FROSTED MUG HOLDINGS, LLC.

MULTIPLE UNIT DEVELOPMENT AGREEMENT

 

This Multiple Unit Development Agreement (this “Agreement”) dated, made and
entered into this 16th day of March, 2006 by and between FROSTED MUG HOLDINGS,
LLC., a corporation with its principal place of business at 777 Walnut Avenue,
Cranford, NJ 07016 (the “Company”), and Rockelle Corp. or its assignee as
hereafter set forth at 162 Miller Place Road, Miller Place, New York 11764, a
Delaware corporation, (“Developer”).

 

WITNESSETH

 

WHEREAS, the Company, as the result of the expenditure of time, skill, effort
and resources has developed and owns a unique and distinctive format and system
(the “System”) relating to the establishment and operation of Stewart’s
restaurants (“Stewarts Restaurants”), which feature and offer for sale to the
public the Company’s approved menu items under the trade name “Stewart’s” and
other various marks;

 

WHEREAS, the distinguishing characteristics of the System include, but are not
limited to, design and appearance, specific actions, uniform standards,
specifications, and procedures for operations, equipment, inventory and
staffing; quality and uniformity of products and services such as water ice
formulas, methods of preparation and specifications; employee training and
assistance; and advertising and promotional programs; all of which may be
changed, improved, and further developed by the Company from time to time;

 

WHEREAS, the Company identifies the System by means of certain trade names,
service marks, trademarks, logos, emblems, and indicia of origin, including but
not limited to the marks “Stewart’s” Stewart’s Root Beer” “The Original
Drive-In”, and such other trade names, service marks, and trademarks as are now
designated and may hereinafter be designated by the Company in writing for use
in connection with the System (the “Proprietary Marks”);

 

WHEREAS, the Company continues to develop, use, and control the use of such
Proprietary Marks in order to identify for the public the source of services and
products marketed thereunder and under the System, and to represent the System’s
high standards of quality, appearance and service;

 

WHEREAS, the Company has developed, and may hereafter develop, unique formulas
and methods for preparing food, and offers and sells, to the public, ice cream
and other food products pursuant to unique and original formulas, trade secrets,
quality standards, and specifications prepared from proprietary and/or approved
mixes (collectively, the “Proprietary Products”); and

 

WHEREAS, Developer wishes to obtain certain development rights to operate
Stewart’s Restaurants under the System, to be identified with the Proprietary
Marks in the territory described in this Agreement, and to be trained by the
Company to establish and operate Stewart’s Restaurants in Wal-Mart stores (the
“Snack Bars”).

 

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NOW THEREFORE, the parties, in consideration of the mutual covenants and
commitments herein contained, hereby agree as follows:

 

1.

Grant

 

1.1       The Company hereby grants to Developer certain development rights
pursuant to the terms and conditions of this Agreement, and Developer hereby
undertakes the obligation, to establish and operate 10 Snack Bars under the
Proprietary Marks and the System, and to use the System solely in connection
therewith, at specific locations to be designated herein pursuant to the
development schedule set forth in Exhibit “A” (the “Development Schedule”).

 

1.2       Each Snack Bar developed hereunder shall be established and operated
pursuant to a separate franchise agreement for the Wal Mart Snack Bar to be
executed by Developer (the “Franchise Agreements”).

 

1.3       Except as otherwise provided in this Agreement, during the term of
this Agreement, the Company shall not establish or operate, nor license any
party other than Developer to establish or operate, under the System and the
Proprietary Marks any Snack Bar in any Wal Mart without offering the Developer
the right of first refusal provided in Section 1.6. Not withstanding the
forefoing Developer acknowledges and agrees that the Company retains the rights,
among others

 

1.3.1    To establish and operate, and license other parties to establish and
operate Stewart’s Restaurants under the System and the Proprietary Marks in any
existing or future (1) office buildings containing 250,000 square feet or more,
(2) shopping malls, (3) airports, (4) bus and train depots and other
transportation terminals, and (5) entertainment facilities (including, without
limitations, sports stadiums) and theme parks; and

 

1.3.2    To use, and to license others to use, the System and the Proprietary
Marks for the operation and licensing of other Stewart’s Restaurant at any
location outside of any Snack Bar developed under this Agreement.

 

1.4       Developer acknowledges and agrees that certain of the Company’s or its
affiliates’ products, including but not limited to, the Proprietary Products,
whether now existing or developed in the future, may be distributed in Wal Mart
stores and other distribution channels on a retail basis by the Company, the
Company’s affiliates, or the Company’s licensees or designees, in such manner
and through such channels of distribution other than through Snack Bars as the
Company, in its sole discretion, shall determine, including, but not limited to,
supermarkets, convenience stores, markets, grocery stores, machines, and variety
stores. The Company reserves the right, among others, to implement any
distribution arrangements relating thereto. Developer understands that this
Agreement grants developer no right (1) to distribute such products through such
channels of distribution as described in this Section 1.4, or (2) to share in
any of the proceeds received by any such party therefrom.

 

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1.5       This Agreement is not a franchise agreement, and does not grant to
Developer any right to use in any manner the Company’s Proprietary Marks or
System. Developer shall have no right under this Agreement to license others to
use in any manner the Proprietary Marks or System.

