In this task, you're given a passage that represents a legal contract or clause between multiple parties. Your job is to write questions that ask the basic details corresponding to the legal contracts or clauses. Avoid questions that can be answered correctly without actually understanding the paragraph, and which might have multiple answers. The answer to each question should be unambiguous.

Input: Consider Input: BW-3 FRANCHISE SYSTEMS, INC.                                  FRANCHISE AGREEMENT

                                  TABLE OF CONTENTS

ARTICLE                                                                     PAGE - -------                                                                     ----                                                                           I.     APPOINTMENT AND FRANCHISE FEE. . . . . . . . . . . . . . . . . . . . .1 II.    TERM AND RENEWAL . . . . . . . . . . . . . . . . . . . . . . . . . . .3 III.   RESTAURANT AND LOCATION. . . . . . . . . . . . . . . . . . . . . . . .4 IV.    TRAINING . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .5 V.     PROPRIETARY MARKS. . . . . . . . . . . . . . . . . . . . . . . . . . .6 VI.    CONFIDENTIAL MANUALS . . . . . . . . . . . . . . . . . . . . . . . . .7 VII.   CONFIDENTIAL INFORMATION . . . . . . . . . . . . . . . . . . . . . . .7 VIII.  MODIFICATION OF THE SYSTEM . . . . . . . . . . . . . . . . . . . . . .8 IX.    ADVERTISING. . . . . . . . . . . . . . . . . . . . . . . . . . . . . .8 X.     CONTINUING FEE . . . . . . . . . . . . . . . . . . . . . . . . . . . 10 XI.    ACCOUNTING AND RECORDS . . . . . . . . . . . . . . . . . . . . . . . 12 XII.   STANDARDS OF QUALITY AND PERFORMANCE . . . . . . . . . . . . . . . . 13 XIII.  OPERATIONS ASSISTANCE. . . . . . . . . . . . . . . . . . . . . . . . 17 XIV.   INSURANCE. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18 XV.    COVENANTS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19 XVI.   DEFAULT AND TERMINATION. . . . . . . . . . . . . . . . . . . . . . . 20 XVII.  RIGHTS AND DUTIES OF PARTIES UPON EXPIRATION OR        TERMINATION. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23 XVIII. TRANSFERABILITY OF INTEREST. . . . . . . . . . . . . . . . . . . . . 24 XIX.   YOUR DEATH OR INCAPACITY . . . . . . . . . . . . . . . . . . . . . . 26 XX.    RIGHT OF FIRST REFUSAL . . . . . . . . . . . . . . . . . . . . . . . 26 XXI.   OPERATION IN THE EVENT OF ABSENCE, DISABILITY OR DEATH . . . . . . . 26 XXII.  INDEPENDENT CONTRACTOR AND INDEMNIFICATION . . . . . . . . . . . . . 27 XXIII. MISCELLANEOUS. . . . . . . . . . . . . . . . . . . . . . . . . . . . 27 XXIV.  APPLICABLE LAW . . . . . . . . . . . . . . . . . . . . . . . . . . . 29 XXV.   DISPUTE RESOLUTION . . . . . . . . . . . . . . . . . . . . . . . . . 29 XXVI.  OWNER AGREEMENT. . . . . . . . . . . . . . . . . . . . . . . . . . . 31 XXVII. ACKNOWLEDGEMENTS . . . . . . . . . . . . . . . . . . . . . . . . . . 31

EXHIBITS:

A.     OWNER AGREEMENT B.     DESCRIPTION OF DESIGNATED AREA C.     LEASE ADDENDUM

                                          i

                            bw-3 FRANCHISE SYSTEMS, INC.

                                FRANCHISE AGREEMENT

       This Franchise Agreement (Agreement) made this _____ day of ________, 19____, by and between bw-3 FRANCHISE SYSTEMS, INC. an Ohio corporation which has its principal place of business at 1919 Interchange Tower, 600 South Highway 169, Minneapolis, Minnesota 55426 (we or us), and __________________________ ________________________________________________________________________________ ________________________________________________________________________________ _______________ (you).  If you are a corporation, partnership or limited liability company, certain provisions of the Agreement also apply to your owners and will be noted.

                                    BACKGROUND:

       A.   Our parent company has developed a unique system (System) for establishing and operating restaurants which use the service mark BUFFALO WILD WINGS and which feature chicken wings, sandwiches, and other products and beverages, which are all prepared according to specified recipes and procedures (Menu Items), some of which use proprietary mixes (Trade Secret Food Products), and has granted to us the right to sublicense the System to others.

       B.   The distinguishing characteristics of the System include, without limitation, distinctive exterior and interior layout, design and color scheme, signage, decorations, furnishings and materials, special recipes, formulae, menus and food and beverage designations, Confidential Manuals, food and beverage storage, preparation service and delivery procedures and techniques, operating procedures for sanitation and maintenance, and methods and techniques for inventory and cost controls, record keeping and reporting, purchasing, sales promotion and advertising, Trade Secret Food Products, all of which may be





changed, improved and further developed from time to time.

       C.   Our parent company is the owner of the trade names, service marks and trademarks BUFFALO WILD WINGS, bw-3 and other logos and commercial symbols, and such other trade names, service marks, and trademarks as are now designated (and may later be designated by us in writing) as part of the System (Marks).

       D.   We grant franchises to qualified candidates for the operation of Buffalo Wild Wings Restaurants offering the Menu Items and utilizing the System and Marks.  You desire to operate a Buffalo Wild Wings Restaurant using the System and Marks and have applied for a franchise, which application has been approved by us in reliance upon all of the representations you have made.

       E.   You understand and acknowledge the importance of our high and uniform standards of quality and service and the necessity of operating the Buffalo Wild Wings business in conformity with our standards and specifications.

                                    AGREEMENTS:

       We and you agree as follows:

I.     APPOINTMENT AND FRANCHISE FEE

       A.   Subject to the provisions stated below, we hereby grant you a license to use the Buffalo Wild Wings Marks and System, and you undertake the obligation to operate a Buffalo Wild Wings restaurant facility featuring the Menu Items and providing sit-down, carry-out and other restaurant services (Franchised

                                          1

Restaurant), and to use the Marks solely in connection with the System, as it is currently established, and as it may be changed, improved and further developed from time to time, at one (1) location only, such location to be: 1) ____________________________________________________________________________ ___________________________________________________________________________, or 2)  at a location to be designated, as provided in Paragraph III within the area described on EXHIBIT B.  When a location has been designated and approved by you and us, it will become part of Paragraph I.A.1., as if originally incorporated in that Paragraph.  You shall not relocate your Franchised Restaurant without our prior written approval.

       B.   You receive a Designated Area within which we and our affiliates shall not operate or grant to anyone else a franchise to operate a Buffalo Wild Wings or bw-3 Restaurant so long as this Agreement is in force and effect.  The Designated Area is described in writing and on a map attached to the Agreement as EXHIBIT B and is made a part of the Agreement.  You do not have any right to sublicense or subfranchise others within or outside of the Designated Area and do not have the right to operate more than one (1) Franchised Restaurant within the Designated Area.

       C.   You acknowledge and agree that we have the right, in our sole discretion, to grant other franchises outside of the Designated Area as we deem appropriate.  Although we will not operate a Buffalo Wild Wings or bw-3 business within the Designated Area, we reserve the right, both within and outside of the Designated Area, to offer and sell at special events (at our option, if you elect not to participate in such events) or at wholesale, through channels of distribution distinct from those of a Franchised Restaurant, products and services which comprise, or may in the future comprise a part of the System, which products may be resold at retail to the general public by such entities. Further, you acknowledge that certain locations within the Designated Area are by their nature unique and separate in character from sites generally developed as Franchised Restaurants.  As a result, you agree that the following locations (Special Sites) are excluded from the Designated Area and we shall have the right to develop (by direct ownership or franchising) such locations: 1) public transportation facilities, including airports, train stations and bus stations; 2) military bases; 3) sports facilities, including race tracks; and 4) amusement and/or theme parks.

       D.   We and our affiliated companies shall not engage in catering and delivery services and activities in the Designated Area.  You shall not engage in catering and delivery services and activities outside of the Designated Area. We shall have no obligation to enforce similar covenants against any other System franchisee.  Other System franchisees shall be deemed third party beneficiaries of such.  You shall not offer for sale any Menu Items or Proprietary Products by means of Internet/World Wide Web programming or advertising.  We reserve the right to market and sell Menu Items and Trade Secret Food Products on the Internet/World Wide Web.

       E.   You pay us a nonrefundable Initial Franchise Fee of ________________ _______________________ Dollars ($________) which is payable in full on the date of this Agreement.  The Initial Franchise Fee has been fully earned upon receipt and is nonrefundable in consideration of the expenses incurred by us in granting this franchise and for the lost or deferred opportunity to franchise others.

       F.   You acknowledge that because complete and detailed uniformity under many varying conditions may not be possible or practical, we specifically reserve the right, at our sole discretion, to vary standards for any System franchisee based upon the peculiarities of the particular site or circumstance, density of population, business potential, population of trade area, existing business practices or any other condition which we deem to be of importance to the successful operation of such franchisee's business.  You shall not be entitled to require us to grant to you a like or similar variation.





       G.   In consideration of our agreement not to grant another franchise in the area described in Paragraph I.C., you at all times shall use your best efforts to promote and increase the sales and service of Menu

                                          2

Items and to effect the widest and best possible distribution throughout the Designated Area, soliciting and servicing all potential customers and accounts for Buffalo Wild Wings food products and services.

II.    TERM AND RENEWAL

       A.   The term of this Agreement is for ten (10) years commencing on the date of this Agreement, unless terminated as provided by this Agreement.

       B.   You have the right to renew the franchise for two (2) successive terms equal to five (5) years each, providing you meet all of the following conditions:

            1.    You have, during the entire term, complied with all the provisions of the Agreement;

            2.    The premises of the Franchised Restaurant meet our then-current standards for Buffalo Wild Wings restaurants and you are able to maintain possession of the Franchised Restaurant.  Before the expiration date of this Agreement you must bring the Franchised Restaurant into full compliance with the specifications and standards then applicable for new or renewing Buffalo Wild Wings businesses and present us with evidence satisfactory that you have the right to remain in possession of the Franchised Restaurant premises for the duration of the renewal term.  In the event you are unable to maintain possession of the premises of the Franchised Restaurant or if the premises do not meet our then-current standards, you may secure substitute premises approved by us and provided that you have furnished, stocked and equipped such premises to bring the Franchised Restaurant at its substituted premises into full compliance with the then-current specifications and standards before the expiration date of this Agreement;

            3.    You have given us written notice of your desire to renew at least six (6) months but not more than twelve (12) months prior to the end of the term;

            4.    You have satisfied all of your monetary obligations to us and our affiliates and have timely met these obligations throughout the term of this Agreement;

            5.    You have executed for the renewal term our then-current form of Franchise Agreement (with appropriate modifications to reflect the fact that the agreement relates to the grant of a renewal franchise), which shall supersede in all respects this Agreement, and the terms of which may differ from the terms of this Agreement, including, without limitation, a different percentage Continuing Fee and advertising contribution; provided, however, that the percentage Continuing Fee shall not exceed seven percent (7%) during any renewal period.  You will not be required to pay the then-current initial franchise fee or its equivalent;

            6.    You have complied with our then-current qualification and training requirements; and

            7.    You have executed a general release, in a form prescribed by us, of all claims against us and our affiliates, and respective officers, directors, agents, shareholders and employees.

       C.   Within ninety (90) days of our receipt of your notice to renew, we will furnish you with written notice of:  (i) reasons which could cause us not to grant a renewal to you including but not limited to any deficiencies which require correction and a schedule for correction by you; and (ii) our then-current requirements relating to the image, appearance, decoration, furnishing, equipping and stocking of Buffalo Wild Wings businesses, and a schedule for effecting upgrading or modifications in order to bring the Franchised Restaurant in compliance, as a condition of renewal.  Renewal of the franchise shall be conditioned upon your compliance with such requirements and continued compliance with all the terms and conditions of this Agreement up to the date of termination of the initial term.

                                          3

       D.   We shall give you written notice of our election not to renew the franchise at least three (3) months prior to the expiration of the initial or first renewal term of this Agreement.

III.   RESTAURANT AND LOCATION

       A.   You shall operate the Franchised Restaurant only at the location specified in Paragraph I of this Agreement.  If the lease for the site of the Franchised Restaurant expires or terminates for reasons other than your breach, or if the site is destroyed, condemned or otherwise rendered unusable, or as otherwise may be agreed upon in writing by us and you, we will grant permission for relocation of the Franchised Restaurant within your Designated Area at a location and site acceptable to us.  Any such relocation shall be at your sole expense and we shall have the right to charge you for any and all reasonable costs incurred by us, and a reasonable fee for our services, in connection with any such relocation of the Franchised Restaurant.





       B.   You shall be responsible for purchasing or leasing a suitable site for the Franchised Restaurant.  Prior to the acquisition by lease or purchase of any site for the premises of the Franchised Restaurant, you shall submit a description of the proposed site to us, together with a letter of intent or other evidence satisfactory to us which confirms your favorable prospects for obtaining the proposed site.  We shall provide you written notice of approval or disapproval of the proposed site within fifteen (15) business days after receiving your written proposal.  Our approval is not a determination or warranty that the proposed site will be a profitable location for the Franchised Restaurant.

       C.   After receiving our written approval of the location of the Franchised Restaurant as provided in Paragraph III.B. above, you shall, subject to our prior approval of terms, execute a lease (if the premises are to be leased) or a binding agreement to purchase the site.  All leases pertaining to the Franchised Restaurant premises must contain an Addendum in the form of EXHIBIT C attached hereto, or contain terms and conditions substantially similar to those contained in EXHIBIT C that we approve.  You shall provide us with a copy of the executed lease for the Franchised Restaurant within five (5) days of its execution, and prior to its execution, provide us with a copy for our approval.  A copy of the executed Addendum must also be provided to us.

       D.   You shall promptly after obtaining possession of the site for the Franchised Restaurant: (i) retain the services of an architect and a contractor each of whom has been approved by us; (ii) have prepared and submitted for our approval a site survey and basic architectural plans and specifications (not for construction) consistent with our general atmosphere, image, color scheme and ambience requirements as set forth from time to time in the Manuals for a Buffalo Wild Wings restaurant (including requirements for dimensions, exterior design, materials, interior design and layout, equipment, fixtures, furniture, signs and decorating); (iii) obtain all required zoning changes, building, utility, health, sanitation, liquor and sign permits and licenses and any other required permits and licenses; (iv) purchase or lease equipment, fixtures, furniture and signs as provided herein; (v) complete the construction and/or remodeling, equipment, fixtures, furniture and sign installation and decorating of the Franchised Restaurant in full and strict compliance with plans and specifications therefore approved by us and all applicable ordinances, building codes and permit requirements; (vi) obtain all customary contractors' sworn statements and partial and final waivers of lien for construction, remodeling, decorating and installation services; and (vii) otherwise complete development of and have the Franchised Restaurant ready to open and commence the conduct of its business in accordance with Paragraph XII of this Agreement.  Our approval of your site survey and architectural plans is not a representation or warranty of any type.

       E.   You shall be required to periodically make reasonable capital expenditures to remodel, modernize and redecorate the premises of the Franchised Restaurant so that the Franchised Restaurant will reflect the then-image intended to be portrayed by Buffalo Wild Wings businesses.  All remodeling, modernization, or redecoration of the premises of the Franchised Restaurant must be done in accordance with the standards and specifications as prescribed by us from time to time and with our prior written approval.  All replacements must

                                          4

conform to our then-current quality standards and specifications and must be approved in writing.  Your total expenditures during the term of the Franchise Agreement for such remodeling, modernizing and redecorating will not exceed ONE HUNDRED THOUSAND Dollars ($100,000.00) adjusted for inflation from the date of this Agreement.  Maintenance of the premises of the Franchised Restaurant and modifying or replacing equipment may exceed this amount, and maintenance costs and equipment costs may not be credited to remodeling, modernization or redecoration expenditures.

IV.    TRAINING

       A.   Before you commence operations, we shall make initial training available to you.  At least three (3) persons designated by you and approved by us must attend and successfully complete the training to our satisfaction.  The training will be at least three (3) weeks in duration and will be conducted at either our Cincinnati, or Columbus, Ohio training facilities or at such other place as we may designate.  The training program covers material aspects of the operation of a Buffalo Wild Wings business, including financial controls, general bookkeeping procedures, food preparation, service and operational techniques, familiarization with recipes and cooking procedures, marketing and advertising techniques, sanitation and maintenance procedures, deployment of labor, and maintenance of quality standards.  We reserve the right to provide less training if you have one or more Franchised Restaurants in operation.  All expenses incurred by you and your employees in attending the program, including without limitation, travel costs, room and board expenses, and the employee compensation shall be your sole responsibility.

       B.   We will, from time to time upon your written request, make available, at your expense, training for additional managers designated by you and approved by us.  Such training shall take place at our Cincinnati, or Columbus, Ohio training facilities or such other place as we may designate.  You acknowledge that the time period within which we provide additional training will be subject to available openings in our regular training program with preference being given to initial training for new franchisees.

       C.   We will schedule the opening of your Franchised Restaurant.  For one (1) week prior to and one (1) week concurrent with the commencement of operations of the Franchised Restaurant, we will furnish to you, at your





Restaurant and at our expense, one (1) or more of our representatives for the purpose of training your employees and management team in the operation of a Franchised Restaurant.  During this period, the representatives will assist in establishing and standardizing procedures and techniques essential to the operation of a Buffalo Wild Wings business.  If you request additional assistance from us in order to facilitate the opening of the Franchised Restaurant, and if, we, in our discretion, deem it necessary, feasible and appropriate to comply with the request, you will reimburse us for our expenses in providing such additional assistance, which may include our then-current service fee.  You agree that during the week preceding the opening, you will have four (4) full days during which the Restaurant is fully operational and will host two (2) opening parties.

       D.   If we determine, in our sole discretion, that you or your manager is unable to satisfactorily complete the required training program, you will have thirty (30) days to provide an alternate person to complete the training program at your sole expense.  At least three (3) persons actively involved in the management and operation of the Franchised Restaurant must successfully complete the training program.  If you fail to provide three (3) persons who can complete the training program, we will have the right to terminate this Agreement and you will not be entitled to a refund of any portion of the franchise fees paid.

       E.   From time to time we may provide and if we do, may require that previously-trained and experienced franchisees, their managers and/or employees attend and successfully complete refresher training programs or seminars to be conducted at our training facility or at such other place as we shall designate. Attendance at such refresher training programs or seminars will be at your sole expense, provided, however, that attendance will not be required at more than two (2) such programs in any calendar year.

                                          5

V.     PROPRIETARY MARKS

       A.   You acknowledge that our parent company is the owner of all right, title and interest together with all the goodwill of the Marks and has licensed the use of such Marks to us with the right to sublicense others.  You further acknowledge that your right to use the Marks is derived solely from this Agreement and is limited to the conduct of business by you pursuant to and in compliance with this Agreement and all applicable standards, specifications, and operating procedures prescribed by us from time to time during the term of the Agreement.  Any unauthorized use of the Marks by you is a breach of this Agreement and an infringement of the rights of us in and to the Marks.  You acknowledge that your usage of the Marks and any goodwill established by your use of the Marks shall inure to the exclusive benefit of us and our affiliate, and that this Agreement does not confer any goodwill or other interests in the Marks upon you.  Any developments and improvements by you relating to the Marks or the System shall be our sole property.  You will not, at any time during the term of this Agreement or after its termination or expiration, contest the validity or ownership of any of the Marks or assist any other person in contesting the validity or ownership of the Marks.  All provisions of this Agreement applicable to the Marks apply to any and all additional trademarks, service marks, and commercial symbols authorized for use by and licensed to you by us after the date of this Agreement.

       B.   You will not use any Mark or portion of any Mark as part of a corporate or trade name, or with any prefix, suffix, or other modifying words, terms, designs, or symbols, or in any modified form.  You will not use any Mark in connection with the sale of any unauthorized product or service or in any other manner not expressly authorized in writing by us.  You shall give such notices of trademark and service mark registrations as we specify and to obtain such fictitious or assumed name registrations as may be required under applicable law.  Your use of any of the Marks on the Internet/World Wide Web (including any Home Page) or any other medium must have our prior written approval.  We reserve the right to prohibit your use of the Marks on the Internet.

       C.   You will promptly notify us of any claim, demand or cause of action based upon or arising from any attempt by any other person, firm or corporation to use the Marks or any colorable imitation of the Marks.  You shall also notify us of any action, claim or demand against you relating to the Marks within ten (10) days after you receive notice of said action, claim or demand.  Upon receipt of timely notice of an action, claim or demand against you relating to the Marks, we and our affiliate shall have the sole right and duty to defend any such action.  We and our affiliate will have the exclusive right to contest or bring action against any third party regarding the third party's use of any of the Marks and will exercise such right in our and our affiliate's sole discretion.  In any defense or prosecution of any litigation relating to the Marks or components of the System undertaken by us, you shall cooperate in all respects with us and our affiliate and execute any and all documents and take all actions as may be desirable or necessary in the opinion of our counsel, to carry out such defense or prosecution.  Both parties shall make every effort consistent with the foregoing to protect, maintain, and promote the Marks as identifying the System and only the System.

       D.   If, in our sole discretion, it becomes advisable at any time, for us to modify or discontinue use of any Mark, and/or use one or more additional or substitute trade names, trademarks, service marks, or other commercial symbols, either systemwide or with respect to use by any selected franchisee, you will comply with our directions within a reasonable time after notice to you.  We will have no liability or obligation whatsoever with respect to your modification or discontinuance of any Mark.

       E.   In order to preserve the validity and integrity of the Marks and





copyrighted material licensed to you and to assure that you are properly employing the same in the operation of your Franchised Restaurant, we and our agents have the right of entry and inspection of your premises and operating procedures at all reasonable times.  We will have the right to observe the manner in which you are rendering your services and conducting your operations, to confer with your employees and customers, and to select Menu Items, ingredients, food and

                                          6

non-food products, beverages, and other items, products, delivery vehicles, products and supplies for test of content and evaluation purposes to make certain that the Menu Items, ingredients, food and non-food products, beverages and other items, products, delivery vehicles, materials and supplies are satisfactory and meet our quality control provisions and performance standards.

VI.    CONFIDENTIAL MANUALS

       A.   We will loan to you during the term of the franchise one (1) copy of our Confidential Operations Manual and other confidential manuals and written materials (all of which are collectively referred to herein as the Manuals) containing reasonable, mandatory and suggested specifications, standards, operating procedures and rules prescribed from time to time by us for Buffalo Wild Wings businesses and information relative to your other obligations.  You will not at any time, without our prior written consent, copy, duplicate, record or otherwise reproduce the Manuals in whole or in part or otherwise make the same available to any person.  Any authorized duplication or copying of any of the Manuals shall be performed by us at your expense.  We have the right to add to and otherwise modify, combine, or replace the Manuals from time to time to reflect changes in the specifications, standards, operating procedures and rules prescribed by us for Buffalo Wild Wings businesses, provided that no such addition or modification shall alter your fundamental status and rights under this Franchise Agreement.

