UNITED STATES DISTRICT COURT MIDDLE DISTRICT OF NORTH CAROLINA No. 1:04-CV ) ) ) ) ) ) ) )

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1 In re KRISPY KREME DOUGHNUTS, INC. SECURITIES LITIGATION This Document Relates To: ALL ACTIONS. UNITED STATES DISTRICT COURT MIDDLE DISTRICT OF NORTH CAROLINA No. 1:04-CV NOTICE OF PENDENCY AND PROPOSED SETTLEMENT OF CLASS ACTION IF YOU PURCHASED OR ACQUIRED KRISPY KREME DOUGHNUTS, INC. PUBLICLY TRADED SECURITIES BETWEEN MARCH 8, 2001 AND APRIL 18, 2005, YOU COULD GET A PAYMENT FROM A CLASS ACTION SETTLEMENT. A federal court authorized this Notice. This is not a solicitation from a lawyer. Securities and Time Period: Krispy Kreme Doughnuts, Inc. ( Krispy Kreme common stock (CUSIP: , warrants (CUSIP: , and options purchased or acquired between March 8, 2001 and April 18, Settlement Fund: $75,000,000 in cash, Krispy Kreme common stock and warrants. Your recovery will depend on the amount of securities purchased and the timing of your purchases and any sales. Depending on the number and type of eligible securities that participate in the settlement and when those securities were purchased and sold, the estimated average recovery per share of common stock will be worth approximately $0.33 before deduction of Court-approved fees and expenses. The recovery for the other securities cannot be accurately estimated. Reasons for Settlement: Avoids the costs and risks associated with continued litigation, including the danger of no recovery for Settlement Class Members. If the Class Action Had Not Settled: Continuing with the case could have resulted in dismissal or loss at trial. The two sides do not agree on the amount of money that could have been won if Class Lead Plaintiffs prevailed at trial. The parties disagree about: (1 the method for determining whether Krispy Kreme securities were artificially inflated during the relevant period; (2 the amount of any such inflation; (3 the extent that various facts alleged by Class Lead Plaintiffs were materially false or misleading; (4 the extent that various facts alleged by Class Lead Plaintiffs influenced the trading price of Krispy Kreme securities during the relevant period; and (5 whether the facts alleged were material, false, misleading or otherwise actionable under the securities laws. Attorneys Fees and Expenses: Class Lead Counsel have not received any payment for their work investigating the facts, conducting this litigation and negotiating the settlement on behalf of the Class Lead Plaintiffs and the Settlement Class. Court-appointed Class Lead Counsel will ask the Court for attorneys fees of 23.5% of the Settlement Fund and reimbursement of out-of-pocket expenses not to exceed $750,000 to be paid from the Class Settlement Fund. If the above amounts are requested and approved by the Court, the average cost per share of common stock will be $ Deadlines: Submit Claim: March 5, 2007 Request Exclusion: January 16, 2007 File Objection: January 16, 2007 Court Hearing on Fairness of Settlement: February 7, 2007 More Information: or Claims Administrator: Lead Counsel: Krispy Kreme Securities Litigation Claims Administrator c/o Gilardi & Co. LLC P.O. Box Petaluma, CA Rick Nelson Shareholder Relations Lerach Coughlin Stoia Geller Rudman & Robbins LLP 655 West Broadway, Suite 1900 San Diego, CA Your legal rights are affected whether you act, or don t act. Read this Notice carefully.