 

1.6       Developer and the Company acknowledge and agree that, during the term
of this Agreement: Developer shall have a conditional right of first refusal on
all future Wal Mart Snack Bars that Company intends to develop in any Wal Mart.
Upon notification by the Company that Wal Mart locations are available, in the
event that Developer elects to purchase the proposed Wal Mart Snack Bar,
Developer must exercise its right of first refusal by (a) notifying the Company
of its election to execute the Company’s then-current form of Franchise
Agreement pursuant to the terms set forth by the Company upon notification of
the Wal Mart Snack Bar’s availability within fourteen (14) days of Developer’s
receipt of such notification from the Company; and (b) executing and delivering
to the Company the Company’s then-current form of the Franchise Agreement along
with payment of the initial franchise fee, within fifteen (15) business days of
Developer’s election to purchase, but in no event sooner than ten (10) business
days after Developer’s receipt from the Company of the Offering Circular and
Franchise Agreement for the proposed location. Developer shall promptly
establish and open such Snack Bar within the time permitted by Wal Mart said
time being set by the Company at the time that the offer of the location to
Developer. In the event Developer does not exercise its right of first refusal
as described in this Section 1.6 the Company shall have the right to license to
any third party the right to establish and operate, and such third party shall
have the right to purchase, establish and operate, a Snack Bar at the location
described in the Company’s notification to Developer and Developer shall have no
rights or claims with respect to same, except as may otherwise be provided under
any Franchise Agreement previously executed between the Company and the
Developer. Developer’s election not to exercise its rights of first refusal with
respect to any site shall not affect Developer’s right of first refusal as to
any subsequent site. The Developer’s right of first refusal and the restrictions
on the Company selling rights to develop Snack Bars in other Wal Mart stores
shall automatically terminate and be of no further legal force or effect in the
event that the Company shall sell all or substantially all of its assets to any
third party. In the event of any such sale, Developer shall retain all rights
set forth herein except for the right of first refusal which shall be
automatically extinguished.

 

1.7       Subject in any event to the provisions of the applicable Franchise
Agreement, the Developer shall have the right to sell any Snack Bar developed
hereunder to any third party and retain any proceeds from such sale and in
consideration of Developer’s responsibility to continuously be responsible for
the collection of royalties, Developer shall be entitled to retain one third of
all royalties collected from any such third party franchisee. Developer’s right
to collect and retain one third of the royalties is subject to Company’s
successful completion of registration to sell such franchises in the States that
require said registration. Until that registration is complete and Developer
confirms with Company that same has been completed, only then does Developer
have the ability to sell the franchises. Consequently, Developer shall be
required to operate all Snack Bars developed hereunder until all registrations
for sale of franchises are completed in the application States.

 

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2.

DEVELOPMENT FEE

 

2.1       In consideration of the development rights granted herein, Developer
shall pay to the Company, upon execution of this Agreement, a development fee
equal to Twelve Thousand Five Hundred ($12,500.00) Dollars per Snack Bar either
under construction or for which a permit has been issued. Said fee shall be paid
upon issuance of each subsequent permit for Snack Bars developed hereunder. For
the initial ten Snack Bars subject to this Agreement the initial fee shall not
exceed One Hundred Tewnty Five Thousand ($125,000.00) Dollars (the “Development
Fee”), receipt of which is hereby acknowledged by the Company, and which shall
be deemed fully earned and non-refundable upon execution of this Agreement in
consideration of the administrative and other expenses incurred by the Company
and for the development opportunities lost or deferred as a result of the rights
granted Developer herein.

 

2.2       Except as otherwise provided herein, the Developer shall also pay Four
Thousand ($4,000) Dollars per unit under the same condition as set forth in
Article 2.1 herein toward the royalties to be charged to the Wal Mart Snack Bars
developed hereunder. Hereafter, said fee shall be paid upon issuance of each
subsequent permit for Snack Bars developed hereunder.

 

2.3        In addition to the Development Fee set forth herein, upon execution
of this Agreement the Developer shall pay Four Thousand Five Hundred ($4,500.00)
Dollars in rental security per unit to be developed payable upon the same terms
set forth in Article 2.1.

 

3.

DEVELOPMENT OBLIGATIONS

 

3.1       In exercising its development rights and fulfilling its development
obligations under this Agreement, Developer shall execute a Franchise Agreement
for each Snack Bar developed under this Agreement. The Franchise Agreement for
each Snack Bar shall be executed by Developer and submitted to the Company
within fifteen (15) business days of receipt of the Company’s notice of site
approval, but in no event sooner than ten (10) business days after Developer’s
receipt from the Company of the Company’s then-current Offering Circular and
Franchise Agreement. At the time Developer submits to the Company the Company’s
fully executed then-current form of Franchise Agreement for each additional
Snack Bar developed in excess of the ten units contemplated hereunder, Developer
shall pay to the Company the Company’s one half of the then-current initial
franchise fee due under the Franchise Agreement.

 

3.2       Recognizing that time is of the essence, Developer agrees to develop,
open and operate the Snack Bars by the dates described in the Development
Schedule and Section 1.1 of this Agreement. If Developer fails to develop, open
and operate the Snack Bars by the respective dates set forth in the Development
Schedule the Company shall have the right, without further notice to Developer,
to cancel this Agreement and seek alternative developers to complete the
Development Schedule.

 

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4.

TERM  

 

4.1       Unless sooner terminated in accordance with the terms of this
Agreement, the term of this Agreement and all rights granted hereunder shall
expire upon the earlier of : (A) failure of Developer to perform any obligation
set forth herein or in any franchise agreement that may be executed for any
particular unit developed hereunder; (B) upon failure to adhere to the
requirements of the Wal Mart Master Relationship Agreement.

 

4.2

Upon expiration of this Agreement as set forth in Section 4.1 of this Agreement:

 

4.2.1    Developer shall not have any right to establish any additional Snack
Bars for which a Franchise Agreement has not been executed by the Company at the
time of expiration; and

 

4.2.2    The Company shall be entitled to establish and operate, and license
others to establish and operate Snack Bars in Wal Mart stores under the System
and Proprietary Marks, except as may otherwise be provided under any Franchise
Agreement which has been executed between the Company and Developer.

 

5.

DUTIES OF THE PARTIES

 

5.1       Company shall be required to maintain a satisfactory working
relationship with Wal-Mart Corporate on a good faith basis.

