KEY EXECUTIVE EMPLOYMENT AND SEVERANCE AGREEMENT

          THIS AGREEMENT, made and entered into as of the 31st day of January,
2002, by and between FRESH BRANDS, INC., a Wisconsin corporation (the
"Company"), and WILLIAM K. JACOBSON (the "Executive").


                              W I T N E S S E T H :

          WHEREAS, the Executive is employed by the Company or one of its
subsidiaries in a key executive capacity and the Executive's services are
valuable to the conduct of the business of the Company;

          WHEREAS, the Company recognizes that circumstances in which a change
in control of the Company occurs, through acquisition or otherwise, are highly
disruptive and will cause uncertainty about the Executive's future employment
with the Company without regard to the Executive's competence or past
contributions and that such uncertainty may adversely affect the Company;

          WHEREAS, Fresh Brands Distributing, Inc. (formerly Schultz Sav-O
Stores, Inc.) ("FBDI") and the Executive entered into a Key Executive Employment
and Severance Agreement, dated as of January 31, 1997 (as amended to date, the
"Existing KEESA"); and

          WHEREAS, the Company and the Executive desire to enter into this
Agreement, which shall supersede and replace the Existing KEESA, to ensure that
any proposal for a change in control or acquisition of the Company will be
considered by the Executive objectively, with reference only to the best
interests of the Company and its shareholders and without undue regard for the
Executive's personal interests.

          NOW, THEREFORE, in consideration of the foregoing, the parties hereto
agree as follows:

          1. Definitions.

          (a) Act. For purposes of this Agreement, the term "Act" means the
Securities Exchange Act of 1934, as amended.

          (b) Affiliate and Associate. For purposes of this Agreement, the terms
"Affiliate" and "Associate" shall have the respective meanings ascribed to such
terms in Rule 12b-2 of the General Rules and Regulations of the Act.

          (c) Beneficial Owner. For purposes of this Agreement, a Person shall
be deemed to be the "Beneficial Owner" of any securities:

               (i) which such Person or any of such Person's Affiliates or
     Associates has the right to acquire (whether such right is exercisable
     immediately or only after the passage of time) pursuant to any agreement,
     arrangement or understanding, or upon the exercise of conversion rights,
     exchange rights, rights, warrants or options, or otherwise;

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     provided, however, that a Person shall not be deemed the Beneficial Owner
     of, or to beneficially own, (A) securities tendered pursuant to a tender or
     exchange offer made by or on behalf of such Person or any of such Person's
     Affiliates or Associates until such tendered securities are accepted for
     purchase, or (B) securities issuable upon exercise of Rights issued
     pursuant to the terms of the Company's Rights Agreement with Firstar Bank,
     N.A., dated as of October 12, 2001, as amended from time to time, at any
     time before the issuance of such securities;

               (ii) which such Person or any of such Person's Affiliates or
     Associates, directly or indirectly, has the right to vote or dispose of or
     "beneficial ownership" of (as determined pursuant to Rule 13d-3 of the
     General Rules and Regulations under the Act), including pursuant to any
     agreement, arrangement or understanding; provided, however, that a Person
     shall not be deemed the Beneficial Owner of, or to beneficially own, any
     security under this subparagraph (ii) as a result of an agreement,
     arrangement or understanding to vote such security if the agreement,
     arrangement or understanding: (A) arises solely from a revocable proxy or
     consent given to such Person in response to a public proxy or consent
     solicitation made pursuant to, and in accordance with, the applicable rules
     and regulations under the Act and (B) is not also then reportable on a
     Schedule 13D under the Act (or any comparable or successor report); or

               (iii) which are beneficially owned, directly or indirectly, by
     any other Person with which such Person or any of such Person's Affiliates
     or Associates has any agreement, arrangement or understanding for the
     purpose of acquiring, holding, voting (except pursuant to a revocable proxy
     as described in Section 1(c)(ii) above) or disposing of any voting
     securities of the Company.

          (d) Cause. "Cause" for termination of the Executive's employment after
a Change in Control of the Company shall, for purposes of this Agreement, be
limited to (i) the engaging by the Executive in intentional conduct not taken in
good faith which has caused demonstrable and serious financial injury to the
Company, as evidenced by a determination in a binding and final judgment, order
or decree of a court or administrative agency of competent jurisdiction, in
effect after exhaustion or lapse of all rights of appeal, in an action, suit or
proceeding, whether civil, criminal, administrative or investigative; (ii)
conviction of a felony (as evidenced by binding and final judgment, order, or
decree of a court of competent jurisdiction, in effect after exhaustion or lapse
of all rights of appeal) which substantially impairs the Executive's ability to
perform his duties or responsibilities; and (iii) continuing willful and
unreasonable refusal by the Executive to perform the Executive's duties or
responsibilities (unless significantly changed without the Executive's consent).


