Document:

KRISPY KREME DOUGHNUT
CORPORATION
FRANCHISE AGREEMENT
BASIC TERMS

	A. 	Effective
      Date  		  
	 	(Insert date Franchisee 
    		  
	 	executes the
      agreement):  		  
	B. 	Franchisor:  	Krispy Kreme Doughnut
      Corporation, a North Carolina corporation  
	C. 	Store
      Number:  		  
	D. 	Store
      Address:  		  
	E. 	Store Type & Initial 
    	_____________	Factory
      Store  	$50,000  
	  	Franchise Fee:  	_____________	Hot
      Shop  	$30,000  
	  	  	_____________	Fresh Shop/Kiosk  	$20,000  
	F. 	Franchisee:  		  
	  	Franchisee’s
      Address:  		 	  
	  	Telephone:  		 	Fax No.: 	  
	  	E-mail
      Address:  	 	  
	G. 	Principal
      Owners:  		 
	H. 	Managing
      Director:  		  
	I. 	General
      Manager:  		  
	J. 	Term: 	The time period
      commencing on the Effective Date and expiring 15 years after the Effective
      Date.

	Franchisor:  	 
	  	(initials)  
	  
	Franchisee:  	  
	  	(initials)  

TABLE OF CONTENTS

		         	  	Page 
	1. 		BACKGROUND  	1 
	2. 		DEFINITIONS  	1 
	3. 		ACKNOWLEDGMENTS, REPRESENTATIONS, AND WARRANTIES  	5 
	4. 		GRANT OF
      FRANCHISE  	7 
	5. 		FRANCHISOR’S RESERVATION OF RIGHTS  	7 
	6. 		SITE
      SELECTION  	8 
	7. 		LEASE OR PURCHASE OF SITE  	9 
	8. 		STORE
      DEVELOPMENT  	9 
	9. 		BUILDING, EQUIPMENT, FIXTURES, FURNISHINGS, SIGNS AND
      SUPPLIES  	10 
	10. 		COMPUTER
      SYSTEM  	11

	11. 		STORE OPENING  	12 
	12. 		CAPITAL
      IMPROVEMENTS  	12

	13. 		INITIAL FRANCHISE FEE AND ROYALTIES  	13 
	14. 		TRAINING AND
      GUIDANCE  	14

	15. 		SYSTEM STANDARDS  	14 
	16. 		MARKS  	15

	17. 		CONFIDENTIAL INFORMATION  	16 
	18. 		PATENTS AND
      INVENTIONS  	17

	19. 		WORKS OF AUTHORSHIP AND COPYRIGHTS  	18 
	20. 		EXCLUSIVE
      RELATIONSHIP  	19

	21. 		COMPLIANCE WITH LAW  	19 
	22. 		MARKETING AND
      ADVERTISING  	20

	23. 		ACCOUNTING, REPORTS AND FINANCIAL STATEMENTS  	22 
	24. 		TRANSFER  	22

	25. 		SUCCESSOR FRANCHISE  	25 
	26. 		TERMINATION OF
      FRANCHISE  	26

	27. 		EFFECT OF TERMINATION OR EXPIRATION  	27 
	28. 		RELATIONSHIP OF
      PARTIES/INDEMNIFICATION  	30

	29. 		MISCELLANEOUS  	32 
	30. 		ACKNOWLEDGMENTS  	35
  

	EXHIBIT A  	       	FRANCHISEE INFORMATION  
	EXHIBIT
      B  		PRINCIPAL
      OWNERS’ PERSONAL GUARANTY  
	EXHIBIT C  		INVESTOR PERSONAL COVENANTS  
	EXHIBIT
      D  		AUTHORIZATION
      FOR ACH DEBITS OR CREDITS  
	EXHIBIT E  		AUTHORIZED OFF-PREMISES SALES  

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KRISPY KREME DOUGHNUT
CORPORATION
FRANCHISE AGREEMENT

     THIS
FRANCHISE AGREEMENT (this “Agreement”) is made and entered into as of the
Effective Date by and between Franchisor and Franchisee.

	1.		BACKGROUND
	 
	1.1	      	Franchisor has
      developed, as a result of considerable time, skill, effort, and money, a
      distinctive system for operating stores called “Krispy Kreme Stores” that
      offer and serve a variety of doughnuts, beverages, and other authorized
      products and services under the Marks.
	 
	1.2		Franchisor’s
      Affiliate, HDN Development Corporation, owns the Marks and has granted
      Franchisor the right to sublicense the Marks to its franchisees for their
      use in operating Krispy Kreme Stores and Commissary
  Facilities.
	 
	1.3		Franchisor grants
      Franchises to own and operate Krispy Kreme Stores and Commissary Facilites
      to Persons who meet its qualifications and are willing to undertake the
      investment and effort to properly develop and operate them.
	 
	1.4		Franchisee has
      submitted a Franchise Application to own and operate a Krispy Kreme Store
      at the Site, and Franchisor has accepted the application in reliance on
      all information Franchisee has provided in connection
  therewith.
	 
	2.		DEFINITIONS
	 
	2.1		Capitalized terms used
      in this Agreement have the meanings given to them in this Section and in
      the Basic Terms.
	 
	 		Account –
      Franchisee’s bank account as to which
      Franchisee has provided Franchisor with all appropriate account
      information and from which Franchisee has authorized Franchisor to
      withdraw funds by electronic funds transfers.
	 
	 		Affiliate –
      Any person that directly or indirectly
      owns or controls, that is directly or indirectly owned or controlled by,
      or that is under common ownership or control with the referenced person,
      including parents and subsidiaries.
	 
	 		Authorized
      Off-Premises Sales – Sales to wholesale
      customers pursuant to an express authorization by Franchisor, the current
      form of which is attached as Exhibit E.
	 
	 		Basic Terms –
      The terms of this Agreement set forth
      on the Krispy Kreme Doughnut Corporation Franchise Agreement Basic Terms
      section on the first page hereof.
	 
	 		Brand Fund –
      As defined in Section
    22.
	 
	 		Commissary Facility
      – A manufacturing facility for
      doughnuts and other Products that are supplied to Hot Shops and Fresh
      Shops/Kiosks. Commissary Facilities are not used for retail sales, but may
      distribute and sell to wholesale customers, subject to Franchisor’s
      authorization pursuant to the Commissary Facility Agreement.
	 
	 		Commissary Facility
      Agreement – An agreement used by
      Franchisor to grant the right to operate a Commissary Facility at a
      specific location.
	 
	 		Competitive
      Business – A business, other than a
      Krispy Kreme Store or Commissary Facility, that: (a) makes, sells or
      distributes yeast-raised doughnuts, cake doughnuts, or any other types of
      doughnuts, miniature doughnuts, doughnut holes or any other bakery
      products in any distribution channel to any customer for consumption or
      resale, and such sales constitute ten percent (10%) or more of its total
      sales (or such sales from any single location constitute 10% or more of
      the total sales of that location) during any calendar quarter or calendar
      year; (b) sells coffee or coffee drinks in any distribution channel to
      any

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      customer for consumption or resale,
      and such sales constitute twenty percent (20%) or more of its total sales
      (or such sales from any single location constitute 20% or more of the
      total sales of that location) during any calendar quarter or calendar
      year; (c) is the same as, or similar to, the Krispy Kreme Store concept as
      it evolves over time; or (d) grants franchises or licenses, or establishes
      joint ventures, for the development and/or operation of any business
      referred to in (a) through (c), above. Restrictions in this Agreement on
      having an Ownership Interest in a Competitive Business shall not apply to
      the ownership of shares of a class of securities listed on a stock
      exchange or traded on a public stock market that represents less than
      three percent (3%) of the number of shares of that class of securities
      issued and outstanding.

      Confidential
      Information – Certain confidential
      information relating to the development and operation of Krispy Kreme
      Stores and Commissary Facilities, which includes:

					 
	     	      	(a)	      	methods, techniques,
      equipment, specifications, standards, policies, procedures, information,
      concepts, and systems relating to and knowledge of and experience in the
      development, equipping, operation, outfitting and franchising of Krispy
      Kreme Stores and Commissary Facilities, as well as expansion, growth and
      development plans, and prospects;
			 
			(b)		marketing and
      advertising programs for Krispy Kreme Stores and Commissary
      Facilities;
			 
			(c)		knowledge concerning
      the logic, structure and operation of computer software programs which
      Franchisor authorizes for use in connection with the operation of Krispy
      Kreme Stores and Commissary Facilities, and all additions, modifications
      and enhancements, and all data generated from use of such
    programs;
			 
			(d)		specifications and
      standards for, and sources of, buildings, equipment, furnishings,
      fixtures, signs, products, materials, supplies, and services utilized in
      the development and operation of Krispy Kreme Stores and Commissary
      Facilities;
			 
			(e)		ingredients, formulas,
      mixes, recipes for and methods of preparation, cooking, serving,
      packaging, and delivery of the Products;
			 
			(f)		information concerning
      sales, operating results, financial performance, consumer preferences,
      inventory requirements, materials and supplies, and other financial data
      of Krispy Kreme Stores and Commissary Facilities, and customer
      lists;
			 
			(g)		current and concluded
      research, development and test programs for products, services and
      operations for use in Krispy Kreme Stores and Commissary
    Facilities;
			 
			(h)		the contents of any
      System Standards Manuals, System Standards, and site selection criteria;
      and
			 
			(i)		employee training, and
      staffing levels.
					 
			
      Development Agreement
      – If applicable, the Krispy Kreme
      Doughnut Corporation Development Agreement pursuant to which Franchisor
      has granted Franchisee the right to develop Krispy Kreme Stores and
      Commissary Facilities in the Development Area and pursuant to which this
      Agreement has been executed.

      Development Area – If applicable, the geographic area in which Franchisee
      has the right to develop Krispy Kreme Stores and Commissary Facilities, as
      set forth in the Development Agreement.

      Factory Store – A retail sales facility with the manufacturing
      capability to produce fresh doughnuts in accordance with System Standards.
      Additionally, Factory Stores may have some capacity to supply fresh
      doughnuts to Hot Shops and Fresh Shops/Kiosks.

      Force Majeure – Any of the following events or circumstances: (a) fire,
      earthquake, storm, hurricane, tornado, flood or other act of God; (b) war,
      act of terrorism, insurrection, rebellion, riots or other civil unrest;
      (c) epidemics, quarantine restrictions or other public health restrictions
      or advisories; and (d) other similar events beyond the reasonable control
      of the party.

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      Franchise – The rights granted and the obligations imposed pursuant
      to this Agreement that relate to the development and operation of the
      Krispy Kreme Store at the Site.

      Franchise
      Agreement – An agreement, such as this
      Agreement, used by Franchisor to grant franchises for the operation of
      Krispy Kreme Stores at specific locations (including all exhibits, riders,
      guarantees and other agreements used in connection therewith).

      Franchise Application –
      The application submitted by Franchisee
      for the Franchise.

      Franchise Disclosure Document
      –
      The franchise disclosure document
      required by applicable law.

      Franchisee – As defined in the Basic Terms.

      Franchisor – As defined in the Basic Terms.

      Fresh Shop/Kiosk –
      A retail sales facility with limited
      manufacturing capabilities (e.g. icing and filling equipment), or no
      manufacturing capabilities, that receives doughnuts from a Factory Store
      or a Commissary Facility and finishes them as necessary to sell in
      accordance with System Standards.

      Fundraising – Sales of doughnuts, redemption cards, or coupons to
      charitable, educational, and other nonprofit organizations restricted to
      those located within the STORE’s local market area (as Franchisor may
      determine from time to time) for resale (or giving) to
      consumers.

      General Manager – The general manager of the STORE. The initial general
      manager is identified in the Basic Terms.

      Good Standing – The condition that Franchisee and its Affiliates: (a)
      are current with all payments due to Franchisor, its Affiliates and
      suppliers; and (b) are not in default of any of their obligations under
      this Agreement, any Development Agreement (including any Development
      Schedule), any Franchise Agreement, any Commissary Facility Agreement or
      any other agreement between the parties hereto or any of their
      Affiliates.

      Hot Shop – A retail sales facility with an impinger oven and
      limited manufacturing capabilities (e.g., icing and filling equipment)
      that receives doughnuts from a Factory Store or a Commissary Facility and
      finishes them as necessary to sell in accordance with System
      Standards.

      Immediate Family – The spouse, parents, brothers, sisters and children,
      whether natural or adopted, of the referenced Person.

      Initial Franchise
      Fee – As defined in Section
      13.1

      Krispy Kreme
      Store(s) – Stores which Franchisor or any
      of its Affiliates own, operate or franchise and which use the Marks and
      the System. Krispy Kreme Stores include Factory Stores, Hot Shops and
      Fresh Shops/Kiosks, but do not include Commissary Facilities. 

      Managing Director – The person designated as managing director of
      Franchisee’s business pursuant to Section 20.2. The initial
      Managing Director is identified in the Basic Terms.

      Marks – The current and future trademarks, service marks,
      logos, designs, trade names, and other commercial symbols, together with
      all distinctive trade dress elements, or combinations thereof, used by
      Franchisor to identify the sources of goods and services offered and sold
      at Krispy Kreme Stores, including the trademark and service mark KRISPY
      KREME®.

      Net Sales – All the STORE’s revenue from food, beverages, and other
      products and merchandise of any type whatsoever sold, whether or not
      produced at the STORE or acquired from a third party, including Products
      purchased from other Krispy Kreme franchises (regardless whether owned by
      Franchisee) and services rendered at or away from the STORE (whether or
      not such sales are authorized by Franchisor) or from any use of the Marks,
      recorded using the accrual basis of accounting and otherwise in accordance
      with accounting principles generally accepted in the United States.
      Without limiting the foregoing, and for

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      the avoidance of doubt, “Net Sales”
      (a) includes all amounts Franchisee receives or has the right to receive
      from the conveyance of products and services, whether such sales are made
      for cash or cash equivalents (including credit, debit and gift cards) or
      on credit terms, but excludes (i) sales and similar taxes collected or
      which Franchisee has the right to collect from customers and which
      Franchisee is required by law to remit to a taxing authority, (ii)
      customer refunds, (iii) credits for product returns and (iv) sales or
      delivery of products to other Krispy Kreme Stores or Commissary Facilities
      (regardless whether owned by Franchisee), and (b) shall not be reduced by
      any charge or other provision for uncollectible accounts. Neither the
      inclusion of any type of revenue in the definition of Net Sales nor
      Franchisor’s demand or receipt of Royalties or Brand Fund contributions on
      such revenues shall constitute waiver or approval of any unauthorized
      sales by Franchisee hereunder, and Franchisor reserves all rights and
      remedies with respect thereto.

      On-Premises Sales – Sales conducted on-premises to retail customers
      visiting the STORE.

      Owner – Each Person (and permitted transferee of each such Person)
      holding: (a) a direct or indirect, legal or beneficial Ownership Interest
      or voting rights in Franchisee or any Affiliate of Franchisee that owns an
      Ownership Interest or voting rights in Franchisee; (b) a direct or
      indirect, legal or beneficial interest in this Agreement; (c) a direct or
      indirect, legal or beneficial interest in the STORE; or (d) any other
      legal or equitable interest, or the power to vest in himself or herself or
      itself any legal or equitable interest, in the revenue, profits, rights or
      assets arising from any of the foregoing.

      Ownership
      Interest – Any direct or indirect, legal
      or beneficial ownership interest of any type, including (a) in relation to
      a corporation, the ownership of shares in the corporation; (b) in relation
      to a partnership, the ownership of a general or limited partnership
      interest; (c) in relation to a limited liability company, the ownership of
      a membership interest; or (d) in relation to a trust, the ownership of a
      legal or beneficial interest of such trust.

      Payment Day – The day of the Week on which Royalties are due, which
      day currently is Friday, but may be changed at Franchisor’s sole
      discretion.

      Person –
      Any individual, corporation, limited liability company, general or
      limited partnership, unincorporated association, cooperative or other
      legal or functional entity.

      Principal Owner – An Owner with an Ownership Interest in Franchisee of
      ten percent (10%) or more.

      Products – The current and future products that Franchisor
      authorizes to be offered and sold at Krispy Kreme Stores, including (a)
      fresh doughnuts (including, yeast-raised doughnuts, cake doughnuts,
      miniature doughnuts, and doughnut holes, which doughnuts have various
      types and flavors of fillings, glazes, or other coatings); (b) hot or cold
      fresh-brewed coffee beverages suitable for immediate consumption; (c) hot
      or cold espresso drinks suitable for immediate consumption; (d) frozen
      beverages suitable for immediate consumption; and (e) such other products
      and beverages as we may determine from time to time. 

      Reporting Day – The day of the Week by which Franchisee is required
      to report Net Sales to Franchisor, which day currently is Tuesday, but may
      be changed at Franchisor’s sole discretion.

      Restricted Person – Franchisee, its Owners and Affiliates, and members of
      the Immediate Families of Franchisee (if a natural Person), and its Owners
      and Affiliates.

      Royalties – As set forth in Section 13.

      Site – The location of the STORE with the street address identified in
      the Basic Terms.

      STORE – The Krispy Kreme Store of the type identified in the Basic Terms
      that Franchisor authorizes Franchisee to operate at the Site pursuant to
      this Agreement. The term includes all of the assets of the STORE,
      including its revenue and income.

      System – Those business formats, methods, procedures, signs,
      designs, layouts, equipment, and mixes designated by Franchisor from time
      to time for use in operating Krispy Kreme Stores and Commissary
      Facilities.

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	 	      	System Standards –
      The mandatory and suggested
      specifications, standards, operating procedures and rules that Franchisor
      prescribes from time to time for the operation of Krispy Kreme Stores and
      Commissary Facilities, including the standards, specifications and other
      requirements related to the purchase, preparation, marketing and sale of
      the Products; On-Premises Sales, Authorized Off-Premises Sales; customer
      service; the design, décor and appearance of the STORE; the maintenance
      and remodeling of the STORE and the equipment, fixtures and furnishings
      therein; the use and display of the Marks; the insurance coverage required
      to be carried for the STORE; the training of STORE employees; the days and
      hours of STORE operation; and the content, quality and use of advertising
      and promotional materials.
	 
	 		System Standards
      Manuals – The documents and other media
      that contain the System Standards.
	 
	 		Term –
      As defined in the Basic
  Terms.
	 
	 		Transfer
      or Transfer the Franchise (or
      similar words) – The direct or indirect sale, assignment, transfer,
      exchange, conversion, license, sublicense, lease, sublease, mortgage,
      pledge, collateral assignment, grant of a security, collateral or
      conditional interest or other encumbrance in or on, or other disposition,
      whether voluntary, involuntary, by operation of law or otherwise, of this
      Agreement, of any interest in or right under this Agreement, any form of
      legal or beneficial ownership interest in Franchisee, or any form of
      ownership interest or right to participate in or receive the benefits of
      the assets, revenues, income or profits of Franchisee’s business, or any
      one or more other acts or events not covered by the foregoing that
      Franchisor reasonably determines to be a form of direct or indirect
      transfer, including: (a) any transfer, redemption or issuance of a legal
      or beneficial ownership interest in the capital stock of, a membership
      interest in, or a partnership interest in, Franchisee or any interest
      convertible into or exchangeable for capital stock of, a membership
      interest in or a partnership interest in, Franchisee; (b) any merger or
      consolidation of Franchisee, whether or not Franchisee is the surviving
      entity, or any conversion of Franchisee from one form of legal entity into
      another form of legal entity, or any sale, exchange, encumbrance or other
      disposition of Franchisee’s assets; (c) any transfer in connection with or
      as a result of a divorce, dissolution of marriage or similar proceeding or
      a property settlement or legal separation agreement in the context of a
      divorce, dissolution or marriage or similar proceeding, an insolvency,
      bankruptcy or assignment for benefit of creditors, a judgment, a
      corporate, limited liability company or partnership dissolution or
      otherwise by operation of law; or (d) any transfer by gift, declaration of
      trust, transfer in trust, revocation of trust, trustee succession, trust
      termination, discretionary or mandatory trust distribution, occurrence of
      any event (e.g., death of a person) that affects or ripens the rights
      of contingent beneficiaries, exercise of a power of appointment, exercise
      of a withdrawal right, adjudication of Franchisee or any Principal Owner
      as legally disabled, or upon or after Franchisee’s death or the death of
      any of Franchisee’s Principal Owners by will, disclaimer or the laws of
      intestate succession or otherwise.
	 
	 		Week
      – Any consecutive seven (7) calendar
      day period that Franchisor may designate from time to time, currently
      consisting of each seven (7) calendar day period ending at 11:59 PM on
      each Sunday.
	 
	2.2		Other terms used in
      this Agreement are defined in the context in which they
arise.
	 
	3.		ACKNOWLEDGMENTS,
      REPRESENTATIONS, AND WARRANTIES
	 
	3.1		Franchisee
      acknowledges that Franchisee has read this Agreement and Franchisor’s
      Franchise Disclosure Document and understands and accepts the terms and
      conditions contained in this Agreement as being reasonably necessary to
      maintain Franchisor’s high standards of quality and service. Franchisee
      further acknowledges that the uniformity of those standards at each Krispy
      Kreme Store is reasonably necessary to protect and preserve the goodwill
      of the Marks. Franchisee acknowledges that Franchisee has conducted an
      independent investigation of the business venture contemplated by this
      Agreement and recognizes that, like any other business, the nature of the
      business conducted by a Krispy Kreme Store may evolve and change over
      time, that an investment in a Krispy Kreme Store involves business risks,
      and that Franchisee’s business abilities and efforts are vital to the
      success of the venture. Any information Franchisee acquires from other
      Krispy Kreme Store franchisees relating to their sales, profits, or cash
      flows does not constitute information obtained from Franchisor, nor does
      Franchisor make any representation as

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	 	      	to the accuracy of any
      such information or the likelihood of Franchisee achieving comparable
      results. Franchisee acknowledges that, in all of its dealings with
      Franchisor, Franchisor’s officers, directors, employees and agents act
      only in a representative, and not in an individual, capacity. All business
      dealings between Franchisee and such Persons in connection with this
      Agreement are solely between Franchisee and Franchisor. Franchisee further
      acknowledges that Franchisor has advised Franchisee to have this Agreement
      reviewed and explained to Franchisee by an attorney.
	 
