ex10_1.htm


     

    Exhibit 10.1

     


    AGREEMENT
      AND
      RELEASE

     

    This
      Agreement and Release (“Agreement”) dated as of January 6, 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 Daryl G. Brewster (the
“Executive”).

     

    The
      parties hereto agree as follows:

     

    1. The
      employment relationship between the Executive and the Companies will terminate
      on January 31, 2008 (the “Termination Date”).  Effective as of
      the date hereof (the “Agreement Date”), the Executive hereby resigns all officer
      and member positions with the Companies and their Affiliates (as defined below)
      as well as his membership on all Boards of Directors and Committees of the
      Companies and their Affiliates and shall, in furtherance thereof, on the
      Agreement Date, execute and deliver a letter of resignation in the form attached
      as Exhibit A hereto.

     

    2. In
      consideration for the covenants of the Executive and the release of claims
      by
      the Executive contained herein and, together with the obligations of the
      Companies under Section 7 below, in full payment of all obligations of any
      nature or kind whatsoever owed or owing to the Executive by the Companies and
      any of their Affiliates, the Companies will pay, or provide benefits to, the
      Executive as follows:

     

    (a) the
      Companies will pay the Executive’s base salary (less applicable reductions for
      benefit contributions), at the rate in effect on the date hereof, through the
      Termination Date, payable on the regular payroll date of the
      Companies;

     

    (b) the
      Company will grant to the Executive on the Agreement Date restricted share
      units
      under the Company’s 2000 Stock Incentive Plan with respect to a number of shares
      of common stock of the Company having an aggregate fair market value (based
      on
      the closing share price on January 4, 2008) equal to $1,190,000, and the shares
      subject to the restricted share units will be distributed to the Executive
      on
      the third trading day following the Company’s release of earnings for the 2008
      fiscal year but no later than April 15, 2008, so long as the Executive has
      not
      revoked this Agreement as provided in Section 18 below and has not breached
      and
      does not breach the provisions referred to in Section 10 below;

     

    (c) the
      Companies will pay to the Executive an aggregate of $700,000 in cash, payable
      in
      12 equal monthly installments on the regular monthly payroll dates of KKDC
      commencing on the regular payroll date for February 2008, provided that the
      Executive will be entitled to any unpaid amounts only if the Executive has
      not
      breached and does not breach the provisions referred to in Section 10
      below;

     


    
      
        
        

      

      
        
        

        
          

        

      

      
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    (d) the
      Companies will reimburse the Executive for all reasonable expenses incurred
      by
      him prior to the Agreement Date in the course of performing his duties under
      the
      Employment Agreement dated as of March 6, 2006 among the Companies and the
      Executive (the “Employment Agreement”) which are consistent with the Companies’
policies in effect from time to time with respect to travel, entertainment
      and
      other business expenses, subject to the
      Companies’ requirements with respect to reporting and documentation of
      expenses;

     

    (e) options
      to purchase 201,399 shares of Company common stock previously granted to the
      Executive under the Company’s 2000 Stock Incentive Plan with an exercise price
      of $3.41 per share will vest and become fully exercisable on the Termination
      Date, and they will remain exercisable until the third anniversary of the
      Termination Date at which time any unexercised options will terminate, and
      the
      options to purchase 500,000 shares of Company common stock previously granted
      to
      the Executive under the Company’s 2000 Stock Incentive Plan with an exercise
      price of $6.39 per share will terminate and be forfeited on the Termination
      Date;

     

    (f) 120,573
      unvested restricted shares of Company common stock previously granted to the
      Executive under the Company’s 2000 Stock Incentive Plan will vest on the
      Termination Date, and the remaining 120,572 unvested restricted shares of
      Company common stock held by the Executive will be forfeited on the Termination
      Date;

     

    (g) the
      Executive and his covered dependents will continue to receive medical insurance
      coverage benefits from the Companies, with the same contribution toward such
      coverage from the Executive, for a period equal to the lesser of
      (x) eighteen months following the Termination Date, or (y) until the
      Executive is provided by another employer with benefits substantially comparable
      to the benefits provided by the Companies’ medical plan;

     

    (h) an
      amount
      of cash equal to $628,398 will be paid to the Executive on August 1, 2008 in
      full payment of the Executive’s benefit under the account required to be
      established under the Krispy Kreme Doughnut Corporation NonQualified Deferred
      Compensation Plan pursuant to Section 4.08 of the Employment Agreement;
      and

     

    (i) the
      Executive's vested accrued benefits under the Companies’ 401(k) plan will be
      paid to the Executive in accordance with the terms of such plan.