       B.   The Manuals shall at all times remain our sole property and shall promptly be returned upon the expiration or termination of this Agreement.

       C.   The Manuals contain our proprietary information which you shall keep confidential both during the term of the franchise and subsequent to the expiration and/or termination of the franchise.  You will at all times insure that your copy of the Manuals are available at the Franchised Restaurant premises in a current and up-to-date manner.  At all times that the Manuals are not in use by authorized personnel, you will maintain the Manuals in a locked receptacle at the premises of the Franchised Restaurant, and will only grant authorized personnel, as defined in the Manuals, access to the key or lock combination of such receptacle.  In the event of any dispute as to the contents of the Manuals, the terms of the master copy of the Manuals maintained by us at our home office will be controlling.

VII.        CONFIDENTIAL INFORMATION

       A.   You acknowledge that your entire knowledge of the operation of a Buffalo Wild Wings business, including, without limitation, the method of preparation of Menu Items and other food products, and other specifications, recipes, standards and operating procedures of a Buffalo Wild Wings business is derived from information disclosed to you by us and that such information is proprietary, confidential and our trade secret.  You will maintain the absolute confidentiality of all such information during and after the term of the franchise and you will not use any such information in any other business or in any manner not specifically authorized or approved in writing by us.

       B.   You will divulge such confidential information only to the extent and only to such of your employees as must have access to it in order to operate the Franchised Restaurant.  Any and all information, knowledge and know-how, including, without limitation, drawings, materials, equipment, techniques, restaurant systems, product formulae, recipes and other data which we designate as confidential will be deemed confidential for purposes of this Agreement, except information: 1) which you can demonstrate lawfully came to your attention prior to disclosure thereof by us, or 2) which, at the time of disclosure by us to you, had lawfully become a part of the public domain, through publication or communication by others, or 3) which, after disclosure to you by us, lawfully becomes a part of the public domain, through publication or communication by others.

                                          7

       C.   Due to the special and unique nature of our confidential information, Marks and Manuals, you acknowledge that we will be entitled to immediate equitable remedies, including but not limited to, restraining orders and injunctive relief in order to safeguard our proprietary, confidential, unique, and special information and you acknowledge that money damages alone would be an insufficient remedy with which to compensate us for any breach of the terms of Paragraph V, VI and VII of this Agreement.  All of your employees having access to our confidential and proprietary information and all of your shareholders, directors, officers, partners and/or members will be required to execute non-disclosure agreements in the form acceptable to us.

VIII.       MODIFICATION OF THE SYSTEM

       You acknowledge that from time to time we may change or modify the System presently identified by the Marks, including, without limitation, the adoption and use of new or modified trade names, trademarks, service marks or copyrighted





materials, new Menu Items, new products, new equipment or new techniques.  You will accept, use and display for the purpose of this Agreement any such changes in the System, as if they were part of this Agreement at the time of execution. You will make such expenditures as are reasonably required by such changes or modifications in the System.  Except as directed by us, you will not change, modify or alter the System in any way.

IX.         ADVERTISING

       Recognizing the value of advertising and the importance of the standardization of advertising and promotion to the furtherance of the goodwill and the public image of Buffalo Wild Wings businesses, you agree:

       A.   Before using any promotional and advertising materials, you will submit to us or our designated agency, for our prior approval, all information pertaining to promotional materials and advertising initiated by you, including, but not limited to, newspapers, radio and television advertising, Internet or any other medium, specialty and novelty items, signs, boxes, napkins, bags and wrapping papers.  In the event written disapproval of any such advertising and promotional material has not been given by us to you within twenty (20) days from the date such information has been received by us, the materials will be deemed approved.  Your failure to conform with these provisions and subsequent nonaction by us to require you to cure or remedy any such failure and default will not be deemed a waiver of future or additional failures and defaults by you under this provision and/or any other provision of this Agreement.  The submission of advertising information to us for our approval will not affect your right to determine the prices at which you sell your products and/or services.

       B.   You will contribute to the Buffalo Wild Wings Advertising and Development Fund (Fund) (which may be one of several regional Funds, if we elect to establish separate Funds to serve various regions in which multiple franchisees are located) an amount equal to three percent (3%) of your Gross Sales, as defined in Paragraph X.  Your required payments to the Fund will be made on or before the fifteenth day of the month for the preceding month.  These contributions may be withdrawn from your bank account as provided in Paragraph X.  We will use such funds to conduct local, regional or national advertising. Such payments shall be made in addition to and exclusive of any sums that you may be required to spend on system or grand opening advertising and promotion. The Fund shall be maintained and administered by us or our designee, as follows:

            1.    We will oversee all advertising programs and have sole discretion over the creative concepts, materials and media used in such programs including the placement and allocation.  We will use the Fund to conduct national advertising, and/or, if regional Funds are developed, to conduct regional or local advertising on your behalf, at our sole discretion.  We may also use such funds to conduct advertising in your local advertising market. However, we cannot and do not ensure that any particular franchisee will benefit directly or pro rata from the placement of advertising.

                                          8

            2.    For each of our company-owned and affiliate-owned Restaurants (except Special Sites identified in Paragraph I.C.) offering products and services similar to the Franchised Restaurant we will make contributions to the Fund or to regional Funds equivalent to the contributions required of Franchised Restaurants within the System or, if applicable, region in which the company-owned or affiliate-owned store is located.

            3.    We will administer and control the Fund and we will have the absolute and unilateral right to determine how, when and where the monies in the Fund will be spent.  This includes the right to use Fund monies for (1) the creation, development and production of advertising and promotional materials, (2) any marketing or related research and development, and (3) advertising and marketing expenses, including without limitation, the absolute right to purchase and pay for product and food research and development, advertising materials, production costs, brochures, ad slicks, radio, film and television commercials, videotapes, newspaper, magazine and other print advertising, direct mail pieces, photographer costs, photographs, pictures, designs, services provided by advertising agencies, public relations firms or other marketing, research or consulting firms or agencies, market research and marketing surveys, menu design and graphics, customer incentive programs, sponsorships, marketing meetings and sales incentives, development of Home Pages on the Internet, Internet access provider costs, Internet/World Wide Web programming and advertising, subscriptions to industry newsletters or magazines, marketing or industry studies, books and research materials, administrative costs and salaries for marketing support personnel.  All sums paid by you to the Fund will be maintained in a separate account from our other funds and shall not be used to defray any of our general operating expenses, except for such reasonable administrative costs and overhead, if any, as we may incur in activities reasonably related to the administration or direction of the Fund and advertising programs including, without limitation, costs incurred in collecting and accounting for assessments for the Fund.

            4.    It is our intent that all contributions to the Fund will be expended for advertising and promotional purposes during our fiscal year within which contributions are made.  Any monies not expended in the fiscal year in which they were contributed will be applied and used for Fund expenses in the following year.

            5.    Although we intend the Fund to be of perpetual duration, we have the right to terminate the Fund.  We will not terminate the Fund, however, until all monies in the Fund have been expended for advertising and promotional purposes.





            6.    An unaudited accounting of Fund contributions and expenditures will be prepared annually and will be made available to you upon request.  At our option, any such annual accounting may include an audit of the contributions and expenditures of the Fund prepared by an independent certified public accountant selected by us and prepared at the expense of the Fund.

            7.    Once you make contributions to the Fund, all such monies will be used as required by this Paragraph IX and will not be returned to you.        C.   In addition to your contributions to the Fund, you may be required to spend up to two percent (2%) of your Gross Sales on approved local advertising.  We may direct that your local advertising expenditures be made either individually or to a local advertising group as described below.

            1.    We shall have the right to designate local advertising markets and you will participate in cooperative advertising and marketing programs in your designated local advertising market as described in this Paragraph.  Each Buffalo Wild Wings and bw-3 Restaurant (except Special Sites identified in Paragraph I.C.) within the designated local advertising area shall be a member of the local advertising group and each member shall have one vote on all matters requiring a vote.  We reserve the right to designate the Bylaws which will govern the operation of local advertising groups.

                                          9

            2.    If we direct you to spend your advertising funds locally, all such expenditures will be made directly by you or the local advertising group, subject to approval and direction by us or our designated advertising agency. You acknowledge that we may direct local advertising to be spent according to a seasonally adjusted schedule; however, such expenditures shall not exceed two percent (2%) of your annual Gross Sales.  You shall furnish to us an accurate accounting of all expenditures on local advertising and promotion.

            3.    You will submit documentation of your advertising expenditures at such times and in such form as we designate.  If you fail to make any required advertising expenditures, we have the right to require you to contribute the amount of any deficiency to the Fund to be used by us for general advertising and promotion.

       D.   We may require you to expend up to FIVE THOUSAND Dollars ($5,000) on newspaper, direct mail or advertising through other media prior to your opening and during your initial ninety (90) days of operation of the Franchised Restaurant.  We retain the right to collect such funds directly from you and expend the funds on your behalf.  Such advertising and promotion will be designated as Grand Opening advertising and promotion and will be conducted in accordance with the specifications set forth in the Manuals.

       E.   You must carry and offer for sale to your customers a representative supply of trademarked clothing.  We may, from time to time, develop and market special promotional items which will be made available to you at our cost plus a reasonable mark up and you will maintain a representative inventory of such promotional items to meet public demand.  You will have the right to purchase alternative promotional items provided that such alternative goods conform to the specifications and quality standards established by us.  You will, on an annual basis, participate in a minimum of fifty percent (50%) of the promotional programs introduced by us from time to time.  You will participate in the specific promotional programs designated by us.

       F.   You will maintain a business phone and advertise continuously in the classified or Yellow Pages of a local telephone directory approved by us or such other directories under the listing Restaurant, or such other listings as deemed appropriate by us using mats of the type and size approved in advance by us.  We reserve the right to require you to advertise in more than one local telephone directory.  When more than one (1) Buffalo Wild Wings and/or bw-3 restaurant serves a metropolitan area, classified advertisements shall list all such restaurants operating within the distribution area of the classified directories, and you shall contribute your equal share in the cost of such advertisement.

       G.   You will not use in advertising or any other form of promotion, or in any manner any of the marks without the appropriate -Registered Trademark- registration mark or the designations TM or SM where applicable.

X.     CONTINUING FEE

       A.   You will pay us without offset, credit or deduction of any nature, so long as this Agreement is in effect, a monthly Continuing Fee equal to five percent (5%) of the Gross Sales derived from the Franchised Restaurant.  The Continuing Fee will be paid monthly in the manner specified below or as otherwise prescribed in the Manuals.

            1.    We must receive from you within five (5) days after the end of each month, a correct statement of your Gross Sales for the preceding fiscal month as determined by us on a form approved by us and signed by you.  Each monthly statement of Gross Sales shall be accompanied by the Continuing Fee payment based on the Gross Sales reported in the statement so submitted.  You will make available to us all original books and records that we may deem necessary to ascertain your Gross Sales for reasonable inspection at reasonable times.

                                          10

            2.    The term Gross Sales, as used in this Agreement, means and





includes the total amount of all revenue from the sale of services, products and merchandise and all income of every kind and nature related to the Franchised Restaurant whether or not sold or performed at or from the Franchised Restaurant and the proceeds from all games, cover charges, service, license, use and similar fees collected by the Franchised Restaurant.  Gross sales do not include any sales tax, use tax, or service taxes collected and paid to the appropriate taxing authority.

       B.   Prior to the opening of your Restaurant (and thereafter as requested by us), you shall execute and deliver to us, our bank(s) and your bank, as necessary, all forms and documents that we may request to permit us to debit your account, either by check, via electronic funds transfer or other means or such alternative methods as we may designate (Payment Methods).  You must comply with all procedures specified by us from time to time to take such actions as we may request to assist in utilizing any of the Payment Methods.  We may use the Payment Methods to collect the amount of each month's Continuing Fee, Advertising Contributions, and any other amounts due to us or our affiliates under this Agreement or otherwise.  The Continuing Fee shall be withdrawn from your designated bank account by electronic fund transfer on the fifth of each month for the previous month, or if the fifth falls on a weekend or bank holiday, then on the next business day.  Advertising Contributions will be withdrawn on the fifteenth of each month or on the next business day. Payments for commissary purchases will be debited one business day after products are delivered to the Restaurant.  We will determine your Gross Sales by means of the approved information system, or if we are unable to do so, you shall report your Gross Sales in writing on or before the fifth day of the month for the preceding month.  You shall notify us at least twenty (20) days before closing or changing the account against which such debits are to be made.  If such account is closed or ceases to be used, you shall immediately provide all documents and information necessary to permit us to debit the amounts due from an alternative account.  You acknowledge that these requirements are only a method to facilitate prompt and timely payment of amounts due and shall not affect any obligation or liability for amounts owed.  If for any reason your account cannot be electronically debited, you shall submit payments by check (certified or cashier's check if requested by us) on or before the dates when due.  You shall indemnify, defend and hold us harmless from and against all claims, damages, losses, costs and expenses resulting from any dishonored debit against your account, regardless whether resulting from the act or omission of you or your bank; provided that you shall not be obligated to indemnify us for any dishonored debit caused by our negligence or mistake.

       C.   All Continuing Fees, Advertising Contributions, amounts due for purchases by you from us and our affiliates, and other amounts which you owe us or our affiliates shall bear interest after due date at the highest applicable legal rate for open account business credit, not to exceed one and one-half percent (1.5%) per month.  You acknowledge that this Paragraph does not constitute agreement by us or our affiliates to accept such payments after same are due or a commitment by us to extend credit to, or otherwise finance your operation of, the Franchised Restaurant.  Further, you acknowledge that your failure to pay all amounts when due shall constitute grounds for termination of this Agreement, as provided in Paragraph XVI hereof, notwithstanding the provisions of this Paragraph.

       D.   Notwithstanding any designation by you, we have the sole discretion to apply any payments by you to any past due indebtedness of yours for Continuing Fees, Advertising Contributions, purchases from us and our affiliates, interest or any other indebtedness.  Further, if you are delinquent in the payment of any fees or indebtedness we have the right to require you to prepay estimated Continuing Fees and Advertising Contributions.

XI.    ACCOUNTING AND RECORDS

       A.   You will maintain during the term of this Agreement, and preserve for the time period specified by us, full, complete, and accurate books, records, and accounts in accordance with the standard accounting

                                          11

system prescribed by us from time to time in writing.  You will retain for a period of three (3) years all books and records related to the Franchised Restaurant, including without limitation, sales checks, purchase orders, invoices, payroll records, customer lists, check stubs, sales tax records and returns, cash receipts and disbursement journals and general ledgers.  If a computerized accounting system is developed by us for use throughout the franchise System, you will at your expense implement and utilize such a system according to the standards and procedures established by us.

       B.   You will supply to us on or before the twenty-eighth (28th) day after the end of each fiscal quarter, in the form approved by us, an activity report and a detailed profit and loss statement, balance sheet and statement of cash flow for the last preceding fiscal quarter.  Additionally, you will, at your expense, submit to us within ninety (90) days after the end of each fiscal year during the term of this Agreement, a detailed profit and loss statement and statement of cash flow for such fiscal year and a balance sheet as of the last day of such fiscal year, prepared on an accrual basis including all adjustments necessary for fair presentation of the financial statements.  Such financial statements must be certified to be true and correct by you and be reviewed by an independent certified public account.

       C.   You will submit to us such other periodic reports, forms and records as specified, and in the manner and at the time as specified in the Manuals or as we otherwise require in writing from time to time.

       D.   You will record all sales on electronic cash registers approved by





us or on such other types of cash registers as may be designated by us in the Manuals or otherwise in writing.  We reserve the right to designate the information system used in your Franchised Restaurant including the computer hardware, software, other equipment and enhancements.  At such time as we designate the approved information system, you will have one hundred eighty (180) days in which to install and commence using the approved information system.  In connection with the approved information system, you agree to the following:

            1.    You understand that you will be required to acquire the right to use the information system, obtain peripheral equipment and accessories and arrange for required maintenance and support services, all at your cost.

            2.    We shall have the right at all times to access the information system and to retrieve, analyze, download and use all software, data and files stored or used on the information system.  We may access the information system in the Franchised Restaurant or from other locations.  You shall store all data and information on the information system that we designate from time to time.

            3.    All modifications and enhancements made to the approved information system shall be our property (or the appropriate vendor if we so designate), without regard to the source of the modification or enhancement. You agree to execute any documents, in the form provided by us, that we determine are necessary to reflect such ownership.

            4.    Upon expiration or termination of this Agreement, you shall allow our employees or agents to remove the required software from the information system, shall immediately return to us the software, each component thereof, any data generated by the use thereof, all documentation for the software and other materials or information that relate to or reveal the software and its operation.  You shall immediately destroy any and all back-up or other copies of the software or parts thereof, and any data generated by the use of the software (other than financial information relating solely to you).

            5.    You acknowledge and agree that there will be fees payable by you in connection with the installation, use, support, maintenance, and periodic enhancements of the approved information system.  These fees will include but are not necessarily limited to an on-site installation and support fee,

                                          12

software support fees and software maintenance fees.  These fees will be payable to us or a vendor designated by us and may be increased from time to time.

            6.    You will be required to execute a software license agreement setting forth in more detail your rights and obligations in connection with your use of the approved information system.

You agree that we have the right to use your data as part of our earnings claim in our Franchise Offering Circular.

       E.   We or our designated agents have the right at all reasonable times to examine and copy, at our expense, your books, records, and tax returns.  We also have the right, at any time, to have an independent audit made of your books and records at our expense.  If an inspection reveals that any payments due to us have been understated in any report to us, then you will immediately pay to us the amount understated upon demand, in addition to interest from the date such amount was due until paid, at the maximum rate permitted by law not to exceed one and half percent (1.5%) per month.  If an inspection discloses an understatement in any report of two percent (2%) or more, you will also reimburse us for any and all costs and expenses connected with the inspection (including, without limitation, reasonable accounting and attorneys' fees), and we will thereafter have the right to require you to submit annual financial statements, prepared in accordance with generally accepted accounting principles, audited by an independent certified public accountant.  The foregoing remedies shall be in addition to any other remedies we may have.

       F.   You acknowledge that nothing contained in this Agreement constitutes our agreement to accept any payments after they are due or a commitment by us to extend credit to or otherwise finance your operation of the Franchised Restaurant.  Further, you acknowledge that your failure to pay all amounts when due constitutes a material default of, and grounds for, termination of this Agreement.

XII.   STANDARDS OF QUALITY AND PERFORMANCE

       In order to promote and protect the value of the Marks and the System, and to insure optimum quality control as to products and services provided and sold in Franchised Restaurants, you acknowledge and agree that substantial uniformity must be maintained in the quality, type and standard of Franchised Restaurant, and in their facilities, products, services and operations. Therefore, you will comply with all requirements described in this Agreement, the Manuals and other written policies supplied by us.  Mandatory specifications, standards, operating procedures and rules prescribed from time to time by us in the Manuals or otherwise communicated to you in writing, shall constitute provisions of this Agreement as if fully set forth herein.  All references herein to this Agreement shall include all such mandatory specifications, standards and operating procedures and rules.

       A.   You will commence operation of your Franchised Restaurant within nine (9) months of the execution of this Agreement or as otherwise required or approved in writing by us.  Before opening, you will have procured all necessary licenses, permits, and approvals, including, but not limited to, liquor and construction permits; hired and trained personnel, made all leasehold





improvements, and acquired initial inventory.  At the time of opening you must have a minimum of Fifty Thousand Dollars ($50,000) in immediately accessible working capital funds to be used solely to defray the costs of operating the Restaurant for the initial several months.  If for any reason you fail to commence operation within the nine (9) month period, we may terminate this Agreement immediately upon delivery of written notice of termination to you.

B.     You will maintain the condition and appearance of the premises of the Franchised Restaurant consistent with our quality controls and standards.  You will effect reasonable maintenance of the Franchised Restaurant as is from time to time required to maintain or improve the appearance and efficient operation of the Franchised Restaurant, including but not limited to replacement of worn out or obsolete fixtures and signs, repair of the exterior and interior of the premises of the Franchised Restaurant, and purchasing and installation of new or

                                          13

modified equipment.  If at any time in our judgment the general state of repair or the appearance of the premises of the Franchised Restaurant or its equipment, fixtures, signs or decor does not meet our quality control and standards therefor, we will notify you, specifying the action to be taken by you to correct such deficiency.  If you fail or refuse to initiate a bona fide program to complete any required maintenance, within thirty (30) days after receipt of such notice, we will have the right, but not the obligation, in addition to all other remedies, to enter upon the premises of the Franchised Restaurant and effect such repairs, painting, maintenance or replacements of equipment, fixtures or signs on your behalf and you shall pay the entire costs thereof on demand.

       C.   You will not make any material alterations to the premises of the Franchised Restaurant make any material replacements of or alterations to the equipment, fixtures or signs of the Franchised Restaurant without our prior written approval.

       D.   The Franchised Restaurant may be used solely for the purpose of conducting a Buffalo Wild Wings Franchised Restaurant.  The operating entity (corporation, partnership or limited liability company) will be dedicated solely to the operation of your Franchised Restaurant(s) and will not hold any interest in, operate or manage any other business of any kind without our prior written approval.

       E.   We have developed and own proprietary sauces for use in preparing chicken wings, the weck kaiser roll and other menu items and specially prepared pocket pizza mix and Buffalo Breath Chili mix (Trade Secret Food Products). In order to protect our trade secrets and to monitor the manufacture, packaging, processing and sale of Trade Secret Food Products, we will (i) manufacture, supply, and sell Trade Secret Food Products to our franchisees; (ii) disclose the formulae for and methods for preparation of the Trade Secret Food Products to a limited number of suppliers who may be authorized by us to manufacture Trade Secret Food Products to our precise specifications and sell Trade Secret Food Products to our franchisees; and/or (iii) disclose the formulae for and methods for preparation of the pocket pizza mix and the Buffalo Breath Chili mix to you who will be authorized by us to manufacture them to our precise specifications for sale only at the location of the Franchised Restaurant specified herein, unless otherwise approved by us.  Under no circumstances will we disclose the formulae for and methods of preparation of any of our proprietary sauces to you.  You acknowledge that you may be required to purchase Trade Secret Food Products (and other products whose consistency and quality is key to the success of the System) from us or a limited number of suppliers so authorized by us and will be required to use Trade Secret Food Products as designated by us.

       F.   You will offer for sale and sell at the Franchised Restaurant all Menu Items, other food and beverage products and other products that we from time to time require and shall not offer for sale or sell at the Franchised Restaurant or the premises which you occupy any unapproved products or menu items or use such premises for any purpose other than the operation of a Franchised Restaurant in full compliance with this Agreement.  You will offer all Menu Items on a menu specified by us.