 

5.2

Developer accepts the following obligations:

 

5.2.1                A Developer which is a corporation shall comply, except as
otherwise approved in writing by the Company, with the following requirements
throughout the term of this Agreement:

 

5.2.1.1                         Developer shall furnish the Company with its
Articles of Incorporation, bylaws, other governing documents and any amendments
thereto including the Resolution of the Board of Directors authorizing entry
into this Agreement. The Company shall maintain the right to review other of
Developer’s corporate documents form time to time as it, in its sole discretion,
deems advisable, including, but not limited to, minutes of the meetings of
Developer’s Board of Directors, any other documents the Company may reasonably
request, and any amendments thereto.

 

5.2.1.2                         Developer shall be a newly organized
corporation, and shall at all times confine its activities, and its governing
documents, shall at all times provide that its activities are confined,
exclusively to the management and operation of the business contemplated
hereunder, including the establishment and operation of the Stewart’s Snack Bars
to be developed hereunder.

 

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5.2.1.3                         Developer shall maintain stop transfer
instructions against the transfer on its records of any equity securities; and
shall issue on certificates for voting securities upon the face of which the
following printed legend does not legibly and conspicuously appear:

 

The transfer of this stock is subject to the terms and conditions of a Multiple
Shop Development Agreement with Frosted Mug Holdings, LLC dated March 16, 2006.
Reference is made to the provisions of the said Multiple Unit Development
Agreement and to the Articles and Bylaws of this Corporation.

 

Provided, however, that the requirements of this Section 5.2.1.3 shall not apply
to a “publicly-held corporation”. A “publicly-held corporation” for purposes of
this Agreement shall mean a corporation registered pursuant to the Securities
and Exchange Act of 1934.

 

5.2.1.4                         Developer shall maintain a current list of all
owners of record and to its knowledge, all beneficial owners of any class of
voting securities of Developer and shall furnish the list to the Company upon
request.

 

5.2.2    A Developer which is a partnership shall comply, except as otherwise
approved in writing by the Company, with the following requirements throughout
the term of this Agreement:

 

5.2.2.1                         Developer shall furnish the Company with its
partnership agreement as well as well as such other documents as the Company may
reasonably request, and any amendments thereto, which shall contain a
restriction on transfer of any partnership interest without the prior written
consent of the Company.

 

5.2.2.2                         Developer shall prepare and furnish to the
Company, upon request, a list of all general and limited partners in Developer.

 

5.2.3    A Developer which is a limited liability company shall comply, except
as otherwise approved in writing by the Company, with the following requirements
throughout the term of this Agreement:

5.2.3.1                         Developer shall furnish the Company with a copy
of its operating agreement and other governing documents and any amendments
thereto. The Company shall maintain the right to review other of Developer’s
limited liability company documents from time to time as it, in its sole
discretion, deems advisable including all documents the Company may reasonably
request, and any amendments thereto.

 

5.2.3.2                         Developer shall be a newly organized limited
liability company, and shall at all times confine its activities, and its
governing documents shall at all times provide that its activities are confined,
exclusively to the management and operation of the business contemplated
hereunder.

 

5.2.3.3                         Developer shall maintain a current list of all
members and managers of record and shall furnish the list to the Company upon
request.

 

 

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5.2.4    Developer shall comply with all requirements of federal, state, and
local laws, rules and regulations.

 

5.2.4    Developer shall comply with all of the other terms, conditions and
obligations of Developer under this Agreement.

 

6.

DEFAULT

 

6.1       Developer shall be deemed in default under this Agreement, and all
rights granted herein shall automatically terminate, without notice to
Developer, if Developer falsifies any information or material provided by the
Developer to the Company; if Developer terminates or repudiates this Agreement
orally or in writing; if Developer shall become insolvent or makes a general
assignment for the benefit of creditors; if a petition in bankruptcy if filed by
Developer or such a petition is filed against and consented to by Developer; if
Developer is adjudicated a bankrupt or insolvent; if a bill in equity or other
proceeding for the appointment of a receiver of Developer or other custodian for
Developer’s business or assets is filed and consented to by Developer; if a
receiver or other custodian (permanent or temporary) of Developer’s business or
assets or any part thereof is appointed by any court of competent jurisdiction;
if proceedings for a composition with creditors under any state or federal law
should be instituted by or against Developer; if a final judgment remains
unsatisfied or of record for thirty (30) days or longer (unless a bond is
filed); if execution is levied against Developer’s business or assets; if suit
to foreclose any lien or mortgage against the premises or equipment is
instituted against Developer and not dismissed within (30) days; if Developer
breaches or fails to fulfill any aspect of this Agreement or any Franchise
Agreement related to any Snack Bar.

 

6.2       If Developer fails to comply with or to perform any of the terms,
conditions or obligations of (1) this agreement, except the development
obligations described in Section 3.5 hereof, (2) any Franchise Agreement or any
other agreement between Developer or any of its affiliates and the Company, its
affiliates or subsidiaries, or (3) makes or attempts to make a transfer or
assignment in violation of Section 7.2 hereof, such failure or action shall
constitute a default under this Agreement. Upon such default, the Company shall
have the right to terminate this Agreement and all rights granted hereunder
without affording Developer any opportunity to cure the default, effective
immediately upon receipt by Developer of written notice.

 

6.3       Upon termination or expiration of this Agreement, Developer shall have
no right to establish or operate any additional Snack Bars for which a Franchise
Agreement has not been executed by the Company at the time of termination. The
Company shall have the right to establish and operate, and to license others to
establish and operate, Snack Bars under the System and the Proprietary in any
area, except as may be otherwise provided under any Franchise Agreement which
has been executed between the Company and Developer.

 

6.4       No default under this Development Agreement shall constitute a default
under any Franchise Agreement between the parties hereto. Default under this
Development Agreement shall constitute default under any other Development
Agreement between the parties hereto.

 

 

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6.5       No right or remedy herein conferred upon or reserved to the Company is
exclusive of any other right or remedy provided or permitted by law or equity.

 

7.

