EMPLOYMENT AGREEMENT 

     THIS
EMPLOYMENT AGREEMENT (“Agreement”) dated as of May 13, 2014,
is 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 Anthony N. Thompson (the “Executive”). 

    
The parties hereto agree as follows: 

ARTICLE 1 
DEFINITIONS 

    
SECTION 1.01 Definitions. For purposes of this
Agreement, in addition to other terms defined herein, 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 (a) 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), (b) the Executive’s conviction of or plea of
nolo contendere to any felony (other than a traffic infraction), (c) 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 (d) the
Executive’s willful violation of any material provision of the code of ethics of
the Companies applicable to the Executive or the Executive’s willful breach of a
material term of the Agreement. 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 (a) or (d) of the definition of Cause, (i) 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 (ii) 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” (with the
Executive abstaining if he is a member of the Board) 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). For purposes of this Agreement, no act or failure to act shall
be considered “willful” unless it is done, or omitted to be done, by Executive
in bad faith or without a reasonable belief that Executive’s action or omission
was in the best interests of KKDC or the Company. 







    
“Change in Control” means any of the following events: 

    
(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) the
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) the
approval by shareholders of the Company of a complete liquidation or dissolution
of the Company; 

provided, however, that, if and to the extent required under Section 409A of the
Code or any regulations and guidelines promulgated thereunder (collectively,
“Section 409A”), 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.


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“Code” means the Internal Revenue Code of 1986, as amended, and any related
regulations or other guidance. 

    
“Committee” means the Compensation Committee of the Board. 

    
“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 the occurrence of any of the following without the
Executive’s consent: (a) a reduction in the Executive’s Base Salary or a
material reduction in the Executive’s Annual Target Bonus opportunity (other
than a reduction in bonus opportunities that applies to executive officers of
the Company generally; and, for the avoidance of doubt, a failure to attain
performance or other objectives, as determined in the discretion of the Board
and/or the Committee, shall not, alone constitute Good Reason); (b) the
Executive no longer serves as the Chief Executive Officer of (i) both the
Company and KKDC, or (ii) in the event of a merger, consolidation or other
business combination involving the Company, the successor to the Company’s
business or assets or (iii) if all or substantially all of the voting stock of
the Company is held by another company, such company; (c) the assignment to the
Executive of any duties or responsibilities materially inconsistent with the
Executive’s status under clause (b) of this sentence or his failure at any time
to report directly to the Executive Chair of the Board or the board of the
applicable company described in clause (b), or, if no person serves as Executive
Chair, the Board or the board of directors of the applicable company described
in such clause (b); (d) the failure of the Executive to be initially appointed
to the Board following his appointment as Chief Executive Officer (it being
expressly agreed upon that the failure of the Executive to be appointed,
nominated or elected to the Board or the KKDC board (i) due to Executive’s
decision not to stand for election or reelection, his removal from the Board or
the board of KKDC, or the failure of the shareholders to elect or re-elect the
Executive, or (ii) the Board’s or the KKDC board’s decision not to nominate the
Executive for election to the Board or the KKDC board due to the exercise of the
Board’s or the KKDC board’s fiduciary duties shall not constitute Good Reason); (e) 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; or (f) any material breach by the Companies
of this Agreement; 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.

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“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. 

ARTICLE 2 
EMPLOYMENT 

    
SECTION 2.01 Employment.
The Companies shall employ the Executive, and
the Executive accepts employment with the Companies, upon the terms and
conditions set forth in this Agreement for the period beginning June 1, 2014
(the “Effective Date”) and ending as provided in Section 5.01 (the
“Employment Period”). It is acknowledged that the Executive may begin 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.

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ARTICLE 3 
POSITION AND DUTIES


    
SECTION 3.01 Position and Duties.
During the Employment Period, the Executive
shall serve as (i) Chief Executive Officer of the Company reporting directly to
the Executive Chair of the Board, or, if none, the Board, and (ii) Chief
Executive Officer of KKDC reporting directly to the Executive Chair of the board
of KKDC, or, if none, the board of KKDC. The Executive shall also serve as
President of the Company and President of KKDC at the pleasure of the Board and
the board of KKDC, as applicable; provided, that any other person serving as
President of the Company or KKDC, as applicable, shall report to the Executive.
The Executive shall also be appointed by the Board, at its regularly scheduled
September 2014 Board meeting or as soon thereafter as practicable, to serve as a
member of the Board and the board of KKDC. In the event of his election or
re-election, the Executive shall serve as a member of the Board and/or the board
of KKDC, as applicable. The Executive shall have such responsibilities, powers
and duties as may from time to time be prescribed by the Board; provided that such
responsibilities, powers and duties are substantially consistent with those
customarily assigned to individuals serving in the chief executive officer
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, which
shall be conducted on a full-time basis, 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. 