       G.   In order to ensure that all Menu Items produced by you meet our high standards of taste, texture, appearance and freshness, and in order to protect our goodwill and Marks, all Menu Items and other food products shall be prepared only by properly trained personnel strictly in accordance with our recipes, cooking techniques and processes, and the Manuals, and shall be sold only at retail to customers in conformity with our marketing plan and concept.  You acknowledge that such recipes, cooking techniques and processes are integral to the System and failure to adhere to such recipes, cooking techniques and processes shall be detrimental to the System and Marks.

       H.   From time to time, we will provide you with a list of approved manufacturers, suppliers and distributors (Approved Suppliers List) and approved inventory products, fixtures, furniture, equipment, signs, stationery, supplies, and other items or services necessary to operate the Franchised Restaurant (Approved Supplies List).  The list will specify the manufacturer, supplier and distributor and the inventory products,

                                          14

fixtures, furniture, equipment, signs, stationery, supplies and services which we have approved to be carried or used in the System.  We may revise the Approved Suppliers List and Approved Supplies List from time to time in our sole





discretion and such lists shall be submitted to you as we deem advisable.  If you propose to offer for sale at the Franchised Restaurant any brand of product, or to use in the operation of the Franchised Restaurant any brand of food ingredient or other material or supply which is not then approved by us as meeting its minimum specifications and quality standards, or to purchase any product from a supplier that is not then designated by us as an approved supplier, you must first notify us and shall upon our request submit samples and such other information as we require for examination and/or testing or to otherwise determine whether such product, material or supply, or such proposed supplier meets its specifications and quality standards.  We may charge you a fee in connection with such examination and/or testing which will not exceed the reasonable cost of the inspection and evaluation and the actual cost of the test.  In some cases we may refuse to consider an alternate supplier of certain items.  We reserve the right to re-inspect the facilities and products of any supplier of an approved item and to revoke its approval of any item or supplier which fails to continue to meet any of our criteria.

       I.   All inventory, products and materials, and other items and supplies used in the operation of the Franchised Restaurant which are not specifically required to be purchased in accordance with our Approved Supplies List and Approved Suppliers List must conform to the specifications and quality standards established by us from time to time.

       J.   You will fully comply with all mandatory specifications, standards, operating procedures and rules as in effect from time to time relating to:

            1.    The safety, maintenance, cleanliness, sanitation, function and appearance of the Franchised Restaurant premises and its equipment, fixtures, decor and signs and maintenance and service agreements therefor;

            2.    Training, dress, general appearance and demeanor of Franchised Restaurant employees;

            3.    Type, quality, taste, portion control and uniformity, and manner of preparation, packaging, displays and sale of all Menu Items, beverages and other food items sold by the Franchised Restaurant and of all food, beverages and other products used in the preparation and packaging thereof;

            4.    The promotion and sale of novelty items bearing the Marks, such as cups, T-shirts and related merchandise and accessories;

            5.    Hours during which the Franchised Restaurant will be open for business;

            6.    Advertising and promotional programs;

            7.    Use and retention of standard forms;

            8.    Our recipes;

            9.    Use and illumination of signs, posters, displays, menu boards and similar items;

            10.   Your identification as the owner of the Franchised Restaurant;

            11.   The handling of customer complaints; and

            12.   Any other standard, specification or procedure designated by us.

                                          15

       K.   You will secure and maintain in force all required licenses, including liquor licenses, permits and certificates relating to the operation of the Franchised Restaurant and will operate the Franchised Restaurant in full compliance with all applicable laws, ordinances and regulations, including without limitation all government regulations relating to occupational hazards and health, dispensing of food products, consumer protection, trade regulation, worker's compensation, unemployment insurance and withholding and payment of Federal and State income taxes and social security taxes and sales, use and property taxes.

       L.   You will refrain from any merchandising, advertising or promotional practice which is unethical or may be injurious to our business and/or the business of other Franchised Restaurants or to the goodwill associated with the Marks or System.

       M.   In the operation of the Franchised Restaurant you will use only displays, trays, boxes, bags, wrapping paper, labels, forms and other paper and plastic products imprinted with the Marks and colors as prescribed from time to time by us.

       N.   You acknowledge that the Franchised Restaurant shall at all times maintain an inventory of ingredients, food and beverage products and other products, materials and supplies that will permit operation of the Franchised Restaurant at maximum capacity.

       O.   The Franchised Restaurant shall at all times be under your direct, on-premises supervision, unless, upon sixty (60) days prior written notice and approval by us you designate a trained and competent employee to act as full-time general manager.  Your designation of a general manager shall be subject to our prior written approval, and shall further be subject to the designated general manager successfully completing our training course.  All costs for the attendance of the designated general manager at our training





course shall be at your cost, except as set forth in Section IV(A).  We will have the right at any time to revoke our approval of a designated manager.  The use of a general manager will in no way relieve you of your obligations to observe, perform and comply with this Agreement and the Manuals and to insure that the Franchised Restaurant is properly managed and operated or the responsibility for the on-site, day to day operation of the Franchised Restaurant.  You will employ a sufficient number of competent and trained employees to insure efficient service to your customers.

       P.   You will not install or maintain on the premises of the Franchised Restaurant any newspaper racks, video games, jukeboxes, gaming machines, gum machines, games, rides, vending machines, pool tables, automated teller machines, or other similar devices without our written approval.  The income derived from any approved machines will be included in gross sales for purposes of your Continuing Fee and advertising contribution.

       Q.   You will timely pay all of your obligations and liabilities due to us, our parent, bw-3, Inc., our affiliates and other suppliers, lessors and creditors.

       R.   You will notify us in writing within five (5) days of the commencement of any action, suit, or proceeding, and of the issuance of any order, writ, injunction, award or decree of any court, agency, or other governmental instrumentality, which may adversely affect the operation or financial condition of the Franchised Restaurant.

       S.   We reserve the right to require you to offer delivery service to customers located within a reasonable radius of the Franchised Restaurant.  As of the date of this Agreement, such delivery service is at your option.  If the Franchised Restaurant offers delivery service to customers located within its Designated Area, in order to maintain the quality of all food products, the Franchised Restaurant will not offer delivery service to any customer whose order cannot be delivered within a reasonable time from when such order is placed, in

                                          16

accordance with our standards.  You will charge the same price for products offered by the Franchised Restaurant whether delivered or sold over the counter in the Franchised Restaurant, plus a reasonable delivery charge.

XIII.  OPERATIONS ASSISTANCE

       A.   We may from time to time advise or offer guidance to you relative to prices for the food and other products offered for sale by the Franchised Restaurant that in our judgment constitute good business practice.  Such guidance will be based on our experience in operating and franchising Restaurants and an analysis of the costs of such products and prices charged for competitive products.  You will not be obligated to accept any such advice or guidance and shall have the sole right to determine the prices to be charged from time to time by the Franchised Restaurant and no such advice or guidance shall be deemed or construed to impose upon you any obligation to charge any fixed, minimum or maximum prices for any product offered for sale by the Franchised Restaurant.  We may from time to time establish promotional practices which you are required to follow such as free refill, buy one and get one free or similar practices.

       B.   Before the opening of the Franchised Restaurant we will provide you with the following:

            1.    A comprehensive list of established sources of equipment, foods, supplies and containers necessary for the operation of the Franchised Restaurant and provide specifications for such products;

            2.    Coordination of product distribution for local, regional and national suppliers; and

            3.    Regulation of quality standards and products in conformance throughout the network of Franchised Restaurants.

       C.   We may furnish you with such assistance in connection with the operation of the Franchised Restaurant as we reasonably determined to be necessary from time to time.  Operations assistance may consist of advice and guidance with respect to:

            1.    Proper utilization of procedures to be utilized by the Franchised Restaurant regarding the service and sale of all Menu Items and other food and beverage items, and related items and materials as approved by us;

            2.    Additional products and services authorized for sale by Franchised Restaurants;

            3.    Purchase of ingredients and other food and beverage items, materials and supplies;

            4.    The institution of proper administrative, bookkeeping, accounting, inventory control, supervisory and general operating procedures for the effective operation of the Franchised Restaurant; and

            5.    Advertising and promotional programs.

       D.   We will make periodic visits to the Franchised Restaurant for the purposes of consultation, assistance, and guidance in all aspects of the operation and management of the Franchised Restaurant as we reasonably determine





to be necessary from time to time.  We or our representatives who visit the Franchised Restaurant will prepare, for the benefit of both us and you, written reports with respect to such visits outlining any suggested changes or improvements in the operations of the Franchised Restaurant and detailing any defaults in such operations which become evident as a result of any such visit, and a copy of each such written report shall be provided to both us and you.  We will advise you of problems arising out of the operation of the Franchised

                                          17

Restaurant as disclosed by reports submitted to us by you or by inspections conducted by us of the Franchised Restaurant.

       E.   We will provide to you the specifications, Approved Suppliers Lists, Approved Supplies Lists, training and Manuals at various times between the execution of this Agreement and the opening of the Franchised Restaurant.

       F.   In the event you request additional operational assistance or services, we have the right to condition the rendering of such services upon the payment of a per diem fee and all of our expenses incurred in rendering the services.

XIV.   INSURANCE

       A.   You will procure at your expense and maintain in full force and effect during the term of this Agreement, an insurance policy or policies protecting you, us and our designated affiliates, and their officers, directors, partners and employees against any loss, liability, personal injury, death, or property damage or expense whatsoever arising or occurring upon or in connection with the Franchised Restaurant, as we may reasonably require for our own and your protection.  We will be named an additional insured in such policy or policies.

       B.   The policy or policies shall be written by an insurance company satisfactory to us in accordance with standards and specifications set forth in the Manuals or otherwise in writing, and shall include, at a minimum (except as different coverages and policy limits may reasonably be specified for all franchisees from time to time by us in the Manuals or otherwise in writing) the following:

            1.    All risks coverage insurance on the Franchised Restaurant and all fixtures, equipment, supplies and other property used in the operation of the Franchised Restaurant, for full repair and replacement value of the machinery, equipment, improvements and betterments, without any applicable co-insurance clause, except that an appropriate deductible clause shall be permitted.

            2.    Worker's compensation and employer's liability insurance as well as such other insurance as may be required by statute or rule of the state in which the Franchised Restaurant is located and operated.

            3.    Comprehensive general liability insurance and product liability insurance with minimum limits of ONE MILLION Dollars ($1,000,000) combined single limit including the following coverages: contractual liability; personal injury; products/completed operation; and tenant's fire legal liability; insuring against all claims, suits, obligations, liabilities and damages, including attorneys' fees, based upon or arising out of actual or alleged personal injuries or property damage resulting from, or occurring in the course of, or on or about or otherwise relating to the Franchised Restaurant, provided that the required amounts herein may be modified from time to time by us to reflect inflation or future experience with claims.

            4.    If you offer delivery service or utilize motor vehicles for any other purpose in the operation of the Franchised Restaurant, automobile liability insurance, including owned, hired and non-owned vehicle coverage, with a combined single limit of at least ONE MILLION Dollars ($1,000,000).

            5.    Such insurance and types of coverage as may be required by the terms of any lease for the Franchised Restaurant, or as may be required from time to time by us.

            6.    Liquor liability coverage in a minimum amount of ONE MILLION Dollars ($1,000,000) or such other amount as may be specified by us.

                                          18

       C.   The insurance afforded by the policy or policies respecting liability shall not be limited in any way by reason of any insurance which may be maintained by us.  The insurance coverage must commence as of the date the location of the Franchised Restaurant has been secured.  You agree to deliver to us prior to opening and periodically at any time upon our request, proper certificate evidencing the existence of the insurance coverage which names us as a named insured.  Such certificate shall state that said policy or policies will not be canceled or altered without at least twenty (20) days prior written notice to us and shall reflect proof of payment of premiums.  Maintenance of such insurance and the performance by you of the obligations under this Paragraph will not relieve you of liability under the indemnity provision set forth in this Agreement.  Minimum limits as required above may be modified from time to time, as conditions require, by written notice to you and we may require you to provide periodic proof of payment of premiums.

       D.   If you, for any reason, do not procure and maintain such insurance





coverage as required by this Agreement, we have the right and authority (without, however, any obligation to do so) immediately to procure such insurance coverage and to charge same to you, which charges, together with a reasonable fee for expenses incurred by us in connection with such procurement, shall be payable by you immediately upon notice.

XV.    COVENANTS

       A.   Unless otherwise specified, the term you as used in this Paragraph XV shall include, collectively and individually, all officers, directors, managers, and holders of a beneficial interest of your securities, and of any corporation directly or indirectly controlling you, if you are a corporation, the general and limited partners (including any corporation and the officers, directors, and holders of a beneficial interest of your securities, of a corporation which controls, directly or indirectly, any general or limited partner), if you are a partnership, and all members if you are a limited liability company.

       B.   You covenant that during the term of this Agreement, except as otherwise approved in writing by us, you (if you are an individual), a shareholder of a beneficial interest of ten percent (10%) or more of your securities (if you are a corporation), a general partner of yours (if you are a partnership), a member (if you are a limited liability company) or your full-time manager approved by us shall devote full time, energy and best efforts to the management and operation of the Franchised Restaurant.  At all times during the term of this Agreement, the on-site day to day management and operation of the Franchised Restaurant shall be conducted by someone who has been approved by us and who has satisfactorily completed our training program.

       C.   You covenant that during the term of this Agreement, except as otherwise approved in writing by us, you will not, either directly or indirectly, for yourself, or through, on behalf of, or in conjunction with any person, persons, partnership, corporation or company:

            1.    Divert or attempt to divert any business or customer of the Franchised 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 Marks or the System.

            2.    Employ or seek to employ any person who is at that time employed by us, our affiliates, or by any other franchisee of ours, or otherwise directly or indirectly induce or seek to induce such person to leave his or her employment thereat.

            3.    Directly or indirectly, for yourself or through, on behalf of, or in conjunction with any person or entity, own, manage, operate, maintain, engage in, consult with or have any interest in: a) any restaurant business, b) any prepared food business, or c) any other business which sells or offers to dispense prepared food products the same as or similar to the type sold in the System.

                                          19

       D.   You specifically acknowledge that, pursuant to this Agreement, you will receive valuable training and confidential information, including, without limitation, information regarding our promotional, operational, sales and marketing methods and techniques and the System.  Accordingly, you covenant that, except as otherwise approved in writing by us, you will not, for a period of two (2) years after the expiration or termination of this Agreement, regardless of the cause of termination, or within two (2) years of the sale of the Franchised Restaurant or any interest in you, either directly or indirectly, for yourself, or through, on behalf of, or in conjunction with any person or entity, own, manage, operate, maintain, engage in, consult with or have any interest in: i) any restaurant business, ii) any prepared food business, or iii) any other business which sells or offers to dispense prepared food products the same as or similar to the type sold in the System:

            1.    At the premises of the former Franchised Restaurant;

            2.    Within a radius of ten (10) miles of the former Franchised Restaurant; or

            3.    Within a radius of ten (10) miles of the location of any other business using the System, whether franchised or owned by us or our affiliates.

       E.   You will not, at any time during or after the term of this Agreement, divulge to any person, partnership, corporation or any other entity any information, trade secrets, the ingredients, recipes, cooking techniques and processes, used in the Trade Secret Food Products, and other food and beverage products and Menu Items used in the System or any information stated in the Manuals.

       F.   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 Paragraph XV is held unreasonable or unenforceable by a court or agency having valid jurisdiction in an unappealed final decision to which we are a party, you will 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 stated in and made a part of this Paragraph XV.

       G.   You understand and acknowledge that we have the right, in our sole discretion, to reduce the scope of any covenant set forth in Paragraphs XV.C. and XV.D. in this Agreement, or any portion thereof, without your consent,





effective immediately upon receipt by you of written notice thereof, and you shall comply forthwith with any covenant as so modified, which shall be fully enforceable notwithstanding the provisions of Paragraph XXVI hereof.

       H.   We have the right to require all of your current and future shareholders, directors, officers, partners, members, managers and all personnel performing managerial or supervisory functions and all personnel receiving training from us to execute similar covenants in a form satisfactory to us.

XVI.   DEFAULT AND TERMINATION

       A.   If you are in substantial compliance with this Agreement and we materially breach this Agreement and fail to cure such breach within a reasonable time after written notice thereof is delivered to us, you may terminate this Agreement.  Reasonable time, as used herein, shall be construed as allowing us at least thirty (30) days within which to commence curing any such material breach.  Such termination shall be effective thirty (30) days after delivery to us of written notice that such breach has not been cured and you elect to terminate this Agreement.  An attempted termination of this Agreement by you except as provided in this Paragraph shall be deemed a termination without cause and a breach of this Agreement.

                                          20

       B.   This Agreement shall terminate automatically upon delivery of written notice of termination to you, if you or any shareholder, officer, partner, member or manager:

            1.    Fails to satisfactorily complete the training program, including the opportunity to provide an alternate manager, as provided in Paragraph IV of this Agreement;

            2.    Has made any material misrepresentation or omission in your application for the franchise;

            3.    Is convicted of or pleads no contest to a felony or other crime or offense that is likely to adversely affect your reputation, the Franchised Restaurant, or the goodwill associated with the Marks or System;

            4.    Makes any unauthorized use, disclosure or duplication of any portion of the Manuals or duplicates or discloses or makes any unauthorized use of any trade secret or confidential information provided to you by us;

            5.    Abandons or fails or refuses to actively operate the Franchised Restaurant for more than five (5) days in any twelve (12) month period or for more than two (2) consecutive business days in any twelve (12) month period, unless the Franchised Restaurant has been closed for a purpose approved by us or due to force majeure, or fails to relocate to approved premises within an approved period of time following expiration or termination of the lease for the premises of the Franchised Restaurant;

            6.    Surrenders or transfers control of the operation of the Franchised Restaurant, makes an unauthorized direct or indirect assignment of the franchise or an ownership interest in you or fails or refuses to assign the franchise or the interest in you of a deceased or disabled controlling owner thereof as herein required;

            7.    Submits to us on five (5) or more separate occasions at any time during the term of this Agreement or on two (2) or more separate occasions during any twelve (12) month period any reports or other data, information or supporting records which understate by more than two percent (2%) the Continuing Fees for any period of, or periods aggregating, three (3) or more months, and you are unable to demonstrate that such understatements resulted from inadvertent error;

            8.    Commits any affirmative act of insolvency, or files any petition or action of insolvency, or for appointment of a receiver or trustee, or makes any assignment for the benefit of creditors, or fails to vacate or dismiss within sixty (60) days after filing any such proceedings commenced against you by a third party;

            9.    Materially misuses or makes an unauthorized use of any Marks or commits any act which can reasonably be expected to materially impair the goodwill associated with any Marks;

            10.   Materially misuses or makes an unauthorized use of our Proprietary Software Program;

            11.   Fails on three (3) or more separate occasions within any period of twelve (12) consecutive months or eight (8) or more separate occasions at any time during the term of this Agreement to submit when due reports or other information or supporting records, to pay when due the Continuing Fees, advertising contributions, amounts due for purchases from us and our affiliates or other payments due to us and our affiliates, or otherwise fails to comply with this Agreement, whether or not such failures to comply are corrected;

                                          21

            12.   Continues after written notice from us and/or any governmental authority to violate any health, safety or sanitation law, ordinance or regulation or operates the Franchised Restaurant in a manner that presents a health or safety hazard to your customers or the public;





            13.   Fails to commence operations within nine (9) months after execution of this Agreement, or as otherwise required or approved in writing by us; or

            14.   Defaults under the lease, if any, for the Franchised Restaurant.

       C.   This Agreement shall terminate at our sole option without further action by us or notice to you if you or your owner:

            1.    Fails or refuses to make payments of any amounts due to us or our affiliates for Continuing Fees, advertising contributions, purchases from us or our affiliates or any other amounts due to us or our affiliates, and does not correct such failure or refusal within ten (10) days after written notice of such failure is delivered to you;

            2.    Fails or refuses to comply with any other provision of this Agreement, or any mandatory specification, standard or operating procedure prescribed in the Manuals or otherwise in writing, and does not correct such failure within thirty (30) days (or provide proof acceptable to us that you have made all reasonable efforts to correct such failure and will continue to make all reasonable efforts to cure until a cure is effected if such failure cannot reasonably be corrected within thirty (30) days) after written notice of such failure to comply is delivered to you.

            3.    Fails to devote your best efforts to adequately represent the Franchised Restaurant in your Designated Area through your sales and service efforts and does not correct such failure within thirty (30) days (or provide proof acceptable to us that you have made all reasonable efforts to correct such failure and will continue to make all reasonable efforts to cure until a cure is effected if such failure cannot reasonably be corrected within thirty (30) days) after written notice of such failure to comply is delivered to you.

       D.   To the extent that the provisions of this Agreement provide for periods of notice less than those required by applicable law, or provide for termination, cancellation, non-renewal or the like other than in accordance with applicable law, such provisions shall, to the extent such are not in accordance with applicable law, not be effective, and we will comply with applicable law in connection with each of these matters.

       E.   In addition to our right to terminate this Agreement, and not in lieu of such right or any other rights against you, we, in the event that you have not cured a default under this Agreement within the twenty (20) days after receipt of a written notice to cure from us, may, at our option, enter upon the premises of the Franchised Restaurant and exercise complete authority with respect to the operation of the Franchised Restaurant until such time as we determine that your default has been cured and that there is compliance with the requirements of this Agreement.  You specifically acknowledge that our designated representative may take over, control, and operate the Franchised Restaurant, and that you will pay us a service fee of not less than TWO HUNDRED Dollars ($200) per day plus all travel expenses, room and board and other expenses reasonably incurred by such representative so long as it shall be required by the representative to enforce compliance herewith.  You further acknowledge that if, as herein provided, we temporarily operate for you the Franchised Restaurant, you will indemnify, defend and hold us harmless and any representative of ours who may act hereunder, from any and all claims arising from the operation of the Franchised Restaurant, including without limitation, acts and omissions of us or our representatives.

                                          22

XVII.  RIGHTS AND DUTIES OF PARTIES UPON EXPIRATION OR TERMINATION

Upon termination or expiration, this Agreement and all rights granted hereunder to you will forthwith terminate, and:

       A.   You will immediately cease to operate the Franchised Restaurant under this Agreement, and shall not thereafter, directly or indirectly, represent to the public or hold yourself out as a present or former franchisee of ours.

       B.   Upon our demand, you will assign to us your interest in any lease then in effect for the Franchised Restaurant premises.

       C.   You will immediately and permanently cease to use, by advertising or in any manner whatsoever, any confidential methods, procedures, and techniques associated with the System; the Marks and distinctive forms, slogans, signs, symbols, logos, or devices associated with the System.  In particular, you will cease to use, without limitation, all signs, advertising materials, stationery, forms, and any other articles which display the Marks associated with the System.

       D.   You will take such action as may be necessary to cancel or assign to us or our designee, at our option, any assumed name rights or equivalent registration filed with state, city, or county authorities which contains the name Buffalo Wild Wings, bw-3 or any Mark, and you will furnish us with evidence satisfactory to us of compliance with this obligation within thirty (30) days after termination or expiration of this Agreement.