	3.2		Franchisee represents
      and warrants to Franchisor, as an inducement to Franchisor’s entry into
      this Agreement, that all statements Franchisee has made and all materials
      Franchisee has submitted to Franchisor in connection with Franchisee’s
      Franchise Application for and purchase of the Franchise are accurate and
      complete and that Franchisee has made no misrepresentations or material
      omissions to obtain the Franchise. Franchisor has approved Franchisee’s
      Franchise Application for a franchise for a Krispy Kreme Store in reliance
      on each of Franchisee’s representations to Franchisor.
	 
	3.3		Franchisee represents
      and warrants to Franchisor that Franchisee has the authority to execute
      and deliver this Agreement and to perform Franchisee’s obligations
      hereunder.
	 
	3.4		Franchisee represents
      and warrants to Franchisor that this Agreement has been duly executed and
      delivered by Franchisee and, assuming the due authorization, execution and
      delivery by Franchisor, constitutes a legal, valid and binding obligation
      of Franchisee, enforceable in accordance with its terms.
	 
	3.5		Franchisee represents
      and warrants to Franchisor that Franchisee’s execution and delivery of
      this Agreement does not, and Franchisee’s performance of its obligations
      under this Agreement will not, with or without the giving of notice or the
      lapse of time or both, (a) conflict with or violate its organizational
      documents, if applicable, (b) conflict with or violate any law, statute,
      ordinance, rule, regulation, order, judgment or decree applicable to
      Franchisee, or (c) conflict with, result in any breach of, or constitute a
      default under, any contract, agreement, lease, license, permit, franchise
      or other instrument or obligation to which Franchisee is a party or by
      which Franchisee is bound.
	 
	3.6		Franchisee represents
      and warrants to Franchisor that: (a) Franchisee owns fee simple title to
      the real property and improvements which comprise the STORE; or (b) if
      Franchisee holds a leasehold interest in the STORE, Franchisee has or will
      have a binding and effective lease with a lease term (plus renewal
      options) extending at least to the end of the Term and otherwise
      conforming to Franchisor’s requirements in accordance with Section
      7.
	 
	3.7		If Franchisee is, or
      at any time becomes, a business corporation, partnership, limited
      liability company or other legal entity, Franchisee and each of its
      Principal Owners represent, warrant and agree that: (a) Franchisee is duly
      organized and validly existing under the laws of the state of its
      organization, and, if a foreign business corporation, partnership, limited
      liability company or other legal entity, Franchisee is duly qualified to
      transact business in the state in which the STORE is located; (b)
      Franchisee has the authority to execute and deliver this Agreement and to
      perform its obligations hereunder; (c) true and complete copies of the
      articles of incorporation, articles of organization, operating agreement
      or principles, partnership agreement, bylaws, subscription agreements,
      buy-sell agreements, voting trust agreements, trust agreements and all
      other documents relating to Franchisee’s ownership, organization,
      capitalization, management and control (“Organizational Documents”) shall
      be promptly delivered to Franchisor for its approval, which approval shall
      not be unreasonably withheld; (d) any and all amendments, deletions and
      additions to Franchisee’s Organizational Documents shall be promptly
      delivered to Franchisor for its approval, which approval shall not be
      unreasonably withheld; (e) Franchisee’s activities are restricted to those
      necessary solely for the development, ownership and operation of Krispy
      Kreme Stores and Commissary Facilities in accordance with this Agreement
      and in accordance with any other agreements entered into with Franchisor
      or any of its Affiliates; (f) the Organizational Documents recite that the
      issuance, transfer or pledge of any direct or indirect legal or beneficial
      ownership interest is restricted by the terms of this Agreement; (g) all
      certificates representing direct or indirect legal or beneficial ownership
      interests now or hereafter issued must bear a legend in conformity with
      applicable law reciting or referring to such restrictions; and (h)
      Franchisee will deliver to Franchisor a Secretary/Clerk’s/Trustee’s
      Certificate

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	 		or other evidence satisfactory to
      Franchisor that the execution, delivery and performance of this Agreement
      and all other agreements and ancillary documents contemplated hereby or
      thereby have been duly authorized by all necessary action by the
      corporation, partnership, limited liability company or other legal entity,
      as applicable, and are within the legal powers of Franchisee’s trustee, if
      Franchisee is a trust.
	 
	3.8	      	Franchisee and each of its
      Principal Owners represent, warrant, and agree that Exhibit A is
      current, complete and accurate. Franchisee agrees that an updated
      Exhibit A will be furnished promptly to Franchisor, so that
      Exhibit A (as so revised and signed by Franchisee) is at all times
      current, complete and accurate. Each person who is or becomes a Principal
      Owner must execute an agreement in the form Franchisor prescribes,
      undertaking to guarantee and be bound jointly and severally by the terms
      of this Agreement, the current form of which is attached hereto as
      Exhibit B. Each person who is or becomes an Owner, whether or not a
      Principal Owner, must execute an agreement in the form Franchisor
      prescribes, undertaking to be bound by the confidentiality and
      non-competition covenants contained in this Agreement, the current form of
      which is attached hereto as Exhibit C. Each Owner must be an
      individual acting in his/her individual capacity, unless Franchisor waives
      this requirement.
	 
	3.9		The provisions of Section
      3 constitute continuing representations and warranties, and Franchisee
      and Franchisee’s Principal Owners shall notify Franchisor immediately in
      writing of the occurrence of any event or the development of any
      circumstance that might render any of the foregoing representations and
      warranties false, inaccurate or misleading.
	 
	4.		GRANT OF
    FRANCHISE
	 
	4.1		Subject to the terms of and on
      the conditions contained in this Agreement, Franchisor hereby grants to
      Franchisee the right to operate the STORE during the Term and to use the
      Marks and the System in the performance of Franchisee’s obligations under
      this Agreement.
	 
	4.2		Franchisee will faithfully,
      honestly, and diligently perform Franchisee’s obligations under this
      Agreement. Franchisee will continuously exert its best efforts to promote
      and enhance the operation of the STORE and to maximize the sale of
      Products.
	 
	4.3		Franchisee may not operate the
      STORE from any location other than the Site without Franchisor’s prior
      written consent. If Franchisor consents to the relocation of the STORE,
      Franchisor has the right to charge Franchisee for its expenses in
      connection with the relocation.
	 
	4.4		Franchisee agrees that the STORE
      will be under direct, on-premises management by a trained Managing
      Director or General Manager or one of Franchisee’s other managers, all of
      whom must have completed training to Franchisor’s
  satisfaction.
	 
	4.5		Franchisee agrees that the STORE
      will not be closed for five (5) or more consecutive days without
      Franchisor’s prior written consent.
	 
	4.6		In addition to selling the
      Products, Franchisee agrees to offer and sell such other goods and
      services as Franchisor may require from time to time in Franchisor’s sole
      discretion. Franchisee will not, however, sell anything at, from or in
      connection with the STORE, other than the Products and other goods or
      services Franchisor authorizes Franchisee to offer or sell.
	 
	4.7		Franchisee may engage only in
      On-Premises Sales at and from the STORE and Authorized Off-Premises Sales,
      and shall not engage in any other types of sales or distribution of
      Products.
	 
	5.		FRANCHISOR’S RESERVATION OF
      RIGHTS
	 
	5.1		Franchisor and its Affiliates
      (and their respective successors and assigns, by purchase, merger,
      consolidation or otherwise) retain all rights not expressly granted to
      Franchisee in this Agreement, including those with respect to Krispy Kreme
      Stores and Commissary Facilities, the Marks, and the sale of Products,
      including all rights Franchisor expressly reserves in this Section
      5. Franchisee waives, to the fullest extent permitted under applicable
      law, all claims, demands or causes of action arising from or related to
      any of such activities by Franchisor or any of its
  Affiliates.

7

	5.2	      	No exclusive
      territory, protection, or other right in the contiguous space, area, or
      market of the STORE is expressly or impliedly granted to Franchisee under
      this Agreement, and Franchisor reserves the right to operate and to grant
      others the right to operate Krispy Kreme Stores at any location on such
      terms and conditions as it deems appropriate. Franchisee acknowledges and
      agrees that such Krispy Kreme Stores and Commissary Facilities may be in
      direct competition with the STORE, without regard to any adverse effect on
      the STORE and without any obligation or liability to
  Franchisee.
	 
	5.3		Franchisor reserves
      the right to acquire, develop, and operate, or be acquired by, any
      company, including a company operating one or more food service businesses
      (including food service businesses selling doughnuts or
  coffee).
	 
	5.4		Franchisor reserves
      the right to license, sample, sell, or market by any means whatsoever
      (including the Internet) the Products and any goods or services identified
      by the Marks. Such goods and services may be licensed, sampled, sold, or
      marketed in any and all locations and venues, and through any method or
      channel of distribution Franchisor deems appropriate in its sole
      discretion (including wholesale distribution of Products to supermarkets,
      grocery stores, convenience stores, and other retail outlets). Such sales
      may be in direct competition with the STORE, without regard to any adverse
      effect on the STORE and without any obligation or liability to
      Franchisee.
	 
	6.		SITE
      SELECTION
	 
	6.1		Franchisee
      acknowledges that, prior to signing this Agreement, Franchisee (with or
      without Franchisor assistance) located, and Franchisor approved, the Site.
      Franchisee acknowledges and agrees that Franchisor’s recommendation or
      approval of the Site, and any information regarding the Site communicated
      to Franchisee, do not constitute any acknowledgement, warranty or
      representation of any kind, express or implied, including any warranty or
      representation as to the potential access, visibility or profitability of
      a Krispy Kreme Store at that Site, or for any other purpose. Franchisor’s
      approval of the Site merely signifies that Franchisor is willing to grant
      a Franchise for a Krispy Kreme Store at that location. Application of
      criteria that have appeared effective with respect to other sites may not
      accurately reflect the potential for all sites, and, after Franchisor’s
      approval of a site, demographic and/or other factors included in or
      excluded from Franchisor’s criteria could change, thereby altering the
      potential of a site. The uncertainty and instability of such criteria are
      beyond Franchisor’s control, and Franchisor will not be responsible for
      the failure of a site Franchisor has recommended or approved to meet
      expectations as to potential revenue or operational criteria. Neither
      Franchisor’s approval of the Site nor any assistance Franchisor may give
      Franchisee in identifying the Site, constitutes a warranty or
      representation of any kind, express or implied, as to the suitability of
      the proposed Site for a Krispy Kreme Store or for any other purpose.
      Franchisee’s decision to develop and operate the STORE at the Site is
      based solely on Franchisee’s own independent investigation of the
      suitability of the Site for a Krispy Kreme Store.
	 
	6.2		Franchisee must also
      cause to be prepared, and submit for approval by Franchisor, a site plan
      and any modifications to Franchisor’s basic plans and specifications for
      the STORE, including requirements for dimensions, exterior design,
      materials, interior layout, equipment, fixtures, furniture, signs and
      decorating. Franchisee understands that Franchisee may modify Franchisor’s
      basic plans and specifications only to the extent required to comply with
      applicable ordinances, building codes and permit requirements and only
      with Franchisor’s prior written approval. Franchisor’s exercise of its
      right to approve the Site layout, to approve any plans, to inspect the
      construction or conversion of the STORE shall be solely for the purpose of
      assuring compliance with the System Standards and shall not be construed
      as any express or implied representation or warranty that the STORE
      complies with any applicable laws, codes or regulations (including the
      Americans with Disabilities Act (“ADA”) or any other federal, state, or
      local law or ordinance regulating standards for the access to, use of, or
      modification of buildings for and by persons whose disabilities are
      protected by law) or that the construction thereof is sound or free from
      defects. Franchisor’s criteria for approval or disapproval do not
      encompass technical, architectural or engineering considerations.
      Franchisor shall have no liability or obligation with respect to the
      construction or conversion of the STORE.

8

	7.		LEASE OR
      PURCHASE OF SITE
	 
	7.1	      	Franchisee
      must lease, sublease or purchase the Site within one-hundred and eighty
      (180) days after the date of Franchisor’s site acceptance letter.
      Franchisor has the right to approve the terms of any lease, sublease or
      purchase contract for the Site, and Franchisee agrees to deliver a copy to
      Franchisor for Franchisor’s approval before Franchisee signs it.
      Franchisee agrees that any lease or sublease for the Site must, in form
      and substance satisfactory to Franchisor, (a) provide for notice to
      Franchisor of Franchisee’s default under the lease or sublease and an
      opportunity for Franchisor to cure such default; (b) require the lessor or
      sublessor to disclose to Franchisor, on its request, sales and other
      information furnished by Franchisee; (c) give Franchisor the right on any
      termination or expiration (without renewal) of this Agreement to assume
      the lease or sublease without the lessor’s or sublessor’s consent; (d)
      give Franchisor the right to enter the STORE to remove signs and other
      tangible property that embodies any of the Marks or that contains or
      embodies patents owned by Franchisor or any of its Affiliates, and provide
      that the lessor and/or sublessor relinquishes to Franchisor, on any
      termination or expiration (without renewal) of this Agreement, any lien or
      other ownership interest, whether by operation of law or otherwise, in and
      to any tangible property, including any outdoor sign, that embodies any of
      the Marks; and (e) require that the lessor and/or sublessor acknowledges
      that Franchisor has no liability or obligation whatsoever under the lease
      or sublease until and unless Franchisor assumes the lease or sublease on
      termination or expiration of this Agreement.
	 
	 		Franchisee
      may not execute a lease, sublease or purchase contract pertaining to the
      Site for the STORE or any modification thereof without Franchisor’s
      approval. Franchisor’s approval of the lease, sublease or purchase
      contract does not constitute a warranty or representation of any kind,
      express or implied, as to its fairness or suitability or as to
      Franchisee’s ability to comply with its terms. Franchisor does not, by
      virtue of approving the lease, sublease or purchase contract, assume any
      liability or responsibility to Franchisee or to any third parties.
      Franchisee must deliver a copy of the fully signed lease, sublease or
      purchase contract to Franchisor within five (5) days after its
      execution.
	 
	8.		STORE
      DEVELOPMENT
	 
	8.1		Franchisee
      is responsible for developing the STORE. In the System Standards Manuals,
      Franchisor will furnish Franchisee with mandatory and suggested
      specifications and layouts for a Krispy Kreme Store, including
      requirements for dimensions, design, image, interior layout, decor,
      equipment, fixtures, furnishings, construction materials, and signs.
      Franchisee acknowledges that the System Standards Manuals do not contain
      the requirements of any federal, state, or local law, code, ordinance or
      regulation (including building codes, permit requirements, and regulations
      and the ADA or similar rules governing accommodations for persons with
      disabilities). Franchisee is obligated to have prepared all required
      construction plans and specifications to suit the shape and dimensions of
      the Site and to insure that such plans and specifications comply with all
      applicable state, federal, and local laws, codes, ordinances, regulations
      (including building codes, permit requirements, and regulations and the
      ADA or similar rules governing accommodations for persons with
      disabilities). Franchisee is obligated to submit construction plans and
      specifications to Franchisor for approval before construction of the STORE
      is commenced and, at Franchisor’s request, to submit all revised plans and
      specifications during the course of such construction with “as built”
      plans to be provided upon completion. Franchisor may be willing to assist
      Franchisee in developing the STORE by recommending engineers and
      architects and otherwise furnishing information to assist Franchisee in
      developing the STORE in accordance with Franchisor’s
    specifications.
	 
	8.2		Franchisee
      agrees, at its own expense, to do the following with respect to developing
      the STORE at the Site:
	 
	 		(a)		secure all financing
      required to develop and operate the STORE;
	 
	 		(b)		obtain all building,
      utility, sign, health, sanitation, business and other permits and licenses
      required to construct and operate the STORE;
	 
	 		(c)	      	construct all required
      improvements to the Site and decorate the STORE in compliance with plans
      and specifications and designs Franchisor has
  approved;

9

	 		(d)		purchase or lease and install all
      required equipment, fixtures, furnishings, and signs required for the
      STORE; and
	 
	 	      	(e)	      	purchase an opening inventory of
      authorized and approved materials and supplies, certain of which items
      must be purchased from Franchisor, its Affiliates, or suppliers designated
      by Franchisor, all as described in the System Standards
  Manuals.
	 
	8.3		Franchisee acknowledges that
      Franchisor is not responsible for, and shall have no liability for, the
      architecture, design, engineering, or construction of the STORE, for the
      STORE’s compliance with any federal, state, or local law (including the
      ADA and any other federal, state or local law or ordinance regulating
      standards for access to, use of the, or modification of buildings for and
      by persons who are protected by law by virtue of such disability or whose
      disabilities are otherwise recognized by law), for any errors, omissions
      or discrepancies of any nature in any drawings or specifications with
      respect to the STORE, or for any other matter relating to the development,
      use or operation of the STORE, even if Franchisor assists in the
      development of the STORE.
	 
	9.		BUILDING, EQUIPMENT, FIXTURES,
      FURNISHINGS, SIGNS AND SUPPLIES
	 
	9.1		Franchisee acknowledges that the
      Products, Marks, and System have established significant prestige and
      goodwill and are well-recognized in the mind of the public and the trade.
      In order to preserve such prestige and goodwill, Franchisee understands
      and agrees that it is necessary and appropriate for Franchisor to closely
      control the supply chain for all equipment (including production equipment
      and fixtures, cash register, POS system and computer), fixtures,
      furnishings, signs, delivery vehicles, raw materials (including doughnut
      mixes and coffee beans), supplies, and any other items used or useful in
      developing or operating the STORE or producing, marketing, or selling the
      Products or other goods Franchisor requires Franchisee to
  sell.
	 
	9.2		Franchisee agrees to use in
      developing and operating the STORE (and producing, marketing, and selling
      the Products and other goods Franchisor requires Franchisee to sell) only
      the equipment, fixtures, furnishings, signs, delivery vehicles, raw
      materials, supplies, cash register, POS system, and computers and other
      items that Franchisor has approved from time to time for Franchisee to use
      in conjunction with the STORE as meeting its specifications and standards
      for quality, design, appearance, function and performance in accordance
      with the System Standards. Any deviation from Franchisor’s mandatory
      specifications and standards as prescribed by the System Standards must
      receive prior written approval from Franchisor. Approval of any item for
      use by Franchisor, its Affiliates, or other developers or franchisees will
      not be construed as approval of such item for Franchisee’s
  use.
	 
	9.3		Notwithstanding Section
      9.2, Franchisor may require Franchisee to purchase any or all of the
      equipment, fixtures, furnishings, signs, delivery vehicles, raw materials,
      supplies, and other items for the STORE directly from Franchisor or its
      Affiliates or other suppliers it may designate from time to time.
      Franchisee agrees to purchase all such items from Franchisor, its
      Affiliates or designated suppliers, as Franchisor may require. Franchisee
      acknowledges and agrees that Franchisor, its Affiliates and designated
      suppliers have the right to profit from the sale of such items and that
      Franchisor does not act as agent, representative or in any other
      intermediary or fiduciary capacity for Franchisee in Franchisor’s
      relationship with any designated suppliers. Franchisee acknowledges and
      agrees that (a) Franchisor and/or its Affiliates may receive payments,
      fees, commission or reimbursements from designated suppliers and third
      parties in respect to such purchases, (b) Franchisor and/or its Affiliates
      may have investments in designated suppliers, and (c) Franchisor and/or
      its Affiliates may profit from Franchisee’s purchases from designated
      suppliers. Franchisor, its Affiliates and designated suppliers shall not
      be liable for any delay in the delivery of ingredients as a result of any
      Force Majeure. Franchisor, its Affiliates and designated suppliers may
      establish policies and procedures from time to time for the allocation and
      distribution of items among Krispy Kreme Stores and Commissary
      Facilities.

10

	9.4	      	All equipment
      (including production equipment), fixtures, furnishings, raw materials
      (including doughnut mixes and coffee beans) that Franchisee purchases from
      Franchisor, its Affiliates or designated suppliers shall be at such prices
      and on such purchase terms (including credit, such as COD, and shipping)
      and conditions as Franchisor, its Affiliates or designated suppliers may
      determine from time to time. EXCEPT AS
      OTHERWISE EXPRESSLY PROVIDED IN ANY PURCHASE ORDER ISSUED BY FRANCHISOR OR
      ITS AFFILIATES OR DESIGNATED SUPPLIERS, NEITHER FRANCHISOR, ANY OF ITS
      AFFILIATES NOR ANY DESIGNATED SUPPLIER MAKES ANY WARRANTY OR
      REPRESENTATION, EXPRESS OR IMPLIED, AS TO MERCHANTABILITY, FITNESS FOR
      PARTICULAR PURPOSE OR OTHERWISE WITH RESPECT ANY ITEMS FRANCHISEE IS
      REQUIRED TO PURCHASE FROM ANY OF THEM. NEITHER FRANCHISOR, ANY OF ITS
      AFFILIATES NOR ANY DESIGNATED SUPPLIER WILL HAVE ANY LIABILITY FOR
      SPECIAL, INCIDENTAL, CONSEQUENTIAL OR PUNITIVE DAMAGES IN CONNECTION WITH
      ANY SUCH ITEMS, INCLUDING FRANCHISEE’S PURCHASE, USE OR RESALE OF ANY SUCH
      ITEMS.
	 
