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                                                                   EXHIBIT 10.34

                              EMPLOYMENT AGREEMENT

         THIS EMPLOYMENT AGREEMENT (THE "AGREEMENT") is made this 1st day of
February, 2001, and is effective the 1st day of February, 2001, by and between
KRISPY KREME DOUGHNUTS, INC., a North Carolina corporation (the "Company"), and
JOHN W. TATE (the "Executive").

                                     RECITAL

         The Executive is being hired as Chief Financial Officer and President
of Krispy Kreme Manufacturing and Distribution, and the parties have negotiated
this Agreement in consideration of the Executive's valuable services and
leadership.

         NOW THEREFORE, in consideration of the mutual promises and covenants
herein contained, the parties do hereby agree as follow:

         1. EFFECTIVE DATE. This Agreement shall be effective upon, and from and
after, the date set forth above.

         2. DEFINITIONS. As used herein, the following terms shall have the
following meanings:

                  (a) "Disability" shall mean the Executive becoming disabled
         and unable to continue his employment with the Company as defined in
         the Company's then applicable disability policy for the Senior
         Management of the Company.

                  (b) "Discharge" shall mean the termination by the Company of
         the Executive's employment during the Period of Employment for any
         reason other than (i) Good Cause, (ii) death of the Executive, (iii)
         Disability of the Executive, or (iv) Retirement of the Executive.

                  (c) "Expiration Date" means the date that the Period of
         Employment (as it may have been extended) expires.

                  (d) "Good Cause" has its meaning as defined in Section 6
         hereof.

                  (e) "Period of Employment" shall be for a term of three years
         beginning February 1, 2001 and ending February 1, 2004; provided,
         however, that commencing February 1, 2002, the Executive's Period of
         Employment shall automatically be extended for successive one-year
         periods each year as of February 1st of each year unless the Company
         gives Executive written notice of nonextension on or before that date.

                  (f) "Retirement" shall mean a time when the sum of the
         Executive's age and employment with the Company equals or exceeds 65.


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                  (g) "Senior Management" shall mean the senior executive
         management of the Company currently consisting of the chief executive
         officer, the president, and the executive vice presidents.

                  (h) "Stock Option Plan" shall mean the Krispy Kreme Doughnut
         Corporation 1998 Stock Option Plan and/or the Krispy Kreme Doughnuts,
         Inc. 2000 Stock Incentive Plan.

                  (i) "Termination Date" shall mean:

                           (i) If the Executive's employment is terminated by
                  reason of death, the Executive's date of death;

                           (ii) If the Executive's employment is terminated by
                  reason of Retirement, the date of his Retirement;

                           (iii) If the Executive's employment is terminated by
                  reason of Disability, the date of his Disability;

                           (iv) If the Executive's employment is terminated for
                  Good Cause, the date specified in the written notice of
                  termination given by the Company pursuant to Section 6(a);

                           (v) If the Executive's employment is terminated by
                  reason of a Discharge, the effective date of Discharge;

                           (vi) If the Executive's employment is terminated by
                  reason of non-extension of the Period of Employment, the
                  Expiration Date; and

                           (vii) If the Executive voluntarily terminates his
                  employment as permitted by Section 6(b), the effective date of
                  his termination of employment.

         3. EMPLOYMENT; PERIOD OF EMPLOYMENT.

         The Company hereby employs the Executive, and the Executive hereby
accepts employment by the Company, for the Period of Employment, in the position
and with the duties and responsibilities set forth in Section 4, upon the terms
and subject to the conditions of this Agreement.

         4. POSITION, DUTIES AND RESPONSIBILITIES. During the Period of
Employment, the Executive shall

                  (a) serve as Chief Financial Officer and President of Krispy
         Kreme Manufacturing and Distribution or in such other Senior Management
         position as may be assigned to him by the Board of Directors. The
         Executive shall be employed hereunder in Forsyth County, North Carolina




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         and he shall not be required to relocate his residence or principal
         office to any place outside Forsyth County, North Carolina without his
         consent; and

                  (b) devote his best efforts to the furtherance of the interest
         of the Company and the performance of his duties hereunder and agrees
         not to engage in any competition whatsoever, either directly or
         indirectly, with the Company or any of its subsidiaries or affiliates.
         The Executive shall be allowed holiday and vacation periods, leaves for
         periods of illness or incapacity and personal leaves in accordance with
         the Company's regular practices for members of Senior Management.

