initial assumption of office occurs as a result
of either an actual or threatened election contest (as such terms are used in
Rule 14a-11 of Regulation 14A promulgated under the Exchange Act, including any
successor to such Rule), or other actual or threatened solicitation or proxies
or consents by or on behalf of a Person other than the Board, shall not be so
considered as a member of the Incumbent Board; or
 
(d) approval by shareholders of the Company of a complete liquidation or
dissolution of the Company;
 

 
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provided, however, that an event will be treated as a “Change in Control” for
purposes of this Agreement only if it is also a “change in control event” (as
defined in Treas. Reg. Section 1.409A-3(i)(5)) with respect to the Company.
 
“Code” means the Internal Revenue Code of 1986, as amended.
 
“Confidential Information” means information that is not generally known to the
public and that was or is used, developed or obtained by the Company or its
Subsidiaries in connection with the business of the Company and its Subsidiaries
and which constitutes trade secrets or information which they have attempted to
protect, which may include, but is not limited to, trade “know-how”, customer
information, supplier information, cost and pricing information, marketing and
sales techniques, strategies and programs, computer programs and software and
financial information. It shall not include information (a) required to be
disclosed by court or administrative order; (b) lawfully obtainable from other
sources or which is in the public domain through no fault of the Executive; or
(c) the disclosure of which is consented to in writing by the Company.
 
“Date of Termination” has the meaning set forth in Section 5.07.
 
“Effective Date” has the meaning set forth in Section 2.01.
 
“Employment Period” has the meaning set forth in Section 2.01.
 
“Exchange Act” means the Securities Exchange Act of 1934, as amended.
 
“Good Reason” shall mean (i) the failure of the Companies to pay any material
amount of compensation to the Executive when due hereunder, (ii) the Executive
is no longer the most senior executive officer of (A) the Company or (B) in the
event of a merger, consolidation or other business combination involving the
Company, the successor to the Company’s business or assets or (C) if all or
substantially all of the voting stock of the Company is held by another public
company, such public company (it being understood that it shall not be an event
of Good Reason for the applicable entity described in this clause (ii) to
appoint an individual other than the Executive as the non-executive chairman of
its board of directors), (iii) the assignment to the Executive of any duties or
responsibilities materially inconsistent with the Executive’s status under
clause (ii) of this sentence or his failure at any time to report directly to
the board of directors of the applicable company described in such clause (ii),
(iv) the failure of the Executive to be appointed or elected (or reelected) to
the Board, other than due to Executive’s decision not to stand for election or
reelection, or his removal from the Board not for Cause and not due to his
Permanent Disability or death, (v) any failure by the Companies to maintain the
Executive’s principal place of employment and the executive offices of the
Companies within 25 miles of the Winston-Salem, North Carolina area, (vi) any
material breach by the Companies of this Agreement, (vii) the term of the
Employment Period ending as a result of the Companies giving the Executive
notice of non-extension of the
 

 
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term of this Agreement in accordance with Section 5.01 solely at either the end
of the initial term or the end of the first, second or third one year extensions
of the term under Section 5.01 (but, for the avoidance of doubt, not at the end
of any further extension of the term) or (viii) a Change in Control; provided,
however, that for any of the foregoing to constitute Good Reason, the Executive
must provide written notification of his intention to resign within 60 days
after the Executive knows or has reason to know of the occurrence of any such
event, and the Companies shall have 30 days (10 days in the case of a material
breach related to payment of any amounts due hereunder) from the date of receipt
of such notice to effect a cure of the condition constituting Good Reason, and,
upon cure thereof by the Companies, such event shall no longer constitute Good
Reason.
 
“Notice of Termination” has the meaning set forth in Section 5.06.
 
“Permanent Disability” means the Executive becomes permanently disabled within
the meaning of the long-term disability plan of the Companies applicable to the
Executive, and the Executive commences to receive benefits under such plan.
 
“Person” means an individual, a partnership, a corporation, a limited liability
company, an association, a joint stock company, an estate, a trust, a joint
venture, an unincorporated organization or a governmental entity or any
department, agency or political subdivision thereof.
 
“Reimbursable Expenses” has the meaning set forth in Section 4.04.
 
“Securities Act” means the Securities Act of 1933, as amended.
 
“Subsidiary” or “Subsidiaries” means, with respect to any Person, any
corporation, partnership, limited liability company, association or other
business entity of which (a) if a corporation, 50 percent or more of the total
voting power of shares of stock entitled (without regard to the occurrence of
any contingency) to vote in the election of directors, managers or trustees
thereof is at the time owned or controlled, directly or indirectly, by that
Person or one or more of the other Subsidiaries of that Person or combination
thereof; or (b) if a partnership, limited liability company, association or
other business entity, 50 percent or more of the partnership or other similar
ownership interests thereof are at the time owned or controlled, directly or
indirectly, by any Person or one or more Subsidiaries of that Person or a
combination thereof. For purposes of this definition, a Person or Persons will
be deemed to have a 50 percent or more ownership interest in a partnership,
limited liability company, association or other business entity if such Person
or Persons are allocated 50 percent or more of partnership, limited liability
company, association or other business entity gains or losses or control the
managing director or member or general partner of such partnership, limited
liability company, association or other business entity.
 

 
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ARTICLE 2
 
EMPLOYMENT
 
SECTION 2.01. Employment. The Companies shall employ the Executive, and the
Executive shall accept employment with the Companies, upon the terms and
conditions set forth in this Agreement for the period beginning January 6, 2008
(the “Effective Date”) and ending as provided in Section 5.01 (the “Employment
Period”).  It is acknowledged that the Executive began service to the Companies
prior to the date of this Agreement, with continued service contingent upon the
preparation of this Agreement in a form mutually acceptable to both the
Executive and the Companies.
 