	9.5		In the event
      Franchisor does not require Franchisee to purchase a particular item from
      Franchisor, its Affiliates, or a designated supplier, Franchisee may
      purchase such item from a supplier Franchisor has approved. If Franchisee
      proposes to purchase any such item from any supplier who is not then
      approved by Franchisor, Franchisee and the proposed supplier must submit
      to Franchisor all information that Franchisor may request in order to
      determine whether to approve the supplier. Franchisor will have the
      unconditional right to approve or disapprove any proposed supplier, and
      Franchisor may approve a supplier conditionally. Within thirty (30) days
      after Franchisor receives all requested information, Franchisor will
      communicate to Franchisee in writing Franchisor’s decision to approve or
      disapprove Franchisee’s proposed supplier. Franchisor will evaluate
      proposed suppliers on their ability to comply with applicable standards,
      specifications and procedures, and Franchisor will only approve those
      proposed suppliers that meet Franchisor’s high standards. Franchisor may
      disapprove any supplier who Franchisor previously approved, and Franchisee
      may not, after receipt of notice of disapproval, reorder from any supplier
      Franchisor has disapproved. Franchisor may prescribe procedures for the
      submission of requests for approval and impose obligations on approved
      suppliers, which will be incorporated in a written license agreement with
      the supplier. Franchisor may obtain from Franchisee and/or such approved
      suppliers reimbursement of Franchisor’s reasonable costs and expenses
      incurred in connection with the approval process of the supplier’s
      compliance with Franchisor’s requirements. Franchisee acknowledges and
      agrees that Franchisor does not act as agent, representative or in any
      other intermediary or fiduciary capacity for Franchisee in Franchisor’s
      relationship with approved suppliers. Franchisor may impose limits on the
      number of approved suppliers. Franchisor has the right to monitor the
      quality of services provided by approved suppliers in a manner Franchisor
      deems appropriate and may terminate any approved supplier that does not
      meet Franchisor’s quality standards and specifications, as may be in
      effect from time to time.
	 
	9.6		Franchisee agrees to
      place or display at the Sites (interior and exterior) only such signs,
      emblems, lettering, logos, and display materials that Franchisor approves
      from time to time.
	 
	10.		COMPUTER
      SYSTEM
	 
	10.1		Franchisee agrees to
      use in the development and operation of the STORE the POS, cash
      register/computer terminals and operating software (“Computer System”)
      that Franchisor specifies from time to time. Franchisee agrees to install
      and use at the STORE the Computer System that Franchisor specifies from
      time to time and to transmit to Franchisor (and otherwise permit
      Franchisor to collect) in the form and at frequencies it specifies from
      time to time, electronic information from the Computer System. Franchisee
      also agrees to identify Product categories and other items in the Computer
      System in a form that Franchisor specifies. Franchisee agrees to install
      and maintain at the STORE a DSL or cable modem, or similar means of
      networking, and dedicated line that Franchisor may use to access sales
      information and other data on the Computer System. Franchisee is
      responsible for maintaining a secure network environment consistent with
      this Agreement and all applicable legal
requirements.

11

	10.2	      	Franchisee acknowledges that
      Franchisor has developed specifications for certain components of the
      Computer System and may modify such specifications and the components of
      the Computer System from time to time. As part of the Computer System,
      Franchisor may require Franchisee to obtain specified computer hardware
      and/or software, including a license to use proprietary software developed
      by Franchisor or others. Franchisor’s modification of such specifications
      for the components of the Computer System may require Franchisee to incur
      costs to purchase, lease and/or license new or modified computer hardware
      and/or software and to obtain service and support for the Computer System
      during the term of this Agreement. Franchisee acknowledges that Franchisor
      cannot estimate the future costs of the Computer System (or additions or
      modifications thereto) and that the cost to Franchisee of obtaining the
      Computer System (including software licenses) (or additions or
      modification thereto) may not be fully amortizable over the remaining term
      of this Agreement. Within sixty (60) days after Franchisee receives notice
      from Franchisor, Franchisee agrees to obtain the components of the
      Computer System that Franchisor designates and requires.
	 
	10.3		Franchisee further acknowledges
      and agrees that Franchisor has the right to charge a reasonable systems
      fee for software or systems, modifications and enhancements specifically
      made for Franchisor that are licensed to Franchisee and other maintenance
      and support services that Franchisor or its Affiliates furnish to
      Franchisee related to the Computer System.
	 
	11.		STORE OPENING
	 
	11.1		Franchisee agrees not to open the
      STORE for business until:
	 
	 		(a)		Franchisor approves the STORE and
      site plan as developed in accordance with Franchisor’s specifications and
      System Standards;
	 
	 		(b)		All required training has been
      completed to Franchisor’s satisfaction;
	 
	 		(c)	      	Franchisee is in compliance with
      all Franchise Agreements, Development Agreements, and Commissary Facility
      Agreements, including the payment of the Initial Franchise Fee and all
      other amounts then due to Franchisor;
	 
	 		(d)		Franchisor has been furnished
      with copies of all insurance policies required by this Agreement, or such
      other evidence of insurance coverage and payment of premiums as Franchisor
      requests or accepts; and
	 
	 		(e)		Other items which Franchisor may
      reasonably require have been furnished to Franchisor.
	 
	11.2		Franchisee must properly staff
      the STORE prior to opening. Franchisor will supply at no charge an opening
      team that will assist Franchisee for a minimum of seven (7) days in the
      opening of the STORE. However, if Franchisee is developing several Krispy
      Kreme Stores or Commissary Facilities pursuant to a Development Agreement,
      this team will be made available at no charge for the first Krispy Kreme
      Store or Commissary Facility, one-half of a team will be made available at
      no charge for the second Krispy Kreme Store or Commissary Facility, a
      field consultant will be made available at no charge for the third Krispy
      Kreme Store or Commissary Facility and a field consultant may or may not
      be made available at no charge for any subsequent Krispy Kreme Stores or
      Commissary Facilities, at Franchisor’s sole discretion. “No charge” means
      Franchisor will be responsible for the team’s travel, room and board, and
      salaries, but Franchisee will be responsible for all other charges or
      expenses.
	 
	12.		CAPITAL
    IMPROVEMENTS
	 
	12.1		In addition to the requirements
      of Section 10 pertaining to the Computer System, Franchisor may,
      from time to time, require Franchisee to make certain capital improvements
      with respect to developing or operating the STORE, including: (a) the
      acquisition of new equipment (whether for the Products or other goods
      Franchisor requires Franchisee to sell or otherwise), fixtures,
      furnishings, signs, delivery vehicles, or other fixed assets; (b) periodic
      remodeling; and (c) replacement of obsolete or worn-out improvements,
      equipment, fixtures, furnishings, signs, delivery vehicles, or other fixed
      assets (“Capital Improvements”).

12

			Franchisee agrees to make such Capital
      Improvements as Franchisor may specify from time to time in Franchisor’s
      sole discretion. Franchisee agrees not to make any modifications to any
      required Capital Improvements without Franchisor’s prior written approval.
      Franchisee further agrees that all intellectual property rights to any
      such Capital Improvements, if applicable, will be the exclusive property
      of Franchisor or its Affiliates.
			 
	13.		INITIAL FRANCHISE FEE AND
      ROYALTIES
	 
	13.1	      	Concurrently with the signing of
      this Agreement, Franchisee agrees to pay Franchisor a nonrecurring initial
      franchise fee in the amount specified in the Basic Terms (“Initial
      Franchise Fee”). The Initial Franchise Fee is fully-earned,
      non-refundable, and payable to Franchisor on the Effective
  Date.
			 
	13.2		On or before the Payment Day each Week,
      Franchisee will pay Franchisor an amount equal to four and one-half
      percent (4.5%) of Net Sales (“Royalties”) for the preceding Week, provided
      however, Royalties on Authorized Off-Premises Sales shall be the following
      percentages of Net Sales: three and one half (3 1⁄2 %)
      of Net Sales incurred during 2008; two and one-half percent (2
      1⁄2%) of Net Sales incurred during 2009; and one percent
      (1%) of Net Sales incurred during 2010 and thereafter. On or before the
      Reporting Day each Week, Franchisee will report to Franchisor, in the form
      it may require from time to time, the true and correct Net Sales of the
      STORE for the preceding Week.
			 
	13.3		Franchisee agrees to give Franchisor
      authorization, in the form that Franchisor designates from time to time
      (the current from is attached as Exhibit D), for direct debits
      from, or credits to, the Account. Franchisee shall not close the Account
      (or allow the Account to be closed) without first opening and notifying
      Franchisor of an alternate Account, nor shall Franchisee terminate any
      direct debit authorization from the Account without a replacement
      authorization approved by Franchisor. Franchisee hereby authorizes
      Franchisor to initiate debit entries and/or credit entries to the Account
      for payments of Royalties and other amounts payable under this Agreement,
      including purchases for production equipment, fixtures, furnishings,
      doughnut mixes and other ingredients, packaging and all supplies purchased
      from Franchisor and any interest charges due thereon. Franchisee agrees to
      make the funds available in the Account for withdrawal no later than the
      due date for payment. The amount actually transferred from the Account to
      pay Royalties will be based on the STORE’s Net Sales reported to
      Franchisor or determined by Franchisor from the records contained in the
      cash register/computer terminals of the STORE. If Franchisee has not
      reported Net Sales of the STORE to Franchisor for any reporting period as
      required above, Franchisee hereby authorizes Franchisor to debit the
      Account in an estimated amount based on prior reports of Net
    Sales.
			 
	13.4		If at any time Franchisor determines that
      Franchisee has under-reported the Net Sales of the STORE, or underpaid
      Royalties or any other amounts due to Franchisor under this Agreement,
      Franchisee hereby authorizes Franchisor to initiate immediately a debit to
      the Account in the appropriate amount, including interest as provided for
      in this Agreement. Any overpayment will be credited to the Account through
      a credit effective as of the first reporting date after Franchisor and
      Franchisee determine that such credit is due.
			 
	13.5		All amounts that Franchisee owes Franchisor
      will bear interest after their due date at the rate of one and one-half
      percent (1.5%) per month or the highest contract rate of interest
      permitted by law, whichever is less. Franchisee acknowledges that this
      Section does not constitute Franchisor’s agreement to accept any payments
      after they are due or Franchisor’s commitment to extend credit to, or
      otherwise finance Franchisee’s operation of, the STORE. Franchisee’s
      failure to pay all amounts when due constitutes a material breach and
      grounds for termination of this Agreement, as provided in Section
      26 hereof, notwithstanding the provisions of this Section
      13.5.
			 
	13.6		Notwithstanding any designation Franchisee
      might make, Franchisor has sole discretion to apply any of Franchisee’s
      payments to any of its past due indebtedness to Franchisor in any
      sequence. Franchisee acknowledges and agrees that Franchisee has no right
      to set off any amounts that Franchisee claims Franchisor owes Franchisee
      against Royalties, Brand Fund contributions, payments for purchases, or
      any other amounts Franchisee owes Franchisor under this Agreement or
      otherwise.

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	14.		TRAINING AND
      GUIDANCE
	 
	14.1	      	Before the STORE
      begins operating, Franchisor will furnish training on the operation of a
      Krispy Kreme Store as follows. Franchisor will furnish a training program
      for up to two (2) STORE managers furnished at Franchisor’s designated
      training facility and/or at an operating Krispy Kreme Store, at
      Franchisor’s discretion. The STORE managers are required to complete
      training to Franchisor’s satisfaction. Although Franchisor will furnish
      training to these managers of the STORE at no additional fee or other
      charge, Franchisee will be responsible for the managers’ wages, salaries,
      travel, room and board, and living expenses during training. Franchisee
      agrees to replace a manager immediately if Franchisor determines that he
      or she is not qualified to serve in this capacity at the STORE. Franchisor
      will furnish the same training program to one (1) additional manager of
      the STORE per year that Franchisee hires after the STORE is open, without
      fee or other charge, subject to the schedules for the training program in
      effect from time to time. Franchisee will be responsible for the managers’
      wages, salaries, travel, room and board, and living expenses during
      training.
	 
	14.2		Franchisor may require
      managers of the STORE to attend and successfully complete periodic or
      additional training programs, and Franchisor may also offer optional
      training programs. Except as provided in Section 14.1, Franchisor
      has the right to charge reasonable fees for providing any such initial,
      periodic or additional training programs. Franchisee will be responsible
      for the managers’ wages, salaries, travel, room and board, and living
      expenses incurred by Franchisee and Franchisee’s personnel in attending
      any training programs. Franchisee shall immediately replace any managers
      who fail to successfully complete any training program.
	 
	14.3		Franchisor will
      furnish Franchisee periodic guidance with respect to the System, including
      improvements and changes to the System. Such guidance, at Franchisor’s
      discretion, will be furnished in the form of the System Standards Manuals,
      bulletins and other written materials, consultations by telephone or in
      person at Franchisor’s offices or at the STORE, or by any other means of
      communications. At Franchisee’s request, Franchisor may provide special
      assistance for which Franchisee will be required to pay the fees and
      charges Franchisor may establish from time to time. If Franchisee requests
      or Franchisor requires additional or special training for Franchisee’s
      employees, all of the expenses that Franchisor incurs in connection with
      such training, including per diem charges and travel and living expenses
      for Franchisor’s personnel, will be Franchisee’s
  responsibility.
	 
	15.		SYSTEM
      STANDARDS
	 
	15.1		Franchisor will loan
      Franchisee one (1) copy of its System Standards Manuals solely for use in
      operating the STORE during the Term. The System Standards Manuals at all
      times will remain Franchisor’s property, and they are protected by
      copyright. Franchisee will keep its copy of the System Standards Manuals
      current and in a secure location at the STORE and shall return them to
      Franchisor immediately upon request, upon termination, or expiration of
      this Agreement or upon any Transfer. If any copies of the System Standards
      Manuals in Franchisee’s possession are lost, destroyed or significantly
      damaged, Franchisee will obtain a replacement copy at Franchisor’s then
      applicable charge. Franchisee may not at any time copy, duplicate, record,
      or otherwise reproduce any part of the System Standards Manuals or allow
      any unauthorized persons access to any System Standards Manuals, including
      those that are made available electronically, nor may Franchisee post all
      or any part of the System Standards Manuals on any limited access intranet
      sites without Franchisor’s approval. Franchisee may not distribute any
      part of the System Standards Manuals and may not disclose any part of the
      System Standards Manuals to any person, other than its employees who have
      a need to know the contents of the System Standards Manuals in order to
      perform their jobs.
	 
	15.2		During the Term,
      Franchisee will comply with all of the System Standards and other
      requirements contained in System Standards Manuals, in addition to all
      applicable laws, regulations, rules, by-laws, orders and ordinances in
      connection with its operation of the STORE. In the event of a dispute
      relating to the contents of the System Standards Manuals, the master copy
      of the System Standards Manuals maintained by Franchisor at its principal
      office is controlling. Franchisor may at any time and from time to time
      change the System Standards Manuals to reflect changes in System
      Standards.

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	15.3	      	To determine whether
      Franchisee is in compliance with this Agreement and all System Standards,
      Franchisor and/or Franchisor’s agents have the right at any time during
      regular business hours, and without prior notice to Franchisee, to: (a)
      inspect the STORE; (b) observe, photograph and videotape the operations of
      the STORE; (c) remove samples of any Products, materials or supplies for
      testing and analysis; (d) interview personnel of the STORE; (e) interview
      customers of the STORE and to require Franchisee to present to Franchisee
      customers any evaluation forms periodically prescribed by Franchisor and
      to participate in and/or request its customers to participate in any
      surveys performed by or on behalf of Franchisor; and (f) inspect and copy
      any books, records and documents relating to the operation of the
      STORE.
	 
	16.		MARKS
	 
	16.1		Franchisee
      acknowledges that HDN Development Corporation is the Owner of the Marks
      and that Franchisor has the right to sublicense the use of the Marks.
      Franchisee further acknowledges that Franchisee’s right to use the Marks
      is derived solely from this Agreement and is limited to the performance of
      Franchisee’s responsibilities and obligations hereunder in accordance with
      the terms hereof. Franchisee acknowledges that its unauthorized use of any
      of the Marks will constitute a material breach of this Agreement,
      warranting immediate termination of this Agreement by Franchisor at
      Franchisor’s election. Franchisee acknowledges and agrees that its usage
      of the Marks and any goodwill established thereby shall inure solely to
      the benefit of the Owner of the Marks and that this Agreement does not
      confer any goodwill or other interests in any of the Marks upon Franchisee
      or Franchisee’s Owners (other than the rights specifically granted by this
      Agreement). All provisions of this Agreement applicable to the Marks apply
      to any additional trademarks, service marks, logos, trade dress and
      commercial symbols Franchisor authorizes Franchisee to use. Franchisee may
      not at any time during or after the Term contest, or assist any other
      person in contesting, the validity or ownership of any of the
    Marks.
	 
	16.2		Franchisee shall use
      the Marks as the sole brand and other source identifier of the STORE,
      provided Franchisee shall identify itself as the independent owner and
      operator of the STORE in the manner Franchisor prescribes. Franchisee
      shall use the Marks only as Franchisor prescribes or allows in writing,
      whether in connection with the sale of Products and the operation of the
      STORE, or otherwise.
	 
	16.3		Franchisee and
      Franchisee’s Owners, affiliates and agents may not: (a) challenge the
      validity of any of the Marks or any registration or application for
      registration therefore, or attempt to claim ownership of or to register
      anywhere any of the Marks or any derivation or colorable imitation
      thereof; (b) attempt to claim ownership of or to register anywhere any
      trademark, service mark, trade name, or trade dress confusingly similar to
      any of the Marks; (c) use any of the Marks or any other trademark or trade
      dress confusingly similar thereto in any manner that would jeopardize
      Franchisor’s rights in the Marks; or (d) do any act that would invalidate
      registration for any of the Marks. Franchisee may not use any of the Marks
      as part of any corporate or legal business name or with any prefix, suffix
      or other modifying words, terms, designs or symbols (other than logos
      licensed to Franchisee hereunder), or in any modified form, nor may
      Franchisee use any of the Marks in connection with the performance or sale
      of any unauthorized products or services or in any other manner Franchisor
      has not expressly authorized in writing. Franchisee agrees to display the
      Marks prominently in the manner Franchisor prescribes, including at the
      STORE, on packaging and serving materials that Franchisor designates and
      in connection with forms and advertising and marketing materials.
      Franchisee agrees to give such notices of trademark and service mark
      registrations and such other trademark and service mark notices as
      Franchisor specifies and to obtain any fictitious or assumed name
      registrations required under applicable law.
	 
	16.4		Franchisee agrees to
      notify Franchisor immediately of any apparent infringement of, or
      challenge to, any of the Marks, or of any claim by any Person of any
      rights in any of the Marks, and Franchisee agrees not to communicate with
      any Person other than Franchisor, Franchisor’s attorneys and Franchisee’s
      attorneys in connection with any such apparent infringement, challenge or
      claim. Franchisor has sole discretion to take such action as Franchisor
      deems appropriate and the right to control exclusively any litigation,
      U.S. Patent and Trademark Office proceeding or any other proceeding
      arising out of any such apparent infringement,

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		      	challenge or claim or
      otherwise relating to any of the Marks, including the exclusive right to
      utilize counsel of Franchisor’s choice to prosecute or defend any such
      litigation or proceeding. Any award recovered in any such action or
      proceeding shall belong exclusively to Franchisor, or, as appropriate,
      Franchisor’s Affiliates. Franchisee agrees to sign any and all instruments
      and documents, render such assistance and do such acts and things as, in
      the opinion of Franchisor and/or Franchisor’s attorneys, may be necessary
      or advisable to protect and maintain Franchisor’s interests in any
      litigation or U.S. Patent and Trademark Office proceeding or other
      proceeding or otherwise to protect and maintain Franchisor’s interests in
      the Marks.
	 
	16.5		Franchisee may not
      register, or attempt to register, any of the Marks as part of any Internet
      domain name or URL, and may neither display nor use any of the Marks or
      other of Franchisor’s or its Affiliates’ intellectual property in
      connection with, or associate the System with (through a link or
      otherwise) any website advertising, address or listing on the World Wide
      Web or any other portion of the Internet without Franchisor’s prior
      written consent.
	 
	16.6		Franchisee may not use
      any of the Marks to incur any obligation or indebtedness on behalf of
      Franchisor or its Affiliates.
	 
	16.7		Franchisee hereby
      assigns to Franchisor all tangible media of expression derived from any of
      the Marks, and agrees to execute such further assignments as Franchisor
      may request. Franchisee shall take all actions and sign all documents
      necessary to give effect to the purpose and intent of this Section
      16. Franchisee irrevocably appoints Franchisor as the true and lawful
      attorney-in-fact for Franchisee and authorizes Franchisor to take such
      actions and to execute, acknowledge and deliver all such documents as may
      from time to time be necessary to convey to Franchisor all rights granted
      by this Agreement.
	 
	16.8		Franchisor may, in its
      sole discretion, modify or discontinue the use of any of the Marks and/or
      to use one or more additional or substitute trademarks or service marks.
      Franchisee agrees to comply with Franchisor’s directions with regard to
      such modification, discontinuance, addition, or substitution of use of any
      Mark. Franchisor will not be obligated to reimburse Franchisee for any
      expense or loss of revenue related thereto.
	 