         5. COMPENSATION, COMPENSATION PLANS AND BENEFITS. During the Period of
Employment, the Executive shall be compensated as follows:

                  (a) He shall receive an annual base salary equal to $330,000,
         with annual increases in accordance with the Company's regular
         practices for members of Senior Management. In addition, he shall
         receive certain non-incentive compensation (including automobile
         allowance). Such compensation shall be paid in accordance with the
         Company's regular schedule for payment of salaried employees.

                  (b) He shall receive such other bonuses as are afforded the
         Company's Senior Management and be eligible to participate in all of
         the Company's executive compensation plans provided to members of
         Senior Management of the Company from time to time.

                  (c) He shall be entitled to participate in and receive other
         employee benefits, which may include, but are not limited to, benefits
         under any life, health, accident, disability, medical, dental and
         hospitalization insurance plans, use of a Company automobile or an
         automobile allowance, and other perquisites and benefits, as are
         provided to members of Senior Management of the Company from time to
         time.

                  (d) He shall be entitled to be reimbursed for the reasonable
         and necessary out-of-pocket expenses, including entertainment, travel
         and similar items, incurred by him in performing his duties hereunder
         upon presentation of such documentation thereof as the Company may
         normally and customarily require of the members of Senior Management.

                  (e) The Company agrees to pay the Executive's dues and
         assessments for membership in either Forsyth Country Club or Oldtown
         Club, and in the Piedmont Club.

         6. TERMINATION OF EMPLOYMENT. During the Period of Employment,
Executive's employment may be terminated in the following manner:

                  (a) Termination for Good Cause.

                           (i) The Company may terminate the Executive's
                  employment for Good Cause. Termination of employment shall be
                  deemed to have been for Good Cause if (i) the Executive
                  habitually neglects or refuses to do his duties and fails to
                  cure such neglect within ten (10) days after having received



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                  written notice of same from the Company or (ii) the Executive
                  commits (a) acts constituting a felony or (b) acts of gross
                  negligence or willful misconduct to the material detriment of
                  the Company.

                           (ii) Termination by the Company for Good Cause may be
                  made only by written notice of termination from the Company to
                  the Executive that has been specifically approved in advance
                  by the Board of Directors. Such notice shall set forth all
                  acts constituting such neglect or refusal to do duties or
                  gross negligence or willful misconduct as is applicable.

                  (b) Voluntary Termination.

                           The Executive may voluntarily terminate his
                  employment with the Company upon 30 days prior written notice.

                  (c) Termination by Reason of Death, Disability, or Retirement.

                           The employment of the Executive shall be terminated
                  by death, Disability or Retirement of the Executive.

         7. EFFECT OF TERMINATION.

                  (a) If the Executive's employment is terminated by reason of
         death, Retirement or voluntary termination of employment, the Company
         shall pay the Executive (or his estate in the case of his death) his
         base salary, non-incentive compensation (including automobile
         allowance), bonuses and benefits as provided in Section 5 through the
         Termination Date and (in the case of his death) a death benefit of
         $5,000. Any payments and benefits due to the Executive under employee
         benefit plans and programs of the Company, including the Stock Option
         Plan, shall be determined in accordance with the terms of such benefit
         plans and programs; provided, however, that all options held by the
         Executive under the Stock Option Plan shall become 100% vested if the
         Executive's employment is terminated by reason of death or Retirement.

                  (b) If the Executive's employment is terminated by reason of
         Disability, the Company shall pay the Executive his base salary,
         non-incentive compensation, bonuses and benefits for a period of six
         months following the date of Disability. Thereafter, this Agreement
         terminates and the Executive shall receive those benefits payable to
         him under the applicable disability insurance plan provided by the
         Company. Any payments and benefits due to the Executive under employee
         benefit plans and programs of the Company, including the Stock Option
         Plan, shall be determined in accordance with the terms of such benefit
         plans and programs; provided, however, that all options held by the
         Executive under the Stock Option Plan shall become 100% vested as of
         the Executive's termination of employment by reason of Disability.

                  (c) In the event of the Executive's Discharge by the Company,



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                           (i) the Company shall pay the Executive

                                    A. his then current annual base salary and
                           non-incentive compensation (including automobile
                           allowance) and provide the Executive with his then
                           current benefits (as provided in Section 5) through
                           the Expiration Date pursuant to Section 2(e) to the
                           extent permitted by law and unless Executive elects a
                           lump sum payment pursuant to subparagraph (f); and

                                    B. within thirty (30) days from the
                           Termination Date (1) a lump sum equal to Executive's
                           then current monthly base salary amount multiplied by
                           the number of months that have elapsed between the
                           month of Discharge and the preceding February, and
                           (2) a lump sum amount equal to the sum of adding
                           three times the Executive's bonus calculated at 50%
                           of his annualized base salary for the then current
                           fiscal year, discounted at the rate of six percent
                           (6%) per annum. The latter payment is full and final
                           satisfaction of all the Company's obligations for
                           bonus and/or other incentive payments.

