Document:

CONFIDENTIAL

Exhibit 10.70

[Conformed Copy]

DISTRIBUTION
AGREEMENT

THIS
AGREEMENT is made
and entered into as of the 8th day of May, 2006, by and between TCBY SYSTEMS, LLC, a Delaware limited
liability company (“COMPANY”) and YANCEY’S
FOODSERVICE COMPANY, INC., a Colorado Corporation (“DISTRIBUTOR”).
DISTRIBUTOR will commence distribution services under this Agreement on June
19, 2006 (the “Effective Date”) unless otherwise mutually agreed upon by the
parties.

RECITALS

A.                                    The
COMPANY is engaged in the worldwide business of franchising or licensing retail
TCBY Stores and other related concepts (“Franchised Stores”).  COMPANY also has several COMPANY-owned stores
that it supports directly (“Company Stores”). 
The Franchised Stores and or individual franchisees (the “Franchisees”)
function as independent companies and are individually and solely responsible
for the activities at each location, including purchasing needed products and
supplies, which includes responsibility for purchasing from DISTRIBUTOR.  COMPANY is responsible for activities at its
Company Stores.  Company Stores and
Franchised Stores are jointly referred to herein as “Stores”, the Franchisees
and individuals responsible for Company Stores are jointly referred to as (“Operators”)
and the combined efforts of the COMPANY and its Franchisees is referred to as
the “System”.  COMPANY takes steps to
assist Stores to meet its purchasing needs and has the right to designate
distributors and suppliers for the System.

B.                                    The
DISTRIBUTOR is engaged in the business of purchasing, selling, distributing and
delivering food service products (including the Products, as defined
below).  In connection therewith, the
DISTRIBUTOR manages, controls, prepares and furnishes reports to its customers
concerning the inventories of products and supplies the DISTRIBUTOR purchases,
manages and controls for sale, distribution and delivery to its customers.

C.                                    COMPANY wishes to
appoint DISTRIBUTOR as a distributor of certain approved proprietary food and
related products to the Stores located within the Territory  (as defined below), and DISTRIBUTOR wishes to
accept such appointment, all on the terms and conditions hereinafter set forth.

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AGREEMENT

NOW, THEREFORE, in
consideration of the mutual covenants herein set forth and other good and
valuable consideration, the receipt and sufficiency of which is hereby
acknowledged, the parties agree as follows:

1.                                      Appointment
— Subject to all terms and conditions of this Agreement, COMPANY hereby
appoints DISTRIBUTOR as a distributor of the products within the product
categories listed in Schedule 1 (the
“Products”), to the Stores in the territory serviced by DISTRIBUTOR’s
distribution center located in Loveland, Colorado (the “Territory”) as
reflected in the map and county listing depicted in Schedule 2 and DISTRIBUTOR hereby accepts such appointment. To
the extent that conflicts arise between the map and the county listing in Schedule 2, the map shall prevail.  Subject to Section 2.02, COMPANY may appoint
DISTRIBUTOR as a distributor of Products to Stores outside of the Territory and
DISTRIBUTOR may agree to such designation.

2.             Distribution
of Products

2.01                        Products
— DISTRIBUTOR will maintain in its inventory of Products the following: (i)
Products designated by COMPANY that contain the proprietary trademarks, service
marks, logos or labels of COMPANY or any of its affiliates or that are made
pursuant to specifications provided by COMPANY, its affiliates, or licensors
for limited distribution to Operators (defined below) or other entities
licensed by COMPANY, its affiliates or licensors (“TCBY Branded Products”), and
(ii) other supplies or other national or regional branded Products
designated  or contracted for by COMPANY
to be maintained in inventory by DISTRIBUTOR for distribution to  COMPANY, its affiliates and the
Operators.  (Collectively, Products
described in clauses (i) and (ii) are referred to as “Proprietary Products”).  DISTRIBUTOR will also maintain in its
inventory non-proprietary Products which DISTRIBUTOR stocks in its inventory
for sale to COMPANY, its affiliates and its Operators. DISTRIBUTOR shall not be
required to maintain more than two hundred (200) Proprietary Products in
inventory at any time.  All Coca Cola
Products carried for COMPANY shall be excluded from the calculation of the
number of Proprietary Products.