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<PAGE>

          (e) Change in Control of the Company. For purposes of this Agreement,
a "Change in Control of the Company" shall mean a change in control of a nature
that would be required to be reported in response to Item 6(e) of Schedule 14A
of Regulation 14A promulgated under the Act. Without limiting the inclusiveness
of the definition in the preceding sentence, a Change in Control of the Company
shall be deemed to have occurred if:

               (i) any Person (other than (i) an Affiliate of the Company, (ii)
     any employee benefit plan of the Company or of any Affiliate of the
     Company, including any Retirement Savings Plan or (iii) any Person
     organized, appointed or established pursuant to the terms of any such
     benefit plan) is or becomes the Beneficial Owner of securities of the
     Company representing at least 20% of the combined voting power of the
     Company's then outstanding securities;

               (ii) two or more of the members of the Board are not Continuing
     Directors;

               (iii) there shall be consummated (x) any consolidation, merger,
     share exchange or other business combination of the Company in which the
     Company is not the continuing or surviving corporation or pursuant to which
     shares of the Company's Common Stock would be converted into cash,
     securities or other property, other than a consolidation, merger, share
     exchange or other reorganization of the Company in which the holders of the
     Company's Common Stock immediately prior to the consolidation, merger,
     share exchange or other reorganization have the same proportionate
     ownership of common stock of the surviving corporation immediately after
     the consolidation, merger, share exchange or other reorganization, or (y)
     any sale, lease, exchange or other transfer (in one transaction or a series
     of related transactions) of all, or substantially all, of the assets of the
     Company; or

               (iv) the shareholders of the Company approve any plan or proposal
     for the liquidation or dissolution of the Company.

          (f) Code. For purposes of this Agreement, the term "Code" means the
Internal Revenue Code of 1986, including any amendments thereto or successor tax
codes thereof.

          (g) Continuing Director. For purposes of this Agreement, the term
"Continuing Director" means any member of the Board of Directors of the Company
who was (i) a member of such Board on the date hereof, (ii) elected by a
majority of the Continuing Directors then on such Board or (iii) recommended to
be elected as a member of the Board by a majority of the Continuing Directors
then on such Board.

          (h) Covered Termination. For purposes of this Agreement, the term
"Covered Termination" means any termination of the Executive's employment where
the Termination Date is any date on or prior to the end of the Employment
Period.

          (i) Employment Period. For purposes of this Agreement, the term
"Employment Period" means a period commencing on the date of a Change in Control
of the Company, and ending at 11:59 p.m. Milwaukee time on the third anniversary
of such date.


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<PAGE>

          (j) Good Reason. For purposes of this Agreement, the Executive shall
have a "Good Reason" for termination of employment after a Change in Control of
the Company in the event of:

               (i) any breach of this Agreement by the Company or one of its
     Affiliates, including, but not limited to, the failure to make any of the
     payments due hereunder;

               (ii) the removal of the Executive from, or any failure to reelect
     the Executive to, any of the positions held by Executive with the Company
     or one of its Affiliates on the date of the Change in Control of the
     Company or any other positions with the Company or one of its Affiliates to
     which the Executive shall thereafter be elected or assigned, except in the
     event that such removal or failure to reelect relates to the termination by
     the Company or one of its Affiliates of the Executive's employment for
     Cause or by reason of disability pursuant to Section 12 hereof;

               (iii) a good faith determination by the Executive that there has
     been a significant adverse change, without the Executive's written consent,
     in the Executive's working conditions or status from such working
     conditions or status in effect immediately prior to the Change in Control
     of the Company, including but not limited to (A) a significant change in
     the nature or scope of the Executive's authority, powers, functions, duties
     or responsibilities, or (B) a reduction in the level of support services,
     staff, secretarial and other assistance, office space and accoutrements; or

               (iv) failure by the Company to obtain the Agreement referred to
     in Section 17(a) hereof as provided therein.

          (k) Person. For purposes of this Agreement, the term "Person" shall
mean any individual, firm, partnership, corporation or other entity and shall
include any successor (by merger or otherwise) of such entity.

          (l) Retirement Savings Plan. For purposes of this Agreement, the term
"Retirement Savings Plan" means the Fresh Brands Distributing, Inc. Retirement
Savings Plan (as such plan may be renamed from time to time) and any similar
plan administered by the Company or any of its Affiliates as in effect
immediately prior to the Change in Control of the Company.