2 YOUR LEGAL RIGHTS AND OPTIONS IN THIS CLASS ACTION SETTLEMENT: SUBMIT A CLAIM FORM The only way to get a payment. EXCLUDE YOURSELF Get no payment. This is the only option that allows you to participate in another lawsuit against the Class Settling Defendants relating to the legal claims in this case. OBJECT You may write to the Court if you don t like this settlement. GO TO A HEARING You may ask to speak in Court about the fairness of the settlement. DO NOTHING Get no payment. These rights and options and the deadlines to exercise them are explained in this Notice. The Court in charge of this case must decide whether to approve the settlement. Payments will be made if the Court approves the settlement and, if there are any appeals, after appeals are resolved. Please be patient. BASIC INFORMATION 1. Why Did I Get This Notice Package? You or someone in your family may have purchased or acquired the publicly traded securities of Krispy Kreme listed above between March 8, 2001 and April 18, The Court sent you this Notice because you have a right to know about a proposed settlement of a class action lawsuit, and about all of your options, before the Court decides whether to approve the settlement. If the Court approves it and after any objections or appeals are resolved, the Claims Administrator appointed by the Court will make the payments that the settlement allows. This package explains the lawsuit, the settlement, your legal rights, what benefits are available, who is eligible for them, and how to get them. The Court in charge of the case is the United States District Court for the Middle District of North Carolina, and the case is known as In re Krispy Kreme Doughnuts, Inc. Securities Litigation, No. 1:04-CV The people who sued are called the Class Lead Plaintiffs, and the companies and the individuals they sued, Krispy Kreme, PricewaterhouseCoopers LLP ( PwC, John Tate, Randy Casstevens, Michael Phalen, John N. McAleer, and Scott A. Livengood, are called the Class Settling Defendants. 2. What Is This Lawsuit About? This case was brought as a class action alleging that the Class Settling Defendants manipulated and overstated Krispy Kreme s financial results by disguising debts as income and making other improper accounting adjustments, resulting in the artificial inflation of the price of Krispy Kreme securities between March 8, 2001 and April 18, Class Settling Defendants deny that they did anything wrong. 3. Why Is This a Class Action? In a class action, one or more people called class representatives (in this case the Court-appointed Class Lead Plaintiffs, Pompano Beach Police & Fire Fighters Retirement System, Alaska Electrical Pension Fund, City of St. Clair Shores Police and Fire Retirement System, City of Sterling Heights General Employee Retirement System, and Jason Hennessy, sue on behalf of people who have similar claims. Here, all these people are called a Settlement Class or Settlement Class Members. One court resolves the issues for all Settlement Class Members, except for those who exclude themselves from the Settlement Class. Judge William L. Osteen is in charge of this class action. 4. Why Is There a Settlement? The Court did not decide in favor of the Class Lead Plaintiffs or Class Settling Defendants. Instead, both sides agreed to a settlement. That way, they avoid the cost of a trial, and eligible Settlement Class Members who make valid claims will get compensation. The Class Lead Plaintiffs and their attorneys think the settlement is best for all Settlement Class Members. WHO IS IN THE SETTLEMENT To see if you will get money from this settlement, you first have to determine if you are a Settlement Class Member. 5. How Do I Know if I Am Part of the Settlement? The Settlement Class includes all persons who purchased or otherwise acquired publicly traded securities of Krispy Kreme between March 8, 2001 and April 18, 2005, except those persons and entities that are excluded, as described below. 6. What Are the Exceptions to Being Included? You are not a Settlement Class Member if you are a Class Settling Defendant, a member of the immediate family of one of the individual defendants listed in question 1, an entity in which any Class Settling Defendant has or had a controlling interest, a director or officer of Krispy Kreme, a legal representative, heir, successor, or assign of any excluded party. - 2-