ARTICLE 3
 
POSITION AND DUTIES
 
SECTION 3.01. Position and Duties. During the Employment Period, the Executive
shall serve as Chief Executive Officer and President of the Company reporting
directly to the Board and shall be the Company’s most senior executive
officer.  The Executive shall also serve as Chairman of the Board of the Company
for as long as the Board desires.  During the Employment Period, the Executive
also shall serve as Chief Executive Officer, President and Chairman of the Board
of KKDC and shall be KKDC’s most senior executive officer. The Executive shall
have such responsibilities, powers and duties as may from time to time be
prescribed by the Board or the most senior executive officer of the Companies;
provided that such responsibilities, powers and duties are substantially
consistent with those customarily assigned to individuals serving in such
position at comparable companies or as may be reasonably required for the proper
conduct of the business of the Companies. During the Employment Period, the
Executive shall devote substantially all of his working time and efforts to the
business and affairs of the Company and its Subsidiaries. The Executive shall
not directly or indirectly render any services of a business, commercial or
professional nature to any other person or organization not related to the
business of the Company or its Subsidiaries, whether for compensation or
otherwise, without the prior approval of the Board; provided, however, the
Executive may serve on the board of directors of one for-profit corporation with
the prior approval of the Board, which will not be unreasonably withheld, and
the Executive may serve as a director of not-for-profit organizations or engage
in other charitable, civic or educational activities, so long as the activities
described in this proviso do not interfere with the Executive’s performance of
his duties hereunder or result in any conflict of interest with the Companies.
 

 
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ARTICLE 4
 
BASE SALARY AND BENEFITS
 
SECTION 4.01. Base Salary. During the Employment Period, the Executive will
receive base salary from the Companies equal to $650,000 per annum (the “Base
Salary”). The Base Salary will be payable in accordance with the normal payroll
practices of the Companies. Annually during the Employment Period the Company
shall review with the Executive his job performance and compensation, and if
deemed appropriate by the Board or its Compensation Committee, in their
discretion, the Executive’s Base Salary may be increased but not decreased.
After any such increase, the term “Base Salary” as used in this Agreement will
thereafter refer to the increased amount.  The Executive’s Base Salary and other
compensation is in lieu of any compensation he would otherwise receive as a
Director of the Company’s Board.
 
SECTION 4.02. Bonuses. In addition to Base Salary, the Executive shall be
eligible to be considered for an annual bonus, and the Executive’s annual target
bonus shall be equal to 70% of Base Salary.  The Compensation Committee of the
Board and the Board shall set targets with respect to and otherwise determine
Executive’s bonus in accordance with the Company’s then current incentive
plans.  The Executive will not receive a bonus attributable to his service
during the Companies’ 2008 fiscal years.  The Executive may elect to receive
bonus amounts that may become payable for the upcoming fiscal year (commencing
with the bonus that may become payable for fiscal year 2009) in equity instead
of cash by delivering a written irrevocable election to such effect prior to the
end of the preceding fiscal year.  Should such an election be made, the equity
will be granted under the Krispy Kreme Doughnuts, Inc. 2000 Stock Incentive Plan
(the “Stock Incentive Plan”).
 
SECTION 4.03. Benefits. During the Employment Period, the Executive shall be
entitled to participate in all employee benefit, perquisite and fringe benefit
plans and arrangements made available by the Companies to their executives and
key management employees upon the terms and subject to the conditions set forth
in the applicable plan or arrangement. Such benefits shall include medical, life
and disability insurance provided in accordance with the policies of the
Companies.  The Executive also shall be provided an executive allowance of
$2,000 per month, and the Executive shall be entitled to four weeks of paid
vacation annually during the Employment Period.
 
SECTION 4.04. Expenses. The Companies shall reimburse the Executive for all
reasonable expenses incurred by him in the course of performing his duties under
this Agreement which are consistent with the Companies’ policies in effect from
time to time with respect to travel, entertainment and other business expenses
(“Reimbursable Expenses”), subject to the Companies’ requirements with respect
to reporting and documentation of expenses.
 

 
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SECTION 4.05. Stock Options.  The Company shall grant to the Executive options
to purchase 500,000 shares of the Company’s common stock (the “Option Shares”)
at an exercise price per share equal to the fair market value per share on the
date of grant, which shall be the same as the date of this Agreement. Twenty
five percent (25%) of the options (specifically, 125,000 Option Shares) will
vest and become exercisable on July 6, 2008, 2008 and 1/18th of the balance
(specifically, 20,833 Option Shares in each of the first 17 months and 20,839
shares in the 18th month) will vest on the 6th day of each month thereafter
commencing on August 6, 2008 and ending on January 6, 2010, so long as, except
as otherwise set forth in the applicable stock option plan, the Executive’s
employment continues through such vesting dates.  The term of the Option Shares
will be ten years from the date of grant, subject to earlier termination in the
event the Executive’s employment terminates.  The Option Shares shall be subject
to the terms of the Stock Incentive Plan, and the option grant agreement for
Executive’s Option Shares shall have terms similar to those of other executive
officers of the Companies.  The Option Shares shall also be subject to, and
Executive agrees to comply with, the ownership guidelines adopted by the Company
as may be applicable to Option Shares of the Company’s Chief Executive Officer
and President.  During the Executive’s service to the Company as a director or
employee, unvested Option Shares will continue to vest.
 
SECTION 4.06. Relocation.  The Companies shall reimburse the Executive for all
reasonable expenses incurred by him in relocating his and his immediate family’s
household items to Winston-Salem, North Carolina, subject to the Companies
requirements with respect to reporting and documentation of such expenses, such
relocation reimbursements to include all normal expenses of moving, packing and
unpacking, home hunting, buying and selling brokerage fees, transfer taxes,
origination fees (not to exceed 1% of the loan amount) and mortgage points (not
to exceed 1% of the loan amount) incurred within one year from the Effective
Date.  Furthermore, the Executive’s temporary housing expenses will be paid by
the Companies through the first to occur of (i) July 6, 2008 or (ii) the closing
date of the Executive’s acquisition of a home in the Winston-Salem area. The
Executive will also receive a gross up for income and payroll taxes payable by
him related to reimbursement by the Companies pursuant to this Section 4.06 and
for the related gross up itself, such that the relocation and commuting expenses
and the related gross up will be effectively tax free to the Executive.
 