          (m) Termination Date. For purposes of this Agreement, except as
otherwise provided in Section 10(b) and Section 17(a) hereof or as set forth
below, the term "Termination Date" means (i) if the Executive's employment is
terminated by the Executive's death, the date of death; (ii) if the Executive's
employment is terminated by reason of voluntary early retirement, as agreed in
writing by the Company and the Executive, the effective date of such early
retirement which is set forth in such written agreement; (iii) if the
Executive's employment is terminated by reason of disability pursuant to Section
12 hereof, the earlier of thirty (30) days after the Notice of Termination is
given or one day prior to the end of the Employment Period; (iv) if the
Executive's employment is terminated by the Executive voluntarily (other than
for Good Reason), the date the Notice of Termination is given; and (v) if the
Executive's


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<PAGE>

employment is terminated by the Company or one of its Affiliates (as applicable)
(other than by reason of disability pursuant to Section 12 hereof) or by the
Executive for Good Reason, the earlier of thirty (30) days after the Notice of
Termination is given or one day prior to the end of the Employment Period.
Notwithstanding the foregoing,

          (A) If termination is by the Company or one of its Affiliates for
Cause as defined in Section 1(d)(iii) of this Agreement and if the Executive has
cured the conduct constituting such Cause as described in the Notice of
Termination delivered by the Company or one of its Affiliates (as applicable)
within such thirty (30) day or shorter period, then the Executive's employment
hereunder shall continue as if no such Notice of Termination had been delivered.

          (B) If the Company or one of its Affiliates shall, in good faith, give
a Notice of Termination for Cause or by reason of disability and the Executive
in good faith notifies the Company that a dispute exists concerning the
termination within the fifteen (15) day period following receipt thereof, then
the Executive may elect to continue his employment during such dispute and the
Termination Date shall be determined under this paragraph. If the Executive so
elects and it is thereafter determined that Cause or disability (as the case may
be) did exist, the Termination Date shall be the earlier of (1) the date on
which the dispute is finally determined, either (x) by mutual written agreement
of the parties or (y) in accordance with Section 23 hereof, (2) the date of the
Executive's death, or (3) one day prior to the end of the Employment Period. If
the Executive so elects and it is thereafter determined that Cause or disability
(as the case may be) did not exist, then the employment of the Executive
hereunder shall continue after such determination as if the Company had not
delivered its Notice of Termination and there shall be no Termination Date
arising out of such Notice. In either case, this Agreement continues, until the
Termination Date, if any, as if such Notice of Termination had not been
delivered except that, if it is finally determined that the Executive's
employment was properly terminated for the reason asserted in the Notice of
Termination, the Executive shall in no case be entitled to a Termination Payment
(as hereinafter defined) arising out of events occurring after such Notice of
Termination was delivered.

          (C) If the Executive shall, in good faith, give a Notice of
Termination for Good Reason and the Company notifies the Executive that a
dispute exists concerning the termination within the fifteen (15) day period
following receipt thereof, then the Executive may elect to continue his
employment during such dispute and the Termination Date shall be determined
under this paragraph. If the Executive so elects and it is thereafter determined
that Good Reason did exist, the Termination Date shall be the earlier of (1) the
date on which the dispute is finally determined, either (x) by mutual written
agreement of the parties or (y) in accordance with Section 23 hereof, (2) the
date of the Executive's death or (3) one day prior to the end of the Employment
Period. If the Executive so elects and it is thereafter determined that Good
Reason did not exist, then the employment of the Executive hereunder shall
continue after such determination as if the Executive had not delivered the
Notice of Termination asserting Good Reason and there shall be no Termination
Date arising out of such Notice. In either case, this Agreement continues, until
the Termination Date, if any, as if the Executive had not delivered the Notice
of Termination except that, if it is finally determined that Good Reason did
exist, the Executive shall in no case be denied the benefits described in
Sections 8(b) and 9


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<PAGE>

hereof (including a Termination Payment) based on events occurring after the
Executive delivered his Notice of Termination.

          (D) Except as provided in Paragraphs (B) and (C) above, if the party
receiving the Notice of Termination in good faith notifies the other party that
a dispute exists concerning the termination within the fifteen (15) day period
following receipt thereof and it is finally determined that the reason asserted
in such Notice of Termination did not exist, then (1) if such Notice was
delivered by the Executive, the Executive will be deemed to have voluntarily
terminated his employment and (2) if delivered by the Company or one of its
Affiliates, the Company and all of its Affiliates will be deemed to have
terminated the Executive other than by reason of death, disability or Cause.

          2. Termination or Cancellation Prior to Change in Control. The
Company, its Affiliates and the Executive shall each retain the right to
terminate the employment of the Executive at any time prior to a Change in
Control of the Company. In the event the Executive's employment is terminated
prior to a Change in Control of the Company, this Agreement shall be terminated
and cancelled and of no further force and effect and any and all rights and
obligations of the parties hereunder shall cease.

          3. Employment Period. If a Change in Control of the Company occurs
when the Executive is employed by the Company or one or more of its Affiliates,
the Company and its Affiliates (as applicable) will continue thereafter to
employ the Executive during the Employment Period, and the Executive will remain
in the employ of the Company and its Affiliates (as applicable), in accordance
with and subject to the terms and provisions of this Agreement, and the terms of
this Agreement shall expressly supersede the terms and conditions of any other
then existing employment arrangement or agreement between the Company and/or its
Affiliates and the Executive.