TRANSFERS

 

7.1

Transfer by the Company:

 

The Company shall have the right to transfer, assign or delegate all or any part
of its rights or obligations herein to any person or legal entity, Developer
agrees hereby to consent to any such assignment and delegation and to execute
any documents in connection therewith as reasonably requested by the Company.
Any such assignment shall be binding upon and inure to the benefit of the
Company’s successors and assigns.

 

7.2

Transfer by Developer:

 

7.2.1    Developer understands and acknowledges that the rights and duties set
forth in this Agreement are unique to Developer, and are granted in reliance on
the business skill, financial capacity, and personal character of Developer or
Developer’s owners. Accordingly, neither Developer nor any immediate or remote
successor to any part of Developer’s interest in this Agreement nor any
individual, partnership, corporation, limited liability company or other legal
entity which directly or indirectly controls Developer, shall transfer or assign
this Agreement, or shall see, assign, transfer, convey or give away any direct
or indirect interest in Developer (including any direct or indirect interest in
a corporate, partnership or limited liability company Developer), in Developer’s
business, or in substantially all the assets of Developer, unless Developer
shall have first tendered to the Company the right of first refusal to acquire
such interest in accordance with the provisions and other conditions set forth
below, and then if the Company fails to exercise said right, only with the prior
written consent of the Company. The Company’s consent shall not be unreasonably
withheld. Any purported assignment or transfer, by operation of law or
otherwise, not having the written consent of the Company, shall be null and void
and shall constitute a material breach of this agreement, for which the Company
may then terminate this Agreement without opportunity to cure pursuant to
Section 6.2 of this Agreement.

 

7.2.2    The Company shall not unreasonably withhold its consent to a transfer
of this Agreement, or a direct or indirect interest in Developer, or of
Developer’s business, or of substantially all of the assets of Developer;
provided, however, that if a transfer alone, or together with other previous,
simultaneous, or proposed transfers, would have the effect of transferring this
Agreement, a controlling interest in Developer or substantially all of
Developer’s assets, the Company may, in its sole discretion, require as a
condition of its approval that:

 

7.2.2.1              All of Developer’s accrued monetary obligations to the
Company and its affiliates and all other outstanding obligations related to the
terms and conditions under this Agreement shall have been satisfied:

 

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7.2.2.2              Developer is not in default of any material provision of
this Agreement, any amendment hereof or successor hereto, or any other agreement
between Developer and the Company, or its subsidiaries and affiliates;

 

7.2.2.3. The transferor shall have executed a general release under seal, in a
form satisfactory to the Company, of any and all claims against the Company and
its officers, directors, shareholders, and employees, in their corporate and
individual capacities, including, without limitation, claims arising under
federal, state, and local laws, rules, and ordinances;

 

7.2.2.4              The transferee (and, if the transferee is other than an
individual, such owners of a beneficial interest in the transferee as the
Company may request) shall enter into a written assignment, under seal and in a
form satisfactory to the Company, assuming and agreeing to discharge all of
Developer’s obligations under this Agreement;

 

7.2.2.5              The transferee (and, if the transferee is other than an
individual, such owners of a beneficial interest in the transferee as the
Company may request) shall demonstrate to the Company’s satisfaction that the
transferee meets the Company’s educational, managerial, and business standards;
possesses a good moral character, business reputation, and credit rating; has
the aptitude and ability to conduct the business contemplated herein (as may be
evidenced by prior related business experience or otherwise) and has adequate
financial resources and capital to comply with the Development Schedule;

 

7.2.2.6              At the Company’s option, the transferee (and, if the
transferee is other than an individual, such owners of a legal or beneficial
interest int he transferee as the Company may request) shall execute (and/or,
upon the Company’s request, shall cause all interested parties to execute), for
a term ending on the expiration date of this Agreement, the Company’s
then-current standard form of Development Agreement, which agreement shall
supersede this Agreement in all respects and the terms of which agreement may
differ from the terms of this Agreement; provided, however, that the Development
Schedule thereunder shall be the same as in this Agreement;

 

7.2.2.7              Developer shall remain liable for all obligations of
Developer’s business prior to the effective date of the transfer and shall
execute any and all instruments reasonably requested by the Company to evidence
such liability;

 

7.2.2.8              Each Snack Bar which has opened and been approved for
operation by the Company is in full compliance with all the conditions and terms
of the Franchise Agreement for such Shop;

 

7.2.2.9              Except in the case of a transfer to a corporation or
limited liability company formed for the convenience of ownership, Developer
shall pay a transfer fee of Five Thousand Dollars ($5,000), or such greater
amount necessary to reimburse the Company for its legal, accounting, training,
and other expenses incurred in connection with the transfer; and

 

7.2.2.10 The transferor shall have first offered to sell such interest to the
Company pursuant to Section 7.4 hereof.

 

 

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7.2.3    Developer shall use its best efforts in the event it grants a security
interest in any of the assets of the business licensed hereunder to cause the
secured party to agree that in the event of any default by Developer under any
documents related to the security interest, the Company shall have the right and
option to be substituted as obligor to the secured party and to cure any default
of Developer, it being understood that such right of the Company may be
subordinate to the rights of Developer’s lenders or landlord.

 

7.2.4    Developer acknowledges and agrees that each condition which must be met
by the transferee developer is necessary to assure such transferee’s full
performance of the obligations hereunder.

 

7.3.      All materials required for any offer or sale of securities of
Developer by federal or state law shall be submitted to the Company for review,
approval, and consent prior to their being filed with any government agency; and
any materials to be used in any exempt offering shall be submitted to the
Company for review, approval, and consent prior to their use. No Developer
offering shall imply (by use of the Proprietary Marks or otherwise) that the
Company is participating as an underwriter, issuer, or offeror of Developer’s or
the Company’s securities; and the Company’s review of any offering shall be
limited solely to the subject of the relationship between Developer and the
Company. Developer shall be limited solely to the subject of the relationship
between Developer and the Company. Developer and the other participants in the
offering must fully indemnify the Company in connection with the offering
(subject to such limitations which are customary in offerings of this nature).
Developer shall give the Company written notice at least seven (7) days prior to
the date of commencement of any such offering. Any such offering shall be
subject to the Company’s right of refusal, as set forth in Section 7.4 hereof.