	16.9		Franchisee
      acknowledges that the Marks have established prestige and goodwill and are
      well recognized in the mind of the public and the trade, and that it is of
      great importance to Franchisor that the high standards and reputation
      symbolized by the Marks be maintained in the manufacture, marketing, and
      sale of the various Products and other authorized goods bearing and
      services utilizing the Marks. Accordingly, all items of Products
      manufactured, marketed, or sold, and services rendered, by Franchisee
      pursuant to this Agreement shall be of high quality as determined by
      Franchisor in its sole discretion. They shall be suitable for the
      exploitation of the Marks to the best advantage and the protection and
      enhancement of the Marks and the goodwill associated therewith. Franchisor
      shall have the right to, and shall, exercise quality control over
      Franchisee’s use of the Marks to the degree reasonably necessary to
      maintain the validity thereof and to protect the goodwill associated
      therewith, including but not limited to the right to inspect and monitor
      Franchisee’s use of the Marks in any manner and time prescribed by
      Franchisor.
	 
	17.		CONFIDENTIAL
      INFORMATION
	 
	17.1		Franchisor will
      disclose to Franchisee such parts of the Confidential Information as
      Franchisor deems necessary or advisable from time to time for the
      performance of Franchisee’s obligations under this Agreement. Franchisee
      acknowledges and agrees that Franchisee and its Owners and Affiliates will
      not acquire any interest in or right to use the Confidential Information,
      other than the right to use it in the performance of Franchisee’s
      obligations under this Agreement, and that the use or duplication of the
      Confidential Information in any other business would constitute an unfair
      method of competition with Franchisor and with other developers and
      Franchisees of Krispy Kreme Stores. Franchisee agrees to disclose the
      Confidential Information to Franchisee’s Owners and to Franchisee’s
      employees only to the extent reasonably necessary for the performance of
      Franchisee obligations under this Agreement. Franchisee’s Owners must
      execute the form of Investor Personal Covenants Regarding Confidentiality,
      Non-Competition and Non-Solicitation attached hereto as Exhibit
      C.

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	17.2	      	Franchisee
      acknowledges and agrees that the Confidential Information is confidential,
      is Franchisor’s proprietary and valuable asset, includes trade secrets
      owned by Franchisor and Franchisor Affiliates and is disclosed to
      Franchisee solely on the condition that Franchisee, Franchisee’s Owners
      and employees who have access to the Confidential Information agree, and
      Franchisee agrees that, during and after the Term, Franchisee,
      Franchisee’s Owners, Franchisee’s Affiliates and Franchisee’s
      employees:
	 
	 		(a)		will not use
      Confidential Information in any other business or capacity;
	 
	 		(b)		will maintain the
      absolute confidentiality of Confidential Information during and after the
      Term;
	 
	 		(c)		will not make
      unauthorized copies of any portion of Confidential Information whether
      through electronic media, writings, or other tangible or intangible means
      of expression; and
	 
	 		(d)	      	will adopt and
      implement all reasonable procedures that Franchisor prescribes from time
      to time to prevent unauthorized use or disclosure of Confidential
      Information, including restrictions on disclosure thereof to STORE
      personnel and others.
	 
	 		Without
      limiting the foregoing, Franchisee, and each of its Owners, as applicable,
      each (i) acknowledge the possibility that they may gain access to
      Franchisor’s material non-public information and/or that of Franchisor’s
      parent company, Krispy Kreme Doughnuts, Inc. (“KKDI”), and that the
      securities laws prohibit trading in KKDI securities while in possession of
      such information, and (ii) agree to refrain from trading in KKDI
      securities in violation of such laws.
	 
	17.3		Notwithstanding anything to the contrary contained in this
      Agreement and provided Franchisee has obtained Franchisor’s prior written
      consent, the restrictions on Franchisee disclosure and use of the
      Confidential Information will not apply to the following:
	 
	 		(a)		information, methods,
      procedures, techniques and knowledge which are or become generally known
      in the food service business, other than through disclosure (whether
      deliberate or inadvertent) by Franchisee, Franchisee’s Owners, agents, or
      employees; and
	 
	 		(b)		the disclosure of the
      Confidential Information in judicial, arbitration or administrative
      proceedings to the extent that Franchisee is legally compelled to disclose
      such information, provided Franchisee has notified Franchisor prior to
      such disclosure and has used Franchisee’s best efforts to obtain, and has
      afforded Franchisor sufficient opportunity to seek an appropriate
      protective order and obtain, assurances satisfactory to Franchisor of
      confidential treatment for the information required to be so
      disclosed.
	 
	18.		PATENTS
      AND INVENTIONS
	 
	18.1		Franchisor
      and/or its Affiliates have obtained certain patent protection and may seek
      additional patent protections for other aspects of the System, the
      Products, and/or other technology related to the development and operation
      of Krispy Kreme Stores and Commissary Facilities and the production,
      marketing, and sale of the Products, or otherwise, including all
      improvements thereto. Nothing in this Agreement shall be construed as
      transferring ownership of any patents or patent applications from
      Franchisor or its Affiliates to Franchisee. Nothing in this Agreement
      shall be construed as transferring the right to sublicense any patents or
      patent applications from Franchisor or its Affiliates to
    Franchisee.
	 
	18.2		Franchisee
      agrees to promptly disclose to Franchisor and/or its Affiliates, and
      Franchisee agrees not to disclose to any other Person or permit any other
      Person to use (absent Franchisor’s prior written consent), any and all
      inventions (which term “inventions” includes any invention, idea, concept,
      method, technique, material, design, discovery, know-how, development,
      improvement, product, process, or innovation), including all improvements
      thereto, which are developed by Franchisee, Franchisee’s Owners, or
      Franchisee’s Affiliates, whether or not constituting protectable
      intellectual property, which are in any way related to the System, the
      Products, the development or operation of Krispy Kreme Stores or
      Commissary Facilities, or the production, marketing, or sale of the
      Products.

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	18.3	      	Franchisee hereby agrees to
      assign, and does assign, to Franchisor and/or the Affiliates Franchisor
      designates all right, title, and interest in any invention, patent
      application, or patent conceived of or reduced to practice which is in any
      way related to the System, the Products, the development or operation of
      Krispy Kreme Stores or Commissary Facilities, or the production,
      marketing, or sale of the Products. Franchisor will have no obligation to
      make payments to Franchisee or any other Person with respect to any such
      assignments. Franchisee agrees that all such inventions, patent
      applications, and patents referenced above shall belong to Franchisor
      and/or Franchisor’s Affiliates, and that all right, title, and interest
      therein shall be the sole and exclusive property of Franchisor and/or
      Franchisor’s Affiliates, except that Franchisee shall be entitled to use
      all such inventions without charge by Franchisor in connection with this
      Agreement for the Term.
	 
	18.4		Franchisee agrees to assist
      Franchisor and/or Franchisor’s Affiliates in the evaluation and
      documentation of any such inventions, patent applications, and patents
      referred to above. Franchisee also agrees to assist Franchisor and/or
      Franchisor’s Affiliates in the documentation of such assignment in any way
      necessary to transfer such interest to Franchisor and/or Franchisor’s
      Affiliates. Franchisee also agrees to assist Franchisor and/or
      Franchisor’s Affiliates in obtaining and maintaining such interest,
      including signing any declaration, patent application, assignment of
      rights, power of attorney, or other documents in such form and substance
      as Franchisor may require related to such invention or interest.
      Franchisee further agrees to assist Franchisor and/or Franchisor’s
      Affiliates in the protection and enforcement of any such interest,
      including testifying in any court action brought to enforce, protect, or
      defend such interest or invention.
	 
	19.		WORKS OF AUTHORSHIP AND
      COPYRIGHTS
	 
	19.1		Franchisee agrees that all works
      (defined herein as including works of authorship, works in any tangible
      medium, writings, documents, and computer programs) authored, made, or
      produced by Franchisee, Franchisee’s Owners, or Franchisee’s Affiliates
      that are in any way related to the System, the Products, the development
      or operation of Krispy Kreme Stores or Commissary Facilities, or the
      production, marketing, or sale of the Products, whether or not such works
      are copyrightable, are “works-made-for-hire” and that Franchisee will not
      have, under this Agreement or otherwise, any right, title, or interest of
      any kind or nature in and to such works, and that all rights therein are
      the sole and exclusive property of Franchisor and/or its
    Affiliates.
	 
	19.2		If any portion of any work
      described above is not considered a work-made-for-hire for Franchisor or
      its Affiliates, Franchisee hereby agrees to assign, and does assign, to
      Franchisor and/or the Affiliates Franchisor designates, all right, title,
      and interest in any work authored, made, or produced by Franchisee or its
      Owners or Affiliates (whether alone or in conjunction with one or more
      other persons) in the course of involvement with Franchisor under this
      Agreement or otherwise relating to the System, the Products, the Marks,
      the development or operation of Krispy Kreme Stores or Commissary
      Facilities, or the production, marketing, or sale of the Products.
      Franchisor will have no obligation to make payments to Franchisee or any
      other Person with respect to any such assignment. Franchisee agrees that
      all such works referenced above shall belong to Franchisor and/or its
      Affiliates, and that all right, title, and interest therein, including any
      copyrights, shall be the sole and exclusive property of Franchisor and/or
      its Affiliates, except that Franchisee shall be entitled to use all such
      works at the STORE (if authorized by Franchisor) without charge by
      Franchisor.
	 
	19.3		Franchisee agrees to assist
      Franchisor in the evaluation, documentation, and registration of any such
      work described above. Franchisee also agrees to assist Franchisor in the
      documentation of such assignment in any way necessary to transfer such
      interest to Franchisor or its Affiliates. Franchisee also agrees to assist
      Franchisor in obtaining and maintaining such interest, including signing
      any assignment of rights, copyright application, power of attorney, or
      other document in such form and substance as Franchisor may require
      related to such work or interest. Franchisee further agrees to assist
      Franchisor in the protection and enforcement of any such interest,
      including testifying in any court action brought to enforce, protect, or
      defend such work.

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	20.		EXCLUSIVE
      RELATIONSHIP
	 
	20.1	      	Franchisee acknowledges
      and agrees that Franchisor would be unable to (a) protect the Confidential
      Information against unauthorized use or disclosure; (b) preserve the
      prestige, integrity, and goodwill of the Products, Marks, and System; or
      (c) encourage the free exchange of ideas and information among Krispy
      Kreme Stores and Commissary Facilities if franchisees and owners of Krispy
      Kreme Stores and Commissary Facilities or their owners were permitted to
      engage in or benefit from certain competitive activities. Franchisee also
      acknowledges that Franchisor has granted the franchise rights to
      Franchisee in consideration of and reliance on Franchisee’s agreement that
      Franchisee and its Owners will deal exclusively with Franchisor.
      Therefore, except as expressly authorized by this Agreement or another
      written agreement with Franchisor, Franchisee agrees that during the term
      of this Agreement, without Franchisor’s prior written consent, neither
      Franchisee, nor any other Restricted Person will:
	 
	 		(i)		have any Ownership Interest in a
      Competitive Business;
	 
	 		(ii)		perform services as a director,
      officer, manager, partner, or supervisory or management-level employee, of
      any Competitive Business;
	 
	 		(iii)	      	perform services as an employee,
      consultant, representative, agent or otherwise for a Competitive Business,
      where such services (A) are substantially similar to those provided to
      Franchisor or Franchisor Affiliates by Franchisee or the respective
      Restricted Person; or (B) create a relationship between Franchisee or the
      Restricted Person and such Competitive Business in which Franchisee or the
      Restricted Person could be reasonably expected to benefit, either directly
      or indirectly, whether financially or otherwise, from the disclosure of
      any material Confidential Information to such Competitive
    Business;
	 
	 		(iv)		recruit or hire any Person who is
      Franchisor’s employee or the employee of any Krispy Kreme Store or
      Commissary Facility, or who has been Franchisor’s employee or the employee
      of any Krispy Kreme Store or Commissary Facility within the past six (6)
      months without obtaining prior written permission from Franchisor and that
      Person’s employer. If Franchisor permits Franchisee to hire any such
      Person, then Franchisee agrees to pay Franchisor a non-refundable
      Management Development Fee in the amount of Twenty-Five Thousand Dollars
      ($25,000) per hired employee as of the date of hire; or
	 
	 		(v)		induce or attempt to induce any
      Person who is Franchisor’s employee or the employee of any Krispy Kreme
      Store or Commissary Facility to discontinue working for Franchisor or such
      Krispy Kreme Store or Commissary Facility as the case may be.
	 
	20.2		At all times during the
      Term, Franchisee will designate a Managing Director of its business
      pursuant to this Agreement who shall complete Franchisor’s mandatory
      training program to Franchisor’s satisfaction. The initial Managing
      Director is identified in the Basic Terms. The Managing Director will use
      his or her full-time efforts to fulfill Franchisee’s obligations under
      this Agreement and under other Franchise Agreements and any Commissary
      Facility Agreements, and will not directly or indirectly engage in any
      other business or activity that requires any significant management
      responsibility or time commitments, or that otherwise conflicts with
      Franchisee’s obligations under this Agreement. If the Managing Director is
      terminated in that role, or if the Managing Director does not carry out
      his or her responsibilities or otherwise perform in accordance with this
      Agreement, Franchisee will promptly designate a replacement, and each such
      replacement shall complete Franchisor’s mandatory training program to
      Franchisor’s satisfaction.
	 
	21.		COMPLIANCE WITH
      LAW
	 
	21.1		In operating the STORE,
      Franchisee agrees to comply with all laws, including, but not limited to,
      all federal, state, and local laws, rules, regulations, ordinances, court
      orders, and decrees. Franchisee agrees that its failure to comply with
      these laws is a material breach and grounds for termination of this
      Agreement.

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	21.2	      	Franchisee and Franchisee’s
      Principal Owners represent and warrant to Franchisor that neither
      Franchisee nor any Principal Owner is identified, either by name or an
      alias, pseudonym or nickname, on the lists of “Specially Designated
      Nationals” or “Blocked Persons” maintained by the U.S. Treasury
      Department’s Office of Foreign Assets Control. Further, Franchisee and
      Franchisee’s Principal Owners represent and warrant that neither has
      violated and agree that neither will violate any law (in effect now or
      which may become effective in the future) prohibiting corrupt business
      practices, money laundering or the aid or support of persons or entities
      who conspire to commit acts of terror against any person or government,
      including acts prohibited by the U.S. Patriot Act, U.S. Executive Order
      13244, or similar law.
	 
	22.		MARKETING AND
      ADVERTISING
	 
	22.1		Franchisor has established a fund
      (the “Brand Fund”) for the creation, production and/or implementation of
      advertising, promotional, marketing, and public relations programs and
      materials Franchisor deems appropriate. Franchisee agrees to contribute to
      the Brand Fund amounts (as determined by Franchisor from time to time) not
      more than one percent (1%) of the Net Sales of the STORE, payable by
      electronic funds transfer in the same manner as the Royalties. Krispy
      Kreme Stores and Commissary Facilities located in the U.S. and owned or
      operated by Franchisor shall contribute to the Brand Fund at least on the
      same basis.
	 
	22.2		Franchisor will direct all
      programs funded by the Brand Fund. Periodically, Franchisor may give
      Franchisee, at no cost, samples of advertising, marketing, and promotional
      formats and materials produced and funded by the Brand Fund. Franchisee
      may purchase additional copies of these materials at cost.
	 
	22.3		The Brand Fund will be accounted
      for separately from Franchisor’s other funds and will not be used to
      defray any of its general operating expenses, except for reasonable
      salaries, administrative costs and overhead Franchisor may incur in
      activities related to the administration of the Brand Fund and its
      programs, including conducting market research, preparing advertising and
      marketing materials and collecting and accounting for contributions to the
      Brand Fund. Franchisor may spend in any fiscal year an amount greater or
      less than the aggregate contributions of all Krispy Kreme Stores and
      Commissary Facilities to the Brand Fund in that year, and the Brand Fund
      may borrow from Franchisor or other lenders to cover deficits in the Brand
      Fund or cause the Brand Fund to invest any surplus for future use by the
      Brand Fund.
	 
	22.4		Franchisor will prepare annually
      a statement of monies collected and costs incurred by the Brand Fund and
      furnish Franchisee a copy upon Franchisee’s written request. Except as
      otherwise expressly provided in this Section 22, Franchisor assumes
      no direct or indirect liability or obligation with respect to the
      maintenance, direction or administration of the Brand Fund. Franchisor
      does not act as trustee or in any other fiduciary capacity with respect to
      the Brand Fund.
	 
	22.5		Franchisor may operate the Brand
      Fund through a separate entity whenever it deems appropriate. The
      successor entity will have all of the rights and duties specified in
      Sections 22.1 through 22.8.
	 
	22.6		Franchisor cannot ensure that
      Brand Fund expenditures in or affecting any geographic area are
      proportionate or equivalent to Brand Fund contributions by contributors
      operating in that geographic area or that any contributor benefits
      directly or in proportion to its Brand Fund contribution.
	 
	22.7		Franchisor has the right, but no
      obligation, to use collection agents and institute legal proceedings to
      collect Brand Fund contributions at the Brand Fund’s expense. Franchisor
      may also forgive, waive, settle and compromise any and all claims for
      contributions to the Brand Fund. Except as expressly provided in
      Sections 22.1 through 22.8, Franchisor assumes no direct or
      indirect liability or obligation to Franchisee for collecting amounts due
      to, maintaining, directing or administering the Brand Fund.
	 
	22.8		Franchisor may at any time defer
      or reduce the Brand Fund contributions of one or more franchisees and,
      upon thirty (30) days’ prior written notice to Franchisee, reduce or
      suspend Brand Fund contributions and operations for one or more periods of
      any length and terminate (and, if terminated, reinstate) the Brand Fund.
      If Franchisor terminates the Brand Fund, it will distribute all unspent
      monies to its franchisees, and to Franchisor and its Affiliates, in
      proportion to their, and Franchisor’s, respective Brand Fund contributions
      during the preceding twelve (12) month period.

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	22.9	      	Franchisee will not
      execute or conduct any advertising or promotional activity in relation to
      the STORE or the System without Franchisor’s prior written approval.
      Franchisee must submit annual marketing plans to Franchisor in a form
      Franchisor specifies. Such annual marketing plans require Franchisor
      approval.
	 
	22.10		Franchisee will be
      responsible for conducting, with Franchisor’s guidance, a grand opening
      marketing program (the “Grand Opening Marketing Program”) during the
      period commencing thirty (30) days before and ending ninety (90) days
      after the opening of the STORE. The Grand Opening Marketing Program will
      utilize public relations and advertising, media, and promotional materials
      that Franchisor has developed or approved. Amounts so spent on the Grand
      Opening Marketing Program, up to one percent (1%) of the STORE’s Net
      Sales, will be credited against Franchisee’s requirement to spend three
      percent (3%) of the STORE’s Net Sales, as set forth in Section
      22.11, for the first year.
	 
	22.11		During each twelve
      (12) month period of the Term, Franchisee agrees to spend for advertising
      and promotion of the STORE not less than three percent (3%) of the STORE’s
      Net Sales and to submit plans for such programs for Franchisor’s approval
      or disapproval in accordance with schedules prescribed by Franchisor. For
      these purposes, advertising expenditures include amounts spent for
      advertising media, such as television, radio, newspaper, billboards,
      posters, direct mail, yellow pages, collateral promotional and novelty
      items, advertising on public vehicles, such as cabs and buses, and, if not
      provided by Franchisor, the cost of producing approved materials necessary
      to participate in these media. Advertising expenditures do not include
      Brand Fund contributions or amounts spent for items which Franchisor, in
      its reasonable judgment, deems inappropriate for meeting the minimum
      advertising requirement, including permanent on-premises signs and menu
      boards, lighting, menus, premiums, discounts, free offers, charitable
      contributions, fundraising activities, and employee incentive programs.
      Franchisor will have the right to review Franchisee’s books and records
      from time to time to determine Franchisee’s expenditures for local
      advertising and promotion.
	 
	22.12		Before Franchisee uses
      any advertising, promotional or marketing materials that Franchisor has
      not prepared or previously approved, Franchisee must send samples of all
      such materials to Franchisor for approval. If Franchisee does not receive
      Franchisor’s written disapproval within thirty (30) days after Franchisor
      receives the materials, they are deemed approved. Franchisee may not use
      any advertising, promotional, or marketing materials that Franchisor has
      disapproved.
	 
	22.13		Franchisee agrees that
      any advertising, promotion and marketing it conducts will be completely
      clear and factual and not misleading and conform to the highest standards
      of ethical marketing and the promotion policies and System Standards that
      Franchisor prescribes from time to time.
	 
	22.14		At Franchisor’s
      option, Franchisor may establish one or more websites to advertise,
      market, and promote Krispy Kreme Stores, the Products, and/or the Krispy
      Kreme franchise system (each a “System Website”). If Franchisor
      establishes a System Website, Franchisor may require Franchisee to
      participate in such System Website by including information relating to
      the STORE. Franchisor will control website traffic and registration of
      additional domain names.
	 
	22.15		Franchisee may not
      develop, maintain, or authorize any other website that mentions or
      describes Franchisee or the STORE or that displays any of the Marks
      without obtaining written approval from Franchisor.
	 
	22.16		Franchisor has the
      right to establish local and/or regional advertising cooperatives for
      Krispy Kreme Stores in Franchisee’s local or regional area, covering such
      geographical areas as Franchisor may designate from time to time.
      Franchisee must participate in such advertising cooperatives and their
      programs and abide by their by-laws. Franchisee must contribute such
      amounts to the advertising cooperatives as they determine from time to
      time in accordance with their by-laws. Any Krispy Kreme Stores owned by
      Franchisor or any of its Affiliates located in such designated local or
      regional areas will contribute to the cooperatives on at least the same
      basis. Contributions to such local and regional advertising cooperatives
      are credited toward the annual three percent (3%) advertising expenditures
      required by Section 22.11.