     

    3. In
      the
      event members of the executive management team of the Company (other than those
      entitled to an annual bonus by contract) receive annual bonuses with respect
      to
      fiscal year 2008 under the Company’s Annual Incentive Performance Award Plan for
      the Chief Executive Officer and Executive Staff, the Executive will be paid
      a
      bonus under

     


    
      
        
        

      

      
        
        

        
          

        

      

      
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    such
      plan
      equal to the product of (i) $490,000 multiplied by (ii) a fraction, the
      numerator of which is the aggregate annual bonus paid to such senior executives
      of the Company (other than those entitled to an annual bonus by contract) under
      such plan for fiscal year 2008, and the denominator of which is the aggregate
      target bonus for such senior executives (other than those entitled to an annual
      bonus by contract) for fiscal year 2008.  Any amount payable under
      this Section 3 will be paid when such annual bonuses are paid to the other
      senior executives of the Company, but by no later than April 15,
      2008.

     

    4. The
      Executive acknowledges and agrees that he is not entitled to any salary,
      bonuses, long-term or short-term incentive compensation or other compensation,
      payments, rights or benefits of any kind in respect of his employment with
      the
      Companies and/or positions with their Affiliates, in respect of the termination
      of such employment and/or other positions, or under any of the compensation
      or
      benefit plans of the Companies or their Affiliates, except as provided by this
      Agreement.

     

    5. The
      Executive, for himself, his wife, heirs, executors, administrators, successors
      and assigns, hereby releases and discharges the Companies and their respective
      direct and indirect parents and subsidiaries, and other affiliated companies,
      and each of their respective past and present officers, directors, agents and
      employees, from any and all actions, causes of action, claims, demands,
      grievances and complaints, known and unknown, which the Executive or his wife,
      heirs, executors, administrators, successors or assigns ever had or may have
      at
      any time through the Agreement Date.  The Executive acknowledges and
      agrees that this release is intended to and does cover, but is not limited
      to,
      (i) any claim of employment discrimination of any kind whether based on a
      federal, state or local statute or court decision, including the Age
      Discrimination in Employment Act with appropriate notice and rescission periods
      observed; (ii) any claim, whether statutory, common law or otherwise, arising
      out of the terms or conditions of the Executive’s employment at the Companies
      and/or the Executive’s separation from the Companies; enumeration of specific
      rights, claims and causes of action being released shall not be construed to
      limit the general scope of this release.  It is the intent of the
      parties that by this release the Executive is giving up all rights, claims
      and
      causes of action occurring on or prior to the Agreement Date, whether or not
      any
      damage or injury therefrom has yet occurred.  The Executive accepts
      the risk of loss with respect to both undiscovered claims and with respect
      to
      claims for any harm hereafter suffered arising out of conduct, statements,
      performance or decisions occurring on or before the Agreement Date.

     

    6. The
      Companies hereby release and discharge the Executive, his wife, heirs,
      executors, administrators, successors and assigns, from any and all actions,
      causes of actions, claims, demands, grievances and complaints, known and
      unknown, which the Companies ever had or may have at any time through the
      Agreement Date.  The Companies acknowledge and agree that this release
      is intended to and does cover, but is not limited to, (i) any claim, whether
      statutory, common law or otherwise, arising out of the terms or conditions
      of
      the Executive’s employment at the Companies and/or the Executive’s separation
      from the

     


    
      
        
        

      

      
        
        

        
          

        

      

      
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    Companies,
      and (ii) any claim for attorneys’ fees, costs, disbursements or other like
      expenses.  The enumeration of specific rights, claims and causes of
      action being released shall not be construed to limit the general scope of
      this
      release.  It is the intent of the parties that by this release the
      Companies are giving up all of their respective rights, claims and causes of
      action occurring on or prior to the Agreement Date, whether or not any damage
      or
      injury therefrom has yet occurred.  The Companies accept the risk of
      loss with respect to both undiscovered claims and with respect to claims for
      any
      harm hereafter suffered arising out of conduct, statements, performance or
      decisions occurring on or before the Agreement Date.

     

    7. The
      releases provided for in Sections 5 and 6 above shall in no event (i) apply
      to
      any claim by either the Executive or the Companies arising from any breach
      by
      the other party of his or its obligations under this Agreement, (ii) waive
      the
      Executive’s claim with respect to compensation or benefits earned or accrued
      prior to the Agreement Date to the extent such claim survives termination of
      the
      Executive’s employment under the terms of this Agreement, (iii) waive the
      Executive’s right to indemnification under the charters and by-laws of the
      Companies and Section 11.02 of the Employment Agreement, or (iv) waive the
      Executive’s rights as a shareholder.