 

7.4       If any party holding any interest in Developer, in this Agreement, in
the Developer’s business, or in substantially all of the Developer’s assets (the
transfer of which interest would have the effect of transferring this Agreement,
a controlling interest in Developer, Developer’s business, or in substantially
all of Developer’s assets), or if Developer desires to accept any bona fide
offer from a third party to purchase such interest, the seller shall notify the
Company in writing of the terms of such offer, and shall provide such
information and documentation relating to the offer as the Company may require;
and the Company shall have the right and option, exercisable within thirty (30)
days after receipt of such written notification, to send written notice to the
seller that the Company intends to purchase the seller’s interest on the same
terms and conditions offered by the third party. In the event that the Company
elects to purchase the seller’s interest, no material change in any offer and no
other offers by a third party for such interest shall be considered with respect
to the Company’s right of first refusal. In the event that the Company elects to
purchase the seller’s interest, closing on such purchase must occur within
ninety (90) days from the date of notice to the seller of the election to
purchase by the Company. In the event that the Company has elected not to
purchase the seller’s interest, any material change in the terms of any offer
prior to closing by any third party shall constitute a new offer subject to the
same rights of first refusal by the Company described in this Section 7.4 as in
the case of an initial offer. Failure by the Company to exercise the option
afforded by this Section as 7.4 shall not constitute a waiver of any other
provision of this Agreement, including all of the requirements of this Section
7.4 with respect to a proposed transfer.

 

 

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In the event the consideration, terms, and/or conditions offered by a third
party such that the Company may not reasonably be required to furnish the same
consideration, terms, and/or conditions, then the Company may purchase the
interest in the Developer’s business proposed to be sold for the reasonable
equivalent in cash. If the parties cannot agree within a reasonable time on the
reasonable equivalent in cash of consideration, terms, and/or conditions offered
by the third party, an independent appraiser shall be designated by mutual
agreement of the Company and Developer, and his determination shall be binding.
If the Company and Developer cannot agree upon the selection of a single
appraiser, then each party shall designate one (1) such appraiser and the tow
(2) designated appraisers, in turn, shall designate a third party appraiser and
the determination of the three (3) appraisers shall be binding.

 

7.5       Upon the death or mental incompetency of any person with a controlling
interest in this Agreement or in Developer the transfer of which requires the
consent of the Company as provided in Section 7.2 hereof, the executor,
administrator, personal representative, guardian, or conservator of such person
shall transfer such interest within nine (9) months after such death or mental
incompetency to a third party approved by the Company. Such transfers,
including, without limitation, transfers by devise or inheritance, shall be
subject to the same conditions as any inter vivos transfer. However, in the case
of transfer by devise or inheritance, if the heirs or beneficiaries of any such
person are unable to meet the conditions of this Section 7, the personal
representative of the deceased person shall have a reasonable time to dispose of
the deceased’s interest, which disposition shall be subject to all the terms and
conditions for transfers contained in this Agreement. If the interest is not
disposed of within a reasonable time, the Company may terminate this Agreement.

 

7.6       The Company’s consent to any transfer under this Section 7 shall not
constitute a waiver of any claims the Company may have against the transferring
party, nor shall it be deemed a waiver of the Company’s right to demand exact
compliance with any of the terms of this Agreement by the transferee.

 

8.

COVENANTS

 

8.1.      Developer covenants that during the term of this Agreement, except as
otherwise approved in writing by the Company, Developer or, if Developer is a
corporation, partnership, or limited liability company, a principal of Developer
approved by the Company, shall devote full time, energy, and best efforts to the
management and operation of the business contemplated hereunder, including the
establishment and operation of the Snack Bars to be developed hereunder.

 

8.2       Developer specifically acknowledges that, pursuant to this Agreement,
Developer will receive valuable confidential information, including, without
limitation, information regarding the site selection and marketing methods and
techniques of the Company and the System, and that Developer has the right and
obligation under this Agreement to identify sites and develop the Development
Area for the benefit of the System. Developer covenants that during the term of
this Agreement, except as otherwise approved in writing by the Company,
Developer shall not, either directly or indirectly, for itself, or through, on
behalf of, or in conjunction with any person, persons, or legal entity:

 

 

--------------------------------------------------------------------------------

 

 

8.2.1    Divert or attempt to divert any business or customer of Developer’s
Snack Bars or any Stewart’s Restaurant to any competitor, by direct or indirect
inducement or otherwise, or do or perform, directly or indirectly, any other act
injurious or prejudicial to the goodwill associated with the Company’s
Proprietary Marks and the System; or

 

8.2.2    Unless released in writing by the employer, employ or seek to employ
any person who is at that time employed by the Company or any franchisee or
developer of the Company, or otherwise directly or indirectly to induce such
person to leave his or her employment.

 

8.3       Developer covenants that, except as otherwise approved in writing by
the Company, Developer shall not, during the term of this Agreement and for a
continuous uninterrupted period commencing upon the expiration or termination of
this Agreement, regardless of the cause for termination, and continuing for
two(2) years thereafter, either directly or indirectly, for itself, or through,
on behalf of, or in conjunction with any person, persona, partnership,
corporation, or limited liability company, own, maintain, operate, engage in,
act as a consultant for, perform services for, or have any interest in any
retail business selling any product or products which are the same as, or
substantially similar to any of, the Proprietary Products, (other than pursuant
to a Franchise Agreement between the Company and the Developer) which business
is, or is intended to be, located within three (3) miles of any Stewarts
Restaurant operating under the System and the Proprietary Marks.

