Document:

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 Jeffrey B. Welch (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 of nolo contendere to 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;

     (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 international
operations and franchise 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 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.

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     “Notice of
Termination” has the meaning set forth
in Section 5.06.

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

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

     “Reimbursable
Expenses” has the meaning set forth in
Section 4.04.

     “Securities Act” means the Securities
Act of 1933, as amended.

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

ARTICLE 2

EMPLOYMENT

     SECTION
2.01. Employment. The 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”).

ARTICLE 3

POSITION AND DUTIES

     SECTION
3.01. Position and Duties. During the Employment Period, the Executive shall serve as
Senior Vice President and General Manager of Global Franchise Operations and
Development of the Company reporting directly to the most senior executive
officer and shall be the Company’s most senior international operations and
franchise officer. During the Employment Period, the Executive also shall serve
as Senior Vice President and General Manager of Global Franchise Operations and
Development of KKDC and shall be KKDC’s most senior international operations and
franchise 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; provided that 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 

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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 $315,000 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.

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.

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     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.

     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.

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     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.

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).

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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 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;

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          (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;

          (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.

-8-

ARTICLE 11

EXECUTIVE REPRESENTATION AND
INDEMNIFICATION

     SECTION
11.01. Executive
Representation. The Executive hereby
represents and warrants to the Companies that (a) the execution, delivery and
performance of this Agreement by the Executive does not and will not conflict
with, breach, violate or cause a default under any contract, agreement,
instrument, order, judgment or decree to which the Executive is a party or by
which he is bound, (b) the Executive is not a party to or bound by any
employment agreement, noncompetition agreement or confidentiality agreement with
any other Person, and (c) upon the execution and delivery of this Agreement by
the Companies, this Agreement will be the valid and binding obligation of the
Executive, enforceable in accordance with its terms. Notwithstanding Section
11.02 below, in the event that any action is brought against 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.

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 

-9-

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.

     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.

-10-

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.

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.

-11-

     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.

     SECTION
13.07. Notices. All notices, demands or other communications to be given or delivered
under or by reason of the provisions of this Agreement will be in writing and
will be deemed to have been given when delivered personally to the recipient,
two business days after the date when sent to the recipient by reputable express
courier service (charges prepaid) or four business days after the date when
mailed to the recipient by certified or registered mail, return receipt
requested and postage prepaid. Such notices, demands and other communications
will be sent to the Executive and to the Companies at the addresses set forth
below.

	     If to the
      Executive:  	To the last address
      delivered to the Companies by the Executive in the manner set 
    
	  	forth herein. 
    
	  
	     If to the
      Companies:  	Krispy Kreme Doughnuts,
      Inc.  
	  	Krispy Kreme Doughnut
      Corporation  
	  	Suite 500 
  
	  	370 Knollwood
      Street  
	  	Winston-Salem, NC
      27103  
	  
	  	Attn: Senior Vice
      President-Human Resources  

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.

-12-

     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.

     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.

[remainder of page left intentionally
blank]

-13-

     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. Brewster  	 
	  	Daryl
      G. Brewster  
	  	Chief
      Executive Officer  
	  
	  
	KRISPY KREME DOUGHNUT CORPORATION  
	  
	  
	By:  	 	/s/ Douglas R. Muir  	 
	  	Douglas R. Muir  
	  	Chief
      Financial Officer  
	  
	  
	EXECUTIVE  
	  
	  
	  	/s/ Jeffrey B. Welch  	 
	  	Jeffrey B. Welch 

-14-KRISPY KREME DOUGHNUTS,
INC.
NONQUALIFIED STOCK OPTION AGREEMENT

     THIS
NONQUALIFIED STOCK OPTION AGREEMENT (this “Agreement”) is made as of
______________ (the “Grant Date”), by and between Krispy Kreme Doughnuts, Inc., a
North Carolina corporation having its principal office at 370 Knollwood Street,
Winston-Salem, North Carolina 27103 (the “Corporation”), and ______________ (the
“Optionee”).

