EMPLOYMENT AGREEMENT

EMPLOYMENT
AGREEMENT (Agreement) dated as of November 7, 2007 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 Kenneth J. Hudson (the Executive).

The parties hereto agree as
follows:

ARTICLE 1

DEFINITIONS

SECTION
1.01.Definitions. For purposes of this Agreement, the following terms have the meanings
set forth below:

Base Salary has the meaning set forth
in Section 4.01.

Board means the Board of Directors of
the Company.

Cause shall mean (i) the Executives failure or refusal to perform the
Executives lawful and proper duties hereunder (other than as a result of total
or partial incapacity due to physical or mental illness or a court or
governmental order), (ii) the Executives conviction of or plea ofnolo contendereto any felony (other than a traffic infraction), (iii) an act or acts on
the Executives part constituting fraud, theft or embezzlement or that otherwise
constitutes a felony under the laws of the United States or any state thereof
which results or was intended to result directly or indirectly in gain or
personal enrichment by the Executive at the expense of the Companies, or (iv)
the Executives insubordination to the Companies most senior executive officer
or willful violation of any material provision of the code of ethics of the
Companies applicable to the Executive. In the case of any item described in the
previous sentence, the Executive shall be given written notice of the alleged
act or omission constituting Cause, which notice shall set forth in reasonable
detail the reason or reasons that the Board believes the Executive is to be
terminated for Cause, including any act or omission that is the basis for the
decision to terminate the Executive. In the case of an act or omission described
in clause (i) or (iv) of the definition of Cause, (A) if reasonably capable of
being cured, the Executive shall be given 30 days from the date of such notice
to effect a cure of such alleged act or omission constituting Cause which,
upon such cure to the reasonable satisfaction of the Board, shall no longer
constitute a basis for Cause, and (B) the Executive shall be given an
opportunity to make a presentation to the Board (accompanied by counsel or other
representative, if the Executive so desires) at a meeting of the Board held
promptly following such 30-day cure period if the Board intends to determine
that no cure has occurred. At or following such meeting, the Board shall
determine whether or not to terminate the Executive for Cause and shall notify
the Executive in writing of its determination and the effective date of such
termination (which date may be no earlier than the date of the aforementioned
Board meeting).

Change in Control means any of the
following events:

(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;

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(b)
consummation of (i) a merger or consolidation involving the Company if the
shareholders of the Company, immediately before such merger or consolidation do
not, as a result of such merger or consolidation, own, directly or indirectly,
more than fifty percent (50%) of the combined voting power of the then
outstanding voting securities of the corporation resulting from such merger or
consolidation in substantially the same proportion as their ownership of the
combined voting power of the voting securities of the Company outstanding
immediately before such merger or consolidation, or (ii) a sale or other
disposition of all or substantially all of the assets of the Company other than
to a Person which is owned directly or indirectly by the shareholders of the
Company in the same proportion as their ownership of stock in the
Company;

(c) a change
in the composition of the Board such that the individuals who, as of the
Effective Date, constitute the Board (such Board shall be hereinafter referred
to as the Incumbent Board) cease for any reason to constitute at least a
majority of the Board; provided, however, for purposes of this definition, that
any individual who becomes a member of the Board subsequent to the Effective
Date whose election, or nomination for election by the Companys shareholders,
was approved by a vote of at least a majority of those individuals who are
members of the Board and who were also members of the Incumbent Board (or deemed
to be such pursuant to this proviso) shall be considered as though such
individual were a member of the Incumbent Board; provided further, however, that
any such individual whose initial assumption of office occurs as a result of
either an actual or threatened election contest (as such terms are used in Rule
14a-11 of Regulation 14A promulgated under the Exchange Act, including any
successor to such Rule), or other actual or threatened solicitation or proxies
or consents by or on behalf of a Person other than the Board, shall not be so
considered as a member of the Incumbent Board; or

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

Code means the Internal Revenue Code
of 1986, as amended.

Confidential
Information means information that is not
generally known to the public and that was or is used, developed or obtained by
the Company or its Subsidiaries in connection with the business of the Company
and its Subsidiaries and which constitutes trade secrets or information which
they have attempted to protect, which may include, but is not limited to, trade
know-how, customer information, supplier information, cost and pricing
information, marketing and sales techniques, strategies and programs, computer
programs and software and financial information. It shall not include
information (a) required to be disclosed by court or administrative order; (b)
lawfully obtainable from other sources or which is in the public domain through
no fault of the Executive; or (c) the disclosure of which is consented to in
writing by the Company.

Date of Termination has the meaning
set forth in Section 5.07.

Effective Date has the meaning set
forth in Section 2.01.

Employment Period has the meaning set
forth in Section 2.01.

