Document:

exv10w1

 

Exhibit 10.1

TREEHOUSE FOODS, INC.

EXECUTIVE SEVERANCE PLAN

     Introduction. TreeHouse Foods, Inc. (the “Company”) hereby establishes a severance
plan, effective May 1, 2006 (the “Effective Date”), to be known as the TreeHouse Foods, Inc.
Executive Severance Plan (the “Plan”). The Plan shall provide severance benefits to certain
employees of the Company and subsidiaries thereof, as identified in Appendix A (“Executive” or
“Executives”), upon certain terminations of employment from the Company and all subsidiaries, as
described in this Plan document. The Plan shall not be applicable to employees of the Company (or
any subsidiary thereof) whose employment is subject to an employment agreement, unless such
agreement expressly states that such employee shall be eligible to participate in the Plan. The
purpose of the Plan is to recognize the past service of Executives whose employment is
involuntarily terminated as set forth herein by providing severance payments. With respect to
Executives identified in Appendix A, this Plan supersedes all prior plans, policies and practices
of the Company (or any subsidiary thereof), including provisions of a prior employment agreement,
if any, between the Executive and the Company (or a subsidiary) with respect to severance or
separation pay for the Executive. The Plan is the only severance program for such Executives.

	1.	 	Definitions.

      (a) “Base Salary” means the regular annual rate of base salary in effect on the
date of termination (or on the date of a Change of Control, if such amount is greater).

      (b) “Cause” means (i) Executive’s conviction of a felony or the entering by
Executive of a plea of nolo contendere to a felony charge, (ii) Executive’s gross neglect or
willful and intentional gross misconduct in the performance of, or willful, substantial and
continual refusal by Executive to perform, the duties, responsibilities or obligations
assigned to Executive, or (iii) a material breach by Executive of the Code of Ethics
applicable to employees of the Company (or any subsidiary), as in effect from time to time.

      (c) “Change of Control” means the occurrence of any of the following events
following the Effective Date: (i) any “person” (as such term is used in Section 13(d) of the
Exchange Act, but specifically excluding the Company, any wholly-owned subsidiary of the
Company and/or any employee benefit plan maintained by the Company or any wholly-owned
subsidiary of the Company) becomes the “beneficial owner” (as determined pursuant to Rule
13d-3 under the Exchange Act), directly or indirectly, of securities of the Company
representing thirty percent (30%) or more of the combined voting power of the Company’s then
outstanding securities; or (ii) individuals who currently serve on the Board, or whose
election to the Board or nomination for election to the Board was approved by a vote of at
least two-thirds (2/3) of the directors who either currently serve on the Board, or whose
election or nomination for election was previously so approved, cease for any reason to
constitute a majority of the Board; or (iii) the Company or any subsidiary of the Company
shall merge with or consolidate into any other corporation, other than a merger or
consolidation which would result in the holders

 

 

of the voting securities of the Company
outstanding immediately prior thereto holding immediately thereafter securities representing
more than sixty percent (60%) of the combined voting power of the voting securities of the
Company or such surviving entity (or its ultimate parent, if applicable) outstanding
immediately after such merger or consolidation; or (iv) the stockholders of the Company
approve a plan of complete liquidation of the Company or an agreement for the sale or
disposition by the Company of all or substantially all of the Company’s assets, or such a
plan is commenced.

      (d) “Code” means the Internal Revenue Code of 1986, as amended.

      (e) “Earned Compensation” means the sum of (i) any Base Salary earned, but
unpaid, for services rendered to the Company (or a subsidiary) on or prior to the date of
termination, (ii) any annual Incentive Compensation payable for services rendered in the
calendar year preceding the calendar year in which the date of termination occurs that has
not been paid on or prior to the date of termination (other than Base Salary and Incentive
Compensation that has been deferred, if any, pursuant to Executive’s election), and which is
payable under the terms of the applicable incentive plan; provided, however, in the event of
a termination of the Executive without Cause and which entitles the Executive to payment
under Section 4(a) hereof, “Earned Compensation” shall include any annual Incentive
Compensation payable for services rendered in the calendar year preceding the calendar year
in which the date of termination occurs, notwithstanding any requirement that the Executive
be in active employment on the date such Incentive Compensation is paid or any other terms
of the applicable incentive plan to the contrary; (iii) any accrued but unused vacation
days; and (iv) any business expenses incurred on or prior to the date of the Executive’s
termination that are eligible for reimbursement in accordance with the Company’s (or the
subsidiary’s, as applicable) expense reimbursement policies as then in effect.

      (f) “Good Reason” means a termination of Executive’s employment by Executive
within 90 days following (i) a reduction in Executive’s annual Base Salary or Target
Incentive Compensation opportunity, or (ii) a material reduction in Executive’s duties and
responsibilities or the assignment to Executive of duties and responsibilities which are
materially inconsistent with his duties or which materially impair Executive’s ability to
function in his or her current position. Notwithstanding the foregoing, a termination shall
not be treated as a termination for Good Reason (i) if Executive shall have consented in
writing to the occurrence of the event giving rise to the claim of termination for Good
Reason or (ii) unless Executive shall have delivered a written notice to the Board within 60
days of his having actual knowledge of the occurrence of one of these such events stating
that he intends to terminate his employment for Good Reason and specifying the factual basis
for such termination, and such event, if capable of being cured, shall not have been cured
within 10 days of the receipt of such notice.

      (g) “Incentive Compensation” means with respect to any calendar year, the
annual incentive bonus paid or payable under any applicable plan or program of the Company
(or a subsidiary) providing for incentive compensation.

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      (h) “Key Employee” means a “specified employee” as such term is defined under
Code Section 409A and the regulations issued thereunder.

      (i) “Severance Period” means the period of time over which payments are made
pursuant to Sections 3(b) or 4(a) hereof, as identified in Appendix A with respect to each
eligible Executive.

      (j) “Target Incentive Compensation” means with respect to any calendar year,
the annual incentive bonus the Executive would have been entitled to receive under any
applicable plan or program of the Company (or of a subsidiary) providing for incentive
compensation had he remained employed by the Company (or a subsidiary) and assuming that
performance at the level designated as “target” for such calendar year had been met.

      (k) “Vested Benefits” means amounts which are vested or which the Executive is
otherwise entitled to receive under the terms of or in accordance with any plan, policy,
practice or program of, or any contract or agreement with, the Company or any of its
subsidiaries (collectively referred to as the “Benefit Plans”), at or subsequent to the date
of his termination without regard to the performance by Executive of further services or the
resolution of a contingency.

	2.	 	Eligibility

Those Executives identified in Appendix A, as such may be amended from time to time by the
Compensation Committee, or its duly authorized designee, in its sole discretion.

	3.	 	Benefits upon Certain Terminations.

      (a) Termination for Any Reason. In the event of the termination of Executive’s
employment for any reason, Executive shall be entitled to any Earned Compensation owed to
Executive but not yet paid as of the date of termination. Such amount(s) shall be paid in
accordance with the Company’s (or the subsidiary’s, as applicable) applicable policy,
practice or procedure following the Executive’s date of termination. Executive shall also
be entitled to payment of Vested Benefits, if any. Any such payment shall be made in
accordance with the terms of the applicable Benefit Plan(s) and the requirements of
applicable law. Nothing in this Agreement shall amend or modify the terms of any such
Benefit Plan(s). No additional termination benefits shall be paid or payable to or in
respect of the Executive pursuant to this Plan unless such Executive qualifies for payment
under Section 3(b) or 4(a) hereof.