          4. Duties. During the Employment Period, the Executive shall, in the
same capacities and positions held by the Executive at the time of the Change in
Control of the Company or in such other capacities and positions as may be
agreed to by the Company and the Executive in writing, devote the Executive's
best efforts and all of the Executive's business time, attention and skill to
the business and affairs of the Company, as such business and affairs now exist
and as they may hereafter be conducted. The services which are to be performed
by the Executive hereunder are to be rendered in the same metropolitan area in
which the Executive was employed at the time of such Change in Control of the
Company, or in such other place or places as shall be mutually agreed upon in
writing by the Executive and the Company from time to time. Without the
Executive's consent the Executive shall not be required to be absent from such
metropolitan area more than forty-five (45) days in any twelve (12) month
period.

          5. Compensation. During the Employment Period, the Executive shall be
compensated as follows:

          (a) Base Salary. The Executive shall receive, at such intervals and in
accordance with such standard policies of the Company as may be in effect
immediately prior to the Change in Control of the Company, an annual base salary
in cash equivalent of not less than the Executive's annual base salary as in
effect immediately prior to the Change in Control of the


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<PAGE>

Company (which base salary shall, unless otherwise agreed in writing by the
Executive, include the current receipt by the Executive of any amounts which,
prior to the Change in Control of the Company, the Executive had elected to
defer, whether such compensation is deferred under Section 401(k) of the Code or
otherwise), subject to adjustment as hereinafter provided.

          (b) Reimbursement of Expenses. The Executive shall, at such intervals
and in accordance with such standard policies as may be in effect immediately
prior to the Change in Control of the Company, be reimbursed for any and all
monies advanced in connection with the Executive's employment for reasonable and
necessary expenses incurred by the Executive on behalf of the Company or any of
its Affiliates, including travel expenses.

          (c) Salaried Employee Benefit Plans. The Executive shall be included,
to the extent eligible thereunder (which eligibility shall not be conditioned on
the Executive's salary grade or on any other requirement which excludes persons
of comparable status to the Executive unless such exclusion was in effect for
such plan or an equivalent plan immediately prior to the Change in Control of
the Company), in any and all plans providing benefits for the salaried employees
of the Company or the Affiliate by which the Executive is employed in general,
including but not limited to group life insurance, hospitalization, medical,
dental, profit sharing (including any Retirement Savings Plan) and stock bonus
plans; provided, that, in no event shall the aggregate level of benefits under
such plans in which the Executive is included be less than the aggregate level
of benefits under plans of the type referred to in this Section 5(c) in which
the Executive was participating immediately prior to the Change in Control of
the Company.

          (d) Vacations and Holidays. The Executive shall annually be entitled
to not less than the amount of paid vacation and not fewer than the number of
paid holidays to which the Executive was entitled annually immediately prior to
the Change in Control of the Company or such greater amount of paid vacation and
number of paid holidays as may be made available annually to other executives of
the Company of comparable status and position to the Executive.

          (e) Executive Benefit Plans. The Executive shall be included in all
plans providing additional benefits to executives of the Company of comparable
status and position to the Executive, including but not limited to deferred
compensation, split-dollar life insurance, supplemental retirement, stock
option, stock appreciation, stock bonus and similar or comparable plans;
provided, that, in no event shall the aggregate level of benefits under such
plans be less than the aggregate level of benefits under plans of the type
referred to in this Section 5(e) in which the Executive was participating
immediately prior to the Change in Control of the Company.

          6. Annual Compensation Adjustments. During the Employment Period, the
Board of Directors of the Company (or an appropriate committee thereof) will
consider and appraise, at least annually, the contributions of the Executive to
the Company's operating efficiency, growth, cash flow from operations and
operating profits, and, in accordance with the Company's practice prior to the
Change in Control of the Company, due consideration shall be given to the
appropriate annual bonus to be paid to the Executive and to the upward
adjustment of the Executive's base compensation rate, at least annually,
commensurate with (i) increases generally given to other executives of the
Company of comparable status and position to the Executive, and (ii) as the
scope of the Company's operations or the Executive's duties expand.


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<PAGE>

          7. Termination For Cause or Without Good Reason. If there is a Covered
Termination for Cause or due to the Executive's voluntarily terminating his
employment, other than for Good Reason (any such terminations to be subject to
the procedures set forth in Section 13 hereof), then the Executive shall be
entitled to receive only Accrued Benefits pursuant to Section 9(a) hereof.

          8. Termination Giving Rise to a Termination Payment.

          (a) If there is a Covered Termination by the Executive for Good Reason
or by the Company or one of its Affiliates other than by reason of (i) death,
(ii) disability pursuant to Section 12 hereof, or (iii) Cause, then the
Executive shall be entitled to receive, and the Company shall promptly pay,
Accrued Benefits pursuant to Section 9(a) hereof and, in lieu of further base
salary for periods following the Termination Date, as liquidated damages and
severance pay, the Termination Payment pursuant to Section 9(b) hereof.

          (b) If there is a Covered Termination and the Executive is entitled to
Accrued Benefits and the Termination Payment, then the Executive shall be
entitled to the following additional benefits:

               (i) The Executive shall receive, at the expense of the Company,
     outplacement services on an individualized basis provided by a nationally
     recognized executive placement firm selected by the Company.