       E.   You will, in the event you continue to operate or subsequently begin to operate any other business, not use any reproduction, counterfeit, copy or colorable imitation of the Marks either in connection with such other business or the promotion thereof, which is likely to cause confusion, mistake or deception, or which is likely to dilute our exclusive rights in and to the Marks





and will not utilize any designation of origin or description or representation which falsely suggests or represents an association or connection with us so as to constitute unfair competition.  You will make such modifications or alterations to the premises of the Franchised Restaurant (including, without limitation, the changing of the telephone number) immediately upon termination or expiration of this Agreement as may be necessary to prevent any association between us or the System and any business thereon subsequently operated by you or others, and will make such specific additional changes thereto as we may reasonably request for that purpose, including, without limitation, removal of all distinctive physical and structural features identifying the System.  In the event you fail or refuse to comply with the requirements of this Paragraph XVII, we have the right to enter upon the premises where your Franchised Restaurant was conducted, without being guilty of trespass or any other tort, for the purpose of making or causing to be made such changes as may be required at your expense, which expense you will pay upon demand.

       F.   You will promptly pay all sums owing to us and our affiliates.  In the event of termination for any default, such sums will include all damages, costs, and expenses, including reasonable attorneys' fees, incurred by us as a result of the default.

       G.   You will pay to us all damages, costs and expenses, including reasonable attorneys' fees, incurred by us in obtaining injunctive or other relief for the enforcement of any provisions of this Agreement.

       H.   You will immediately return to us at your cost all Manuals, our Proprietary Software Program, customer lists, records, files, instructions, brochures, agreements, disclosure statements, and any and all other materials provided by us to you relating to the operation of the Franchised Restaurant (all of which are acknowledged to be our property).

                                          23

       I.   We will have the right, title and interest to any sign or sign faces bearing the Marks.  You hereby acknowledge our right to access the premises of the Franchised Restaurant if we elect to take possession of any sign or sign faces bearing the Marks.

       J.   You hereby acknowledge that all telephone numbers used in the operation of the Franchised Restaurant constitute assets of the Franchised Restaurant; and upon termination or expiration of this Agreement  you will assign to us or our designee, all right, title, and interest in and to your telephone numbers and will notify the telephone company and all listing agencies of the termination or expiration of your right to use any telephone number and any regular, classified or other telephone directory listing associated with the Marks and to authorize a transfer of same to or at our direction.

       K.   We will have the right (but not the duty), to be exercised by notice of intent to do so within sixty (60) days after termination or expiration, to purchase for cash any or all assets of the Franchised Restaurant, including leasehold improvements, equipment, supplies, and other inventory, advertising materials, and all items bearing the Marks, at your cost or fair market value, whichever is less.  You acknowledge that, pursuant to Paragraph XVII.I. of this Agreement, all signs and sign faces bearing the Marks are specifically excluded from this provision as such signs and sign faces are deemed to be our property. If the parties cannot agree on fair market value within a reasonable time, the determination of fair market value shall be determined by an appraiser selected by us and you.  If you and we cannot agree on a single appraiser, each party shall select one appraiser, who together will select a third appraiser and the fair market value will be the average of the three (3) independent appraisers. Each party will pay their own appraiser and the cost of the third appraiser will be shared equally by the parties.  If we elect to exercise any option to purchase as herein provided, we have the right to set off all amounts due from you under this Agreement, if any, against any payment therefor.

       L.   You will comply with the covenants contained in Paragraph XV of this Agreement.

XVIII. TRANSFERABILITY OF INTEREST

       A.   This Agreement and all rights hereunder can be assigned and transferred by us and, if so, shall be binding upon and inure to the benefit of our successors and assigns.

       B.   This Agreement, and your rights and obligations under it, are and shall remain personal to you.  The term Transfer shall mean any sale, assignment, gift, pledge, mortgage or any other encumbrance, transfer by bankruptcy, transfer by judicial order, merger, consolidation, share exchange, transfer by operation of law or otherwise, whether direct or indirect, voluntary or involuntary, of this Agreement or any interest in it, or any rights or obligations arising under it, or of any material portion of your assets, or of any interest in you.  You (and your shareholders, partners and members) will not directly or indirectly make a Transfer without our prior written consent.  We will not withhold our consent to a Transfer, subject to all of the following conditions being satisfied:

            1.    You are in full compliance with this Agreement, you have no uncured defaults, all your fees, debts and financial obligations to us, our affiliates and the Fund are current, and you are current in your required local advertising expenditures;

            2.    You execute a written agreement in a form satisfactory to us in which you and your owners covenant to observe all applicable post-term obligations and covenants contained in this Agreement;





            3.    The proposed transferee enters into a written agreement in a form satisfactory to us assuming and agreeing to discharge all of your obligations and covenants under this Agreement for the remainder of its term or, at our option, execute our then-current standard form of franchise agreement (which

                                          24

may provide for different fees, advertising requirements, duration, and other rights and obligations from those provided in this Agreement);

            4.    The proposed transferee agrees in writing to perform such maintenance, remodeling and re-equipping of the Restaurant that we determine necessary to bring the Restaurant in compliance with our then-current standards;

            5.    Prior to the date of the proposed Transfer, the proposed transferee's management team successfully completes such training and instruction as we deem necessary;

            6.    We are satisfied that the proposed transferee (and if the proposed transferee is an entity, all holders of any interest in such entity) meets all of the requirements for our new franchisees applicable on the date we receive notice of the proposed transfer and including, but not limited to, good reputation and character, business experience, restaurant management experience, and financial strength and liquidity;

            7.    You and all holders of an interest in you execute a general release, in the form prescribed by us, releasing, to the fullest extent permitted by law, all claims that you or any of your investors may have against us and our affiliates, including our and their respective shareholders, officers, directors and employees, in both their individual and corporate capacities;

            8.    You pay us a transfer fee equal to one-half (1/2) of the then-current Initial Franchise Fee; and

            9.    We waive our right of first refusal under Paragraph XX.

       C.   Application for our consent to a transfer and tender of the right of first refusal provided for in Paragraph XX, will be accompanied by the documents (including a copy of the proposed purchase or other transfer agreement) or other information required by us.  Any agreement used in connection with a transfer including a lease or management agreement, shall be subject to our prior written approval.

       D.   In the event you are a corporation, partnership, limited liability company or other entity, any transfer of stock (or other form of ownership interest) constituting a controlling interest in you will be subject to the consent, right of first refusal, transfer fee and all other applicable provisions of this Agreement.  For purposes of this Paragraph XVIII, any change in the percentage you owned, directly or indirectly, by any person or entity who directly or indirectly owns an interest in you (including any addition or deletion of any such person or entity) which results in a change in forty-nine percent (49%) or more of your ownership or any series of changes in the percentage you owned, directly or indirectly, by any such person or entity (including any addition or deletion of any such person or entity) which results within a period of three (3) years in any change in forty-nine percent (49%) or more of your ownership shall be deemed a transfer of a controlling interest in you.  Any individual transfer of an interest less than a controlling interest in you or the Franchised Restaurant must have our prior written consent, which will not be unreasonably withheld, but will not be subject to our right of first refusal or the payment of the transfer fee.  You will however, reimburse us for its out-of-pocket expenses incurred in approving the transfers including our attorneys' fees.  Any person who acquires any interest in you, this Agreement or the Franchised Restaurant must execute the Owner Agreement attached as EXHIBIT A to this Agreement.

       E.   You will not, without our prior written consent, place in, on or upon the location of the Franchised Restaurant, or in any communication media, any form of advertising, or list with any business, real estate broker, agent, or attorney any information relating to the sale of the Franchised Restaurant or the rights granted hereunder.

                                          25

XIX.   YOUR DEATH OR INCAPACITY

       A.   In the event of your death or incapacity, or the death or incapacity of any partner, any shareholder owning fifty percent (50%) or more of your capital stock, or any Member who owns a majority interest in a limited liability company, the heirs, beneficiaries, devisees, or legal representatives of said individual, partner or shareholders shall, within one hundred eighty (180) days of such event:

            1.    Apply to us for the right to continue to operate the franchise for the duration of the term of this Agreement and any renewals hereof, which right shall be granted upon the fulfillment of all of the conditions set forth in Paragraph XVIII. of this Agreement (except that no transfer fee shall be required); or

            2.    Sell, assign, transfer, or convey your interest in compliance with the provisions of Paragraphs XVIII and XX of this Agreement; provided,





however, in the event a proper and timely application for the right to continue to operate has been made and rejected, the one hundred eighty (180) days to sell, assign, transfer or convey shall be computed from the date of said rejection.  For purposes of this Paragraph, our silence on an application made pursuant to Paragraph XIX.A.1. through the one hundred and eighty (180) days following the event of death or incapacity shall be deemed a rejection made on the last day of such period.

       B.   In the event of the death or incapacity of an individual franchisee, or any partner or shareholder of you which is a partnership or corporation, where the aforesaid provisions of Paragraph XVIII have not been fulfilled within the time provided, all rights licensed to you under this Agreement shall, at our option, terminate forthwith and we will have the option to purchase the assets of the Franchised Restaurant in accordance with Paragraph XVII.K. herein.

XX.    RIGHT OF FIRST REFUSAL

       If you or your owners propose to sell the Franchised Restaurant (or its assets) or a controlling interest in the ownership of you as defined in Paragraph XVIII, you or your owners will obtain and deliver a bona fide, executed written offer to purchase same to us, which shall, for a period of thirty (30) days from the date of delivery of such offer to us, have the right, exercisable by written notice to you or your owners, to purchase the Franchised Restaurant, (its assets) or an ownership interest in you for the price and on the terms and conditions contained in such offer, provided that we may substitute cash for any form of payment proposed in such offer.  If we do not exercise this right of first refusal, you may accept the offer, subject to our prior written approval, as provided in Paragraph XVIII hereof, provided that if such offer is not so accepted within six (6) months of the date thereof, we will again have the right of first refusal herein described.

XXI.   OPERATION IN THE EVENT OF ABSENCE, DISABILITY OR DEATH

       In order to prevent any interruption of the Franchised Restaurant which would cause harm to the Franchised Restaurant and thereby depreciate the value thereof, you authorize us, in the event that you are absent or incapacitated by reason of illness or death and are not, therefore, in our sole judgment, able to operate the Franchised Restaurant, to operate the Franchised Restaurant for so long as we deem necessary and practical, and without waiver of any other rights or remedies we may have under this Agreement.  Provided, however, that we shall not be obligated to so operate the Franchised Restaurant.  All monies from the operation of the business during such period of operation by us shall be kept in a separate account and the expenses of the Franchised Restaurant, including reasonable compensation and expenses for our representative, shall be charged to said account.  If, as herein provided, we temporarily operate for you the Franchised Restaurant, you will indemnify and hold us harmless and any representative of ours who may act hereunder, from any and all claims arising from

                                          26

the operation of the Franchised Restaurant, including, without limitation, our acts and omissions and acts and omissions of our representatives.

XXII.  INDEPENDENT CONTRACTOR AND INDEMNIFICATION

       A.   This Agreement does not make, appoint or constitute you as our agent, legal representative, joint venturer, partner, employee, or servant for any purpose whatsoever.  You cannot represent to third parties that you are our agent and it is understood between the parties that you will be an independent contractor who is in no way authorized to make any contract, agreement, warranty or representation on our behalf, or to create any obligation, express or implied, on our behalf.  As an independent entrepreneur, you are solely responsible for the control,  management and day-to-day operation of the Franchised Restaurant, including but not limited to, such matters as determining the prices at which you will offer and sell approved products and services, hiring and discharging your employees and setting and paying wages and benefits of your employees and that we will have no power, responsibility or liability with respect to such pricing, hiring, discharging, setting and paying of wages or related matters.  All standards of quality and performance, including those listed in Paragraph XII, are established to promote and protect the value of the Marks and the System and to insure optimum quality control as to products and services.  You alone are responsible for the food production and preparation at the Franchised Restaurant.

       B.   You will prominently display, by posting of a sign within public view, on or in the premises of the Franchised Restaurant, a statement that clearly indicates that the Franchised Restaurant is independently owned and operated by you as a franchisee and not as an agent.

       C.   You agree to indemnify, defend and hold us and our affiliates harmless from and against any and all claims, losses, damages and liabilities, however caused, arising directly or indirectly from, as a result of, or in connection with, the use and operation of the Franchised Restaurant, as well as the costs, including attorneys' fees, of defending against them (hereinafter are Franchise Claims).  Franchise Claims include, but are not limited to, those arising from any death, personal injury or property damage (whether caused wholly or in part through our active or passive negligence), latent, or other defects in the Franchised Restaurant, or your employment practices.  In the event a Franchise Claim is made against us, we reserve the right in our sole discretion to select our own legal counsel to represent our interests and you will reimburse us for our attorneys' fees immediately upon our request as they are incurred.





XXIII. MISCELLANEOUS

       A.   Our failure to exercise any power reserved to us hereunder, or to insist upon strict compliance by you with any obligation or condition hereunder, and any custom or practice of the parties in variance with the terms hereof, shall not constitute a waiver of our right to demand exact compliance with the terms hereof.  Our waiver of any default by you shall not be binding unless in writing and executed by us and shall not affect or impair our right with respect to any subsequent default of the same or of a different nature.

       B.   Any and all notices required or permitted under this Agreement shall be in writing and shall be personally delivered, mailed by certified mail, return receipt requested, or sent overnight courier to the respective parties at the following addresses unless and until a different address has been designated by written notice to the other party:

Notices to Us:    bw-3 FRANCHISE SYSTEMS, INC.                   1919 Interchange Tower                   600 South Highway 169                   Minneapolis, Minnesota 55426

                                          27

Copy to           Mary Beth Brody, Esq.                   Fredrikson & Byron, P.A.                   1100 International Centre                   900 Second Avenue South                   Minneapolis, MN 55402

Notices to You:   At the address specified on Page 1 of this Agreement.

Copy to:                   -------------------------------

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

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

Any notice by certified mail shall be deemed to have been given at the date and time of mailing.  If you fail to provide us with written notice of alleged breach of this Agreement or any other legal claims within one (1) year from the date that you have knowledge of or becomes aware of such breach or grounds for claim, then the alleged breach or claim shall be deemed waived.

       C.   In the event either party brings an action to enforce the terms of this Agreement or to enjoin the violation of any of its terms and prevails, such party shall be entitled to recover all litigation costs including attorneys' fees.

       D.   This Agreement and the Exhibits attached shall be construed together and constitute the entire, full and complete agreement between the parties concerning the subject matter hereof, and supersede all prior agreements.  No other representation has induced you to execute this Agreement, and there are no representations, inducements, promises, or agreements, oral or otherwise, between the parties not embodied herein, which are of any force or effect with reference to this Agreement or otherwise.  No amendment, change or variance from this Agreement shall be binding on either party unless executed in writing, signed by both parties.

       E.   Each Paragraph, part, term and/or provision of this Agreement shall be considered severable, and if, for any reason, any Paragraph, 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, such shall not impair the operation of or affect the remaining portions, sections, parts, terms and/or provisions of this Agreement, and the latter will continue to be given full force and effect and bind the parties hereto; and said invalid sections, parts, terms and/or provisions shall be reformed to most nearly implement the intentions of the parties hereto or, if reformation is not possible, be deemed not part of this Agreement; provided, however, that if we determine that said finding of illegality adversely affects the basic consideration of this Agreement, we may, at our option, terminate this Agreement.  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 you and us and such of their respective successors and assigns as may be contemplated by this Agreement, any rights or remedies under or by reason of this Agreement.

XXIV.  APPLICABLE LAW

       A.   THIS AGREEMENT TAKES EFFECT UPON ITS ACCEPTANCE AND EXECUTION BY US, AND SHALL BE INTERPRETED AND CONSTRUED UNDER THE LAWS OF THE STATE IN WHICH THE FRANCHISED RESTAURANT IS LOCATED, EXCEPT TO THE EXTENT GOVERNED BY THE UNITED STATES TRADEMARK ACT OF 1946 (LANHAM ACT, 15, U.S.C. SECTIONS 1051 ET SEQ).  YOU AGREE THAT ANY DISPUTES BETWEEN YOU AND US, bw-3, INC. OR OUR OTHER AFFILIATES SHALL ALSO BE CONSTRUED UNDER THE LAWS OF THE STATE IN WHICH THE FRANCHISED RESTAURANT IS LOCATED.

                                          28

       B.   ANY ACTION SOUGHT TO BE BROUGHT BY EITHER PARTY OR ANY ACTION BROUGHT BY YOU AGAINST OUR PARENT OR OTHER AFFILIATE, SHALL BE BROUGHT IN THE UNITED STATES DISTRICT COURT OR THE STATE DISTRICT COURT IN THE STATE IN WHICH





OUR COMPANY HEADQUARTERS ARE LOCATED.  AS OF THE DATE OF THIS AGREEMENT, THE LOCATION IS HENNEPIN COUNTY, MINNESOTA.  THE PARTIES DO HEREBY WAIVE ALL QUESTIONS OF PERSONAL JURISDICTION OR VENUE FOR THE PURPOSES OF CARRYING OUT THIS PROVISION.

       C.   NO RIGHT OR REMEDY CONFERRED UPON OR RESERVED TO US OR YOU 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.

       D.   NOTHING HEREIN CONTAINED SHALL BAR OUR RIGHT TO OBTAIN INJUNCTIVE RELIEF AGAINST THREATENED CONDUCT THAT WILL CAUSE US LOSS OR DAMAGES, UNDER THE USUAL EQUITY RULES, INCLUDING THE APPLICABLE RULES FOR OBTAINING RESTRAINING ORDERS AND PRELIMINARY INJUNCTIONS.

XXV.   DISPUTE RESOLUTION

       A.   The parties have entered into this Agreement in good faith and in the belief that it is mutually advantageous to them.  It is with that same spirit of cooperation that they pledge to attempt to resolve any dispute amicably without the necessity of litigation.  Accordingly, they agree that except as set forth below, if any dispute arises between them relating to this Agreement that prior to the commencement of any legal action to interpret or enforce this Agreement, they will first use the procedures specified in this Section.

       B.   The party seeking to initiate the procedure shall give written notice to the other party, describing in general terms the nature of the dispute, the claim for relief and identifying one or more individuals with authority to settle the dispute on such party's behalf.  The party receiving such notice shall have ten (10) business days within which to designate by written notice one or more individuals with authority to settle the dispute on such party's behalf.

       C.   The authorized individuals shall be entitled to make such investigation of the dispute as they deem appropriate, but agree to meet promptly, and in no event later than thirty (30) days from the date of the initial written notice, to discuss resolution of the dispute.  The authorized individuals shall meet at such times and places and with such frequency as they may agree.  If the dispute has not been resolved within thirty (30) days from the date of their initial meeting, the parties shall cease direct negotiations and shall submit the dispute to mediation in accordance with the following procedure.

       D.   The authorized individuals shall have five (5) business days from the date they cease direct negotiations to submit to each other a written list of acceptable qualified mediators not affiliated with any of the parties. Within five (5) days from the date of receipt of such list, the authorized individuals shall rank the mediators in numerical order of preference and exchange such rankings.  If one or more names are on both lists, the highest ranking person shall be designated as the mediator.  If no mediator has been selected under this procedure, the parties agree jointly to request the local administrative judge of the County in which our corporate headquarters are situated to supply within ten (10) business days a list of potential qualified mediators.  Within five (5) business days of receipt of the list, the parties shall again rank the proposed mediators in numerical order of preference and shall simultaneously exchange such lists and shall select as the mediator the individual

                                          29

receiving the highest combined ranking.  If such mediator is not available to serve, they shall proceed to contact the mediator who was next highest in ranking until they are able to select a mediator.

       E.   In consultation with the mediator selected, the parties shall promptly designate a mutually convenient time and place for the mediation, and unless circumstances require otherwise, such time is to be not later than forty-five (45) days after selection of the mediator.  In the event any party to this Agreement has substantial need for information in the possession of another party to this Agreement in order to prepare for the mediation, all parties shall attempt in good faith to agree on procedures for the expeditious exchange of such information, with the help of the mediator if required.  At least seven (7) days prior to the first scheduled session of the mediation, each party shall deliver to the mediator and to the other party a concise written summary of its views on the matter in dispute, and such other matters required by the mediator. The mediator may also request that a confidential issue paper be submitted to him by each party.

       F.   In the mediation, each party shall be represented by an authorized individual and may be represented by counsel.  In addition, each party may, with permission of the mediator, bring such additional persons as are needed to respond to questions, contribute information and participate in the negotiations.

       G.   The mediator shall determine the format for the meetings, designed to assure that both the mediator and the authorized individuals have an opportunity to hear an oral presentation of each party's views on the matter in dispute, and that the authorized parties attempt to negotiate a resolution of the matter in dispute, with or without the assistance of counsel or others, but with the assistance of the mediator.  To this end, the mediator is authorized to conduct both joint meetings and separate private caucuses with the parties.  The mediation session shall be private.  The mediator will keep confidential all information learned in private caucus with any party unless specifically





authorized by such party to make disclosure of the information to the other party.  The parties agree to sign a document agreeing that the mediator shall be governed by the provisions of the local Rules of Civil Procedure and such other rules as the mediator shall prescribe.  The parties commit to participate in the proceedings in good faith with the intention of resolving the dispute, if at all possible.

       H.   The parties agree to participate in the mediation procedure to its conclusion.  The mediation shall be terminated (i) by the execution of a settlement agreement by the parties, (ii) by a declaration of the mediator that the mediation is terminated, or (iii) by a written declaration of a party to the effect that the mediation process is terminated at the conclusion of one full day's mediation session.  Even if the mediation is terminated without a resolution of the dispute, the parties agree not to terminate negotiations and not to commence any legal action or seek other remedies prior to the expiration of five (5) days following the mediation.  The fees and expenses of the mediator shall be shared equally by the parties.  The mediator shall be disqualified as a witness, consultant, expert or counsel for any party with respect to the dispute and any related matters.

       I.   Mediation is a compromise negotiation for purposes of the Federal and State Rules of Evidence and constitutes privileged communication.  The entire mediation process is confidential, and no stenographic, visual or audio record shall be made.  All conduct, statements, promises, offers, views and opinions, whether oral or written, made in the course of the mediation by any party, by their agents, employees, representatives or other invitees and by the mediator are confidential and shall, in addition and where appropriate, be deemed to be privileged.  Such conduct, statements, promises, offers, views and opinions shall not be discoverable or admissible for any purposes, including impeachment, in any litigation or other proceeding involving the parties, and shall not be disclosed to anyone not an agent, employee, expert, witness, or representative of any of the parties;  provided however, that evidence otherwise discoverable or admissible is not excluded from discovery or admission as a result of its use in the mediation.

                                          30

       J.   Nothing herein contained shall bar our right to seek and obtain temporary injunctive relief from a court of competent jurisdiction in accordance with applicable law against any conduct or threatened conduct by you which could impair the goodwill associated with the Marks.

       K.   The parties (and their respective owners) agree to waive, to the fullest extent permitted by law, the right to or claim for any punitive or exemplary damages against the other and agree that in the event of a dispute between them, each will be limited to the recovery of actual damages sustained.