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	23.		ACCOUNTING, REPORTS
      AND FINANCIAL STATEMENTS
	 
	23.1	      	Franchisee will, at
      Franchisee’s expense, retain all records relating to the development and
      operation of the STORE. All such records shall be kept at the premises of
      the STORE, unless Franchisor otherwise approves. Franchisee will furnish
      to Franchisor via the medium Franchisor prescribes from time to time, in a
      form consistent with its then-current accounting practices and procedures:
      (a) by each Reporting Day, reports of the STORE’s sales, cost of goods
      sold, labor expense and number of transactions for the preceding Week; (b)
      within thirty (30) days after the end of each month, an operating income
      statement of Franchisee, the STORE, or both for such month and fiscal year
      to date, prepared in accordance with generally accepted accounting
      principles consistently applied; (c) within forty-five (45) days after the
      end of each fiscal quarter, a balance sheet and income statement of
      Franchisee, the STORE, or both for such quarter and fiscal year to date,
      prepared in accordance with generally accepted accounting principles
      consistently applied; (d) within one hundred twenty days (120) days after
      the end of Franchisee’s fiscal year, a balance sheet and an income
      statement for the STORE and/or Franchisee for such fiscal year (reflecting
      all year-end adjustments), and a statement of cash flow of the STORE,
      prepared in accordance with generally accepted accounting principles
      consistently applied; and (e) upon request by Franchisor, such other data,
      reports, information and supporting records as Franchisor may from time to
      time prescribe.
	 
	23.2		Franchisee agrees to
      maintain and to furnish to Franchisor, upon request, complete copies of
      all withholding, income, sales, value added, use and service tax returns
      filed by Franchisee reflecting activities of the STORE.
	 
	23.3		Franchisor has the
      right to (a) disclose data derived from all reports; (b) require
      Franchisee to have audited financial statements prepared on an annual
      basis; and (c) to access all cash registers/computer terminals and
      Franchisee’s Computer System and retrieve all information relating to the
      STORE, as often as it deems appropriate. Franchisee will take such action
      as may be necessary to provide such access to Franchisor. Furthermore,
      Franchisee will immediately report to Franchisor any events or
      developments which may have a significant or material adverse impact on
      the operation of the STORE, Franchisee’s performance under this Agreement,
      or the goodwill associated with the Marks and Krispy Kreme Stores.
      Franchisee will sign and verify as correct and complete each report and
      financial statement submitted by Franchisee in the manner prescribed by
      Franchisor.
	 
	23.4		Each year, Franchisor
      requires that Franchisee submit an annual business plan for Franchisor’s
      review. Further, Franchisor has the right to audit at any time during
      regular business hours, and without prior notice to Franchisee, to inspect
      and audit, or cause to be inspected and audited, the business, financial
      and tax records of the STORE and Franchisee. Franchisee will fully
      cooperate and cause its employees and agents to fully cooperate with
      Franchisor’s representatives and independent accountants hired by
      Franchisor to conduct any such inspection or audit. Franchisor’s right to
      audit includes the right to access the Computer System. In the event any
      such inspection or audit reveals an understatement of the Net Sales of the
      STORE, Franchisee will pay to Franchisor, within fifteen (15) days after
      receipt of the inspection or audit report, the Royalty payments and Brand
      Fund contributions (and any required advertising cooperative
      contributions) due on the amount of such understatement, plus interest (at
      the rate and on the terms provided in this Agreement) from the date
      originally due until the date of payment. Further, in the event such
      inspection or audit is made necessary by Franchisee’s failure to furnish
      timely any reports or supporting records required to be submitted under
      this Agreement or if an understatement of Net Sales for the period of any
      audit is determined by any such audit or inspection to be greater than two
      percent (2%), Franchisee will reimburse Franchisor for the cost of such
      inspection or audit, including legal fees, accountants’ fees and the
      travel expenses, room and board, per diem charges, and other associated
      expenses for Franchisor’s employees. The foregoing remedies are in
      addition to all other remedies and rights contained in this Agreement or
      under applicable law.
	 
	24.		TRANSFER
	 
	24.1		This Agreement is
      fully transferable by Franchisor (without any obligation to provide notice
      to Franchisee or obtain Franchisee’s consent) and will inure to the
      benefit of any assignee or other legal successor to Franchisor’s
      interests. Franchisee agrees that Franchisor will have the right, from
      time to time, to delegate

22

			the
      performance of any portion of or all of its obligations and duties under
      this Agreement or otherwise in connection with the System to designees,
      whether the same are Franchisor’s agents or independent contractors with
      which Franchisor has contracted to provide such services or perform such
      duties.
			 
	24.2		Franchisee’s
      rights and duties under this Agreement are personal to Franchisee, or if
      Franchisee is a business corporation, partnership, limited liability
      company or any other legal entity, its Owners. Accordingly, neither
      Franchisee nor any of its Owners may Transfer the Franchise without
      Franchisor’s prior approval and without complying with the terms and
      conditions of Section 24. Any Transfer without such approval or
      compliance constitutes a breach of this Agreement, and is void and of no
      force or effect. Notwithstanding the foregoing, Franchisee may not under
      any circumstances directly or indirectly subfranchise or sublicense any of
      its rights hereunder.
			 
	24.3	      	If
      Franchisor has not exercised its right of first refusal under Section
      24.5, Franchisor will not unreasonably withhold its approval of a
      Transfer of the Franchise that meets all of the reasonable restrictions,
      requirements and conditions Franchisor imposes on the Transfer, the
      transferor(s) and/or the transferee(s) from time to time, which shall in
      any event include, the following:
			 
			(a)		Franchisee must be in
      Good Standing;
			 
			(b)	      	the proposed
      transferee and its owners (if the proposed transferee is a corporation,
      partnership, limited liability company or other legal entity) must provide
      Franchisor on a timely basis all information Franchisor requests, and must
      be individuals acting in their individual capacities who are of good
      character and reputation, who must have sufficient business experience,
      aptitude and financial resources to operate the STORE pursuant to this
      Agreement and to develop Krispy Kreme Stores and Commissary Facilities
      pursuant to the Development Agreement, if applicable, and who must
      otherwise meet Franchisor’s then-current standards for
  approval;
			 
			(c)		the proposed
      transferee may not be an entity, or be affiliated with an entity, that is
      required to comply with the reporting and information requirements of the
      Securities Exchange Act of 1934, as amended;
			 
			(d)		the transferee (and
      its owners) must agree to be bound by all of the provisions of this
      Agreement for the remainder of the Term or, at Franchisor’s option,
      execute Franchisor’s then current Franchise Agreement and related
      documents used in the state where the STORE is located (which may provide
      for different royalties, advertising contributions and expenditures,
      duration and other rights and obligations than those provided in this
      Agreement);
			 
			(e)		the transferee must
      acquire, in a concurrent transaction, all of the rights and obligations of
      Franchisee and its Affiliates under all agreements between Franchisee or
      its Affiliates and Franchisor or its Affiliates, including any Development
      Agreement and all Franchise Agreements and Commissary Facility Agreements
      executed by Franchisee or its Affiliates pursuant to the Development
      Agreement or pursuant to any other development or similar agreement with
      Franchisor;
			 
			(f)		Franchisee or the
      transferee must pay Franchisor a transfer fee in an amount equal to Five
      Thousand Dollars ($5,000.00);
			 
			(g)		Franchisee and its
      Owners and Affiliates must, except to the extent limited or prohibited by
      applicable law, execute a general release, in form and substance
      satisfactory to Franchisor, of any and all claims against Franchisor, its
      Affiliates and shareholders, members, managers, officers, directors,
      employees, agents, successors and assigns;
			 
			(h)		Franchisee must
      provide Franchisor with all information requested by Franchisor in
      connection with the Transfer, and Franchisor must not have disapproved the
      material terms and conditions of such Transfer (including the price and
      terms of payment and the amount to be financed by the transferee in
      connection with such Transfer) on the basis that they are so burdensome as
      to be likely, in Franchisor’s reasonable judgment, to adversely affect the
      transferee’s operation of the STORE or its compliance with this Agreement,
      all Franchise Agreements, Commissary Facility Agreements, and Development
      Agreements being transferred, and any other agreements to be executed by
      the transferee;

23

	 	      	(i)	      	If Franchisee (or any
      of its Owners or Affiliates) finances any part of the sales price of the
      transferred interest, Franchisee and/or its Owners or Affiliates must
      agree that all obligations of the transferee, and security interests
      reserved by any of them in the assets transferred, will be subordinate to
      the transferee’s obligations to pay all amounts due Franchisor and its
      Affiliates and to otherwise comply with this Agreement, all Franchise
      Agreements, Commissary Facility Agreements, and Development Agreements
      being transferred and any other agreements to be executed by the
      transferee;
	 
	 		(j)		Franchisee and its
      Owners must execute non-competition and non-solicitation covenants, in
      form and substance satisfactory to Franchisor, substantially similar to
      those contained in Section 27.3; and
	 
	 		(k)		Franchisee and its
      Owners and Affiliates must execute such other documents and do such other
      things as Franchisor reasonably requires to protect its rights under this
      Agreement and all Development Agreements, Franchise Agreements, Commissary
      Facility Agreements and other agreements being transferred.
	 
	24.4		Franchisor’s
      approval of a Transfer of the Franchise does not constitute: (a) a
      representation as to the fairness of the terms of any agreement or
      arrangement between Franchisee or its Owners and the transferee or as to
      the prospects for success by the transferee; or (b) a release of
      Franchisee and its Owners, a waiver of any claims against Franchisee or
      its Owners or a waiver of Franchisor’s right to demand the transferee’s
      compliance with this Agreement or any other agreements being transferred.
      Any approval shall apply only to the specific Transfer of the Franchise
      being proposed and shall not constitute Franchisor’s approval of, or have
      any bearing on, any other proposed Transfer of the Franchise.
	 
	24.5		If
      Franchisee or any of its Owners desires to Transfer the Franchise (other
      than by gift or bequest), Franchisee or such Owners must obtain a
      bona fide, executed written offer from a responsible and fully disclosed
      purchaser (which must contain a confidentiality covenant by Franchisee and
      the prospective buyer to which Franchisor shall be an intended third party
      beneficiary) and must deliver immediately to Franchisor a complete and
      accurate copy of such offer. If the offeror proposes to buy any other
      property or rights from Franchisee or any of its Owners or Affiliates
      (other than rights under any Development Agreements, Franchise Agreements
      or Commissary Facility Agreements) as part of the bona fide offer, the
      proposal for such property or rights must be set forth in a separate,
      contemporaneous offer that is fully disclosed to Franchisor, and the price
      and terms of purchase offered to Franchisee or its Owners for the Transfer
      of the Franchise must reflect the bona
      fide price offered therefor and not
      reflect any value for any other property or rights.
	 
	24.6		Franchisor
      has the option, exercisable by notice delivered to Franchisee or its
      Owners within thirty (30) days from the date of delivery of a complete and
      accurate copy of such offer to Franchisor, to purchase such interest for
      the price and on the terms and conditions contained in such offer,
      provided that: (a) Franchisor may substitute cash for any form of payment
      proposed in such offer; (b) Franchisor’s credit shall be deemed equal to
      the credit of any proposed purchaser; (c) Franchisor shall have not less
      than ninety (90) days from the option exercise date to consummate the
      transaction; and (d) Franchisor shall not be required to pay deposits
      (such as earnest money) or to escrow funds prior to closing. Franchisor
      has the right to investigate and analyze the business, assets and
      liabilities and all other matters Franchisor deems necessary or desirable
      in order to make an informed investment decision with respect to the
      fairness of the terms of the right of first refusal. Franchisor may
      conduct such investigation and analysis in any manner Franchisor deems
      reasonably appropriate, and Franchisee and its Owners must cooperate fully
      with Franchisor in connection therewith.
	 
	24.7		If
      Franchisor exercises its option to purchase, Franchisor is entitled to
      purchase such interest subject to all representations and warranties,
      closing documents, releases, non-competition covenants and indemnities as
      Franchisor reasonably may require, provided if Franchisor exercises its
      option as a result of a written offer reflected in a fully negotiated
      definitive agreement with the proposed purchaser, Franchisor will not be
      entitled to any additional representations, warranties, closing documents
      or indemnities that will have a materially adverse effect on Franchisee’s
      rights and obligations under the definitive
agreement.

24

	 		If Franchisor does not exercise
      its option to purchase, Franchisee or its Owners may complete the sale to
      such offeror pursuant to and on the exact terms of such offer, subject to
      Franchisor’s approval of the Transfer as provided in Sections 24.2
      and 24.3, provided that if the sale to such offeror is not
      completed within ninety (90) days after delivery of such offer to
      Franchisor, or if there is a change in the terms of the offer, Franchisee
      must promptly notify Franchisor and Franchisor shall have an additional
      option to purchase (on the terms of the revised offer, if any, and
      otherwise as set forth herein) during the thirty (30)-day period following
      Franchisee’s notification of the expiration of the ninety (90)-day period
      or the change to the terms of the offer.
	 
	24.8	      	Neither Franchisee nor any of its
      Owners or Affiliates may issue or sell, or offer to issue or sell, any of
      Franchisee’s securities or any securities of any of its Affiliates,
      regardless of whether such sale or offer would be required to be
      registered pursuant to the provisions of the Securities Act of 1933, as
      amended, or the securities laws of any other jurisdiction and regardless
      of the means by which such sale is conducted, directly or indirectly, or
      by operation of law (including by merger, consolidation, reorganization or
      otherwise) without obtaining Franchisor’s prior consent and complying with
      all of its requirements and restrictions concerning use of information
      about Franchisor and its Affiliates. Neither Franchisee nor any of its
      Owners or Affiliates may issue or sell Franchisee’s securities or the
      securities of any of its Affiliates if: (1) such securities would be
      required to be registered pursuant to the Securities Act of 1933, as
      amended, or such securities would be owned by more than 35 persons; or (2)
      after such issuance or sale, Franchisee or such Affiliate would be
      required to comply with the reporting and information requirements of the
      Securities Exchange Act of 1934, as amended. Any memorandum or other
      communications circulated in connection with any solicitation of offers to
      purchase that would require Franchisor’s consent to Transfer the Franchise
      (through whatever form of transaction, whether through direct or indirect
      sale of assets or securities, by operation of law or otherwise) shall be
      subject to approval by Franchisor.
	 
	25.		SUCCESSOR
    FRANCHISE
	 
	25.1		Upon expiration of the Term,
      Franchisor will grant Franchisee a successor franchise on Franchisor’s
      then-current terms if Franchisee and each of its Owners and Affiliates are
      in full compliance with the provisions of this Agreement and any other
      agreements with Franchisor or any of its Affiliates, and provided that the
      following conditions are met:
	 
	 		(a)		Franchisee maintains possession
      of the Site and agrees to upgrade the STORE to Franchisor’s then-current
      standards for Krispy Kreme Stores;
	 
	 		(b)	      	If Franchisee is unable to
      maintain possession of the Site, or if in Franchisor’s judgment the STORE
      should be relocated, and Franchisee secures a substitute site approved by
      Franchisor, Franchisee develops such site in compliance with Franchisor’s
      then-current standards for Krispy Kreme Stores, and continues to operate
      the STORE at the Site until operations are transferred to the substitute
      site;
	 
	 		(c)		Franchisee gives Franchisor
      written notice of its election to acquire a successor franchise at least
      six (6) months but not more than twelve (12) months prior to the
      expiration of the term of the Franchise;
	 
	 		(d)		Franchisee and its Owners and
      Affiliates are then in compliance with all of the terms and conditions of
      this Agreement and all other agreements between such parties and
      Franchisor and its Affiliates, and have been in substantial compliance
      with all such agreements throughout their respective terms;
	 
	 		(e)		Franchisee and its Owners will
      execute the terms and conditions of the agreements Franchisor then
      customarily uses in connection with the grant of successor franchises for
      Krispy Kreme Stores in the state where the STORE is located;
  and
	 
	 		(f)		Franchisee and its Owners and
      Affiliates will execute and deliver general releases, in form satisfactory
      to Franchisor, of any and all claims against Franchisor and its
      Affiliates, shareholders, officers, directors, employees, agents,
      successors, and assigns.
	 
	25.2		Once Franchisor receives notice
      from Franchisee in accordance with Section 25.1(c) above,
      Franchisor will give Franchisee notice, within ninety (90) days after
      Franchisor’s receipt of Franchisee’s notice and any supporting information
      requested by Franchisor, of Franchisor’s decision: (a) to grant
      Franchisee

25

	 	      	a successor franchise; (b) to grant Franchisee a successor
      franchise on the condition that deficiencies of the STORE, and/or
      in its operation of the STORE, or such other matters as Franchisor may
      indicate are deficient in its sole discretion are corrected; or (c) not to
      grant Franchisee a successor franchise. If Franchisor’s notice states that
      Franchisee must cure certain deficiencies of the STORE, its operation or
      otherwise as a condition to the grant of a successor franchise, Franchisee
      will have thirty (30) days from the receipt of such notice to cure such
      deficiencies. If Franchisee does not cure such deficiencies, Franchisor
      will give Franchisee written notice of a decision not to grant a successor
      franchise, based upon Franchisee failure to cure such deficiencies, within
      thirty (30) days after the expiration of the cure period, provided,
      however, that Franchisor will not be required to give Franchisee such
      notice if Franchisor decides not to grant Franchisee a successor franchise
      due to Franchisee’s breach of this Agreement during the cure period or the
      thirty (30) day period thereafter.
	 
	26.		TERMINATION OF FRANCHISE
	 
	26.1		Franchisee
      is in material breach of this Agreement, and this Agreement will
      automatically terminate without notice, at Franchisor’s discretion, if:
      (a) Franchisee becomes insolvent by reason of its inability to pay its
      debts as they mature; (b) Franchisee is adjudicated bankrupt or insolvent;
      (c) Franchisee files a petition in bankruptcy, reorganization or similar
      proceeding under the bankruptcy laws of the United States or has such a
      petition filed against Franchisee, which is not discharged within thirty
      (30) days; (d) a receiver or other custodian, permanent or temporary, is
      appointed for Franchisee’s business, assets or property; (e) Franchisee
      requests the appointment of a receiver or makes a general assignment for
      the benefit of creditors; (f) a final judgment against Franchisee in the
      amount of Fifty Thousand Dollars ($50,000.00) or more remains unsatisfied
      of record for sixty (60) days or longer; (g) Franchisee’s bank accounts,
      property or accounts receivable are attached; (h) execution is levied
      against Franchisee’s business or property; (i) suit is filed to foreclose
      any lien or mortgage against any of Franchisee’s assets and such suit is
      not dismissed within thirty (30) days; (j) Franchisee voluntarily
      dissolves or liquidates or has a petition filed for corporate or
      partnership dissolution and such petition is not dismissed within thirty
      (30) days; or (k) Franchisee’s assets, property or interest are “blocked”
      under any law, ordinance or regulation relating to terrorist activities or
      if Franchisee is otherwise in violation of any such law, ordinance or
      regulation.
	 
	26.2		In addition
      to Franchisor’s right to terminate pursuant to other provisions of this
      Agreement and under applicable law, Franchisor has the right to terminate
      this Agreement, effective upon delivery of notice of termination to
      Franchisee, if Franchisee or any of its Principal Owners or
      Affiliates:
	 
	 		(a)		opens the STORE in violation of
      Section 11.1;
	 
	 		(b)		abandons or fails actively to
      operate the STORE for five (5) consecutive days, unless a closing of the
      STORE has been approved by Franchisor;
	 
	 		(c)		makes any material misstatement
      or omission in the Franchise Application or in any other information,
      report, or summary provided to Franchisor at any time;
	 
	 		(d)		suffers cancellation or
      termination of the lease or sublease for the STORE;
	 
	 		(e) 		is convicted of, or pleads no
      contest to, a felony or other crime or offense that Franchisor believes,
      in its sole judgment, may adversely affect the System or the goodwill
      associated with the Marks;
	 
	 		(f)		makes an unauthorized Transfer of
      the Franchise;
	 
	 		(g)		makes any unauthorized use or
      disclosure of any Confidential Information or uses, duplicates or
      discloses any portion of the System Standards Manuals in violation of this
      Agreement;
	 
	 		(h)	      	fails or refuses to comply with
      any mandatory specification, standard, or operating procedure prescribed
      by Franchisor relating to the cleanliness or sanitation of the STORE or
      violates any applicable health, safety or sanitation law, ordinance or
      regulation that Franchisor in its sole judgment believes may pose harm to
      the public or to its reputation, and does not correct such failure,
      refusal or violation within 24 hours after written notice thereof is
      delivered to Franchisee;

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	 	      	(i)	      	fails to report
      accurately Net Sales, to establish, maintain and/or have sufficient funds
      available in the Account as required by Section 13.3 or fails to
      make payment of any amounts due Franchisor or any of its Affiliates, and
      does not correct such failure within ten (10) days after written notice of
      such failure is delivered to Franchisee;
	 
	 		(j)		fails to make a timely
      payment of any amount due to a supplier unaffiliated with Franchisor
      (other than payments which are subject to bona fide dispute), and does not
      correct such failure within thirty (30) days after Franchisor delivers to
      Franchisee notice of such failure to comply;
	 
	 		(k)		fails to comply with
      any other provision of this Agreement or any other mandatory
      specification, standard or operating procedure or other obligation
      prescribed in the System Standards Manuals and does not correct such
      failure within thirty (30) days after notice of such failure to comply is
      delivered to Franchisee; or
	 
	 		(l)		fails on three (3) or
      more separate occasions within any period of twelve (12) consecutive
      months to submit when due reports or other data, information or supporting
      records or to pay when due Royalties, Brand Fund contributions or other
      payments due Franchisor, any of its Affiliates or any unaffiliated
      suppliers or otherwise fails to comply with this Agreement or any
      mandatory specification, standard or operating procedure or other
      obligation prescribed in the System Standards Manuals, whether or not such
      failure is corrected after notice is delivered to Franchisee.
	 
	 		Franchisor
      has no obligation whatsoever to refund any portion of the Initial
      Franchise Fee upon any termination.
	 