Exchange Act means the Securities
Exchange Act of 1934, as amended.

Good Reason shall mean (i) the failure of the Companies to pay any material amount
of compensation to the Executive when due hereunder, (ii) the Executive is no
longer the most senior human resources officer of (A) the Company or (B) in the
event of a merger, consolidation or other business combination involving the
Company, the successor to the Companys business or assets or (C) if all or
substantially all of the voting stock of the Company is held by another public
company, such public company, (iii) the assignment to the Executive of any
duties or responsibilities materially inconsistent with the Executives status
under clause (ii) of this sentence or his failure at any time to report directly
to the most senior executive officer of the applicable company described in such
clause (ii), (iv) 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, (v) any material breach by
the Companies of this Agreement, or (vi) the term of the Employment Period
ending as a result

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of the Companies giving the Executive
notice of nonextension of the term of this Agreement in accordance with Section
5.01 solely at either the end of the initial term or the end of the first,
second or third one year extensions of the term under Section 5.01 (but, for the
avoidance of doubt, not at the end of any further extension of the term);
provided, however, that for any of the foregoing to constitute Good Reason, the
Executive must provide written notification of his intention to resign within 60
days after the Executive knows or has reason to know of the occurrence of any
such event, and the Companies shall have 30 days (10 days in the case of a
material breach related to payment of any amounts due hereunder) from the date
of receipt of such notice to effect a cure of the condition constituting Good
Reason, and, upon cure thereof by the Companies, such event shall no longer
constitute Good Reason.

Notice of Termination has the meaning
set forth in Section 5.06.

Permanent Disability means the Executive becomes permanently disabled within the
meaning of the long-term disability plan of the Companies applicable to the
Executive, and the Executive commences to receive benefits under such
plan.

Person means an individual, a partnership, a corporation, a limited liability
company, an association, a joint stock company, an estate, a trust, a joint
venture, an unincorporated organization or a governmental entity or any
department, agency or political subdivision thereof.

Reimbursable Expenses has the meaning
set forth in Section 4.04.

Securities Act means the Securities
Act of 1933, as amended.

Subsidiary or Subsidiaries means, with respect to any Person, any corporation,
partnership, limited liability company, association or other business entity of
which (a) if a corporation, 50 percent or more of the total voting power of
shares of stock entitled (without regard to the occurrence of any contingency)
to vote in the election of directors, managers or trustees thereof is at the
time owned or controlled, directly or indirectly, by that Person or one or more
of the other Subsidiaries of that Person or combination thereof; or (b) if a
partnership, limited liability company, association or other business entity, 50
percent or more of the partnership or other similar ownership interests thereof
are at the time owned or controlled, directly or indirectly, by any Person or
one or more Subsidiaries of that Person or a combination thereof. For purposes
of this definition, a Person or Persons will be deemed to have a 50 percent or
more ownership interest in a partnership, limited liability company, association
or other business entity if such Person or Persons are allocated 50 percent or
more of partnership, limited liability company, association or other business
entity gains or losses or control the managing director or member or general
partner of such partnership, limited liability company, association or other
business entity.

ARTICLE 2

EMPLOYMENT

SECTION
2.01.Employment. The Executive is a current employee of KKDC and a current officer of
the Company. However, under this Agreement, and beginning the Effective Date,
both Companies shall employ the Executive, and the Executive shall accept
employment with the Companies, upon the terms and conditions set forth in this
Agreement for the new period beginning November 7, 2007 (the Effective Date) and ending
as provided in Section 5.01 (the Employment
Period).

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ARTICLE 3

POSITION AND DUTIES

SECTION
3.01.Position and Duties. During the Employment Period, the Executive shall serve as
Senior Vice President of Human Resources and Organizational Development of the
Company reporting directly to the most senior executive officer and shall be the
Companys most senior human resources officer. During the Employment Period, the
Executive also shall serve as Senior Vice President of Human Resources and
Organizational Development of KKDC and shall be KKDCs most senior human
resources officer. The Executive shall have such responsibilities, powers and
duties as may from time to time be prescribed by the Board or the most senior
executive officer of the Companies;providedthat such responsibilities,
powers and duties are substantially consistent with those customarily assigned
to individuals serving in such position at comparable companies or as may be
reasonably required for the proper conduct of the business of the Companies.
During the Employment Period, the Executive shall devote substantially all of
his working time and efforts to the business and affairs of the Company and its
Subsidiaries. The Executive shall not directly or indirectly render any services
of a business, commercial or professional nature to any other person or
organization not related to the business of the Company or its Subsidiaries,
whether for compensation or otherwise, without the prior approval of the Board;
provided, however, the Executive may serve on the board of directors of one
for-profit corporation with the prior approval of the Board, which will not be
unreasonably withheld, and the Executive may serve as a director of
not-for-profit organizations or engage in other charitable, civic or educational
activities, so long as the activities described in this proviso do not interfere
with the Executives performance of his duties hereunder or result in any
conflict of interest with the Companies.

