Director Indemnification Agreement

 

Exhibit 10.42
DIRECTOR INDEMNIFICATION AGREEMENT
     This Director Indemnification Agreement, dated as of October 4, 2004 (this “Agreement”),is made by and between Krispy Kreme Doughnuts, Inc., a North Carolina corporation (the “Company”),and                     Indemnitee”).
RECITALS:
     A. Section 55-8-01 of the North Carolina Business Corporation Act provides that the businessand affairs of a corporation shall be managed by or under the direction of its board of directors.
     B. By virtue of the managerial prerogatives vested in the directors of a North Carolinacorporation, directors act as fiduciaries of the corporation and its stockholders.
     C. Thus, it is critically important to the Company and its stockholders that the Company beable to attract and retain the most capable persons reasonably available to serve as directors ofthe Company.
     D. In recognition of the need for corporations to be able to induce capable and responsiblepersons to accept positions in corporate management, North Carolina law authorizes (and in someinstances requires) corporations to indemnify their directors and officers, and further authorizescorporations to purchase and maintain insurance for the benefit of their directors and officers.
     E. The North Carolina courts have recognized that indemnification by a corporation serves thedual policies of (1) allowing corporate officials to resist unjustified lawsuits, secure in theknowledge that, if vindicated, the corporation will bear the expense of litigation and (2)encouraging capable women and men to serve as corporate directors and officers, secure in theknowledge that the corporation will absorb the costs of defending their honesty and integrity.
     F. The number of lawsuits challenging the judgment and actions of directors of North Carolinacorporations, the costs of defending those lawsuits, and the threat to directors’ personal assetshave all materially increased over the past several years, chilling the willingness of capablewomen and men to undertake the responsibilities imposed on corporate directors.
     G. Recent federal legislation and rules adopted by the Securities and Exchange Commission andthe national securities exchanges have imposed additional disclosure and corporate governanceobligations on directors of public companies and have exposed such directors to new andsubstantially broadened civil liabilities.
     H. These legislative and regulatory initiatives have also exposed directors of publiccompanies to a significantly greater risk of criminal proceedings, with attendant defense costs andpotential criminal fines and penalties.
     I. Under North Carolina law, a director’s right to be reimbursed for the costs of defense ofcriminal actions, whether such claims are asserted under state or federal law, does not depend uponthe merits of the claims asserted against the director and is separate and distinct from any rightto indemnification the director may be able to establish, and indemnification of

 


 

the director against criminal fines and penalties is permitted if the director satisfies theapplicable standard of conduct.
     J. Indemnitee is a director of the Company and his/her willingness to serve in such capacityis predicated, in substantial part, upon the Company’s willingness to indemnify him/her inaccordance with the principles reflected above, to the fullest extent permitted by the laws of theState of North Carolina, and upon the other undertakings set forth in this Agreement.
     K. Section 55-8-57(b) of the North Carolina Business Corporation Act provides that theauthorization, adoption, approval, and favorable recommendation of this Agreement by the Company’sBoard of Directors will not be deemed an act or corporate transaction in which the Indemnitee has aconflict of interest and this Agreement will not be void or voidable on such grounds, provided thatthis Agreement does not apply to claims made or liabilities asserted against the director prior tothe date of this Agreement.
     L. Therefore, in recognition of the need to provide Indemnitee with substantial protectionagainst personal liability, in order to procure Indemnitee’s continued service as a director of theCompany and to enhance Indemnitee’s ability to serve the Company in an effective manner, and inorder to provide such protection pursuant to express contract rights (intended to be enforceableirrespective of, among other things, any amendment to the Company’s Articles of Incorporation orAmended and Restated Bylaws (collectively, the “Constituent Documents”), any change in thecomposition of the Company’s Board of Directors (the “Board”) or any change-in-control or businesscombination transaction relating to the Company), the Company wishes to provide in this Agreementfor the indemnification of and the advancement of Expenses (as defined in Section 1(e)) toIndemnitee as set forth in this Agreement and for the continued coverage of Indemnitee under theCompany’s directors’ and officers’ liability insurance policies.
     M. In light of the considerations referred to in the preceding recitals, it is the Company’sintention and desire that the provisions of this Agreement be construed liberally, subject to theirexpress terms, to maximize the protections to be provided to Indemnitee hereunder.
AGREEMENT:
     NOW, THEREFORE, the parties hereby agree as follows:
     1. Certain Definitions. In addition to terms defined elsewhere herein, the following termshave the following meanings when used in this Agreement with initial capital letters:
          (a) “Change in Control” means the occurrence after the date of this Agreement of any of thefollowing events:
               (i) the acquisition by any individual, entity or group (within the meaning of Section 13(d)(3)or 14(d)(2) of the Exchange Act) (a “Person”) of beneficial ownership (within the meaning of Rule13d-3 promulgated under the Exchange Act) of 20% or more of the combined voting power of thethen-outstanding Voting Stock of the Company; provided, however, that:

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                     (A) for purposes of this Section 1(a)(i), the following acquisitions shall not constitute aChange in Control: (1) any acquisition of Voting Stock of the Company directly from the Companythat is approved by a majority of the Incumbent Directors, (2) any acquisition of Voting Stock ofthe Company by the Company or any Subsidiary, (3) any acquisition of Voting Stock of the Company byany employee benefit plan (or related trust) sponsored or maintained by the Company or anySubsidiary, and (4) any acquisition of Voting Stock of the Company by any Person pursuant to aBusiness Combination that complies with clauses (A), (B) and (C) of Section 1(a)(iii) below;
                     (B) if any Person acquires beneficial ownership of 20% or more of the combined voting power ofthe then-outstanding Voting Stock of the Company as a result of a transaction described in clause(A)(1) of Section 1(a)(i) and such Person thereafter becomes the beneficial owner of any additionalshares of Voting Stock of the Company representing 1% or more of the then-outstanding Voting Stockof the Company, other than in an acquisition directly from the Company that is approved by amajority of the Incumbent Directors or other than as a result of a stock dividend, stock split orsimilar transaction effected by the Company in which all holders of Voting Stock are treatedequally, such subsequent acquisition shall be deemed to constitute a Change in Control;
                     (C) a Change in Control will not be deemed to have occurred if a Person acquires beneficialownership of 20% or more of the Voting Stock of the Company as a result of a reduction in thenumber of shares of Voting Stock of the Company outstanding unless and until such Person thereafterbecomes the beneficial owner of any additional shares of Voting Stock of the Company representing1% or more of the then-outstanding Voting Stock of the Company, other than in an acquisitiondirectly from the Company that is approved by a majority of the Incumbent Directors or other thanas a result of a stock dividend, stock split or similar transaction effected by the Company inwhich all holders of Voting Stock are treated equally; and
                     (D) if at least a majority of the Incumbent Directors determine in good faith that a Personhas acquired beneficial ownership of 20% or more of the Voting Stock of the Company inadvertently,and such Person divests as promptly as practicable a sufficient number of shares so that suchPerson beneficially owns less than 20% of the Voting Stock of the Company, then no Change inControl shall have occurred as a result of such Person’s acquisition; or
                (ii) a majority of the Directors are not Incumbent Directors; or
                (iii) the consummation of a reorganization, merger or consolidation, or sale or otherdisposition of all or substantially all of the assets of the Company or the acquisition of assetsof another corporation, or other transaction (each, a“Business Combination”), unless, in eachcase, immediately following such Business Combination (A) all or substantially all of theindividuals and entities who were the beneficial owners of Voting Stock of the Company immediatelyprior to such Business Combination beneficially own, directly or indirectly, more than 60% of thecombined voting power of the then outstanding shares of Voting Stock of the entity resulting fromsuch Business Combination (including, without limitation, an entity which as a result of suchtransaction owns the Company or all or substantially all of the Company’s assets either directly orthrough one or more subsidiaries), (B) no Person (other than the

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           Company, such entity resulting from such Business Combination, or any employee benefit plan(or related trust) sponsored or maintained by the Company, any Subsidiary or such entity resultingfrom such Business Combination) beneficially owns, directly or indirectly, 20% or more of thecombined voting power of the then outstanding shares of Voting Stock of the entity resulting fromsuch Business Combination, and (C) at least a majority of the members of the Board of Directors ofthe entity resulting from such Business Combination were Incumbent Directors at the time of theexecution of the initial agreement or of the action of the Board providing for such BusinessCombination; or
                (iv) approval by the stockholders of the Company of a complete liquidation or dissolution ofthe Company, except pursuant to a Business Combination that complies with clauses (A), (B) and (C)of Section 1(a)(iii).
                (v) For purposes of this Section 1(a) and as used elsewhere in this Agreement, the followingterms shall have the following meanings:
                     (A) “Exchange Act” shall mean the Securities Exchange Act of 1934, as amended.
                     (B) “Incumbent Directors” means the individuals who, as of the date hereof, are Directors ofthe Company and any individual becoming a Director subsequent to the date hereof whose election,nomination for election by the Company’s stockholders, or appointment, was approved by a vote of atleast two-thirds of the then Incumbent Directors (either by a specific vote or by approval of theproxy statement of the Company in which such person is named as a nominee for director, withoutobjection to such nomination); provided, however, that an individual shall not be an IncumbentDirector if such individual’s election or appointment to the Board occurs as a result of an actualor threatened election contest (as described in Rule 14a-12(c) of the Exchange Act) with respect tothe election or removal of Directors or other actual or threatened solicitation of proxies orconsents by or on behalf of a Person other than the Board.
                     (C) “Subsidiary” means an entity in which the Company directly or indirectly beneficially owns50% or more of the outstanding Voting Stock.
                     (D) “Voting Stock” means securities entitled to vote generally in the election of directors(or similar governing bodies).
          (b)“Claim” means, except as stated below, (i) any threatened, asserted, pending or completedclaim, demand, action, suit or proceeding, whether civil, criminal, administrative, arbitrative,investigative or other, and whether made pursuant to federal, state or other law; and (ii) anythreatened, pending or completed inquiry or investigation, whether made, instituted or conducted bythe Company or any other person, including without limitation any federal, state or othergovernmental entity, that Indemnitee determines might lead to the institution of any such claim,demand, action, suit or proceeding. Notwithstanding the foregoing, in no event will the term“Claim” be deemed to include any Claim existing against Indemnitee prior to the date of thisAgreement.
          (c) “Controlled Affiliate” means any corporation, limited liability company, partnership,joint venture, trust or other entity or enterprise, whether or not for profit, that is