	26.3		Franchisor
      has the option, but not the obligation, to cure any of Franchisee’s
      default under Section 26.2. If Franchisor chooses to exercise such
      option, then within five (5) days of the date Franchisor sends Franchisee
      notice of Franchisor’s expenses incurred in curing Franchisee’s default,
      Franchisee shall reimburse Franchisor for all such expenses.
	 
	27.		EFFECT OF
      TERMINATION OR EXPIRATION
	 
	27.1		Within ten
      (10) days after the effective date of termination or expiration (without
      renewal) of this Agreement, Franchisee must pay Franchisor and its
      Affiliates all Royalties, Brand Fund contributions, amounts owed for
      purchases from Franchisor or its Affiliates, interest due on any of the
      foregoing and all other amounts owed to Franchisor or its Affiliates which
      are then unpaid.
	 
	27.2		Upon the
      termination or expiration (without renewal) of this Agreement, Franchisee
      will:
	 
	 		(a)		not directly or
      indirectly at any time or in any manner use any Mark, any colorable
      imitation of any Mark or any other indicia of a Krispy Kreme Store or
      Commissary Facility;
	 
	 		(b)		take such action as
      may be required to cancel all fictitious or assumed name registrations
      relating to Franchisee’s use of any Mark;
	 
	 		(c)		notify the telephone
      company and all telephone directory publishers of the termination or
      expiration of Franchisee’s right to use any telephone number and any
      regular, classified or other telephone directory listings associated with
      any Mark and to authorize transfer of the number to Franchisor or at its
      direction;
	 
	 		(d)		if Franchisor does not
      exercise its option to purchase the STORE pursuant to Section 27.5,
      promptly remove from the Site, and discontinue using for any purpose, all
      signs, fixtures, furniture, decor items, advertising materials, forms and
      other materials and supplies which display any of the Marks or any
      distinctive features, images, or designs associated with Krispy Kreme
      Stores or Commissary Facilities and, at Franchisee’s expense, make such
      alterations as may be necessary to distinguish the Site so clearly from
      its former appearance as a Krispy Kreme Store as to prevent any
      possibility of confusion by the public;

27

	 		(e)		immediately cease to
      use all Confidential Information and return to Franchisor all copies of
      the System Standards Manuals and any other confidential materials which
      have been loaned to Franchisee;
	 
	 		(f)	      	immediately
      discontinue any mode of communications on the Internet directly or
      indirectly relating to the STORE, including any websites or web pages, and
      immediately take all steps required by Franchisor to transfer to
      Franchisor any domain name associated with the STORE (such as executing a
      registrant name change agreement with the applicable registrar).
      Franchisee irrevocably appoints an authorized officer of Franchisor as
      Franchisee’s duly authorized agent and attorney-in-fact to execute all
      instruments and take all steps to transfer such domain names;
	 
	 		(g)		immediately
      discontinue the use of any proprietary software; and
	 
	 		(h)		within thirty (30)
      days after the effective date of termination or expiration, furnish
      evidence satisfactory to Franchisor of Franchisee’s compliance with the
      foregoing obligations.
	 
	27.3	      	Upon
      termination or expiration (without renewal) of this Agreement, neither
      Franchisee nor any Restricted Person will, for a period of two (2) years
      commencing on the effective date of such termination or expiration or the
      date on which Franchisee ceases to conduct its activities under this
      Agreement, whichever is later:
	 
	 		(a)		have any Ownership
      Interest in a Competitive Business located within a radius of ten (10)
      miles of the Site or of any other Krispy Kreme Store or Commissary
      Facility open or under construction on the effective date of termination
      or expiration;
	 
	 		(b)		perform services as a
      director, officer, manager, partner, or supervisory or management-level
      employee, of any Competitive Business located within a radius of ten (10)
      miles of the Site or of any other Krispy Kreme Store or Commissary
      Facility then open or under construction;
	 
	 		(c)		perform services as an
      employee, consultant, representative, agent or otherwise for a Competitive
      Business located within a radius of ten (10) miles of the Site or of any
      other Krispy Kreme Store or Commissary Facility then open or under
      construction, where such services (i) are substantially similar to those
      provided to Franchisee; or (ii) create a relationship between Franchisee
      or the Restricted Person and such Competitive Business in which Franchisee
      or the Restricted Person could be reasonably expected to benefit, either
      directly or indirectly, whether financially or otherwise, from the
      disclosure of any Confidential Information to such Competitive
      Business;
	 
	 		(d)		recruit or hire any
      Person who is Franchisor’s employee or the employee of any Krispy Kreme
      Store or Commissary Facility, or who has been Franchisor’s employee or the
      employee of any Krispy Kreme Store or Commissary Facility within the past
      six (6) months without obtaining prior written permission from Franchisor
      and that Person’s employer. If Franchisor permits Franchisee to hire any
      such Person, then Franchisee agrees to pay Franchisor a non-refundable
      Management Development Fee in the amount of Twenty-Five Thousand Dollars
      ($25,000) per hired employee as of the date of hire; or
	 
	 		(e)		induce or attempt to
      induce any Person who is Franchisor’s employee or the employee of any
      Krispy Kreme Store or Commissary Facility to discontinue working for
      Franchisor or such Krispy Kreme Store or Commissary Facility as the case
      may be.
	 
	 		Franchisee
      and each of its Owners expressly acknowledges the possession of skills and
      abilities of a general nature and other opportunities for exploiting such
      skills in other ways, so that enforcement of the covenants contained in
      Section 27.3 will not deprive any of them their personal goodwill
      or ability to earn a living. If Franchisee or any of its Owners fails or
      refuses to abide by any of the foregoing covenants and Franchisor obtains
      enforcement in a judicial or arbitration proceeding, the obligations under
      the breached covenant will be tolled during the period(s) of time that the
      covenant is breached and/or Franchisor seeks to enforce it and will
      continue in effect for a period of time ending two (2) years after the
      date of the order enforcing the covenant.

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	27.4	      	Upon termination or
      expiration (without renewal) of this Agreement, Franchisor shall have the
      right, exercisable by giving notice thereof within thirty (30) days after
      the date of such termination or expiration, to purchase (and, if
      necessary, take possession of and remove from the Site) any and all
      equipment used or useable at the STORE (including all equipment that
      contains or embodies patents owned by Franchisor or any of its Affiliates)
      at its net book value, determined in accordance with generally accepted
      accounting principles, consistently applied. This right is separate and
      apart from Franchisor’s rights under Section 27.5.
	 
	27.5		Upon termination or
      expiration (without renewal) of this Agreement, Franchisor shall have the
      right, exercisable by giving notice thereof (“Appraisal Notice”) within
      thirty (30) days after the date of such termination or expiration, to
      require that a determination be made of the “Fair Market Value” (as
      defined below) of any or all of the assets of the STORE which Franchisee
      owns, including inventory of non-perishable products, materials, supplies,
      furniture, equipment, signs, and any and all leasehold improvements,
      fixtures, building and land, but excluding any cash and short-term
      investments and any items not meeting Franchisor’s specifications for
      Krispy Kreme Stores (the “Purchased Assets”). Notwithstanding the
      foregoing, if Franchisee notifies Franchisor not less than one hundred
      eighty (180) days nor more than two hundred seventy (270) days prior to
      the expiration of this Agreement that Franchisee does not desire to enter
      into a successor franchise agreement on expiration, then Franchisor
      agrees, if Franchisor desires to exercise its right to purchase, to give
      Franchisee the Appraisal Notice at least one hundred twenty (120) days
      prior to the date of expiration of this Agreement.
	 
	27.6		Upon delivery of the
      Appraisal Notice, Franchisee may not sell or remove any of the assets of
      the STORE from the Premises (other than in the ordinary course of
      business) and must give Franchisor, its designated agents and the
      “Appraisers” (as defined below) full access to the STORE and all of
      Franchisee’s books and records at any times during customary business
      hours in order to conduct inventories and determine the purchase price for
      the Purchased Assets.
	 
	27.7		The Fair Market Value
      shall be defined as the amount at which an arm’s length purchaser would be
      willing to pay for the Purchased Assets, assuming that the Purchased
      Assets would be used for the operation of a Krispy Kreme Store under a
      valid franchise agreement reflecting the then-current (or if Franchisor is
      not offering franchises at that time, then the most recent) standard terms
      upon which Franchisor offers franchises for Krispy Kreme Stores. Under no
      circumstances will any value be attributed to any goodwill associated with
      the Marks or any value attributed to the System (all of which Franchisee
      acknowledges to be owned by Franchisor and its Affiliates). In the first
      instance, Fair Market Value shall be determined by consultation between
      Franchisor and Franchisee. If Franchisee and Franchisor are unable to
      agree on the Fair Market Value of the Purchased Assets within fifteen (15)
      days after the Appraisal Notice, then Fair Market Value will be determined
      by calculating the mean average of three (3) separate appraisals done by
      three (3) independent appraisers (“Appraisers”). Franchisor and Franchisee
      shall each designate one (1) Appraiser within thirty (30) days of the
      Appraisal Notice and the two (2) Appraisers so designated will select a
      third (3rd) Appraiser within ten (10) days thereafter. If the two
      designated Appraisers are unable to select a third (3rd) Appraiser within
      such ten (10) days, then the third (3rd) Appraiser shall be selected, on
      demand of either party, by the director of the Regional Office of the
      American Arbitration Association located nearest to Winston-Salem, North
      Carolina.
	 
	27.8		Each Appraiser will
      make his or her determination and submit a written report (“Appraisal
      Report”) to Franchisee and Franchisor as soon as practicable, but in no
      event more than thirty (30) days after his or her appointment. Each party
      may submit in writing to the Appraisers its judgment of Fair Market Value
      (together with its reasons therefor and with copies to each other);
      however, the Appraisers shall not be limited to these submissions and may
      make such independent investigations as they reasonably determine to be
      necessary. The Appraisers’ fees and costs shall be borne equally by the
      parties.
	 
	27.9		Franchisor has the
      option, exercisable by delivering notice thereof within thirty (30) days
      after submission of the last Appraisal Report (or the date that an
      agreement is reached, if the parties agree to the Fair Market Value), to
      agree to purchase the Purchased Assets at the Fair Market Value, as so
      determined. Franchisor shall have the unrestricted right to assign this
      option to purchase separate and apart from the remainder of this
      Agreement.

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	27.10		If Franchisor
      exercises its option to purchase, the purchase price for the Purchased
      Assets will be paid in cash at the closing, which will occur at the place,
      time and date Franchisor designates, but not later than sixty (60) days
      after the exercise of Franchisor’s option to purchase the Purchased
      Assets. At the closing, Franchisor will be entitled to all
      representations, warranties, covenants, title insurance policies and other
      closing documents and post-closing indemnifications and hold-backs as
      Franchisor reasonably requires, including: (a) instruments transferring
      good and marketable title to the Purchased Assets, free and clear of all
      liens, encumbrances, and liabilities, to Franchisor or its designee, with
      all sales and other transfer taxes paid by Franchisee; (b) an assignment
      of all leases of assets used in the operation of the STORE, including
      land, building and/or equipment (or if an assignment is prohibited, a
      sublease to Franchisor or its designee for the full remaining term and on
      the same terms and conditions as Franchisee’s lease, including renewal
      and/or purchase options), provided, however, that if any of Franchisee’s
      Owners or Affiliates directly or indirectly owns the land, building and/or
      equipment of the STORE, Franchisee will, at Franchisor’s option, cause
      such Owner or Affiliate to grant to Franchisor a lease at reasonable and
      customary rental rates and other terms prevailing in the community where
      the STORE is located; and (c) a general release by Franchisee and its
      Owners and Affiliates in form and substance satisfactory to
      Franchisor.
	 
	27.11	     	If Franchisee cannot
      deliver clear title to all of the Purchased Assets, or if there are other
      unresolved issues, the closing of the sale may, at Franchisor’s option, be
      accomplished through an escrow on such terms and conditions as Franchisor
      deems appropriate, including the making of payments, to be deducted from
      the purchase price, directly to third parties in order to obtain clear
      title to all of the Purchased Assets. Further, Franchisee and Franchisor
      shall comply with any applicable Bulk Sales provisions of the Uniform
      Commercial Code as enacted in the state where the STORE is located and all
      applicable state and local sales and income tax notification and/or escrow
      procedures. Franchisor has the right to set off against and reduce the
      purchase price by any and all amounts owed by Franchisee or any of its
      Owners or Affiliates to Franchisor or any of its Affiliates.
	 
	27.12		Upon delivery of the
      Appraisal Notice and pending (a) determination of Fair Market Value, (b)
      Franchisor’s option period, and (c) the closing of the purchase,
      Franchisor may authorize continued temporary operations of the STORE
      pursuant to the terms of this Agreement, subject to the supervision and
      control of one or more of Franchisor’s appointed managers.
	 
	27.13		Franchisor’s exercise
      of any of its rights under Section 27 will be in addition to and
      not in limitation of any other rights and remedies it may have in the
      event of any breach or default by Franchisee.
	 
	27.14		All the obligations of
      Franchisee and its Owners and Affiliates under this Agreement, which
      expressly or by their nature survive or are intended to survive the
      termination or expiration of this Agreement, will continue in full force
      and effect subsequent to and notwithstanding the termination or expiration
      until they are satisfied in full or by their nature expire.
	 
	28.		RELATIONSHIP OF
      PARTIES/INDEMNIFICATION
	 
	28.1		Neither this Agreement
      nor the dealings of the parties pursuant to this Agreement shall create
      any fiduciary relationship or any other relationship of trust or
      confidence between the parties hereto. Franchisor and Franchisee, as
      between themselves, are and shall be independent contractors.
	 
	28.2		Franchisee understands
      and agrees that Franchisor may operate and change the System and its
      business in any manner that is not expressly and specifically prohibited
      by this Agreement. Whenever Franchisor has expressly reserved in this
      Agreement or is deemed to have a right and/or discretion to take or
      withhold an action, or to grant or decline to grant Franchisee a right to
      take or withhold an action, except as otherwise expressly and specifically
      provided in this Agreement, Franchisor may make its decision or exercise
      its right and/or discretion on the basis of its judgment of what is in its
      best interests, including its judgment of what is in the best interests of
      its franchise network, at the time its decision is made or its right or
      discretion is exercised, without regard to whether: (a) other reasonable
      alternative decisions or actions could have been made by Franchisor; (b)
      Franchisor’s decision or action promotes its financial or other individual
      interest; (c) Franchisor’s decision or action applies differently to
      Franchisee and one or

30

	 	     	more other franchisees
      or its company-owed operations; or (d) Franchisor’s decision or the
      exercise of its right or discretion is adverse to Franchisee’s interests.
      In the absence of an applicable statute, Franchisor will have no liability
      to Franchisee for any such decision or action. The parties intend that the
      exercise of Franchisor’s right or discretion will not be subject to
      limitation or review. If applicable law implies a covenant of good faith
      and fair dealing in this Agreement, the parties agree that such covenant
      shall not imply any rights or obligations that are inconsistent with a
      fair construction of the terms of this Agreement and that this Agreement
      grants Franchisor the right to make decisions, take actions and/or refrain
      from taking actions not inconsistent with Franchisee’s rights and
      obligations hereunder.
	 
	 		Nothing contained in
      this Agreement, nor arising from the conduct of the parties hereunder, is
      intended to make either party a general or special agent, joint venturer,
      partner or employee of the other for any purpose whatsoever. Franchisee
      must conspicuously identify itself in all dealings with customers,
      lessors, contractors, suppliers, public officials, employees and others as
      the owner of the rights granted hereunder and must place such other
      notices of independent ownership on such forms, business cards,
      stationery, advertising and other materials as we may require from time to
      time. Franchisee is solely responsible for all employment decisions with
      respect to its personnel, including hiring, firing, compensation,
      training, supervision and discipline, and regardless whether Franchisee
      receives advise from Franchisor on any of these subjects.
	 
	28.3		Franchisee may not
      make any express or implied agreements, warranties, guarantees or
      representations or incur any debt in Franchisor’s name or on its behalf or
      represent that the relationship of the parties hereto is anything other
      than that of independent contractors. Franchisor will not be obligated by
      or have any liability under any agreements made by Franchisee with any
      third party or for any representations made by Franchisee to any third
      party. Franchisor will not be obligated for any damages to any person or
      property arising directly or indirectly out of the operation of
      Franchisee’s business hereunder.
	 
	28.4		Franchisor will have
      no liability for any sales, use, service, occupation, excise, gross
      receipts, income, property or other taxes, whether levied upon Franchisee
      or the STORE, in connection with the business Franchisee conducts (except
      for taxes Franchisor is required by law to collect from Franchisee with
      respect to purchases from Franchisor). Payment of all such taxes is
      Franchisee’s responsibility.
	 
	28.5   		Franchisor agrees to
      indemnify Franchisee against, and to reimburse Franchisee for, all damages
      for which Franchisee is held liable as a result of a claim that
      Franchisee’s authorized use of any Mark or of any of Franchisor’s other
      intellectual property rights pursuant to and in full compliance with this
      Agreement infringes on the rights of another person and, except as
      provided herein, for all costs Franchisee reasonably incurs in defending
      any such claim brought against Franchisee, provided that Franchisee has
      timely notified Franchisor of such claim and provided further that
      Franchisee and Franchisee’s Principal Owners and Affiliates are in full
      compliance with this Agreement and with all other agreements entered into
      with Franchisor or any of its Affiliates. HDN Development Corporation or
      its agent or assignee, at its sole discretion, is entitled to prosecute,
      defend and/or settle any such proceeding arising out of Franchisee’s use
      of any Mark or other intellectual property right pursuant to this
      Agreement and, if HDN Development Corporation or its agent or assignee
      undertakes to prosecute, defend and/or settle any such matter, Franchisor,
      HDN Development Corporation or its agent or assignee, has no obligation to
      indemnify or reimburse Franchisee for any fees or disbursements of any
      legal counsel retained by Franchisee.
	 
	28.6  		Franchisee agrees to
      indemnify Franchisor, its Affiliates and their respective directors,
      officers, employees, shareholders, members, managers, agents, successors
      and assigns (collectively “Indemnified Parties”), and to hold the
      Indemnified Parties harmless to the fullest extent permitted by law, from
      any and all losses and expenses (as defined below) incurred in connection
      with any litigation or other form of adjudicatory procedure, claim,
      demand, investigation, or formal or informal inquiry (regardless of
      whether it is reduced to judgment) or any settlement thereof which arises
      directly or indirectly from, or as a result of, a claim of a third party
      against any one or more of the Indemnified Parties, including those in
      connection with (a) Franchisee’s failure to perform or breach of any
      covenant, agreement, term or provision of this Agreement, (b) Franchisee’s
      breach of any representation or warranty contained in this Agreement, (c)
      Franchisee’s marketing, promotion, advertisement or sale of any of the
      products and services offered by the STORE,

31

	 	     	including unfair or
      fraudulent advertising claims (whether in print advertising, electronic
      media or otherwise), and product liability claims, (d) Franchisee’s
      development, ownership, operation and/or closing of the STORE, (e)
      Franchisee’s failure to pay any amounts owed to a supplier, (f) claims by
      Franchisee’s employees (including workers’ or unemployment compensation),
      (g) personal injury claims, (h) Franchisee’s failure to comply with any
      law, and (i) any allegedly unauthorized service or act, rendered or
      performed in connection with this Agreement, (collectively “Event”)
      and regardless of whether it resulted from any strict or vicarious
      liability imposed by law on the Indemnified Parties. The foregoing
      indemnity shall apply even if it is determined that the Indemnified
      Parties’ negligence caused such loss, liability or expense, in whole or in
      part, provided, however, that this indemnity will not apply to any
      liability arising from a breach of this Agreement by Franchisor or with
      respect to any Indemnified Party whose gross negligence or willful acts
      caused such liability (except to the extent that joint liability is
      involved, in which event the indemnification provided herein will extend
      to any finding of comparative or contributory negligence attributable to
      Franchisee). The term “losses and expenses” includes compensatory,
      exemplary, and punitive damages; fines and penalties; attorneys’ fees;
      experts’ fees; court costs; costs associated with investigating and
      defending against claims; settlement amounts; judgments; compensation for
      damages to our reputation and goodwill; and all other costs associated
      with any of the foregoing losses and expenses. Franchisor agrees to give
      Franchisee reasonable notice of any event of which Franchisor becomes
      aware for which indemnification may be required, and Franchisor may elect
      (but is not obligated) to direct the defense thereof, provided that the
      selection of counsel shall be subject to Franchisee’s consent, which
      consent shall not be unreasonably withheld or delayed. Franchisor may, in
      its reasonable discretion, take such actions as Franchisor deems necessary
      and appropriate to investigate, defend, or settle any event or take other
      remedial or corrective actions with respect thereto as may be necessary
      for the protection of the Indemnified Parties or Krispy Kreme Stores
      generally, provided however, that any settlement (to the extent payment is
      made by Franchisee) shall be subject to Franchisee’s consent, which
      consent shall not be unreasonably withheld or delayed. Further,
      notwithstanding the foregoing, if the insurer on a policy or policies
      obtained in compliance with this Agreement agrees to undertake the defense
      of an Event (an “Insured Event”), Franchisor agrees not to exercise its
      right to select counsel to defend the Event if such would cause
      Franchisee’s insurer to deny coverage. Franchisor reserves the right to
      retain counsel to represent Franchisor with respect to an Insured Event at
      Franchisor’s sole cost and expense.
	 