 

8.4       Section 8.3 shall not apply to ownership by Developer of less than a
one percent (1%) beneficial interest in the outstanding equity securities of any
corporation which is registered under the Securities and Exchange Act of 1934.

 

8.5       The parties agree that each of the foregoing covenants shall be
construed as independent of any other covenant or provision of this Agreement.
If all or any portion of a covenant in this Section 8 is held unreasonable or
unenforceable by a court or agency having valid jurisdiction in an unappeased
final decision to which the company is a party, Developer expressly agrees to be
bound by any lesser covenant subsumed within the terms of such covenant that
imposes the maximum duty permitted by law, as if the resulting covenant were
separately state in and made a part of this Section 8.

 

8.6       Developer understands and acknowledges that the Company shall have the
right, in its sole discretion, to reduce the scope of any covenant set forth in
Sections 8.2 and 8.3 in this Agreement or any portion thereof, without
Developer’s consent, effective immediately upon receipt by Developer of written
notice thereof, and Developer agrees to comply forthwith any covenant as so
modified, which shall be fully enforceable notwithstanding the provisions of
Section 13 hereof.

 

8.7       Developer expressly acknowledges that the existence of any claims
which Developer may have against the Company, whether or not arising from this
Agreement, shall not constitute a defense to the enforcement by the Company of
the covenants in this Section 8.

 

--------------------------------------------------------------------------------

 

 

8.8       Developer acknowledges that Developer’s violation of the terms of this
Section 8 would result in irreparable injury to the Company for which no
adequate remedy at law may be available; and Developer accordingly consents to
the issuance of, and agrees to pay all court costs and reasonable attorneys’
fees incurred by the Company in obtaining, an injunction prohibiting any conduct
by Developer in violation of the terms of this Section 8.

 

8.9       At the request of the Company, Developer shall provide the Company
with executed covenants similar in substance to those set forth in Section 8
(including covenants applicable upon the termination of a person’s relationship
with Developer) from the following persons: (1) any other person employed by
Developer who has received training from the Company; (2) if Developer is a
corporation, all officers, directors, and unless Developer is publicly-held
corporation, holders of a direct or indirect beneficial ownership interest of
five percent (5%) or more in Developer; (3) if Developer is a partnership, the
general partners (including any corporation, and the officers, directors, and
holders of a beneficial interest of five percent (5%) or more of the securities
of any corporation which controls, directly or indirectly, any general or
limited partner); and (4) if Developer is a limited liability company, all
members and managers of the limited liability company. With respect to each
person who becomes associated with Developer in one of the capacities enumerated
above subsequent to execution of this Agreement, Developer shall require and
obtain such covenants form them and promptly provide the Company with executed
copies of such covenant. In no event shall any person enumerated be granted
access to any confidential aspect of the System or any Franchised Business prior
to execution of such a covenant. All covenants required by this Section 8.9
shall be in the form satisfactory to the Company and shall identify the Company
as a third party beneficiary of such covenants with the independent right to
enforce them. Failure by Developer to obtain execution of a covenant required by
this Section 8.9, and provide the same to the Company upon its request, shall
constitute a material breach of this Agreement.

 

9.

NOTICES

 

Any and all notices required or permitted under this Agreement shall be in
writing and shall be personally delivered, sent by registered or certified mail
return receipt requests, overnight carrier, facsimile or by other means which
affords the sender evidence of delivery, to the respective parties at the
following addresses unless and until a different address has been designated by
written notice to the other party. Any notice by a means which affords the
sender evidence of delivery shall be deemed to have been given at the date and
time of receipt.

 

Notices to the Company

FROSTED MUG HOLDINGS, LLC

 

777 Walnut Avenue

 

 

Cranford, New Jersey 07016

 

 

Fax: (908) 653-9101

 

 

Notices to Developer:

ROCKELLE CORP.

 

162 Miller Place Road

 

 

Miller Place, New York 11764

 

 

Fax: (631)244-9841

 

 

 

--------------------------------------------------------------------------------

 

 

With a copy to:

Anslow & Jaclin, LLP

 

 

195 Route 9, Suite 204

 

Manalapan, NJ 07726

 

 

Fax (732)577-1188

 

 

10.

INDEPENDENT CONTRACTOR AND INDEMNIFICATION

 

10.1     It is understood and agreed by the parties hereto that this Agreement
does not create a fiduciary relationship between them; that Developer shall be
an independent contractor; and, that nothing in this Agreement is intended to
constitute either party an agent, legal representative, subsidiary, joint
venturer, partner, employee, or serve an of the other for any purpose
whatsoever.

 

10.2     During the term of this Agreement, Developer shall hold itself out to
the public to be an independent contractor operating pursuant to this Agreement.
Developer agrees to take such affirmative action as shall be necessary to do so,
including, without limitation, exhibiting a notice of that fact in a conspicuous
place in the franchised premises, the content of which the Company reserves the
right to specify.

 

10.3     Developer understands and agrees that nothing in this Agreement
authorizes Developer to make any contract, agreement, warranty, or
representation on the Company’s behalf, or to incur any debt or other obligation
in the Company’s name; and, that the Company shall in no event assume liability
for, or be deemed liable as a result of, any such action, or by reason of any
act or omission of Developer in Developer’s operations hereunder, or any claim
or judgment arising therefrom against the Company. Developer shall indemnify and
hold the Company harmless against any and all such claims directly or indirectly
from as a result of, or in connection with Developer’s operations hereunder, as
well as the costs, including attorney’s fees, of defending against them.

 

11.

APPROVALS AND WAIVERS

 

11.1     Whenever this Development Agreement requires the prior approval or
consent of the Company, Developer shall make timely written request to the
Company therefor; and, except as otherwise provided therein, any approval or
consent granted shall be in writing.

 

11.2     The Company makes no warranties or guarantees upon which Developer may
rely, and assumes no liability or obligation to Developer, by providing any
waiver, approval, advice, consent, or suggestion to Developer in connection with
this Agreement, or by reason of any neglect, delay, or denial of any request
therefor.