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          directly or indirectly controlled by the Company. For purposes of this definition, “control”means the possession, directly or indirectly, of the power to direct or cause the direction of themanagement or policies of an entity or enterprise, whether through the ownership of votingsecurities, through other voting rights, by contract or otherwise; provided that direct or indirectbeneficial ownership of capital stock or other interests in an entity or enterprise entitling theholder to cast 20% or more of the total number of votes generally entitled to be cast in theelection of directors (or persons performing comparable functions) of such entity or enterpriseshall be deemed to constitute control for purposes of this definition.
          (d) “Disinterested Director” means a director of the Company who is not and was not a party tothe Claim in respect of which indemnification is sought by Indemnitee.
          (e)“Expenses” means attorneys’ and experts’ fees and expenses and all other costs andexpenses paid or payable in connection with investigating, defending, being a witness in orparticipating in (including on appeal), or preparing to investigate, defend, be a witness in orparticipate in (including on appeal), any Claim.
          (f)“Indemnifiable Claim” means any Claim based upon, arising out of or resulting from (i) anyactual, alleged or suspected act or failure to act by Indemnitee in his or her capacity as adirector, officer, employee or agent of the Company or as a director, officer, employee, member,manager, trustee or agent of any other corporation, limited liability company, partnership, jointventure, trust or other entity or enterprise, whether or not for profit, as to which Indemnitee isor was serving at the request of the Company as a director, officer, employee, member, manager,trustee or agent, (ii) any actual, alleged or suspected act or failure to act by Indemnitee inrespect of any business, transaction, communication, filing, disclosure or other activity of theCompany or any other entity or enterprise referred to in clause (i) of this sentence, or (iii)Indemnitee’s status as a current or former director, officer, employee or agent of the Company oras a current or former director, officer, employee, member, manager, trustee or agent of theCompany or any other entity or enterprise referred to in clause (i) of this sentence or any actual,alleged or suspected act or failure to act by Indemnitee in connection with any obligation orrestriction imposed upon Indemnitee by reason of such status. In addition to any service at theactual request of the Company, for purposes of this Agreement, Indemnitee shall be deemed to beserving or to have served at the request of the Company as a director, officer, employee, member,manager, trustee or agent of another entity or enterprise if Indemnitee is or was serving as adirector, officer, employee, member, manager, trustee or agent of such entity or enterprise and (i)such entity or enterprise is or at the time of such service was a Controlled Affiliate, (ii) suchentity or enterprise is or at the time of such service was an employee benefit plan (or relatedtrust) sponsored or maintained by the Company or a Controlled Affiliate, or (iii) the Company or aControlled Affiliate directly or indirectly caused or authorized Indemnitee to be nominated,elected, appointed, designated, employed, engaged or selected to serve in such capacity.
          (g)“Indemnifiable Losses” means any and all Losses relating to, arising out of or resultingfrom any Indemnifiable Claim.
          (h) “Independent Counsel” means a law firm, or a member of a law firm, that is experienced inmatters of corporation law and neither presently is, nor in the past five years has been, retainedto represent: (i) the Company (or any Subsidiary) or Indemnitee in any matter

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material to either such party (other than with respect to matters concerning the Indemniteeunder this Agreement, or of other indemnitees under similar indemnification agreements), or (ii)any other named (or, as to a threatened matter, reasonably likely to be named) party to theIndemnifiable Claim giving rise to a claim for indemnification hereunder. Notwithstanding theforegoing, the term “Independent Counsel” shall not include any person who, under the applicablestandards of professional conduct then prevailing, would have a conflict of interest inrepresenting either the Company or Indemnitee in an action to determine Indemnitee’s rights underthis Agreement.
          (i) “Losses” means, except as stated below, any and all Expenses, damages, losses,liabilities, judgments, fines, penalties (whether civil, criminal or other) and amounts paid insettlement, including without limitation all interest, assessments and other charges paid orpayable in connection with or in respect of any of the foregoing. Notwithstanding the foregoing,in no event will the term “Losses” be deemed to include any Losses incurred by the Indemnitee priorto the date of this Agreement or relating to any Claim existing against Indemnitee prior to thedate of this Agreement.
     2. Indemnification Obligation. Subject to Section 7, the Company shall indemnify, defend andhold harmless Indemnitee, to the fullest extent permitted or required by the laws of the State ofNorth Carolina in effect on the date hereof or as such laws may from time to time hereafter beamended to increase the scope of such permitted indemnification, against any and all IndemnifiableClaims and Indemnifiable Losses; provided, however, that, except as provided in Sections 4 and 20,Indemnitee shall not be entitled to indemnification pursuant to this Agreement in connection withany Claim initiated by Indemnitee against the Company or any director or officer of the Companyunless the Company has joined in or consented to the initiation of such Claim.
     3. Advancement of Expenses. Indemnitee shall have the right to advancement by the Companyprior to the final disposition of any Indemnifiable Claim of any and all Expenses relating to,arising out of or resulting from any Indemnifiable Claim paid or incurred by Indemnitee or whichIndemnitee determines are reasonably likely to be paid or incurred by Indemnitee. Indemnitee’sright to such advancement is not subject to the satisfaction of any standard of conduct. Withoutlimiting the generality or effect of the foregoing, within five business days after any request byIndemnitee, the Company shall, in accordance with such request (but without duplication), (a) paysuch Expenses on behalf of Indemnitee, (b) advance to Indemnitee funds in an amount sufficient topay such Expenses, or (c) reimburse Indemnitee for such Expenses; provided that Indemnitee shallrepay, without interest any amounts actually advanced to Indemnitee that, at the final dispositionof the Indemnifiable Claim to which the advance related, were in excess of amounts paid or payableby Indemnitee in respect of Expenses relating to, arising out of or resulting from suchIndemnifiable Claim. In connection with any such payment, advancement or reimbursement, Indemniteeshall execute and deliver to the Company an undertaking, which need not be secured and shall beaccepted without reference to Indemnitee’s ability to repay the Expenses, by or on behalf of theIndemnitee, to repay any amounts paid, advanced or reimbursed by the Company in respect of Expensesrelating to, arising out of or resulting from any Indemnifiable Claim in respect of which it shallhave been determined, following the final disposition of such Indemnifiable Claim and in accordancewith Section 7, that Indemnitee is not entitled to indemnification hereunder.