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 $725,000 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 the 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 shall not receive additional compensation
for service as a Director on the Company’s Board (other than reimbursement of
reasonable expenses). 

5 







    
SECTION 4.02 Bonuses. The Executive shall be paid a bonus (the “Signing Bonus”) in the
amount of $160,000, subject to applicable withholdings, which Signing Bonus
shall be deemed earned and payable upon the Executive’s continued employment
through February 15, 2015. The Signing Bonus will be paid on the first regular
payroll payment date that occurs after February 15, 2015. In addition to Base
Salary and the Signing Bonus described herein, the Executive shall be eligible
to be considered for an annual bonus, and the Executive’s “Annual Target Bonus” amount
shall be equal to 100% of Base Salary (such amount to be pro rated for the
Executive’s first year of service based on the number of months the Executive is
employed during the performance period). The Compensation Committee and/or the
Board shall set targets with respect to and otherwise determine the Executive’s
bonus in accordance with the Company’s then current incentive plans.

    
SECTION 4.03 Benefits. During the Employment Period, the Executive shall be entitled
to participate in all employee benefit, perquisite and fringe (if any) 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 shall be entitled to no less than four weeks of paid
vacation annually during the Employment Period.

    
SECTION 4.04 Expenses; Relocation.
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 and the
provisions of Section 13.14. The Executive shall reside in the Winston-Salem,
North Carolina community on a full-time basis commencing on or before August 1,
2014. The Executive shall be eligible to receive relocation benefits in
accordance with the Companies’ relocation policies for executive officers, and,
without limiting the foregoing, the Companies shall reimburse the Executive for
all reasonable relocation expenses incurred by him in relocating his and his
immediate family’s household items to the Winston-Salem, North Carolina area,
subject to compliance with the Companies’ relocation reimbursement policies for
executive officers and the Companies’ requirements with respect to reporting and
documentation of such expenses. The Companies shall also reimburse the Executive
for legal fees of up to $7,500 incurred with respect to entering into the
Agreement. Such reimbursements shall be made in accordance with this Section
4.04 and Section 13.14 herein. 

    
SECTION 4.05 Stock
Option. The Company shall grant to the
Executive a stock option (the “Option”) to purchase such number of
shares of the Company’s common stock as may be determined based on an aggregate
award fair value of $950,000, as calculated on or as close in time as
practicable to the grant date,
at an exercise price per share equal to the
fair market value per share on the date of grant, which shall be a date
determined by the Committee of the Board to occur on or as soon as practicable
after the Effective Date. The Option shall vest and become exercisable in four
equal annual installments beginning one year following the grant date, so long
as the Executive’s employment continues through such vesting dates, except as
otherwise provided herein. The term of the Option will be ten years from the
date of grant, subject to earlier termination in the event the Executive’s
employment terminates. The Option shall be designated as an incentive stock option if and to
the extent it so qualifies. The Option shall be subject to the terms of Krispy
Kreme Doughnuts, Inc. 2012 Stock Incentive Plan, as it may be amended, or its
successor plan (the “Stock
Plan”), and a Stock Option Agreement, which
shall be substantially similar to the current form of stock option agreement
used with respect to grants to other executive officers of the Companies,
modified as provided herein.