3 If you sold Krispy Kreme securities between March 8, 2001 and April 18, 2005, that alone does not make you a Settlement Class Member. You are a Settlement Class Member only if you purchased or acquired Krispy Kreme securities between March 8, 2001 and April 18, I m Still Not Sure if I Am Included in the Class Action. If you are still not sure whether you are included, you can ask for free help. You can call Rick Nelson at 619/ for more information. Or you can fill out and return the claim form described in question 10, to see if you qualify. THE SETTLEMENT BENEFITS WHAT YOU GET 8. What Does the Settlement Provide? Class Settling Defendants have agreed to pay a total of $75 million in cash and Krispy Kreme common stock and warrants. The $75 million fund is comprised of: $39,167,000 in cash; $17,916,500 worth of Krispy Kreme common stock; and $17,916,500 worth of Krispy Kreme freely tradable warrants for common stock. Krispy Kreme Settlement Stock The Krispy Kreme Settlement Stock will consist of freely tradable shares of Krispy Kreme common stock equal to $17,916,500 divided by the Measurement Price. Measurement Price means the average of the daily Closing Prices for each trading day of Krispy Kreme common stock for the ten-trading day period commencing on the fifth trading day next preceding the date Krispy Kreme files its Form 10-K for Fiscal Year The Closing Price for each day shall be the last reported sales price for Krispy Kreme common stock on the New York Stock Exchange. Krispy Kreme will not provide any price protection for the Krispy Kreme Settlement Stock; after the number of shares has been determined, the number of shares will not be adjusted regardless of whether the value of each share later increases or decreases before distribution to the Settlement Class Members. However, the number of shares constituting the Krispy Kreme Settlement Stock will be adjusted to account for stock splits, reverse stock splits and other similar actions taken by Krispy Kreme. If Krispy Kreme is sold, acquired or merges prior to distribution of the Krispy Kreme Settlement Stock to the Settlement Class, the shares will be treated for purposes of any corporate transaction as if they had been issued, distributed, and outstanding, and will receive the same proportionate treatment as other shares of Krispy Kreme common stock. All costs associated with the delivery or distribution of the Krispy Kreme Settlement Stock shall be borne by Krispy Kreme. No fractional shares of Krispy Kreme Settlement Stock will be issued. The calculation of the number of shares to be distributed will be rounded up or down to the nearest whole share. The Krispy Kreme Settlement Stock shall be registered or exempt from the registration requirements of the Securities Act of 1933 under 3(a(10 of the Securities Act of The Krispy Kreme Settlement Stock shall be freely tradable, shall not constitute restricted securities under the Securities Act of 1933 and may be sold or transferred by recipients thereof who are not affiliates of Krispy Kreme (as that term is defined in Rule 144 of the Securities Act of 1933 or recipients deemed to be underwriters under the Securities Act of 1933 without registration under 5 of the Securities Act of 1933 or compliance with Rule 144. Krispy Kreme Settlement Warrants The Krispy Kreme Settlement Warrants will have a total value (determined as of the last day of the ten-trading day period referred to in the definition of Measurement Price equal to $17,916,500 determined by the independent valuation analysis commissioned by Krispy Kreme and provided to PwC, which will be based on the Black-Scholes-Merton model and assumptions consistent with those used by Krispy Kreme historically in valuing warrants, including: (i the volatility of Krispy Kreme common stock will be based on the historical and implied volatilities of Krispy Kreme s common stock and the common stock of companies similar to Krispy Kreme; (ii the risk free rate of interest will be based on the Treasury bill rate most closely corresponding to the 5-year term of the warrants; and (iii the dividend yield will be 0%. The price per share of Krispy Kreme common stock utilized in the Black-Scholes-Merton model will be equal to the Measurement Price. The exercise price of each share of Krispy Kreme common stock issuable upon exercise of each Krispy Kreme Settlement Warrant will be equal to 125 % of the Measurement Price. The aggregate number of shares of Krispy Kreme Settlement Stock issuable upon exercise of the Krispy Kreme Settlement Warrants will be based upon a total value for the Krispy Kreme Settlement Warrants of $17,916,500 determined as aforesaid. The Warrant Agreement is on file with the Court and includes all terms and conditions applicable