ARTICLE 5
 
TERM AND TERMINATION
 
SECTION 5.01. Term. The Employment Period will terminate on January 6, 2011,
unless sooner terminated as hereinafter provided; provided, however, that the
Employment Period will be automatically extended for successive one-year periods
following the original term ending January 6, 2011 until either the Companies,
on the one hand, or the Executive, on the other hand, at least 180 days prior to
the expiration
 

 
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of the original term or any extended term, shall give written notice to the
other of their intention not to so extend the Employment Period.
 
SECTION 5.02. Termination Due to Death or Permanent Disability. If the
Employment Period shall be terminated due to death or Permanent Disability of
the Executive, the Executive (or his estate or legal representative) shall be
entitled solely to the following: (i) Base Salary through the Date of
Termination (paid on the Companies’ normal payroll payment date); (ii) any
vested stock options will remain exercisable for two years after the Date of
Termination (subject to the Companies discretion to cash out these awards in
connection with a Change in Control), and (iii) medical benefits as provided in
Section 5.05 below. The Executive’s entitlements under any other benefit plan or
program shall be as determined thereunder. In addition, promptly following any
such termination, the Executive (or his estate or legal representative) shall be
reimbursed for all Reimbursable Expenses incurred by the Executive prior to such
termination.
 
SECTION 5.03. Termination for Good Reason or Without Cause. Except as otherwise
set forth in Section 5.09 below, if the Employment Period shall be terminated
(a) by the Executive for Good Reason, or (b) by the Companies not for Cause,
provided the Executive has executed, on or before the date that is fifty (50)
days following the date of his termination of employment, an irrevocable (except
to the extent required by law to be revocable) general release of claims in the
form attached hereto as Exhibit A, and does not revoke such release prior to the
end of the seven day statutory revocation period, the Executive shall be
entitled solely to the following: (i) Base Salary through the Date of
Termination, paid on the Companies’ normal payroll payment date; (ii) an amount
equal to two times the sum of Base Salary and the Executive’s target annual
bonus amount for the year of termination (or the Base Salary or target annual
bonus for the prior year if reduction of the Executive’s Base Salary or target
annual bonus, or both, was the event giving rise to Good Reason), provided that,
the Executive shall be entitled to any unpaid amounts only if the Executive has
not breached and does not breach the provisions of Sections 6.01, 7.01, 8.01 or
9 below; (iii) a bonus for the year of termination of employment equal to the
Executive’s target annual bonus for such year pro rated for the number of full
months during the bonus year prior to such termination of employment, to be
paid, subject to Section 13.14 below, 60 days following such termination of
employment; (iv) all of the restricted shares and stock options held by the
Executive shall vest and/or become exercisable on the Date of Termination, and
(v) medical benefits as provided in Section 5.05 below. The Executive’s
entitlements under any other benefit plan or program shall be as determined
thereunder, except that duplicative severance benefits shall not be payable
under any other plan or program. Amounts described in clause (ii) above will be
paid, subject to Section 13.14 below, in twelve (12) equal installments, the
first two (2) of which shall be paid on the date that is two (2) months
following the Date of Termination and the next ten (10) of which will be paid in
ten (10) equal monthly installments commencing on the date that is three (3)
months following the Date of Termination and continuing on each of the next nine
(9) monthly anniversaries of the Date of Termination. In addition, promptly
following any
 

 
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such termination, the Executive shall be reimbursed for all Reimbursable
Expenses incurred by the Executive prior to such termination.  
 
SECTION 5.04. Termination for Cause or Other Than Good Reason. If the Employment
Period shall be terminated (a) by the Companies for Cause, or (b) as a result of
the Executive’s resignation or leaving of his employment other than for Good
Reason, the Executive shall be entitled to receive solely Base Salary through
the Date of Termination (paid on the Companies’ normal payroll payment date) and
reimbursement of all Reimbursable Expenses incurred by the Executive prior to
such termination.  The Executive’s rights under the benefit plans and programs
shall be as determined thereunder. A voluntary resignation by the Executive
shall not be deemed to be a breach of this Agreement.
 
SECTION 5.05. Benefits.  If the Employment Period is terminated as a result of a
termination of employment as specified in Section 5.02, 5.03 or 5.09, the
Executive and his covered dependents shall continue to receive medical insurance
coverage benefits from the Companies, with the same contribution toward such
coverage from the Executive or his estate as was given during the Employment
Period, for a period equal to the lesser of (x) twelve months following the Date
of Termination, or (y) until the Executive is provided by another employer with
benefits substantially comparable to the benefits provided by the Companies’
medical plan.  Furthermore, in the event of Executive’s Permanent Disability,
insurance benefits will continue under the Companies’ long term disability plan
in accordance with its terms.
 
SECTION 5.06. Notice of Termination. Any termination by the Companies for
Permanent Disability or Cause or without Cause or by the Executive with or
without Good Reason shall be communicated by written Notice of Termination to
the other party hereto. For purposes of this Agreement, a “Notice of
Termination” shall mean a notice which shall indicate the specific termination
provision in this Agreement relied upon and shall set forth in reasonable detail
the facts and circumstances claimed to provide a basis for termination of
employment under the provision indicated.
 
SECTION 5.07. Date of Termination. “Date of Termination” shall mean (a) if the
Employment Period is terminated as a result of a Permanent Disability, five days
after a Notice of Termination is given, (b) if the Employment Period is
terminated as a result of his death, on the date of his death, and (c) if the
Employment Period terminates due to expiration of the term of this Agreement,
the date the term expires, and (d) if the Employment Period is terminated for
any other reason, the later of the date of the Notice of Termination and the end
of any applicable correction period.
 
SECTION 5.08. No Duty to Mitigate. The Executive shall have no duty to seek new
employment or other duty to mitigate following a termination of employment as
described in this Article 5, and no compensation or benefits described in this
Article 5 shall be subject to reduction or offset on account of any subsequent
compensation, other than as provided in Section 5.05.
 