                           (ii) Any payments and benefits due to executive under
                  the employee benefit plans and programs of the Company,
                  including the Stock Option Plan, shall be determined in
                  accordance with the terms of such benefit plans and programs;
                  provided, however, that all options held by the Executive
                  under the Stock Option Plan shall become 100% vested as of the
                  Termination Date.

                  (d) In the event of the Company's nonextension of the
         Employment Period, Executive shall continue to be employed by the
         Company pursuant to this Agreement through the Expiration Date, and his
         employment shall be terminated as of the Expiration Date. Then, the
         following provisions shall apply:

                           (i) within thirty (30) days from the Termination
                  Date, the Company shall pay Executive (1) a lump sum equal to
                  Executive's then current annual base salary, and (2) a lump
                  sum amount equal to three times the Executive's bonus
                  calculated at 50% of his base salary for the then current
                  fiscal year discounted at the rate of six percent (6) per
                  annum. The latter payment is full and final satisfaction of
                  all the company's obligations for bonus and/or other incentive
                  payments.

                           (ii) Any payments and benefits due to Executive under
                  employee benefit plans and programs of the Company, including
                  the Stock Option Plan, shall be determined in accordance with
                  the terms of such benefit plans and programs; provided,
                  however, that all options held by the Executive under the
                  Stock Option Plan shall become 100% vested as of the
                  Expiration Date.

                  It is further provided, however, that within sixty (60) days
                  of the date of notification by the Company to the Executive of


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                  its intention not to extend the Period of Employment, the
                  Executive may, at his option, elect to have the non-extension
                  treated as a Discharge with an effective date thirty (30) days
                  after the Executive's notification to the Company of his
                  election.

                  (e) In the event of the Executive's Termination For Cause by
         the Company, the Company shall pay the Executive his then current base
         salary and non-incentive compensation (including automobile allowance)
         and provide the Executive with his then current benefits (as provided
         in Section 5) through the Termination Date. Any payments and benefits
         due the Executive under employee benefit plans and programs of the
         Company, including the Stock Option Plan, shall be determined in
         accordance with the terms of such benefit plans and programs.

                  (f) In the event the Executive's employment is terminated by
         reason of Discharge or nonextension of the Employment Period, the
         Executive may, at his option, elect to receive a lump sum amount equal
         to the base salary and non-incentive compensation due, discounted at a
         rate of six percent (6%) per annum.

                  (g) In the event the Executive's employment is terminated by
         reason of Discharge, the Company shall furnish the Executive, for a
         period of six (6) months subsequent to the Termination Date,
         outplacement services, reasonable office space, and secretarial
         assistance.

                  (h) If any of the payments provided for in this Agreement,
         together with any other payments which the Executive has the right to
         receive from the Company or any corporation which is a member of an
         "affiliated group" as defined in Section 1504(a) of the Code (without
         regard to Section 1504(b) of the Code) of which the Company is a
         member, would constitute an "excess parachute payment" as defined in
         Section 280G(b)(1) of the Code as it presently exists, such that any
         portion of such payments are subject to the excise tax imposed by
         Section 4999 of the Code, or any interest or penalty with respect to
         such excise tax (such excise tax, together with any such interest or
         penalty, are collectively referred to as the "Excise Tax"), then the
         Executive shall be entitled to receive an additional payment (an
         "Excise Tax Restoration Payment"). The amount of the Excise Tax
         Restoration Payment shall be the amount necessary to fund the payment
         by the Executive of any Excise Tax on the total payments, as well as
         all income taxes imposed on the Excise Tax Restoration Payment, any
         excise tax imposed on the Excise Tax Restoration Payment, and any
         interest or penalties imposed with respect to taxes on the Excise Tax
         Restoration Payment or any Excise Tax.

         8. TERMINATION FOR GOOD REASON. In the event of a "Change in Control"
of the Company (as hereinafter defined), the Executive may terminate his
employment for Good Reason. For purposes of this Agreement, "Good Reason" shall
mean the occurrence of any of the following events during the twelve (12) months
immediately preceding or following the effective date of a Change in Control of
the Company:




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                  (a) a material change in the scope of the Executive's assigned
         duties and responsibilities from those in effect immediately prior to a
         Change in Control of the Company or the assignment of duties or
         responsibilities that are inconsistent with the Executive's status in
         the Company;

                  (b) a reduction by the Company in the Executive's base salary
         or incentive compensation as in effect on the date of a Change in
         Control;

                  (c) the Company's requirement that the Executive be based
         anywhere other than the Company's office in Forsyth County, North
         Carolina, at which he was based prior to the Change in Control of the
         Company; or

                  (d) the failure by the Company to continue to provide the
         Executive with benefits substantially similar to those specified in
         Section 5 of this Agreement.