2.02                        Approved
Operators — DISTRIBUTOR shall sell and deliver to Franchisees and
Operators of Stores approved by COMPANY and located within the Territory such
quantities of the Products (subject to minimum Product order requirements) as
the Operators may order from time to time during the term of this Agreement.
DISTRIBUTOR shall cease selling TCBY Branded Products to any Operator not later
than three (3) days following receipt of written notice from COMPANY 

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                                                advising
DISTRIBUTOR that such Operator is no longer approved by COMPANY and shall,
within such timeframe, further cease selling, under the terms of any supplier
agreement negotiated by COMPANY, all Proprietary Products to such Operators
referenced in such notice. In addition, DISTRIBUTOR shall have the right to
cease the sale and distribution of Products to any Operator (a) who is in
default of its obligations to DISTRIBUTOR, provided that DISTRIBUTOR has given
COMPANY at least three (3) business days notice of such default before ceasing
deliveries to such Operator, or (b) who has filed a voluntary petition in
bankruptcy or under any other similar insolvency or debtor relief law or who
has had such a petition filed against it, or who has made a general assignment
for the benefit of its creditors. COMPANY shall also have the right to
reinstate delivery to any Operator that COMPANY previously stopped selling by
providing written notice to DISTRIBUTOR and DISTRIBUTOR shall provide such
delivery as soon as mutually agreed between the parties.

A list of the present Operators with Stores located
within the Territory and approved by COMPANY and their respective Store
locations is attached hereto as Schedule 3.  Schedule 3A
also includes a current list of the Stores to be cross-docked by DISTRIBUTOR
with Valley Distributing of Montana, Inc. 
(“Cross-Docked Stores” and “VDI”) pursuant to Section 2.04 below. During
the term of this Agreement, COMPANY shall maintain and provide to DISTRIBUTOR a
current list of all Operators with Stores within the Territory who have been
approved by COMPANY for distribution of the Products under this Agreement.
DISTRIBUTOR shall have the right to rely upon such list, as amended or modified
by COMPANY in writing from time to time, in performing its obligations under
this Agreement. COMPANY shall notify DISTRIBUTOR of new Stores within the
Territory not less than fourteen (14) days prior to the desired date of first
shipment of Products to any such new Stores. In addition, provided and to the
extent that COMPANY and DISTRIBUTOR mutually agree in writing, DISTRIBUTOR
shall provide distribution services to Stores located outside the Territory, as
designated by COMPANY.

COMPANY represents and warrants that the terms of this
Agreement, as and if amended in the manner permitted under this Agreement, are
binding upon and shall govern DISTRIBUTOR and COMPANY’s obligations with
respect to distribution services performed by DISTRIBUTOR hereunder and that
each Franchisee that is an owner or operator of a Franchised Store within the
System shall be bound by the terms of this Agreement, as it may hereafter be
amended, upon such Operator’s purchase of Proprietary Products from
DISTRIBUTOR.

2.03                        Product Orders — All Product orders shall be submitted by
the Operators to DISTRIBUTOR and shall specify the location of the Operator’s
Stores, the type of Product, and the quantity desired.  