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SECTION 4.06 Restricted Stock
Units. The Company shall grant to the
Executive restricted stock units (the “Restricted Stock Units”) for such
number of shares of the Company’s common stock as may be determined based on an
aggregate award fair value of $1,900,000, as calculated on or as close in time
as practicable to the grant date. The grant date for the Restricted Stock Units
shall be determined by the Committee and will occur on or as soon as practicable
after the Effective Date. The Restricted Stock Units will vest, provided that
the Executive’s employment continues through the applicable vesting dates, in
four equal annual installments, beginning on the first anniversary of the grant
date and continuing on each of the following three year anniversaries of the
grant date (except as otherwise provided herein). The Restricted Stock Units
(including the distribution of any shares of the Company’s common stock issuable
pursuant thereto) shall be subject to the terms of the Stock Plan and a
Restricted Stock Unit Agreement, which shall be substantially similar to the
current form of restricted stock unit agreement used with respect to grants to
other executive officers of the Companies, modified as provided
herein.

    
SECTION 4.07 Other Equity
Awards. On or prior to the date of the
Company’s first award of annual equity awards to executive officers occurring
after the Effective Date, and subject to the Executive’s continued employment
through the grant date, the Company shall grant to the Executive an initial
annual equity award (the “Initial
Annual Equity Award”) with an aggregate fair
value of $800,000, as determined on or as close in time as practicable to the
grant date. The Committee shall have discretion to determine the type or types
of equity awards which comprise the Initial Annual Equity Award, which may
include a combination of awards. The Initial Annual Equity Award shall be
subject to such performance and/or service vesting and other terms and condition
as may be determined by the Committee and shall be granted under, and subject to
the terms of, the Stock Plan and applicable award agreement(s). The Executive
agrees and acknowledges that the future grant of equity awards (other than the
Initial Annual Equity Award), if any, and the terms of any such equity awards
shall be subject to the discretion of the Committee and the Stock Plan and
applicable award agreement(s). 

    
SECTION 4.08 Compliance with
Compensation and Equity Policies. The
Executive agrees to comply with the Company’s Stock Ownership and Equity
Retention Policy and Compensation Recovery Policy, each as in effect from time
to time, with respect to annual or long-term incentive or other compensation, as
applicable, including the compensation provided pursuant to this Agreement. The
terms of the Company’s Stock Ownership and Equity Retention Policy and
Compensation Recovery Policy, each as in effect from time to time, are hereby
incorporated by reference into this Agreement. 

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ARTICLE 5 
TERM AND TERMINATION 

    
SECTION 5.01 Term. The Employment Period will terminate on May 31, 2017 (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 May 31, 2017, until either the Companies, on
the one hand, or the Executive, on the other hand, at least 180 days prior to
the expiration of the original term or any extended term, shall give written
notice to the other of their intention not to so extend the Employment Period;
provided, the Employment Period shall automatically be extended until the second
anniversary of any Change in Control (except, until May 31, 2017 if a Change in
Control occurs prior to May 31, 2015). 

    
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: (a) Base Salary and accrued unused vacation
through the Date of Termination (paid on the Companies’ normal payroll payment
date); and (b) 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 in
accordance with Section 4.04 and Section 13.14 herein.

    
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 in either case that 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 and accrued
unused vacation 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 Annual Target Bonus for the year of termination (or the Base
Salary or Annual Target 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 Article 9 below; (iii) a bonus for the year of
termination of employment equal to the Executive’s actual annual bonus for such
year pro rated for the number of full months during the bonus year prior to the
Date of Termination, to be paid, subject to Section 13.14 below (including but
not limited to any delay in payment due to application of the Delay Period),
seventy-five (75) days after the end of the fiscal year during which the bonus
was eligible to be earned; (iv) notwithstanding anything to the contrary in any
equity award agreement, the Option granted under Section 4.05 herein and the
RSUs granted under Section 4.06 herein shall fully vest and the RSUs shall be
settled immediately and the Option shall become exercisable (provided that all
other equity awards granted to the Executive pursuant to Section 4.07 or
otherwise shall instead be subject to the terms of the Stock Plan and applicable
award agreement(s)); 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 (including, but
not limited to, any delay in payment due to application of the Delay Period), in
twelve (12) equal monthly 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, the Executive shall be reimbursed for all
Reimbursable Expenses incurred by the Executive prior to such termination in
accordance with Section 4.04 and Section 13.14 herein. For the purposes of this
Agreement, the actual annual bonus shall be determined by the Committee. In
addition, the provisions of clause (iv), above, shall apply to any involuntary
termination of Executive’s employment by the Company without Cause or voluntary
termination by Executive for Good Reason occurring on or after expiration of the
Employment Period under Section 5.01 following any Company notice to Executive
that the Employment Period will not be automatically so extended (and for the
avoidance of doubt, this sentence and related provisions of this Agreement shall
survive any such expiration of the Employment Period).