 
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SECTION 5.09. Change in Control.  All stock options and restricted shares held
by the Executive will become vested in full upon a Change in Control; provided,
however, that the vesting of the restricted shares and stock options held by
Executive shall not be accelerated where the Executive continues as the chief
executive officer of a publicly traded parent corporation of the
parent/subsidiary affiliated group that included the Companies (the “Surviving
Entity”) and either the Company’s common stock remains outstanding or
replacement equity awards are granted by the Surviving Entity so long as the
terms of this Agreement are expressly assumed and continued by the Surviving
Entity and the Executive has not elected to properly terminate this Agreement
for Good Reason.
 
SECTION 5.10. Separation From Service.  Notwithstanding any provision of this
Agreement to the contrary, for purposes of Section 5.03 and Section 5.09, the
Executive will be deemed to have terminated his employment on the date of his
“separation from service” (within the meaning of Treas. Reg. Section
1.409A-1(h)) with the Companies, the Employment Period will be deemed to have
ended on the date of his “separation from service” with the Companies, and the
Date of Termination will be deemed to be the date of his “separation from
service” with the Companies.
 
ARTICLE 6
 
CONFIDENTIAL INFORMATION
 
SECTION 6.01. Nondisclosure and Nonuse of Confidential Information. The
Executive will not disclose or use at any time during or after the Employment
Period any Confidential Information of which the Executive is or becomes aware,
whether or not such information is developed by him, except to the extent he
reasonably believes that such disclosure or use is directly related to and
appropriate in connection with the Executive’s performance of duties assigned to
the Executive pursuant to this Agreement. Under all circumstances and at all
times, the Executive will take all appropriate steps to safeguard Confidential
Information in his possession and to protect it against disclosure, misuse,
espionage, loss and theft.  Executive also agrees to execute and comply with
such other confidentiality agreements or provisions as required of executive
officers of the Company.
 
ARTICLE 7
 
INTELLECTUAL PROPERTY
 
SECTION 7.01. Ownership of Intellectual Property. In the event that the
Executive as part of his activities on behalf of the Companies generates,
authors or contributes to any invention, design, new development, device,
product, method of process (whether or not patentable or reduced to practice or
comprising Confidential Information), any copyrightable work (whether or not
comprising Confidential Information) or any other form of Confidential
Information relating directly or indirectly
 

 
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to the business of the Company or its Subsidiaries as now or hereafter conducted
(collectively, “Intellectual Property”), the Executive acknowledges that such
Intellectual Property is the sole and exclusive property of the Company and its
Subsidiaries and hereby assigns all right, title and interest in and to such
Intellectual Property to the Company or its designated Subsidiary. Any
copyrightable work prepared in whole or in part by the Executive during the
Employment Period will be deemed “a work made for hire” under Section 201(b) of
the Copyright Act of 1976, as amended, and the Company or its designated
Subsidiary will own all of the rights comprised in the copyright therein. The
Executive will promptly and fully disclose all Intellectual Property and will
cooperate with the Companies to protect their interests in and rights to such
Intellectual Property (including providing reasonable assistance in securing
patent protection and copyright registrations and executing all documents as
reasonably requested by the Companies, whether such requests occur prior to or
after termination of Executive’s employment hereunder).
 
ARTICLE 8
 
DELIVERY OF MATERIALS UPON TERMINATION OF EMPLOYMENT
 
SECTION 8.01. Delivery of Materials upon Termination of Employment. As requested
by the Companies from time to time, and upon the termination of the Executive’s
employment with the Companies for any reason, the Executive will promptly
deliver to the Companies all property of the Company or its Subsidiaries,
including, without limitation, all copies and embodiments, in whatever form or
medium, of all Confidential Information in the Executive’s possession or within
his control (including written records, notes, photographs, manuals, notebooks,
documentation, program listings, flow charts, magnetic media, disks, diskettes,
tapes and all other materials containing any Confidential Information)
irrespective of the location or form of such material and, if requested by the
Companies, will provide the Companies with written confirmation that to the best
of his knowledge all such materials have been delivered to the Companies or
destroyed.
 
ARTICLE 9
 
NON-COMPETITION AND NONSOLICITATION
 
SECTION 9.01. Noncompetition. The Executive acknowledges that, during his
employment with the Companies, he will become familiar with trade secrets and
other Confidential Information concerning the Company and its Subsidiaries and
his services will be of special, unique and extraordinary value to the
Companies. In addition, the Executive hereby agrees that at any time during the
Noncompetition Period (as defined below), he will not directly or indirectly
own, manage, control, participate in, consult with, become employed by or
otherwise render services to any business listed on Exhibit B hereto in the
Territory. During the Noncompetition Period, the Company shall have the right
to, in good faith, add other entities which are in substantial competition
 

 
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with the Companies to the list of businesses on Exhibit B, subject to the
consent of the Executive which shall not be unreasonably withheld.
Notwithstanding the foregoing, if the Executive’s termination of employment
occurs at the end of the Employment Period due to the Companies giving written
notice after the second anniversary of the Effective Date pursuant to Section
5.01 of its intention not to extend the Employment Period, this Section 9.01
will only apply if the Companies elect and agree in writing to pay the Executive
his Base Salary and his annual target bonus in effect for the year during which
his employment is terminated for an additional one-year period following the
termination of employment, such amount to be paid, subject to Section 13.14
below, in twelve (12) equal installments, the first two (2) of which shall be
paid on the date that is two (2) months following the date of the Executive’s
“separation from service” with the Companies (as defined in Section 5.10 above)
and the next ten (10) of which will be paid in ten (10) equal monthly
installments commencing on the date that is three (3) months following such date
and continuing on each of the next nine (9) monthly anniversaries of such date;
provided, however, that if such termination of employment is within two years
after a Change in Control, such amount shall instead be paid, subject to Section
13.14 below, 60 days following the Executive’s “separation from service” with
the Companies.  It shall not be considered a violation of this Section 9.01 for
the Executive to be a passive owner of not more than 2% of the outstanding stock
of any class of any corporation which is publicly traded, so long as the
Executive has no active participation in the business of such corporation.
 