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                                                Operators
may place orders electronically (“Electronic Orders”) or by telephoning or
faxing DISTRIBUTOR’s customer service center in accordance with the guidelines
detailed below. All shipment expenses from DISTRIBUTOR’s distribution center to
the Operator’s location shall be at 
DISTRIBUTOR’s expense unless otherwise noted elsewhere in this
Agreement. Product order guides will be provided by DISTRIBUTOR to the
Operators monthly via DISTRIBUTOR’s website and with a hard copy delivered to
each Store, with availability of such order guides to be made prior to the
beginning of the month, but only after review and approval of the order guide
by COMPANY. The order guides will be organized by Product categories and will
include, among other things, the Product Sell Price (as defined herein),
Product units and new Products. DISTRIBUTOR will assign one product code number
to each stock-keeping unit (“SKU”) of each Product, which will be common
throughout its entire distribution system and will be used on all documents
such as order guides, invoices, monthly reports, etc. SKU’s, and, accordingly,
the assigned product code number, must differ for equivalent Products supplied
by different suppliers. DISTRIBUTOR       
will use its best efforts to utilize the existing TCBY product item
numbers.  Only Products approved for sale
to its Operators by the COMPANY will be listed on this order guide. Electronic
Orders will be placed via telephone modem or internet using DISTRIBUTOR’s
automated order entry system.  All orders
are subject to the standard order cut-off time of 2:00 p.m. one (1) day prior
to their scheduled delivery day, with the exception of Stores located in the
State of Utah and Durango, Colorado which must be submitted two (2) days prior
to their scheduled delivery day and the Cross-docked Stores which must be
submitted one (1) day prior to the day their order is to be picked up at the DISTRIBUTOR
distribution center.  Operators will be
notified prior to the time of final order cut-off if a product is expected to
be out of stock so that an alternative may be ordered, subject to the
provisions of Section 3.02.  Operators
will have until 4:30 p.m, one (1) day before their order shipping day to modify
or add-on to their order (Sunday at 4:30 p.m. for Stores whose deliveries will
leave DISTRIBUTOR’s facility on Monday). 
Where reasonably possible, DISTRIBUTOR will schedule ordering days and
delivery days that are mutually agreed upon by and between DISTRIBUTOR and each
Operator and will provide notice to the affected Operator at least fourteen
(14) days before routing changes.

Although DISTRIBUTOR may schedule deliveries on any
day of the week, it is DISTRIBUTOR’S intent to schedule deliveries on Tuesdays,
Wednesdays or Thursdays, wherever possible. 
On an exception basis, DISTRIBUTOR will consider shortening the
permissible time frames for scheduled deliveries for those Operators that,
given unique and compelling business needs, require the same.  Operator will be notified of any Product
shortages at the time of order placement or, in the case of an Electronic
Order, one (1) day prior to the loading of the delivery truck.

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2.04                       Deliveries.    Delivery vehicles used by DISTRIBUTOR will
only display the marks of DISTRIBUTOR, except for locations that cannot
accommodate delivery by DISTRIBUTOR’S existing tractor trailers or in the
instances where recovery deliveries are made by outside services or DISTRIBUTOR
has the need for temporary short term rental equipment.

DISTRIBUTOR agrees that, excluding key drops (deliveries scheduled to
be made during the period running from one (1) hour or more after the retail
closing time of the Store to deliveries one (1) hour or more before the retail
opening time of the Store) and Cross-docked Stores, an overall average of 90%
of all regularly scheduled deliveries will be made within a two (2) hour
window, meaning no earlier than one (1) hour before and no later than one (1)
hour after the scheduled delivery time. If a delivery is anticipated to fall
outside of this two (2) hour window, DISTRIBUTOR will immediately notify the
Operator. DISTRIBUTOR will provide an inside delivery to each Operator in
accordance with Company’s temperature store requirements as detailed in Section
4.09, placing refrigerated and frozen Products into their appropriate storage
areas, but will not be responsible for stocking shelves or rotating
inventories.

All invoices for deliveries made during Store’s business hours will be
signed for by the Store’s store manager or other representative prior to
DISTRIBUTOR’s driver leaving the Store (provided that the driver is not
unreasonably delayed).  Copies of
invoices for deliveries made after the Store’s regular business hours will be
left at the Store.

The COMPANY agrees to use its commercially reasonable
efforts to cause Operators to provide keys and security codes for night
deliveries where necessary.  In the event
Operator refuses to provide keys and security codes, Operator will promptly
meet the delivery driver at the scheduled appointment time or at such other
time as Operator has been notified in the event of a late delivery.  If the Operator fails to meet the DISTRIBUTOR
delivery at the appropriate time on more than one occasion, the Operator shall
be responsible for payment of a penalty fee of [CONFIDENTIAL](1)
to DISTRIBUTOR for subsequent occurrences. 
In the event of a Product shortage or delivery problem that occurs
during an unattended delivery, the authorized representative of the Stores will
contact the distribution center no later than the first Notification Deadline
following such unattended delivery.  The “Notification
Deadline” is 4:00 p.m. local time each day for the affected Stores.