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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 and
accrued unused vacation 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 (in accordance with Section
4.04 and Section 13.14 herein). 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 be entitled to continue to
participate in the Companies’ medical (including prescription drug coverage) and
dental plan (the “Company Health Care Plan”) for up to eighteen (18) months
following the date his employment is terminated (the “Continuation Coverage
Period”). The Executive shall pay the entire premium charged for the coverage of
the Executive and his covered dependents under the Company Health Care Plan. The
premium required for the continuation coverage provided pursuant to this Section
5.05 shall be equal to the premium required by the continuation of coverage
requirements of Section 4980B of the Code and Part 6 of Title I of the Employee
Retirement Income Security Act of 1974, as amended (“COBRA”) for such
continuation coverage. During the Continuation Coverage Period, the Company
shall reimburse the Executive for the difference between the monthly premium
amount actually paid by the Executive pursuant to this Section 5.05 and the
monthly premium amount paid by active employees for the same level of coverage
under the Company Health Care Plan. Such reimbursement shall be paid to the
Executive on or before the 20th day of the month immediately
following the month in which the Executive timely remits the required premium
payment. The right to reimbursement and the coverage provided pursuant to this
Section 5.05 shall terminate prior to the end of the Continuation Coverage
Period if the Executive is eligible to receive benefits under another
employer-provided or group plan (which plan may be the plan of his new employer or
his spouse’s employer) substantially comparable to the benefits provided by the
Company Health Care Plan. Furthermore, in the event of the Executive’s Permanent
Disability, insurance benefits will continue under the Companies’ long term
disability plan in accordance with its terms.

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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, unless the parties
agree otherwise, (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, the date of his
death, (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. 

    
SECTION 5.09 Termination for Good
Reason or Without Cause Following a Change in Control. If the Employment Period shall be terminated within two years
after a Change in Control (a) by the Executive for Good Reason, or (b) by the
Companies not for Cause, then the Executive’s compensation and benefits upon
termination shall be governed by this Section 5.09 instead of the provisions of
Section 5.03 above, and, 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 and accrued unused vacation through the Date of Termination, paid on
the Companies’ normal payroll payment date; (ii) an amount equal to two times
the sum of his Base Salary and his Annual Target Bonus for the year of
termination, 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 or 8.01 or Article 9 below; (iii) a bonus for
the year of termination of employment equal to the Executive’s Annual Target
Bonus for such year pro rated for the number of full months during the bonus
year prior to such termination of employment; (iv) notwithstanding anything to
the contrary in any equity award agreement, the Option granted under Section
4.05 herein and the RSUs granted under Section 4.06 herein shall fully vest and
the RSUs shall be settled immediately and the Option shall become exercisable
(provided that (A) all other equity awards granted to the Executive pursuant to
Section 4.07 or otherwise shall instead be subject to the terms of the Stock
Plan and applicable award agreement(s), and (B) with respect to the Option
granted under Section 4.05 herein and the RSUs granted under Section 4.06
herein, such equity awards shall be subject to the terms of the Stock Plan and
applicable award agreements if the benefits provided pursuant to such
instruments in the event of a Change in Control are more favorable to the
Executive); and (v) medical benefits as provided in Section 5.05. 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. In addition, promptly following any
such termination, the Executive shall be reimbursed for all Reimbursable
Expenses incurred by the Executive prior to such termination (in accordance with
Section 13.14). The amounts due under clauses (ii) and (iii) of this Section
5.09 shall be paid, subject to Section 13.14 below, sixty (60) days following
such termination of employment. In addition, the provisions of clause (iv),
above, shall apply to any involuntary termination of Executive’s employment by
the Company without Cause or voluntary termination by Executive for Good Reason
occurring on or after expiration of the Employment Period under Section 5.01
following any Company notice to Executive that the Employment Period will not be
automatically so extended (and for the avoidance of doubt, this sentence and
related provisions of this Agreement shall survive any such expiration of the
Employment Period). 

10







    
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 if and to the extent required under Section 409A. Further, to the
extent required under Section 409A, references to “termination of employment” or
words of similar import shall be deemed to refer to, and shall be defined in
accordance with, a “separation from service” as defined under Section 409A.