      (b) Involuntary or Constructive Termination. If following the Effective Date,
(1) the Executive’s employment with the Company (or a subsidiary, as applicable) is
terminated by the Company (or the subsidiary, as applicable) without Cause, or (2) the
Executive has Good Reason to terminate employment, the Executive shall be entitled to the
following payments and other benefits (in addition to the payments under Section 3(a)
hereof):

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	 	(i)	 	Salary continuation payments in an amount equal to one times
(or such other multiple as may be identified with respect to a
particular Executive in Appendix A) the Executive’s Base Salary and one
times (or such other multiple as may be identified with respect to a
particular Executive in Appendix A) the Executive’s Target Incentive
Compensation; provided, however that an Executive who
is a Tier III Executive, as determined under Appendix A, shall be
eligible for salary continuation payments in an amount equal to one
times (or such other multiple as may be identified with respect to a
particular Executive in Appendix A) the Executive’s Base Salary only.
Tier III Executives shall not be eligible to receive Target Incentive
Compensation as salary continuation. If applicable, Target Incentive
Compensation shall be prorated as necessary and in accordance with the
terms of any applicable incentive plan to reflect a partial year of
active and eligible employment. Base Salary continuation payments shall
be paid subject to the terms of this Plan in equal (or approximately
equal) installments in accordance with the Company’s (or the
subsidiary’s, as applicable) standard payroll practices until the
amount required under this Section 3(b)(i) is paid in full. Such
period of continued salary payments shall be the “Severance Period.”
Target Incentive Compensation (prorated, as applicable) shall be paid
in a single lump sum payment in accordance with the terms of the
applicable incentive plan.
	 
	 	(ii)	 	In the event that the amount payable pursuant to Section
3(b)(i) or the time period over which such amounts are paid shall be
determined to be in excess of the limitations applicable to separation
pay under Section 409A of the Code, or such payment is otherwise
determined to be “deferred compensation” within the meaning of Code
Section 409A, then any such payment to a Key Employee following such
Key Employee’s separation from service shall be subject to a six (6)
month delay if and to the extent required to achieve compliance with
Section 409A of the Code. In such event, payment shall be made in
accordance with Section 6(f) hereof.
	 
	 	(iii)	 	The Company will provide comparable medical (including
prescription drug), dental, hospitalization and life insurance
benefits, as applicable, to the Executive and his or her eligible
dependents for the Severance Period, provided the Executive continues
to pay the applicable employee rate for such coverage. Any such
coverage provided by the Company shall be provided under the benefit
plan(s) applicable to employees of the Company (or the subsidiary, as
applicable) in general and shall be subject to the terms of such
plan(s), as such terms may be amended by the Company in its sole
discretion from time to time. In the case of

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	 	 	 	any coverage or plan to
which the Consolidated Omnibus Budget Reconciliation Act of 1985, as
amended (COBRA) would apply, any continuation of such coverage shall
run concurrently with any period of continuation coverage required
under COBRA and shall otherwise be provided in accordance with COBRA
and the regulations issued thereunder; provided, however, in
the event the Company is unable to provide such coverage on account of
any limitations under the terms of any applicable contract with an
insurance carrier or third party administrator, or the terms of any
applicable plan, the Company shall pay the Executive an amount equal to
the portion of the premium for such coverage that is paid by the
Company for employees generally. Continuation coverage provided under
this Section 3(b)(ii) shall terminate prior to the expiration of the
Severance Period on the date the Executive first becomes eligible for
other group health plan coverage, or otherwise in accordance with COBRA
and the regulations issued thereunder. Nothing in this Agreement shall
amend or modify the terms of any plan, contract or program providing
for medical, prescription drug, dental, hospitalization and/or life
insurance benefits.

	4.	 	Benefits upon Change of Control and Termination. 

      (a) In lieu of the payments due under Section 3(b) hereof, in the event the Executive’s
employment with the Company is terminated by reason of a termination without Cause or
termination for Good Reason within the 24-month period immediately following a Change of
Control, the Executive shall be entitled to the following payments and other benefits (in
addition to the payments under Section 3(a) hereof):

	 	(i)	 	Salary continuation payments in an amount equal to one times
(or such other multiple as may be identified with respect to a
particular Executive in Appendix A) the Executive’s Base Salary and one
times (or such other multiple as may be identified with respect to a
particular Executive in Appendix A) the Executive’s Target Incentive
Compensation. If applicable, Target Incentive Compensation shall be
prorated as necessary and in accordance with the terms of any
applicable incentive plan to reflect a partial year of active and
eligible employment. This amount shall be paid by the Company subject
to the terms of the Plan in a single lump sum no later than thirty (30)
business days following the date of termination.
	 
	 	(ii)	 	In the event that the amount payable pursuant to Section
4(a)(i) or the time period over which such amounts are paid shall be
determined to be in excess of the limitations applicable to separation
pay under Section 409A of the Code, or such payment is otherwise
determined to be “deferred compensation” within the

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	 	 	 	meaning of Code
Section 409A, then any such payment to a Key Employee following such
Key Employee’s separation from service shall be subject to a six (6)
month delay if and to the extent required to achieve compliance with
Section 409A of the Code. In such event, payment shall be made in
accordance with Section 6(f) hereof.
	 
	 	(iii)	 	The Company will provide comparable medical (including
prescription drug), dental, hospitalization and life insurance
benefits, as applicable, to the Executive and his or her eligible
dependents for a period not to exceed the period of salary continuation
payments if those payments were made in installments in accordance with
the Company’s (or the subsidiary’s, as applicable) standard payroll
practices, provided the Executive continues to pay the applicable
employee rate for such coverage. Any such coverage provided by the
Company shall be provided under the benefit plan(s) applicable to
employees of the Company in general and shall be subject to the terms
of such plan(s), as such terms may be amended by the Company in its
sole discretion from time to time. In the case of any coverage or plan
to which the Consolidated Omnibus Budget Reconciliation Act of 1985, as
amended (COBRA) would apply, any continuation of such coverage shall
run concurrently with any period of continuation coverage required
under COBRA and shall otherwise be provided in accordance with COBRA
and the regulations issued thereunder; provided, however, in
the event the Company is unable to provide such coverage on account of
any limitations under the terms of any applicable contract with an
insurance carrier or third party administrator, or the terms of any
applicable plan, the Company shall pay the Executive an amount equal to
the portion of the premium for such coverage that is paid by the
Company for employees generally. Continuation coverage provided under
this Section 4(a)(ii) shall terminate prior to the expiration of the
period described in this Section 4(a)(ii) on the date the Executive
first becomes eligible for other group health plan coverage, or
otherwise in accordance with COBRA and the regulations issued
thereunder. Nothing in this Agreement shall amend or modify the terms
of any plan, contract or program providing for medical, prescription
drug, dental, hospitalization and/or life insurance benefits.

      (b) Payments following a Change of Control.

	 	(i)	 	Gross-Up for Tax Liability under Section 4999 of the
Code. If the aggregate of all payments or benefits made or
provided to Executive with respect to payment under Section 4(a)
hereof, if applicable, and under all other plans and programs of the
Company

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	 	 	 	(the “Aggregate Payment”) is determined to constitute a
Parachute Payment, as such term is defined in Section 280G(b)(2) of the
Code, and exceeds an amount which is equal to three (3) times the
Executive’s “base amount” (as such term is defined in accordance with
Section 280G(b)(3)) by more than 10%, then the Company shall pay to
Executive, prior to the time any excise tax imposed by Section 4999 of
the Code (the “Excise Tax”) is payable with respect to such Aggregate
Payment, an additional amount which, after the imposition of all
income, employment and excise taxes thereon, is equal to the Excise Tax
on the Aggregate Payment.
	 
	 	(ii)	 	Limitation on the Amount of Payment. If Aggregate
Payment is determined to constitute a Parachute Payment, as such term
is defined in Section 280G(b)(2) of the Code, and equals three (3)
times the Executive’s “base amount” (as such term is defined in
accordance with Section 280G(b)(3)) or exceeds such amount by 10% or
less, then the Company shall reduce the amount payable under Section
4(a) to an amount, the value of which is one dollar ($1.00) less than
an amount which is equal to three (3) times the Executives “base
amount” and no payment shall be required or made pursuant to Section
4(b)(i) hereof.
	 