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 $250,000 per annum (the Base Salary). The Base Salary will be
payable in accordance with the normal payroll practices of the Companies.
Annually during the Employment Period the Company shall review with the
Executive his job performance and compensation, and if deemed appropriate by the
Board or its Compensation Committee, in their discretion, the Executives Base
Salary may be increased but not decreased. After any such increase, the term
Base Salary as used in this Agreement will thereafter refer to the increased
amount.

SECTION
4.02.Bonuses. In addition to Base Salary, the Executive shall be eligible to be
considered for an annual bonus, and the Executives annual target bonus shall be
equal to 40% of Base Salary. The Compensation Committee of the Board and the
Board shall set targets with respect to and otherwise determine Executives
bonus in accordance with the Companys then current incentive plans.

SECTION
4.03.Benefits. During the Employment Period, the Executive shall be entitled to
participate in all employee benefit, perquisite and fringe benefit plans and
arrangements made available by the Companies to their executives and key
management employees upon the terms and subject to the conditions set forth in
the applicable plan or arrangement. Such benefits shall include medical, life
and disability insurance provided in accordance with the policies of the
Companies. Executive shall be entitled to four weeks of paid vacation annually
during the Employment Period.

SECTION
4.04.Expenses. The Companies shall reimburse the Executive for all reasonable expenses
incurred by him in the course of performing his duties under this Agreement
which are consistent with the Companies policies in effect from time to time
with respect to travel, entertainment and other business expenses(Reimbursable
Expenses), subject to the Companies
requirements with respect to reporting and documentation of expenses.

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ARTICLE 5

TERM AND TERMINATION

SECTION
5.01.Term.
The Employment Period will terminate on November 7, 2010, 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 November 7, 2010 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.

SECTION
5.02.Termination Due to Death or Permanent
Disability. If the Employment Period shall be
terminated due to death or Permanent Disability of the Executive, the Executive
(or his estate or legal representative) shall be entitled solely to the
following: (i) Base Salary through the Date of Termination; and (ii) medical
benefits as provided in Section 5.05 below. The Executives entitlements under
any other benefit plan or program shall be as determined thereunder. In
addition, promptly following any such termination, the Executive (or his estate
or legal representative) shall be reimbursed for all Reimbursable Expenses
incurred by the Executive prior to such termination.

SECTION
5.03.Termination for Good Reason or Without
Cause. Except as otherwise set forth in
Section 5.09 below, if the Employment Period shall be terminated (a) by the
Executive for Good Reason, or (b) by the Companies not for Cause, provided the
Executive has executed an irrevocable (except to the extent required by law, and
to the extent required by law to be revocable, has not revoked) general release
of claims, in the form attached hereto as Exhibit A, the Executive shall be
entitled solely to the following: (i) Base Salary through the Date of
Termination; (ii) an amount equal to one times the Base Salary, provided that,
the Executive shall be entitled to any unpaid amounts only if the Executive has
not breached and does not breach the provisions of Sections 6.01, 7.01, 8.01 or
9 below; (iii) a bonus for the year of termination of employment equal to the
Executives target annual bonus for such year pro rated for the number of full
months during the bonus year prior to such termination of employment, payable as
soon as practicable following such termination of employment; and (iv) 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 payable in equal monthly
installments for a period of 12 months commencing on the first month anniversary
of the Date of Termination, except, to the extent required by Section 409A of
the Code, amounts otherwise payable under clause (ii) within six months after
the Executives termination of employment shall be deferred to and paid on the
day following the six month anniversary of such termination of employment. In
addition, promptly following any such termination, the Executive shall be
reimbursed for all Reimbursable Expenses incurred by the Executive prior to such
termination.

SECTION
5.04.Termination for Cause or Other Than Good
Reason. If the Employment Period shall be
terminated (a) by the Companies for Cause, or (b) as a result of the Executives
resignation or leaving of his employment other than for Good Reason, the
Executive shall be entitled to receive solely Base Salary through the Date of
Termination and reimbursement of all Reimbursable Expenses incurred by the
Executive prior to such termination. The Executives rights under the benefit
plans and programs shall be as determined thereunder. A voluntary resignation by
the Executive shall not be deemed to be a breach of this Agreement.