W I T N E S S E T H:

     WHEREAS, the
Board of Directors and shareholders of the Corporation have approved the Krispy
Kreme Doughnuts, Inc. 2000 Stock Incentive Plan (the “Plan”), for the purposes
and subject to the provisions set forth in the Plan;

     WHEREAS, pursuant to authority
granted to it in the Plan, the Compensation Committee of the Board of Directors
of the Corporation (the “Committee”) has, on behalf of the Corporation, granted
to Optionee an option to purchase shares of the Corporation’s Common Stock, no
par value per share (the “Common Stock” or the “Stock”), as set forth below;
and

     WHEREAS, this Agreement evidences
the grant of such option pursuant to the Plan.

     NOW,
THEREFORE, in consideration of the foregoing, of the mutual promises set forth
below and for other good and valuable consideration, the receipt and sufficiency
of which are hereby acknowledged, the parties hereto, intending to be legally
bound, agree as follows:

1. Summary of
Grant

Number of Shares:
Option Exercise
Price:
Date of Grant:

2. Grant of
Option

     This
Agreement sets forth the terms of a nonqualified option granted to the Optionee
to purchase from the Corporation, during the period specified in Sections 3 and
4 of this Agreement, a total of ______________ shares of Common Stock, at the
purchase price of ______________ per share (the “Exercise Price”), in accordance
with the terms and conditions stated in this Agreement. The shares of Common
Stock subject to the option granted hereby are referred to below as the
“Shares,” and the option to purchase such Shares is referred to below as the
“Option.”

3. Vesting and Exercise of
Option

     The Option
shall vest and become exercisable in increments in accordance with the schedule
set forth below, provided that the Option shall vest and become
exercisable with respect to an increment as specified only if the Optionee has
not incurred a Termination of Employment prior to the vesting date with respect
to such increment:

     (a) no portion of the Option shall
vest or become exercisable prior to the first anniversary of the Grant
Date;

     (b) on the
first anniversary of the Grant Date one fourth of the number of shares in the
Option (as indicated in Section 1) shall vest and become exercisable;

     (c) on the
second anniversary of the Grant Date an additional one fourth of the number of
shares in the Option (as indicated in Section 1) shall vest and become
exercisable;

     (d) on the
third anniversary of the Grant Date an additional one fourth of the number of
shares in the Option (as indicated in Section 1) shall vest and become
exercisable; and

     (e) on the
fourth anniversary of the Grant Date the remaining one fourth of the number of
shares in the Option (as indicated in Section 1) shall vest and become
exercisable.

     Notwithstanding the vesting provisions described above, the Option shall
vest and become exercisable with respect to 100% of the Shares upon the
Optionee’s Termination of Employment if the Optionee’s Termination of Employment
is due to his or her Retirement, death or Disability.

     The schedule
set forth above is cumulative, so that Shares as to which the Option has become
vested and exercisable pursuant to the provisions above may be purchased
pursuant to exercise of the Option at any date subsequent to vesting but prior
to termination of the Option. The Option may be exercised at any time and from
time to time to purchase up to the number of Shares as to which it is then
vested and exercisable.

     The Option
will become vested and exercisable in full upon a Change in Control, provided
that Optionee has not incurred a Termination of Employment prior to the date of
such Change in Control. In the event of a Change in Control, the Board, in its
sole discretion, may send Optionee prior written notice of the effectiveness of
such event and the last day on which Optionee may exercise the Option. In such
event, Optionee may, upon compliance with all of the terms of this Agreement and
the Plan, purchase any or all of the Shares with respect to which the Option is
vested and exercisable on or prior to the last day specified in such notice,
and, to the extent the Option is not exercised, it shall terminate at 5:00 P.M.,
Eastern Standard Time, on the last day specified in such notice. For purposes
hereof, Change in Control shall have the meaning set forth in the Plan, except
in the case of a transaction described in clauses (1) or (3) of paragraph (b) of
such definition, the consummation of such a transaction, rather than the
approval by shareholders of the Corporation of such transaction or agreement to
effect such a transaction, shall constitute a Change in Control.