               (ii) Until the earlier of the third anniversary of the
     Termination Date or such time as the Executive has obtained new employment
     and is covered by benefits which in the aggregate are at least equal in
     value to the following benefits the Executive shall continue to be covered,
     at the expense of the Company, by the same or equivalent life insurance,
     hospitalization, medical and dental coverage as was required hereunder with
     respect to the Executive immediately prior to the date the Notice of
     Termination is given.

          9. Payments Upon Termination.

          (a) Accrued Benefits. For purposes of this Agreement, the Executive's
"Accrued Benefits" shall include the following amounts, payable as described
herein: (i) all base salary for the time period ending with the Termination
Date; (ii) reimbursement for any and all monies advanced in connection with the
Executive's employment for reasonable and necessary expenses incurred by the
Executive on behalf of the Company or its Affiliates for the time period ending
with the Termination Date; (iii) any and all other cash earned through the
Termination Date and deferred at the election of the Executive or pursuant to
any deferred compensation plan then in effect; (iv) a lump sum payment of the
bonus or incentive compensation otherwise payable to the Executive with respect
to the year in which termination occurs under all bonus or incentive
compensation plan or plans in which the Executive is a participant; and (v) all
other payments and benefits to which the Executive may be entitled as
compensatory fringe benefits or under the terms of any benefit plan, including
severance payments under severance policies of the Company and its Affiliates
(as applicable) and practices as in effect immediately prior to the Change in
Control of the Company. Payment of Accrued Benefits shall be made promptly in


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accordance with the prevailing practice with respect to Subsections (i) and (ii)
or, with respect to Subsections (iii), (iv) and (v), pursuant to the terms of
the benefit plan or practice establishing such benefits.

          (b) Termination Payment. The Termination Payment shall be an amount
equal to three (3) times the sum of (i) the Executive's annual base salary, as
in effect immediately prior to the Change in Control of the Company, as adjusted
upward from time to time pursuant to Section 6 hereof, plus (ii) the higher of
(a) the average of the two highest annual bonuses (if any) paid to the Executive
in the three years immediately prior to the Change in Control of the Company or
(b) the average of the two highest annual bonuses (if any) paid to the Executive
in the three years immediately prior to the date of the Covered Termination.
Except as otherwise provided herein, the Termination Payment shall be paid to
the Executive in cash no later than ten (10) business days after the Termination
Date; provided, however, the Termination Payment shall be paid immediately upon
receipt by the Company of a Notice of Termination relating to a Discretionary
Termination (regardless of any differing effective date of the Executive's
employment termination). The Executive shall not be required to mitigate the
amount of the Termination Payment by securing other employment or otherwise, nor
will such Termination Payment be reduced by reason of the Executive securing
other employment or for any other reason.

          (c) Gross-Up Payment.

               (i) Notwithstanding any other provision of this Agreement, if any
     portion of any payment under this Agreement, or under any other agreement
     with or plan of the Company or any of its Affiliates (in the aggregate, the
     "Total Payments"), would constitute an "excess parachute payment," the
     Company shall pay Executive an additional amount (the "Gross-Up Payment")
     such that the net amount retained by Executive after deduction of any
     excise tax imposed under Section 4999 of the Code, any interest charges or
     penalties in respect of the imposition of such excise tax (but not any
     federal, state or local income tax, or employment tax) on the Total
     Payments, and any federal, state and local income tax, employment tax, and
     excise tax upon the payment provided for by this Section 9(c), shall be
     equal to the Total Payments. For purposes of determining the amount of the
     Gross-Up Payment, Executive shall be deemed to pay federal income tax and
     employment taxes at the highest marginal rate of federal income and
     employment taxation in the calendar year in which the Gross-Up Payment is
     to be made and state and local income taxes at the highest marginal rate of
     taxation in the state and locality of Executive's domicile for income tax
     purposes on the date the Gross-Up Payment is made, net of the maximum
     reduction in federal income taxes that may be obtained from the deduction
     of such state and local taxes.

               (ii) For purposes of this Agreement, the terms "excess parachute
     payment" and "parachute payments" shall have the meanings assigned to them
     in Section 280G of the Code and such "parachute payments" shall be valued
     as provided therein. Present value for purposes of this Agreement shall be
     calculated in accordance with Section 280G(d)(4) of the Code (or any
     successor provision). Promptly following a Covered Termination or notice by
     the Company to the Executive of its belief that there is a payment or
     benefit due the Executive which will result in an excess parachute payment