         For purposes of Section 8(c) above, the Company shall be deemed to have
required the Executive to be based somewhere other than the Company's office at
which he was based prior to the Change in Control if the Executive is required
to spend more than two days per week on a regular basis at a business location
not within 50 miles of the Executive's primary business location as of the
effective date of a Change in Control.

         If the Executive terminates his employment for Good Reason, this shall
be treated as the Discharge of the Executive by the Company. Accordingly, the
Company shall pay the amounts and provide the benefits to the Executive
specified in Section 7 above, applicable in the event of Discharge. The
Executive shall not be obligated in any way to mitigate the Company's
obligations to him under this Section 8 and any amounts earned by the Executive
subsequent to his termination of employment shall not serve as an offset to the
payments due him by the Company under this Section.

         For purposes of this Agreement, a "Change in Control" means the date on
which the earlier of the following events occur:

                  (a) the acquisition by any entity, person or group of
         beneficial ownership, as that term is defined in Rule 13d-3 under the
         Securities Exchange Act of 1934, of more than 30% of the outstanding
         capital stock of the Company entitled to vote for the election of
         directors ("Voting Stock");

                  (b) the merger or consolidation of the Company with one or
         more corporations as a result of which the holders of outstanding
         Voting Stock of the Company immediately prior to such a merger or
         consolidation hold less than 60% of the Voting Stock of the surviving
         or resulting corporation;

                  (c) the transfer of substantially all of the property of the
         Company other than to an entity of which the Company owns at least 80%
         of the Voting Stock; or



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                  (d) the election to the Board of Directors of the Company of
         three or more directors during any twelve (12) month period without the
         recommendation or approval of the incumbent Board of Directors of the
         Company.

         Upon a Change in Control, as defined above in this Section 8, all
outstanding stock options shall become 100% vested and immediately exercisable,
regardless of whether the Executive terminates employment or not.

         If the Executive terminates employment with Good Reason within twelve
(12) months of a Change in Control, to the extent permitted by law, the Company
shall continue the medical, disability and life insurance benefits which
Executive was receiving at the time of termination for a period of 36 months
after termination of employment or, if earlier, until Executive has commenced
employment elsewhere and becomes eligible for participation in the medical,
disability and life insurance programs, if any, of his successor employer.
Coverage under Employer's medical, disability and life insurance programs shall
cease with respect to each such program as Executive becomes eligible for the
medical, disability and life insurance programs, if any, of his successor
employer.

         9. CONFIDENTIALITY. During the Period of Employment and following
termination for any reason, the Executive covenants and agrees that he will not
divulge any trade secrets or other confidential information pertaining to the
business of the Company. It is understood that the term "trade secrets" as used
in this Agreement is deemed to include any information which gives the Company a
material and substantial advantage over its competitors but that such term does
not include knowledge, skills or information which is otherwise publicly
disclosed.

         10. NON-COMPETITION. In the event of Termination For Good Cause, or
Voluntary Termination of the Executive, the Executive agrees that for a period
of two years following the Termination Date, Executive shall not directly or
indirectly, personally or with other employees, agents or otherwise, or on
behalf of any other person, firm, or corporation, engage in the business of
making and selling doughnuts and complementary products

                  (a) within a 100 mile radius of any place of business of the
         Company (including franchised operations) or of any place where the
         Company (or one of its franchised operations) has done business since
         the Effective Date of this Agreement,

                  (b) in any county where the Company is doing business or has
         done business since the Effective Date, or

                  (c) in any state where the Company is doing business or has
         done business since the Effective Date.

         Notwithstanding the above, ownership by Executive of an interest in any
licensed franchisee of the Company shall not be deemed to be in violation of
this Section 10. In the event of an actual or threatened breach of this


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provision, the Company shall be entitled to an injunction restraining Executive
from such action and the Company shall not be prohibited in obtaining such
equitable relief or from pursuing any other available remedies for such breach
or threatened breach, including recovery of damages from Executive.

         11. SUCCESSORS; BINDING AGREEMENT.

                  (a) This Agreement shall be binding upon, and inure to the
         benefit of, the parties hereto, their heirs, personal representatives,
         successors and assigns.