SECTION
5.05.Benefits. If the Employment Period is terminated as a result of a termination of
employment as specified in Section 5.02, 5.03 or 5.09, the Executive and his
covered dependents shall continue to receive medical insurance coverage benefits
from the Companies, with the same contribution toward such coverage from the
Executive or his estate, for a period equal to the lesser of (x) eighteen months
following the Date of Termination, or (y) until the Executive is provided by
another employer with benefits substantially comparable to the benefits provided
by the Companies medical plan. Furthermore, in the event of Executives
Permanent Disability, insurance benefits will continue under the Companies long
term disability plan in accordance with its terms.

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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 (a) if the Employment
Period is terminated as a result of a Permanent Disability, five days after a
Notice of Termination is given, (b) if the Employment Period is terminated as a
result of his death, on the date of his death, and (c) if the Employment Period
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 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 an irrevocable (except to the extent required by law,
and to the extent required by law to be revocable, has not revoked) general
release of claims, in the form attached hereto as Exhibit A, the Executive shall
be entitled solely to the following: (i) Base Salary through the Date of
Termination; (ii) an amount equal to 1.25 times the sum of his Base Salary and
his target annual 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, 8.01 or 9
below; (iii) a bonus for the year of termination of employment equal to the
Executives target annual bonus for such year pro rated for the number of full
months during the bonus year prior to such termination of employment; and (iv)
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. The amounts due under clauses (i), (ii) and (iii) of
this Section 5.09 shall be paid in a lump sum upon termination of
employment.

ARTICLE 6

CONFIDENTIAL INFORMATION

SECTION
6.01.Nondisclosure and Nonuse of Confidential
Information. The Executive will not disclose
or use at any time during or after the Employment Period any Confidential
Information of which the Executive is or becomes aware, whether or not such
information is developed by him, except to the extent he reasonably believes
that such disclosure or use is directly related to and appropriate in connection
with the Executives performance of duties assigned to the Executive pursuant to
this Agreement. Under all circumstances and at all times, the Executive will
take all appropriate steps to safeguard Confidential Information in his
possession and to protect it against disclosure, misuse, espionage, loss and
theft. Executive also agrees to execute and comply with such other
confidentiality agreements or provisions as required of executive officers of
the Company.

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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 Executives employment hereunder).

ARTICLE 8

DELIVERY OF MATERIALS UPON TERMINATION
OF EMPLOYMENT

SECTION
8.01.Delivery of Materials upon Termination
of Employment. As requested by the Companies
from time to time, and upon the termination of the Executives employment with
the Companies for any reason, the Executive will promptly deliver to the
Companies all property of the Company or its Subsidiaries, including, without
limitation, all copies and embodiments, in whatever form or medium, of all
Confidential Information in the Executives possession or within his control
(including written records, notes, photographs, manuals, notebooks,
documentation, program listings, flow charts, magnetic media, disks, diskettes,
tapes and all other materials containing any Confidential Information)
irrespective of the location or form of such material and, if requested by the
Companies, will provide the Companies with written confirmation that to the best
of his knowledge all such materials have been delivered to the Companies or
destroyed.

ARTICLE 9

NON-COMPETITION AND
NONSOLICITATION

SECTION
9.01.Noncompetition. The Executive acknowledges that, during his employment with
the Companies, he will become familiar with trade secrets and other Confidential
Information concerning the Company and its Subsidiaries and his services will be
of special, unique and extraordinary value to the Companies. In addition, the
Executive hereby agrees that at any time during the Noncompetition Period (as
defined below), he will not directly or indirectly own, manage, control,
participate in, consult with, become employed by or otherwise render services to
any business listed on Exhibit B hereto in the Territory. During the
Noncompetition Period, the Company shall have the right to, in good faith, add
other entities which are in substantial competition with the Companies to the
list of businesses on Exhibit B, subject to the consent of the Executive which
shall not be unreasonably withheld. Notwithstanding the foregoing, if the
Executives termination of employment occurs at the end of the Employment Period
due to the Companies giving written notice after the fifth anniversary of the
Effective Date pursuant to Section 5.01 of its intention not to extend the
Employment Period, this Section 9.01 will only apply if the Companies elect and
agree in writing to pay the Executive his Base Salary and his annual target
bonus in effect for the year during which his employment is terminated for an
additional one-year period following the termination of employment, such amount
to be payable in monthly installments over the additional

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one-year period, except that, to the
extent required by Section 409A of the Code, amounts otherwise payable under
this sentence within six months after the Executives termination of employment
shall be deferred to and paid on the day following the six month anniversary of
such termination of employment. It shall not be considered a violation of this
Section 9.01 for the Executive to be a passive owner of not more than 2% of the
outstanding stock of any class of any corporation which is publicly traded, so
long as the Executive has no active participation in the business of such
corporation.