 

11.3     No failure of the Company to exercise any power reserved to it by this
Agreement, or to insist upon strict compliance by Developer with any obligation
or condition hereunder, and no custom or practice of the parties at variance
with the terms hereof, shall constitute a waiver of the Company’s right to
demand exact compliance with any of the terms herein. Waiver by the Company of
any particular default by Developer shall not affect or impair the Company’s
rights with respect to any subsequent default of the same, similar or different
nature, nor shall any delay, forbearance or omission of the Company to exercise
any power or

 

--------------------------------------------------------------------------------

 

right arising out of any breach or default by Developer of any of the terms,
provisions or covenants hereof, affect or impair the Company’s right to exercise
the same, nor shall such constitute a waiver by the Company of any right
hereunder, or the right to declare any subsequent breach or default and to
terminate this Agreement prior to the expiration of its term. Subsequent
acceptance by the Company of any payments due to it hereunder shall not be
deemed to be a waiver by the Company of any preceding breach by Developer of any
terms, covenants or conditions of this Agreement.

 

12.

SEVERABILITY AND CONSTRUCTION

 

12.1     Except as expressly provided to the contrary herein, each section,
part, term, and/or provision of this Agreement shall be considered severable;
and if, for any reason, any section, part, term, and/or provision herein is
determined to be invalid and contrary to, or in conflict with, any existing or
future law or regulation by a court or agency having valid jurisdiction, such
shall not impair the operation of, or have any other effect upon, such other
portions, sections, parts, terms, and/or provisions of this Agreement as may
remain otherwise intelligible, and the latter shall continue to be given full
force and effect and bind the parties hereto; and said invalid sections, parts,
terms, and/or provisions shall be deemed not to be a part of this Agreement.

 

12.2     Anything to the contrary herein notwithstanding, nothing in this
Agreement is intended, nor shall be deemed, to confer upon any person or legal
entity other than the Company or Developer and such of their respective
successors and assigns as may be contemplated by Section 7 hereof, any rights or
remedies under or by reason of this Agreement.

 

12.3     Developer expressly agrees to be bound by any promise or covenants
imposing the maximum duty permitted by law which is subsumed within the terms of
any provision hereof, as though it were separately articulated in and made a
part of this Agreement, that my result from striking form any of the provisions
hereof any portion or portions which a court may hold to be unreasonable and
unenforceable in a final decision to which the Company is a party, or from
reducing the scope of any promise or covenant to the extent required to comply
with such a court order.

 

12.4     All captions in this Agreement are intended solely for the convenience
of the parties, and none shall be deemed to affect the meaning or construction
of any provision hereof.

 

13.

ENTIRE AGREEMENT

 

This Agreement, the documents referred to herein, and the Attachments hereto, if
any, constitute the entire, full, and complete agreement between the Company and
Developer concerning the subject matter hereof and supersede any and all prior
agreements. Except for the covenants set forth in Section 8 hereof, no
amendment, change, or variance from this Agreement shall be binding on either
party unless executed in writing.

 

--------------------------------------------------------------------------------

 

 

 

14.

APPLICABLE LAW AND ARBITRATION

 

14.1     This Agreement takes effect upon its acceptance and execution by the
Company, and shall be interpreted and construed under the laws of the State of
New Jersey, which laws shall prevail in the event of any conflict of law.

 

14.2     Except as otherwise provided herein, all disputes and claims relating
to this Agreement, the rights and obligations of the parties hereof, or any
other claims or causes of action relating to the making, interpretation, or
performance of either party under this Agreement, shall be settled by
arbitration in accordance with the Federal Arbitration Act and the Commercial
Arbitration Rules of the American Arbitration Association. The right and duty of
the parties to this Agreement to resolve any disputes by arbitration shall be
governed by the Federal Arbitration Act, as amended. The following shall
supplement and, in the event of a conflict, shall govern any arbitration. The
parties shall select one arbitrator form the panel provided by the American
Arbitration Association and the arbitrator shall use the laws of New Jersey for
interpretation of this Agreement. In selecting the arbitrator form the list
provided by the American Arbitration Association, the Company and Developer
shall make the selection by the striking method. The Company and Developer shall
each bear all of their own costs of arbitration; however, the fees of the
arbitrator shall be divided equally between the Company and Developer. The
arbitrator shall have no authority to amend or modify the terms of the
Agreement. The Company and Developer further agree that, unless such a
limitation is prohibited by applicable law, neither the Company nor Developer
shall be liable for punitive or exemplary damages, and the arbitrator shall have
no authority to award the same. To the extent permitted by applicable law, no
issue of fact or law shall be given preclusive or collateral estoppel effect in
any arbitration hereunder, except to the extent such issue may have been
determined in another proceeding between Developer and the Company. Judgment
upon the award of the arbitrator shall be submitted for confirmation to the
United States District Court for New Jersey located in Newark, New Jersey and,
if confirmed, may be subsequently entered in any court having competent
jurisdiction. This agreement to arbitrate shall survive any termination or
expiration of this Agreement.

 

14.3     Nothing contained in this Agreement shall prevent the Company form
applying to and obtaining form any court having jurisdiction a writ of
attachment, a temporary injunction, preliminary injunction and/or other
emergency relief available to safeguard and protect the Company’s interest.

 

14.4     The parties expressly agree to the jurisdiction and venue of any court
of general jurisdiction in Union County, New Jersey, and the jurisdiction and
venue of the Superior Court of New Jersey. Except with respect to appeals from
or relating to arbitration or an arbitrator’s award being submitted for
confirmation, this provision shall only apply where an arbitrator would not have
jurisdiction or a claim cannot be arbitrated as matter as law.

 

14.5     No right or remedy conferred upon or reserved to the Company or
Developer by this Agreement is intended to be, nor shall be deemed, exclusive of
any other right or remedy herein or by law or equity provided or permitted, but
each shall be cumulative of every other right or remedy.