ARTICLE 6
CONFIDENTIAL INFORMATION

    
SECTION 6.01 Nondisclosure and Nonuse
of Confidential Information; Non-disparagement. 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. The Executive also agrees to
execute and comply with such other confidentiality agreements or provisions as
required of executive officers of the Company. The Executive further agrees
that, during the Employment Period and thereafter, the Executive shall not make
any disparaging remarks, or remarks that could reasonably be construed as
disparaging, regarding the Companies, or its or their officers, directors,
employees, shareholders, representatives, agents, businesses, or practices. The
Company agrees that, during the Employment Period and thereafter, none of the
Company’s officers or members of the Board shall make any disparaging remarks,
or remarks that could reasonably be construed as disparaging, regarding the
Executive. 

11







ARTICLE 7
INTELLECTUAL PROPERTY 

    
SECTION 7.01 Ownership of Intellectual
Property. In the event that the Executive as
part of his activities on behalf of the Companies generates, authors or
contributes to any invention, design, new development, device, product, method
of process (whether or not patentable or reduced to practice or comprising
Confidential Information), any copyrightable work (whether or not comprising
Confidential Information) or any other form of Confidential Information relating
directly or indirectly to the business of the Company or its Subsidiaries as now
or hereafter conducted (collectively, “Intellectual Property”), the Executive
acknowledges that such Intellectual Property is the sole and exclusive property
of the Company and its Subsidiaries and hereby assigns all right, title and
interest in and to such Intellectual Property to the Company or its designated
Subsidiary. Any copyrightable work prepared in whole or in part by the Executive
during the Employment Period will be deemed “a work made for hire” under Section
201(b) of the Copyright Act of 1976, as amended, and the Company or its
designated Subsidiary will own all of the rights comprised in the copyright
therein. The Executive will promptly and fully disclose all Intellectual
Property and will cooperate with the Companies to protect their interests in and
rights to such Intellectual Property (including providing reasonable assistance
in securing patent protection and copyright registrations and executing all
documents as reasonably requested by the Companies, whether such requests occur
prior to or after termination of the 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, but not limited to, 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. 


12







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 own, manage, control,
consult with, or become employed by or render services in an executive or senior
management capacity to, or as a director of, any business listed on
Exhibit B
hereto in the Territory. During the Noncompetition Period, the Company shall
have the right to, in good faith, add other entities which are in substantial
competition with the Companies to the list of businesses on Exhibit B, subject to the
consent of the Executive which shall not be unreasonably withheld. 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 or reduce the volume of business done with the Company or its Subsidiaries.


    
SECTION 9.03 Definitions.
It is agreed that the “Territory,” for purposes of
this Article 9, shall mean: 

    
(a) 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; 

    
(b) 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; 

    
(c) 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; 

    
(d) 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 

13







    
(e) 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:


    
(a) The
Employment Period and a period ending one year after the Date of Termination;
and 

    
(b) 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:


    
(c) The
Employment Period and a period ending two years after the Date of Termination;


    
(d) 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; 

    
(e) 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 

    
(f) 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. 

14







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 the 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 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. 


15








ARTICLE 12
LIMITATION ON CERTAIN PAYMENTS CONTINGENT ON CHANGE IN CONTROL

    
SECTION 12.01 Limitation on Certain
Payments Contingent on Change In Control. 