XXVI.  OWNER AGREEMENT

       The franchisee (you) includes all persons who succeed to the interest of the original franchisee by permitted transfer or operation of law and shall be deemed to include not only the individual or entity described in the introductory paragraph of this Agreement but shall also include all partners if you are a partnership, all shareholders if you are a corporation and all members if you are a limited liability company.  By their signatures hereto, all of your officers, partners, members and managers acknowledge and accept the duties and obligations imposed upon each of them, individually, by the terms of this Agreement.  All partners, all shareholders, or all members, as the case may be, and your restaurant manager must execute the Owner Agreement attached as EXHIBIT A and made a part hereof.

XXVII. ACKNOWLEDGEMENTS

       A.   You acknowledge that the success of the business venture contemplated to be undertaken by you by virtue of this Agreement is speculative and depends, to a large extent, upon your ability as an independent businessperson, and your participation in the daily affairs of the business as well as other factors.  We do not make any representation or warranty, express or implied, as to the potential success of the business venture contemplated hereby.

       B.   You acknowledge that other of our franchisees have been or will be granted franchises at different times and in different situations, and further acknowledges that the provisions of such franchises may vary substantially from those contained in this Agreement.

       C.   You represent and acknowledge that you have received, read and understood this Agreement and our Uniform Franchise Offering Circular, and that we have fully and adequately explained the provisions of each to your satisfaction, and that we have accorded you ample time and opportunity to consult with advisors of your own choosing about the potential benefits and risks of entering into this Agreement.

       D.   You and each agent signing on your behalf acknowledge that the officers, partners, members and/or managers who are signing this Agreement on your behalf are authorized to execute the Agreement and bind you to its terms.

                                          31

       E.   It is contemplated that the parties may execute this Agreement on different dates.  The date of execution and the commencement of the term of this Agreement shall take place on the date this Agreement is executed by us.





       IN WITNESS WHEREOF, the parties hereto, intending to be legally bound hereby, have duly executed and delivered this Agreement in duplicate the day and year first above written.

                                    FRANCHISOR:

ATTEST:                             BW-3 FRANCHISE SYSTEMS, INC.

                                    By - ------------------------------        ------------------------------------------ Witness                                     Its                                         ----------------------------------------

                                    FRANCHISEE:

ATTEST:                                     --------------------------------------------

                                    By - ------------------------------        ------------------------------------------ Witness                                     Its                                         ----------------------------------------

ATTEST:

                                    By - ------------------------------        ------------------------------------------ Witness                                     Its                                         ----------------------------------------

                                          32

                                     EXHIBIT A

                                 BUFFALO WILD WINGS                                   OWNER AGREEMENT

       As a condition to the granting by bw-3 Franchise Systems, Inc. (we or us) of an Area Development Agreement and/or one or more Franchise Agreements executed (collectively the Agreements) providing certain rights relating to Buffalo Wild Wings Restaurants (the Restaurants) to ________________________ ________________ (Franchisee), each of the undersigned individuals (you), who constitute each beneficial holder of an interest in the Franchisee, covenants and agrees to be bound by the terms and restrictions of this Agreement (Agreement):

       1.   ACKNOWLEDGMENTS.  Each of you, jointly and severally, represents and warrants to us:

            A.    That you are the holders of all equity, voting and other interests in Franchisee and/or all options, warrants and rights to acquire an interest in Franchisee and that the address and telephone number set forth next to your name below are accurate and complete and you will immediately advise us of any change in the information and we may use or distribute the same as required by law, including in our Uniform Franchise Offering Circular;

            B.    That Franchisee is a corporation, limited liability company or partnership, duly organized, validly existing and in good standing under the laws of the State of ____________________, and that Franchisee is qualified to do business in the state where the Restaurant(s) are to be located;

            C.    It is a condition to the granting of the franchise to Franchisee that you enter into this Agreement and we have entered into the Agreements in reliance upon your agreement to do so, and will continue to do so;

            D.    That, as Franchisee's owners, you have received adequate consideration to support your execution of this Agreement.

       2.   CONFIDENTIALITY AND NON-COMPETITION AGREEMENTS.

            A.    IN TERM COVENANT NOT-TO-COMPETE.  Each of you agrees that during the period Franchisee operates any Buffalo Wild Wings and/or bw-3 Restaurants, or has any beneficial interest therein, or holds any rights to develop one or more such Restaurants (including all renewal periods) you shall not directly or indirectly on your own account or as an employee, consultant, partner, officer, director, shareholder or member of any person, firm, entity, partnership, corporation or company, own, operate, lease franchise, engage in, be connected with, have any interest in, or assist any person or entity engaged in:  1) any restaurant business, 2) any prepared food business, or 3) any other business which sells prepared food products the same or similar as the type sold in our System.

            B.    POST TERM COVENANT NOT-TO-COMPETE.  Each of you agrees that





for a two-year period after Franchisee ceases to have any interest in any Restaurants or any rights to develop Restaurants, regardless of the reasons such interest ceases or terminates, you will not directly or indirectly on your own account or as an employee, consultant, partner, officer, director, shareholder or member of any person, firm, entity, partnership, corporation or company, own operate, lease franchise, engage in, be connected with, have any interest in, or assist any person or entity engaged in:  1) any restaurant business, 2) any prepared food business, or 3) any other business which sells prepared food products the same or similar as the type sold in our System; which is located at or within a ten (10) mile radius of your former Franchised Restaurant or any Buffalo Wild Wings or bw-3 Restaurant.

                                          33

            C.    APPROPRIATION AND DISCLOSURE OF INFORMATION.  Except as permitted under the Agreements, you will not at any time use, copy or duplicate the System or any aspect thereof, or any of our trade secrets, recipes, methods of operation, processes, formulas, advertising, marketing, designs, plans, software, programs, know-how or other proprietary ideas or information, nor will you convey, divulge, make available or communicate such information to any third party or assist others in using, copying or duplicating any of the foregoing.

            D.    INFRINGEMENT; VALIDITY OF MARKS AND COPYRIGHTS; REGISTRATIONS. You will not at any time commit any act that would infringe upon or impair the value of the System or the Marks, nor will you engage in any business or market any product or service under a name, mark, or design that is confusingly or deceptively similar to any of the Marks.  You agree that you will not, at any time directly or indirectly challenge or contest the validity of, or take any action to jeopardize our rights in or ownership of, any of the Marks or any registration of a Mark or any copyrighted work.  If you violate this provision, we shall be entitled to all equitable, monetary, punitive and any other relief that may be available under applicable law, as well as the recovery of all costs, expenses and attorneys' fees incurred by us as a result of such violation.

            E.    SOLICITATION OF EMPLOYEES.  You agree that from and after the date hereof, you will not solicit, entice, induce to leave employment or hire directly or indirectly, any person who has been employed by us or by our affiliates or franchisees within the previous twelve (12) month period.

            F.    TRADE SECRETS AND CONFIDENTIAL INFORMATION.  You understand and agree that we have disclosed or may disclose to you certain confidential or proprietary information and trade secrets.  Except as necessary in connection with the operation of the Restaurant and as approved by us, you shall not, at any time (during or after term), regardless of the cause of termination, directly or indirectly, use for your own benefit or communicate or divulge to, or use for the benefit of any other person or entity, any trade secrets, confidential information, knowledge or know-how concerning the recipes, food products, advertising, marketing, designs, plans, software, programs or methods of operation of the Restaurant or the System.  You shall disclose to your employees only such confidential, proprietary or trade secret information as is necessary to operate your business hereunder and then only while this Agreement is in effect.  Any and all information, knowledge, or know-how, including without limitation, drawings, materials, equipment, marketing, recipes and other data, that we designate under the Agreements as secret or confidential shall be deemed secret and confidential for purposes of this Agreement.

            G.    REASONABLENESS OF SCOPE AND DURATION.  You agree that the covenants and agreements contained in Section 2 are, taken as a whole, reasonable with respect to the activities covered and their geographic scope and duration, and no party shall raise any issue of the reasonableness of the areas, activities or duration of any such covenants in any proceeding to enforce any such covenants.  Each of you acknowledge and agree that you have other skills and resources and that the restrictions contained in this Section will not hinder your activities or ability to make a living either under the Agreement or in general.

            H.    ENFORCEABILITY.  Each of you agree that we may not be adequately compensated by damages for a breach of any of the covenants and agreements contained herein, and that we shall, in addition to all other remedies, be entitled to injunctive relief and specific performance.  The covenants and agreements contained in this Section 2 shall be construed as separate covenants and agreements, and if any court shall finally determine that the restraints provided for in any such covenants and agreements are too broad as to the area, activity or time covered, said area, activity or time covered may be reduced to whatever extent the court deems reasonable, and such covenants and agreements shall be enforced as to such reduced area, activity or time.  To the extent required by the laws of the state in which the Restaurant is located, the duration or the geographic areas included within the foregoing covenants, or both, shall be deemed amended in accordance with Section 2.

                                          34

       3.   GUARANTY.

            A.    GUARANTY.  Each of you personally and unconditionally guaranty to us and to our parent and other affiliates, as well as any of their successors or assigns, the punctual payment when due of all sums, indebtedness and liabilities of every kind and nature that Franchisee may now or in the future owe to any of us (including interest, and all attorneys' fees, costs and expenses incurred by any of us in collection).





            B.    COVENANTS AND ACKNOWLEDGMENTS.  Each of you covenant and agree that: (1) liability under this guaranty shall be joint and several; (2) that this is a guaranty of payment and not of collection and you shall render any payment required under the Agreements or this guaranty upon demand; (3) this guaranty shall extend to all amounts you may now or in the future owe to any of us, whether pursuant to the Agreements, another agreement with us or otherwise; (4) your liability under this guaranty shall not be contingent or conditioned upon pursuit by us of any remedies against Franchisee or any of you; (5) your liability hereunder shall not be diminished, relieved, or otherwise affected by any extension of time, credit, or other indulgence or waiver that we may from time to time grant to Franchisee or to any of you, including, without limitation, the acceptance of partial payment or performance, the compromise or release of any claims, the release of any other guarantor, or our consent to any transfer or assignment of the franchise or any interest therein and expressly reserve all rights that we may have against you.

            C.    TERM OF GUARANTY.  This guaranty and your obligations under it shall continue in effect so long as you operate any Buffalo Wild Wing Restaurant or hold any beneficial interest therein and for a one (1) year period thereafter.  Further, this guaranty shall be extended during any period in which (1) any of us is involved in any judicial or administrative process with Franchisee or any of you (i) to collect any amounts owed us by you, or (ii) to enforce the terms of this guaranty, or (2) any bankruptcy or similar proceeding involving Franchisee or any of you.  Your obligations under this guaranty shall remain in full force and effect without regard to, and shall not be released, discharged or in any way modified or affected by, any circumstance or condition of Franchisee (whether or not you shall have any knowledge or notice thereof), including, without limitation, bankruptcy, insolvency, reorganization, composition, liquidation or similar proceeding or any action taken by any trustee or receiver or by any court in any such proceeding.

            D.    WAIVERS.  Each of you waives notice of demand, notice of protest, nonpayment or default, and all other notices to which Franchisee or you may be entitled, and all suretyship and guarantor's defenses generally and any and all other notices and legal or equitable defenses to which you may be entitled.  You waive all exemptions to which you may now or hereafter be entitled under the laws of this or any other state or of the United States.  You waive any right that you may have to require that an action be brought against Franchisee or any other payments and claims for reimbursement or subrogation that you may have against Franchisee arising as a result of your execution and performance of this guaranty.

            E.    ASSIGNMENT.  This guaranty is personal to you and the obligations and duties imposed in it may not be delegated or assigned; provided, this guaranty shall be binding upon your successors, assigns, estates and personal representatives.  This guaranty shall inure to our benefit, and the benefit of our affiliates, successors and assigns.

            F.    ENFORCEMENT.  If any one or more provisions in this guaranty shall for any reason be held to be invalid, illegal, or unenforceable in any respect, such invalidity, illegality or unenforceability shall not affect any other provision hereof and this guaranty shall be construed to bind you to the maximum extent permitted by law that is subsumed within the terms of such provision as though it were separately articulated herein.

                                          35

       4.   COVENANT NOT TO TRANSFER INTERESTS.  The Agreements, and your rights and obligations under them, are and shall remain personal to you.  Any proposed transfer by you (regardless of the form of transfer) shall be subject to the same terms and conditions contained in the Franchise Agreement.  As used herein, the term Transfer shall mean any sale, assignment, gift, pledge, mortgage or any other encumbrance, transfer by bankruptcy, transfer by judicial order, merger, consolidation, share exchange, transfer by operation of law or otherwise, whether direct or indirect, voluntary or involuntary, of the Agreements or any interest in any of them or any rights or obligations arising under them, or of any material portion of the business assets, or of any interest in the Franchisee.  Each of you agree and covenant that you will not at any time during which Franchisee is a Buffalo Wild Wings/bw-3 franchisee and/or developer, directly or indirectly, voluntarily or involuntarily, make any Transfer, unless you first obtain our written approval in compliance with the same provisions applicable to a transfer by you as set forth in the Agreements. You shall cause all stock certificates (or other documents evidencing an interest or right to acquire an interest) issued by Franchisee to bear a legend indicating that such stock (or other documents) is subject to the restrictions provided for in the applicable Agreement.

       5.   MISCELLANEOUS.

            A.    CAPITALIZED TERMS.  For purposes of this Agreement, all capitalized terms shall have the same meaning as those terms are defined in the Franchise Agreement.

            B.    DISPUTES.  Disputes under this Agreement shall be resolved in the same manner as provided under the Franchise Agreement.  You expressly acknowledge that the provisions of the Franchise Agreement pertaining to mediation, venue, applicable law, time periods and limitations govern any disputes between us and you.

       IN WITNESS WHEREOF, each of you have signed this Agreement on the date set forth opposite your signature.

Signature:                                      Date:           --------------------------                 -------------------





Name:      ------------------------------- Address:         ----------------------------

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

- ------------------------------------ Percentage Interest:                     ----------

Signature:                                      Date:           --------------------------                 ------------------- Name:      ------------------------------- Address:         ----------------------------

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

- ------------------------------------ Percentage Interest:                     ----------

Signature:                                      Date:           --------------------------                 ------------------- Name:      ------------------------------- Address:         ----------------------------

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

- ------------------------------------ Percentage Interest:                     ---------- Signature:                                      Date:           --------------------------                 -------------------

                                          36

Name:      ------------------------------- Address:         ----------------------------

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

- ------------------------------------ Percentage Interest:                     ----------

Signature:                                      Date:           --------------------------                 ------------------- Name:      ------------------------------- Address:         ----------------------------

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

- ------------------------------------ Percentage Interest:                     ----------

TO BE COMPLETED IF MANAGER IS NOT AN OWNER.

I represent and acknowledge that I am the Manager of a Restaurant and that I agree to be bound by the provisions of Section 2 of this Agreement.

MANAGER

Signature:                                      Date:           --------------------------                 ------------------- Name:      ------------------------------- Address:         ----------------------------

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

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

                                          37

                                     EXHIBIT B





                           DESCRIPTION OF DESIGNATED AREA

FRANCHISOR:                               FRANCHISEE:

BW-3 FRANCHISE SYSTEMS, INC.                                           ------------------------------------

By                                        By   ----------------------------------        ----------------------------------

   Its                                       Its        -----------------------------            ------------------------------

                                          By                                             ----------------------------------

                                             Its                                                 ------------------------------

                                          38

                                     EXHIBIT C                                  ADDENDUM TO LEASE

       THIS ADDENDUM TO LEASE, dated ______________, 199__, is entered into by and between _______________________(Lessor), and __________________________ (Lessee).

       RECITALS:

       A.   The parties hereto have entered into a certain Lease Agreement, dated _____________, 199__, and pertaining to the premises located at _________ __________________________________ (the Lease).

       B.   Lessor acknowledges that Lessee intends to operate a Restaurant from the leased premises (the Premises) pursuant to a Franchise Agreement (the Franchise Agreement) with bw-3 Franchise Systems, Inc. (bw-3) under the name Buffalo Wild Wings or other name designated by bw-3 (Franchised Restaurant).

       C.   The parties now desire to amend the Lease in accordance with the terms and conditions contained herein.

       AGREEMENT:

       NOW, THEREFORE, it is hereby mutually covenanted and agreed between Lessor and Lessee as follows:

       1.   REMODELING AND DECOR.  Lessor agrees that Lessee shall have the right to remodel, equip, paint and decorate the interior of the Premises and to display such proprietary marks and signs on the interior and exterior of the Premises as Lessee is reasonably required to do pursuant to the Franchise Agreement and any successor Franchise Agreement under which Lessee may operate a Franchised Restaurant on the Premises.

       2.   ASSIGNMENT.  Lessee shall have the right to assign all of its right, title and interest in the Lease to bw-3 or any affiliate of bw-3 at any time during the term of the Lease, including any extensions or renewals thereof, without first obtaining Lessor's consent.  However, no assignment shall be effective until such time as bw-3 or its designated affiliate gives Lessor written notice of its acceptance of such assignment, and nothing contained herein or in any other document shall constitute bw-3 or its designated affiliate a party to the Lease, or  guarantor thereof, and shall not create any liability or obligation of bw-3 or any affiliate of bw-3 unless and until the Lease is assigned to, and accepted in writing by, bw-3 or its designated affiliate.  In the event of an assignment, Lessee shall remain liable under the terms of the Lease.

       3.   DEFAULT AND NOTICE.

            (a)   In the event there is a default or violation by Lessee under        the terms of the Lease, Lessor shall give Lessee and bw-3 written notice        of such default or violation within a reasonable time after Lessor        receives knowledge of its occurrence.  bw-3 will notify Lessor whether it        intends to cure the default and take an automatic assignment of Lessee's        interest as provided in Paragraph 4(a).  bw-3 will have an additional        fifteen (15) days in which to cure the default or violation.

            (b)   All notices to bw-3 shall be sent by registered or certified        mail, postage prepaid, to the following address:

                  bw-3 Franchise Systems, Inc.                   1919 Interchange Tower                   600 South Highway 169                   Minneapolis, MN 55426





                                          39

                  Attention: Chief Financial Officer bw-3 may change its address for receiving notices by giving Lessor written notice of such new address.  Lessor agrees that it will notify both Lessee and bw-3 of any change in Lessor's mailing address to which notices should be sent.

       4.   TERMINATION OR EXPIRATION.

            (a)   Upon the expiration or termination of either the Lease or the        Franchise Agreement, bw-3 will, at its option, have the right (but not        the requirement) to take an automatic assignment of Lessee's interest.

            (b)   Upon the expiration or termination of either the Lease or the        Franchise Agreement, Landlord will cooperate with and assist us in        gaining possession of premises and if bw-3 does not elect to take an        assignment of the Lessee's interest, Lessor will allow bw-3 to enter the        Premises, without being guilty of trespass and without incurring any        liability to Lessor, to remove all signs, awnings, and all other items        identifying the Premises as a Franchised Restaurant and to make such        other modifications (such as repainting) as are reasonably necessary to        protect the bw-3 marks and system, and to distinguish the Premises from        Franchised Restaurants.  In the event bw-3 exercises its option to        purchase assets of Lessee, Lessor shall permit bw-3 to remove all such        assets being purchased by bw-3.

       5.   CONSIDERATION; NO LIABILITY.

            (a)   Lessor hereby acknowledges that the provisions of this        Addendum to Lease are required pursuant to the Franchise Agreement under        which Lessee plans to operate its business and the Lessee would not lease        the Premises without this Addendum.

            (b)   Lessor further acknowledges that Lessee is not an agent or        employee of bw-3 and the Lessee has no authority or power to act for, or        to create any liability on behalf of, or to in any way bind bw-3 or any        affiliate of bw-3, and that Lessor has entered into this Addendum to        Lease with full understanding that it creates no duties, obligations or        liabilities of or against bw-3 or any affiliate of bw-3.

       6.   SALES REPORTS.  If requested by bw-3, Lessor will provide bw-3 with whatever information Lessor has regarding Lessee's sales from the Restaurant.

       7.   AMENDMENTS.  No amendment or variation of the terms of this Addendum to the Lease shall be valid unless made in writing and signed by the parties hereto.

       8.   REAFFIRMATION OF LEASE.  Except as amended or modified herein, all of the terms, conditions and covenants of the Lease shall remain in full force and effect and are incorporated herein by reference and made a part hereof as though copied herein in full.

       9.   BENEFICIARY.  Lessor and Lessee expressly agree that bw-3 is a third party beneficiary of this Addendum.

                                          40

       IN TESTIMONY WHEREOF, witness the signatures of the parties hereto as of the day, month and year first written above.

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

                              By:                                      -----------------------------------                               Title:                                      -----------------------------------                                                 (Lessor)

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

                              By:                                      -----------------------------------                               Title:                                      -----------------------------------                                                 (Lessee)

                                          41

Output: Highlight the parts (if any) of this contract related to Third Party Beneficiary that should be reviewed by a lawyer. Details: Is there a non-contracting party who is a beneficiary to some or all of the clauses in the contract and therefore can enforce its rights against a contracting party?


Input: Consider Input: 1                                                                     EXHIBIT 10.4

             MARKETING AND TRANSPORTATION SERVICES AGREEMENT

  THIS AGREEMENT made in duplicate this 20 day of November, 1995.

B E T W E E N:

                         PUROLATOR COURIER LTD.                                 (Purolator)                                                                           - and -                                                            PARCELWAY COURIER SYSTEMS CANADA LTD.                          a subsidiary of Dynamex Inc.                                  (Dynamex)

  WHEREAS Purolator inter alia, is licensed to provide courier services for compensation across Canada and the United States of America;

  AND WHEREAS Dynamex inter alia, is licensed to provide courier services for compensation across Canada and the United States of America;

  AND WHEREAS Purolator's principal business activity is next day or multiple day service:

  AND WHEREAS Dynamex' principal business is sameday service;

  AND WHEREAS Purolator and Dynamex wish to cooperate, as independent contractors, in the marketing of their respective services and in the provision of those services to their respective customers;

  NOW THEREFORE in consideration of the mutual covenants contained in this Agreement, the Parties hereto agree as follows:

1.0  DEFINITIONS

1.1  The following words shall have the following meanings throughout this      Agreement:                 a)    Agreement means this Agreement and all Schedules annexed hereto,            as amended from time to time by the Parties;

  b)     Freight means any goods directed to one Party by the other for             pick up and/or delivery;

  c)     Force Majeure means

         i)      An Act of God;

         ii)     A strike, lock out or other labour disturbance;

2                                      - 2 -

         iii)     A war, revolution, insurrection, riot, blockade or any                      other unlawful act against public order authority;                                                                                               iv)      A storm, fire, flood, explosion, lightening or other                      hazardous weather condition;                                                   v)       Any Ministry of Transportation road closure or other acts                      of government or transport authorities which are beyond the                      control of the Parties;                                                        vi)      Any air traffic control delays, cancellations, reroutes or                      other acts of government, airport or aviation authorities,                      which are beyond the control of the Parties;                                                                             vii)     Any loss, hijacking, government seizure or diversion.