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     as defined in Section 280G of the Code, the Executive and the Company, at
     the Company's expense, shall obtain the opinion (which need not be
     unqualified) of nationally recognized tax counsel ("National Tax Counsel")
     selected by the Company's independent auditors and reasonably acceptable to
     the Executive (which may be regular outside counsel to the Company), which
     opinion sets forth (i) the amount of the Base Period Income, (ii) the
     amount and present value of Total Payments, (iii) the amount and present
     value of any excess parachute payments, and (iv) the amount of any Gross-Up
     Payment. As used in this Agreement, the term "Base Period Income" means an
     amount equal to the Executive's "annualized includible compensation for the
     base period" as defined in Section 280G(d)(1) of the Code. For purposes of
     such opinion, the value of any noncash benefits or any deferred payment or
     benefit shall be determined by the Company's independent auditors in
     accordance with the principles of Section 280G(d)(3) and (4) of the Code
     (or any successor provisions), which determination shall be evidenced in a
     certificate of such auditors addressed to the Company and the Executive.
     The opinion of National Tax Counsel shall be addressed to the Company and
     the Executive and shall be binding upon the Company and the Executive. If
     such National Tax Counsel so requests in connection with the opinion
     required by this Section 9(c), the Executive and the Company shall obtain,
     at the Company's expense, and the National Tax Counsel may rely on, the
     advice of a firm of recognized executive compensation consultants as to the
     reasonableness of any item of compensation to be received by the Executive
     solely with respect to its status under Section 280G of the Code and the
     regulations thereunder. Within five (5) days after the National Tax
     Counsel's opinion is received by the Company and the Executive, the Company
     shall pay (or cause to be paid) or distribute (or cause to be distributed)
     to or for the benefit of Executive such amounts as are then due to
     Executive under this Agreement.

               (iii) In the event that upon any audit by the Internal Revenue
     Service, or by a state or local taxing authority, of the Total Payments or
     Gross-Up Payment, a change is finally determined to be required in the
     amount of taxes paid by Executive, appropriate adjustments shall be made
     under this Agreement such that the net amount which is payable to the
     Executive after taking into account the provisions of Section 4999 of the
     Code shall reflect the intent of the parties as expressed in this Section
     9, in the manner determined by the National Tax Counsel.

               (iv) The Company agrees to bear all costs associated with, and to
     indemnify and hold harmless, the National Tax Counsel of and from any and
     all claims, damages, and expenses resulting from or relating to its
     determinations pursuant to this Section 9(c), except for claims, damages or
     expenses resulting from the gross negligence or willful misconduct of such
     firm.

          10. Death.

          (a) Except as provided in Section 10(b) hereof, in the event of a
Covered Termination due to the Executive's death, the Executive's estate, heirs
and beneficiaries shall receive all the Executive's Accrued Benefits through the
Termination Date.


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<PAGE>

          (b) In the event the Executive dies after a Notice of Termination is
given (i) by the Company, other than by reason of disability, or (ii) by the
Executive for Good Reason, the Executive's estate, heirs and beneficiaries shall
be entitled to the benefits described in Section 10(a) hereof and, subject to
the provisions of this Agreement, to such Termination Payment as the Executive
would have been entitled to had the Executive lived. For purposes of this
Section 10(b), the Termination Date shall be the earlier of thirty (30) days
following the giving of the Notice of Termination or one day prior to the end of
the Employment Period, subject to delay pursuant to Section 1(n) hereof.

          11. Retirement. If, during the Employment Period, the Executive and
the Company shall execute an agreement providing for the early retirement of the
Executive from the Company, or the Executive shall otherwise give notice that he
is voluntarily choosing to retire early from the Company, the Executive shall
receive Accrued Benefits through the Termination Date; provided, that if the
Executive's employment is terminated by the Executive for Good Reason or by the
Company other than by reason of death, disability or Cause and the Executive
also, in connection with such termination, elects voluntary early retirement,
the Executive shall also be entitled to receive a Termination Payment pursuant
to Section 9(b) hereof.

          12. Termination for Disability. If, during the Employment Period, as a
result of the Executive's disability due to physical or mental illness or injury
(regardless of whether such illness or injury is job-related), the Executive
shall have been absent from the Executive's duties hereunder on a full-time
basis for six (6) consecutive months and, within thirty (30) days after the
Company notifies the Executive in writing that it intends to terminate the
Executive's employment (which notice shall not constitute the Notice of
Termination contemplated below), the Executive shall not have returned to the
performance of the Executive's duties hereunder on a full-time basis, the
Company and its Affiliates may terminate the Executive's employment pursuant to
a Notice of Termination given in accordance with Section 13 hereof. In the event
the Executive's employment is terminated on account of the Executive's
disability in accordance with this Section 12, the Executive shall receive
Accrued Benefits in accordance with Section 9(a) hereof and shall remain
eligible for all benefits provided by any long term disability programs for
which the Executive is eligible and that are in effect at the time of such
termination.

          13. Termination Notice and Procedure. Any Covered Termination by the
Company, any of its Affiliates or the Executive shall be communicated by written
Notice of Termination to the Executive, if such Notice is given by the Company
or one of its Affiliates, and to the Company, if such Notice is given by the
Executive, all in accordance with the following procedures and those set forth
in Section 24 hereof:

          (a) If such termination is for disability, Cause or Good Reason, the
Notice of Termination shall indicate in reasonable detail the facts and
circumstances alleged to provide a basis for such termination.