	 	(iii)	 	The determination of whether the Aggregate Payment
constitutes a Parachute Payment and, if so, whether such amount shall
be subject to an excise tax imposed under Section 4999 of the Code, as
well as the determination of the amount to be paid to Executive and the
time of payment pursuant to this Section 4 shall be made by the
Company’s independent auditor or, if such independent auditor is
unwilling or unable to serve in this capacity, such other nationally
recognized accounting firm selected by the Company with the consent of
the person serving as the Chief Executive Officer of the Company
immediately prior to the Change of Control, which consent shall not be
unreasonably withheld. For purposes of this calculation, the Executive
shall be deemed to pay federal, state and local taxes at the highest
marginal rate of taxation for the applicable tax year.
	 
	 	(iv)	 	The estimated amount of the payment due the Executive
pursuant to paragraphs (4)(b)(i) or (ii), as applicable, shall be paid
to the Executive in a lump sum not later than thirty (30) business days
following the delivery of such estimate to the Executive and the
Company. In the event that the amount of the estimated payment is less
than the amount actually due to the Executive under this Section 4(b),
the amount of any shortfall shall be paid to the Executive within ten
(10) business days after the existence of the shortfall is determined.

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	5.	 	Conditions and Limitations on Severance Payments. The following conditions and
limitations shall apply to all severance benefits payable under this Plan and all severance
payments under the Plan shall be specifically conditioned upon the Executive’s satisfaction of
the conditions noted:

      (a) Full Discharge of Company Obligations. The amounts payable to Executive
under this Plan following termination of his employment (including amounts payable with
respect to Vested Benefits) shall be in full and complete satisfaction of Executive’s rights
under this Plan and any other claims he may have in respect of his employment by the Company
or any of its subsidiaries other than claims for common law torts or under other contracts
between Executive and the Company or its subsidiaries. Such amounts shall constitute
liquidated damages with respect to any and all such rights and claims and, upon Executive’s
receipt of such amounts, the Company and all its subsidiaries shall be released and
discharged from any and all liability to Executive in connection with this Plan or otherwise
in connection with Executive’s employment with the Company and its subsidiaries and, as a
condition to payment of any such amounts that are in excess of the Earned Compensation and
the Vested Benefits following the date of termination, Executive and the Company shall
execute (and not revoke) a valid mutual release to be prepared by the Company pursuant to
which the Executive and the Company (and its subsidiaries and affiliates) shall each
mutually agree to release the other, to the maximum extent permitted under applicable law,
from any and all claims either party may have against the other that relate to or arise out
of the employment or termination of employment of the Executive, except any claims or rights
which cannot be waived by law.

      (b) No Mitigation; No Offset. In the event of any termination of employment
that entitles the Executive to a payment or payments under this Plan, Executive shall be
under no obligation to seek other employment and there shall be no offset against amounts
due Executive under this Plan on account of any remuneration attributable to any subsequent
employment that he may obtain, except as may be applied pursuant to COBRA or other
applicable law respecting the continuation of benefits.

      (c) Company Property. Promptly following termination of Executive’s
employment, Executive shall return to the Company all property of the Company or any
subsidiary, and all copies thereof in Executive’s possession or under his control, except
that Executive may retain his personal notes, diaries, Rolodexes, calendars and
correspondence.

      (d) Confidentiality. Without the prior written consent of the Company, except
(a) in the course of carrying out his or her duties hereunder or (b) to the extent required
by an order of a court having competent jurisdiction or under subpoena from an appropriate
government agency, Executive shall not disclose any trade secrets, customer lists, drawings,
designs, information regarding product development, marketing plans, sales plans,
manufacturing plans, management organization information (including data and other
information relating to members of the Board and management), operating policies or manuals,
business plans, financial records, packaging design or other financial, commercial, business
or technical information relating to the Company or any

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of its subsidiaries or information
designated as confidential or proprietary that the Company or any of its subsidiaries may
receive belonging to suppliers, customers or others who do business with the Company or any
of its subsidiaries (collectively, “Confidential Information”) to any third person unless
such Confidential Information has been previously disclosed to the public by the Company or
has otherwise become available to the public (other than by reason of Executive’s breach of
this Section 6(d)).

      (e) Non-Solicitation of Employees. During Executive’s employment with the
Company, and any subsidiary thereof, and during the twelve (12) month period following any
termination of Executive’s employment for any reason, Executive shall not, except in the
course of carrying out his duties hereunder, directly or indirectly induce any employee of
the Company or any of its subsidiaries to terminate employment with such entity, and shall
not directly or indirectly, either individually or as owner, agent, employee, consultant or
otherwise, knowingly employ or offer employment to any person who is or was employed by the
Company or a subsidiary thereof unless such person shall have ceased to be employed by such
entity for a period of at least six (6) months.

      (f) Non-Disparagement. Executive shall not disparage, slander or injure the
business reputation or goodwill of the Company (or any subsidiary) in any material way,
including, by way of illustration, through any contact with vendors, suppliers, employees or
agents of the Company (or any subsidiary) which could harm the business reputation or
goodwill of the Company (or any subsidiary).

      (g) Confidentiality of Payments under the Plan. Executive shall keep all
aspects of this Plan not otherwise currently publicly available strictly confidential,
including but not limited to the fact, amount and/or duration of any payment under this Plan
strictly confidential, except that Executive may make necessary disclosures to his or her
attorney(s) or tax advisor(s) that are retained to advise Executive in connection with
amounts paid under this Plan.

      (h) Remedies. To the extent permitted by law, if the Company determines that
the Executive has engaged in any of the restricted activities referenced in this Section 5,
the Company will immediately cease any unpaid severance payments and will have the right to
seek repayment of any such payments that have already been made. In addition, the covenants
and obligations of Executive with respect to confidentiality, Company property,
non-competition, non-solicitation and non-disparagement relate to special, unique and
extraordinary matters and that a violation of any of the terms of such covenants and
obligations may cause the Company irreparable injury for which adequate remedies are not
available at law. Therefore, the Company shall be entitled to an injunction, restraining
order or such other equitable relief restraining Executive from committing any violation of
the covenants and obligations under the Plan. These injunctive remedies shall be cumulative
and in addition to any other rights and remedies the Company ha have at law or in equity.

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	6.	 	Miscellaneous. 

      (a) Survival. Sections 5(d), (e), (f), (g) and (h) (relating to
confidentiality, non-competition, non-solicitation and non-disparagement) and 6(p) (relating
to governing law) shall survive the termination of this Plan.

      (b) Binding Effect. This Plan shall be binding on, and shall inure to the
benefit of, the Company and any person or entity that succeeds to the interest of the
Company (regardless of whether such succession does or does not occur by operation of law)
by reason of a merger, consolidation or reorganization involving the Company or a sale of
all or substantially all of the assets of the Company, provided that the assignee or
transferee is the successor to all or substantially all of the assets of the Company and
such assignee or transferee assumes the liabilities, obligations and duties of the Company,
as contained in this Plan, either contractually or as a matter of law. In the event of a
sale of assets as described in the preceding sentence, the Company shall use its reasonable
best efforts to cause such assignee or transferee to expressly assume the liabilities,
obligations and duties of the Company hereunder. This Plan shall also inure to the benefit
of Executive’s heirs, executors, administrators and legal representatives and beneficiaries.

      (c) Inalienability; Assignment. Except as provided under Section 6(b), in no
event may any Executive sell, transfer, anticipate, assign or otherwise dispose of any right
or interest under the Plan. At no time will any such right or interest be subject to the
claims of creditors nor liable to attachment, execution or other legal process..