to the Krispy Kreme Settlement Warrants. No fractional Krispy Kreme Settlement Warrants will be issued. The calculation of the number of warrants to be distributed will be rounded up or down to the nearest whole warrant. The Krispy Kreme Settlement Warrants shall be exempt from the registration requirements of the Securities Act of 1933 under 3(a(10 of the Securities Act of Within ten (10 business days of delivery to Class Lead Counsel, Krispy Kreme will cause the Krispy Kreme Settlement Warrants to be listed upon the New York Stock Exchange and shall pay all fees required to maintain their listing for their term as long as a sufficient number of Krispy Kreme Settlement Warrants remain outstanding and the Company otherwise is entitled to list the Krispy Kreme Settlement Warrants upon the New York Stock Exchange. The Krispy Kreme Settlement Warrants shall be freely tradable and shall not constitute restricted securities under the Securities Act of 1933 and may be sold or transferred by recipients thereof who are not affiliates of Krispy Kreme (as that term is defined in Rule 144 of the Securities Act of 1933 or recipients deemed to be underwriters under the Securities Act of 1933 without registration under 5 of the Securities Act of 1933 or compliance with Rule 144. Upon receipt of the Krispy Kreme Settlement Stock and Krispy Kreme Settlement Warrants, Class Lead Counsel will have the right to take any measures they deem appropriate to protect the overall value of the Krispy Kreme Settlement Stock prior to - 3-

4 distribution to Authorized Claimants. Class Lead Counsel shall have no liability for any sale, liquidation, transfer or other disposition of the Krispy Kreme Settlement Stock or Krispy Kreme Settlement Warrants absent gross negligence or willful misconduct. Class Lead Counsel shall also have the right to use the cash component of the Class Settlement Fund to protect the overall value of the Class Settlement Fund. The Class Settlement Fund will be divided among all eligible Settlement Class Members who send in valid claim forms, after payment of Court-approved attorneys fees and expenses and the costs of claims administration, including the costs of printing and mailing this Notice and the cost of publishing newspaper notice (the Net Settlement Fund. 9. How Much Will My Payment Be? Your share of the fund will depend on the number of valid claim forms that Settlement Class Members send in and how many shares of securities you purchased during the relevant period and when you bought and sold them. A claim will be calculated under the following Plan of Allocation, subject to Court approval: COMMON STOCK 1. For shares of Krispy Kreme common stock purchased or acquired on March 8, 2001 through March 9, 2004, and a sold on or before March 9, 2004, the claim per share is $0; b sold on March 10, 2004 through May 6, 2004, the claim per share is the lesser of: (i the purchase price less the sales price, or (ii $3.94 (March 10, 2004 price decline; c sold on May 7, 2004 through July 28, 2004, the claim per share is the lesser of: (i the purchase price less the sales price, or (ii $13.23 (March 10, 2004 and May 7, 2004 price declines; d sold on July 29, 2004 through January 3, 2005, the claim per share is the lesser of: (i the purchase price less the sales price, or (ii $16.18 (March 10, 2004, May 7, 2004 and July 29, 2004 price declines; e sold on January 4, 2005, the claim per share is the lesser of: (i the purchase price less the sales price, or (ii $18.01 (March 10, 2004, May 7, 2004, July 29, 2004 and January 4, 2005 price declines; f sold on January 5, 2005 through April 18, 2005, the claim per share is the lesser of: (i the purchase price less the sales price, or (ii $18.79 (March 10, 2004, May 7, 2004, July 29, 2004, January 4, 2005 and January 5, 2005 price declines; g held at the close of trading on April 18, 2005, the claim per share shall be the lesser of: (i the purchase price less $6.48 (closing price on April 19, 2005, or (ii $19.45 (March 10, 2004, May 7, 2004, July 29, 2004, January 4, 2005, January 5, 2005 and April 19, 2005 price declines. 