          (b) Any Notice of Termination by the Company or one of its Affiliates
shall have been approved, prior to the giving thereof to the Executive, by a
resolution duly adopted by a majority of the directors of the Company (or any
successor corporation) then in office.


                                       11
<PAGE>

          (c) The Executive shall have thirty (30) days, or such longer period
as the Company may determine to be appropriate, to cure any conduct or act, if
curable, alleged to provide grounds for termination of the Executive's
employment for Cause under this Agreement.

          (d) The recipient of the Notice of Termination shall personally
deliver or mail in accordance with Section 24 hereof written notice of any
dispute relating to such Notice of Termination to the party giving such Notice
within fifteen (15) days after receipt thereof. After the expiration of such
fifteen (15) days, the contents of the Notice of Termination shall become final
and not subject to dispute.

          14. Confidentiality Obligations of the Executive; Noncompetition.

          (a) During and following the Executive's employment by the Company,
the Executive shall hold in confidence and not directly or indirectly disclose
or use or copy or make lists of any confidential information or proprietary data
of the Company, except to the extent authorized in writing by the Board of
Directors of the Company or required by any court or administrative agency,
other than to an employee of the Company or a person to whom disclosure is
reasonably necessary or appropriate in connection with the performance by the
Executive of duties as an executive of the Company. Confidential information
shall not include any information known generally to the public or any
information of a type not otherwise considered confidential by persons engaged
in the same business or a business similar to that of the Company. All records,
files, documents and materials, or copies thereof, relating to the business of
the Company which the Executive shall prepare, or use, or come into contact
with, shall be and remain the sole property of the Company and shall be promptly
returned to the Company upon termination of employment.

          (b) The Executive agrees that, in the event of a Covered Termination
in which the Executive has or will receive a Termination Payment, for a period
of one year after the Termination Date or until the end of the Employment
Period, whichever is shorter, the Executive shall not, within the State of
Wisconsin, except as permitted by the Company's prior written consent (which
shall not be unreasonably withheld), participate in the management of any
business which is a direct and substantial competitor of the Company or one of
its Affiliates. The ownership of less than five percent of any class of
securities of any corporation listed on a national securities exchange or
regularly traded over the counter even though such corporation may be a
competitor of the Company or one of its Affiliates as specified above, shall not
be deemed as constituting a financial interest in such competitor.

          15. Expenses and Interest. If, after a Change in Control of the
Company, a good faith dispute arises with respect to the enforcement of the
Executive's rights under this Agreement or if any legal or arbitration
proceeding shall be brought in good faith to enforce or interpret any provision
contained herein, or to recover damages for breach hereof, the Executive shall
recover from the Company any reasonable attorneys' fees and necessary costs and
disbursements incurred as a result of such dispute, legal or arbitration
proceeding ("Expenses"), and prejudgment interest on any money judgment or
arbitration award obtained by the Executive calculated at the rate of interest
announced by U.S. Bank, N.A. (or any successor thereto) from time to time as its
prime or base lending rate from the date that payments to him should have been
made under this Agreement. Within ten (10) days after the Executive's written
request


                                       12
<PAGE>

therefor, the Company shall pay to the Executive, or such other person or entity
as the Executive may designate in writing to the Company, the Executive's
reasonable Expenses in advance of the final disposition or conclusion of any
such dispute, legal or arbitration proceeding.

          16. Payment Obligations Absolute. The Company's obligation during and
after the Employment Period to pay the Executive the amounts and to make the
benefit and other arrangements provided herein shall be absolute and
unconditional and shall not be affected by any circumstances, including, without
limitation, any setoff, counterclaim, recoupment, defense or other right which
the Company may have against him or anyone else. Except as provided in Section
15 of this Agreement, all amounts payable by the Company hereunder shall be paid
without notice or demand. Except as provided in Section 9(c) of this Agreement,
each and every payment made hereunder by the Company shall be final, and the
Company will not seek to recover all or any part of such payment from the
Executive, or from whomsoever may be entitled thereto, for any reason
whatsoever.

          17. Successors.

          (a) If the Company sells, assigns or transfers all or substantially
all of its business and assets to any Person, or if the Company merges into or
consolidates or otherwise combines with any Person, then the Company shall
assign all of its right, title and interest in this Agreement as of the date of
such event to such Person, and the Company shall cause such Person, by written
agreement in form and substance reasonably satisfactory to the Executive, to
expressly assume and agree to perform from and after the date of such assignment
all of the terms, conditions and provisions imposed by this Agreement upon the
Company. Failure of the Company to obtain such agreement shall be a breach of
this Agreement constituting "Good Reason" hereunder, except that for purposes of
implementing the foregoing, the date upon which such transfer or other
succession becomes effective shall be deemed the Termination Date. In case of
such assignment by the Company and of assumption and agreement by such Person,
as used in this Agreement, "Company" shall thereafter mean such Person which
executes and delivers the agreement provided for in this Section 17 or which
otherwise becomes bound by all the terms and provisions of this Agreement by
operation of law, and this Agreement shall inure to the benefit of and be
enforceable by such Person. The Executive shall, in his discretion, be entitled
to proceed against any or all of such Persons, any Person which theretofore was
such a successor to the Company (as defined in the first paragraph of this
Agreement) and the Company (as so defined) in any action to enforce any rights
of the Executive hereunder. Except as provided in this Section 17(a), this
Agreement shall not be assignable by the Company. This Agreement shall not be
terminated by the voluntary or involuntary dissolution of the Company.