4. Termination of
Option

     Unless
adjusted by the Committee in its sole discretion, the Option shall remain
exercisable as specified in Section 3 above until 5:00 p.m., Eastern Standard
Time, on the earliest to occur of the dates specified below, upon which date the
Option shall terminate:

     (a) the date all of the Shares are
purchased pursuant to the terms of this Agreement;

     (b) upon the
expiration of 90 days following the Optionee’s Termination of Employment for any
reason other than his or her Retirement, death, Disability, or for
Cause;

     (c) upon the
expiration of 180 days following Optionee’s Termination of Employment on account
of his or her Disability;

     (d) upon the
expiration of 360 days following Optionee’s Termination of Employment on account
of his or her death;

     (e) immediately upon Optionee’s
Termination of Employment for Cause, as defined below in Section
21(a);

     (f) on the last date specified in
the notice described in Section 3 above in the event of a Change in Control;
or

     (g) on the ten year anniversary of
the Grant Date (the “Expiration Date”).

     Upon its
termination, the Option shall have no further force or effect and Optionee shall
have no further rights under the Option or to any Shares which have not been
purchased pursuant to prior exercise of the Option.

5. Manner of Exercise of
Option

     (a)
Exercise. The Option may be exercised only by (i) Optionee’s completion, execution
and delivery to the Corporation of a notice of exercise and (ii) the payment to
the Corporation, pursuant to the terms of this Agreement, of an amount equal to
the Exercise Price multiplied by the number of Shares being purchased as
specified in Optionee’s notice of exercise (the “Purchase Price”). Optionee’s
notice of exercise shall be given in the manner specified in Section 10 but any
exercise of the Option shall be effective only when the items required by the
preceding sentence are actually received by the Corporation. The notice of
exercise shall be in

2

the form attached to this Agreement.
Notwithstanding anything to the contrary in this Agreement, the Option may be
exercised only if compliance with all applicable federal and state securities
laws can be effected, with the Committee being the final arbitrator thereof, in
its sole and absolute discretion, in the event of any dispute between the
Corporation and the Optionee with regard to the interpretation of such
laws.

     (b)
Form of Payment. Payment of the Purchase Price may be
made (i) by check payable to the order of the Corporation for an amount in U.S.
dollars equal to the Purchase Price of such Shares; (ii) by authorizing a third
party to sell a portion of the Shares acquired upon exercise of the Option and
remit to the Corporation a sufficient portion of the sales proceeds to pay the
full Purchase Price; or (iii) by combining the above methods.

     (c)
Issuance and Delivery of
Shares. As soon as practicable following receipt of such notice and payment, the
Corporation shall notify the Optionee of any payment required under subsection
(d) below. The Corporation shall deliver a certificate or certificates for the
Shares to the Optionee as soon as practicable after the Optionee has made any
payment required under subsection (d) below. Shares issued pursuant to the
exercise of this option will be issued only in the name of Optionee and may not
be transferred into the name of any agent of or nominee for Optionee until such
time as Optionee has complied with the terms of this Agreement.

     (d)
Withholding Obligation. Issuance of Shares upon
exercise of the Option shall be subject to the condition that the Optionee shall
pay to the Corporation, in addition to the Purchase Price, the minimum amount
the Corporation is required by law or regulation of any governmental authority,
whether federal, state or local, domestic or foreign, to withhold in connection
with such exercise of the Option, if any. In lieu of the payment specified in
this paragraph, Optionee may satisfy the obligation, in whole or in part, by the
methods specified in subsection (b) above.