SECTION 9.02. Nonsolicitation. The Executive hereby agrees that (a) during the
Nonsolicitation Period (as defined below), the Executive will not, directly or
indirectly through another Person, induce or attempt to induce any employee of
the Company or its Subsidiaries to leave the employ of the Company or its
Subsidiaries, or in any way interfere with the relationship between the Company
or its Subsidiaries and any person employed by them at any time during such
Nonsolicitation Period, and (b) during the Nonsolicitation Period, the Executive
will not induce or attempt to induce any customer, supplier, client or other
business relation of the Company or its Subsidiaries to cease doing business
with the Company or its Subsidiaries.
 
SECTION 9.03. Definitions. It is agreed that the “Territory,” for purposes of
this Article 9, shall mean:
 
(i) The entire United States and any other country where the Company or any of
its Subsidiaries, joint venturers, franchisees or affiliates has operated a
retail facility at which the Companies’ products have been sold at any time in
the one-year period ending on the last day of the Executive’s employment with
the Companies;
 
(ii) In the event that the preceding clause shall be determined by judicial
action to define too broad a territory to be enforceable, then “Territory” shall
mean the entire United States;
 

 
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(iii) In the event that the preceding clauses shall be determined by judicial
action to define too broad a territory to be enforceable, then “Territory” shall
mean the states in the United States where the Company or any of its
Subsidiaries, joint venturers, franchisees or affiliates has operated a retail
facility at which the Companies’ products have been sold at any time in the
one-year period ending on the last day of Executive’s employment with the
Companies;
 
(iv) In the event that the preceding clauses shall be determined by judicial
action to define too broad a territory to be enforceable, then “Territory” shall
mean the area that includes all of the areas that are within a 50-mile radius of
any retail store location in the United States at which the Companies’ products
have been sold at any time in the one-year period ending on the last day of the
Executive’s employment with the Companies; and
 
(v) In the event that the preceding clauses shall be determined by judicial
action to define too broad a territory to be enforceable, then “Territory” shall
mean the entire state of North Carolina.
 
It is also agreed that “Noncompetition Period,” for purposes hereof, shall mean:
 
(i) the Employment Period and a period ending one year after the Date of
Termination; and
 
(ii) In the event that the preceding clause shall be determined by judicial
action to define too long a period to be enforceable, “Noncompetition Period”
shall mean the Employment Period and a period ending six months after the Date
of Termination.
 
It is also agreed that “Nonsolicitation Period,” for purposes hereof, shall
mean:
 
(i) the Employment Period and a period ending two years after the Date of
Termination;
 
(ii) In the event that the preceding clause shall be determined by judicial
action to define too long a period to be enforceable, “Nonsolicitation Period”
shall mean the Employment Period and a period ending eighteen months after the
Date of Termination;
 
(iii) In the event that the preceding clauses shall be determined by judicial
action to define too long a period to be enforceable, “Nonsolicitation Period”
shall mean the Employment Period and a period ending one year after the Date of
Termination; and
 

 
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(iv) In the event that the preceding clauses shall be determined by judicial
action to define too long a period to be enforceable, “Nonsolicitation Period”
shall mean the Employment Period and a period ending six months after the Date
of Termination.
 
ARTICLE 10
 
EQUITABLE RELIEF
 
SECTION 10.01. Equitable Relief. The Executive acknowledges that (a) the
covenants contained herein are reasonable, (b) the Executive’s services are
unique, and (c) a breach or threatened breach by him of any of his covenants and
agreements with the Companies contained in Sections 6.01, 7.01, 8.01 or Article
9 could cause irreparable harm to the Companies for which they would have no
adequate remedy at law. Accordingly, and in addition to any remedies which the
Companies may have at law, in the event of an actual or threatened breach by the
Executive of his covenants and agreements contained in Sections 6.01, 7.01, 8.01
or Article 9, the Companies shall have the absolute right to apply to any court
of competent jurisdiction for such injunctive or other equitable relief, without
the necessity to post bond, as such court may deem necessary or appropriate in
the circumstances.
 
ARTICLE 11
 
EXECUTIVE REPRESENTATION AND INDEMNIFICATION
 
SECTION 11.01. Executive Representation. The Executive hereby represents and
warrants to the Companies that (a) the execution, delivery and performance of
this Agreement by the Executive does not and will not conflict with, breach,
violate or cause a default under any contract, agreement, instrument, order,
judgment or decree to which the Executive is a party or by which he is bound,
(b) the Executive is not a party to or bound by any employment agreement,
noncompetition agreement or confidentiality agreement with any other Person, and
(c) upon the execution and delivery of this Agreement by the Companies, this
Agreement will be the valid and binding obligation of the Executive, enforceable
in accordance with its terms. Notwithstanding Section 11.02 below, in the event
that any action is brought against Executive involving any breach of any
employment agreement, noncompetition agreement or confidentiality agreement with
any other Person, the Executive shall bear his own costs incurred in defending
such action, including but not limited to court fees, arbitration costs,
mediation costs, attorneys’ fees and disbursements.
 
SECTION 11.02. General Indemnification. The Companies, jointly and severally,
agree that if the Executive is made a party, or is threatened to be made a
party, to any action, suit or proceeding, whether civil, criminal,
administrative or investigative (each, a “Proceeding”), by reason of the fact
that he is or was a director, officer or employee of the Company or any of its
Subsidiaries or is or was serving at the
 

 
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request of the Company or any of its Subsidiaries as a director, officer,
member, employee or agent of another corporation, partnership, joint venture,
trust or other enterprise, including service with respect to employee benefit
plans, whether or not the basis of such Proceeding is the Executive’s alleged
action in an official capacity while serving as a director, officer, member,
employee or agent, the Executive shall be indemnified and held harmless by the
Companies to the fullest extent permitted or authorized by applicable law and
their bylaws, against all cost, expense, liability and loss (including, without
limitation, advancement of attorneys’ and other fees and expenses) reasonably
incurred or suffered by the Executive in connection therewith. The Company
agrees to use its best efforts to maintain a directors’ and officers’ liability
insurance policy covering the Executive during the Employment Period and for at
least four years thereafter to the extent available on commercially reasonable
terms.
 
