Document:

AGREEMENT OF SUBSTITUTION AND
                          AMENDMENT OF RIGHTS AGREEMENT

     This Agreement of Substitution and Amendment of Rights Agreement (the
"Amendment") is entered into as of August 19, 2002, by and between Fresh Brands,
Inc., a Wisconsin corporation (the "Company") and American Stock Transfer and
Trust Company, a New York banking corporation ("AST").

                                    RECITALS

A.   On or about October 12, 2001, the Company entered into a Common Shares
     Rights Agreements (the "Rights Agreement") with Firstar Bank, N.A., a
     National Banking Association (the "Predecessor Agent"), pursuant which the
     Predecessor Agent agreed to act as the Company's rights agent.

B.   Predecessor Agent was chosen as the Company's rights agent because
     Predecessor Agent was the Company's transfer agent and performed certain
     other related services.

C.   Predecessor Agent has indicated that it will cease performing transfer
     agent and related services.

D.   The Company wishes to remove the Predecessor Agent and substitute AST as
     rights agent pursuant to Section 21 of the Rights Agreement, and AST wishes
     to accept such substitution.

E.   The Company has given the Predecessor Agent notice of removal of the
     Predecessor Agent as rights agent.

                                    AGREEMENT

     NOW THEREFORE, in consideration of the foregoing and of other
consideration, the sufficiency of which is hereby acknowledged, the parties
agree as follows:

     1.   Section 21 of the Rights Agreement is deleted and replaced by the
following:

          Section 21. Change of Rights Agent. The Rights Agent or any successor
     Rights Agent may resign and be discharged from its duties under this
     Agreement upon 30 days' notice in writing mailed to the Company and to each
     transfer agent of the Common Shares by registered or certified mail, and to
     the holders of the Right Certificates by first class mail. The Company may
     remove the Rights Agent or any successor Rights Agent upon 30 days' notice
     in writing, mailed to the Rights Agent or successor Rights Agent, as the
     case may be, and to each transfer agent of the Common Shares by registered
     or certified mail, and to the holders of the Right Certificates by first
     class mail. If the Rights Agent shall resign or be removed or shall
     otherwise become incapable of acting, the Company shall appoint a successor
     to the Rights Agent. If the Company shall fail to make such appointment
     within a period of 30 days after giving

<PAGE>

     notice of such removal or after it has been notified in writing of such
     resignation or incapacity by the resigning or incapacitated Rights Agent or
     by the holder of a Right Certificate (who shall, with such notice, submit
     his Right Certificate for inspection by the Company), then the registered
     holder of any Right Certificate may apply to any court of competent
     jurisdiction for the appointment of a new Rights Agent. Any successor
     Rights Agent, whether appointed by the Company or by such a court, shall be
     (a) a corporation authorized to do business as a banking institution,
     organized and doing business under the laws of the United States, of the
     State of Wisconsin or of the State of New York, in good standing, having an
     office in the State of Wisconsin or the State of New York (or, in the
     discretion of the Board of Directors of the Company, any other state of the
     United States), which is authorized under such laws to exercise corporate
     trust or stock transfer powers and is subject to supervision or examination
     by federal or state authority and which has at the time of its appointment
     as Rights Agent a combined capital and surplus of at least $10 million, or
     (b) an Affiliate of a corporation described in clause (a) of this sentence.
     After appointment, the successor Rights Agent shall be vested with the same
     powers, rights, duties and responsibilities as if it had been originally
     named as Rights Agent without further act or deed; but the predecessor
     Rights Agent shall deliver and transfer to the successor Rights Agent any
     property at the time held by it hereunder, and execute and deliver any
     further assurance, conveyance, act or deed necessary for the purpose. Not
     later than the effective date of any such appointment the Company shall
     file notice thereof in writing with the predecessor Rights Agent and each
     transfer agent of the Common Shares, and mail a notice thereof in writing
     to the registered holders of the Right Certificates. Failure to give any
     notice provided for in this Section 21, however, or any defect therein,
     shall not affect the legality or validity of the resignation or removal of
     the Rights Agent or the appointment of the successor Rights Agent, as the
     case may be.

     2.   The Company hereby appoints AST as rights agent pursuant to Section 21
of the Rights Agreement, to serve in that capacity for the consideration and
subject to all of the terms and conditions of the Rights Agreement, as amended
by this Amendment.

     3.   AST hereby accepts the appointment as rights agent pursuant to Section
21 of the Rights Agreement and agrees to serve in that capacity for the
consideration and subject to all of the terms and conditions of the Rights
Agreement, as amended by this Amendment.