     (e)
Deferral of Issuance of
Shares. Anything in this Agreement to the contrary notwithstanding, if, at any
time specified herein for the issuance of Shares to Optionee, any law, or any
regulation or requirement of the Securities and Exchange Commission or other
governmental authority having jurisdiction over such matter shall require either
the Corporation or Optionee to take any action in connection with the Shares
then to be issued, the issuance of such Shares shall be deferred until such
action shall have been taken; the Corporation shall be under no obligation to
take such action; and the Corporation shall have no liability whatsoever as a
result of the non-issuance of such shares, except to refund to Optionee any
consideration tendered in respect of the Purchase Price.

     (f)
Stop Transfer Instructions. The Corporation may impose
stop-transfer instructions with respect to any Shares (or other securities)
subject to any restriction set forth in this Agreement until the restriction has
been satisfied or terminates.

6. Restrictions on Transfer of
Option

     (a) Except
as otherwise provided in subsections (b), (c) and (d) below, the Option may not
be sold, exchanged, delivered, assigned, bequeathed or gifted, pledged,
mortgaged, hypothecated or otherwise encumbered, transferred or permitted to be
transferred, or otherwise disposed of, whether voluntarily, involuntarily or by
operation of law (including, without limitation, the laws of bankruptcy,
intestacy, descent and distribution or succession) or on an absolute or
contingent basis. For purposes of this Section, any reference to Optionee shall
(when applicable) be deemed to be and include references to Optionee’s estate,
executors or administrators, personal or legal representatives and transferees
(direct or indirect).

     (b) If
permitted by the Committee, Optionee may transfer this Option to members of his
or her Immediate Family (as defined below), to one or more trusts for the
benefit of such Immediate Family members, to one or more partnerships where such
Immediate Family members are the only partners, or to one or more limited
liability companies (or similar entities) where such Immediate Family members
are the only members or beneficial owners of the entity, if (i) the Optionee
does not receive any consideration in any form whatsoever for such transfer,
(ii) such transfer is permitted under applicable tax laws, and (iii) if the
Optionee is an “Insider,” such transfer is permitted under Rule 16b-3 of the
Exchange Act as in effect from time to time. For purposes hereof, “Immediate
Family” means the Optionee and the Optionee’s spouse, children and
grandchildren.

3

     (c) In the
event of Optionee’s death, the Option may be transferred to any executor,
administrator, personal or legal representative, legatee, heir or distributee of
the estate of Optionee.

     (d) In the
event of Optionee’s divorce, Optionee may transfer some or all of the Option to
his or her former spouse incident to Optionee’s divorce from the former
spouse.

     (e) As a
condition precedent to the transfer of the Option, each and every prospective
transferee shall (i) provide or cause to be provided to the Corporation, at its
request, sufficient evidence of the legal right and authority of such
prospective transferee to have the Option so transferred and (ii) comply with
the provisions of this Agreement. Any Option so transferred pursuant to this
Section shall continue to be subject to the same terms and conditions in the
hands of the transferee as were applicable to said Option immediately prior to
the transfer thereof, and any reference in this Agreement to the performance of
services for the Corporation by the Optionee shall continue to refer to the
performance by the transferring Optionee.

7. Rights Prior to
Exercise

     Optionee
shall not be deemed for any purpose to be a shareholder of the Corporation with
respect to any Shares as to which this Option shall not have been exercised and
payment made as hereby provided and a stock certificate for such Shares actually
issued to Optionee. No adjustment will be made for dividends or other rights for
which the record date is prior to the date of such issuance.

8. Employment of
Optionee

     Nothing in
this Agreement shall be construed as constituting a commitment, guarantee,
agreement or understanding of any kind or nature that the Corporation, any
Subsidiary or affiliate shall continue to employ Optionee, nor shall this
Agreement affect in any way the right of the Corporation, any Subsidiary or
affiliate to terminate the employment or other service of Optionee at any time
and for any reason. By Optionee’s execution of this Agreement, Optionee
acknowledges and agrees that Optionee’s employment or other service to the
Corporation, any Subsidiary or affiliate is “at will.” No change of Optionee’s
duties with respect to the Corporation, any Subsidiary or affiliate shall result
in, or be deemed to be, a modification of any of the terms of this Agreement.
Optionee acknowledges and agrees that the award and acceptance of the Options
pursuant to this Agreement does not entitle Optionee to future grants under the
Plan or any other plan.