2. For shares of Krispy Kreme common stock purchased or acquired on March 10, 2004 through May 6, 2004, and a sold on or before May 6, 2004, the claim per share is $0; b sold on May 7, 2004 through July 28, 2004, the claim per share is the lesser of: (i the purchase price less the sales price, or (ii $9.29 (May 7, 2004 price decline; c sold on July 29, 2004 through January 3, 2005, the claim per share is the lesser of: (i the purchase price less the sales price, or (ii $12.24 (May 7, 2004 and July 29, 2004 price declines; d sold on January 4, 2005, the claim per share is the lesser of: (i the purchase price less the sales price, or (ii $14.07 (May 7, 2004, July 29, 2004 and January 4, 2005 price declines; e sold on January 5, 2005 through April 18, 2005, the claim per share is the lesser of: (i the purchase price less the sales price, or (ii $14.85 (May 7, 2004, July 29, 2004, January 4, 2005 and January 5, 2005 price declines; f held at the close of trading on April 18, 2005, the claim per share shall be the lesser of: (i the purchase price less $6.48 (closing price on April 19, 2005, or (ii $15.51 (May 7, 2004, July 29, 2004, January 4, 2005, January 5, 2005 and April 19, 2005 price declines. 3. For shares of Krispy Kreme common stock purchased or acquired on May 7, 2004 through July 28, 2004, and a sold on or before July 28, 2004, the claim per share is $0; b sold on July 29, 2004 through January 3, 2005, the claim per share is the lesser of: (i the purchase price less the sales price, or (ii $2.95(July 29, 2004 price decline; c sold on January 4, 2005, the claim per share is the lesser of: (i the purchase price less the sales price, or (ii $4.78 (July 29, 2004 and January 4, 2005 price declines; d sold on January 5, 2005 through April 18, 2005, the claim per share is the lesser of: (i the purchase price less the sales price, or (ii $5.56 (July 29, 2004, January 4, 2005 and January 5, 2005 price declines; e held at the close of trading on April 18, 2005, the claim per share shall be the lesser of: (i the purchase price less $6.48 (closing price on April 19, 2005, or (ii $6.22 (July 29, 2004, January 4, 2005, January 5, 2005 and April 19, 2005 price declines. - 4-

5 4. For shares of Krispy Kreme common stock purchased or acquired on July 29, 2004 through January 3, 2005, and a sold on or before January 3, 2005, the claim per share is $0; b sold on January 4, 2005, the claim per share is the lesser of: (i the purchase price less the sales price, or (ii $1.83 (January 4, 2005 price decline; c sold on January 5, 2005 through April 18, 2005, the claim per share is the lesser of: (i the purchase price less the sales price, or (ii $2.61 (January 4, 2005 and January 5, 2005 price declines; d held at the close of trading on April 18, 2005, the claim per share shall be the lesser of: (i the purchase price less $6.48 (closing price on April 19, 2005, or (ii $3.27 (January 4, 2005, January 5, 2005 and April 19, 2005 price declines. 5. For shares of Krispy Kreme common stock purchased or acquired on January 4, 2005, and a sold on January 4, 2005, the claim per share is $0; b sold on January 5, 2005 through April 18, 2005, the claim per share is the lesser of: (i the purchase price less the sales price, or (ii $0.78 (January 5, 2005 price decline; c held at the close of trading on April 18, 2005, the claim per share shall be the lesser of: (i the purchase price less $6.48 (closing price on April 19, 2005, or (ii $1.44 (January 5, 2005 and April 19, 2005 price declines. 6. For shares of Krispy Kreme common stock purchased or acquired on January 5, 2005 through April 18, 2005, and a sold on or before April 18, 2005, the claim per share is $0; b held at the close of trading on April 18, 2005, the claim per share shall be the lesser of: (i the purchase price less $6.48 (closing price on April 19, 2005, or (ii $0.66 (April 19, 2005 price decline. CALL OPTIONS 1. For call options on Krispy Kreme common stock purchased on March 8, 2001 through April 18, 2005, and a owned at the close of trading on March 9, 2004, May 6, 2004, July 28, 2004, January 3, 2005, January 4, 2005 or April 18, 2005, the claim per call option is the difference between the price paid for the call option less the proceeds received upon the settlement of the call option contract; b not owned at the close of trading on March 9, 2004, May 6, 2004, July 28, 2004, January 3, 2005, January 4, 2005 or April 18, 2005, the claim per call option is $0. 2. For call options on Krispy Kreme common stock written on March 8, 2001 through April 18, 2005, the claim per call option is $0. PUT OPTIONS 1. For put options on Krispy Kreme common stock written on March 8, 2001 through April 18, 2005, and a held at the close of trading on March 9, 2004, May 6, 2004, July 28, 2004, January 3, 2005, January 4, 2005 or April 18, 2005, the claim per put option is the difference between the price paid upon settlement of the put option contract less the initial proceeds received upon the sale of the put option contract; b not held at the close of trading on March 9, 2004, May 6, 2004, July 28, 2004, January 3, 2005, January 4, 2005 or April 18, 2005, the claim per put option is $0. 