ARTICLE 12
 
CERTAIN ADDITIONAL PAYMENTS
 
SECTION 12.01. Anything in this Agreement to the contrary notwithstanding, in
the event it shall be determined that any payment, award, benefit or
distribution (including, without limitation, the acceleration of any payment,
award, distribution or benefit) by the Company or its Subsidiaries to or for the
benefit of the Executive (whether pursuant to the terms of this Agreement or
otherwise, but determined without regard to any additional payments required
under this Article 12) (a “Payment”) would be subject to the excise tax imposed
by Section 4999 of the Code or any corresponding provisions of state or local
tax law, or any interest or penalties are incurred by the Executive with respect
to such excise tax (such excise tax, together with any such interest and
penalties, are hereinafter collectively referred to as the “Excise Tax”), then
the Executive shall be entitled to receive an additional payment (a “Gross-Up
Payment”) in an amount such that after payment by the Executive of all taxes
(including any Excise Tax, income tax or employment tax) imposed upon the
Gross-Up Payment and any interest or penalties imposed with respect to such
taxes, the Executive retains from the Gross-Up Payment an amount equal to the
Excise Tax imposed upon the Payments. The payment of a Gross-Up Payment under
this Section 12.01 shall not be conditioned upon the Executive’s termination of
employment. Notwithstanding the foregoing provisions of this Section 12.01, if
it shall be determined that the Executive is entitled to a Gross-Up Payment, but
that the portion of the Payments that would be treated as “parachute payments”
under Section 280G of the Code does not exceed the lesser of
110%                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              of
the Safe Harbor Amount (as defined in the following sentence) or $200,000, then
no Gross-Up Payment shall be made to the Executive and the amounts payable under
this Agreement shall be reduced so that the Payments, in the aggregate, are
reduced to the Safe Harbor Amount.  The “Safe Harbor Amount” is the greatest
amount of payments in the nature of compensation that are contingent on a Change
in Control for purposes of Section 280G of the Code that could be paid to the
Executive without giving rise to any Excise Tax. The reduction of the amounts
payable hereunder, if applicable, shall be made
 

 
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 by first reducing the cash payments under Article 5 hereof. For purposes of
reducing the payments to the Safe Harbor Amount, only amounts payable under this
Agreement (and no other Payments) shall be reduced. If the reduction of the
amounts payable under this Agreement would not result in a reduction of the
Payments to the Safe Harbor Amount, no amounts payable under this Agreement
shall be reduced pursuant to this Section 12.01.
 
SECTION 12.02. Subject to the provisions of Section 12.03, all determinations
required to be made under this Article 12, including the determination of
whether a Gross-Up Payment is required and of the amount of any such Gross-up
Payment, shall be made by the Company’s independent auditors or such other
accounting firm agreed by the parties hereto (the “Accounting Firm”), which
shall provide detailed supporting calculations to the Companies within 15
business days after the receipt of notice from the Companies that the Executive
has received a Payment, or such earlier time as is requested by the Companies,
provided that any determination that an Excise Tax is payable by the Executive
shall be made on the basis of substantial authority. The Companies will promptly
provide copies of such supporting calculations to the Executive on which the
Executive may rely. The initial Gross-Up Payment, if any, as determined pursuant
to this Section 12.02, shall be paid to the Executive (or for the benefit of the
Executive to the extent of the Companies’ withholding obligation with respect to
applicable taxes) no later than one day prior to the due date for the payment of
any Excise Tax. If the Accounting Firm determines that no Excise Tax is payable
by the Executive, it shall furnish the Companies with a written opinion that
substantial authority exists for the Executive not to report any Excise Tax on
his Federal income tax return and, as a result, the Companies are not required
to withhold Excise Tax from payments to the Executive. The Companies will
promptly provide a copy of any such opinion to the Executive on which the
Executive may rely. Any determination by the Accounting Firm meeting the
requirements of this Section 12.02 shall be binding upon the Companies and the
Executive. As a result of the uncertainty in the application of Section 4999 of
the Code at the time of the initial determination by the Accounting Firm
hereunder, it is possible that Gross-Up Payments which will not have been made
by the Companies should have been made (“Underpayment”), consistent with the
calculations required to be made hereunder. In the event that the Companies
exhaust their remedies pursuant to Section 12.03 and the Executive thereafter is
required to make a payment of any Excise Tax, the Accounting Firm shall
determine the amount of the Underpayment that has occurred, and any such
Underpayment shall be promptly paid by the Companies to or for the benefit of
the Executive. The fees and disbursements of the Accounting Firm shall be paid
by the Companies.
 
SECTION 12.03. The Executive shall notify the Companies in writing of any claim
by the Internal Revenue Service that, if successful, would require the payment
by the Companies of a Gross-Up Payment. Such notification shall be given as soon
as practicable but not later than ten business days after the Executive receives
written notice of such claim and shall apprise the Companies of the nature of
such claim
 

 
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and the date on which such Claim is requested to be paid. The Executive shall
not pay such claim prior to the expiration of the 30-day period following the
date on which it gives such notice to the Companies (or such shorter period
ending on the date that any payment of taxes with respect to such claim is due).
If the Companies notify the Executive in writing prior to the expiration of such
period that they desire to contest such claim, the Executive shall:
 
(i) give the Companies any information reasonably requested by the Companies
relating to such claim,
 
(ii) take such action in connection with contesting such claim as the Companies
shall reasonably request in writing from time to time, including, without
limitation, accepting legal representation with respect to such claim by an
attorney reasonably selected by the Companies,
 
(iii) cooperate with the Companies in good faith in order effectively to contest
such claim, and
 