    
(a) Anything in this Agreement to the contrary notwithstanding, in the event
it shall be determined that (i) any payment, award, benefit or distribution (or
any acceleration of any payment, award, benefit or distribution) by the
Companies (or any of their affiliated entities) or any entity which effectuates
a Change in Control (or any of its affiliated entities) to or for the benefit of
the Executive (whether pursuant to the terms of this Agreement or otherwise)
(the “Payments”) would be subject to the excise tax imposed by Section 4999 of the Code
(the “Excise Tax”), and (ii) the reduction of the amounts payable to the Executive under
this Agreement to the maximum amount that could be paid to the Executive without
giving rise to the Excise Tax (the “Safe
Harbor Cap”) would provide the Executive with
a greater after-tax amount than if such amounts were not reduced, then the
amounts payable to the Executive under this Agreement shall be reduced (but not
below zero) to the Safe Harbor Cap. Unless the Companies and the Executive agree
otherwise (in a manner intended to comply with Code Section 409A), the reduction
of the amounts payable hereunder, if applicable, shall be made to the extent
necessary in the following order: (i) first, any such Payments that became
fully vested prior to the Change in Control and that pursuant to paragraph (b)
of Treas. Reg. § 1.280G-1, Q/A 24, are treated as contingent compensation
payments solely by reason of the acceleration of their originally scheduled
dates of payment will be reduced, by cancellation of the acceleration of their
vesting; (ii) second, any severance payments or benefits, performance-based cash
or equity incentive awards, or other contingent compensation payments the full
amounts of which are treated as contingent on the Change in Control pursuant to
paragraph (a) of Treas. Reg. § 1.280G-1, Q/A 24, will be reduced; and (iii)
third, any
cash or equity incentive awards, or nonqualified deferred compensation amounts,
that vest solely based on the Executive’s continued service with the Companies,
and that pursuant to paragraph (c) of Treas. Reg. § 1.280G-1, Q/A 24, are
treated as contingent on the Change in Control because they become vested as a
result of the Change in Control, will be reduced, first by cancellation of any
acceleration of their originally scheduled dates of payment (if payment with
respect to such items is not treated as automatically occurring upon the vesting
of such items for purposes of Section 280G of the Code) and then, if necessary,
by canceling the acceleration of their vesting. In each case, the amounts of the
contingent compensation payments will be reduced in the inverse order of their
originally scheduled dates of payment or vesting, as applicable, and will be so
reduced only to the extent necessary to achieve the required reduction. For
purposes of reducing the Payments to the Safe Harbor Cap, only amounts payable
under this Agreement (and no other Payments) shall be reduced. If the reduction
of the amounts payable hereunder would not result in a greater after-tax result
to the Executive, no amounts payable under this Agreement shall be reduced
pursuant to this provision. 

    
(b) All
determinations required to be made under this Section 12.01 shall be made by the
public accounting firm that is retained by the Companies as of the date
immediately prior to the Change in Control (the “Accounting Firm”), which shall provide
detailed supporting calculations both to the Companies and the Executive within
fifteen (15) business days of the receipt of notice from the Companies or the
Executive that there has been a Payment, or such earlier time as is requested by
the Companies. Notwithstanding the foregoing, in the event (i) the Board shall
determine prior to the Change in Control that the Accounting Firm is precluded
from performing such services under applicable auditor independence rules or
(ii) the Audit Committee of the Board determines that it does not want the
Accounting Firm to perform such services because of auditor independence
concerns or (iii) the Accounting Firm is serving as accountant or auditor for
the person(s) effecting the Change in Control, the Board shall appoint another
nationally recognized public accounting firm to make the determinations required
hereunder (which accounting firm shall then be referred to as the Accounting
Firm hereunder). All fees, costs and expenses (including, but not limited to,
the costs of retaining experts) of the Accounting Firm shall be borne by the
Companies. If payments are reduced to the Safe Harbor Cap or the Accounting Firm
determines that no Excise Tax is payable by the Executive without a reduction in
payments, the Accounting Firm shall provide a written opinion to the Executive
to such effect, that the Executive is not required to report any Excise Tax on
the Executive’s federal income tax return, and that the failure to report the
Excise Tax, if any, on the Executive’s applicable federal income tax return will
not result in the imposition of a negligence or similar penalty. The
determination by the Accounting Firm shall be binding upon the Companies and the
Executive (except as provided in Section 12.01(c) below). 