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     4. Indemnification for Additional Expenses. Without limiting the generality or effect of theforegoing, the Company shall indemnify and hold harmless Indemnitee against and, if requested byIndemnitee, shall reimburse Indemnitee for, or advance to Indemnitee, within five business days ofsuch request, any and all Expenses paid or incurred by Indemnitee or which Indemnitee determinesare reasonably likely to be paid or incurred by Indemnitee in connection with any Claim made,instituted or conducted by Indemnitee for (a) indemnification or reimbursement or advance paymentof Expenses by the Company under any provision of this Agreement, or under any other agreement orprovision of the Constituent Documents now or hereafter in effect relating to Indemnifiable Claims,and/or (b) recovery under any directors’ and officers’ liability insurance policies maintained bythe Company, regardless in each case of whether Indemnitee ultimately is determined to be entitledto such indemnification, reimbursement, advance or insurance recovery, as the case may be;provided, however, that Indemnitee shall return, without interest, any such advance of Expenses (orportion thereof) which remains unspent at the final disposition of the Claim to which the advancerelated.
     5. Partial Indemnity. If Indemnitee is entitled under any provision of this Agreement toindemnification by the Company for some or a portion of any Indemnifiable Loss, but not for all ofthe total amount thereof, the Company shall nevertheless indemnify Indemnitee for the portionthereof to which Indemnitee is entitled.
     6. Procedure for Notification. To obtain indemnification under this Agreement in respect ofan Indemnifiable Claim or Indemnifiable Loss, Indemnitee shall submit to the Company a writtenrequest therefor, including a brief description (based upon information then available toIndemnitee) of such Indemnifiable Claim or Indemnifiable Loss. If, at the time of the receipt ofsuch request, the Company has directors’ and officers’ liability insurance in effect under whichcoverage for such Indemnifiable Claim or Indemnifiable Loss is potentially available, the Companyshall give prompt written notice of such Indemnifiable Claim or Indemnifiable Loss to theapplicable insurers in accordance with the procedures set forth in the applicable policies. TheCompany shall provide to Indemnitee a copy of such notice delivered to the applicable insurers, andcopies of all subsequent correspondence between the Company and such insurers regarding theIndemnifiable Claim or Indemnifiable Loss, in each case substantially concurrently with thedelivery or receipt thereof by the Company. The failure by Indemnitee to timely notify the Companyof any Indemnifiable Claim or Indemnifiable Loss shall not relieve the Company from any liabilityhereunder unless, and only to the extent that, the Company did not otherwise learn of suchIndemnifiable Claim or Indemnifiable Loss and such failure results in forfeiture by the Company ofsubstantial defenses, rights or insurance coverage.
     7. Determination of Right to Indemnification.
          (a) To the extent that Indemnitee shall have been successful on the merits or otherwise indefense of any Indemnifiable Claim or any portion thereof or in defense of any issue or mattertherein, including without limitation dismissal without prejudice, Indemnitee shall be indemnifiedagainst all Indemnifiable Losses relating to, arising out of or resulting from such IndemnifiableClaim in accordance with Section 2 and no Standard of Conduct Determination (as defined in Section7(b)) shall be required.
          (b) To the extent that the provisions of Section 7(a) are inapplicable to an IndemnifiableClaim that shall have been finally disposed of, any determination of whether