9. Burden and
Benefit

     (a) This
Agreement shall be binding upon and inure to the benefit of any assignee or
successor in interest to the Corporation, whether by merger, consolidation or
the sale of all or substantially all of the Corporation’s assets.

     (b) This
Agreement shall be binding upon and inure to the benefit of Optionee and his or
her legal representative and any person to whom the Options may be transferred
by will, the applicable laws of descent and distribution, or otherwise in
accordance with the terms of the Plan.

10. Notices

     Any and all
notices under this Agreement shall be in writing, and sent by hand delivery or
by certified or registered mail (return receipt requested and first-class
postage prepaid), in the case of the Corporation, to its principal executive
offices to the attention of the Chief Financial Officer, and, in the case of
Optionee, to Optionee’s address as shown on the Corporation’s
records.

11. Specific
Performance

     Strict
compliance by Optionee shall be required with each and every provision of this
Agreement. The parties hereto agree that the Shares are unique, that Optionee’s
failure to perform the obligations provided by this Agreement will result in
irreparable damage to the Corporation and that specific performance of
Optionee’s obligations may be obtained by suit in equity.

4

12. Entire
Agreement

     The parties
hereto agree that this Agreement sets forth all of the promises, agreements,
conditions, understandings, warranties, and representations between the parties
with respect to the Option and Shares and that there are no promises,
agreements, conditions, understandings, warranties, or representations, oral or
written, express or implied between the parties with respect to the Option and
Shares other than as set forth in this Agreement and in the Plan. Any
modifications or any waiver of any provision contained in this Agreement shall
not be valid unless made in writing and signed by the person or persons sought
to be bound by such waiver or modifications.

13. Severability

     The
provisions of the Agreement are severable and if any one or more provisions are
determined to be illegal or otherwise unenforceable, in whole or in part, the
remaining provisions, and any partially unenforceable provision to the extent
enforceable in any jurisdiction, shall nevertheless be binding and
enforceable.

14. Waiver

     The waiver
by the Corporation of a breach of any provision of this Agreement by the
Optionee shall not operate or be construed as a waiver of any subsequent breach
by the Optionee.

15. Terms and Conditions of
Plan

     The Option
and the terms and conditions set forth herein are subject in all respects to the
terms and conditions of the Plan (which are incorporated herein by reference).
Except as otherwise expressly set forth herein, the capitalized terms used in
this Agreement shall have the same definitions as set forth in the Plan. To the
extent that any conflict may exist between any term or provision of this
Agreement and any term or provision of the Plan, such term or provision of the
Plan shall control.

16. Authority of
Committee

     All
determinations made by the Committee with respect to the interpretation,
construction and application of any provision of this Agreement shall be final,
conclusive and binding on the parties.

17. Covenants and Representations of
Optionee

     Optionee represents, warrants,
covenants and agrees with the Corporation as follows:

     (a) Optionee
has not relied upon the Corporation with respect to any tax consequences related
to the grant or exercise of this Option, or the disposition of Shares purchased
pursuant to its exercise. Optionee acknowledges that, as a result of the grant
and/or exercise of the Option, Optionee may incur a substantial tax liability.
Optionee assumes full responsibility for all such consequences and the filing of
all tax returns and elections Optionee may be required or find desirable to file
in connection therewith.

     (b) Optionee
will not distribute or resell any Shares (or other securities) issuable upon
exercise of the Option granted hereby in violation of law. Optionee shall comply
with all provisions of the Corporation’s Securities Trading Policy and the
Corporation’s Stock Ownership Guidelines, each as in effect from time to
time.