SECTION
9.02.Nonsolicitation. The Executive hereby agrees that (a) during the
Nonsolicitation Period (as defined below), the Executive will not, directly or
indirectly through another Person, induce or attempt to induce any employee of
the Company or its Subsidiaries to leave the employ of the Company or its
Subsidiaries, or in any way interfere with the relationship between the Company
or its Subsidiaries and any person employed by them at any time during such
Nonsolicitation Period, and (b) during the Nonsolicitation Period, the Executive
will not induce or attempt to induce any customer, supplier, client or other
business relation of the Company or its Subsidiaries to cease doing business
with the Company or its Subsidiaries.

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

(i) The entire United States and any other country where the
Company or any of its Subsidiaries, joint venturers, franchisees or affiliates
has operated a retail facility at which the Companys products have been sold at
any time in the one-year period ending on the last day of the Executives
employment with the Companies;

(ii) In the event that the preceding clause shall be
determined by judicial action to define too broad a territory to be enforceable,
then Territory shall mean the entire United States;

(iii) In the event that the preceding clauses shall be
determined by judicial action to define too broad a territory to be enforceable,
then Territory shall mean the states in the United States where the Company or
any of its Subsidiaries, joint venturers, franchisees or affiliates has operated
a retail facility at which the Companys products have been sold at any time in
the one-year period ending on the last day of Executives employment with the
Companies;

(iv) In the event that the preceding clauses shall be
determined by judicial action to define too broad a territory to be enforceable,
then Territory shall mean the area that includes all of the areas that are
within a 50-mile radius of any retail store location in the United States at
which the Companys products have been sold at any time in the one-year period
ending on the last day of the Executives employment with the Companies;
and

(v) In the event that the preceding clauses shall be
determined by judicial action to define too broad a territory to be enforceable,
then Territory shall mean the entire state of North Carolina.

It is also agreed that
Noncompetition Period, for purposes hereof, shall mean:

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

(ii) In the event that the preceding clause shall be
determined by judicial action to define too long a period to be enforceable,
Noncompetition Period shall mean the Employment Period and a period ending six
months after the Date of Termination.

It is also agreed that
Nonsolicitation Period, for purposes hereof, shall mean:

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

(ii)In the event that the
preceding clause shall be determined by judicial action to define too long a
period to be enforceable, Nonsolicitation Period shall mean the Employment
Period and a period ending eighteen months after the Date of
Termination;

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(iii)In the event that the
preceding clauses shall be determined by judicial action to define too long a
period to be enforceable, Nonsolicitation Period shall mean the Employment
Period and a period ending one year after the Date of Termination;
and

(iv) In the event that the preceding clauses shall be
determined by judicial action to define too long a period to be enforceable,
Nonsolicitation Period shall mean the Employment Period and a period ending
six months after the Date of Termination.

ARTICLE 10

EQUITABLE RELIEF

SECTION
10.01.Equitable Relief. The Executive acknowledges that (a) the covenants contained
herein are reasonable, (b) the Executives services are unique, and (c) a breach
or threatened breach by him of any of his covenants and agreements with the
Companies contained in Sections 6.01, 7.01, 8.01 or Article 9 could cause
irreparable harm to the Companies for which they would have no adequate remedy
at law. Accordingly, and in addition to any remedies which the Companies may
have at law, in the event of an actual or threatened breach by the Executive of
his covenants and agreements contained in Sections 6.01, 7.01, 8.01 or Article
9, the Companies shall have the absolute right to apply to any court of
competent jurisdiction for such injunctive or other equitable relief, without
the necessity to post bond, as such court may deem necessary or appropriate in
the circumstances.

ARTICLE 11

EXECUTIVE REPRESENTATION AND
INDEMNIFICATION

SECTION 11.01.Executive Representation.
The Executive hereby represents and warrants to theCompanies that (a) the execution, delivery and performance of this
Agreement by the Executive does not and will not conflict with, breach, violate
or cause a default under any contract, agreement, instrument, order, judgment or
decree to which the Executive is a party or by which he is bound, (b) the
Executive is not a party to or bound by any employment agreement, noncompetition
agreement or confidentiality agreement with any other Person, and (c) upon the
execution and delivery of this Agreement by the Companies, this Agreement will
be the valid and binding obligation of the Executive, enforceable in accordance
with its terms. Notwithstanding Section 11.02 below, in the event that any
action is brought against Executive involving any breach of any employment
agreement, noncompetition agreement or confidentiality agreement with any other
Person, the Executive shall bear his own costs incurred in defending such
action, including but not limited to court fees, arbitration costs, mediation
costs, attorneys fees and disbursements.

SECTION
11.02.General Indemnification. The Companies, jointly and severally, agree that if the
Executive is made a party, or is threatened to be made a party, to any action,
suit or proceeding, whether civil, criminal, administrative or investigative
(each, a Proceeding), by reason of the fact that he is or was a director,
officer or employee of the Company or any of its Subsidiaries or is or was
serving at the 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
Companies agree to use their 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.