      (d) Entire Plan. This Plan document constitutes the entire understanding of
the Company and the Executive with respect to the matters referred to herein. With respect
to Executives identified in Appendix A, this Plan supersedes all prior plans, policies and
practices of the Company, including provisions of a prior employment agreement, if any,
between the Executive and the Company (or a subsidiary) with respect to severance or
separation pay for the Executive. The Plan is the only severance program for such
Executives.

      (e) Severability; Reformation. In the event that one or more of the provisions
of this Plan shall become invalid, illegal or unenforceable in any respect, the validity,
legality and enforceability of the remaining provisions contained herein shall not be
affected thereby. In the event any of Sections 5 (d), (e), (f), (g) or (h) is not
enforceable in accordance with its terms, such Section(s) shall be interpreted or reformed
to make such Section enforceable in a manner which provides the Company the maximum rights
permitted at law.

      (f) Compliance with Code Section 409A. It is the Company’s intent that
amounts paid under this Plan shall not constitute “deferred compensation” as that term is
defined under Section 409A of the Code and the regulations promulgated thereunder. In the
event that any amount paid under this Plan is determined to be “deferred compensation”
within the meaning to Code Section 409A and compliance with one or more of the provisions of
this Plan causes or results in a violation of Section 409A of the Code, then such provision
shall be interpreted or reformed in the manner necessary to achieve compliance with Section
409A, including but not limited to the imposition of a six (6) month delay in payment to any
Key Employee following such Key Employee’s

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date of termination which entitles him to a
payment or payments under this Plan. Should it be determined that this six (6) month delay
must be applied, then payment shall be made to the Executive as soon as administratively
practicable following the expiration of such six (6) month period, in a single lump sum
representing the first six (6) months of payments. Payment(s) for the seventh month and all
subsequent months shall be made in accordance with the Company’s (or a subsidiary’s, as
applicable) standard payroll practices.

      (g) Waiver. Waiver by any party hereto of any breach or default by the other
party of any of the terms of this Plan shall not operate as a waiver of any other breach or
default, whether similar to or different from the breach or default waived. No waiver of any
provision of this Plan shall be implied from any course of dealing between the parties
hereto or from any failure by either party hereto to assert its or his rights hereunder on
any occasion or series of occasions.

      (h) Administration. The Plan is administered by the Compensation Committee of
the Board of Directors of TreeHouse Foods, Inc. The Plan Administrator has the power, in
its sole discretion, to approve and interpret the Plan, to decide all matters under the
Plan, including eligibility to participate and benefit entitlement, and to adopt rules and
procedures it deems appropriate for the administration and implementation of the Plan. The
Plan Administrator’s determinations and interpretations shall be conclusive and binding on
all individuals. In administering the Plan, the Plan Administrator may, at its option,
employ compensation consultants, accountants, counsel and other persons to assist or render
advice and other services, all at the expense of the Company.

The Plan Administrator may delegate all or part of its authority to such other person or
persons as the Plan Administrator designates from time to time.

The Plan Administrator has delegated to the Senior Vice President (SVP), Administration, of
the Company authority to determine eligibility under the Plan and authority over all aspects
of day-to-day administration of the Plan (including but not limited review of claims for
benefits). The actions of the SVP, Administration shall be final and binding on all
employees and Participants.

The Company shall indemnify and hold harmless each of the members of the Compensation
Committee and any employee to whom any of the duties of the Compensation Committee may be
delegated, from and against any and all claims, losses, costs, damages expenses or
liabilities arising from any action or failure to act with respect to this Plan, except in
the case of willful misconduct by such member or such employee. This indemnification shall
be in addition to, and not in limitation of, any other indemnification of any such member or
employee.

      (i) Claims. Any person that believes he or she is entitled to any payment
under the Plan may submit a claim in writing to the Company. Any such claim should be sent
to TreeHouse Foods, Inc., Attention: Senior Vice President of Administration, 2 Westbrook
Corporate Center, Suite 1070, Westchester, Illinois 60154. If the claim is

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denied (either
in full or in part), the claimant will be provided with written notice explaining the
specific reasons for the denial and referring to the provisions of the Plan on which the
denial is based. The notice will describe any additional information needed to support the
claim. The denial notice will be provided within 90 days after the claim is received. If
special circumstances require an extension of time (up to 90 days), written notice of the
extension will be given within the initial 90-day period.

      (j) Appeal Procedure. If a claimant’s claim is denied, the claim may apply in
writing to the Compensation Committee for a review of the decision denying the claim. The
claimant then has the right to review pertinent documents and to submit issues and comments
in writing. The Compensation Committee will provide written notice of its decision on
review within 60 days after it receives a review request. If additional time (up to 60
days) is needed to review the request, the claimant will be given written notice of the
reason for the delay.

      (k) Source of Payments. All payments under the Plan will be paid in cash
(except with respect to the payment of Vested Benefits which will be paid in accordance with
the terms of the applicable Benefit Plans) from the general funds of the Company; no
separate fund will be established under the Plan and no assets will be segregated or set
aside for the sole purpose of making payments under the Plan. Any right of any person to
receive any payment under the Plan will be no greater than the right of any other unsecured
creditor of the Company.

      (l) No Expansion of Employment Rights. Neither the establishment or
maintenance of the Plan, the payment of any amount under the Plan, nor any action of the
Company, or any subsidiary thereof, shall confer upon any individual any right to be
continued as an employee nor any right or interest in the Plan other than as provided in the
Plan.

      (m) Amendment and Termination. The Company reserves the right, in its sole and
absolute discretion, to amend or terminate the Plan, in whole or in part, for any reason or
no reason, at any time and from time to time; provided, however, that no amendment or
termination of the Plan shall take effect until the expiration of a six (6) month period
from the date such amendment is adopted or such decision to terminate is made by the Board
of Directors of the Company, or its duly authorized designee. Any such amendment or
termination may affect the benefits payable to an Executive.

      (n) Headings. Headings to Sections in this Plan are for convenience only and
are not intended to be part of or to affect the meaning or interpretation hereof.

      (o) Withholding. Any payments provided for herein shall be reduced by any
amounts required to be withheld by the Company from time to time under applicable federal,
state or local income or employment tax laws or similar statutes or other provisions of law
then in effect.

12

 

      (p) Governing Law. This Plan shall be governed by the laws of the State of
Illinois without reference to principles of conflicts or choice of law under which the law
of any other jurisdiction would apply.

13

 

     IN WITNESS WHEREOF, TreeHouse Foods, Inc., by its duly authorized officer, has executed this
Plan on the date indicated below.

	 	 	 	 	 
	 	TREEHOUSE FOODS, INC.