     (c) The
agreements, representations, warranties and covenants made by Optionee herein
with respect to the Option shall also extend to and apply to all of the Shares
issued to Optionee from time to time pursuant to exercise of the Option.
Acceptance by Optionee of any certificate representing Shares shall constitute a
confirmation by Optionee that all such agreements, representations, warranties
and covenants made herein continue to be true and correct at that
time.

5

18. Limitation of
Liability

     The
liability of the Corporation under this Agreement and in the award of the Shares
hereunder is limited to the obligations set forth herein with respect to such
award, and nothing herein contained shall be interpreted as imposing any
liability in favor of the Optionee or any others with respect to any loss, cost
or expense which Optionee or any others may incur in connection with or arising
out of any transaction involving the Shares.

19. Governing Law

     This
Agreement shall be governed by, construed and enforced in accordance with the
laws of the State of North Carolina, without giving effect to the conflict of
laws provisions thereof.

20. Definitions

     (a)
“Retirement” shall mean the Optionee’s Termination of Employment at a time when for an
Optionee, the sum of the Optionee’s age and years of employment with the
Corporation, its Subsidiaries and affiliates equals or exceeds 65.

     (b)
“Termination of Employment” means the discontinuance of the Optionee’s service
relationship with the Corporation, its Subsidiaries and affiliates, including
but not limited to service as an Optionee of the Corporation, its Subsidiaries
and affiliates, as a non-Optionee member of the board of directors of the
Corporation, or as a consultant or advisor to the Corporation, its Subsidiaries
and affiliates. Except to the extent provided otherwise in an Agreement or
determined otherwise by the Committee, a Termination of Employment shall not be
deemed to have occurred if the capacity in which the Optionee provides service
to the Corporation changes (for example, a change from consultant status to
Optionee status or vice versa) or if the Optionee transfers among the various
entities constituting the Corporation and its Subsidiaries and affiliates, so
long as there is no interruption in the provision of service by the Optionee to
the Corporation and its Subsidiaries and affiliates. The determination of
whether an Optionee has incurred a Termination of Employment shall be made by
the Committee in its discretion. An Optionee shall not be deemed to have
incurred a Termination of Employment if the Optionee is on military leave, sick
leave, or other bona fide leave of absence approved by the Corporation of 180
days or fewer (or any longer period during which the Optionee is guaranteed
reemployment by statute or contract.) In the event an Optionee’s leave of
absence exceeds this period, he or she will be deemed to have incurred a
Termination of Employment on the day following the expiration date of such
period.

21. Forfeiture in the Event of
Competition and/or Solicitation or other Detrimental Acts

     In return for granting the Option to
Optionee, Optionee agrees to the following restrictions:

     (a) Optionee
expressly agrees and covenants that during the Restricted Period (as defined
below), Optionee shall not, without the prior written consent of the
Corporation, directly or indirectly:

     (i) own, manage, control,
participate in, consult with, become employed by or otherwise render services to
any Competitive Business (as defined below) in the Territory (as defined below),
except that it shall not be considered a violation of this clause for the
Optionee to be a passive owner of not more than two percent of the outstanding
stock of any class of any corporation which is publicly traded, so long as
Optionee has no active participation in the business of such
corporation;

     (ii) induce or attempt to induce any
customer, supplier, client or other business relation of the Corporation or its
affiliates to cease doing business with the Corporation or its affiliates if
such cessation could reasonably be expected to result in material harm to the
Corporation;

     (iii) induce or attempt to induce
any Optionee of the Corporation or its affiliates to leave the employ of the
Corporation or its affiliates, or in any way interfere with the relationship
between the Corporation or its affiliates and any person employed by them;
or

     (iv) violate the Corporation’s
Securities Trading Policy.