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ARTICLE 12

CERTAIN ADDITIONAL PAYMENTS

SECTION
12.01. Anything in this Agreement to the contrary notwithstanding, in the event
it shall be determined that any payment, award, benefit or distribution
(including, without limitation, the acceleration of any payment, award,
distribution or benefit) by the Company or its Subsidiaries to or for the
benefit of the Executive (whether pursuant to the terms of this Agreement or
otherwise, but determined without regard to any additional payments required
under this Article 12) (a Payment) would be subject to the
excise tax imposed by Section 4999 of the Code or any corresponding provisions
of state or local tax law, or any interest or penalties are incurred by the
Executive with respect to such excise tax (such excise tax, together with any
such interest and penalties, are hereinafter collectively referred to as the
Excise Tax), then the Executive shall be entitled to receive an additional payment
(a Gross-Up Payment) in an amount such that after payment by the Executive of
all taxes (including any Excise Tax, income tax or employment tax) imposed upon
the Gross-Up Payment and any interest or penalties imposed with respect to such
taxes, the Executive retains from the Gross-Up Payment an amount equal to the
Excise Tax imposed upon the Payments. The payment of a Gross-Up Payment under
this Section 12.01 shall not be conditioned upon the Executives termination of
employment. Notwithstanding the foregoing provisions of this Section 12.01, if
it shall be determined that the Executive is entitled to a Gross-Up Payment, but
that the portion of the Payments that would be treated as parachute payments
under Section 280G of the Code does not exceed the lesser of 110% of the Safe
Harbor Amount (as defined in the following sentence) or $200,000, then no
Gross-Up Payment shall be made to the Executive and the amounts payable under
this Agreement shall be reduced so that the Payments, in the aggregate, are
reduced to the Safe Harbor Amount. The Safe Harbor Amount is the greatest
amount of payments in the nature of compensation that are contingent on a Change
in Control for purposes of Section 280G of the Code that could be paid to the
Executive without giving rise to any Excise Tax. The reduction of the amounts
payable hereunder, if applicable, shall be made by first reducing the cash
payments under Article 5 hereof. For purposes of reducing the payments to the
Safe Harbor Amount, only amounts payable under this Agreement (and no other
Payments) shall be reduced. If the reduction of the amounts payable under this
Agreement would not result in a reduction of the Payments to the Safe Harbor
Amount, no amounts payable under this Agreement shall be reduced pursuant to
this Section 12.01.

SECTION
12.02. Subject to the provisions of Section 12.03, all determinations required
to be made under this Article 12, including the determination of whether a
Gross-Up Payment is required and of the amount of any such Gross-up Payment,
shall be made by the Companys independent auditors or such other accounting
firm agreed by the parties hereto (the Accounting Firm), which shall provide
detailed supporting calculations to the Companies within 15 business days after
the receipt of notice from the Companies that the Executive has received a
Payment, or such earlier time as is requested by the Companies, provided that
any determination that an Excise Tax is payable by the Executive shall be made
on the basis of substantial authority. The Companies will promptly provide
copies of such supporting calculations to the Executive on which the Executive
may rely. The initial Gross-Up Payment, if any, as determined pursuant to this
Section 12.02, shall be paid to the Executive (or for the benefit of the
Executive to the extent of the Companies withholding obligation with respect to
applicable taxes) no later than one day prior to the due date for the payment of
any Excise Tax. If the Accounting Firm determines that no Excise Tax is payable
by the Executive, it shall furnish the Companies with a written opinion that
substantial authority exists for the Executive not to report any Excise Tax on
his Federal income tax return and, as a result, the Companies are not required
to withhold Excise Tax from payments to the Executive. The Companies will
promptly provide a copy of any such opinion to the Executive on which the
Executive may rely. Any determination by the Accounting Firm meeting the
requirements of this Section 12.02 shall be binding upon the Companies and the
Executive. As a result of the uncertainty in the application of Section 4999 of
the Code at the time of the initial determination by the Accounting Firm
hereunder, it is possible that Gross-Up Payments which will not have been made
by the Companies should have been made (Underpayment), consistent with the
calculations required to be made hereunder. In the event that the Companies
exhaust their remedies pursuant to Section 12.03 and the Executive thereafter is
required to make a payment of any Excise Tax, the Accounting Firm shall
determine the amount of the Underpayment that has occurred, and any such
Underpayment shall be promptly paid by the Companies to or for the benefit of
the Executive. The fees and disbursements of the Accounting Firm shall be paid
by the Companies.