2. For put options on Krispy Kreme common stock purchased on March 8, 2001 through April 18, 2005, the claim per put option is $0. Note: In the case the option was exercised for Krispy Kreme common stock, the amount paid, or proceeds received, upon the settlement of the option contract equals the intrinsic value of the option using Krispy Kreme common stock s closing price on the date the option was exercised. WARRANTS 1. For Krispy Kreme warrants purchased on March 8, 2001 through April 18, 2005, and a sold on or before April 18, 2005, the claim per warrant is the difference between the purchase price less the sales price; b held at the close of trading on April 18, 2005, the claim per warrant is 10% of the purchase price. For the purposes of this allocation, the total aggregate allowed claims for all warrants, call options, and put options shall not exceed 3% of the Net Settlement Fund. The payment you get will reflect your pro rata share of the Net Settlement Fund. Depending on the number and type of eligible securities that participate in the settlement and when those shares were purchased and sold, the estimated average payment for common stock will be approximately $0.33 for each share before deduction of Court-approved fees and expenses. The number of claimants who send in claims varies widely from case to case. If fewer than anticipated Settlement Class Members send in claim forms, you could get more money. - 5-

6 The date of purchase, acquisition or sale is the contract or trade date as distinguished from the settlement date. For Settlement Class Members who held Krispy Kreme securities at the beginning of the Settlement Class Period or made multiple purchases or sales during the Settlement Class Period, the first-in, first-out ( FIFO method will be applied to such holdings, purchases and sales for purposes of calculating a claim. Under the FIFO method, sales of securities during the Settlement Class Period will be matched, in chronological order, first against securities held at the beginning of the Settlement Class Period. The remaining sales of securities during the Settlement Class Period will then be matched, in chronological order, against securities purchased during the Settlement Class Period. A Settlement Class Member will be eligible to receive a distribution from the Net Settlement Fund only if a Settlement Class Member had a net loss, after all profits from transactions in Krispy Kreme securities during the Settlement Class Period are subtracted from all losses. HOW YOU GET A PAYMENT SUBMITTING A CLAIM FORM 10. How Will I Get a Payment? To qualify for payment, you must be an eligible Settlement Class Member and you must send in a claim form. A claim form is enclosed with this Notice. Read the instructions carefully, fill out the form, include all the documents the form asks for, sign it, and mail it in the enclosed envelope postmarked no later than March 5, When Will I Get My Payment? The Court will hold a hearing on February 7, 2007, to decide whether to approve the settlement. If Judge Osteen approves the class action settlement, there may be appeals. It is always uncertain whether these appeals can be resolved, and resolving them can take time, perhaps several years. Everyone who sends in a claim form will be informed of the determination with respect to their claim. Please be patient. 12. What Am I Giving Up to Get a Payment or Stay in the Settlement Class? Unless you exclude yourself, you are staying in the Settlement Class, and that means that you cannot sue, continue to sue, or be part of any other lawsuit against the Class Settling Defendants about the same legal issues in this case. It also means that all of the Court s orders will apply to you and legally bind you and you will release your claims in this case against the Class Settling Defendants. The terms of the release are included in the claim form that is enclosed. EXCLUDING YOURSELF FROM THE SETTLEMENT If you don t want a payment from this settlement, but you want to keep the right to sue or continue to sue any of the Class Settling Defendants on your own about the same legal issues in this case, then you must take steps to get out of the Settlement Class. This is called excluding yourself or is sometimes referred to as opting out of the Settlement Class. 