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                                                                   EXHIBIT 10.12

                        COLLATERAL REPURCHASE AGREEMENT


         THIS COLLATERAL REPURCHASE AGREEMENT, made as of the 2nd day of
January, 1998, by and among BONNIE SILVEY VANDEGRIFT, a resident of Transylvania
County, North Carolina, and BREVARD TENNIS AND ATHLETIC CLUB, INCORPORATED, a
North Carolina corporation (collectively, the "Borrower"); KRISPY KREME DOUGHNUT
CORPORATION, a North Carolina corporation (the "Company"); and BRANCH BANKING
AND TRUST COMPANY, a national banking institution ("BB&T").

                                R E C I T A L S :

         A. BB&T has on this date extended credit to the Borrower in the
aggregate principal sum of Three Hundred Twenty-Six Thousand and no/100 Dollars
($326,000.00) (the "Indebtedness"), evidenced by a Promissory Note of even date
herewith executed and delivered by the Borrower to BB&T.

         B. The Indebtedness is secured, in part, by a pledge by Bonnie Silvey
Vandegrift ("Pledgor") of all of the common voting stock of the Company owned by
Pledgor (the "Pledged Stock"), pursuant to a pledge agreement of even date
herewith executed by and between Pledgor and BB&T (the "Pledge Agreement,"); the
Pledge Agreement, and all other documents, instruments and agreements executed
to evidence, create or secure the Indebtedness are herein called the "Loan
Documents").

         C. The Pledged Stock is subject to a stock purchase agreement dated
July 1, 1984 executed by and among the Company and its shareholders (as it may
be amended) (the "Stock Purchase Agreement"), which Stock Purchase Agreement has
been consented and agreed to by Pledgor.

         D. In order to induce BB&T to make the loans giving rise to the
Indebtedness, the Company has agreed to purchase all or part of the Pledged
Stock in the event of a default under the Note or any of the Loan Documents in
accordance with the terms of this Agreement.

         E. BB&T has required the execution and delivery of this Agreement by
the parties hereto as a condition to making the loans comprising the
Indebtedness.

         NOW, THEREFORE, in consideration of the premises and for other valuable
consideration, the receipt and sufficiency of which are hereby acknowledged,
the parties hereto agree as follows:

         1. Election by BB&T to Cause the Company to Purchase the Pledged Stock.
Upon a default under the Note or any of the Loan Documents (hereinafter referred
to as a "Default"), BB&T may give notice to the Company and the Borrower,
requiring the Company to purchase, and the Pledgor to sell, the Pledged Stock in
the following manner and upon the



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following terms. The notice shall specify whether the purchase is to be made (a)
from the Pledgor prior to the commencement of proceedings by BB&T to exercise
its rights and remedies as a secured party against the Pledged Stock, or (b) at
a private sale ("Private Sale") conducted pursuant to the terms of the Pledged
Agreement and applicable law. For purposes of determining the time as of which
such purchase price is to be determined, the Pledgor and BB&T agree that such
notice shall constitute written notice of a proposed transfer, disposition or
sale of its Pledged Stock under paragraph 2(a) of the Stock Purchase Agreement.
At the Closing (as defined in Paragraph 3 hereof), the Company shall pay to BB&T
and not to the Borrower or Pledgor, in United States dollars and in immediately
available funds, a purchase price determined in accordance with the Stock
Purchase Agreement. If the purchase price of the Pledged Stock is greater than
the then outstanding Indebtedness (including accrued but unpaid interest and all
other sums owed by Borrower to BB&T pursuant to the terms of the Note and the
Loan Documents), then the Company shall be required to purchase hereunder only
so much of the Pledged Stock as is necessary to pay in full the Indebtedness. In
consideration of the purchase price received by BB&T, the Pledgor shall transfer
title to the Pledged Stock (or so much therefor as shall be purchased) to the
Company or in the event the sale is at a Private Sale, BB&T shall deliver to
Company the certificates evidencing the Pledged Stock (or so much thereof as
shall be purchased) together with stock powers executed in blank by the Pledgor.
In either case, BB&T shall release its security interest in the Pledged Stock
purchased by the Company upon receipt of the purchase price. The Borrower and
the Company hereby acknowledge that the Pledged Stock is subject to the terms
and provisions of the Stock Purchase. Agreement which provides, in part, an
option to purchase the Pledged Stock in favor of the Company and each of its
shareholders in the event Pledgor desires to transfer, sell or dispose of all or
any portion of the Pledged Stock. Accordingly, and given the difficulty of
obtaining a reasonable price for the Pledged Stock at a public sale or auction
and the difficulty of selling the Pledged Stock at a public sale or auction in
compliance with the Stock Purchase Agreement and applicable federal and state
securities laws, the Company, the Pledgor and the Borrower specifically agree
that a Private Sale at which the Company shall purchase any or all of the
Pledged Stock pursuant to the terms of this Agreement shall have been conducted
in a commercially reasonable manner, and, to the extent permitted by applicable
law, the Company, the Pledgor and the Borrower hereby waive any claim or defense
to any such sale arising under Section 9504(3) of the Uniform Commercial Code as
in effect in the applicable jurisdiction.