1.2     All references to currency in this Agreement shall be to Canadian         currency, unless otherwise indicated.

1.3     All references to days in this Agreement are references to calendar days         unless the reference is to business days, in which case business days          shall be interpreted as business days as designated in the Province of          Ontario.

2.0     TERM

2.1     This Agreement shall be effective from the date first above written and         shall continue indefinitely until terminated by either Party in          accordance with the provisions of this Agreement.

3.0     SCOPE OF SERVICES

3.1     Subject to the terms and conditions hereinafter set out, Purolator         agrees to do the following:

     i)     Offer sameday courier services to its customers under the                Purolator name and trade-mark;





     ii)    Tender to Dynamex all sameday courier service requests that it                receives;

     iii)   In connection with such sameday service requests, Purolator will                handle the customer request, will dispatch the pickup                 request to Dynamex, will be responsible for billing the customer                for the service and collecting the revenue and provide such sales                and marketing service, in conjunction with Dynamex, as may be                necessary;

     iv)    Will provide its next day and multiple day transportation                services to Dynamex' customers as may be required from time to                time, such services to be provided in accordance with the                service standards set out in Schedule A attached hereto, which                service standards may be amended from time to time;

3                                      - 3 -

     v)     In providing such next day or multiple day services, agrees to                provide customer service, dispatch, pickup and delivery, tracing                and tracking, together with joint sales and marketing efforts                with Dynamex, and will invoice Dynamex for the services provided                at the rates provided for herein.

3.2     Subject to the terms and conditions hereinafter set out, Dynamex agrees         to do the following:

     i)     Offer overnight courier services to its customers under the                Dynamex name and trade-mark;

     ii)    Tender to Purolator all overnight courier service requests that                it receives;

     iii)   In connection with such overnight service requests, will handle                the customer request, will dispatch the pickup request to                Purolator, will be responsible for billing the customer for the                 service and collecting the revenue and provide such sales and                 marketing service, in conjunction with Purolator, as may be                 necessary;

     iv)    Will provide its sameday transportation services to Purolator's                customers as may be required from time to time, such services to                be provided in accordance with the service standards set out                in Schedule B attached hereto, which service standards may be                amended from time to time;

     v)     In providing such sameday services, agrees to provide customer                service, dispatch, pickup and delivery, tracing and tracking,                together with joint sales and marketing efforts with Purolator,                and will invoice Purolator for the services provided, at the                 rates provided for herein.

3.3     For greater certainty, it is understood and agreed that either Party, in         providing the services referred in 3.1 and 3.2 above, may agree          to a variation of the services to be provided, including but not         limited to who shall provide pick up and delivery, tracking, tracing,         dispatch or other services.

3.4     Each Party agrees to provide the services outlined above at an on time         performance level of no less than ninety percent (90%) of the scheduled         delivery time, excluding delays caused by the other Party or events of          Force Majeure. Monthly, the performance level shall be measured as set          out above. Failure to provide services as set out herein constitutes a          Monthly Service Failure.

3.5     Except for the joint marketing efforts referred to in Section 3.1 (v)         above, Purolator agrees not to directly or indirectly solicit next day         or multiple day freight from existing sameday customers of Dynamex.             4 3.6    Except for the joint marketing efforts referred to in Section 3.1 (v)        above, Dynamex agrees not to directly or indirectly solicit overnight        freight from customers of Purolator.

3.7    Purolator agrees to tender to Dynamex all sameday service requests that        it receives.

3.8    Dynamex agrees to tender to Purolator all next day and multiple day        transportation requests to Purolator for delivery.

3.9    Dynamex agrees not to provide sameday delivery services for any other        provider of next day or multiple day courier services. It is understood        and agreed that Dynamex, from time to time and upon request, may provide        pick-up and/or delivery services for other next-day or multiple day        courier service providers, as part of their next-day and multiple day        service commitment, provided Dynamex' services will not result in the        provision of same day service to the customer of the provider of        next-day or multiple day courier service.





    Dynamex may continue to provide the same day service it currently        provides to Alltours customers, provided revenue to Dynamex from this        business does not exceed Five Thousand Dollars ($5,000.00) per month        provided there is no change in control, direct or indirect, in Alltours.

3.10   It is understood and agreed by the Parties that each Party presently        offers a number of services which are complementary to those provided        for herein, including but not limited to mail room management services        and building distribution services. In that regard, Dynamex offers        its services as Dynamex while Purolator offers its services under the        name Distribution Management Services Inc. or DMS. It is understood and        agreed that nothing in this Agreement shall prevent the Parties from        continuing to provide such services or their continued development of        such services/operations.

3.11   The Parties covenant and agree that this Agreement shall cover their        services throughout Canada and the United States of America. If either        Party desires to enter into an agreement with another party providing         for services similar to those provided for herein, in either Canada or        the United States of America or both, or to provide services similar to         those provided for herein without an agreement, then same can only be         done with the prior written consent of the other Party. It is understood        and agreed that Dynamex may enter into an Agreement with another party         to provide its services as described herein in the United States,         provided however that any such agreement shall not preclude or prevent         Dynamex from providing such Services to Purolator in the United States.

3.12   Attached hereto as Schedule C to this Agreement is the Operational        Plan for this Agreement. The Operational Plan details the obligations        and responsibilities of the Parties pursuant to this Agreement,        including but not limited to details as to the handling of freight, the        exchange of freight, customer service, billing, invoicing, track and

5        tracing responsibilities. Monthly, the Parties shall conduct operational         meetings to adjust co-ordination, operational planning and any other        requirements determined by the Parties from time to time.

4.0    RATES

4.1    Subject to all other terms and conditions of this Agreement, Purolator        shall pay to Dynamex the rates set forth in Schedule D.

4.2    Subject to all other terms and conditions of this Agreement, Dynamex        shall pay to Purolator the rates set forth in Schedule E.

5.0    PAYMENT PROCEDURES

5.1    Each Party shall invoice the other twice a month, effective the        fifteenth (15th) day and the last day of the month for services          rendered for the period since the last invoicing.

5.2    Every invoice shall be accompanied by supporting documentation to        substantiate same. Failure to provide such documentation shall result in        payment of only the invoiced amount which is supported by the        documentation.

    Any amounts invoiced which are not supported by documentation shall not        be paid until such time as documentation is provided by the invoicing        Party.

    It is understood and agreed that Bills of Lading will not be required as         supporting documentation.

5.3    Dynamex must forward all invoices in duplicate and required        documentation pertaining to this Agreement, to the attention of:

    Purolator Courier Ltd.        5995 Avebury Road, Suite 500        Mississauga, Ontario        L5R 3T8

    Attention: Finance

5.4    Purolator must forward all invoices in duplicate and required         documentation pertaining to this Agreement, to the attention of:

    Dynamex Express        2630 Skymark Avenue        Mississauga, Ontario        L4W 5A4

5.5    Every invoice shall be reviewed by the invoiced Party and subject to        paragraphs 5.2, shall pay the invoice net fifteen (15) days from the        date of invoicing. Invoices shall be delivered to the invoiced Party        within three (3) days of the date of invoicing.





6                                      - 6 -

5.6    Interest, at the prime rate then charged to commercial customers by the        Canadian Imperil Bank of Commerce (Toronto Main Branch), shall be        payable on all amounts overdue for thirty (30) days or more.

5.7    Any discrepancy in an invoice which is discovered by either Party may        result in the issuance of a debit note or credit note by the appropriate        Party, and notwithstanding any prior payment, the same shall be         accompanied by supporting documentation. Payment shall be made by the         appropriate Party net fifteen (15) days from receipt and acceptance of         the documentation.

5.8    (a)     The Parties acknowledge and agree that the Services to be                provided hereunder constitute the supply of freight                transportation services in the course of the continuous                movement of freight, also referred to as interlining.                Accordingly, the Services under this Agreement are zero-rated                for the purposes of the Goods and Services Tax (hereinafter                 referred to as GST) pursuant to Section 1 of Part VII of                Schedule VI of the Excise Tax Act, R.S.C. 1985, Chapter E-15,                as amended from time to time.

    (b)     In the event that GST or any other value added or sales taxes                are applicable at any time during the Term of this Agreement:

                 (i)    Either party shall be liable for the same, if                             applicable;

                 (ii)   Either Party shall identify such tax separately on                             each invoice; and

                 (iii)  Either Party's GST registration number shall                             appear on each invoice.

6.0    LIABILITY FOR LOSS OR DAMAGE

6.1    A Party shall be liable to the other for loss, damage or delay to        Freight due to its acts or omissions, including its negligence, and        those of its employees, agents and those for whom in law it is        responsible and occurring while Freight is in its care, custody or        control. For the purpose of this Agreement, Freight shall be considered        in the care, custody or control of a Party from the time it is tendered        to it by the other Party or the other Party's customer until the time of        its delivery to the other Party or the consignee, as intended. For        greater certainty, a Party shall not be liable hereunder if the Freight        is damaged solely as a result of improper packing.

6.2    A Party shall, in the event of loss, damage or delay to Freight while in        its care, custody or control, immediately notify the other Party of the         loss or damage, carry out an investigation of the incident to determine        the cause of such loss, damage or delay and shall within

7        thirty (30) days of the event of loss, damage or delay or knowledge of        such incident of loss, damage or delay, whichever is later, as the case        may be, report its findings to the other Party. All costs associated        with such investigation shall be the responsibility of such Party if the        loss, damage or delay was due to the acts or omissions or those of its        employees, agents or those for whom in law its is responsible;        otherwise, the costs shall be shared equally by the Parties hereto.

6.3    A party shall, for any loss, damage or delay to Freight while in its        care, custody or control, forthwith pay to the other Party the actual        damages suffered by such other Party. Such liability shall not exceed the        other Party's contractual liability to its customers. The Parties        acknowledge that their contract of carriage with their customers provides        that liability for loss, damage or delay, including liability for        consequential loss, is limited to Four Dollars and Forty One Cents        ($4.41) per kilogram or Two Dollars ($2.00) per pound unless a higher        value has been declared for insurance purposes.

7.0    SET-OFF

7.1    A Party shall pay to the other the full amount of any paid claim, loss        or damage for which it is liable within forty five (45) days following           presentation of supporting documentation. If a Party fails to pay        following presentation of supporting documentation then the other Party        shall have the right to deduct the amount of such claim, loss or damage        from any monies due or becoming due to the first Party by the second        Party.

8.0    INDEMNIFICATION

8.1    Each Party shall at all times indemnify and hold harmless the other, its        directors, officers, employees and any others for whom it may be        responsible in law, from and against all claims, including claims made        by the indemnifying Party's personnel under worker's compensation        legislation, demands, awards, judgments, actions and proceedings by        whomsoever made, brought or prosecuted in respect of loss of, damage to        or destruction of property (including loss or damage sustained by the        indemnifying party) or personal injury including death and from and        against any and all loss or, damage to or destruction of property,        expenses and costs (including legal fees and disbursements) suffered or        incurred by the indemnifying Party, its directors, officers, employees





    and any others for whom it may be responsible in law, arising out of or        in any way connected with the indemnifying Party, its directors,        officers, employees and any others for whom it may be responsible in law,        arising out of or in any way connected with the indemnifying Party        provision of Services under this Agreement and whether or not caused by        the indemnifying Party's negligence. Loss or damage sustained by the        indemnifying Party shall also include loss as a result of loss of use.

8                                      - 8 -

8.2    Notwithstanding anything contained herein to the contrary, the        indemnifying party's liability to the other hereunder shall not        exceed the insurance coverage set out in Section 9.0.

9.0    INSURANCE

9.1    Each Party shall purchase and maintain, at its own expense, the        following insurance coverages:

    (a)     cargo liability insurance, subject to a combined single limit of                not less than One Hundred Thousand dollars ($100,000.00)                inclusive per occurrence. The other Party shall be named as an                additional insured and the policy shall contain a cross                liability clause;

    (b)     automobile, non-owned automobile, fleet, comprehensive general,                public and property liability insurance with a limit of not less                than Two Million dollars ($2,000,000.00) inclusive of bodily                injury and property damage for any one occurrence arising out of                one (1) cause. The policy shall cover all non-air operations,                non-owned automobile, contractual liability and liability                specifically assumed under this Agreement. The other party shall                be named as an additional insured and the policy shall contain a                cross liability clause;

9.2    Each Party shall deliver to the other, prior to commencing to provide        the Services and thereafter, annually, a certificate or certificates of        insurance evidencing that the required insurance coverages as        provided for in paragraph 9.1 are in effect and that each Party shall be        given thirty (30) days prior written notice of cancellation or         expiry of or material change to such insurance coverages.

9.3    The Policies set out in paragraph 9.1 shall contain a waiver of        subrogation rights in favour of the other Party, its officers,        directors, employees and any others for whom it may be responsible in        law.

9.4    Each Party shall maintain the insurance coverages provided for in        paragraph 9.1 hereof, in full force and effect during the term of        this Agreement and covenants that nothing shall be done whereby any        policy will be cancelled and shall pay all renewal premiums thereon on or        before the due date and shall forthwith furnish the other Party with        copies of certificates of insurance of such renewals.

9.5    The policies set out in paragraph 9.1 shall not limit the insurance        required by municipal, provincial, federal or other law. It shall        be the sole responsibility of each Party to determine what additional        insurance coverages, if any, are necessary and advisable for its own        protection

9                                      - 9 -

    or to fulfil its obligations under this Agreement. Any such additional        insurance shall be provided and maintained by that Party at its own        expense.

9.6    Each Party shall ensure that any subcontractor or other party with whom        it contracts in providing the Services shall carry adequate        insurance coverage, but not less than that provided in paragraph 9.1.

10.1   COMPLIANCE WITH LAW

10.1   (a)     Each Party shall comply with all legislation directly or                indirectly applicable to the performance of its obligations                under this Agreement.

    (b)     Each Party shall notify the other at least thirty (30) days or                in any event as soon as possible, before any change is made in                its licences or operating authorities which may affect in any                way the performance of any of its obligations under this                Agreement.

11.0   PROTECTION OF FREIGHT

11.1   Each Party shall take all reasonable measures to ensure that Freight in        its care, custody or control is protected at all times from theft,        weather and all other damage or danger, and without restricting the        foregoing, shall ensure that:

    (a)     Freight is not kept out-of-doors except for purposes of loading                or off loading; and

    (b)     If at any time Freight is not under its complete visual and                physical control, it shall provide a secure storage area





            in a facility at its own cost.

12.0   SECURITY

12.1   Each Party shall ensure that all reasonable security and investigation        measures are implemented including but not limited to the provisions set        forth in Schedule F respecting the provision of Services.

12.2   Each Party shall implement and put in place security and investigation           procedures to ensure the protection and security of Freight. These        procedures shall include spot checks, inspections, reporting,        investigations and any other procedures to ensure not only that the        Services required by the other Party are provided but that the Services        are provided in accordance with industry standards.

10                                      - 10 -

13.0   DANGEROUS GOODS

13.1   The Parties acknowledge that the Transportation of Dangerous Goods Act,        S.C. 1992, c.34, as amended from time to time (hereinafter referred        to as the TDGA) prohibits transportation of any explosive, dangerous         or destructive substance, or anything likely to injure or damage property        or persons (hereinafter referred to as Dangerous Goods) unless the        requirements of the TDGA are met. The Parties agree that they only intend        for Dangerous Goods to be carried pursuant to this Agreement if the        requirements of the TDGA are met and both Parties are aware that such        goods are being carried. Notwithstanding the foregoing, the Parties agree        that neither Dynamex nor Purolator shall be under any obligation or duty        whatsoever to open for prior inspection any Freight tendered to Dynamex        pursuant to this Agreement. Neither Party shall be responsible for any        losses or damage whatsoever that may be sustained by the other Party, its        directors, officers, employees and any persons for whom it may become        responsible in law, as a result of any Dangerous Goods contained in        Freight unless such Party had actual prior knowledge of the presence of        Dangerous Goods. In the event a Party had actual prior knowledge of the        presence of Dangerous Goods, then it shall be liable for loss or damage        to the other Party if it would otherwise be liable under this Agreement        or at law.

13.2   Each Party must comply with the placarding and all other regulations        applicable to the handling of Dangerous Goods. The Parties agree to        maintain at their own expense a current Dangerous Goods Training        Certificate for both air and ground shipments for itself and its        operators during the term of this Agreement and to provide the other        Party with a copy of same upon execution of the Agreement and thereafter,        as the Parties request, failure of which may result in the termination of        this Agreement immediately by the other Party.

13.3   The Parties agree to ensure that their respective Dangerous Goods        Handling Procedures are compatible to ensure complete adherence with the        Legislation and Regulations. Each Party agrees to promptly advise the        other of any changes to its Dangerous Goods Handling Procedures.

14.0   RECORDS AND REPORTS    14.1   Each Party shall maintain performance reports, comparing actual to        scheduled departure and arrival times for Services provided. Such        reports shall be made available for review by the other Party and in        connection with same, a Party shall provide copies of all data and        records relating thereto.

11                                      - 11 -

14.2   Each Party shall maintain complete maintenance and operational records.

14.3   Each Party shall keep accurate books, accounts and records covering all         transactions relating to this Agreement, including books of original        entry, and upon request from the other Party, shall allow access to        same.

14.4   Either Party shall have the right to request the other to provide,        through an auditor agreed to by the Parties, validation of the        information and data referred to herein.

15.0   CONTINGENCY PLANS

15.1   In the event a Party is unable to provide the Services as a result of a        strike or other labour disruption caused by its employees, it shall              attempt to subcontract the Services to another operator or operators,        acceptable to the other Party. Such Services shall be provided by such        subcontractor/subcontractors on the same terms and conditions herein set        out and will be continued to be provided during the period of any such        strike or labour disruption, unless this Agreement is otherwise        terminated pursuant to the provisions of this Agreement. It is        understood and agreed that, if such Party provides the Services by        subcontracting to another operator/operators, then it shall be deemed        not to be in default pursuant to paragraph 17.1(c). Notwithstanding        same, all other default provisions as set out in paragraph 17, continue        to apply.





16.0   SERVICE FAILURE REMEDIES

16.1   In the event that Monthly Performance Failures occur more than three (3)        times in any twelve (12) month period, an Event of Default shall have         occurred.

17.0   DEFAULT PROVISIONS

17.1   For the purposes of this Agreement, the following shall constitute        events of default by a Party (hereinafter referred to as Events of         Default):

    (a)     if a petition is filed against it under any applicable bankruptcy                legislation and is not withdrawn or dismissed within sixty                (60) days thereafter;

    (b)     if a resolution is passed by it respecting the sale of all or                substantially all of its assets, or an order for the winding                 up of its business is made, or it otherwise agrees to make a                 bulk sale of it's assets;

    (c)     if it ceases or threatens to cease to carry on its business;

12                                      - 12 -

     (d)     if it commits or threatens to commit an act of bankruptcy, or                 if it becomes insolvent or bankrupt or makes an assignment or if                 a receiver or receiver manager is appointed in respect of its                 business and affairs of either by way of private instrument or                 through court proceedings;

     (e)     if a judgment or order is entered with respect to it under the                 Company Creditors Arrangement Act R.S.C. 1985, Chapter C-36, as                 amended, or similar legislation, or it takes advantage of the                 provisions of any bankruptcy or insolvency legislation;

     (f)     if any execution, or any other process of any court becomes                 enforceable against all or substantially all of it's property or                 if a distress or analogous process is levied against all or                 substantially all of its property;

     (g)     if it is in default as per paragraph 16.1 hereof; or

     (h)     if it otherwise neglects or fails to perform or observe any of                 its obligations under this Agreement and fails to cure the                 breach or default within thirty (30) days of written notice to                 the other Party.

17.2    Upon the occurrence of an Event of Default and in addition to any         rights or remedies available to it under this Agreement or at law or in         equity, the Party not in default may exercise any or all of the         following remedies:

     (a)     terminate this Agreement, upon giving one hundred and twenty                 (120) days written notice, otherwise upon written notice with                 respect to 17.1 (g) and (h);

     (b)     recover from the defaulting Party any and all monies then due                 and to become due; and

     (c)     take possession, immediately, without demand or notice, without                 any court order or other process of law, any and all of its                 property (including bags and containers) and Freight received by                 the defaulting Party under this Agreement.

17.3    Termination of this Agreement shall be without prejudice to any other         rights of the Party not in default, including the right to claim         damages, and to the rights of the Parties that have accrued prior to         termination.

17.4    In the event the Defaulting Party fails to pay any amount due pursuant         to paragraph 17.2, then the other Party shall have the right to deduct         same from any amount due or to become due to the defaulting Party.    13                                      - 13 -

18.0    PERFORMANCE PENALTIES

18.1    In the event a Party has, in any twelve (12) month period, more than         three (3) Monthly Performance Failures, then the defaulting Party shall         pay a penalty to the Party not in default, which the Parties acknowledge         is a pre-estimation of damages suffered by the non-defaulting Party due         to the current month's Monthly Performance Failure (Default Month).

     For each Default Month, the Party in default shall pay a penalty equal         to five (5) times the Party not in default's corporate average yield         during the Default Month for each shipment below the performance





     commitment.

     For example, if the defaulting Party, in a Default Month, provided         services at an eighty five percent (85%) level and the average yield for         the Default Month of the Party not in default is ten dollars ($10.00)         and the total number of shipments handled by the defaulting Party         pursuant to this Agreement is one hundred (100), then the penalty would         be equal to 5 x[(Performance Commitment - Actual Performance Level) x #         of shipments] x average yield or 5 x [(90-85) x 100] x 10 = $250.00.                                       100 19.0    TERMINATION WITHOUT CAUSE

19.1    Either Party may terminate this Agreement, without cause, by giving two         (2) years written notice.

19.2    In the event of a change in control of a Party, the other Party shall         have the right, upon written prior notice, to terminate this          Agreement.

20.0    NOTICE

20.1    Any notice or other communication with respect to this Agreement shall         be in writing and shall be effectively given if delivered, or sent         (postage or other charges prepaid) by letter, facsimile or electronic         means addressed:

     (a)     in the case of Purolator to:                                  Purolator Courier Ltd.                 5995 Avebury Road, Suite 500                 Mississauga, Ontario                 L5R 3T8                 Attention:

     (b)     in the case of Dynamex:

             Dynamex Inc.                 2630 Skymark Avenue                 Suite 610                 Mississauga, Ontario                 L4W 5A4    14                                      - 14 -

     or to any other address of which the Party in question advises to the         other Party in writing. Any notice that is delivered shall be deemed to         have been received on delivery; any notice sent by facsimile or         electronic means shall be deemed to have been received when sent and         receipt confirmed and any notice that is mailed shall be deemed to have         been received five (5) business days after being mailed. In the event of         a postal disruption, service to be effective must be delivered or sent         by facsimile.