In the case of Stores
located in the states of Montana, North Dakota and South Dakota and the
portions of Wyoming located outside of the Territory, DISTRIBUTOR agrees to
manage the 

(1)           Confidential treatment has been
requested for the redacted portion.  The
confidential, redacted portions have been filed separately with the SEC.

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entire distribution process in conjunction with VDI,
including the processing of orders from the Stores, picking, palletizing,
shrink-wrapping and loading of product onto VDI’s truck at DISTRIBUTOR’S
distribution center, invoicing of Operators and the processing of credits and
payments.  DISTRIBUTOR shall have no
liability with respect to the acts or non-performance of VDI but will be
responsible for its own errors in performing the services outlined above
including but not limited to mispicks and out-of-stocks not attributable to
supplier non-performance.  VDI will be
permitted to inspect and verify total case counts on each pallet prior to
loading of the order onto its truck.

DISTRIBUTOR agrees to assume all liability for
compensating VDI as mutually agreed upon between VDI and COMPANY and COMPANY
shall have no obligation to compensate VDI except through the Markup and
surcharges assessed to the Stores pursuant to Sections 4 and 5 of this
Agreement.  COMPANY has provided
DISTRIBUTOR with a copy of the current compensation arrangement with VDI and
agrees to notify DISTRIBUTOR in writing fourteen (14) days prior to any
changes.  DISTRIBUTOR will not be
obligated to implement such a change in the compensation arrangement with VDI
until COMPANY and DISTRIBUTOR have agreed on the impact of such a change on the
Markup called for in Sections 4.01 and 4.04. 
DISTRIBUTOR will pay VDI its compensation at times mutually agreed to
between DISTRIBUTOR and VDI.  In the
event it should become necessary to replace VDI, COMPANY and DISTRIBUTOR agree
to work together diligently to find a solution satisfactory to both
parties.  However, DISTRIBUTOR will not
be obligated to provide delivery services to the Cross-docked Stores unless it
is mutually agreed upon between 
DISTRIBUTOR and COMPANY.

2.05                        Delivery Frequency/Routing — DISTRIBUTOR will provide each
Operator with a minimum delivery frequency based on annual case volume as shown
below as long as the Operator meets the minimum order requirements set forth in
Section 5 hereof:

	
   

  	
   

  	
  Delivery Frequency

  	
   

  
	
  Annual Case Volume

  	
   

  	
  Summer Routing

  	
   

  	
  Winter Routing

  	
   

  
	
  Less than 120
  cases

  	
   

  	
  3
  deliveries during a 12 month period

  	
   

  
	
  120-199 cases

  	
   

  	
  4
  deliveries during a 12 month period

  	
   

  
	
  200-349 cases

  	
   

  	
  6
  deliveries during a 12 month period

  	
   

  
	
  350-499 cases

  	
   

  	
  8
  deliveries during a 12 month period

  	
   

  
	
  500-999 cases

  	
   

  	
  Every
  4 weeks

  	
   

  	
  Every
  4 weeks

  	
   

  
	
  1,000-1,999
  cases

  	
   

  	
  Every
  3 weeks

  	
   

  	
  Every
  4 weeks

  	
   

  
	
  2,000-3,499
  cases

  	
   

  	
  Every
  week

  	
   

  	
  Every
  2 weeks

  	
   

  
	
  Greater than 3,499
  cases

  	
   

  	
  Every week

  	
   

  	
  Every week

  	
   

  

 