     

    8. The
      Executive understands and agrees that the consideration provided for herein
      is
      more than the Executive would otherwise be entitled to if he did not agree
      to
      the provisions of Section 5 above.

     

    9. The
      Executive agrees not to make any disparaging statements about the Companies,
      their Affiliates or their current or former officers, directors, managers and/or
      employees, to anyone, including but not limited to the Companies’ franchisees,
      customers, competitors, suppliers, employees, former employees or the press
      or
      other media, unless placed under legal compulsion to do so by a court or other
      governmental authority.  Similarly, the Companies will not make (and
      will instruct their executive officers that they not make and will request
      their
      directors that they not make) disparaging statements about the Executive to
      the
      Companies’ franchisees, customers, competitors, suppliers, employees, or former
      employees, his prospective employers or the press or other media, unless placed
      under legal compulsion to do so by a court or other governmental
      authority.  For purposes of this Agreement, an “Affiliate” of the
      Companies includes any person, directly or indirectly, through one or more
      intermediaries, controlling, controlled by or under common control with either
      of the Companies, and such term shall specifically include, without limitation,
      each of the Companies’ subsidiaries.  The Company’s press release and
      Form 8-K describing this Agreement and the Executive’s termination of employment
      will be substantially in the forms previously delivered by the Companies to
      the
      Executive.

     

    10. The
      provisions of Sections 6.01 (Confidential Information), 7.01 (Intellectual
      Property), 9.01 (Noncompetition, except that George Weston Limited and
      Interstate Bakeries Corporation shall be removed from Exhibit B), 9.02
      (Nonsolicitation), 9.03 (Defini-

     


    
      
        
        

      

      
        
        

        
          

        

      

      
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    tions),
      10.01 (Equitable Relief) and 11.02 (Indemnification) of the Employment Agreement
      will survive the termination of the Employment Agreement and continue in effect
      in accordance with their terms.

     

    11. On
      or
      before the Termination Date, the Executive will deliver to the Companies all
      property of the Companies or their Affiliates, including, without limitation,
      all copies and embodiments, in whatever form or medium, of all Confidential
      Information (as defined in the Employment Agreement), 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.

     

    12. The
      Executive will, at the request of the Companies, cooperate with the Companies
      in
      the defense and/or investigation of any third party claim, dispute or any
      investigation or proceeding, whether actual or threatened, including, without
      limitation, meeting with attorneys and/or other representatives of the
      Companies, at a time and place reasonably convenient to the Executive, to
      provide reasonably requested information regarding same and/or participating
      as
      a witness in any litigation, arbitration, hearing or other proceeding between
      the Companies or their Affiliates and a third party or any government
      body.  The Companies will reimburse the Executive for all reasonable
      expenses incurred by him in connection with such assistance including, without
      limitation, reasonable travel expenses.

     

    13. The
      Companies will reimburse the Executive for reasonable attorney’s fees and
      expenses incurred by him in connection with negotiating and entering into this
      Agreement (not to exceed $15,000), subject to the Companies’ requirements with
      respect to recording and documentation of expenses.

     

    14. This
      Agreement shall be governed by and construed in accordance with the laws of
      North Carolina, without reference to the principles of conflict of laws
      thereof.

     

    15. The
      Executive will pay to the Company, in cash, an amount sufficient to fund the
      Companies’ tax withholding obligations with respect to compensation paid to the
      Executive hereunder in the form of common stock of the Company, and such
      payments will be made to the Companies on or before the date such amounts are
      required to be deposited with the applicable tax authorities.  In
      addition, 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 therefrom pursuant to any applicable law or regulation.

     

    16. This
      Agreement represents the complete agreement between the Executive and the
      Companies concerning the subject matter in this Agreement and supersedes all
      prior agreements or understandings, written or oral, including (except as
      provided in Section 10 above) the Employment Agreement.  This
      Agreement may not be amended or modified

     


    
      
        
        

      

      
        
        

        
          

        

      

      
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    other
      than by a written agreement executed by the parties hereto or their respective
      successors and legal representatives.

     

    17. Each
      of
      the sections contained in this Agreement shall be enforceable independently
      of
      every other section in this Agreement, and the invalidity or nonenforceability
      of any section shall not invalidate or render unenforceable any other section
      contained in this Agreement.