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Indemnitee has satisfied any applicable standard of conduct under North Carolina law that is alegally required condition precedent to indemnification of Indemnitee hereunder againstIndemnifiable Losses relating to, arising out of or resulting from such Indemnifiable Claim (a“Standard of Conduct Determination”) shall be made as follows: (i) if a Change in Control shallnot have occurred, or if a Change in Control shall have occurred but Indemnitee shall haverequested that the Standard of Conduct Determination be made pursuant to this clause (i), (A) by amajority vote of the Disinterested Directors, even if less than a quorum of the Board, (B) if suchDisinterested Directors so direct, by a majority vote of a committee of Disinterested Directorsdesignated by a majority vote of all Disinterested Directors, or (C) if there are no suchDisinterested Directors, by Independent Counsel in a written opinion addressed to the Board, a copyof which shall be delivered to Indemnitee; and (ii) if a Change in Control shall have occurred andIndemnitee shall not have requested that the Standard of Conduct Determination be made pursuant toclause (i), by Independent Counsel in a written opinion addressed to the Board, a copy of whichshall be delivered to Indemnitee. Indemnitee will cooperate with the person or persons making suchStandard of Conduct Determination, including providing to such person or persons, upon reasonableadvance request, any documentation or information which is not privileged or otherwise protectedfrom disclosure and which is reasonably available to Indemnitee and reasonably necessary to suchdetermination. The Company shall indemnify and hold harmless Indemnitee against and, if requestedby Indemnitee, shall reimburse Indemnitee for, or advance to Indemnitee, within five business daysof such request, any and all costs and expenses (including attorneys’ and experts’ fees andexpenses) incurred by Indemnitee in so cooperating with the person or persons making such Standardof Conduct Determination.
          (c) The Company shall use its reasonable best efforts to cause any Standard of ConductDetermination required under Section 7(b) to be made as promptly as practicable. If (i) the personor persons empowered or selected under Section 7 to make the Standard of Conduct Determinationshall not have made a determination within 30 days after the later of (A) receipt by the Company ofwritten notice from Indemnitee advising the Company of the final disposition of the applicableIndemnifiable Claim (the date of such receipt being the “Notification Date”) and (B) the selectionof an Independent Counsel, if such determination is to be made by Independent Counsel, that ispermitted under the provisions of Section 7(e) to make such determination and (ii) Indemnitee shallhave fulfilled his/her obligations set forth in the second sentence of Section 7(b), thenIndemnitee shall be deemed to have satisfied the applicable standard of conduct; provided that such30-day period may be extended for a reasonable time, not to exceed an additional 30 days, if theperson or persons making such determination in good faith requires such additional time for theobtaining or evaluation or documentation and/or information relating thereto.
          (d) If (i) Indemnitee shall be entitled to indemnification hereunder against any IndemnifiableLosses pursuant to Section 7(a), (ii) no determination of whether Indemnitee has satisfied anyapplicable standard of conduct under North Carolina law is a legally required condition precedentto indemnification of Indemnitee hereunder against any Indemnifiable Losses, or (iii) Indemniteehas been determined or deemed pursuant to Section 7(b) or (c) to have satisfied any applicablestandard of conduct under North Carolina law which is a legally required condition precedent toindemnification of Indemnitee hereunder against any Indemnifiable Losses, then the Company shallpay to Indemnitee, within five business days after the later of (x) the Notification Date inrespect of the Indemnifiable Claim or portion thereof to which such Indemnifiable Losses arerelated, out of which such Indemnifiable Losses arose or from which

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such Indemnifiable Losses resulted and (y) the earliest date on which the applicable criterionspecified in clause (i), (ii) or (iii) above shall have been satisfied, an amount equal to theamount of such Indemnifiable Losses.
          (e) If a Standard of Conduct Determination is to be made by Independent Counsel pursuant toSection 7(b)(i), the Independent Counsel shall be selected by the Board of Directors, and theCompany shall give written notice to Indemnitee advising him or her of the identity of theIndependent Counsel so selected. If a Standard of Conduct Determination is to be made byIndependent Counsel pursuant to Section 7(b)(ii), the Independent Counsel shall be selected byIndemnitee, and Indemnitee shall give written notice to the Company advising it of the identity ofthe Independent Counsel so selected. In either case, Indemnitee or the Company, as applicable,may, within five business days after receiving written notice of selection from the other, deliverto the other a written objection to such selection; provided, however, that such objection may beasserted only on the ground that the Independent Counsel so selected does not satisfy the criteriaset forth in the definition of “Independent Counsel” in Section 1(h), and the objection shall setforth with particularity the factual basis of such assertion. Absent a proper and timelyobjection, the person or firm so selected shall act as Independent Counsel. If such writtenobjection is properly and timely made and substantiated, (i) the Independent Counsel so selectedmay not serve as Independent Counsel unless and until such objection is withdrawn or a court hasdetermined that such objection is without merit and (ii) the non-objecting party may, at itsoption, select an alternative Independent Counsel and give written notice to the other partyadvising such other party of the identity of the alternative Independent Counsel so selected, inwhich case the provisions of the two immediately preceding sentences and clause (i) of thissentence shall apply to such subsequent selection and notice. If applicable, the provisions ofclause (ii) of the immediately preceding sentence shall apply to successive alternative selections.If no Independent Counsel that is permitted under the foregoing provisions of this Section 7(e) tomake the Standard of Conduct Determination shall have been selected within 30 days after theCompany gives its initial notice pursuant to the first sentence of this Section 7(e) or Indemniteegives its initial notice pursuant to the second sentence of this Section 7(e), as the case may be,either the Company or Indemnitee may petition the courts of the State of North Carolina forresolution of any objection which shall have been made by the Company or Indemnitee to the other’sselection of Independent Counsel and/or for the appointment as Independent Counsel of a person orfirm selected by the Court or by such other person as the Court shall designate, and the person orfirm with respect to whom all objections are so resolved or the person or firm so appointed willact as Independent Counsel. In all events, the Company shall pay all of the reasonable fees andexpenses of the Independent Counsel incurred in connection with the Independent Counsel’sdetermination pursuant to Section 7(b).