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This schedule is intended to serve as a guideline only and DISTRIBUTOR
agrees to provide additional regular deliveries as requested by Operator and
approved by COMPANY in writing.  COMPANY will
provide DISTRIBUTOR with the initial delivery frequency for each Store in Schedule 3. 
Notwithstanding the foregoing unless and until it obtains another
customer in the Salt Lake City area, DISTRIBUTOR will only be obligated to
service the Utah portion of the Territory every two (2) weeks unless it
acquires additional business from a 3rd party in that state and COMPANY acknowledges
that Operators in Utah will receive service at two (2) week intervals, i.e.
every 2, 4, 6, 8 10, 12, 14 or 16 weeks as the case may be, until such time as
that 3rd party business begins.  Similarly, DISTRIBUTOR will only be obligated
to service Stores located in Casper, Mills, Lander and Glen Rock, Wyoming at
three (3) week intervals, i.e. every 3, 6, 9, 12 or 15 weeks, as the case may
be, unless and until DISTRIBUTOR acquires additional business in these markets
as well. Stores to be serviced by VDI will receive service at two (2) week
intervals, i.e. every 2, 4, 6, 8, 10, 12, 14 or 16 weeks, as the case may be.  Scheduled delivery service from DISTRIBUTOR
to Durango, Colorado and Pocatello, Idaho will be up to ten (10) and thirteen
(13) times per year, respectively, until such time as the respective Operator
purchases 1,000 or more cases on a rolling twelve (12) month basis.  COMPANY and DISTRIBUTOR will mutually agree on
the exact date for routing changes from summer to winter and winter to summer
but each period will be approximately six (6) months with summer routing from
April through September and winter routing from October through March.

In the event an emergency delivery is required based upon the Operator’s
needs and not due to a delivery error by DISTRIBUTOR nor during the time
periods specified in Section 2.06, DISTRIBUTOR will accommodate the Operator’s
request with the most efficient available delivery method. All additional
freight expense will be at the Operator’s expense and will be billed upon
DISTRIBUTOR’s receipt of the invoice from the shipping agent. If DISTRIBUTOR is
able to schedule such an emergency delivery in conjunction with a nearby route,
the additional freight expense will be [CONFIDENTIAL](2).  Where possible, a store may order up to [CONFIDENTIAL](3) cases to be delivered to a nearby store,
on that store’s delivery day (and with that store’s consent) without an
additional charge.  Products delivered to
a nearby store will be billed on a separate invoice.

Should the need arise for an emergency or special delivery due to
supplier error, DISTRIBUTOR and COMPANY will work with the supplier to remedy
the shortage at the supplier’s expense. If supplier fails to pay the additional
freight expense, COMPANY will be required to do so provided DISTRIBUTOR
notifies COMPANY immediately of supplier non-performance.  If an 

(2)           Confidential treatment has been requested
for the redacted portion.  The
confidential, redacted portions have been filed separately with the SEC.

(3)           Confidential treatment has been
requested for the redacted portion.  The
confidential, redacted portions have been filed separately with the SEC.

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emergency delivery is necessary due to DISTRIBUTOR error, DISTRIBUTOR
will arrange a special delivery with any additional freight to be paid by
DISTRIBUTOR.

DISTRIBUTOR will arrange its routes to insure that its
delivery trucks will be in all markets (SMSA’s of at least 250,000 population)
within each Territory at least twice a week where at least twenty-five (25)
Stores serviced by DISTRIBUTOR under this Agreement are located.

2.06                        Special Deliveries During Roll-Out and New
Operator Openings — DISTRIBUTOR
and COMPANY recognize that during the initial roll-out phase of the DISTRIBUTOR
distribution program, many new processes will be in place for each of COMPANY,
the Operators and DISTRIBUTOR, including changes in the way the Operators
order, the distance from the DISTRIBUTOR distribution center to the Operators,
and lead times from order day to delivery day for the Operators. Therefore,
DISTRIBUTOR will process emergency orders for all Operators for the first
thirty (30) days following the commencement of distribution service at no
additional charge, subject to the minimum order requirements and applicable
handling fees, if any, as set forth in Section 5 of this Agreement.  In addition, during the term of this Agreement
and excepting new Operator openings in Utah, Wyoming, Durango, Colorado and
Pocatello, Idaho, DISTRIBUTOR will process emergency orders for all Operators’
newly added Stores within the first thirty (30) days following the opening of
the new Stores, subject only to minimum order requirements and applicable
handling fees, if any, as set forth in Section 5 of this Agreement.