         2. Other Purchasers. In the event of a default under any of the Loan
Documents, BB&T agrees not to purchase all or any part of the Pledged Stock or
allow any other person (other than the Company) to do so, without the prior
written consent of the Company, unless the Company shall, within thirty (30)
days after BB&T's request for performance hereunder, fail, refuse or be unable
to perform its obligations hereunder.

         3. The Closing. If purchase of the Pledged Stock is to be made from the
Pledgor, or the Borrower, as the case may be, the Closing shall take place at a
time and place selected by BB&T within fifteen (15) days after the date of
BB&T's notice to the Company and the Borrower requiring that the Company
purchase the Pledged Stock. If purchase of the Pledged Stock is to take place
pursuant to a Private Sale, Closing shall take place at a time and in the manner
as provided for by applicable law or in the Pledge Agreement, as the case may
be, or as


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may be provided for in any notice given by BB&T pursuant thereto for the Private
Sale provided, however, that the Closing and delivery of the Pledged Stock
purchased by the Company shall occur at the principal office of BB&T in
Winston-Salem, North Carolina, at no expense to BB&T.

         4. Surplus. If all proceeds ever received by BB&T, either before or
after the Closing, from any sale or other disposition of any collateral, or
part therefor, for the Indebtedness, or the exercise of any other remedy
pursuant to the Note or any of the Loan Documents, together with the aggregate
purchase price actually received by BB&T for the Pledged Stock to be purchased
pursuant to this Agreement, shall exceed the aggregate amount of the
Indebtedness, interest thereon, the costs and expenses incurred or other sums
thereunder owed by the Borrower to BB&T pursuant to any of the Note or the Loan
Documents, and the costs and expenses incurred in the enforcement of the
Borrower's obligations under this Agreement, including reasonable attorneys'
fees, the amount of such excess shall be remitted to or for the account of the
Borrower, subject however, to the rights and claims of others having a prior
interest in or a lien upon any such proceeds.

         5. Assignment by Borrower. Borrower hereby assigns all of its right,
title and interest in and to this Agreement to BB&T as collateral security for
the Indebtedness and agrees to execute and deliver Uniform Commercial Code
Financing Statements with respect thereto as BB&T may request.

         6. Continuing Obligations. The obligations of the Company under this
Agreement shall be continuing, and the Company agrees that its obligations
hereunder shall not be modified, diminished, extinguished or released by reason
that the whole or any part of any security or collateral for the Indebtedness
now or hereafter held may be exchanged, compromised, impaired, released, or
surrendered from time to time, that the time or place of payment of any
Indebtedness or of any security therefor may be exchanged or extended, in whole
or in part, to a time certain or otherwise, and may be renewed or accelerated,
in whole or in part, that the Borrower may be granted indulgences generally,
that any of the provisions of any note or other instrument evidencing any debt
of the Borrower or any security therefor, including, without limitation, the
Note and the Loan Documents, may be modified or waived, or that any party liable
for the payment thereof (including but not limited to any guarantor, surety or
endorser) may be granted indulgences or released, all of which are hereby
expressly consented to by the Company, provided, however, that the original
principal amount of the Note may not be increased nor may additional amounts be
advanced or readvanced under the Note. Neither the death, disability,
bankruptcy, or insolvency of any one or more of the Borrower or any guarantor,
surety or endorser shall affect the continuing obligation of the Company. No
claim need be asserted against the personal representative, guardian,
custodian, trustee, debtor in bankruptcy, or receiver of any deceased,
incompetent, bankrupt or insolvent borrower, guarantor, surety or endorser. Any
deposit balance to the credit of the Borrower or any other party liable for the
payment of the Indebtedness or liable upon any security therefor may be
released, in whole or in part, at, before and/or after the stated, extended or
accelerated maturity of any Indebtedness. All of the foregoing may be done
without notice to or further assent by the Company, which shall remain bound
hereon notwithstanding any such exchange, compromise, surrender, extension,
renewal, acceleration, modification,


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indulgence or release. The Company expressly waives notice of acceptance of this
Agreement and of all extensions of credit to the Borrower, presentment and
demand for payment of the Indebtedness, protest and any notice of dishonor or of
default to the Company or to any other party with respect to any of the
Indebtedness or with respect to any security or collateral therefor and all
other notices to which the Company might otherwise be entitled. The obligations
of the Company under this Agreement shall be direct and immediate and not
conditional or contingent upon either the pursuit of any remedies against the
Borrower or any other person or foreclosure of any security interest or liens
available to BB&T, its successors, endorsees or assigns, the Company hereby
waiving any rights to require that any action be brought against the Borrower or
any other person or to require that resort be had to any security or to any
balance of any deposit account or credit on the books of BB&T in favor of the
Borrower or any other person, and the Company hereby waiving any rights of the
Company pursuant to North Carolina General Statutes Section 26-7 or any similar
or subsequent law. If the Indebtedness is partially paid through the election of
BB&T, its successors, endorsees or assigns, to pursue any of the remedies
mentioned herein, in the Note, or in the Loan Document or if such Indebtedness
is otherwise partially paid, the Company shall nevertheless remain fully liable
and obligated under and pursuant to the terms of this Agreement. The Borrower
and BB&T agree to provide the Company with copies of all Loan Documents and
modifications thereof.