 	 
	 
	 	By:  	 	 
	 
	 	Its: 	 	 
	 
	 	Date: 	 	 
	 

14

 

APPENDIX A

Tier I Executives

	 	 	 	 	 	 	 
	 	 	 	 	 	 	Change in Control
	Title	 	Company	 	Regular Severance	 	Severance
	Senior Vice
President and
Chief
Financial Officer

	 	TreeHouse Foods, Inc.
	 	2x Base Salary

2x Target Incentive

Compensation
	 	3x Base Salary

3x Target Incentive

Compensation

Tier II Executives

	 	 	 	 	 	 	 
	 	 	 	 	 	 	Change in Control
	Title	 	Company	 	Regular Severance	 	Severance
	President

	 	Bay Valley Foods LLC.
	 	1x Base Salary

1x Target Incentive

Compensation
	 	2x Base Salary

2x Target Incentive

Compensation
	 
	 	 	 	 	 	 
	Senior Vice
President—HR

	 	TreeHouse Foods, Inc.
	 	1x Base Salary

1x Target Incentive

Compensation
	 	2x Base Salary

2x Target Incentive

Compensation

Tier III Executives

	 	 	 	 	 	 	 
	 	 	 	 	 	 	Change in Control
	Title	 	Company	 	Regular Severance	 	Severance
	Vice President &

Assistant General
Counsel

	 	TreeHouse Foods, Inc.
	 	1x Base Salary
	 	1x Base Salary

1x Target Incentive

Compensation
	 
	 	 	 	 	 	 
	Senior Vice Presidents

	 	Bay Valley Foods LLC
	 	1x Base Salary
	 	1x Base Salary

1x Target Incentive

Compensation
	 
	 	 	 	 	 	 
	Executive Vice
Presidents

	 	Bay Valley Foods LLC
	 	1x Base Salary
	 	1x Base Salary

1x Target Incentive

Compensation
	 
	 	 	 	 	 	 
	Vice Presidents

	 	Bay Valley Foods LLC
	 	1x Base Salary
	 	1x Base Salary

1x Target Incentive

Compensation<PAGE>

                                                                    EXHIBIT 10.9

CONFIDENTIAL

                            NON EXCLUSIVE DISTRIBUTOR
                                    CONTRACT

THIS CONTRACT IS ENTERED INTO BY AND BETWEEN:

     BRIDGETECH HOLDING INTERNATIONAL INC., "HEALTH CARE PILOT" ("DISTRIBUTOR")
a corporation having its principal place of 402 West Broadway 26th Floor San
Diego, CA 92101.

     AND

     SOVEREIGN TRACKING SYSTEMS, L.L.C. ("STS"), a limited liability company, or
its assignee, with its main place of business at, 1108 INDUSTRIAL PARKWAY,
BRICK, NEW JERSEY 08724

     Jointly referred to hereafter as the parties.

PREAMBLE

     Distributor is in Healthcare technology Marketing and integration business.
STS is in the business of offering an asset tracking system that works on radio
frequency under the trade name "PalTrack". PalTrack and related products
designated by STS as available for sale by Distributor are referred to as the
"Products". Distributor wishes to purchase from STS PalTrack units and to market
such units ".

     Distributor has technical expertise in marketing and RFID technology and
provides its customers with before and after sales support, know how, specific
marketing and packaging solutions. Distributor is a Value Added Reseller,
meaning a party with technical expertise, training experience and market
relationships that offer it the ability to properly (as determined by STS)
represent and market products.

     The parties have decided to work together to develop market opportunities
based on the Distributor and STS's expertise, in order for the Distributor to
sell. Specifically, the parties contemplate Distributor's resale and
distribution of PalTrack as a stand-alone system.

The development, sale or adaptation of Products into other technologies of
Distributor shall be subject to separate agreement between STS and Distributor.
STS shall have sole discretion in approving any suggested application of
Distributor.

     This contract takes into consideration the above with the purpose of
facilitating relationship between the Distributor and STS.

     ARTICLE 1 - SCOPE OF CONTRACT

     Subject to the terms and limitations of this Contract, STS grants the
Distributor, and Distributor accepts the non-exclusive right to sell STS's
Products. The Distributor has the right to sell the Products according to the
terms and conditions agreed upon between the parties and stated in the following
Articles 2 to 13.

     ARTICLE 2 - TERM

     This contract will come into force on latest of the dates of signature by
either party and will expire on February 3, 2007 providing all distributor fees
have been paid to STS for initial and during anniversary date of each subsequent
follow on years. See Attachment "A" for Fee schedule.. It will be renewed
automatically as provided for in Attachment "B,2".

<PAGE>

CONFIDENTIAL

                            NON EXCLUSIVE DISTRIBUTOR
                                    CONTRACT

     ARTICLE 3 - LEGAL POSITION OF THE DISTRIBUTOR

     The Distributor will sell, in its own name and on its own behalf, the
Products, which it purchases from STS. Upon completion of Distributor's training
pursuant to Article 4.2 and upon STS's determination that Distributor has
demonstrated expertise sufficient to properly market and or install the
Products, the Distributor shall be authorized to perform marketing and or
installation of the Products. As a material inducement to STS's granting the
right to Distributor to perform marketing and or installation, Distributor shall
indemnify and hold STS harmless from any errors, omissions, neglect or
consequences resulting from Distributor's installations, and shall purchase and
maintain for its benefit and the benefit of STS, its principals, agents and
employees, who shall each be named parties insured, general and product
liability and malpractice insurance reasonably satisfactory to STS. Distributor
shall provide STS with evidence that insurance is at all times in place as noted
above, delivering any time upon STS 's request and at least annually, not more
that thirty (30) days prior to expiration of policies, certificates of insurance
showing the same to be in place for the following year. Policies shall be with
national reputable insurance companies licensed to do business in all states
where installation is to take place, such companies having a Best Rating of at
least A, XIV. Policies shall not be cancelable except upon thirty -(30) days
written notice to STS. Distributor may not perform installations when insurance
as required hereunder, is not in place to STS's satisfaction.

Distributor's installations shall be in accordance with guidelines and
procedures established by STS. STS shall sell Products to Distributor at its
then-published wholesale price list, as modified from time to time but not more
than annually, and on terms set forth in Article 7 below. STS responsibilities
are restricted to those defined in this contract.

After acceptance of the present contract by both parties, the Distributor is
authorized to publicly define its activity with the following statements:
"AUTHORIZED SELLER AND DISTRIBUTOR OF PALTRACK". Upon satisfactory completion of
training and delivery of evidence that insurance requirements of STS are met,
Distributor may also represent it as an "authorized installer of PalTrack".

ARTICLE 4 - RIGHTS AND OBLIGATIONS OF STS

4.1  SALES

Subject to compliance by Distributor with the terms and conditions of this
Agreement and payment of invoices issued by STS for Products, STS undertakes to
honor orders received and to comply with the delivery periods mutually agreed
upon, subject to Excused Delay.

When giving quotations, the delivery periods, which vary according to the type
of Product and any customization which may be attached thereto are provided only
as an indication by STS of the expected time frame and are subject to
confirmation on a case-by-case basis.

     STS reserves the right to cease or restrict the production and delivery of
any Product and to redesign or modify any Product without incurring obligations
towards the Distributor other than those of meeting purchase orders already
received, provided that: (a) the Distributor will be notified in writing of a
Product withdrawal at least three (3) month's in advance, and (b) at the end of
this three (3) month's period, the Distributor will be able to send to STS a "
Last Buy Order ". Notwithstanding the foregoing, STS can immediately withdraw a
Product in case of an error, a change required or recommended under applicable
law, court order or by STS's attorneys. In such case, any orders outstanding
shall be deemed cancelled or, at the option of Distributor, modified to be for
the new or alternative product recommended by STS then available at a price and
upon terms then in effect for the new or alternative product.

                                  Page 2 of 11

<PAGE>

CONFIDENTIAL

                            NON EXCLUSIVE DISTRIBUTOR
                                    CONTRACT

4.2  TRAINING

     The signature of this Agreement by the Distributor entitles the Distributor
to technical and commercial training sessions for people representing both the
commercial staff and the technical staff of the Distributor. Such training
sessions shall take place at STS's premises. Any additional training shall be
available at mutually agreeable dates and times.

     The date of the initial training sessions will be fixed by mutual consent.
The training will be organized by STS and at STS's facility. Should the
Distributor wish the initial training sessions be presented on its site, or
should the number of persons the Distributor seeks trained be greater than seven
(7), STS may require additional compensation for training, the terms and
conditions of such training to be furnished by STS in advance for the
Distributor's approval and will include acceptable locations, travel and lodging
expense reimbursement.

     The parties acknowledge that the Distributor's understanding of the
Product, its functions and applications is a material inducement to STS's
continuing into this Agreement and that it is important that the Distributor
remain current in its knowledge. Accordingly, after initial training, STS may
propose future training to the Distributor, on reasonable terms and conditions
to be agreed upon at such time. STS may condition the continuance of the
Distribution Agreement upon the Distributor's undertaking such additional
training.