          (b) This Agreement and all rights of the Executive shall inure to the
benefit of and be enforceable by the Executive's personal or legal
representatives, executors, administrators, heirs and beneficiaries. All amounts
payable to the Executive under Sections 7, 8, 9, 10, 11 and 12 hereof if the
Executive had lived shall be paid, in the event of the Executive's death, to the
Executive's estate, heirs and representatives.

          18. Termination of Existing KEESA. Executive acknowledges that he is
not, as of the date hereof, entitled to any benefits under the Existing KEESA.
The Existing KEESA


                                       13
<PAGE>

is superseded in its entirety by this Agreement and the Existing KEESA shall, as
of the date hereof, be of no further force or effect.

          19. Severability. The provisions of this Agreement shall be regarded
as divisible, and if any of said provisions or any part hereof are declared
invalid or unenforceable by a court of competent jurisdiction, the validity and
enforceability of the remainder of such provisions or parts hereof and the
applicability thereof shall not be affected thereby.

          20. Amendment. This Agreement may not be amended or modified at any
time except by written instrument executed by the Company and the Executive.

          21. Withholding. The Company and its Affiliates shall be entitled to
withhold from amounts to be paid to the Executive hereunder any federal, state
or local withholding or other taxes or charges which it is from time to time
required to withhold; provided, that the amount so withheld shall not exceed the
minimum amount required to be withheld by law. The Company and its Affiliates
shall be entitled to rely on an opinion of nationally recognized tax counsel if
any question as to the amount or requirement of any such withholding shall
arise.

          22. Certain Rules of Construction. No party shall be considered as
being responsible for the drafting of this Agreement for the purpose of applying
any rule construing ambiguities against the drafter or otherwise. No draft of
this Agreement shall be taken into account in construing this Agreement. Any
provision of this Agreement which requires an agreement in writing shall be
deemed to require that the writing in question be signed by the Executive and an
authorized representative of the Company.

          23. Governing Law; Resolution of Disputes. This Agreement and the
rights and obligations hereunder shall be governed by and construed in
accordance with the laws of the State of Wisconsin. Any dispute arising out of
this Agreement shall, at the Executive's election, be determined by arbitration
under the rules of the American Arbitration Association then in effect or by
litigation. Executive shall be entitled to the rights set forth in Section 15 to
recover his costs with respect to any such dispute. Whether the dispute is to be
settled by arbitration or litigation, the venue for the arbitration or
litigation shall be Sheboygan, Wisconsin or, at the Executive's election, if the
Executive is no longer residing or working in the Sheboygan, Wisconsin
metropolitan area, in the judicial district encompassing the city in which the
Executive resides. The parties consent to personal jurisdiction in each trial
court in the selected venue having subject matter jurisdiction notwithstanding
their residence or situs, and each party irrevocably consents to service of
process in the manner provided hereunder for the giving of notices.

          24. Notice. Notices given pursuant to this Agreement shall be in
writing and, except as otherwise provided by Section 13(d) hereof, shall be
deemed given when actually received by the Executive or actually received by the
Company's Secretary or any officer of the Company other than the Executive. If
mailed, such notices shall be mailed by United States registered or certified
mail, return receipt requested, addressee only, postage prepaid, if to the
Company or any of its Affiliates, to Fresh Brands, Inc., Attention: Secretary,
2215 Union Avenue, Sheboygan, Wisconsin 53081 and to Foley & Lardner, Attention:
Steven R. Barth, 777 East Wisconsin Avenue, Milwaukee, Wisconsin 53202, or if to
the Executive, at the address set


                                       14
<PAGE>

forth below the Executive's signature to this Agreement, or to such other
address as the party to be notified shall have theretofore given to the other
party in writing.

          25. No Waiver. No waiver by either party at any time of any breach by
the other party of, or compliance with, any condition or provision of this
Agreement to be performed by the other party shall be deemed a waiver of similar
or dissimilar provisions or conditions at the same time or any prior or
subsequent time.

          26. Headings. The headings herein contained are for reference only and
shall not affect the meaning or interpretation of any provision of this
Agreement.

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

                                        FRESH BRANDS, INC.



                                        By:
                                           -------------------------------------
                                           Elwood F. Winn
                                           President and Chief Executive Officer




                                        EXECUTIVE



                                        ---------------------------------------
                                        William K. Jacobson
                                        [Address]


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