2.07                        Return of Products/Credits — Any
Products ordered by Operators which are returned to DISTRIBUTOR for any reason
must be returned no later than the next regularly scheduled delivery (except
that, in the case of Products to be returned as a result of concealed damage,
within the remaining shelf life of such Products) and all claims for Products
to be returned must be made either to the driver upon check-in of the order, by
telephone by 4 p.m. on the day of delivery following receipt of the Products if
an unattended delivery or, in the case of concealed damage, within twenty-four
(24) hours of discovery of concealed damage by the Operator.  All returned items must be in unmarked
original packaging and must be in suitable condition for resale (unless damaged
or mis-marked Product was the reason for the return). Subject to the foregoing,
DISTRIBUTOR shall provide credit to the affected Operator for defective,
shorted or damaged Products within twenty-four (24) hours of the driver’s
return if brought to the driver’s attention or noticed by the driver during
delivery or, in any event, within forty-eight (48) hours of DISTRIBUTOR’s
receipt of the Operator’s claim of damaged, shorted  or defective Products (or receipt of product,
if warranted) and will immediately provide documentation on its website for
Operator of such credit if the original order was placed electronically or via
fax or phone if the 

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order was placed in some other manner.  Notwithstanding the foregoing, no returns
will be permitted for cooler or freezer items, or fresh produce due to misorder
by the Operator.  Products refused by
Operator at time of delivery for reasons other than damage or remaining shelf
life below agreed upon parameters will be subject to a [CONFIDENTIAL](4)
restocking charge to be paid by Operator. 
In the event that the shorted, defective or damaged Product is a Kill
Item, then DISTRIBUTOR will remedy the situation in accordance with Section 3.02
if so requested by the Operator.

DISTRIBUTOR’s obligations under this Section 2.07 with respect to
Product sold to Cross-docked  Stores,
shall be limited to mispicks, product shortages/mis-labeling and concealed
damage.  DISTRIBUTOR does agree, however,
to issue timely credits to Operators for errors committed by VDI and to adjust
the compensation of VDI as mutually agreed between DISTRIBUTOR and VDI.

2.08                        Limited
Time Offers (“LTO’s”) — In order to allow DISTRIBUTOR to maintain
service levels to the Operators, COMPANY will provide DISTRIBUTOR with at least
twenty-eight (28) days prior written notice of any and all LTO’s to be run by
COMPANY (subject to availability of LTO Products from the supplier within the
twenty-eight (28) day period). Such written notices shall include estimated
usage for the Products to be promoted if such usage is expected to deviate
materially from historical levels or if a new Product. Subject to the above,
DISTRIBUTOR agrees to stock sufficient inventory for any new Proprietary
Products to be used in national LTO promotions and other key items, as
reasonably requested by COMPANY.  Unless
retained on the Operator’s menu at the instruction of the COMPANY or mutually
agreed to between COMPANY and DISTRIBUTOR, all LTO Products must be removed
from the DISTRIBUTOR distribution centers no later than sixty (60) days after
the completion of the LTO and COMPANY shall purchase all remaining inventory of
such LTO as provided in Section 3.02. The sale of LTO Products by DISTRIBUTOR
is final and LTO Products may not be returned to DISTRIBUTOR, unless the return
is necessitated due to a DISTRIBUTOR error or due to Product damage not caused
by the Operator.

3.             Suppliers of Products; Inventory
of Products.

3.01                        Suppliers/Contracted
Products — The Proprietary Products to be distributed to the Operators
under the terms and conditions of this Agreement shall be purchased by
DISTRIBUTOR, on its own account, from the suppliers (including COMPANY)
selected by COMPANY, pursuant to 

(4)           Confidential treatment has been
requested for the redacted portion.  The
confidential, redacted portions have been filed separately with the SEC.