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     8. Presumption of Entitlement. In making any Standard of Conduct Determination, the person orpersons making such determination shall presume that Indemnitee has satisfied the applicablestandard of conduct, and the Company may overcome such presumption only by its adducing clear andconvincing evidence to the contrary. Any Standard of Conduct Determination that is adverse toIndemnitee may be challenged by the Indemnitee in the courts of the State of North Carolina. Nodetermination by the Company (including by its directors or any Independent Counsel) thatIndemnitee has not satisfied any applicable standard of conduct shall be a defense to any Claim byIndemnitee for indemnification or reimbursement or advance payment of Expenses by the Companyhereunder or create a presumption that Indemnitee has not met any applicable standard of conduct.
     9. No Other Presumption. For purposes of this Agreement, the termination of any Claim byjudgment, order, settlement (whether with or without court approval) or conviction, or upon a pleaof nolo contendere or its equivalent, will not create a presumption that Indemnitee did not meetany applicable standard of conduct or that indemnification hereunder is otherwise not permitted.
     10. Non-Exclusivity. The rights of Indemnitee hereunder will be in addition to any otherrights Indemnitee may have under the Constituent Documents, or the substantive laws of theCompany’s jurisdiction of incorporation, any other contract or otherwise (collectively, “OtherIndemnity Provisions”); provided, however, that (a) to the extent that Indemnitee otherwise wouldhave any greater right to indemnification under any Other Indemnity Provision, Indemnitee will bedeemed to have such greater right hereunder and (b) to the extent that any change is made to anyOther Indemnity Provision which permits any greater right to indemnification than that providedunder this Agreement as of the date hereof, Indemnitee will be deemed to have such greater righthereunder. The Company will not adopt any amendment to any of the Constituent Documents the effectof which would be to deny, diminish or encumber Indemnitee’s right to indemnification under thisAgreement or any Other Indemnity Provision.
     11. Liability Insurance and Funding. For the duration of Indemnitee’s service as a directorand/or officer of the Company, and thereafter for so long as Indemnitee shall be subject to anypending or possible Indemnifiable Claim, the Company shall use commercially reasonable efforts(taking into account the scope and amount of coverage available relative to the cost thereof) tocause to be maintained in effect policies of directors’ and officers’ liability insurance providingcoverage for directors and/or officers of the Company that is at least substantially comparable inscope and amount to that provided by the Company’s current policies of directors’ and officers’liability insurance. The Company shall provide Indemnitee with a copy of all directors’ andofficers’ liability insurance applications, binders, policies, declarations, endorsements and otherrelated materials, and shall provide Indemnitee with a reasonable opportunity to review and commenton the same. Without limiting the generality or effect of the two immediately preceding sentences,the Company shall not discontinue or significantly reduce the scope or amount of coverage from onepolicy period to the next (i) without the prior approval thereof by a majority vote of theIncumbent Directors, even if less than a quorum, or (ii) if at the time that any suchdiscontinuation or significant reduction in the scope or amount of coverage is proposed there areno Incumbent Directors, without the prior written consent of Indemnitee (which consent shall not beunreasonably withheld or delayed). In all policies of directors’ and officers’ liability insuranceobtained by the Company, Indemnitee shall be named as an insured in such a manner as to provideIndemnitee the same rights and benefits, subject to