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SECTION
12.03. The Executive shall notify the Companies in writing of any claim by the
Internal Revenue Service that, if successful, would require the payment by the
Companies of a Gross-Up Payment. Such notification shall be given as soon as
practicable but not later than ten business days after the Executive receives
written notice of such claim and shall apprise the Companies of the nature of
such claim and the date on which such Claim is requested to be paid. The
Executive shall not pay such claim prior to the expiration of the 30-day period
following the date on which it gives such notice to the Companies (or such
shorter period ending on the date that any payment of taxes with respect to such
claim is due). If the Companies notify the Executive in writing prior to the
expiration of such period that they desire to contest such claim, the Executive
shall:

(i) give the Companies any information
reasonably requested by the Companies relating to such claim,

(ii) take such action in connection with contesting such
claim as the Companies shall reasonably request in writing from time to time,
including, without limitation, accepting legal representation with respect to
such claim by an attorney reasonably selected by the Companies,

(iii)
cooperate with the Companies in good faith in order effectively to contest such
claim, and

(iv)
permit the Companies to participate in any proceedings relating to such
claim;

provided, however, that the Companies
shall bear and pay directly all costs and expenses (including additional
interest and penalties) incurred in connection with such contest and shall
indemnify and hold the Executive harmless, on an after-tax basis, for any Excise
Tax, income tax or employment tax, including interest and penalties with respect
thereto, imposed as a result of such representation and payment of costs and
expenses. Without limitation on the foregoing provisions of this Section 12.03,
the Companies shall control all proceedings taken in connection with such
contest and, at their sole option, may pursue or forgo any and all
administrative appeals, proceedings, hearings and conferences with the taxing
authority in respect of such claim and may, at their sole option, either direct
the Executive to pay the tax claimed and sue for a refund or contest the claim
in any permissible manner, and the Executive agrees to prosecute such contest to
a determination before any administrative tribunal, in a court of initial
jurisdiction and in one or more appellate courts, as the Companies shall
determine; provided, however, that if the Companies direct the Executive to pay
such claim and sue for a refund, the Companies shall advance the amount of such
payment to the Executive on an interest-free basis and shall indemnify and hold
the Executive harmless, on an after-tax basis, from any Excise Tax, income tax
or employment tax, including interest or penalties with respect thereto, imposed
with respect to such advance (except that if such a loan would not be permitted
under applicable law, the Companies may not direct the Executive to pay the
claim and sue for a refund); and further provided that any extension of the
statute of limitations relating to the payment of taxes for the taxable year of
the Executive with respect to which such contested amount is claimed to be due
is limited solely to such contested amount. Furthermore, the Companies control
of the contest shall be limited to issues with respect to which a Gross-Up
Payment would be payable hereunder and the Executive shall be entitled to settle
or contest, as the case may be, any other issue raised by the Internal Revenue
Service or any other taxing authority.

SECTION
12.04. If, after the receipt by the Executive of an amount advanced by the
Companies pursuant to Section 12.03, the Executive becomes entitled to receive
any refund with respect to such claim, the Executive shall (subject to the
compliance by the Companies with the requirements of Section 12.03) promptly pay
to the Companies the amount of such refund (together with any interest paid or
credited thereon after taxes applicable thereto). If, after the receipt by the
Executive of an amount advanced by the Companies pursuant to Section 12.03, a
determination is made that the Executive shall not be entitled to any refund
with respect to such claim and the Companies do not notify the Executive in
writing of their intent to contest such denial of refund prior to the expiration
of 30 days after such determination, then such advance shall be forgiven and
shall not be required to be repaid and the amount of such advance shall offset,
to the extent thereof, the amount of the Gross-Up Payment required to be
paid.

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ARTICLE 13

MISCELLANEOUS

SECTION
13.01.Binding Arbitration. The parties agree that, except as provided in Articles 9 and
10 above, any disputes under this Agreement shall be settled exclusively by
arbitration conducted in Winston-Salem, North Carolina. Except to the extent
inconsistent with this Agreement, such arbitration shall be conducted in
accordance with the National Rules for the Resolution of Employment Disputes of
the American Arbitration Association then in effect at the time of the
arbitration and otherwise in accordance with principles which would be applied
by a court of law or equity. The arbitrator shall be acceptable to both the
Companies and the Executive. If the parties cannot agree on an acceptable
arbitrator, the dispute shall be decided by a panel of three arbitrators, one
appointed by each of the parties and the third appointed by the other two
arbitrators or if the two arbitrators do not agree, appointed by the American
Arbitration Association. The costs of arbitration incurred by the Executive (or
his beneficiaries) will be borne by the Companies (including, without
limitation, reasonable attorneys fees and other reasonable charges of counsel)
(i) if the arbitration occurs prior to a Change in Control, if the Executive
prevails on a majority of the material issues in the dispute, and (ii) if the
arbitration occurs after a Change in Control, if the Executive prevails on at
least one material issue in the dispute. Judgment upon the final award rendered
by such arbitrator(s) may be entered in any court having jurisdiction
thereof.