     

    18. For
      a
      period of seven (7) days following the execution of this Agreement, the
      Executive may revoke this Agreement, and this Agreement shall not become
      effective or enforceable until the revocation period has expired.  Any
      such revocation must be effected by delivery of a written notification of
      revocation of the Agreement to the Secretary of the Company prior to the end
      of
      such seven (7) day revocation period.  In the event that the Agreement
      is revoked by the Executive, the Companies shall have no obligations under
      the
      Agreement, no amounts will be payable under this Agreement, and this Agreement
      shall be deemed to be void ab initio
      and of no
      further force or effect.

     

    19. This
      Agreement has been entered into voluntarily and not as a result of coercion,
      duress or undue influence.  The Executive acknowledges that he has
      read and fully understands the terms of this Agreement and has been advised
      to
      consult with, and has consulted with, an attorney before executing this
      Agreement.  Additionally, the Executive acknowledges that he has been
      afforded the opportunity of at least 21 days to consider this Agreement, which
      has been waived by the Executive.

     

    20. This
      Agreement shall inure to the benefit of and be enforceable by the Executive's
      personal and legal representatives, executors, administrators, heirs,
      distributees, devisees and legatees.  If the Executive dies while any
      amounts are still payable to him hereunder, all such amounts, unless otherwise
      provided herein, will be paid in accordance with the terms of this Agreement
      to
      the Executive's devisee, legatee or other designee or, if there be no such
      designee, to the Executive's estate.

     

    21. It
      is
      intended that this Agreement will comply with Section 409A of the Internal
      Revenue Code of 1986, as amended (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.  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.  With respect to all reimbursement
      arrangements of the Companies provided for herein that constitute deferred
      compensation for purposes of Section 409A of the Code, the following
      conditions shall be applicable:  (i) the amount eligible for
      reimbursement under any such arrangement in one calendar year may not affect
      the
      amount eligible for reimbursement under such arrangement in any other calendar
      year, and (ii) any reimbursement must be made on or before the last day of
      the calendar year following the calendar year in which the expense was
      incurred.  The parties agree that in no event has

     


    
      
        
        

      

      
        
        

        
          

        

      

      
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    the
      Executive, directly or indirectly, designated the calendar year of any payment
      to be made under this Agreement.

     

    22. This
      Agreement may be executed and delivered (including by facsimile transmission)
      in
      one or more counterparts, and by the different parties hereto in separate
      counterparts, each of which when executed and delivered shall be deemed to
      be an
      original but all of which taken together shall constitute one and the same
      agreement.

     

    


     

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    The
      parties to this Agreement have executed this Agreement as of the day and year
      first written above.

     

     

    KRISPY
      KREME DOUGHNUTS, INC.

     

     

    


     

     

    By:    /s/
      James H.
      Morgan

    Name:
      James H. Morgan

    Title:
      Chairman of the Board

     

    


     

     

    KRISPY
      KREME DOUGHNUT CORPORATION

     

     

    


     

     

    By:    /s/
      James H.
      Morgan

    Name:
      James H. Morgan

    Title:
      Chairman of the Board

     

     

    


     

     

    /s/
      Daryl G.
      Brewster

    DARYL
      G.
      BREWSTER

     

    


     


    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    


    Exhibit
      A

    


    


    


    January
      6, 2008

    


    


    


    


    


    


    Board
      of
      Directors

    Krispy
      Kreme Doughnuts, Inc.

    Krispy
      Kreme Doughnut Corporation

    370
      Knollwood Street, Suite 500

    Winston-Salem,
      NC  27103

    


    Re:    
      Resignation

    


    Ladies
      and Gentlemen:

    


    Effective
      immediately, I hereby resign
      as a member of the Board of Directors of  Krispy Kreme Doughnuts, Inc.
      (“KKDI”) and Krispy Kreme Doughnut Corporation (“KKDC”) and all committees
      thereof, as President and Chief Executive Officer of KKDI and KKDC and, as
      applicable, as officer, director or manager of Affiliates of each of KKDI and
      KKDC of which I am an officer, director or manager, and as a member of any
      committee of the board of directors of any such entity of which I am a
      member.   For purposes hereof, an “Affiliate” of KKDI or KKDC
      includes any person, directly or indirectly, through one or more intermediaries,
      controlling, controlled by or under common control with KKDI or KKDC, and such
      term shall specifically include, without limitation, each of the subsidiaries
      of
      KKDI and KKDC.

    


    


    
      	
              Very
                truly yours,

            
	 
	 
	 
	
              Daryl
                G. Brewster