         7. No Credit; Waiver of Defenses. The Company shall not be entitled to
provide for the payment of the purchase price either for the Pledged Stock (or
any part thereof) by the issuance of credit or credits to or for the account of
the Borrower, the Pledgor or either of them. Nor shall any portion of any
purchase price for the Pledged Stock be subject to offset, reduction or
diminution by reason of any disputed or undisputed claim, suit or demand which
the Company may have against the Borrower, the Pledgor or either of them, or by
reason of any disputed or undisputed unpaid accounts or liabilities of or
amounts otherwise owed by the Borrower, the Pledgor or either of them to the
Company. Nothing herein shall prohibit the Company from purchasing the Pledged
Stock over and above the amounts necessary to satisfy the Borrower's obligations
to BB&T and applying the proceeds thereof to any obligation of the Borrower to
the Company.

         8. Notification of Stock Purchase Agreement. Nothing herein shall
prevent or restrict the Company and the Pledgor from amending or terminating the
Stock Purchase Agreement (and the Company and Pledgor shall have the right to
amend and/or terminate the Stock Purchase Agreement) provided that, in the event
of the termination or modification of the Stock Purchase Agreement, the Company
and the Pledgor shall remain obligated to comply with Paragraph 1 above as if
the Stock Purchase Agreement remained in force (unmodified) as it is as of the
date hereof.

         9. Choice of Law. The parties hereby acknowledge and agree that this
Agreement shall be governed by and construed in accordance with the laws of the
State of North Carolina.

         10. Modification of Collateral Repurchase Agreement. This Agreement may
not be changed, amended or modified orally or by implication but only by a
written instrument signed by each of the parties hereto, and no obligation of
the Company or the Borrower or the


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Pledgor shall be released, waived or modified by BB&T or any officer or agent of
BB&T except by a writing signed by a duly authorized officer of BB&T and bearing
the seal of BB&T. This Agreement shall be irrevocable by the Company, the
Borrower and the Pledgor until the Indebtedness has been completely repaid and
all other obligations and undertakings of the Borrower under, or by reason of,
or pursuant to the Note or any of the Loan Documents have been completely
performed and satisfied.

         11. Notices. Any and all notices or demands permitted or required to be
made under this Agreement shall be in writing, signed by the party giving such
notice or demand, and shall be delivered personally or by a nationally
recognized courier service or sent by registered or certified United States
mail, postage prepaid, to the other party(ies) at the addressees) set forth
below, or at such other address as may have been designated in writing. The
effective date of such notice or demand shall be date of personal service or the
date on which the notice or demand is deposited in the mails.

         The address of the Borrower is:  Bonnie Silvey Vandegrift
                                          5 Robin Circle
                                          Brevard, NC 28712

                                          Brevard Tennis and Athletic Club, Inc.
                                          P.O. Box 1520
                                          Brevard, NC 28712

         The address of the Company is:   Krispy Kreme Doughnut Corporation
                                          370 Knollwood Street, Suite 500
                                          Winston-Salem, NC 27103
                                          Attn: Stephen A. Johnson

         The address of BB&T is:          Branch Banking and Trust Company
                                          Post Office Box 15008
                                          Winston-Salem, NC 27113
                                          Attn: Adam D. Jackson

         12. Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original but taken together shall
constitute but one Agreement.

         13. Benefit. This Agreement shall be binding upon and shall inure to
the benefit of the parties hereto and their respective legal representatives,
heirs, successors and assigns.

         14. Termination of Existing Collateral Repurchase Agreements. This
Agreement shall replace previously executed Collateral Repurchase Agreements
dated May 25, 1994 and September 28, 1995, which are hereby terminated.


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         IN WITNESS WHEREOF, the parties have either hereunto set his hand and
seal or caused this Agreement to be executed as of the day and year first above
written.


                                           /s/ Bonnie Silvey Vandergrift  (SEAL)


                                           BREVARD TENNIS AND ATHLETIC
                                           CLUB, INC.


                                           By:  /s/ Bonnie Silvey Vandergrift
                                                President

ATTEST:
/s/  Michael A. Vandergrift
Secretary

(CORPORATE SEAL)


                                           KRISPY KREME DOUGHNUT
                                           CORPORATION

                                           By:  Randy S. Casstevens
                                           Title: VP-Finance


ATTEST:
/s/  Stephen A. Johnson
Assistant Secretary

(CORPORATE SEAL)


                                           BRANCH BANKING AND TRUST
                                           COMPANY

                                           By: /s/  Adam D. Jackson
                                               Banking Officer



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