16







    
(c) If it
is established pursuant to a final determination of a court or an Internal
Revenue Service (the “IRS”) proceeding, which has been finally and conclusively
resolved, that Payments have been made to, or provided for the benefit of, the
Executive by the Companies, which are in excess of the limitations provided in
this Section 12.01 (referred to hereinafter as an “Excess Payment”), the Executive shall
repay the Excess Payment to the Companies on demand, together with interest on
the Excess Payment at the applicable federal rate (as defined in Section 1274(d)
of the Code) from the date of the Executive’s receipt of such Excess Payment
until the date of such repayment. As a result of the uncertainty in the
application of Section 4999 of the Code at the time of the determination, it is
possible that Payments which will not have been made by the Companies should
have been made (an “Underpayment”), consistent with the
calculations required to be made under this Section 12.01. In the event that it
is determined (i) by the Accounting Firm, the Companies (which shall include the
position taken by the Companies, or together with their consolidated group, on
their federal income tax returns) or the IRS or (ii) pursuant to a determination
by a court, that an Underpayment has occurred, the Companies shall pay an amount
equal to such Underpayment to the Executive within ten (10) days of such
determination together with interest on such amount at the applicable federal
rate from the date such amount would have been paid to the Executive until the
date of payment. The Executive shall cooperate, to the extent the Executive’s
expenses are reimbursed by the Companies, with any reasonable requests by the
Companies in connection with any contests or disputes with the IRS in connection
with the Excise Tax or the determination of the Excess Payment. Notwithstanding
the foregoing, in the event that amounts payable under this Agreement were
reduced pursuant to Section 12.01(a) and the value of stock options is
subsequently re-determined by the Accounting Firm within the context of Treasury
Regulation §1.280G-1 Q/A 33 that reduces the value of the Payments attributable
to such options, the Companies shall promptly pay to the Executive any amounts
payable under this Agreement that were not previously paid solely as a result of
Section 12.01(a), subject to the Safe Harbor Cap. 


17







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)
(a) 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 (b) 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 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 (i) 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 (ii) 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. Notwithstanding the foregoing, the Companies shall
have unilateral authority to amend this Agreement (without Executive consent) to
the extent necessary to comply with applicable laws, rules or regulations
(including but not limited to Section 409A) or changes to applicable laws, rules
or regulations. 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.

18







    
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. 

    
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 Doughnuts Corporation
		370 Knollwood Street, Suite 500
		Winston-Salem, NC 27103
		Attn: Senior Vice President-Human Resources
  and
		Organizational
Development




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 relate in any way to the subject matter
hereof. 

    
SECTION 13.11 Construction.
The language used in this Agreement will be
deemed to be the language chosen by the parties to express their mutual intent,
and no rule of strict construction will be applied against any party. Any
reference to any federal, state, local or foreign statute or law will be deemed
also to refer to all rules and regulations promulgated thereunder, unless the
context requires otherwise. 

19







    
SECTION 13.12 Survival.
Sections 6.01, 7.01, 8.01 and Articles 1, 5,
9, 10, 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, 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 this 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, and any remaining payments shall be made as
provided in the Agreement and in a manner in accordance with Section 409A. 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. In the
event that this Agreement or any compensation payable hereunder shall be deemed
not to comply with (or be exempt from) Section 409A, then neither the Companies,
the Board, the Board of Directors of KKDC, nor its or their designees or agents,
shall be liable to the Executive or other persons for actions, decisions or
determinations made in good faith. 

    
With respect to any reimbursement or in-kind benefit arrangements of the
Companies and their subsidiaries that constitute deferred compensation for
purposes of Section 409A, except as otherwise permitted by Section 409A, the
following conditions shall be applicable: (a) the amount eligible for
reimbursement, or in-kind benefits provided, under any such arrangement in one
calendar year may not affect the amount eligible for reimbursement, or in-kind
benefits to be provided, under such arrangement in any other calendar year
(except that the health and dental plans may impose a limit on the amount that
may be reimbursed or paid), (b) 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, and (c) the right to reimbursement or in-kind benefits is not
subject to liquidation or exchange for another benefit. Whenever a payment under
this Agreement specifies a payment period with reference to a number of days
(e.g., “payment shall be made within thirty (30) days after termination of
employment”), the actual date of payment within the specified period shall be
within the sole discretion of the Companies. Whenever payments under this
Agreement are to be made in installments, each such installment shall be deemed
to be a separate payment for purposes of Section 409A. Any reimbursement by the
Company pursuant to Section 12.01(c) herein shall be made to the Executive not
later than the end of the Executive’s taxable year following the taxable year in
which he remits the related taxes. 

20







    
SECTION 13.15 Representations of the
Companies. The Companies represent and
warrant that (a) the execution, delivery and performance of this Agreement by
the Companies has been fully and validly authorized by all necessary corporate
action, (b) the officer(s) signing this Agreement on behalf of the Companies is
duly authorized to do so, (c) 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 (d) upon execution and
delivery of this Agreement by the parties hereto, it will be a valid and binding
obligation of the Companies enforceable against the Companies 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. 