     4.   From and after the effective date hereof, each and every reference in
the Rights Agreement to a "Rights Agent" shall be deemed to be a reference to
AST.

     5.   Section 26(b) of the Rights Agreement is amended to substitute the
following address for the address of the Predecessor Agent:

          If to AST:        American Stock Transfer & Trust Company
                            59 Maiden Lane
                            New York, NY  10038
                            Attention:   Corporate Trust Department
<PAGE>

     6.   Except as expressly modified herein, the Right Agreement shall remain
in full force and effect.

     7.   This Amendment may be executed in one or more counterparts, each of
which shall together constitute one and the same document.

     IN WITNESS WHEREOF, the parties have caused this Agreement to be duly
executed as of the dated indicated above.

ATTEST:                                  FRESH BRANDS, INC.

By: /s/ Armand C. Go                     By: /s/ Elwood F. Winn
    --------------------------------         ---------------------------------
    Armand C. Go                             Elwood F. Winn
    Vice President, Chief Financial          President and Chief Executive
    Officer, Treasurer and Secretary         Officer

ATTEST:                                  AMERICAN STOCK TRANSFER & TRUST COMPANY

By:     /s/ Susan Silber                 By:      /s/ Herbert J. Lemmer
    --------------------------------         ---------------------------------
Name:   Susan Silber                     Name:    Herbert J. Lemmer
      ------------------------------           -------------------------------
Title:  Assistant Secretary              Title:   Vice President
       -----------------------------            ------------------------------October 7, 2002

PERSONAL AND CONFIDENTIAL

William K. Jacobson
2714 Windepoint Court
Sheboygan, WI 53083

Dear Bill:

This letter confirms our mutual understanding regarding the terms and conditions
related to your retirement from Fresh Brands Distributing, Inc.

You agree to announce your pending retirement on Monday, November 4, 2002. You
will effectively resign that day as a Director and Assistant Secretary. You will
retain your title of Senior Vice President of Retail Operations and Development
until a successor is named or February 14, 2003, whichever occurs first. In
order to ensure a seamless transition of your duties and responsibilities and to
ensure you will be able to complete various projects such as new business
prospecting and other projects or duties and responsibilities assigned to you by
Elwood Winn, to whom you will continue to report until your retirement, you will
continue as an active, full-time employee of Fresh Brands at your current base
salary rate through, and retire as of, Friday, February 14, 2003. Your
retirement will not affect your eligibility to receive allocations under our
Executive Benefit Restoration Plan related to compensation paid to you in 2002,
but you will not receive any allocations under this plan related to compensation
paid to you in 2003. You will be eligible to receive any discretionary bonus for
2002 as may be deemed appropriate by the Compensation Committee in its sole and
absolute discretion. You will not be eligible for any bonus for 2003. On your
retirement date, you will receive payment of your five (5) weeks of accrued and
unused vacation and your two (2) personal holidays, minus the vacation and/or
personal holidays that you use prior to your retirement date. Your retirement
will be considered a "retirement" for purposes of determining the vesting of
your stock options.

Commencing February 15, 2003 and ending on December 31, 2003, you will be
retained by Fresh Brands as a consultant reporting directly to Elwood Winn
and/or his designees. During this period ( the "Initial Consulting Period"), you
agree to provide up to five hundred (500) hours of consulting services as and
when reasonably requested by Fresh Brands. On or shortly after March 3, 2003 and
thereafter promptly after the beginning of each subsequent month during the
Initial Consulting Period, Fresh Brands will pay you a retainer fee of seven
thousand five hundred dollars ($7,500), provided that you've remained in
compliance with all of the terms and conditions of this agreement through such
date. If, during the Initial Consulting Period, Fresh Brands uses your
consulting services for more than a total of five hundred (500) hours, Fresh
Brands will pay you an additional $125 for each additional hour of consulting
services provided. You will also

<PAGE>

be eligible to receive such other consulting payments as mutually agreed between
you and Fresh Brands.

Beginning January 1, 2004 and ending December 31, 2004 (the "Second Consulting
Period" and collectively with the Initial Consulting Period, the "Consulting
Periods"), you agree to provide up to five hundred (500) hours of consulting
services as and when reasonably requested by Fresh Brands. Promptly after the
beginning of each month during the Second Consulting Period, Fresh Brands will
pay you a retainer fee of six thousand two hundred fifty dollars ($6,250),
provided that you've remained in compliance with all of the terms and conditions
of this agreement through such date. If during the Second Consulting Period,
Fresh Brands uses your consulting services for more than a total of five hundred
(500) hours, Fresh Brands will pay you an additional $125 for each additional
hour of consulting services provided.