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the same limitations, as are accorded to the Company’s directors and officers most favorablyinsured by such policy. The Company may, but shall not be required to, create a trust fund, granta security interest or use other means, including without limitation a letter of credit, to ensurethe payment of such amounts as may be necessary to satisfy its obligations to indemnify and advanceexpenses pursuant to this Agreement.
     12. Subrogation. In the event of payment under this Agreement, the Company shall besubrogated to the extent of such payment to all of the related rights of recovery of Indemniteeagainst other persons or entities (other than Indemnitee’s successors), including any entity orenterprise referred to in clause (i) of the definition of “Indemnifiable Claim” in Section 1(f).Indemnitee shall execute all papers reasonably required to evidence such rights (all ofIndemnitee’s reasonable Expenses, including attorneys’ fees and charges, related thereto to bereimbursed by or, at the option of Indemnitee, advanced by the Company).
     13. No Duplication of Payments. The Company shall not be liable under this Agreement to makeany payment to Indemnitee in respect of any Indemnifiable Losses to the extent Indemnitee hasotherwise actually received payment (net of Expenses incurred in connection therewith) under anyinsurance policy, the Constituent Documents and Other Indemnity Provisions or otherwise (includingfrom any entity or enterprise referred to in clause (i) of the definition of “Indemnifiable Claim”in Section 1(f)) in respect of such Indemnifiable Losses otherwise indemnifiable hereunder.
     14. Defense of Claims. The Company shall be entitled to participate in the defense of anyIndemnifiable Claim or to assume the defense thereof, with counsel reasonably satisfactory to theIndemnitee; provided that if Indemnitee believes, after consultation with counsel selected byIndemnitee, that (a) the use of counsel chosen by the Company to represent Indemnitee would presentsuch counsel with an actual or potential conflict, (b) the named parties in any such IndemnifiableClaim (including any impleaded parties) include both the Company and Indemnitee and Indemniteeshall conclude that there may be one or more legal defenses available to him or her that aredifferent from or in addition to those available to the Company, or (c) any such representation bysuch counsel would be precluded under the applicable standards of professional conduct thenprevailing, then Indemnitee shall be entitled to retain separate counsel (but not more than one lawfirm plus, if applicable, local counsel in respect of any particular Indemnifiable Claim) at theCompany’s expense. The Company shall not be liable to Indemnitee under this Agreement for anyamounts paid in settlement of any threatened or pending Indemnifiable Claim effected without theCompany’s prior written consent. The Company shall not, without the prior written consent of theIndemnitee, effect any settlement of any threatened or pending Indemnifiable Claim to which theIndemnitee is, or could have been, a party unless such settlement solely involves the payment ofmoney and includes a complete and unconditional release of the Indemnitee from all liability on anyclaims that are the subject matter of such Indemnifiable Claim. Neither the Company nor Indemniteeshall unreasonably withhold its consent to any proposed settlement; provided that Indemnitee maywithhold consent to any settlement that does not provide a complete and unconditional release ofIndemnitee.
     15. Successors and Binding Agreement. (a) The Company shall require any successor (whetherdirect or indirect, by purchase, merger, consolidation, reorganization or otherwise) to all orsubstantially all of the business or assets of the Company, by agreement in form and substancesatisfactory to Indemnitee and his or her counsel, expressly to assume and agree to

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perform this Agreement in the same manner and to the same extent the Company would be requiredto perform if no such succession had taken place. This Agreement shall be binding upon and inureto the benefit of the Company and any successor to the Company, including without limitation anyperson acquiring directly or indirectly all or substantially all of the business or assets of theCompany whether by purchase, merger, consolidation, reorganization or otherwise (and such successorwill thereafter be deemed the “Company” for purposes of this Agreement), but shall not otherwise beassignable or delegatable by the Company.
          (b) This Agreement shall inure to the benefit of and be enforceable by the Indemnitee’spersonal or legal representatives, executors, administrators, heirs, distributees, legatees andother successors.
          (c) This Agreement is personal in nature and neither of the parties hereto shall, without theconsent of the other, assign or delegate this Agreement or any rights or obligations hereunderexcept as expressly provided in Sections 15(a) and 15(b). Without limiting the generality oreffect of the foregoing, Indemnitee’s right to receive payments hereunder shall not be assignable,whether by pledge, creation of a security interest or otherwise, other than by a transfer by theIndemnitee’s will or by the laws of descent and distribution, and, in the event of any attemptedassignment or transfer contrary to this Section 15(c), the Company shall have no liability to payany amount so attempted to be assigned or transferred.
     16. Notices. For all purposes of this Agreement, all communications, including withoutlimitation notices, consents, requests or approvals, required or permitted to be given hereundershall be in writing and shall be deemed to have been duly given when hand delivered or dispatchedby electronic facsimile transmission (with receipt thereof electronically confirmed), or fivebusiness days after having been mailed by United States registered or certified mail, returnreceipt requested, postage prepaid or one business day after having been sent for next-day deliveryby a nationally recognized overnight courier service, addressed to the Company (to the attention ofthe Secretary of the Company) and to Indemnitee at the applicable address shown on the signaturepage hereto, or to such other address as any party may have furnished to the other in writing andin accordance herewith, except that notices of changes of address will be effective only uponreceipt.
     17. Governing Law. The validity, interpretation, construction and performance of thisAgreement shall be governed by and construed in accordance with the substantive laws of the Stateof North Carolina, without giving effect to the principles of conflict of laws of such State. TheCompany and Indemnitee each hereby irrevocably consent to the jurisdiction of the courts of theState of North Carolina for all purposes in connection with any action or proceeding which arisesout of or relates to this Agreement and agree that any action instituted under this Agreement shallbe brought only in the courts of the State of North Carolina. As used in this Agreement,references to “the courts of the State of North Carolina” will mean the North Carolina BusinessCourt or such other North Carolina court as may succeed the North Carolina Business Court as aforum for cases involving issues of corporate and commercial law. In the event that the NorthCarolina Business Court is abolished without a successor, references to “the courts of the State ofNorth Carolina” will mean either the Superior Court of Forsyth County, North Carolina or the UnitedStates District Court for the Middle District of North Carolina.