21.0    REPRESENTATIONS AND WARRANTIES

21.1    Dynamex represents and warrants that:

     (a)     it has the capacity, power and lawful authority to enter into                 this Agreement and to fulfill any and all covenants set forth                  in this Agreement to be fulfilled by it;

     (b)     the terms of this Agreement are not in breach of any law,                 regulation, by-law, agreement, charter document or covenant by                 which Dynamex is governed or bound;

     (c)     all necessary licenses, permits, consents or approvals of,                 notices to or registrations with or the taking of any other                 action in respect of any governmental authority or agency                 required to be obtained or accomplished by Dynamex has been                 obtained or accomplished and are in good standing; and

     (d)     there are no pending or threatened actions or proceedings to                 Dynamex is a Party, or which is before any court or                 administrative agency, which might materially adversely affect                 the financial or other condition, business, assets, liabilities                 or operations of Dynamex or the ability of Dynamex to perform                 its obligations under this Agreement;

20.2    Purolator represents and warrants that:

     (a)     it has the capacity, power and lawful authority to enter into                 this Agreement and to fulfill any and all covenants set forth in                 this Agreement to be fulfilled by it;

     (b)     the terms of this Agreement are not in breach of any law,                 regulation, by-law, agreement, charter document or covenant by                 which Purolator is governed or bound;

     (c)     all necessary licenses, permits, consents or approvals of,                 notices to or registrations with or the taking of any other                 action in respect of any    15                                      - 15 -                   governmental authority or agency required to be obtained or                  accomplished by Purolator has been obtained or accomplished





             and are in good standing; and

     (d)     there are no pending or threatened actions or proceedings                 to which Purolator is a Party, or which is before any court                  or administrative agency, which might materially adversely                  affect the financial or other condition, business, assets,                  liabilities or operations of Purolator or the ability of                  Dynamex to perform its obligations under this Agreement;

22.0    FORCE MAJEURE

22.1    No Party hereto shall be in breach of this Agreement by reason of a          delay in the performance of, or failure to perform, any of its          obligations hereunder if such a delay or failure is a result of         an event of Force Majeure.          22.2    Each of the Parties hereto shall minimize, to the extent reasonably         practicable, the impact on either Party of any of the events of Force         Majeure in its performance of its obligations under this Agreement.

22.3    The Party invoking an event of Force Majeure shall immediately notify in         writing the other Party of such occurrence, whereupon the other Party         shall confirm in writing having received such notice of the occurrence         of an event of Force Majeure.

23.0    ASSIGNMENT

23.1    Neither Party shall sell, assign, subcontract, transfer or dispose of         this Agreement or any part thereof, without the prior written consent of         the other Party or otherwise enter into an agreement with any other         Party for Services contemplated herein.

23.2    The terms and conditions of any such subcontract shall respect the terms         and conditions of this Agreement and in all cases shall be of equivalent         or higher standards. Neither Party shall reveal the contents of this         Agreement; however a Party may enter into identical agreements with its         connectors, and/or subcontractors, as the case may be, with respect to         the terms and conditions of this Agreement, save and except rates.

24.0    ENTIRE AGREEMENT

24.1    This Agreement and all Schedules attached hereto, embody the entire         agreement of the Parties hereto and no representation, understanding, or         agreement, verbal or otherwise exists between the Parties except as         herein expressly provided.    16                                      - 16 -

24.2    The following order of precedence shall be given in the event of a         conflict between the documents comprising the Agreement:

     (a) Agreement         (b) Schedules, and          (c) the operating plan and any amendments thereto.

25.0    WAIVER

25.1    Failure of any Party to enforce or insist upon compliance with any of         the terms or conditions of this Agreement shall not constitute a general         waiver or relinquishment of any such terms or conditions but the same         shall be and remain at all times in full force and effect.

26.0    HEADINGS AND CAPTIONS

26.1    Headings and captions are inserted for each section of this Agreement         for convenience only and in no way define, limit or describe the scope         of intent of this Agreement, nor shall they have any effect in regard to         its interpretation.

27.0    AMENDMENTS

27.1    Unless otherwise provided herein, this Agreement shall not in any manner         be supplemented, amended or modified except by written instrument         executed on behalf of both Parties by their duly authorized         representatives.

28.0    SINGULAR/PLURAL

28.1    Whenever, in this Agreement, the context requires or permits the         singular number shall be read as if plural were expressed.

29.0    SEPARATE COUNTERPARTS

29.1    This Agreement may be executed in several counterparts, each of which,         when so executed, shall be deemed to be an original of this Agreement         and such counterparts together shall constitute but one and the same         instrument.

30.0    TIME

30.1    Time shall, in all respects, be of the essence in each and every of the         terms, covenants, obligations and conditions in this Agreement.

31.0    SEVERABILITY





31.1    In the event that any provision of this Agreement is invalid,         unenforceable or illegal, then such provision shall be severed from this         Agreement and this Agreement shall be read as if such provision were not         part of this Agreement and provided such severance does not    17                                      - 17 -

     substantially frustrate the intention of this Agreement, such invalidity         or unenforceability or illegality shall not affect any other provision         of this Agreement.

32.0    BINDING EFFECT

32.1    This Agreement shall enure to the benefit of and be binding upon the         Parties hereto, successors and assigns.

33.0    RELATIONSHIP OF THE PARTIES

33.1    The Parties recognize that they operate as an independent business and         declare that nothing in this Agreement shall be construed as creating a         relationship of employment, joint venture, partnership or agency between         Purolator and Dynamex, and no act or omission of either Party shall bind         or obligate the other except as expressly set forth in this Agreement.         The Parties agree that no representation will be made or acts undertaken         by either of them which could establish or imply any apparent         relationship of agency, partnership, joint venture or employment and         neither Party shall be bound in any manner whatsoever by any agreements,         warranties, representatives or actions of the other Party to such         effect.

34.0    CONFIDENTIAL INFORMATION

34.1    The Parties recognize that this Agreement contains information which is         commercially sensitive and agree to keep the entire contents of this         Agreement confidential and not to make any disclosures to any third         Parties (other than their professional and financial advisers who agree         to be bound by this provision) unless required by law to do so or unless         prior written consent is obtained from the other Party.      35.0    TRADE-MARKS

35.1    Each Party's trade-marks, distinctive colours and designs used in         connection with the Services shall remain at all times during the term         of this Agreement and on the expiration or termination thereof, the         exclusive property of each Party and any benefit associated with such         use shall accrue solely to that Party. Each Party shall use the other         Party's trade-mark, distinctive colours and designs only with the         prior written consent of the other Party and only in connection with the         services provided hereunder.

36.0    LAW OF THE AGREEMENT

36.1    This Agreement shall be governed and construed in accordance with the         laws of the Province of Ontario. All legal proceedings arising out of         this Agreement shall be brought in a court of competent jurisdiction in         the Province of Ontario, and each of the Parties hereby attorn to the         jurisdiction of such court with respect to such proceedings.    18                                      - 18 -

37.0    REMEDIES

37.1    All remedies herein are cumulative and are in addition to, not in lieu         of, any remedies provided at law or in equity.

38.0    PUBLIC ANNOUNCEMENT

38.1    The content and timing of any public announcement, press release or         publication of any kind regarding this Agreement shall be mutually         agreed to by the Parties, except disclosures required by applicable law,         in which case advance notice will be given to the other Party.

39.0    ARBITRATION

39.1    If at any time a dispute arises between the Parties hereto which cannot         be resolved by agreement among the Parties, or if the Parties are unable         to agree on any matter that requires their mutual agreement hereunder,         the dispute or matter shall be submitted to arbitration as provided in         this Article by any Party hereto giving written notice to the other         Party (the Notice to Arbitrate). The Notice to Arbitrate shall contain         a concise description of the matter submitted for arbitration.

39.2    The Parties hereto shall within ten (10) business days of receipt of         the Notice to Arbitrate jointly appoint a single arbitrator. If the         Parties fail to appoint an arbitrator who shall jointly select a third         arbitrator within ten (10) days, failing which same shall be designated         by the President of the Arbitrators' Institute of Canada Inc. upon the         request of either Party.

39.3    The arbitration shall take place in the Municipality of Metropolitan         Toronto and shall be governed by the provisions of the Arbitration Act.

39.4    The determination of the arbitrator shall be in writing and shall be         final and binding upon the Parties hereto.

39.5    The cost of the arbitration shall be borne by the Parties hereto





     equally.

39.6    Submission to the arbitration under this Article shall be a condition         precedent to the bringing of any action with respect to this Agreement.

40.1    LANGUAGE

40.1    The Parties have expressly requested that this Agreement be written in         the English language.

     Les Parties ont specifiquement requis que la presente entente soit         redigee en langue anglaise.    19                                      - 19 -

41.0    REPUTATION

41.1    In the event a Party has committed or shall commit any material act, or         has or does become involved in any material situation or occurrence         bringing either Party into public disrepute, contempt, scandal or         ridicule, or shocking, insulting or offending potential customers of         either Party or any racial, religious or ethnic, age or gender group, or         reflecting unfavourably on either Party's reputation or their products         or services, then the other Party may terminate this Agreement upon         giving such notice as it deems appropriate. The non-offending Party's         decision on such matter arising hereunder shall be based on its judgment         as to whether or not the act or involvement of the offending Party has         materially harmed or may be materially harmful to the Parties, their         products, services or trademarks, in any respect, acting bona fidely.

42.0    NON-COMPETITION

32.1    In the event this Agreement is terminated pursuant to the provisions of         paragraph 17, then the Party in default shall not enter into an         agreement with any other Party to provide services similar to those         provided herein or to provide its services similar to those provided for         herein without an agreement, for a period of six (6) months from the         effective date of termination.

42.2    In the event this Agreement is terminated pursuant to the provisions of         paragraph 19.2, then the Party whose control has changed shall not         enter into an agreement with any other Party to provide services similar         to those provided herein or to provide its services similar to those         provided for herein without an agreement, for a period of twelve (12)         months from the effective date of termination.

The Parties have executed this Agreement as of the day, month and year first above written by their proper officers duly authorized on that behalf.

                             PARCELWAY COURIER SYSTEMS CANADA LTD.

                             Per:  (ILLEGIBLE)  11/20/95      c/s                                     -----------------------------

                             Per:                             c/s                                     -----------------------------

                             PUROLATOR COURIER LTD.

                             Per:   (ILLEGIBLE)               c/s                                     -----------------------------

                             Per:   (ILLEGIBLE)                                                   --------------------------------

Output: Highlight the parts (if any) of this contract related to Insurance that should be reviewed by a lawyer. Details: Is there a requirement for insurance that must be maintained by one party for the benefit of the counterparty?


Input: Consider Input: Exhibit 10.17

Supply Agreement - FUSION

CERTAIN CONFIDENTIAL PORTIONS OF THIS EXHIBIT HAVE BEEN OMITTED AND REPLACED WITH [***]. SUCH IDENTIFIED INFORMATION HAS BEEN EXCLUDED FROM THIS EXHIBIT BECAUSE IT IS (I) NOT MATERIAL AND (II) WOULD LIKELY CAUSE COMPETITIVE HARM TO THE COMPANY IF DISCLOSED.

SUPPLY AGREEMENT (Supply Agreement) effective as of the date of last signing (Effective Date) between Centre for Probe Development and Commercialization, a not-for-profit research and services institution with offices located at McMaster University, Nuclear Research Building, 1280 Main Street West, Hamilton, Ontario, Canada, L8S 4K1, (CPDC), and FUSION Pharmaceuticals Inc. (FUSION), having a place of business at 270 Longwood Road South, Hamilton, Ontario, Canada, L8P 0A6, (together the Parties each a Party). This document defines the terms and conditions under which CPDC will provide FUSION the Product outlined in this Supply Agreement.

This Supply Agreement is conducted under the general provisions of the Master Services Agreement and the Quality Agreement entered into between the PARTIES. Unless explicitly stated within this Supply Agreement should there be discrepancies between the Supply Agreement and the Master Services Agreement, then the Master Services Agreement will be the controlling document. 1. Products: 1.1 Ac-225 FPI-1434 1.2 [***] 1.3 The specifications for the Products are further defined in Schedule 2. 2. Definitions

As used herein, the following terms shall have the following meanings: 2.1 Affiliate(s) shall exclude CPDC, when referring to FUSION'S affiliates, and shall exclude FUSION, when referring to CPDC's affiliates. 2.2 Batch shall mean a single production, testing and release of Product according to the approved and validated processes. 2.3 Clinical Phase shall mean the period during which human studies involving the Products are performed for the purpose of evaluating the safety, efficacy and appropriate dose ranges of Product (Clinical Trials), to secure marketing approval from a Regulatory Authority. 2.4 Current Good Manufacturing Practices or cGMP(s) shall mean the standards required by the Regulatory Authority for the manufacturing, testing and quality control of pharmaceutical materials, which practices are current on the Effective Date of this Agreement and may be supplemented, amended or modified by such regulatory authority from time to time. 2.5 Date of Manufacturing shall mean the date on which the drug product is produced. 2.6 [***] Territory shall mean the territories [***] for which CPDC shall be the [***] supplier of Products for Fusion. 2.7 Master Services Agreement the agreement executed between the Parties on the 21st day of February, 2017. 2.8 Precursors shall mean the starting materials required to produce Product. For the purpose of this agreement, the Precursors are defined as FPI- 1175 and [***]. Page 1 of 13 CONFIDENTIAL





Supply Agreement - FUSION 2.9 Process' shall mean a GMP-validated method for producing the Product, including formulation, manufacturing controls, and all applicable testing and evaluation suitable to meet regulatory requirements for use of the Product in clinical trials. 2.10 Production Order* shall mean a written request from FUSION to CPDC authorizing the manufacture of one or more Batches of a Product as further described in Section 3.2. The Production Order is jointly maintained by CPDC and FUSION based on clinical trial requirements. 2.11 Quality Agreement means the agreement separately executed between the Parties defining the Specifications, applicable standards, commitment, responsibilities, and activities that both FUSION and CPDC will undertake to ensure that the cGMP manufacturing and services as expressly required under this Agreement and the Master Services Agreement are in full compliance. 2.12 Regulatory Authority means the United States Food and Drug Administration (FDA'), European Medicines Agency ('EMA'), Health Canada and/or any other governmental, regulatory or administrative body having jurisdiction over any activities conducted under this Agreement. 2.13 Specifications shall mean the standards established in writing by the Parties for the characteristics, quality, and quality control testing of Product, and its constituents, components, and packaging, as further described in Section 4.4 below and Schedule 2, and as in effect from time to time. 2.14 Unit shall refer to an individual vial of Product produced according to the approved specifications. 3. Manufacture and Supply of Products 3.1 Scope and Object; Engagement. This Supply Agreement governs Clinical Phase supply for the Products in connection with Clinical Trials sponsored by FUSION, and in accordance with the responsibilities and obligations attributed to each of the Parties as set out in this Supply Agreement.

Accordingly, FUSION hereby engages CPDC, and CPDC hereby accepts such engagement, to supply Products for the Territory in connection with FUSION'S Clinical Trials.

The Products shall be manufactured by CPDC at the location in its cGMP facilities in the Nuclear Research Building (NRB) and on the campus of McMaster University in Hamilton, Ontario, Canada, established for this purpose pursuant to Deliverables defined within Supply Agreement.

For the avoidance of doubt, it shall be the responsibility of FUSION or its designate to file, obtain and maintain any Investigational New Drug (IND) applications, registrations, listings, authorizations and approvals, as the Regulatory Authority may require to enable use of Product in Clinical Trials, and provide CPDC with all particulars thereof and developments thereunder.

Both Parties acknowledge that at the time of signing this Supply Agreement that the CPDC is subject to a supply restriction to the United States of America (the USA) due to and Import Alert 66-40 (the Import Alert) issued by the FDA. 3.2 Production Orders. From time to time during the Term set forth in Section 6 of this Supply Agreement, FUSION and CPDC will agree to binding Production Orders for Products, as follows: (a) Based on a template order form for such Production Orders provided by CPDC to FUSION, FUSION shall complete the Production Order in such form [***] no later than (a) the order cut-off period for the third-party isotope providers (Minimum Lead Time). • In the case of [***] the isotope order cut-off is [***] eastern standard time the week prior to isotope delivery Page 2 of 13 CONFIDENTIAL





Supply Agreement - FUSION • In the case of Actinium-225 the isotope order cut-off is [***] eastern standard time the week prior to isotope delivery. (b) CPDC will respond, by email, the acceptance or rejection of each duly completed Production Order within [***] of receipt of such Production Order (an 'Accepted Production Order or Rejected Production Order, respectively). If there is no response to a Production Order within such timeline, it shall be considered an Accepted Production Order. In the case of a Rejected Production Order, [***]. (c) FUSION shall be entitled to make changes to Production Orders (a 'Change Order) to alter the quantity of Units packaged or distributed up to [***] prior to the Date of Manufacturing by providing CPDC with written notice [***]. CPDC will respond, by email, the acceptance or rejection of each Change Order within [***] of receipt of such change (an Accepted Change Order or Rejected Change Order, respectively). If there is no response to a Change Order within such timeline, it shall be considered an Accepted Change Order. In the case of a Rejected Change Order, [***]. Changes to the number of Units packaged or distributed with less than [***] notice will be subject to the applicable [***] defined in Schedule 1. Notwithstanding the foregoing, CPDC is unable to alter the total quantity of Product produced after the order deadlines imposed by any third-party isotope supplier. (d) Cancelation of a Production Orders: (i) [***] (ii) All cancellations of Production Orders shall be provided to CPDC by FUSION in writing [***]. (e) [***]. 3.3 Shipping: All deliveries of Products shall be Free Carrier shipping point [***]. For greater certainty, [***] shall take ownership of and bear all risk of loss of or damage to the Products at the origin of the shipment. (a) If requested, [***] shall arrange for any insurance desired by [***] on shipments of Product, in amounts that [***] shall determine, and naming [***]. (b) When shipping Product, CPDC shall comply with all applicable laws and regulations, [***]. (c) All costs and responsibility for return shipping of any Products [***] and or re-usable packaging including but not limited to, lead pots, cardboard boxes or foam inserts, and/or other materials shall be borne by [***]. (d) In the event that any Product packaging materials are returned for reuse from clinical trial sites, [***] shall be responsible for transportation, disposal and/or replacement of any damaged, unusable or lost materials, if applicable. 3.4 Inability to Supply. In the event that it becomes apparent to CPDC at any time that it will be unable to fulfill any Production Order, then CPDC shall immediately notify FUSION in writing of CPDC's inability to meet such requirements for Product, along with a specific indication of the amount of such shortfall in manufacture of Product and anticipated timing of delivery. If CPDC is unable to fulfill the Production Order or any portion thereof within [***] of the planned delivery, then either: (a) CPDC will [***]; or Page 3 of 13 CONFIDENTIAL





Supply Agreement - FUSION (b) CPDC will [***]. 3.5 Pricing and Payment Terms. Schedule 1 of this Supply Agreement details the pricing and payment terms for the Product. For supply of Product, CPDC shall invoice FUSION [***]. CPDC shall send such invoices to:

Address:

270 Longwood Rd. South Hamilton, Ontario L8P 0J6 Canada [***]

FUSION shall pay such invoice within [***] of receipt of the invoice in accordance with the Supply Agreement 3.6 Batch Testing. FUSION shall have the right but not the obligation to conduct any Batch testing [***] or investigation it determines to be of value to determine compliance of Product with the Specifications and/or pursuant to any other standard imposed by law. A Batch shall be deemed to be acceptable if, upon testing, it meets the Specifications, relevant cGMP standards, all other applicable laws, rules and regulations (and any additional tests as agreed by the Parties). If either Party discovers that a Batch does not meet the Specifications, relevant cGMP standards or other applicable laws, rules or regulations, then the discovering Party shall promptly communicate with the other Party. All warranty obligations of CPDC with respect to a particular Batch shall cease and have no effect to the extent that any defect in such Batch arises from abuse, misuse, alteration, mishandling, improper storage or gross negligence by FUSION or FUSION'S employees, representatives, agents, suppliers or carriers, or defects in Precursor materials furnished by FUSION which are used in the production of such Batch. 3.7 Dispute Over Quality. In the event of a conflict regarding whether or not Product met the Specifications, cGMP standards or other applicable laws, rules or regulations, at the time of delivery, which CPDC and FUSION are unable to resolve after a good faith attempt by both Parties to resolve such matter in a period of [***] after the conflict arises, a sample of such Product shall be submitted by FUSION or its designee to an independent laboratory or quality assurance professional reasonably acceptable to both Parties for testing or review of the batch documentation. Any test results obtained by such laboratory shall be final and controlling for purposes of this Agreement. In the event the independent review and/or test results indicate that the rejected Product in question met the Specifications, cGMP standards, and all other applicable laws, rules and regulations, then [***]. 3.8 Non-Conforming Products. In the event it is settled pursuant to Section 3.6 or 3.7 that Product in question did not meet the Specifications, cGMP standards or other applicable laws, rules or regulations, FUSION shall be entitled [***]. 4. Additional Obligations of the Parties 4.1 Record Keeping, Inspection, etc. CPDC shall: (a) conform to the provisions detailed within the Quality Agreement, which includes the right of FUSION to conduct inspections, and the responsibility of CPDC to conduct quality control testing of Product prior to shipment and ensure conformance with the Specifications. CPDC shall retain or have retained accurate and complete records pertaining to such testing. Each shipment of CPDC hereunder shall be accompanied by a certificate of analysis for each Batch of CPDC therein; Page 4 of 13 CONFIDENTIAL