During both Consulting Periods, provided that you've remained in compliance with
all of the terms and conditions of this agreement, (i) your consulting retainer
fees will be paid to you in consideration of you remaining available to provide
reasonably requested consulting services and regardless of the number of hours
of consulting services that you actually provide and (ii) Fresh Brands will
reimburse you for your reasonable and documented out-of-pocket expenses incurred
directly in conjunction with your provision of consulting services. On or prior
to the tenth day of each month during the Consulting Periods, you will provide
Fresh Brands with a statement itemizing your out-of-pocket expenses incurred and
the number of hours you provided consulting services under this agreement during
the previous month. Such statement will be subject to Fresh Brands' review and
approval. As additional consideration for the services provided under this
agreement, Fresh Brands will, until December 31, 2005, provide you with health
insurance for you and your family under Fresh Brands' current (or similar)
health insurance plan, provided that you've remained in compliance with all of
the terms and conditions of this agreement. You will be responsible for the
employee contribution payments for such insurance. Beginning when you reach the
age of 55, you will be eligible to purchase the retiree insurance for you and
your family entirely at your own expense.

In consideration for the payments and benefits to be provided to you under this
agreement, you will not, during the Consulting Periods and for one year
thereafter, directly or indirectly (i) engage in any activities that compete
with, or otherwise damage or are adverse to, any portion of Fresh Brands' (or
its affiliates') business (as conducted now or at any time on or before the end
of the Consulting Periods); (ii) solicit the business of any current or
prospective Fresh Brands' (or one of its affiliates') franchisee or independent
store customer, other than on behalf of Fresh Brands (or its affiliates); (iii)
solicit for employment or advise or recommend to any other person that he or she
solicit for employment, or otherwise hire, any person employed at that time by
Fresh Brands (or one of its affiliates); or (iv) engage in any form of conduct,
or make any statements or representations, that disparage or otherwise harm the
reputation, good will or commercial interest of Fresh Brands or any of its
affiliates or the officers, employees or other representatives of Fresh Brands
or any of its affiliates. In addition, during the

<PAGE>

Consulting Periods, you agree to actively support and promote Fresh Brands' and
its affiliates' best interests, especially with respect to their relationships
with their franchisees and independent customers, and use all efforts to
maintain such franchisees' and independent customers' relationships with, and
support of, Fresh Brands and its affiliates. The sole exceptions to clause (i)
above are the following items (which shall be allowed only to the extent that
they do not interfere with your other obligations hereunder): (1) working
directly for one of Fresh Brands' (or one of its affiliate's) franchisees
(provided that you first so advise Fresh Brands); and (2) owning and operating a
floral business with your wife. You will also maintain the confidentiality of
all confidential and/or proprietary information of or about Fresh Brands and/or
its affiliates at all times after the date of this letter.

If, at any time after September 1, 2003, you receive an opportunity to work with
another company on a full-time basis and your acceptance of that job would not
violate the terms of this agreement except that you may be unable to provide the
consulting services required, you may, on sixty (60) days' written notice,
terminate your obligation to provide consulting services under this agreement.
Such termination (i) will not affect your obligations in the previous paragraph
and (ii) will terminate all of Fresh Brands' obligations under this agreement.
If, at any time, you receive an opportunity to work with another company and
your acceptance of that job would violate your obligations in the previous
paragraph, you may, in writing, ask me for a written waiver of the previous
paragraph (which waiver will not affect your confidentiality obligations
included below).

The payments and other benefits provided to you pursuant to this agreement are
conditioned upon your compliance with all of the terms and conditions of this
agreement. Each of the provisions of this agreement are material terms of this
agreement. If you or anyone acting at your direction violate any provision of
this agreement, then Fresh Brands may withhold and terminate all payments and
other benefits pursuant to this agreement. The exercise of such rights will not
affect Fresh Brands' right to pursue any other available legal or equitable
remedies.

You agree to keep this agreement confidential and not to reveal its content to
anyone other than your attorney, financial consultant, and immediate family
members. Fresh Brands, Inc. may, however, disclose the contents of this
agreement pursuant to any rule or regulation of the Securities and Exchange
Commission or The Nasdaq Stock Market or otherwise required by law.
Notwithstanding anything to the contrary in this agreement, this paragraph will
survive the termination of this agreement.

<PAGE>

If you agree that the foregoing satisfactorily states our mutual understanding,
please sign and date this agreement in the spaces indicated below and return it
directly to me.

Sincerely yours,

Fresh Brands Distributing Inc.

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

Agreed and accepted this 17th day of October, 2002

/s/ William K. Jacobson
-------------------------------------
William K. Jacobson

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