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     18. Validity. If any provision of this Agreement or the application of any provision hereofto any person or circumstance is held invalid, unenforceable or otherwise illegal, the remainder ofthis Agreement and the application of such provision to any other person or circumstance shall notbe affected, and the provision so held to be invalid, unenforceable or otherwise illegal shall bereformed to the extent, and only to the extent, necessary to make it enforceable, valid or legal.In the event that any court or other adjudicative body shall decline to reform any provision ofthis Agreement held to be invalid, unenforceable or otherwise illegal as contemplated by theimmediately preceding sentence, the parties thereto shall take all such action as may be necessaryor appropriate to replace the provision so held to be invalid, unenforceable or otherwise illegalwith one or more alternative provisions that effectuate the purpose and intent of the originalprovisions of this Agreement as fully as possible without being invalid, unenforceable or otherwiseillegal.
     19. Miscellaneous. No provision of this Agreement may be waived, modified or dischargedunless such waiver, modification or discharge is agreed to in writing signed by Indemnitee and theCompany. No waiver by either party hereto at any time of any breach by the other party hereto orcompliance with any condition or provision of this Agreement to be performed by such other partyshall be deemed a waiver of similar or dissimilar provisions or conditions at the same or at anyprior or subsequent time. No agreements or representations, oral or otherwise, expressed orimplied with respect to the subject matter hereof have been made by either party that are not setforth expressly in this Agreement. References to Sections are to references to Sections of thisAgreement.
     20. Legal Fees and Expenses. It is the intent of the Company that Indemnitee not be requiredto incur legal fees and or other Expenses associated with the interpretation, enforcement ordefense of Indemnitee’s rights under this Agreement by litigation or otherwise because the cost andexpense thereof would substantially detract from the benefits intended to be extended to Indemniteehereunder. Accordingly, without limiting the generality or effect of any other provision hereof,if it should appear to Indemnitee that the Company has failed to comply with any of its obligationsunder this Agreement or in the event that the Company or any other person takes or threatens totake any action to declare this Agreement void or unenforceable, or institutes any litigation orother action or proceeding designed to deny, or to recover from, Indemnitee the benefits providedor intended to be provided to Indemnitee hereunder, the Company irrevocably authorizes theIndemnitee from time to time to retain counsel of Indemnitee’s choice, at the expense of theCompany as hereafter provided, to advise and represent Indemnitee in connection with any suchinterpretation, enforcement or defense, including without limitation the initiation or defense ofany litigation or other legal action, whether by or against the Company or any director, officer,stockholder or other person affiliated with the Company, in any jurisdiction. Notwithstanding anyexisting or prior attorney-client relationship between the Company and such counsel, the Companyirrevocably consents to Indemnitee’s entering into an attorney-client relationship with suchcounsel, and in that connection the Company and Indemnitee agree that a confidential relationshipshall exist between Indemnitee and such counsel. Without respect to whether Indemnitee prevails,in whole or in part, in connection with any of the foregoing, the Company will pay and be solelyfinancially responsible for any and all attorneys’ and related fees and expenses incurred byIndemnitee in connection with any of the foregoing.

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     21. Certain Interpretive Matters. Unless the context of this Agreement otherwise requires,(a) “it” or “its” or words of any gender include each other gender, (b) words using the singular orplural number also include the plural or singular number, respectively, (c) the terms “hereof,”“herein,” “hereby” and derivative or similar words refer to this entire Agreement, (d) the terms“Article,” “Section,” “Annex” or “Exhibit” refer to the specified Article, Section, Annex orExhibit of or to this Agreement, (e) the terms “include,” “includes” and “including” will be deemedto be followed by the words “without limitation” (whether or not so expressed), and (f) the word“or” is disjunctive but not exclusive. Whenever this Agreement refers to a number of days, suchnumber will refer to calendar days unless business days are specified and whenever action must betaken (including the giving of notice or the delivery of documents) under this Agreement during acertain period of time or by a particular date that ends or occurs on a non-business day, then suchperiod or date will be extended until the immediately following business day. As used herein,“business day” means any day other than Saturday, Sunday or a United States federal holiday.
     22. Counterparts. This Agreement may be executed in one or more counterparts, each of whichwill be deemed to be an original but all of which together shall constitute one and the sameagreement.
     23. Prospective Effect. Notwithstanding anything to the contrary contained anywhere in thisAgreement, in no event will this Agreement be deemed to apply to any Claim existing againstIndemnitee prior to the date of this Agreement, any Losses incurred by Indemnitee prior to the dateof this Agreement, or any Losses relating to any Claim existing against Indemnitee prior to thedate of this Agreement.
[Signatures Appear On Following Page]

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     IN WITNESS WHEREOF, Indemnitee has executed and the Company has caused its duly authorizedrepresentative to execute this Agreement as of the date first above written.
             
    KRISPY KREME DOUGHNUTS, INC.
370 Knollwood Street, Suite 500
Winston-Salem, NC 27103

   
 
           
 
           
 
  By:    

 


   
 
  Name:    

 


   
 
  Title:    

 


   
 
           
    [INDEMNITEE]    
    [Address]    
 
           
 
           
         
    [Indemnitee]    

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