     (b) Optionee
expressly agrees and covenants that Optionee will not, without the prior written
consent of the Corporation, directly or indirectly, disclose or use at any time
before or after Optionee’s Termination of Employment any Confidential
Information (as defined below) of which Optionee is or becomes aware,
whether

6

or not such information is developed by
Optionee, except to the extent such disclosure or use is directly related to and
appropriate in connection with Optionee’s performance of duties assigned to
Optionee by the Corporation or its affiliates. Under all circumstances and at
all times, Optionee will take all appropriate steps to safeguard Confidential
Information in his or her possession and to protect it against disclosure,
misuse, espionage, loss and theft.

     (c) If the
Committee determines that Optionee has violated any provisions of this Section
21 or that Optionee’s employment has been terminated for Cause, then Optionee
agrees and covenants that:

     (i) Optionee shall automatically
forfeit any rights Optionee may have with respect to the Option as of the date
of such determination; and

     (ii) if Optionee has exercised all
or any part of the Option within the twelve-month period immediately preceding a
violation of this Section 21 or termination of Optionee’s employment for Cause,
upon the Corporation’s demand, Optionee shall immediately deliver to the
Corporation an amount equal to the gain realized by Optionee upon such exercise
(the excess of the aggregate Fair Market Value, on the date of exercise, of the
Common Stock received upon exercise over the aggregate exercise price of the
Option with respect to such Common Stock, then less any taxes paid which are not
refundable or for which the Optionee does not otherwise receive a tax credit or
other form of reimbursement).

     (d) Definitions. For purposes
of this Section 21, the following definitions shall apply:

     (i) “Competitive Business” means any
business listed on Exhibit A hereto.

     (ii) “Confidential
Information” means information that is
not generally known to the public and that was or is used, developed or obtained
by the Corporation or its affiliates in connection with the business of the
Corporation or its affiliates 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 Optionee; or (c) the disclosure of which is consented to in writing
by the Corporation.

     (iii) “Restricted
Period” means the period during which
Optionee is employed by the Corporation or an affiliate and twelve months
following the date that Optionee ceases to be employed by the Corporation or an
affiliate for any reason whatsoever.

     (iv) “Territory” means:

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

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

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

     (D) In the event that the preceding
clauses shall be determined by judicial action to define too broad a territory
to be enforceable, then “Territory” shall mean the area that includes all of the
areas that are within a 50-mile radius of any retail store location in the
United States at which the Corporation’s products have been sold at any time in
the one-year period ending on the last day of Optionee’s employment with the
Corporation or its affiliates; and

7

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

     (e) The
Corporation may require Optionee, in connection with the exercise of the Option,
to certify in a manner acceptable to the Corporation that Optionee has not
violated the terms of this Section 21 and may decline to give effect to such
exercise if Optionee fails so to certify. If Optionee is required to repay any
Option gain to the Corporation pursuant to this Section 21, Optionee shall pay
such amount in such manner and on such terms and conditions as the Corporation
may require, and the Corporation shall be entitled to withhold or set-off
against any other amount owed to Optionee by the Corporation or any of its
affiliates (other than any amount owed to Optionee under any retirement plan
intended to be qualified under Section 401(a) of the Code) up to any amount
sufficient to satisfy any unpaid obligation of Optionee under this Section
21.

     (f) Optionee
acknowledges and agrees that the period, scope and geographic areas of
restriction imposed upon Optionee by the provisions of Section 21 are fair and
reasonable and are reasonably required for the protection of the Corporation. In
the event that any part of this Agreement, including, without limitation,
Section 21, is held to be unenforceable or invalid, the remaining parts of
Section 21 and this Agreement shall nevertheless continue to be valid and
enforceable as though the invalid portions were not a part of this Agreement. If
any one of the provisions in this Section 21 is held to be excessively broad as
to period, scope and geographic areas, any such provision shall be construed by
limiting it to the extent necessary to be enforceable under applicable
law.