13. How Do I Get Out of the Settlement Class? To exclude yourself from the Settlement Class, you must send a letter by mail stating that you want to be excluded from In re Krispy Kreme Doughnuts, Inc. Securities Litigation, No. 1:04-CV You must include your name, address, telephone number, your signature, and the number and type of Krispy Kreme securities you purchased or acquired between March 8, 2001 and April 18, 2005, the number and type of securities sold during this time period, if any, and the dates of such purchases and sales. You must mail your exclusion request postmarked no later than January 16, 2007 to: Krispy Kreme Securities Litigation Claims Administrator c/o Gilardi & Co LLC P.O. Box Petaluma, CA You cannot exclude yourself on the phone or by . If you ask to be excluded, you are not eligible to get any settlement payment, and you cannot object to the settlement. You will not be legally bound by anything that happens in this lawsuit. 14. If I Do Not Exclude Myself, Can I Sue the Class Settling Defendants for the Same Thing Later? No. Unless you exclude yourself, you give up any right to sue the Class Settling Defendants for the claims resolved by the class action settlement. If you have a pending lawsuit against any of the Class Settling Defendants, speak to your lawyer in that case immediately. Remember, the exclusion deadline is January 16, If I Exclude Myself, Can I Get Money from This Settlement? No. If you exclude yourself, do not send in a claim form. But, you may sue, continue to sue, or be part of a different lawsuit against any of the Class Settling Defendants. THE LAWYERS REPRESENTING YOU 16. Do I Have a Lawyer in This Case? The Court asked the law firm of Lerach Coughlin Stoia Geller Rudman & Robbins LLP to represent you and other Settlement Class Members. - 6-

7 These lawyers are called Class Lead Counsel. You will not be charged for these lawyers. If you want to be represented by your own lawyer, you may hire one at your own expense. 17. How Will the Lawyers Be Paid? Class Lead Counsel will ask the Court for attorneys fees of 23.5% of the Settlement Fund (an average of $0.078 per share of common stock and for reimbursement of their out-of-pocket expenses up to $750,000 ($0.003 per share of common stock, that were advanced in connection with the Class Action. Such sums as may be approved by the Court will be paid from the Class Settlement Fund. Settlement Class Members are not personally liable for any such fees or expenses. The attorneys fees and expenses requested will be the only payment to Class Lead Counsel for their efforts in achieving this settlement and for their risk in undertaking this representation on a wholly contingent basis. To date, Class Lead Counsel have not been paid for their services for conducting this litigation on behalf of the Class Lead Plaintiffs and the Settlement Class nor for their substantial out-of-pocket expenses. The fee requested will compensate Class Lead Counsel for their work in achieving the Class Settlement Fund and is well within the range of fees awarded to class counsel under similar circumstances in other cases of this type. The Court may award less than this amount. OBJECTING TO THE SETTLEMENT You can tell the Court that you don t agree with the settlement or some part of it. 18. How Do I Tell the Court that I Don t Like the Class Action Settlement? If you are a Settlement Class Member, you can object to the settlement if you don t like any part of it. You can give reasons why you think the Court should not approve it. The Court will consider your views. To object, you must send a letter saying that you object to the settlement in In re Krispy Kreme Doughnuts, Inc. Securities Litigation, No. 1:04-CV Be sure to include your name, address, telephone number, your signature, the number and type of Krispy Kreme securities purchased and sold between March 8, 2001 and April 18, 2005, and the reasons you object to the settlement. Any objection to the settlement must be mailed or delivered such that it is received by each of the following no later than January 16, 2007: Class Lead Counsel: Joy Ann Bull LERACH COUGHLIN STOIA GELLER RUDMAN & ROBBINS LLP 655 West Broadway, Suite 1900 San Diego, CA Court: Clerk of the Court UNITED STATES DISTRICT COURT MIDDLE DISTRICT OF NORTH CAROLINA United States Courthouse 324 West Market Street, Suite 401 Greensboro, NC Counsel for Krispy Kreme: Jerome F. Birn, Jr. WILSON SONSINI GOODRICH & ROSATI, P.C. 650 Page Mill Road Palo Alto, CA What s the Difference Between Objecting and Excluding? Objecting is simply telling the Court that you don t like something about the settlement. You can object only if you stay in the Settlement