Supply Agreement - FUSION (b) keep accurate financial records of all Services performed and passthrough costs under this Supply Agreement and all amounts to be invoiced to FUSION and all invoice calculations, and, upon request by FUSION, make such records available for review by FUSION or its representatives to permit verification of the correctness of such amounts and calculations. 4.2 Licenses and Permits. CPDC shall be responsible for obtaining and maintaining any and all facility or other licenses, permits, registrations, and any regulatory approvals necessary to manufacture, handle, store, label, package and prepare under cGMP conditions Products for shipment, and the packaging, supply and export of Product to FUSION or its designees in accordance with the terms and conditions of this Agreement for the Clinical Phase. This includes, but is not limited to, the use and handling of radioactive materials. For greater certainty CPDC will abide by all laws, rules and regulations as applicable for radiation safety by the Canadian Nuclear Safety Commission (CNSC) for compliance. 4.3 Precursor and Reference Standards. FUSION or, at FUSION'S discretion, its designee, shall provide to CPDC, at no charge, Precursor and reference standards, which meet the Specifications and in sufficient quantities to permit CPDC to meet its Production Schedule obligations hereunder. FUSION shall provide to CPDC all required supporting documentation required for its use in manufacturing the Product. In the event that the Precursor supplied by FUSION is found to be adulterated, damaged, or with compromised packaging, or not shipped within the required environmental conditions CPDC shall return the Precursor at FUSION'S cost. Should the applicable regulations require that CPDC audit FUSION'S Precursor supplier, FUSION shall compensate CPDC for the time and reasonable out of pocket expenses required to complete the audit. CPDC shall only use Precursor and reference standards provided hereunder for the development, validation or manufacture of Products pursuant to this Agreement. FUSION shall at all times retain title in and to such Precursor and reference standard materials in CPDC's possession. FUSION, to the best of its knowledge, represents and warrants to CPDC that it has all requisite rights and intellectual property in such Precursor and reference standard so as to permit their use by CPDC as contemplated by this Agreement without infringement of any third party rights. 4.4 Product Specifications. It is understood that the Specifications may be subject to change from time-to-time based on written agreement by both Parties and in accordance to the Quality Agreement. The current Product Specifications may be referred to within the CPDC controlled document attached as Schedule 2 hereto which is approved at the effective date of this Supply Agreement. 4.5 Changes by CPDC. CPDC shall manufacture Product in compliance with the approved batch records, Specifications, applicable cGMPs, the Quality Agreement, and all applicable laws, rules and regulations, and shall not make any changes contravening that specified within the Quality Agreement. 4.6 Complaints and Adverse Reactions. CPDC or FUSION shall provide to each other prompt notice of any information either of them receives regarding the safety of the Precursor, reference standards, excipients, Products or isotopes, including any confirmed or unconfirmed information regarding adverse, serious or unexpected events associated with any Product that may implicate the manufacture of the Product or one of its components; provided, however, that FUSION shall not be required to provide Clinical Trial reporting to CPDC. For all complaints with respect to any Product of which a Party becomes aware concerning adverse reactions or safety issues, notice must be given by telephone within [***] after receipt of the information, followed immediately with written notice, advising the other Party, regardless of the origin of such information. Any other complaints shall be reported in writing to the other party [***]. CPDC agrees to co-operate with FUSION and any Regulatory Authority in evaluating any complaint, claim, safety or adverse use report related to any Product CPDC will provide timely assistance in responding to any such complaints, including reviews of Batch records and retained samples as well as any necessary testing within reason. Page 5 of 13 CONFIDENTIAL





Supply Agreement - FUSION 4.7 Recalls. FUSION shall notify CPDC promptly if any Product is the subject of a recall or correction (a Recall), and FUSION and/or its designee shall have sole responsibility for the handling and disposition of such Recall. [***]. (a) In the event that CPDC disputes FUSION'S determination that the fault is due to CPDC and/or to its employees or agents, the Parties will select a mutually agreeable outside consulting firm which will be instructed to review the applicable information and data and to confirm or dissent from FUSION'S determination. If the consulting firm confirms FUSION'S determination, CPDC will pay the fees of such consulting firm. If the consulting firm dissents from FUSION'S determination, CPDC will not have the obligations set forth herein with respect to the Recall and FUSION will pay the fees of such consulting firm. (b) FUSION and/or its designee shall maintain records of all sales, shipping records of Product and customers in sufficient detail to adequately administer a Recall for the period of time as required by applicable law and regulation. CPDC's Shipping Records of Product will be given to Fusion on request such that Fusion can maintain the records and, if such a request is made, will be delivered within a timeframe to be detailed within Quality Agreement. 4.8 New Regulatory Requirements. Each Party shall promptly notify the other of new regulatory requirements of which it becomes aware which are relevant to the manufacture of any Product under this Agreement and which are required by the Regulatory Authorities, as applicable. The Parties shall confer with each other with respect to the best means to implement and comply with such requirements. Any reasonable costs for modifications or additions to the facility required as a result of new regulatory requirements shall be borne by [***]. 4.9 Records. CPDC shall maintain all records necessary to evidence compliance in all respects with (i) the applicable cGMP regulations, Canadian Environmental Health and Safety (EHS) regulations, the requirements of the CNSC for handling of radioactive materials and the Canadian and International regulations for the transport of dangerous goods as related to the supply and manufacture of Products; (ii) the Specifications; and (iii) obligations under this Agreement. All such records shall be maintained by CPDC according to that specified within the Quality Agreement. CPDC shall provide to FUSION reasonable access to such records upon request Prior to destruction of any record after such time, CPDC shall give written notice to FUSION. FUSION shall have the right within [***] of receipt of such notice to request that CPDC maintain such records in an off-site storage facility for such longer periods as FUSION requests, provided that FUSION pays all costs associated with such off-site storage. 5. Representations and Warranties 5.1 Mutual Representations and Warranties. Each Party represents and warrants to the other as follows: (a) it is a corporation duly organized and validly existing under the laws of the state, province or country of its incorporation; (b) it has the complete and unrestricted power and right to enter into this Agreement and to perform its obligations hereunder; (c) this Agreement has been duly authorized, executed and delivered by such Party and constitutes a legal, valid and binding obligation of such Party enforceable against such Party in accordance with its terms except as enforceability may be limited by applicable bankruptcy, insolvency, reorganization, receivership, moratorium, fraudulent transfer, or other similar laws affecting the rights and remedies of creditors generally and by general principles of equity; Page 6 of 13 CONFIDENTIAL





Supply Agreement - FUSION (d) the execution, delivery and performance of this Agreement by such Party do not conflict with any agreement, instrument or understanding, oral or written, to which such Party is a Party or by which such Party may be bound, nor violate any law or regulation of any court, governmental body or administrative or other agency having authority over such Party; (e) all consents, approvals and authorizations from all governmental authorities or other third parties required to be obtained by such Party in connection with the execution and delivery of this Agreement have been obtained; (f) no person or entity has or will have, as a result of the transactions contemplated by this Agreement, any right, interest or valid claim against or upon such Party for any commission, fee or other compensation as a finder or broker because of any act by such Party or its agents, or, with respect to such Party, because of any act by its Affiliates or sublicensees; (g) it has not entered into any agreement with any third Party that is in conflict with the rights granted to the other Party pursuant to this Agreement; and (h) neither it nor its Affiliates has been debarred or is subject to debarment, and such Party will not use in any capacity in connection with this Agreement any person or entity who has been debarred pursuant to Section 306 of the United States Federal Food, Drug and Cosmetic Act. 5.2 CPDC Limited Product Warranty. CPDC hereby provides a limited product warranty, and accordingly does warrant for each Batch, that the Product shipped will (i) conform with the Specifications, (ii) be manufactured, tested, processed, packed and prepared for shipment in accordance with cGMPs, and (iii) be free from defects in material and workmanship for the period from the date of manufacture to the expiry date set out on each Unit of Product packed and prepared for shipment. 5.3 No Implied or Other Warranties. CPDC is manufacturing Batches to meet Specifications and is supplying Products to FUSION'S designees. Except as expressly set out in this Supply Agreement, CPDC and FUSION hereby disclaim all other warranties or conditions, whether express or implied, statutory or otherwise including, but not limited to, any implied warranties or conditions of merchantability or fitness for a particular purpose. 6. Term 6.1 Term. This Supply Agreement shall commence on the Effective Date, and shall continue for a period of [***] unless terminated earlier in accordance with the terms of this Supply Agreement.

[***] Import Alert [***], the Parties shall [***]. Negotiating in good faith, the Parties shall agree to a reasonable minimum percentage of Product supply to [***] Import Alert. In addition, the parties will negotiate the different aspects of the territories and related terms which may include, but are not limited to, [***].

[***] Import Alert [***], the Parties shall amend this Supply Agreement to revise the [***] Territories. Negotiating in good faith, the Parties shall agree to a reasonable minimum percentages of Product supply to the each territory, including but not limited to [***] and such amendment shall be closed within [***] of CPDC notifying Fusion [***] Import Alert. 6.2 Term, Renewal. Following the Term, this Supply Agreement shall automatically renew for successive periods of one (1) year (each a Renewal Term), unless a Party delivers written notice of non-renewal to the other Party [***] prior to the end of the applicable term. The Term, Initial Renewal Term and Renewal Terms shall be collectively referred to as the Term. Page 7 of 13 CONFIDENTIAL





Supply Agreement - FUSION 7. Termination 7.1 Termination by FUSION, Without Cause. FUSION may terminate this Agreement by providing written notice to the CPDC where: (a) [***] following the Effective Date of this Supply Agreement, FUSION may terminate this Agreement without cause by providing CPDC with [***] prior written notice. (b) Fusion discontinues the trial or terminates the program, Fusion may terminate this agreement by giving [***] written notice to CPDC 7.2 Termination by FUSION, For Cause. FUSION may terminate this Agreement with immediate effect, by providing written notice to the CPDC, where: (a) CPDC commits a fundamental breach of any of its obligations under this Agreement, and such breach is not remedied (if capable of remedy) within [***] of notice in writing from FUSION requiring that such breach be remedied; (b) CPDC becomes insolvent or goes into administration, receivership or liquidation or enters into any arrangement or composition with its creditors; or (c) CPDC ceases or threatens to cease carrying on business. (d) CPDC fails to maintain a Drug Establishment License with Health Canada 7.3 Without limiting Section 11, in the event of for cause termination of this Agreement by FUSION pursuant to Section 7.2, CPDC's maximum liability shall be no greater than that set forth in Section 11.2. 7.4 Termination by CPDC, For Cause. CPDC may terminate this Agreement immediately on written notice to FUSION if: (a) FUSION fails to pay or dispute any invoice in accordance with Section 3.5 and fails to remedy such breach within [***] of a notice from CPDC requiring FUSION to remedy the same and stipulating that FUSION is in breach of this Agreement; or (b) FUSION becomes insolvent or goes into administration, receivership or liquidation or enters into any arrangement or composition with its creditors. 7.5 Termination of this Agreement is without prejudice to any accrued rights of either party as at the date of termination, including, without limitation, CPDC's right to invoice FUSION pursuant to Section 3.5 for any amounts chargeable pursuant to this Agreement as of the date of termination, or as a result of termination. 7.6 Upon termination of this Agreement for any reason whatsoever: (a) CPDC must immediately return, [***], all of FUSION'S property in CPDC's possession; and (b) all then active Production Orders shall be deemed to have been cancelled by FUSION as of the date of termination of this Agreement. Page 8 of 13 CONFIDENTIAL





Supply Agreement - FUSION (c) Shall relieve CPDC of its Exclusivity and Performance of Work obligations set forth in the Master Services Agreement sections 3 and 4 respectively, unless, other work orders under the MSA are still valid. 7.7 Prior Obligations. Except as otherwise set forth in this Section 7, termination of this Supply Agreement for any reason shall not release either Party from any obligation theretofore accrued. 8. Survival. Any provision of this Supply Agreement, which, by its terms, is intended to survive the termination or expiration of this Supply Agreement, shall survive such termination or expiration of this Agreement. 9. Assignment. This Agreement shall inure to the benefit of and be binding upon the successors and assigns of the Parties hereto; provided, however, that neither Party shall transfer or assign this Agreement without the prior written consent of the other Party, such consent not to be unreasonably withheld, except where such assignment is by CPDC to any successor or subsidiary organization created within [***] of the Effective Date of this Agreement, which assignment may be completed without the prior written consent of FUSION. Notwithstanding the foregoing, each Party may assign this Agreement and its rights and obligations hereunder without such consent in connection with the transfer or sale of all or substantially all of the business of such Party to which this Agreement relates, whether by merger, sale of stock, sale of assets or otherwise, provided the assignee agrees in writing with the other Party hereto to assume all obligations and liabilities of the assignor under this Agreement. 10. Indemnification 10.1 By CPDC. CPDC shall defend, indemnify and hold FUSION and its Affiliates and sublicensees, and each of their respective directors, officers and employees, harmless from and against any and all damages, liabilities, costs and expenses (including the reasonable costs and expenses of lawyers and other professionals) (collectively Losses) incurred by FUSION in connection with any claim, demand, action or other proceeding (each, a Claim) by a third party (excluding FUSION'S Affiliates and sublicensees), to the extent such Losses arise out of (a) failure of the Product delivered under this Agreement to conform to the Specifications; (b) CPDC's breach of this Agreement, including without limitation any failure of its representations and warranties set forth in Section 5.1 or 5.2 to have been accurate when made or any breach of the covenants set forth in this Agreement; or (c) the gross negligence or intentional misconduct of CPDC or any of its Affiliates, or any of their respective directors, officers, employees, provided CPDC will not have an indemnification obligation with respect to any Claim to the extent that FUSION has an indemnification obligation under Section 10.2. 10.2 By FUSION. FUSION shall defend, indemnify and hold CPDC and Its Affiliates, and each of their respective directors, officers and employees, harmless from and against any and all Losses incurred by CPDC in connection with of any Claim by a third party (excluding CPDC's Affiliates), to the extent such Losses arise out of: (a) except to the extent arising from the failure of the Product to conform to the Specifications, the use or sale of the Product by FUSION, its Affiliates, sublicensees, distributors, agents or other parties; (b) except to the extent arising from the failure of the Product to conform to the Specifications, the manufacture, storage, use, handling, promotion, marketing, distribution, importation, sale or offering for sale of Product; (c) interactions and communications with governmental authorities, physicians or other third parties; or (d) FUSION'S breach of this Agreement, including without limitation any of its representations and warranties set forth in Section 5.1, (e) the gross negligence or intentional misconduct of FUSION or any of its Affiliates, or any of their respective directors, officers, employees, provided FUSION will not have an indemnification obligation with respect to any Claim to the extent that CPDC has an indemnification obligation under Section 10.1. Page 9 of 13 CONFIDENTIAL





Supply Agreement - FUSION 10.3 EXPENSES. AS THE PARTIES INTEND COMPLETE INDEMNIFICATION, ALL COSTS AND EXPENSES OF ENFORCING ANY PROVISION OF THIS SECTION 10 SHALL ALSO BE REIMBURSED BY THE INDEMNITOR. 11. LIMITATIONS OF LIABILITY. 11.1 GENERAL. EXCEPT FOR DAMAGES FOR WHICH A PARTY IS RESPONSIBLE PURSUANT TO ITS INDEMNIFICATION OBLIGATIONS SET FORTH IN SECTION 10 ABOVE, EACH PARTY SPECIFICALLY DISCLAIMS ALL LIABILITY FOR AND SHALL IN NO EVENT BE LIABLE FOR ANY INCIDENTAL, SPECIAL, INDIRECT OR CONSEQUENTIAL DAMAGES, EXPENSES, LOST PROFITS, LOST SAVINGS, INTERRUPTIONS OF BUSINESS OR OTHER DAMAGES OF ANY KIND OR CHARACTER WHATSOEVER ARISING OUT OF OR RELATED TO THIS AGREEMENT OR RESULTING FROM THE MANUFACTURE, HANDLING. MARKETING, SALE, DISTRIBUTION OR USE OF LICENSED PRODUCT REGARDLESS OF THE FORM OF ACTION, WHETHER IN CONTRACT, TORT, STRICT LIABILITY OR OTHERWISE, EVEN IF SUCH PARTY WAS ADVISED OF THE POSSIBILITY OF SUCH DAMAGES. FUSION SHALL HAVE NO REMEDY, AND CPDC SHALL HAVE NO LIABILITY, OTHER THAN AS EXPRESSLY SET FORTH IN THIS AGREEMENT. EXCEPT FOR DAMAGES FOR WHICH A PARTY IS RESPONSIBLE PURSUANT TO ITS INDEMNIFICATION OBLIGATIONS SET FORTH IN SECTION 10 ABOVE, NO ACTION, REGARDLESS OF FORM, ARISING OUT OF OR RELATED TO THIS AGREEMENT MAY BE BROUGHT BY EITHER PARTY MORE THAN [***] AFTER SUCH PARTY HAS KNOWLEDGE OF THE OCCURRENCE THAT GAVE RISE TO THE CAUSE OF SUCH ACTION. 11.2 CPDC MAXIMUM LIABILITY. NOTWITHSTANDING ANY OTHER TERM HEREIN, OR ANY TERM OF THE MASTER SERVICES AGREEMENT. CPDC'S MAXIMUM LIABILITY TO FUSION UNDER THIS SUPPLY AGREEMENT FOR ANY REASON WHATSOEVER, INCLUDING, WILL NOT EXCEED [***]. 12. Non-Solicitation. During the term and for a period of [***] thereafter, neither party shall solicit, induce, encourage or attempt to induce or encourage any employee of the other party with whom such party has had direct contact to terminate his or her employment with such other party or to breach any other obligation to such other party. This section is not meant to encompass general solicitations such as may be found in newspaper advertisements and the like and the interviewing or hiring of any person who responds to a general solicitation 13. FORCE MAJEURE. NEITHER PARTY SHALL BE LIABLE FOR FAILURE TO PERFORM, OR DELAY IN THE PERFORMANCE OF, ITS OBLIGATIONS UNDER THIS AGREEMENT (OTHER THAN PAYMENT OBLIGATIONS) WHEN SUCH FAILURE OR DELAY IS CAUSED BY AN EVENT OF FORCE MAJEURE. FOR PURPOSES OF THIS AGREEMENT, AN EVENT OF FORCE MAJEURE MEANS ANY EVENT OR CIRCUMSTANCE BEYOND THE REASONABLE CONTROL OF THE AFFECTED PARTY. INCLUDING BUT NOT LIMITED TO, WAR, INSURRECTION, RIOT, FIRE, FLOOD OR OTHER UNUSUAL WEATHER CONDITION, EXPLOSION. ACT OF GOD, PERIL OF THE SEA, STRIKE, LOCKOUT OR OTHER INDUSTRIAL DISTURBANCE, SABOTAGE, ACCIDENT, EMBARGO, BREAKAGE OF MACHINERY OR APPARATUS, INJUNCTION, ACT OF GOVERNMENTAL AUTHORITY, COMPLIANCE WITH GOVERNMENTAL ORDER ON NATIONAL DEFENSE REQUIREMENTS, OR INABILITY TO OBTAIN FUEL, POWER, RAW MATERIALS, LABOR OR TRANSPORTATION FACILITIES. IF, DUE TO ANY EVENT OF FORCE MAJEURE, EITHER PARTY SHALL BE UNABLE TO FULFILL ITS OBLIGATIONS UNDER THIS AGREEMENT (OTHER THAN PREVIOUSLY ACCRUED PAYMENT OBLIGATIONS FROM COMPLETED WORK, THE AFFECTED PARTY SHALL IMMEDIATELY NOTIFY THE OTHER PARTY OF SUCH INABILITY AND OF THE PERIOD DURING WHICH SUCH INABILITY IS EXPECTED TO CONTINUE AND SHALL USE COMMERCIALLY REASONABLE EFFORTS TO MITIGATE THE LENGTH AND EFFECT OF SUCH FORCE MAJEURE EVENT. Page 10 of 13 CONFIDENTIAL





Supply Agreement - FUSION 14. Compliance with Law. Each Party agrees to comply, and to require its Affiliates and Sublicensees to comply with all applicable international, federal, state and local laws, rules and regulations, including, but not limited to, import/export restrictions, laws, rules and regulations governing use and patent, copyright and trade secret protection, in the performance of its activities as contemplated by this Agreement. 15. Costs and Expenses. Except as otherwise expressly provided in this Agreement, [***] shall bear all costs and expenses associated with the performance of [***] under this Agreement. 16. Notices. Any notice or other communication required or permitted to be given hereunder shall be in writing and shall be delivered in person, transmitted by facsimile, e-mail or similar means of recorded electronic communication or sent by registered mail, charges prepaid, addressed to the addresses set out on the signature page hereof. Any such notice or other communication shall be deemed to have been given and received on the day on which it was delivered or transmitted (or, if such day is not a business day, on the next following business day) unless mailed, in which case on the [***] following the date of mailing; provided, however, that if at the time of mailing or within [***] thereafter there is or occurs a labour dispute or other event that might reasonably be expected to disrupt the delivery of documents by mail, any notice or other communication hereunder shall be delivered or transmitted by means of recorded electronic communication as described. 17. Severability. Each provision contained in this Agreement is distinct and severable and a declaration of invalidity or unenforceability of any such provision or part thereof by a court of competent jurisdiction shall not affect the validity or enforceability of any other provision hereof. 18. Headings and References. The descriptive headings of this Agreement are for convenience only and shall be of no force or effect in construing or interpreting any of the provisions of this Agreement. The terms this Agreement, hereof, hereunder and similar expressions refer to this Agreement and not to any particular Sections, subsection or other portion hereof, and include any agreement supplemental hereto. Unless something in the subject matter or context is inconsistent therewith, references herein to Sections, subsections, paragraphs, subparagraphs and further subdivisions are references to such subdivisions of this Agreement. 19. Number, Gender and Persons. Unless the context otherwise requires, any reference to gender shall include both genders and words importing the singular number shall include the plural and vice-versa. Words importing persons include individuals, partnerships, associations, trusts, unincorporated organizations and corporations. 20. Calculation of Time Periods. Where a time period is expressed to begin or end at, on or with a specified day, or to continue to or until a specified day, the time period includes that day. Where a time period is expressed to begin after or to be from a specified day, the time period does not include that day. Where anything is to be done within a time period expressed after, from or before a specified day, the time period does not include that day. If the last day of a time period is not a business day, the time period shall end on the next business day. 21. Definitions. Any definitions contained in this Agreement shall include any necessarily corresponding definitions as the context may require. Any capitalized or otherwise defined term used in this Agreement shall have the meaning ascribed in this Agreement regardless of whether such meaning is ascribed earlier or later in this document than the reference in question. 22. Further Assurances. Each of the Parties hereto shall, at all times and from time to time hereafter, execute, acknowledge, and deliver such other instruments and shall take such other action as may be necessary to carry out their respective obligations under this Agreement. Page 11 of 13 CONFIDENTIAL





Supply Agreement - FUSION 23. Waiver. Except as expressly provided in this Agreement, no amendment or waiver of this Agreement or any portion thereof shall be binding unless executed in writing. No waiver of any provision of this Agreement shall constitute a waiver of any other provision, nor shall any waiver of any provision of this Agreement constitute a continuing waiver unless otherwise expressly provided. 24. Counterparts. This Agreement may be executed in any number of counterparts, and/or by facsimile or e-mail transmission of standard PDF files, each of which shall constitute an original and all of which, taken together, shall constitute one and the same instrument.

(remainder of page intentionally left blank; signature page follows) Page 12 of 13 CONFIDENTIAL





Supply Agreement - FUSION IN WITNESS WHEREOF, the Parties hereto have each caused this Supply Agreement to be duly executed as of the Effective Date. Centre for Probe Development and Commercialization McMaster University Nuclear Research Building, A316 1280 Main Street West Hamilton, Ontario Canada, L8S 4K1

Fusion Pharmaceuticals Inc. 270 Longwood Road South Hamilton, Ontario Canada, L8P 0A6

By By Name Name Title Title Date Date

[SIGNATURE PAGE] Page 13 of 13 CONFIDENTIAL





Supply Agreement - FUSION SCHEDULE 1: SUPPLY PRICING

[***] 4. Production Standby Fee: a fee of $45,000 per month shall apply to [***]. CONFIDENTIAL Page 1 of 2

CONFIDENTIAL


Output: Highlight the parts (if any) of this contract related to Insurance that should be reviewed by a lawyer. Details: Is there a requirement for insurance that must be maintained by one party for the benefit of the counterparty?