SECTION
13.02.Consent to Amendments; No
Waivers. The provisions of this Agreement may
be amended or waived only by a written agreement executed and delivered by the
Companies and the Executive. No other course of dealing between the parties to
this Agreement or any delay in exercising any rights hereunder will operate as a
waiver of any rights of any such parties.

SECTION
13.03.Successors and Assigns. All covenants and agreements contained in this Agreement by
or on behalf of any of the parties hereto will bind and inure to the benefit of
the respective successors, assigns, heirs, executors and estates of the parties
hereto whether so expressed or not, provided that the Executive may not assign
his rights or delegate his obligations under this Agreement without the written
consent of the Companies (other than to his estate or heirs) and the Company may
assign this Agreement only to a successor to all or substantially all of the
assets of the Company.

SECTION
13.04.Severability. Whenever possible, each provision of this Agreement will be interpreted
in such manner as to be effective and valid under applicable law, but if any
provision of this Agreement is held to be prohibited by or invalid under
applicable law, such provision will be ineffective only to the extent of such
prohibition or invalidity, without invalidating the remainder of this
Agreement.

SECTION
13.05.Counterparts. This Agreement may be executed simultaneously in two or more
counterparts, any one of which need not contain the signatures of more than one
party, but all of which counterparts taken together will constitute one and the
same agreement.

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.

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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 themanner set forth herein.

If to the
Companies:       Krispy Kreme Doughnuts,
Inc.Krispy Kreme Doughnut
Corporation                                               Suite
500                                               370
Knollwood
Street                                               Winston-Salem,
NC 27103

Attn:
General Counsel

or to such other address or to the
attention of such other person as the recipient party has specified by prior
written notice to the sending party.

SECTION
13.08.Withholding. The Companies may withhold from any amounts payable under this
Agreement such federal, state, local or foreign taxes as shall be required to be
withheld pursuant to any applicable law or regulation.

SECTION
13.09.No Third-Party
Beneficiary. This Agreement will not confer
any rights or remedies upon any person other than the Companies, the Executive
and their respective heirs, executors, successors and assigns.

SECTION
13.10.Entire Agreement. This Agreement (including any other documents referred to
herein) constitutes the entire agreement among the parties and supersedes any
prior understandings, agreements or representations by or among the parties,
written or oral, that may have related in any way to the subject matter
hereof.

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

SECTION
13.12.Survival. Sections 6.01, 7.01, 8.01 and Articles 5, 9, 11, 12 and 13 will survive
and continue in full force in accordance with their terms notwithstanding any
termination of the Employment Period, and the Agreement shall otherwise remain
in full force to the extent necessary to enforce any rights and obligations
arising hereunder during the Employment Period.

SECTION
13.13.GOVERNING LAW. ALL QUESTIONS CONCERNING THE CONSTRUCTION, VALIDITY AND
INTERPRETATION OF THIS AGREEMENT WILL BE GOVERNED BY THE INTERNAL LAW OF NORTH
CAROLINA, WITHOUT REGARD TO PRINCIPLES OF CONFLICT OF LAWS.

SECTION
13.14.Section 409A. It is intended that this Agreement will comply with Section 409A of the
Code (and any regulations and guidelines issued thereunder) to the extent the
Agreement is subject thereto, and the Agreement shall be interpreted on a basis
consistent with such intent. If an amendment of the Agreement is necessary in
order for it to comply with Section 409A, the parties hereto will negotiate in
good faith to amend the Agreement in a manner that preserves the original intent
of the parties to the extent reasonably possible.

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SECTION
13.15.Representations of the
Companies. The Companies represent and
warrant that (i) the execution, delivery and performance of this Agreement by
the Companies has been fully and validly authorized by all necessary corporate
action, (ii) the officer(s) signing this Agreement on behalf of the Companies is
duly authorized to do so, (iii) the execution, delivery and performance of this
Agreement does not violate any applicable law, regulation, order, judgment or
decree or any agreement, plan or corporate governance document to which the
Companies are a party or by which they are bound, and (iv) upon execution and
delivery of this Agreement by the parties hereto, it 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.

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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/ Daryl G. BrewsterDaryl G.
      BrewsterChief Executive
      OfficerKRISPY KREME
      DOUGHNUT CORPORATIONBy:
    /s/ Douglas R. MuirDouglas R. MuirChief Financial
      OfficerEXECUTIVE/s/ Kenneth J. HudsonKenneth J.
      Hudson


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