Class. Excluding yourself is telling the Court that you don t want to be part of the Settlement Class. If you exclude yourself, you have no basis to object because the case no longer affects you. THE COURT'S FAIRNESS HEARING The Court will hold a hearing to decide whether to approve the settlement. You may attend and you may ask to speak, but you don t have to. 20. When and Where Will the Court Decide Whether to Approve the Settlement? The Court will hold a fairness hearing at 9:00 a.m., on February 7, 2007, at the United States Courthouse, 324 West Market Street, Greensboro, North Carolina. At this hearing the Court will consider whether the settlement of the Class Action is fair, reasonable, and adequate. If there are objections, the Court will consider them. Judge Osteen will listen to people who have asked to speak at the hearing. The Court will also consider how much to pay to Class Lead Counsel. The Court may decide these issues at the hearing or take them under consideration. We do not know how long these decisions will take. 21. Do I have to Come to the Hearing? No. Class Lead Counsel will answer questions Judge Osteen may have. But, you are welcome to come at your own expense. If you send an objection, you don t have to come to Court to talk about it. As long as you mailed your written objection on time, the Court will consider it. You may also pay your own lawyer to attend, but it is not necessary. - 7-

8 22. May I Speak at the Hearing? You may ask the Court for permission to speak at the Settlement Hearing. To do so, you must send a letter saying that it is your intention to appear in In re Krispy Kreme Doughnuts, Inc. Securities Litigation, No. 1:04-CV Be sure to include your name, address, telephone number, your signature, and the number and type of Krispy Kreme securities purchased or acquired between March 8, 2001 and April 18, Your notice of intention to appear must be received no later than January 16, 2007, by the Clerk of the Court, Class Lead Counsel, and Krispy Kreme s counsel, at the three addresses listed in question 18. You cannot speak at the hearing if you exclude yourself from the Settlement Class. IF YOU DO NOTHING 23. What Happens if I Do Nothing at All? If you do nothing, you ll get no money from this settlement. But, unless you exclude yourself, you won t be able to start a lawsuit, continue with a lawsuit, or be part of any other lawsuit against the Class Settling Defendants about the same legal issues in this case. GETTING MORE INFORMATION 24. Are There More Details About the Settlement? This Notice summarizes the proposed settlement. More details are in the Stipulation and Agreement of Class and Derivative Settlement dated as of October 30, You can get a copy of the Stipulation by writing to Rick Nelson, c/o Lerach Coughlin Stoia Geller Rudman & Robbins LLP, 655 West Broadway, Suite 1900, San Diego, CA or from the Clerk s office at the United States District Court for the Middle District of North Carolina, 324 West Market Street, Suite 401, Greensboro, NC during regular business hours. 25. How Do I Get More Information? You can call 619/ or write to Rick Nelson, Lerach Coughlin Stoia Geller Rudman & Robbins LLP, 655 West Broadway, Suite 1900, San Diego, CA or visit the website at DO NOT TELEPHONE THE COURT REGARDING THIS NOTICE SPECIAL NOTICE TO NOMINEES If you hold shares of any Krispy Kreme securities purchased between March 8, 2001 and April 18, 2005 as nominee for a beneficial owner, then, within ten (10 days after you receive this Notice, you must either: (1 send a copy of this Notice by first class mail to all such Persons; or (2 provide a list of the names and addresses of such Persons to the Claims Administrator: Krispy Kreme Securities Litigation Claims Administrator c/o Gilardi & Co LLC P.O. Box Petaluma, CA If you choose to mail the Notice and Proof of Claim yourself, you may obtain from the Claims Administrator (without cost to you as many additional copies of these documents as you will need to complete the mailing. Regardless of whether you choose to complete the mailing yourself or elect to have the mailing performed for you, you may obtain reimbursement for or advancement of reasonable administrative costs actually incurred or expected to be incurred in connection with forwarding the Notice and which would not have been incurred but for the obligation to forward the Notice, upon submission of appropriate documentation to the Claims Administrator. DATED: NOVEMBER 15, 2006 BY ORDER OF THE COURT UNITED STATES DISTRICT COURT MIDDLE DISTRICT OF NORTH CAROLINA - 8-