[remainder of page left intentionally
blank] 

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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/ Douglas R.
      Muir
		Douglas R. Muir
		Chief Financial Officer
	 
	 
	KRISPY KREME DOUGHNUT
    CORPORATION
	 
	 
	By:       	/s/ Douglas R.
      Muir
		Douglas R. Muir
		Chief Financial Officer
	 
	 
	EXECUTIVE
	 
	 
	/s/
      Anthony N. Thompson
	Anthony N.
Thompson




[Signature Page to Employment Agreement]


22







Exhibit A 

MUTUAL RELEASE 

    
This mutual release (this “Release”) is entered into as of this ____ day
of ______, ____ (the “Release Date”) 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 Anthony N. Thompson (the “Executive”). 

    
1. Reference is hereby made to the employment agreement dated as of May 13,
2014 (the “Employment Agreement”) by the parties
hereto setting forth the agreements among the parties regarding the termination
of the employment relationship between the Executive and the Companies.
Capitalized terms used but not defined herein have the meanings ascribed to them
in the Employment Agreement. 

    
2. The
Executive, for himself, his spouse, heirs, executors, administrators, successors
and assigns, hereby releases and discharges the Companies and its 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 spouse,
heirs, executors, administrators, successors or assigns ever had or may have at
any time through the Release 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; and (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. 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
Executive is giving up all rights, claims and causes of action occurring prior
to the Release 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 before
the Release Date. 

    
It is understood that the Executive has been advised to consult with an
attorney prior to executing this Release; that he in fact has consulted a
knowledgeable, competent attorney regarding this Release; that he may, before
executing this Release, consider this Release for a period of 21 calendar days;
and that the consideration he receives for this Release is in addition to
amounts to which he was already entitled. If the Executive is signing this
Release prior to the expiration of such 21-day period, the Executive is waiving
his right to review the Release for such full 21-day period prior to signing it.
It is further understood that the Executive may revoke this Release within seven
calendar days from the date of execution hereof. If the Executive revokes this
Release within such seven-day period, no severance benefit will be payable to
him under the Employment Agreement and he shall return to the Company any such
payment received prior to that date. 

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3. The
Companies hereby release and discharge the Executive, his spouse, 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
Release 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 or service to the Companies and/or the Executive’s
separation from the 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 prior to the Release 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
before the Release Date. 

    
4. This
Release 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 its obligations under the Employment Agreement occurring on or after
the Release Date, (ii) waive the Executive’s claim with respect to compensation
or benefits earned or accrued prior to the Release Date to the extent such claim
survives termination of the Executive’s employment under the terms of the
Employment Agreement, (iii) waive the Executive’s right to indemnification under
the charters and by-laws of the Companies, or (iv) waive the Executive’s rights
as a shareholder. 

    
5. This
Mutual Release shall be effective as of the Release Date and only if executed by
both parties. 

    
6. All
questions concerning the construction, validity and interpretation of this
Mutual Release will be governed by the internal
law of North Carolina, without regard to principles of conflict of laws.


    
IN WITNESS WHEREOF, each party hereto, intending to be legally bound, has
executed this Mutual Release on the date indicated above. 


	KRISPY KREME DOUGHNUTS,
  INC.
	 
	By:       	 
	 
	KRISPY KREME DOUGHNUT
    CORPORATION
	 
	By:	 
	 
	EXECUTIVE
	 
	 
	Anthony N.
Thompson




24







Exhibit B 

    
The following businesses, together with their Subsidiaries, affiliates
and successors in interest, are the businesses for purposes of Section 9.01
hereof: 

Dunkin Brands Inc.
Tim Hortons,
Inc.
George Weston Limited
Flowers Foods, Inc.
McKee Foods
Corporation
Starbucks
Dewey’s Bakery
Salem Baking Company
Dawn Food
Products, Inc.
CSM Baking Products
Bimbo Bakeries USA, Inc.
Hostess
Brands, LLC
Panera Bread Company 

And any other business that derives
more than fifty percent (50%) of its revenues from the indirect or direct sale
of coffee, doughnuts and/or bakery or sweet goods.

25