4.3  TECHNICAL SUPPORT

     STS may condition further Product sales to Distributor if it determines
technical support provided by Distributor for the installation and sale of the
Products to its customers is not sufficient.

     STS agrees to assist Distributor by providing a technical hotline service
during regular business hours.

     STS may elect to provide such additional necessary technical support not
provided by Distributor to Distributor and in such case, STS will quote the
price for such technical support according to the needs of the Distributor.

     STS undertakes to keep the Distributor informed of the launching of new
types of Products for which it wishes to entrust sales to the Distributor so
that Distributor can prepare for their installation and sale.

4.4  MARKETING SUPPORT

     The signature of this Contract by the Distributor entitles the Distributor
to a Welcome Kit consisting of existing marketing materials respecting the
Products. The Welcome Kit will be delivered in the form of a CD. Any updated
promotional materials will be made available to Distributor at STS's cost in the
form of a CD. Distributor shall be responsible for production of such marketing
materials provided by STS on CD. Any desired change to marketing materials shall
be subject to STS approval, not to be unreasonably withheld. STS retains sole
copyright in the Welcome Kit and all other marketing materials produced by STS.

ARTICLE 5 - RIGHTS AND OBLIGATIONS OF THE DISTRIBUTOR

5.1 THE DISTRIBUTOR UNDERTAKES TO:

     - Use STS as the sole source of supply for Products. Distributor shall not
manufacture, distribute nor offer for sale, installation or integration for its
own account or that of others, any product which is competitive with the
Products

                                  Page 3 of 11

<PAGE>

CONFIDENTIAL

                            NON EXCLUSIVE DISTRIBUTOR
                                    CONTRACT

without the written consent of STS, which may be withheld, conditioned or
delayed in STS's sole discretion. Violation of this covenant shall constitute,
at STS's sole election, an incurable breach allowing, in addition to other
remedies, immediate termination of Distributor's rights to buy and resell or
install Products.

5.2  TRADEMARKS AND LOGO/INDUSTRIAL PROPERTY

     The Distributor is only entitled to use the specific STS logo for the sale
of Products supplied to the Distributor by STS. This specific logo will be
provided by STS in PC format to which the Distributor shall not make any
modification.

     The Distributor shall not make any reference to, STS, STS's business, its
Products and the relationship between Distributor and STS except through
labeling programs agreed to by the parties and press releases approved by both
STS and Distributor, each party agreeing not to unreasonably withhold such
consent. Notwithstanding the foregoing, STS may inform the public of the
identities of its distributors.

5.3  STOCKS OF PRODUCTS AND DEVELOPMENT SYSTEM SAMPLES

     In consultation with STS, and with due consideration given to existing and
future estimates of Product orders from Distributor's customers, Distributor
agrees to maintain a sufficient stock of the Products, in order to be able to
rapidly supply its customers. Sovereign transmitters, transceivers and SAM units
require minimum purchases as provided for in Attachment "B,7".

To adequately present the STS product to the customer, the distributor must
purchase at least one STS SAM Demo case. The distributor price for the initial
SAM demo case is $950.00 USD; any additional SAM Demo case purchased by the
distributor will be discounted to $750.00 USD.

5.4  QUALIFICATION OF PERSONNEL

     The Distributor undertakes to assign qualified personnel to the sale,
service and installation of the Products. Any new member joining the Distributor
and assigned to the installation of STS's Products shall be trained by the
people who have been trained according to the terms and conditions set forth in
article 4.2 above.

5.5  PROMOTION

     In communication with third parties, the Distributor shall specify that it
is one of STS's distributors. Distributor shall promote the Products and STS,
through its sales force, through exhibitions, web sites, showrooms, press
releases, and brochures, all of which shall be subject to review and approval of
STS, such approval not to be unreasonably withheld.

ARTICLE 6 - CONFIDENTIALITY

In providing its services, each Party will have access to commercial, financial,
technical or strategic information, hereinafter referred to as "Confidential
Information" which shall be treated as confidential.

Each Party gives formal assurance to the other that such Confidential
Information will be safeguarded and will, under no

                                  Page 4 of 11

<PAGE>

CONFIDENTIAL

                            NON EXCLUSIVE DISTRIBUTOR
                                    CONTRACT

circumstances, be disclosed to another party without previous approval of the
disclosing Party in writing.

Even after the expiry of this contract, both parties undertake to treat as
strictly confidential any and all Confidential Information received from either
party.

ARTICLE 7 - PRICE AND PAYMENT CONDITIONS

     The Products will be sold by STS to the Distributor according to its
then-current wholesale price list. STS may impose certain minimum purchase
requirements as provided for in Attachment "B,7".

     STS will invoice the Distributor in US$. Payment arrangements shall as
provided for in Attachment "B,7", FOB, STS offices (unless otherwise arranged);
for foreign (Non-US) purchase orders, 100% of purchase order must be wired
transferred at time of purchase order placement. Payment not made when due shall
be subject to interest at eighteen percent (18%) per annum. STS may withhold
pending orders and/or refuse new orders until past due payments are made and
satisfactory evidence of payment for future orders is provided to STS.

ARTICLE 8 - WARRANTY

SUBJECT TO LIMITATIONS AND CONDITIONS HEREIN PROVIDED, STS warrants to the
Distributor that all PalTrack units sold to Distributor hereunder will be free
from defects in material and workmanship, will conform to all specifications for
the units, and will be fit for the purpose for which they were designed.

     STS further warrants that its Products shall comply with their functional
specifications. STS's warranty is strictly limited to the replacement or repair
of the Products (at STS's election) considered as defective by STS.

     STS's warranty is a one year parts valid from the date of signature of the
acceptance certificate for hardware Products requiring installation or from the
date on which the hardware Products are supplied to the Distributor for those
hardware Products which do not require installation, excluding travel and
accommodation expenses in the case of on-site attendance; the Distributor
bearing the cost of transportation of the defective hardware Products in the
case of a workshop return. In this latter case, the defective Products shall be
returned to STS in good condition.

The above warranty does not cover:

-    Engineering samples.

-    Products which have been damaged by the Distributor or any third-party or
     which have been stored under conditions which do not comply with STS
     specifications or normal usage.

-    Products not integrated (where authorized) or installed properly.

-    Products submitted to abnormal conditions (mechanical, electrical,
     thermal); abnormal conditions being defined as any conditions exceeding the
     ones stated in the product specifications ones stated in the Product
     specifications.

-    Products which are incorrectly adjusted or defective when this results from
     use in excessive operating conditions (sundry temperatures, voltage and
     supply limits) as defined by STS, or from an incorrect choice of
     application (where authorized) by the Distributor or its customers.

-    Products that are sold to distributor as a Sovereign module and
     incorporated in a further end-item either hardware or software.

     Defective Products must be sent back to STS following STS's return
procedures.

     Distributor shall notify STS of the defects within 15 working days after
the defects are discovered.