(iv) permit the Companies to participate in any proceedings relating to such
claim;
 
provided, however, that the Companies shall bear and pay directly all costs and
expenses (including additional interest and penalties) incurred in connection
with such contest and shall indemnify and hold the Executive harmless, on an
after-tax basis, for any Excise Tax, income tax or employment tax, including
interest and penalties with respect thereto, imposed as a result of such
representation and payment of costs and expenses. Without limitation on the
foregoing provisions of this Section 12.03, the Companies shall control all
proceedings taken in connection with such contest and, at their sole option, may
pursue or forgo any and all administrative appeals, proceedings, hearings and
conferences with the taxing authority in respect of such claim and may, at their
sole option, either direct the Executive to pay the tax claimed and sue for a
refund or contest the claim in any permissible manner, and the Executive agrees
to prosecute such contest to a determination before any administrative tribunal,
in a court of initial jurisdiction and in one or more appellate courts, as the
Companies shall determine; provided, however, that if the Companies direct the
Executive to pay such claim and sue for a refund, the Companies shall advance
the amount of such payment to the Executive on an interest-free basis and shall
indemnify and hold the Executive harmless, on an after-tax basis, from any
Excise Tax, income tax or employment tax, including interest or penalties with
respect thereto, imposed with respect to such advance (except that if such a
loan would not be permitted under applicable law, the Companies may not direct
the Executive to pay the claim and sue for a refund); and further provided that
any extension of the statute of limitations relating to the payment of taxes for
the taxable year of the Executive with respect to which such contested amount is
claimed to be due is limited solely to such contested amount. Furthermore, the
Companies’ control of the contest shall be limited to issues with respect to
which a Gross-Up Payment would be payable hereunder and the
 

 
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Executive shall be entitled to settle or contest, as the case may be, any other
issue raised by the Internal Revenue Service or any other taxing authority.
 
SECTION 12.04. If, after the receipt by the Executive of an amount advanced by
the Companies pursuant to Section 12.03, the Executive becomes entitled to
receive any refund with respect to such claim, the Executive shall (subject to
the compliance by the Companies with the requirements of Section 12.03) promptly
pay to the Companies the amount of such refund (together with any interest paid
or credited thereon after taxes applicable thereto). If, after the receipt by
the Executive of an amount advanced by the Companies pursuant to Section 12.03,
a determination is made that the Executive shall not be entitled to any refund
with respect to such claim and the Companies do not notify the Executive in
writing of their intent to contest such denial of refund prior to the expiration
of 30 days after such determination, then such advance shall be forgiven and
shall not be required to be repaid and the amount of such advance shall offset,
to the extent thereof, the amount of the Gross-Up Payment required to be paid.
 
SECTION 12.05. Anything in this Agreement to the contrary notwithstanding, in no
event shall any payment by the Company pursuant to this Article 12 be made later
than the end of the Executive’s taxable year next following the Executive’s
taxable year in which he remits the related taxes.
 
ARTICLE 13
 
MISCELLANEOUS
 
SECTION 13.01. Binding Arbitration. The parties agree that, except as provided
in Articles 9 and 10 above, any disputes under this Agreement shall be settled
exclusively by arbitration conducted in Winston-Salem, North Carolina. Except to
the extent inconsistent with this Agreement, such arbitration shall be conducted
in accordance with the National Rules for the Resolution of Employment Disputes
of the American Arbitration Association then in effect at the time of the
arbitration and otherwise in accordance with principles which would be applied
by a court of law or equity. The arbitrator shall be acceptable to both the
Companies and the Executive. If the parties cannot agree on an acceptable
arbitrator, the dispute shall be decided by a panel of three arbitrators, one
appointed by each of the parties and the third appointed by the other two
arbitrators or if the two arbitrators do not agree, appointed by the American
Arbitration Association. The costs of arbitration incurred by the Executive (or
his beneficiaries) will be borne by the Companies (including, without
limitation, reasonable attorneys’ fees and other reasonable charges of counsel)
(i) if the arbitration occurs prior to a Change in Control, if the Executive
prevails on a majority of the material issues in the dispute, and (ii) if the
arbitration occurs after a Change in Control, if the Executive prevails on at
least one material issue in the dispute. Judgment upon the final award rendered
by such arbitrator(s) may be entered in any court having jurisdiction thereof.
Following the final determination of the dispute in which, based on the outcome
of the dispute, the Executive is, in accordance with this Section 13.01,
entitled to have his costs
 

 
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borne by the Companies, the Companies shall pay all such reasonable costs within
ten (10) days following written demand therefor (supported by documentation of
such costs) by the Executive, and the Executive shall make such written demand
within sixty (60) days following the final determination of the dispute;
provided, however, that such payment shall be made no later than on or prior to
the end of the calendar year following the calendar year in which the costs are
incurred.  Notwithstanding the foregoing, in the event a final determination of
the dispute has not been made by December 20 of the year following the calendar
year in which the costs are incurred, the Companies shall, within ten (10) days
after such December 20, reimburse such reasonable costs (supported by
documentation of such costs) incurred in the prior taxable year; provided,
however, that the Executive shall return such amounts to the Companies within
ten (10) business days following the final determination if (x) in the case of
an arbitration prior to a Change in Control, the Executive does not prevail on a
majority of the material issues in the dispute, or (y) in the case of an
arbitration after a Change in Control, the Executive does not prevail on at
least one material issue in the dispute.  The amount of any costs eligible for
payment under this Section 13.01 during a calendar year will not affect the
amount of any costs eligible for payment under this Section 13.01 in any other
taxable year.
 
SECTION 13.02. Consent to Amendments; No Waivers. The provisions of this
Agreement may be amended or waived only by a written agreement executed and
delivered by the Companies and the Executive. No other course of dealing between
the parties to this Agreement or any delay in exercising any rights hereunder
will operate as a waiver of any rights of any such parties.
 
SECTION 13.03. Successors and Assigns. All covenants and agreements contained in
this Agreement by or on behalf of any of the parties hereto will bind and inure
to the benefit of the respective successors, assigns, heirs, executors and
estates of the parties hereto whether so expressed or not, provided that the
Executive may not assign his rights or delegate his obligations under this
Agreement without the written consent of the Companies (other than to his estate
or heirs) and the Company may assign this Agreement only to a successor to all
or substantially all of the assets of the Company.
 