	28.7   		In furtherance of the
      indemnity contained in Section 28.6, during the Term, Franchisee
      agrees to maintain commercial general liability insurance, product
      liability coverage, automobile liability insurance, worker’s compensation
      insurance, employer’s liability insurance and any other insurance policies
      as Franchisor may require from time to time, insuring Franchisee and the
      Indemnified Parties against the matters described in Section 28.6,
      including claims for bodily and personal injury, death and property
      damage, among other things, caused by or occurring in conjunction with the
      conduct of business by Franchisee pursuant to this Agreement, under one or
      more policies of insurance acceptable to Franchisor and containing minimum
      liability coverage Franchisor prescribes from time to time. Each such
      insurance policy will name Franchisor as an additional insured and will
      provide for thirty (30) days’ prior written notice to Franchisor of any
      material modification, cancellation, or expiration of such policy. Each
      such insurance policy will give Franchisor notice of default under the
      policy and the opportunity to cure such default on Franchisee’s behalf.
      Simultaneous with the execution of this Agreement, Franchisee will provide
      Franchisor with evidence of such insurance; thereafter, Franchisee will
      furnish to Franchisor annually and upon the replacement or material
      modification of any insurance policy providing the coverage required under
      this Agreement, a copy of the certificate of insurance or other evidence
      requested by Franchisor that such insurance coverage is continuously in
      force without interruption. The maintenance of sufficient insurance
      coverage (both as to the type and limits of coverage) for the STORE is
      Franchisee’s sole responsibility.
	 
	28.8  		The terms of
      Section 28 will survive the termination or expiration of this
      Agreement.
	 
	29.		MISCELLANEOUS
	 
	29.1		This Agreement and all
      issues arising from or relating to this Agreement shall be governed by and
      construed under the laws of the State of North Carolina, provided the
      foregoing shall not constitute a waiver of Franchisee’s rights under any
      applicable franchise law of another state. Otherwise, in the
    event

32

	 	     	of any conflict of
      law, North Carolina law will prevail, without regard to the application of
      North Carolina conflict of law principles, except that any North Carolina
      law regulating the sale of franchises or business opportunities or
      governing the relationship of a franchisor and its franchisees will not
      apply unless its jurisdictional requirements are met independently without
      reference to this section.
	 
	29.2   		Franchisee and each of
      its Owners agree that the U.S. District Court for the Middle District of
      North Carolina, or if such court lacks jurisdiction, the Superior Court
      (or its successor) for Forsyth County North Carolina, shall be the venue
      and exclusive forum in which to adjudicate any case or controversy arising
      from or relating to this Agreement, or any Development Agreement,
      Commissary Facility Agreement or any other Franchise Agreement, including
      any guarantees or covenants by Franchisee’s Owners. In the event a case or
      controversy is to be heard by the Superior Court (or its successor) for
      Forsyth County North Carolina, any party may request that the matter be
      assigned to the North Carolina Business Court. Franchisee and each of its
      Owners irrevocably submit to the jurisdiction of such courts and waive any
      objections to either the jurisdiction of or venue in such courts.
      Franchisee and each of its Owners irrevocably waive, to the fullest extent
      they may lawfully do so, the defense of an inconvenient forum to the
      maintenance of such suit, action or proceeding and agree that service of
      process for purposes of any such suit, action or proceeding need not be
      personally served or served within the State of North Carolina but may be
      served with the same effect as if they were served within the State of
      North Carolina, by certified mail or any other means permitted by law,
      addressed to Franchisee and its Owners (as applicable) at the address set
      forth herein. Nothing contained herein shall affect Franchisor’s rights to
      bring a suit, action or proceeding in any other appropriate jurisdiction,
      including any suit, action or proceeding brought by Franchisor to enforce
      any judgment against Franchisee or any of its Owners entered by a State or
      Federal Court.
	 
	29.3		Franchisor may obtain
      at any time in any court of competent jurisdiction any injunctive relief,
      including temporary restraining orders and preliminary injunctions,
      against conduct or threatened conduct for which no adequate remedy at law
      may be available or which may cause Franchisor irreparable harm.
      Franchisor may have such injunctive relief, without bond, but upon due
      notice, in addition to such further and other relief as may be available
      at equity or in law, and Franchisee’s sole remedy in the event of the
      entry of such injunction, shall be the dissolution of such injunction, if
      warranted, upon hearing duly had (all claims for damages by reason of the
      wrongful issuance of any such injunction being expressly waived hereby).
      Franchisee and each of its Owners acknowledges that any violation of
      Sections 16, 17.3, 18, 19, 20,
      24.3(j) or 27.3 would result in irreparable injury to
      Franchisor for which no adequate remedy at law may be available.
      Accordingly, Franchisee and each of its Owners consent to the issuance of
      an injunction at Franchisor’s request (without posting a bond or other
      security) prohibiting any conduct in violation of any of those sections
      and agree that the existence of any claims Franchisee or any of its Owners
      may have against Franchisor, whether or not arising herefrom, shall not
      constitute a defense to the enforcement of any of those
  Sections.
	 
	29.4		If Franchisor claims
      in any judicial proceeding that Franchisee owes Franchisor or any of its
      Affiliates money or that Franchisee has otherwise breached this Agreement
      and Franchisor prevails on such claims, then Franchisor shall be awarded
      its costs and expenses incurred in connection with such proceedings,
      including reasonable attorneys’ fees.
	 
	29.5  		Except with respect to
      any of Franchisee’s obligations herein regarding the Confidential
      Information, the Marks, and any other intellectual property rights of
      Franchisor, Franchisor and Franchisee (and its Owners) each waives, to the
      fullest extent permitted by law, any right to or claim for any punitive or
      exemplary damages against the other. Franchisee and each of its Owners
      waives, to the fullest extent permitted by applicable law, the right to
      recover consequential damages for any claim directly or indirectly arising
      from or relating to this Agreement. FURTHERMORE, THE PARTIES AGREE THAT ANY LEGAL ACTION IN CONNECTION
      WITH THIS AGREEMENT SHALL BE TRIED TO THE COURT SITTING WITHOUT A JURY,
      AND ALL PARTIES WAIVE ANY RIGHT TO HAVE ANY ACTION TRIED BY
      JURY.

33

	29.6		Every part of this
      Agreement shall be considered severable. If for any reason any part of
      this Agreement is held to be invalid, that determination shall not impair
      the other parts of this Agreement. If any covenant herein which restricts
      competitive activity is deemed unenforceable by virtue of its scope in
      terms of geographical area, type of business activity prohibited and/or
      length of time, but could be rendered enforceable by reducing any part or
      all of it, Franchisee and Franchisor agree that it will be so modified as
      to remain enforceable to the fullest extent permissible under applicable
      law. If any applicable law requires a greater prior notice of the
      termination of or refusal to enter into a successor franchise than is
      required hereunder, a different standard of “good cause”, or the taking of
      some other action not required hereunder, the prior notice, “good cause”
      standard and/or other action required by such law shall be substituted for
      the comparable provisions hereof. If any provision of this Agreement or
      any specification, standard or operating procedure prescribed by
      Franchisor is invalid or unenforceable under applicable law, Franchisor
      has the right, in its sole discretion, to modify such invalid or
      unenforceable provision, specification, standard or operating procedure to
      the extent required to make it valid and enforceable.
	 
	29.7		Franchisor and
      Franchisee may by written instrument signed by the waiving party
      unilaterally waive or reduce any obligation of the other under this
      Agreement. Any waiver granted by Franchisor shall be without prejudice to
      any other rights Franchisor may have, will be subject to continuing review
      by Franchisor and may be revoked, in its sole discretion, at any time and
      for any reason, effective upon delivery to Franchisee of 10 days’ prior
      notice. Franchisee and Franchisor shall not be deemed to have waived any
      right reserved by this Agreement by virtue of any custom or practice of
      the parties at variance with it; any failure, refusal or neglect by
      Franchisee or Franchisor to exercise any right under this Agreement or to
      insist upon exact compliance by the other with its obligations hereunder;
      any waiver, forbearance, delay, failure or omission by Franchisor to
      exercise any right, whether of the same, similar or different nature, with
      respect to other Krispy Kreme Stores; or the acceptance by Franchisor of
      any payments due from Franchisee after any breach of this
    Agreement.
	 
	29.8		The rights of
      Franchisor and Franchisee hereunder are cumulative and no exercise or
      enforcement by Franchisor or Franchisee of any right or remedy hereunder
      shall preclude the exercise or enforcement by Franchisor or Franchisee of
      any other right or remedy hereunder which Franchisor or Franchisee is
      entitled to enforce by law.
	 
	29.9		The language of this
      Agreement shall be construed according to its fair meaning and not more
      strictly against any one party than the other. The Basic Terms,
      introduction, personal guarantees and covenants, exhibits, schedules and
      riders (if any) to this Agreement are a part of this Agreement, which
      constitutes the entire agreement of the parties with respect to the
      subject matter hereof. Except as otherwise expressly provided herein,
      there are no other oral or written agreements, understandings,
      representations or statements relating to the subject matter of this
      Agreement, other than the Franchise Disclosure Document, that either party
      may or does rely on or that will have any force or effect. Nothing in this
      Agreement shall be deemed to confer any rights or remedies on any person
      or legal entity not a party hereto. This Agreement shall not be modified
      except by written agreement signed by both parties.
	 
	29.10		The headings of
      sections are for convenience only and do not limit or construe their
      contents. The word “including” shall be construed to include the words
      “without limitation.” The term “Franchisee” is applicable to one or more
      persons, a corporation, limited liability company or a partnership and its
      owners, as the case may be. If two or more persons are at any time
      Franchisee hereunder, whether as partners, joint venturers or otherwise,
      their obligations and liabilities to Franchisor shall be joint and
      several.
	 
	29.11		References to a
      controlling interest in an entity shall mean more than fifty percent (50%)
      of the equity and voting control of such entity.
	 
	29.12	     	This Agreement is
      binding on the parties hereto and their respective executors,
      administrators, heirs, assigns and successors in interest. This Agreement
      may be executed in multiple copies, each of which shall be deemed an
      original. Time is of the essence in this
Agreement.

34

	29.13	     	Whenever
      this Agreement requires the approval or consent of either party, the other
      party shall make written request therefor, and such approval or consent
      shall be obtained in writing; provided however, unless specified otherwise
      in this Agreement, such party may withhold approval or consent for any
      reason or for no reason at all. Furthermore, unless specified otherwise in
      this Agreement, no such approval or consent shall be deemed to constitute
      a warranty or representation of any kind, express or implied, and the
      approving or consenting party shall have no responsibility, liability or
      obligation arising therefrom.
	 
	29.14		All notices,
      requests and reports permitted or required to be delivered by this
      Agreement shall be deemed delivered: (a) at the time delivered by hand to
      the recipient party (or to an officer, director or partner of the
      recipient party); (b) one (1) business day after being placed in the hands
      of a commercial courier service for guaranteed overnight delivery; or (c)
      five (5) business days after placement in the United States Mail by
      Registered or Certified Mail, Return Receipt Requested, postage prepaid
      and addressed to the party to be notified at its most current principal
      business address of which the notifying party has been notified in
      writing. All payments and reports required by this Agreement shall be sent
      to Franchisor at the address identified in this Agreement unless and until
      a different address has been designated by written notice. No restrictive
      endorsement on any check or in any letter or other communication
      accompanying any payment shall bind Franchisor, and its acceptance of any
      such payment shall not constitute an accord and satisfaction.
	 
	30.		ACKNOWLEDGMENTS
	 
	30.1		By
      initialing below, Franchisee hereby specifically acknowledges the
      following:
	 
	 		(a)	     	Domicile. Franchisee
      acknowledges that Franchisee is not a domiciliary or a resident of any
      state, other than the state where the STORE is located or, if different,
      the state listed in the Basic Terms as Franchisee’s address.
	 
	 		 		Initials ________/________
      
	 
	 		(b)		Receipt of
      Franchise Disclosure Document.
      Franchisee acknowledges having received Franchisor’s Franchise Disclosure
      Document at least fourteen (14) calendar days before signing a binding
      agreement or before making any payment to Franchisor or any of its
      Affiliates relating to this Agreement. Franchisee has read and understands
      Franchisor’s Franchise Disclosure Document.
	 
	 		 		Initials ________/________
      
	 
	 		(c)		No Inconsistent
      Representations. Franchisee
      acknowledges that no representations have been made to Franchisee which
      are inconsistent with information presented in Franchisor’s Franchise
      Disclosure Document, and Franchisee has not relied on any representations
      inconsistent with or not contained in Franchisor’s Franchise Disclosure
      Document.
	 
	 		 		Initials ________/________
      
	 
	 		(d)		Business Risks;
      Independent Investigation. Franchisee
      recognizes that the nature of Krispy Kreme Stores and Commissary
      Facilities may change over time, that an investment in a Krispy Kreme
      Store or Commissary Facility involves business risks and that the success
      of the investment is largely dependent on Franchisee’s own business
      abilities, efforts and financial resources. Franchisee has conducted an
      independent investigation of the business contemplated by this Agreement
      and recognizes that the food service industry is highly
    competitive.
	 
	 		 		Initials ________/________
      
	 
	 		(e)		Independent
      Counsel. Franchisee acknowledges having
      had the opportunity to seek independent counsel concerning the execution
      of this Agreement and the operation of the Franchise.
	 
	 		 		Initials ________/________ 

35

	     	        	(f)	     	No Guarantee or
      Assurance. Franchisee has not received
      from Franchisor or its representatives or relied on any statement,
      representation, guaranty or assurance, express or implied, as to the
      revenues, profits or success of the business venture contemplated by this
      Agreement, nor has Franchisee received from Franchisor or its
      representatives any information from which Franchisee may easily ascertain
      a specific level or range of actual or potential sales, income, gross or
      net profits from franchised or non-franchised Krispy Kreme Stores or
      Commissary Facilities.
			 
			 		Initials ________/________

IN WITNESS WHEREOF, the parties hereto have executed and delivered this
Agreement as of the Effective Date.

	KRISPY
      KREME DOUGHNUT CORPORATION  	[FRANCHISEE]  
	  
	  
	By:	  	    
     	By:	 
    
	Title:	  	 	Title:	 
    
	Dated:	  	 	Dated:	 
    

36

EXHIBIT A

TO THE FRANCHISE AGREEMENT BETWEEN

KRISPY KREME DOUGHNUT CORPORATION
AND

_______________________________
DATED _______________,
________

FRANCHISEE INFORMATION

	1.	    	Form of
      Entity of Franchisee.
	  
	  	
      (a) Corporation or Limited
      Liability Company. Franchisee was organized on ___________, _________
      under the laws of the State of ______. Its Federal Identification Number
      is ________________. It has not conducted business under any name other
      than its corporate or company name. The following is a list of all of
      Franchisee’s directors and officers or managing members as of 
      _______________, _______.

	      
    	Name of Each Director/Officer/Managing Member	               
    	Position(s) Held	                                          
      
		 	 	  	 
		 		  	 
		 		  	 
		 		  	 
		  		   	 

	       	
      (b) Partnership. Franchisee
      is a [general] [limited] partnership formed on ___________, _________
      under the laws of the State of _______. Its Federal Identification Number
      is ______________________. It has not conducted business under any name
      other than its partnership name. The following is a list of all of
      Franchisee ‘s general partners as of, ___________,
  _________.

	      
    	Name of Each General Partner	 
		 
		   
		 

A-1

	2.	    	Owners. Franchisee and
      each of its Owners represents and warrants that the following is a
      complete and accurate list of all Owners of Franchisee, including the full
      name and mailing address of each Owner, and fully describes the nature and
      extent of each Owner’s interest in Franchisee. Franchisee and each Owner
      as to his/her ownership interest, represents and warrants that each Owner
      is the sole and exclusive legal and beneficial owner of his/her ownership
      interest in Franchisee, free and clear of all liens, restrictions,
      agreements and encumbrances of any kind or nature, other than those
      required or permitted by this Agreement.
	 

	      
    	Owner’s Name and Mailing Address  	               
    	Percentage and Nature of Ownership Interest 
  
		 		 
    
		 		 
		 		 
    
		 		 
		 		 

Submitted by Franchisee and

Accepted by Franchisor and 
made a part of the Franchise

Agreement as of_____, ___.

	KRISPY KREME DOUGHNUT CORPORATION,	         	(Name of corporation, limited liability
      
	a
      North Carolina corporation		company or partnership)
			 
			 
	By:	   		By:	   
	Print Name:	 		Print Name:	 
	Title:	   		Title:	   
		 	 
			 
	  		By:	   
	  	 	Print Name:	 
	  		Title:	   
				 	 
	  		Owners:	 
			 
			 
	  		(Signature)	 
			 
			 
	  		(Print Name)	 
			 
			 
	  		(Signature)	 
			 
			 
	  		(Print Name)	 

A-2

EXHIBIT B

TO THE FRANCHISE AGREEMENT BETWEEN

KRISPY KREME DOUGHNUT CORPORATION
AND

________________________________
DATED _______________,
________

PRINCIPAL OWNERS’ PERSONAL GUARANTY
OF 
FRANCHISEE’S OBLIGATIONS (“Guaranty”)

     In
consideration of, and as an inducement to, the execution of the Krispy Kreme
Doughnut Corporation Franchise Agreement dated as of _______________, _________
(the “Agreement”) by and between KRISPY KREME DOUGHNUT CORPORATION
(“Franchisor”), and ____________ (“Franchisee”), each of the undersigned
Principal Owners of a ten percent (10%) or greater interest in Franchisee hereby
personally and unconditionally: (a) guarantees to Franchisor and its successors
and assigns, for the term of the Agreement and thereafter as provided in the
Agreement, that Franchisee shall punctually pay and perform each and every
undertaking, agreement and covenant set forth in the Agreement (and any
amendments) and that each and every representation of Franchisee made in
connection with the Agreement (and any amendments) are true, correct and
complete in all respects at and as of the time given; and (b) agrees personally
to be bound by each and every provision in the Agreement (and any
amendments).

     Each of the
undersigned waives: (a) acceptance and notice of acceptance by Franchisor of the
foregoing undertakings; (b) notice of demand for payment of any indebtedness or
nonperformance of any obligations hereby guaranteed; (c) protest and notice of
default to any party with respect to the indebtedness or nonperformance of any
obligations hereby guaranteed; (d) any right that the undersigned may have to
require that an action be brought against Franchisee or any other person as a
condition of liability; (e) notice of any amendment to the Agreement; (f) any
and all other notices and legal or equitable defenses to which that the
undersigned may be entitled; and (g) the provisions of N.C. General Statutes §
26.7 et seq.

     Each of the
undersigned consents and agrees that: (a) the undersigned’s direct and immediate
liability under this guaranty shall be joint and several; (b) the undersigned
shall render any payment or performance required under the Agreement upon demand
if Franchisee fails or refuses to do so punctually; (c) such liability shall not
be contingent or conditioned upon pursuit by Franchisor of any remedies against
Franchisee or any other person; and (d) such liability shall not be diminished,
relieved or otherwise affected by any extension of time, credit or other
indulgence which Franchisor may from time to time grant to Franchisee or to any
other person including the acceptance of any partial payment or performance or
the compromise or release of any claims, none of which shall in any way modify
or amend this guaranty, which shall be continuing and irrevocable until
satisfied in full.

     Each of the
undersigned agrees that the U.S. District Court for the Middle District of North
Carolina, or if such court lacks jurisdiction, the Superior Court (or its
successor) for Forsyth County North Carolina, shall be the venue and exclusive
forum in which to adjudicate any case or controversy arising from or relating to
this Guaranty. In the event a case or controversy is to be heard by the Superior
Court (or its successor) for Forsyth County North Carolina, any party may
request that the matter be assigned to the North Carolina Business Court. Each
of the undersigned irrevocably submits to the jurisdiction of such courts and
waives any objections to either the jurisdiction of or venue in such courts.
Each of the undersigned irrevocably waives, to the fullest extent he/she may
lawfully do so, the defense of an inconvenient forum to the maintenance of such
suit, action or proceeding and agrees that service of process for purposes of
any such suit, action or proceeding need not be personally served or served
within the State of North Carolina but may be served with the same effect as if
the undersigned were served within the State of North Carolina, by certified
mail or any other means permitted by law addressed to the undersigned at the
address set forth herein. Nothing contained herein shall affect Franchisor’s
rights to bring a suit, action or proceeding in any other appropriate
jurisdiction, including any suit, action or proceeding brought by Franchisor to
enforce any judgment against the undersigned entered by a State or Federal
Court.

B-1

     Each of the
undersigned waives all rights to payments and claims for reimbursement or
subrogation which any of the undersigned may have against Franchisee arising as
a result of the undersigned’s execution of and performance under this
Guaranty.

     IN
WITNESS WHEREOF, each of the undersigned has
hereunto affixed his/her signature as of the _____day of ________,
_____.

	PERCENTAGE
      OF OWNERSHIP  	GUARANTOR(S)  
	INTERESTS
      IN FRANCHISEE  	  
			 
	 		 
	  	  	(Signature)  
	  
			 
	  	  	(Print
      Name)  
			 
			 
			 
	  	  	(Address) 
    
			 
	 		 
	  	 	(Signature)  
	  
			 
	  	  	(Print
      Name)  
			  
			 
			 
	  	  	(Address) 
    
			 
	 		 
	  	  	(Signature)  
	  
			 
	  	  	(Print
      Name)  
			  
			 
			 
	  	  	(Address) 
    
			 
	 		 
	  	  	(Signature)  
	  
			 
			 
	  	  	(Print
      Name)  
			 
			 
			 
	  	  	(Address) 
    
	Subscribed
      and sworn to before me	  
	this _____ day of
      _________, _____.		  
	 