     THE REMEDY PROVIDED ABOVE IS IN LIEU AND TO THE EXCLUSION OF ALL OTHER
REMEDIES, OBLIGATIONS OR LIABILITIES ON THE PART OF STS FOR DAMAGES, WHETHER IN

                                  Page 5 of 11

<PAGE>

CONFIDENTIAL

                            NON EXCLUSIVE DISTRIBUTOR
                                    CONTRACT

CONTRACT, TORT OR OTHERWISE, AND INCLUDING BUT NOT LIMITED TO, DAMAGES FOR ANY
DEFECTS IN THE PRODUCTS OR FOR ANY INJURY, DAMAGE, OR LOSS RESULTING FROM SUCH
DEFECTS OR FROM ANY WORK DONE IN CONNECTION THEREWITH OR FOR CONSEQUENTIAL LOSS,
WHETHER BASED UPON LOSS OF ASSETS, THEFT, LOST GOODWILL, LOST RESALE PROFITS,
IMPAIRMENT OF OTHER GOODS OR ARISING FROM CLAIMS BY THIRD PARTIES OR OTHERWISE.
DISTRIBUTOR ACKNOWLEDGES AND AGREES THAT THE PRODUCTS AND PALTRACK SYSTEM DO NOT
CONSTITUTE SECURITY PRODUCTS/SYSTEMS AND ARE NOT DESIGNED TO PREVENT THEFT,
DAMAGE OR VANDALISM TO PERSONS OR PROPERTY. THE PALTRACK SYSTEM IS DESIGNED TO
GENERALLY TRACK MOVEMENT OF ITEMS WITHIN A SPECIFIED AREA, NOTHING MORE, AND
THIS WILL NOT OCCUR UNLESS INSTALLED PROPERLY IN STRICT ACCORDANCE WITH ALL
SPECIFICATIONS OF STS. THIS MAY ALSO NOT OCCUR WHERE THERE EXISTS INTERFERENCE
OR DISRUPTING FACTORS AFFECTING RADIO WAVES. WHILE THE PALTRACK SYSTEM AND
PRODUCTS MAY AID IN SECURITY, THEY DO NOT CONSTITUTE A SECURITY SYSTEM AND STS
MAKES NO REPRESENTATION OR WARRANTY AS TO THE PALTRACK OR PRODUCTS FUNCTIONALITY
OR EFFECTIVENESS AS A SECURITY SYSTEM. DISTRIBUTOR AGREES TO NOTIFY CUSTOMERS OF
THE PROVISIONS OF THIS SECTION, AND THE LIMITATION OF WARRANTIES AND LIABILITY,
HEREIN STATED, AND CUSTOMERS ACKNOWLEDGMENT AND ACCEPTANCE OF THIS ARTICLE 8 AND
AGREEMENT TO LOOK SOLELY TO DISTRIBUTOR FOR ANY CLAIMS SHALL BE A MANDATORY
CONDITION OF SALE.

     STS DISCLAIMS ANY EXPRESS WARRANTY NOT PROVIDED HEREIN AND ANY IMPLIED
WARRANTY, GUARANTY OR REPRESENTATION AS TO PERFORMANCE, QUALITY AND ABSENCE OF
HIDDEN DEFECTS, AND ANY REMEDY FOR BREACH OF CONTRACT, WHICH BUT FOR THIS
PROVISION, MIGHT ARISE BY IMPLICATION, OPERATION OF LAW, CUSTOM OF TRADE OR
COURSE OF DEALING, INCLUDING IMPLIED WARRANTIES OF MERCHANTABILITY AND FITNESS
FOR A PARTICULAR PURPOSE.

     NO COMPENSATION SHALL BE PAID BY STS IN RESPECT OF DEPRIVATION OF
ENJOYMENT. STS'S ENTIRE LIABILITY, IF INCURRED, WHETHER IN CONTRACT, TORT OR
OTHERWISE, SHALL BE LIMITED TO THE AMOUNT OF THE DEFECTIVE PRODUCT ORDER.

ARTICLE 9 - INTELLECTUAL PROPERTY RIGHTS

     STS and/or its licensors, as applicable, shall retain title and full
ownership of its Products and technology, and more generally of any industrial
and/or intellectual property rights pertaining to its Products and technology,
including any integration, application, alteration or modification of or
utilization of the Products, regardless of the party performing same, and
regardless whether such was done with STS's consent or performed without STS's
consent in violation of this Agreement.

     Nothing in this Contract shall be construed as granting to the Distributor
or implying any rights, by license, grant or otherwise, under any intellectual
and/or industrial property rights of or concerning any of the Products or any
integration, application, modification of or utilizing the Products, regardless
of the party performing same, or information transmitted by STS. No source code
will be transmitted to the Distributor. The Distributor shall not make any
copies, reverse engineer, disassemble, or decompile any Product, any software
contained in or used with any Product or purchased from STS as a stand alone
Product. Distributor agrees, without charge to STS but at STS's expense, to
execute and deliver all documents necessary, including original applications and
applications for renewal, extension or re-issue of such patents, trademark
registrations or copyright registrations in any and all countries to vest title
in STS or its licensors (as applicable and as their interests may appear), their
successor and assigns.

The Distributor shall not modify any hardware or software provided by STS
without STS prior written consent. Software incorporated into the Product is
licensed to end users pursuant to separate agreement

                                  Page 6 of 11

<PAGE>

CONFIDENTIAL

                            NON EXCLUSIVE DISTRIBUTOR
                                    CONTRACT

ARTICLE 10 - TRANSFER

Distributor agrees not to assign, sublicense, transfer or sell any rights and/or
obligations, skills and duties arising from this contract to third parties
without prior mutual consent in writing. Such consent shall not be unreasonably
withheld. Notwithstanding the foregoing, the sale of stock or substantially all
of a Distributors' assets or a merger or corporate reorganization, assignment by
operation of law or assignment or transfer of this Agreement to entities under
common ownership or control ("affiliates") shall not be an assignment requiring
the other parties' consent.

Furthermore, Distributor hereby agrees to inform STS without delay and in
writing of any change in the management or control of their Company.

This Agreement is personal to both parties and entered into based on the
experience, market presence knowledge and representations made by each party.
For this reason, Distributor acknowledges that STS may grant or withhold consent
to a transfer in its sole business judgment.

ARTICLE 11 - TERMINATION IN ADVANCE

Notwithstanding the provisions of Article 2 above, STS reserves the right to
terminate this Contract immediately without the issue of prior notice in the
following cases:

     -    any total or partial transfer by the Distributor of its rights under
          this contract without STS's prior consent in writing,

     -    and, any change in the control of the Distributor which STS considers
          to be against its interests.

     -    any sale of products compatible with the Products or PalTrack.

     -    any violation of the provisions of Article 9 of this Agreement.

     Each of the Parties also reserves the right to terminate this Contract in
advance and without compensation with notice by registered letter or national
overnight delivery with acknowledgment or refusal of receipt in the case where
the other Party has failed to comply with its non-monetary contractual
obligations and has failed to remedy such breach within a period of thirty (30)
STS shall be entitled to recover its cost of enforcing its rights under this
Agreement (including reasonable legal fees).

     Each of the Parties reserves the right to terminate this Contract
immediately without the issue of prior notice in the case of any state of
insolvency, receivership or compulsory liquidation of the other Party.

ARTICLE 12 - RULES APPLYING DURING THE EXPIRY OF TERMINATION OF THE CONTRACT

     Except as otherwise agreed in writing by, STS, the Distributor must:

-    immediately cease using STS's name, address and logo in any form
     whatsoever.

-    return to STS, within 30 days of the end of this contract, all promotional
     and advertising documents and materials which may have been available for
     its execution.

All sums due by the Distributor to STS will be payable within thirty days from
the date of expiry or termination of this Contract.

                                  Page 7 of 11

<PAGE>

CONFIDENTIAL

                            NON EXCLUSIVE DISTRIBUTOR
                                    CONTRACT

     This Agreement shall be governed by, construed, interpreted and the rights
of the parties determined in accordance with the applicable laws of the United
States and the State of New Jersey, notwithstanding its choice of law rules. The
parties stipulate to the personal and subject matter jurisdiction of the courts
of the State of New Jersey, provided the parties further agree in any litigation
between them, to proceed with non-binding mediation or arbitration prior to
fully litigating its respective claims.