SECTION 13.04. Severability. Whenever possible, each provision of this Agreement
will be interpreted in such manner as to be effective and valid under applicable
law, but if any provision of this Agreement is held to be prohibited by or
invalid under applicable law, such provision will be ineffective only to the
extent of such prohibition or invalidity, without invalidating the remainder of
this Agreement.
 
SECTION 13.05. Counterparts. This Agreement may be executed simultaneously in
two or more counterparts, any one of which need not contain the signatures of
more than one party, but all of which counterparts taken together will
constitute one and the same agreement.
 

 
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SECTION 13.06. Descriptive Headings. The descriptive headings of this Agreement
are inserted for convenience only and do not constitute a part of this
Agreement.
 
SECTION 13.07. Notices. All notices, demands or other communications to be given
or delivered under or by reason of the provisions of this Agreement will be in
writing and will be deemed to have been given when delivered personally to the
recipient, two business days after the date when sent to the recipient by
reputable express courier service (charges prepaid) or four business days after
the date when mailed to the recipient by certified or registered mail, return
receipt requested and postage prepaid. Such notices, demands and other
communications will be sent to the Executive and to the Companies at the
addresses set forth below.
 

 
If to the Executive:
 
To the last address delivered to the Companies
by the Executive in the manner set forth herein.
 
   
If to the Companies:
 
Krispy Kreme Doughnuts, Inc.
Krispy Kreme Doughnut Corporation
Suite 500
370 Knollwood Street
Winston-Salem, NC 27103
 
Attn: Senior Vice President-Human Resources

 
or to such other address or to the attention of such other person as the
recipient party has specified by prior written notice to the sending party.
 
SECTION 13.08. Withholding. The Companies may withhold from any amounts payable
under this Agreement such federal, state, local or foreign taxes as shall be
required to be withheld pursuant to any applicable law or regulation.
 
SECTION 13.09. No Third-Party Beneficiary. This Agreement will not confer any
rights or remedies upon any person other than the Companies, the Executive and
their respective heirs, executors, successors and assigns.
 
SECTION 13.10. Entire Agreement. This Agreement (including any other documents
referred to herein) constitutes the entire agreement among the parties and
supersedes any prior understandings, agreements or representations by or among
the parties, written or oral, that may have related in any way to the subject
matter hereof.
 

 
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SECTION 13.11. Construction. The language used in this Agreement will be deemed
to be the language chosen by the parties to express their mutual intent, and no
rule of strict construction will be applied against any party. Any reference to
any federal, state, local or foreign statute or law will be deemed also to refer
to all rules and regulations promulgated thereunder, unless the context requires
otherwise.
 
SECTION 13.12. Survival. Sections 6.01, 7.01, 8.01 and Articles 5, 9, 11, 12 and
13 will survive and continue in full force in accordance with their terms
notwithstanding any termination of the Employment Period, and the Agreement
shall otherwise remain in full force to the extent necessary to enforce any
rights and obligations arising hereunder during the Employment Period.
 
SECTION 13.13. GOVERNING LAW. ALL QUESTIONS CONCERNING THE CONSTRUCTION,
VALIDITY AND INTERPRETATION OF THIS AGREEMENT WILL BE GOVERNED BY THE INTERNAL
LAW OF NORTH CAROLINA, WITHOUT REGARD TO PRINCIPLES OF CONFLICT OF LAWS.
 
SECTION 13.14. Section 409A. It is intended that this Agreement will comply with
Section 409A of the Code (and any regulations and guidelines issued thereunder)
to the extent the Agreement is subject thereto, and the Agreement shall be
interpreted on a basis consistent with such intent. If an amendment of the
Agreement is necessary in order for it to comply with Section 409A, the parties
hereto will negotiate in good faith to amend the Agreement in a manner that
preserves the original intent of the parties to the extent reasonably possible.
Notwithstanding any provision to the contrary in this Agreement, if the
Executive is deemed on the date of his “separation from service” (within the
meaning of Treas. Reg. Section 1.409A-1(h)) to be a “specified employee” (within
the meaning of Treas. Reg. Section 1.409A-1(i)), then with regard to any payment
that is required to be delayed pursuant to Section 409A(a)(2)(B) of the Code,
the portion, if any, of such payment so required to be delayed shall not be made
prior to the earlier of (i) the expiration of the six (6)-month period measured
from the date of his “separation from service”, or (ii) the date of his death
(the “Delay Period”).  Upon the expiration of the Delay Period, all payments
delayed pursuant to this Section shall be paid to the Executive in a lump
sum.  The Companies shall not have any obligation to indemnify or otherwise
protect the Executive from any obligation to pay any taxes pursuant to Section
409A of the Code.
 
SECTION 13.15. Representations of the Companies. The Companies represent and
warrant that (i) the execution, delivery and performance of this Agreement by
the Companies has been fully and validly authorized by all necessary corporate
action, (ii) the officer(s) signing this Agreement on behalf of the Companies is
duly authorized to do so, (iii) the execution, delivery and performance of this
Agreement does not violate any applicable law, regulation, order, judgment or
decree or any agreement, plan or corporate governance document to which the
Companies are a party or by which they are bound, and (iv) upon execution and
delivery of this Agreement by the parties hereto, it
 

 
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will be a valid and binding obligation of the Companies enforceable against the
Companies and their successors and assigns in accordance with its terms, except
to the extent that enforceability may be limited by applicable bankruptcy,
insolvency or similar laws affecting the enforcement of creditors’ rights
generally.
 
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the
date and year first above written.
 
KRISPY KREME DOUGHNUTS, INC.
 
By:  /s/ Kenneth J. Hudson
        Kenneth J. Hudson
        Senior Vice President Human Resources
        and Organizational Development
 
KRISPY KREME DOUGHNUT CORPORATION
 
By:  /s/ Kenneth J. Hudson
        Kenneth J. Hudson
        Senior Vice President Human Resources
        and Organizational Development
 
EXECUTIVE
 
/s/ James H. Morgan
James H. Morgan

 
 
 
 
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