    		
	Notary
      Public  	  	  
	My Commission
      expires:________ 	  

B-2

EXHIBIT C

TO THE FRANCHISE AGREEMENT BETWEEN

KRISPY KREME DOUGHNUT CORPORATION
AND

______________________________
DATED ______________,
________

INVESTOR PERSONAL COVENANTS
REGARDING
CONFIDENTIALITY,
NON-COMPETITION AND NON-SOLICITATION

     In
conjunction with your investment in __________ (“Franchisee”) a ______________,
the undersigned _________________ (“Owner”), acknowledges and agrees as
follows:

1. Franchisee owns and operates a Krispy
Kreme Store pursuant to a franchise agreement dated ____________________, _________ (“Franchise Agreement”) with Krispy Kreme
Doughnut Corporation (“Franchisor”), which Franchise Agreement requires persons
with legal or beneficial ownership interests in Franchisee to be personally
bound by the confidentiality and noncompetition covenants contained in the
Franchise Agreement. All capitalized terms contained herein shall have the same
meaning set forth in the Franchise Agreement.

2. Owner owns or intends to own a
__________________ percent (__ %) legal or beneficial ownership interest in
Franchisee and acknowledges and agrees that the execution of this Agreement is a
condition to Franchisee’s ability to enter into the Franchise Agreement and/or
Owner’s ability to invest in Franchisee. Owner has received good and valuable
consideration for executing this Agreement. Franchisor may enforce this
Agreement directly against Owner.

3. Owner may gain access to information
comprising Franchisor’s Confidential Information as a result of investing in
Franchisee. The Confidential Information is proprietary and includes
Franchisor’s trade secrets. Owner hereby agrees that while Owner has a legal or
beneficial ownership interest in Franchisee and thereafter, Owner: (a) will not
use the Confidential Information in any other business or capacity; (b) will
maintain the confidentiality of the Confidential Information; and (c) will not
make unauthorized copies of any portion of the Confidential Information, whether
through electronic media, writings, or other tangible or intangible means of
expression. Without limiting the foregoing, Owner (i) acknowledges that he/she
may have access to Franchisor’s material non-public information and that of its
parent, Krispy Kreme Doughnut Inc. (“KKDI”), and that the securities laws
prohibit trading in KKDI securities while in possession of such information, and
(ii) agrees to refrain from trading in KKDI securities in violation of such
laws. If Owner ceases to have an interest in Franchisee, Owner must deliver to
Franchisor any such Confidential Information in his/her possession or
control.

4. Notwithstanding anything to the
contrary contained herein and provided Owner has obtained Franchisor’s prior
written consent, the restrictions on Owner’s disclosure and use of the
Confidential Information will not apply to the following:

	     	(a)	     	information, methods,
      procedures, techniques and knowledge which are or become generally known
      in the food service business, other than through disclosure (whether
      deliberate or inadvertent) by Franchisee, Franchisee’s Owners, agents, or
      employees; and
		 
		(b)		the disclosure of the
      Confidential Information in judicial, arbitration or administrative
      proceedings to the extent that Owner is legally compelled to disclose such
      information, provided Owner has notified Franchisor prior to such
      disclosure and has used its best efforts to obtain, and has afforded
      Franchisor sufficient opportunity to seek an appropriate protective order
      and obtain, assurances satisfactory to Franchisor of confidential
      treatment for the information required to be so
  disclosed.

C-1

5. Owner acknowledges and agrees that
Franchisor would be unable to (a) protect the Confidential Information against
unauthorized use or disclosure; (b) preserve the prestige, integrity, and
goodwill of the Products, Marks, and System; or (c) encourage the free exchange
of ideas and information among Krispy Kreme Stores and Commissary Facilities if
franchisees and owners of Krispy Kreme Stores and Commissary Facilities or their
owners were permitted to engage in or benefit from certain competitive
activities. Therefore, except as expressly authorized by another written
agreement with Franchisor, Owner agrees that during the term of the Franchise
Agreement or during such time as Owner has an Ownership Interest in Franchisee
(whichever is shorter), without Franchisor’s prior written consent, Owner shall
not directly or indirectly (including through a Restricted Person):

	     	(i)	     	have any Ownership
      Interest in a Competitive Business;
		 
		(ii)		perform services as a
      director, officer, manager, partner, or supervisory or management-level
      employee, of any Competitive Business;
		 
		(iii)		perform services as an
      employee, consultant, representative, agent or otherwise for a Competitive
      Business, where such services could be reasonably expected to benefit,
      either directly or indirectly, whether financially or otherwise, from the
      disclosure of any Confidential Information to such Competitive
      Business;
		 
		(iv)		recruit or hire any
      Person who is Franchisor’s employee or the employee of any Krispy Kreme
      Store or Commissary Facility, or who has been Franchisor’s employee or the
      employee of any Krispy Kreme Store or Commissary Facility within the past
      six (6) months without obtaining prior written permission from Franchisor
      and that Person’s employer. If Franchisor permits Owner to hire any such
      Person, then Owner agrees to pay Franchisor a non-refundable Management
      Development Fee in the amount of Twenty-Five Thousand Dollars ($25,000)
      per hired employee as of the date of hire; or
		 
		(v)		induce or attempt to
      induce any Person who is Franchisor’s employee or the employee of any
      Krispy Kreme Store or Commissary Facility to discontinue working for
      Franchisor or such Krispy Kreme Store or Commissary Facility as the case
      may be.

6. Upon termination of the Franchise
Agreement or Owner’s Ownership Interest in Franchisee (whichever first occurs),
Owner shall not directly or indirectly (including through a Restricted Person),
for a period of two (2) years commencing on the effective date of such
termination:

	     	(a)	     	have any Ownership
      Interest in a Competitive Business located within a radius of ten (10)
      miles of the Site or of any other Krispy Kreme Store or Commissary
      Facility then open or under construction;
		 
		(b)		perform services as a
      director, officer, manager, partner, or supervisory or management-level
      employee, of any Competitive Business located within a radius of ten (10)
      miles of the Site or of any other Krispy Kreme Store or Commissary
      Facility then open or under construction;
		 
		(c)		perform services as an
      employee, consultant, representative, agent or otherwise for a Competitive
      Business located within a radius of ten (10) miles of the Site or of any
      other Krispy Kreme Store or Commissary Facility then open or under
      construction, where such services could be reasonably expected to benefit,
      either directly or indirectly, whether financially or otherwise, from the
      disclosure of any Confidential Information to such Competitive
      Business;
		 
		(d)		recruit or hire any
      Person who is Franchisor’s employee or the employee of any Krispy Kreme
      Store or Commissary Facility or who has been Franchisor’s employee or the
      employee of any Krispy Kreme Store or Commissary Facility within the past
      six (6) months without obtaining prior written permission from Franchisor
      and that Person’s employer. If Franchisor permits Owner to hire any such
      Person, then Owner agrees to pay Franchisor a non-refundable Management
      Development Fee in the amount of Twenty-Five Thousand Dollars ($25,000)
      per hired employee as of the date of hire; or
		 
		(e)		induce or attempt to
      induce any Person who is Franchisor’s employee or the employee of any
      Krispy Kreme Store or Commissary Facility to discontinue working for
      Franchisor or such Krispy Kreme Store or Commissary Facility as the case
      may be.

C-2

7. Owner expressly acknowledges the
possession of skills and abilities of a general nature and the opportunity to
exploit such skills in other ways, so that enforcement of the covenants
contained in Sections 5 and 6 of these covenants will not deprive
him/her of his/her personal goodwill or ability to earn a living. If any
covenant herein which restricts competitive activity is deemed unenforceable by
virtue of its scope or in terms of geographic area, type of business activity
prohibited and/or length of time, but could be rendered enforceable by reducing
any part or all of it, Owner agrees that it will be enforced to the fullest
extent permissible under applicable law and public policy. Franchisor may obtain
in any court of competent jurisdiction any injunctive relief, including
temporary restraining orders and preliminary injunctions, against conduct or
threatened conduct for which no adequate remedy at law may be available or which
may cause it irreparable harm. Owner acknowledges that any violation of
Sections 4, 5, or 6 of these covenants would result in
irreparable injury for which no adequate remedy at law may be available. If
Franchisor files a claim to enforce this Agreement and prevails in such
proceeding, Owner agrees to reimburse Franchisor for all its costs and expenses,
including reasonable attorneys’ fees. 

8. Owner agrees that the U.S. District
Court for the Middle District of North Carolina, or if such court lacks
jurisdiction, the Superior Court (or its successor) for Forsyth County North
Carolina, shall be the venue and exclusive forum in which to adjudicate any case
or controversy arising from or relating to these covenants. In the event a case
or controversy is to be heard by the Superior Court (or its successor) for
Forsyth County North Carolina, any party may request that the matter be assigned
to the North Carolina Business Court. Owner irrevocably submits to the
jurisdiction of such courts and waives any objections to either the jurisdiction
of or venue in such courts. Owner irrevocably waives, to the fullest extent he
or she may lawfully do so, the defense of an inconvenient forum to the
maintenance of such suit, action or proceeding and agrees that service of
process for purposes of any such suit, action or proceeding need not be
personally served or served within the State of North Carolina but may be served
with the same effect as if he or she were served within the State of North
Carolina, by certified mail or any other means permitted by law, addressed to
Owner at the address set forth herein. Nothing contained herein shall affect
Franchisor’s rights to bring a suit, action or proceeding in any other
appropriate jurisdiction, including any suit, action or proceeding brought by
Franchisor to enforce any judgment against Owner entered by a State or Federal
Court.

9. If Franchisor claims in any judicial
proceeding that Owner has breached any of the covenants contained herein, and
Franchisor prevails on such claims, then Franchisor shall be awarded its costs
and expenses incurred in connection with such proceedings, including reasonable
attorneys’ fees.

     IN WITNESS
WHEREOF, the undersigned has executed and delivered this Agreement on the ___
day of _________, ______. 

	OWNER  
	 	 
	(Signature)  
	  
	  	 
	(Print
      Name)  
	 
	 
	 
	(Address)  

C-3

EXHIBIT D

TO THE FRANCHISE AGREEMENT BETWEEN

KRISPY KREME DOUGHNUT CORPORATION
AND

______________________________
DATED ______________,
________

Automatic Debit Notification (ADN)
Program 
Authorization for ACH Debits or Credits

The undersigned Franchisee hereby
authorizes Krispy Kreme Doughnut Corporation (“KKDC”) to initiate debit and/or
credit entries via the Automated Clearing House (ACH) to the bank account
established with the bank shown below. This authority is to remain in full and
force and effect until the bank has received written notification from
Franchisee of the termination of such authority and such termination has been
confirmed in writing by KKDC. 

	BANK NAME  	        
    	City, State  
	 		
	 
    		 
	Bank Transit/ABA
      Number  		Bank Account
      Number  
	   
	 		
	  		
	 
    		
	Franchisee (Print
      Name)  	 	  
	 		
	 		
	By:  
    		  
	 		
	 		
	Title:  		 
	 		
	 		
	Date:  		  

D-1

EXHIBIT E

TO THE FRANCHISE AGREEMENT BETWEEN

KRISPY KREME DOUGHNUT CORPORATION
AND

______________________________
DATED______________,
________

AUTHORIZED OFF-PREMISES
SALES

     By signing
below, Franchisor authorizes Franchisee to make sales of the specified Products
to the following locations on a non-exclusive basis from Store Number
______located at ___________________________. Capitalized terms used herein
shall have the meanings ascribed to them in the Franchise Agreement for Store
Number ____. Franchisor may impose other terms and conditions from time to time
by written directives. This authorization runs concurrently with the term of the
Franchise Agreement for the store and terminates automatically and without
notification on any termination or expiration of that agreement. In addition,
either party may terminate this authorization, with or without cause, upon
180-days written notice to the other party. 

	Products:  		  
	    
	   
    	  	 		 
	 	  	 		 
	   	  	 		 
	 		
	Locations:  		  
	 		
	 	 
    	 		
	 	 
    	 		
	 	 
    	 		
	 		
	KRISPY
      KREME DOUGHNUT CORPORATION  		FRANCHISEE  
		 			
	By:	  	 	By:	 	 
		 			
	Its:	  		Its:	 	 
		 			
	Date:	 	 	Date:	 	 

E-1EMPLOYMENT AGREEMENT

     EMPLOYMENT
AGREEMENT (“Agreement”) dated as of November 7, 2007 among Krispy Kreme Doughnut
Corporation, a North Carolina corporation (“KKDC”), Krispy Kreme Doughnuts, Inc.,
a North Carolina corporation (the “Company” and, together with KKDC, the
“Companies”), and Kenneth J. Hudson (the “Executive”).

     The parties hereto agree as
follows:

ARTICLE 1

DEFINITIONS

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

     “Base Salary” has the meaning set forth
in Section 4.01.

     “Board” means the Board of Directors of
the Company.

     “Cause” shall mean (i) the Executive’s failure or refusal to perform the
Executive’s lawful and proper duties hereunder (other than as a result of total
or partial incapacity due to physical or mental illness or a court or
governmental order), (ii) the Executive’s conviction of or plea 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 human resources officer of (A) the Company or (B) in the
event of a merger, consolidation or other business combination involving the
Company, the successor to the Company’s business or assets or (C) if all or
substantially all of the voting stock of the Company is held by another public
company, such public company, (iii) the assignment to the Executive of any
duties or responsibilities materially inconsistent with the Executive’s status
under clause (ii) of this sentence or his failure at any time to report directly
to the most senior executive officer of the applicable company described in such
clause (ii), (iv) any failure by the Companies to maintain the Executive’s
principal place of employment and the executive offices of the Companies within
25 miles of the Winston-Salem, North Carolina area, (v) any material breach by
the Companies of this Agreement, or (vi) the term of the Employment Period
ending as a result 

-2-

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

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

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

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

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

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

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

ARTICLE 2

EMPLOYMENT

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

-3-

ARTICLE 3

POSITION AND DUTIES

     SECTION
3.01. Position and Duties. During the Employment Period, the Executive shall serve as
Senior Vice President of Human Resources and Organizational Development of the
Company reporting directly to the most senior executive officer and shall be the
Company’s most senior human resources officer. During the Employment Period, the
Executive also shall serve as Senior Vice President of Human Resources and
Organizational Development of KKDC and shall be KKDC’s most senior human
resources officer. The Executive shall have such responsibilities, powers and
duties as may from time to time be prescribed by the Board or the most senior
executive officer of the Companies; 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 of directors of one
for-profit corporation with the prior approval of the Board, which will not be
unreasonably withheld, and the Executive may serve as a director of
not-for-profit organizations or engage in other charitable, civic or educational
activities, so long as the activities described in this proviso do not interfere
with the Executive’s performance of his duties hereunder or result in any
conflict of interest with the Companies.

ARTICLE 4

BASE SALARY AND BENEFITS

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

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

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

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

-4-

ARTICLE 5

TERM AND TERMINATION

     SECTION
5.01. Term.
The Employment Period will terminate on November 7, 2010, unless sooner
terminated as hereinafter provided; provided, however, that the Employment
Period will be automatically extended for successive one-year periods following
the original term ending November 7, 2010 until either the Companies, on the one
hand, or the Executive, on the other hand, at least 180 days prior to the
expiration of the original term or any extended term, shall give written notice
to the other of their intention not to so extend the Employment
Period.

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

     SECTION
5.03. Termination for Good Reason or Without
Cause. Except as otherwise set forth in
Section 5.09 below, if the Employment Period shall be terminated (a) by the
Executive for Good Reason, or (b) by the Companies not for Cause, provided the
Executive has executed an irrevocable (except to the extent required by law, and
to the extent required by law to be revocable, has not revoked) general release
of claims, in the form attached hereto as Exhibit A, the Executive shall be
entitled solely to the following: (i) Base Salary through the Date of
Termination; (ii) an amount equal to one times the Base Salary, provided that,
the Executive shall be entitled to any unpaid amounts only if the Executive has
not breached and does not breach the provisions of Sections 6.01, 7.01, 8.01 or
9 below; (iii) a bonus for the year of termination of employment equal to the
Executive’s target annual bonus for such year pro rated for the number of full
months during the bonus year prior to such termination of employment, payable as
soon as practicable following such termination of employment; and (iv) medical
benefits as provided in Section 5.05 below. The Executive’s entitlements under
any other benefit plan or program shall be as determined thereunder, except that
duplicative severance benefits shall not be payable under any other plan or
program. Amounts described in clause (ii) above will be payable in equal monthly
installments for a period of 12 months commencing on the first month anniversary
of the Date of Termination, except, to the extent required by Section 409A of
the Code, amounts otherwise payable under clause (ii) within six months after
the Executive’s termination of employment shall be deferred to and paid on the
day following the six month anniversary of such termination of employment. In
addition, promptly following any such termination, the Executive shall be
reimbursed for all Reimbursable Expenses incurred by the Executive prior to such
termination.

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

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

-5-

     SECTION
5.06. Notice of Termination. Any termination by the Companies for Permanent Disability or
Cause or without Cause or by the Executive with or without Good Reason shall be
communicated by written Notice of Termination to the other party hereto. For
purposes of this Agreement, a “Notice of
Termination” shall mean a notice which shall
indicate the specific termination provision in this Agreement relied upon and
shall set forth in reasonable detail the facts and circumstances claimed to
provide a basis for termination of employment under the provision
indicated.

     SECTION
5.07. Date of Termination. “Date of
Termination” shall mean (a) if the Employment
Period is terminated as a result of a Permanent Disability, five days after a
Notice of Termination is given, (b) if the Employment Period is terminated as a
result of his death, on the date of his death, and (c) if the Employment Period
is terminated for any other reason, the later of the date of the Notice of
Termination and the end of any applicable correction period.

     SECTION
5.08. No Duty to Mitigate. The Executive shall have no duty to seek new employment or
other duty to mitigate following a termination of employment as described in
this Article 5, and no compensation or benefits described in this Article 5
shall be subject to reduction or offset on account of any subsequent
compensation, other than as provided in Section 5.05.

     SECTION
5.09. Termination for Good Reason or Without
Cause Following a Change in Control. If the
Employment Period shall be terminated within two years after a Change in Control
(a) by the Executive for Good Reason, or (b) by the Companies not for Cause,
then Executive’s compensation and benefits upon termination shall be governed by
this Section 5.09 instead of the provisions of Section 5.03 above, and, provided
the Executive has executed an irrevocable (except to the extent required by law,
and to the extent required by law to be revocable, has not revoked) general
release of claims, in the form attached hereto as Exhibit A, the Executive shall
be entitled solely to the following: (i) Base Salary through the Date of
Termination; (ii) an amount equal to 1.25 times the sum of his Base Salary and
his target annual bonus for the year of termination, provided that, the
Executive shall be entitled to any unpaid amounts only if the Executive has not
breached and does not breach the provisions of Sections 6.01, 7.01, 8.01 or 9
below; (iii) a bonus for the year of termination of employment equal to the
Executive’s target annual bonus for such year pro rated for the number of full
months during the bonus year prior to such termination of employment; and (iv)
medical benefits as provided in Section 5.05. The Executive’s entitlements under
any other benefit plan or program shall be as determined thereunder, except that
duplicative severance benefits shall not be payable under any other plan or
program. In addition, promptly following any such termination, the Executive
shall be reimbursed for all Reimbursable Expenses incurred by the Executive
prior to such termination. The amounts due under clauses (i), (ii) and (iii) of
this Section 5.09 shall be paid in a lump sum upon termination of
employment.

ARTICLE 6

CONFIDENTIAL INFORMATION

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

-6-

ARTICLE 7

INTELLECTUAL PROPERTY

     SECTION
7.01. Ownership of Intellectual
Property. In the event that the Executive as
part of his activities on behalf of the Companies generates, authors or
contributes to any invention, design, new development, device, product, method
of process (whether or not patentable or reduced to practice or comprising
Confidential Information), any copyrightable work (whether or not comprising
Confidential Information) or any other form of Confidential Information relating
directly or indirectly to the business of the Company or its Subsidiaries as now
or hereafter conducted (collectively, “Intellectual Property”), the Executive
acknowledges that such Intellectual Property is the sole and exclusive property
of the Company and its Subsidiaries and hereby assigns all right, title and
interest in and to such Intellectual Property to the Company or its designated
Subsidiary. Any copyrightable work prepared in whole or in part by the Executive
during the Employment Period will be deemed “a work made for hire” under Section
201(b) of the Copyright Act of 1976, as amended, and the Company or its
designated Subsidiary will own all of the rights comprised in the copyright
therein. The Executive will promptly and fully disclose all Intellectual
Property and will cooperate with the Companies to protect their interests in and
rights to such Intellectual Property (including providing reasonable assistance
in securing patent protection and copyright registrations and executing all
documents as reasonably requested by the Companies, whether such requests occur
prior to or after termination of Executive’s employment hereunder).

ARTICLE 8

DELIVERY OF MATERIALS UPON TERMINATION
OF EMPLOYMENT

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

ARTICLE 9

NON-COMPETITION AND
NONSOLICITATION

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

-7-

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

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

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

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

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

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

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

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

     It is also agreed that
“Noncompetition Period,” for purposes hereof, shall mean:

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

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

     It is also agreed that
“Nonsolicitation Period,” for purposes hereof, shall mean:

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

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

-8-

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

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

ARTICLE 10

EQUITABLE RELIEF

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

ARTICLE 11

EXECUTIVE REPRESENTATION AND
INDEMNIFICATION

     SECTION 11.01. Executive Representation.
The Executive hereby represents and warrants to 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.

-9-

ARTICLE 12

CERTAIN ADDITIONAL PAYMENTS

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

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

-10-

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

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

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

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

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

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

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

-11-

ARTICLE 13

MISCELLANEOUS

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

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

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

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

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

     SECTION
13.06. Descriptive Headings. The descriptive headings of this Agreement are inserted for
convenience only and do not constitute a part of this Agreement.

-12-

     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:
General Counsel

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

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

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

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

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

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

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

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

-13-

     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]

-14-

     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/ Kenneth J. Hudson  
	  	Kenneth J.
      Hudson  

S-1

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