ARTICLE 13 - MISCELLANEOUS

     All notices, requests, demands, and other communications shall be in
writing and shall be deemed to have been duly given if personally delivered,
sent by facsimile transmission or overnight courier, or if mailed, by certified
or registered mail, postage paid, to the parties at the following address:

IF TO STS:

William A. Robinson, President
Sovereign Tracking Systems LLC
1108 Industrial Parkway
Brick, New Jersey 08724

With a copy (which shall not constitute notice) to:
Steven M. Abramson, Esquire
Silver, Freedman & Taff, L.L.P.
1700 Wisconsin Avenue, NW
Washington, D.C. 20007

IF TO DISTRIBUTOR
Name: Michael Chermak, President and CEO
402 West Broadway 26th Floor
San Diego, CA 92101.

SOVEREIGN TRACKING SYSTEMS, L.L.C., A LIMITED LIABILITY COMPANY

By: /s/ William A. Robinson
    ---------------------------------
    William A. Robinson, as AGENT ONLY
    Date: 2/8/06

DISTRIBUTOR:

By: /s/ Michael Chermak
    ---------------------------------
    Michael Chermak
    President and CEO
    Date 2/8/06

                                  Page 8 of 11

<PAGE>

CONFIDENTIAL

                            NON EXCLUSIVE DISTRIBUTOR
                                    CONTRACT

                                 ATTACHMENT - A
                            NON-EXCLUSIVE DISTRIBUTOR
                                       FEE
                                    SCHEDULE

                           Non-Exclusive Fee Schedule

<TABLE>
<CAPTION>
Annual Distributor STS Purchases    Standard Annual Fee
--------------------------------    -------------------
<S>                                 <C>
$4,000,000                                     --
$2,000,000                                     --
$1,000,000                                     --
$  500,000                                     --
$  250,000                                     --
$  100,000                                 $5,000
$   50,000                                 $5,000
Initial Non-Exclusive Distributor          $5,000
</TABLE>

                         ALL DOLLARS ARE IN US CURRENCY.

  INITIAL NON-EXCLUSIVE DISTRIBUTOR FEE PAYMENT IS DUE ON DISTRIBUTOR CONTRACT
                                    EXECUTION

                 FEE PAYMENT IS DUE ON CONTRACT ANNIVERSARY DATE
                        ON ALL SUBSEQUENT CONTRACT YEARS

                                  Page 9 of 11

<PAGE>

CONFIDENTIAL

                            NON EXCLUSIVE DISTRIBUTOR
                                    CONTRACT

                                 ATTACHMENT - B

                                   TERM SHEET
                                      Final

          In follow-up to our telephone conversation of this morning, please
find below a term sheet outlining terms and conditions that STS would consider
in settlement of claims:

     1.   The exclusive distributor agreement dated July 22, 2005 ("Exclusive
          Distributor Agreement") is acknowledged as terminated, subject to
          STS's rights to enforce rights and remedies for default arising under
          said agreement, as modified by the terms contained below.

     2.   Bridgetech will be allowed to continue as a non-exclusive distributor
          for a term of one year, which will renew automatically on a
          year-to-year basis unless either party notifies the other 90 days in
          advance of the expiration date of its determination not to renew.
          Bridgetech will execute and deliver a new non-exclusive distribution
          agreement in form and content similar to that of the Exclusive
          Distributor Agreement, except minimum dollar purchase requirements
          (however, minimum unit requirements for orders will remain), exclusive
          rights and certain minimum guaranteed payments will be eliminated. A
          copy of the form non-exclusive distributor agreement is attached,
          which agreement will be deemed amended by the terms of this proposal.
          In case of any conflict between the terms of this proposal and the
          non-exclusive distributor agreement, the terms of this proposal shall
          control.

     3.   At any time either party would have right to terminate the
          non-exclusive distribution agreement by giving 90 days prior written
          notice. However, even if such notice is given, STS would allow
          Bridgetech to service any customers placing orders for products for
          delivery during the 90 day period and would afford Bridgetech the
          option of continuing to sell products and provide support to its
          existing customers that have bought product for so long as such
          customers have and operate the system sold to them during the term (as
          opposed to any new systems or products for which no rights shall be
          reserved to Bridgetech). In lieu thereof, Bridgetech may request that
          STS or any other distributor designated by STS, assume these support
          obligations on a going forward basis.

     4.   No rights of exclusivity will be agreed to at this time. The volume of
          product sales by Bridgetech and its ability to serve its customers as
          measured over time will determine if and when STS, in its sole
          business judgment, will enter into further discussions regarding
          exclusive rights. However, once Bridgetech secures a contract with a
          customer for Products, STS will notify other distributors that orders
          for Products from such customers are to be served by Bridgetech.
          Bridgetech will honor similar rights of other STS distributors and
          agree not to serve accounts of other STS distributors unless otherwise
          agreed in advance by STS and the other distributor. Bridgetech agrees
          to notify STS of any contracts with Customers so as to allow STS to
          notify its other Distributors of the relationship. Bridgetech also
          recognizes that STS may reserve certain accounts from time to time and
          agrees not to solicit such accounts, absent the prior written consent
          of STS. Bridgetech's exclusive rights with respect to its customers
          shall expire with the expiration or sooner termination of the
          non-exclusive distribution agreement, subject to the rights afforded
          Bridgetech to continue to support and supply systems sold during the
          term to Bridgetech's customers in accordance with paragraph 3 above.

     5.   All future purchase orders shall be paid in full at the time the order
          is placed with STS. Alternatively, Bridgetech may deliver along with
          the order, a 50% cash deposit and an irrevocable letter of credit for
          the balance from a financial institution acceptable to STS that may be
          drawn upon at the time the Products under the order are shipped. In no
          event shall STS be required to ship less than the minimum number of
          units per order. Partial payments shall be accrued and credited
          against orders shipped once payment for the

                                 Page 10 of 11

<PAGE>

CONFIDENTIAL

                            NON EXCLUSIVE DISTRIBUTOR
                                    CONTRACT

          full order is received or the balance of the order is less than the
          letter of credit held by STS. The minimum number of units per order is
          currently as follows: 3,000 units for transmitters, 250 units for
          transceivers, and 20 units for the SAM systems. The minimum number of
          units per order is subject to change if STS manufacturers require
          different quantities to maintain present pricing levels.

     6.   Bridgetech will pay to STS cash in the amount of $50,000, payable as
          follows: $20,000 at the time of execution of the non-exclusive
          distribution agreement, $20,000 on or before February 15, 2006 and
          $10,000 on or before March 1,2006, The foregoing sum shall be in
          consideration of STS' entering into the non-exclusive distribution
          agreement and shall not be credited against inventory purchases of
          Bridgetech. In addition, Bridgetech will deliver to STS a Promissory
          Note in the amount of $237,620.00 (representing the balance of the
          amount that was due under the Exclusive Distributor Agreement as of
          December 31, 2005). The note shall be for a term of one year and shall
          bear interest at 10% per annum. The note will secure Bridgetech's
          orders of additional inventory and payments made by Bridgetech for
          inventory over the term of the note will be deducted from first the
          interest and than the principal amount of the note. If at the end of
          the term of the note, Bridgetech has not put forth and paid purchase
          orders equal to the accrued interest and principal remaining on the
          note, the balance shall be immediately due and payable. This will
          allow Bridgetech to catch up on its past due obligations as it builds
          its business over time. STS will agree not to exercise its rights
          under the note until the earlier of: (i) a breach by Bridgetech of its
          obligations under the non-exclusive agreement (ii) the termination or
          expiration of the non-exclusive agreement or (iii) the first
          anniversary of the date of the note, (any remaining principal balance
          and accrued and unpaid interest would be paid at that time).

     7.   Bridgetech will covenant to maintain staffing, marketing and
          promotional efforts (including the HIMSS show) at all times throughout
          the term of the non-exclusive agreement and not to distribute any
          other competing products or systems.

                                 Page 11 of 11

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