 

 

--------------------------------------------------------------------------------

 

 

14.6     DEVELOPER HEREBY WAIVES ANY AND ALL RIGHTS WHICH FRANCHISEE MAY HAVE TO
A JURY TRIAL IN CONNECTION WITH ANY LITIGATION BETWEEN THE PARTIES
HERETO.                                          
                                          
                                          
                                          
                                          
                                          
                                          
                                                              
Initials_______________________

 

15.

ACKNOWLEDGMENTS, REPRESENTATIONS AND WARRANTIES

 

15.1     Developer acknowledges that it has conducted an independent in
investigation of the business contemplated hereunder, and recognized that the
business venture contemplated by this Agreement involves business risks and that
its success will be largely dependent upon the ability of Developer as an
independent businessman, or if Developer is a corporation, partnership or
limited liability company, its owners as independent businessmen. The Company
expressly disclaims the making of, and Developer expressly disclaims receiving
any warranty, representation or guarantee, express or implied, not contained
expressly in this Agreement including, without limitation, as to the potential
sales volume, profits, or success of the business venture contemplated by this
Agreement. Developer also expressly disclaims relying upon any such warranty,
representation or guarantee in connection with Developers independent
investigation of the business contemplated hereunder.

 

15.2     Developer acknowledges that Developer has received a copy of the
complete Frosted Mug Holdings, LLC Multiple Unit Development Agreement, the
attachments hereto, and agreements relating thereto, if any, at least five (5)
business days prior to the date on which this Agreement was executed. Developer
further acknowledges that it has received a disclosure document which is
required by the Trade Regulation Rule of the Federal Trade Commission entitle
“Disclosure Requirements and Prohibitions Concerning Franchising and Business
Opportunity Ventures”, and which contains a copy of this Development Agreement,
at least ten (10) days prior to the date on which this Agreement was executed.

 

15.3     Developer acknowledges that it has read and understood this Agreement,
the attachments hereto, and agreements relating thereto; and, that the Company
has accorded Developer ample time and opportunity to consult with advisors of
its own choosing about the potential benefits and risks of entering into this
Agreement.

 

16.

MISCELLANEOUS

 

16.1 Upon execution of this Agreement Developer shall reimburse Company for all
expenses and outlays for all Wal-Mart Snack Bars spent thus far by Company as
set forth on Exhibit “B” annexed hereto in addition to any other fees required
herein. Hereafter, Developer shall be responsible for all expenses incurred in
constructing, operating and any other expesnes related to the Snack Bars.

 

16.2 Developer understands and agrees that each Wal Mart Snack Bar set forth on
Exhibit “A” must be complete as soon as practical after a permit has been
issued. Developer also understands that in the event that the Snack Bar units
are not completed by April 30, 2006 Wal Mart has the power and authority
pursuant to the terms of the the Master Relationship Agreement to remove the
Snack Bars from the Company and hence the Developer. This risk has been fully
explained to Developer and its counsel and Developer fully understands this risk
and

 

--------------------------------------------------------------------------------

 

is still willing to take the risk. Developer further agrees that in any such
event Developer is NOT entitled to any refund of money paid to Company nor is
Developer entitled to make any claim of breach of contract or any other cause of
action based upon Wal Mart’s taking the Snack Bars away from Developer and
Company. Company will however, seek an extension of time from Wal Mart at a time
when Company, in its sole and absoulute discretion, determines is the best
opportunity to seek such extension.

 

16.3 Developer acknowledges that Company has already contracted to build certain
units set forth on Exhibit “A” with Pal Mar Construction. A copy of said
contract is annexed hereto as Exhibit “C” and Developer hereby agrees to accept
assignment of and full responsibility for said contract and will execute any
documents required hereby to accept same. Further, Developer agrees to reimburse
Company for any money already expended pursuant to said contract in addition to
the reimbursable money set forth on Exhibit “B”.

 

16.4 Anything to the contrary set forth herein not withstanding, Company hereby
grants Developer a one time right of assignment, without charge or approval from
Company, by Developer to an entity of which Rockelle Corporation is a
shareholder, member or partner, as the case may be owning no less than 50%
thereof.

 

IN WITNESS WHEREOF, the parties hereto have fully executed, sealed, and
delivered this Agreement on the day and year first above written.

 

 

Frosted Mug Holdings, LLC

Rockelle Corporation

 

 

By:Alfred Mattia
Alfred Mattia, Manager

By:Gerard Stephan
Gerard A. Stephan, President

 

 

 

 

 

 

 

 

 

 

 

 

 

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EXHIBIT “A”

 

Under Construction or Permit Issued:

Location:

Store No.:

Shrewsbury, PA

2519

Bartow, FL

580

Live Oak, FL

2626

 

 

Permit Not Yet Issued:

 

Cambridge, MD

2272

Mt. Airy, MD

2551

Pocomoke, MD

2514

Glen Burnie, MD

2279

Ogdensburg, NY

2092

Wauseon, OH

2350

Van Wert, OH

1333

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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EXHIBIT “B”

 

FEES DUE UPON EXECUTION

FOR REIMBURSEMENT IN ADDITION TO OTHER FEES:

 

Building Departments

$

6,059.94

Health Departments

$

1,240.00

Expediter

$

9,407.50

 

 

 

Architect

$

77,000.00

$

19,250.00

$

5,097.76

$

270.00

$

369.60

 

 

 

Total

$

118,694.80*

 

 

 

 

 

 

 

 

 

 

 

 

 

* - Developer shall also be responsible for reimbursement of money paid to Pal
Mar as set forth in paragraph 16.3 of the Agreement as well as construction
management fees spent to date for Florida and Ohio locations. All such amounts
have been previously discussed and agreed upon between Developer and Company.

 

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EXHIBIT “C”

 

COPY OF PAL MAR CONTRACT PREVIOUSLY PROVIDED TO DEVELOPER