     (g) Optionee
acknowledges that breach by Optionee of this Agreement would cause irreparable
harm to the Corporation and that, in the event of such breach, the Corporation
shall have, in addition to monetary damages and other remedies at law, the right
to an injunction, specific performance and other equitable relief to prevent
violations of your obligations hereunder.

     (h) If the
Corporation is required to prepare an accounting restatement due to the material
noncompliance of the Corporation as a result of misconduct pertaining to any
financial reporting requirement under the securities laws (“Misconduct”), and
such Misconduct is the result of actions taken by either the Chief Executive
Officer and/or the Chief Financial Officer, then such of the Chief Executive
Officer and/or the Chief Financial Officer as have committed such Misconduct as
determined by the Committee shall reimburse the Corporation for (1) any bonus or
other incentive-based or equity-based compensation received by either or both of
them, as applicable, from the Corporation during the 12-month period following
the first public issuance or filing with the Securities and Exchange Commission
(whichever first occurs) of the financial document embodying the financial
reporting requirement that gives rise to the restatement; and (2) any profits
realized by either or both of them, as applicable, from the sale of securities
of the Corporation during that 12-month period.

22. Holding Period After Resignation
or Termination

     In return
for granting the Option to Optionee, Optionee agrees that in the event of
Optionee’s Termination of Employment in a manner that would otherwise permit
Optionee to exercise Optionee’s Options after leaving employment by the
Corporation, Optionee will nevertheless delay making any transactions in the
Corporation’s stock until such time as the Corporation has filed its next
succeeding quarterly (10-Q) or annual (10-K) financial filing, as applicable,
with the U. S. Securities and Exchange Commission.

8

     IN WITNESS
WHEREOF, the Corporation and Optionee have executed this Agreement hereto as of
the day and year first above written.

		KRISPY KREME DOUGHNUTS,
      INC. 
		 	
		 	
		By: 	 	 
		Title: 	 	 
		 
	 	 
		OPTIONEE 
		 
		 
		Signature: 	 
		Printed
    Name:  	 

 

9

STOCK OPTION EXERCISE
FORM

This form must be completed and returned
to Krispy Kreme’s Chief Financial Officer on or before 1:00 p.m. Eastern
Standard Time on date of exercise.

	NAME (please
      print): 	SOCIAL SECURITY
      NO.: 
	 	
	 	
	SECTION
      I 	 
	 	
	HOME
      ADDRESS: 	WORK
      ADDRESS: 
	 	
	 	
	HOME
      TELEPHONE: 	WORK
      TELEPHONE: 

SECTION II: I wish to exercise the
following options:

	A 	B 	C 	D 
	 	NUMBER OF 	EXERCISE 	TOTAL PURCHASE
      PRICE: 
	GRANT
      DATE 	OPTIONS 	PRICE 	(COLUMN B x
      COLUMN C) 
	 	 	 	 
	 	 	 	 
	 	 	 	 
	 	 	 	 
	TOTAL 	 	 	  

	SECTION
III 	 	 	 	SECTION
  IV 
			 			 	I elect to pay my taxes on this
      transaction 
	I elect to pay for my shares
      (check one): 				(check one): 
	 		 
	£	     	Broker assisted Cashless Exercise
      for 	     	£	     	Sell shares to cover taxes
      (Cashless Exercise for 
		Cash 			Cash/Stock) 
			 
	£		Cash Purchase by Check (payable
      to 		£		Check (payable to Krispy Kreme
      Doughnuts, Inc.) 
		Krispy Kreme Doughnuts,
      Inc.) 			(required for Cash
      Purchases) 

  

	 		 
	Signature 	 	Date of
      Exercise 

	Return 	KRISPY KREME
      DOUGHNUT 
	form
      to:       	CORPORATION 
	 	ATTN: Chief
      Financial Officer 
	 	P.O. Box
      83 
	 	Winston-Salem,
      NC 27102 
		Phone:
    336-725-2981

10

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