                  (b) The Company shall require any successor (whether direct or
         indirect and whether by purchase, merger, consolidation or otherwise)
         to all or substantially all of the business or assets of the Company
         expressly to assume and agree to perform this Agreement in the same
         manner and to the same extent that the Company would be required to
         perform if no such succession had taken place. As used herein,
         "Company" shall mean the Company as defined in the preamble to this
         Agreement and any successor to its business or assets which executes
         and delivers (or is required to execute and deliver) the agreement
         provided for in this Section 11(b), or which otherwise becomes bound by
         the terms and provisions of this Agreement or by operation of law.

         12. ARBITRATION. Except as hereinafter provided, any controversy or
claim arising out of or relating to this Agreement of any alleged breach thereof
shall be settled by arbitration in the City of Winston-Salem, North Carolina in
accordance with the rules then obtaining of the American Arbitration Association
and any judgment upon any award, which may include an award of damages, may be
entered in the highest State or Federal court having jurisdiction. Nothing
contained herein shall in any way deprive the Company of its claim to obtain an
injunction or other equitable relief arising out of the Executive's breach of
the provisions of Paragraphs 9 and 10 of this Agreement. In the event of the
termination of Executive's employment, Executive's sole remedy shall be
arbitration as herein provided and any award of damages shall be limited to
recovery of lost compensation and benefits provided for in this Agreement.

         13. NOTICES. For the purposes of this Agreement, notices and all other
communications provided for herein shall be in writing and shall be deemed to
have been duly given when delivered or mailed by United States registered or
certified mail, return receipt requested, postage prepaid, addressed as follows:

         IF TO THE EXECUTIVE:               John W. Tate
                                            161 Wing Haven Circle
                                            Winston-Salem, NC  27106

         IF TO THE COMPANY:                 Krispy Kreme Doughnut Corporation
                                            P.O. Box 83
                                            Winston-Salem, NC  27102-0083
                                            (for mail)



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                                            370 Knollwood Street
                                            Suite 500
                                            Winston-Salem, NC  27103
                                            (for delivery)

                                            Attn:  Randy S. Casstevens,
                                                   Corporate Secretary

         14. GOVERNING LAW. The validity, interpretation, construction and
performance of this Agreement shall be governed by the laws of the State of
North Carolina.

         15. MISCELLANEOUS. No provisions of this Agreement may be modified,
waived or discharged unless such waiver, modification or discharge is agreed to
in writing signed by the Executive and the Company. No waiver by either party
hereto at any time of any breach by the other party hereto of, or compliance
with, any condition or provision of this Agreement to be performed by such other
party shall be deemed a waiver of other provisions or conditions at the same or
at any prior or subsequent time. No agreements or representations, oral or
otherwise, express or implied, with respect to the subject matter hereof have
been made by either party which are not set forth expressly in this Agreement.

         16. SEPARABILITY. The invalidity or lack of enforceability of a
provision of this Agreement shall not affect the validity of any other provision
hereof, which shall remain in full force and effect.

         17. WITHHOLDING OF TAXES. The Company may withhold from any benefits
payable under this Agreement all federal, state and other taxes as shall be
required pursuant to any law or governmental regulation or ruling.

         18. SURVIVAL. The provisions of Sections 9 and 10 of the Agreement
shall survive the termination of this Agreement and shall continue for the terms
set forth in Sections 9 and 10.

         19. CAPTIONS. Captions to the sections of this Agreement are inserted
solely for the convenience of the parties, are not a part of this Agreement, and
in no way define, limit, extend or describe the scope hereof or the intent of
any of the provisions.

         20. NON-ASSIGNABILITY. This Agreement is personal in nature and neither
and neither of the parties hereto shall, without the consent of the other,
assign or transfer this Agreement or any rights or obligations hereunder.
Without limiting the foregoing, the Executive's right to receive payments
hereunder shall not be assignable or transferable, whether by pledge, creation
of a security interest or otherwise, other than a transfer by will or by the
laws of descent or distribution. In the event of any attempted assignment or
transfer contrary to this section, the Company shall have no liability to pay
any amount so attempted to be assigned or transferred.

         IN WITNESS WHEREOF, the Company has caused this Agreement to be
executed and delivered under its seal pursuant to the specific authorization of
its board of directors and the Executive has hereunto set his hand and seal on
the day and year first above written.



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                          KRISPY KREME DOUGHNUTS, INC.

                          By:
                             --------------------------------------------
                                   Scott A. Livengood, CEO and President


[CORPORATE SEAL]


                          EXECUTIVE

                                                                         (Seal)
                          ------------------------------------------------
                                   John W. Tate



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