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                                                terms
and conditions as are agreed upon by and between DISTRIBUTOR and such suppliers
(including COMPANY). In the event COMPANY enters into direct contracts with
suppliers, the terms and conditions of such contracts that obligate DISTRIBUTOR
shall be provided to DISTRIBUTOR for its business and legal review and, if the
business and legal terms of the proposed contract that apply to DISTRIBUTOR are
reasonably acceptable to DISTRIBUTOR, DISTRIBUTOR will approve the supplier
contract. The guaranteed supplier price provided under such supplier contract
(net of billbacks by DISTRIBUTOR, if any), plus applicable freight if the supplier
price is not a delivered price, [CONFIDENTIAL](5)
if any, attributable to the Product, [CONFIDENTIAL](6)  plus any applicable Sourcing Fees
(defined below) shall be the “Cost” of the Product.  Products governed by such supplier contracts
negotiated by COMPANY are referred to herein as “Contracted Products.” The
freight charges for Contracted Products will be an amount negotiated with the
supplier by COMPANY.  DISTRIBUTOR agrees
that Cost for any Contracted Products will not include any unloading costs for
palletized and slipsheet loads.

3.02                        Inventory
— During the term of this Agreement, DISTRIBUTOR shall maintain an inventory of
the Products in quantities necessary to provide the Operators with an adequate
supply of such Products based upon initial usage projections by COMPANY, future
historical usage of such Products by the Operators, and the fill rate
performance requirements detailed below. DISTRIBUTOR agrees to work with
COMPANY, to attempt to maximize the quantities of Products purchased to efficiently
reduce the cost of Products purchased, and to maximize Product inventory turns.
In addition, DISTRIBUTOR agrees to order Products in the quantities indicated
on the inbound quantity matrix attached hereto as Schedule 5, as amended by COMPANY to reflect the growth in the
number of Stores serviced by DISTRIBUTOR in the Territory from time to time. To
further insure DISTRIBUTOR’s ability to comply with the performance
requirements detailed later in this Section 3.02, DISTRIBUTOR will also
maintain at each distribution center servicing Operators “safety stock” of not
less than [CONFIDENTIAL](7) days historical usage
for all Proprietary Products and will also have an additional [CONFIDENTIAL](8) days historical usage of white chocolate
mousse, chocolate and vanilla frozen yogurt on the road at all times.
DISTRIBUTOR agrees that all Products delivered to Operators will have at least
one-third of their original shelf-life remaining as of the date of delivery.

COMPANY categorizes Products into three classes:

(5)           Confidential treatment has been
requested for the redacted portion.  The
confidential, redacted portions have been filed separately with the SEC.

(6)           Confidential treatment has been
requested for the redacted portion.  The
confidential, redacted portions have been filed separately with the SEC.

(7)           Confidential treatment has been
requested for the redacted portion.  The
confidential, redacted portions have been filed separately with the SEC.

(8)           Confidential treatment has been
requested for the redacted portion.  The
confidential, redacted portions have been filed separately with the SEC.

 

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Proprietary Products that Operators must have (“Kill
Items”), which Kill Items will not number more than [CONFIDENTIAL](9)
at any time, excluding beverage Products and LTO items. COMPANY will
provide a list of Kill Items and other Proprietary Products to DISTRIBUTOR,
which list will be updated by COMPANY from time-to-time.  The initial list of Kill Items is attached as
Schedule 4.

Other Proprietary
Products that can be substituted in an emergency.

Non-proprietary Products, including, any produce items
that DISTRIBUTOR may agree to provide.

DISTRIBUTOR will achieve a 100% fill rate on Kill Items with overnight
emergency delivery, if requested, an overall aggregate “fill rate” for all
Products of [CONFIDENTIAL](10),  and at least [CONFIDENTIAL](11)
of all invoices issued by DISTRIBUTOR to the Operators will be completely
accurate at the time of initial issuance, with all of the above measured
quarterly.  The “fill rate” equals the
percentage of Products or Kill Items, as the case may be, obtained by dividing
the total number of Products or Kill Items shipped by DISTRIBUTOR and received
by the Operators at the time of delivery for the month, by the total number of
Product or Kill Items ordered by the Operators from the DISTRIBUTOR for that
same month.  All fill rate measurements
(and invoice accuracy requirements) will be net of supplier-related issues such
as shortages and delayed deliveries to DISTRIBUTOR, provided DISTRIBUTOR
notifies COMPANY immediately in the event of supplier non-performance. If
emergency delivery is required due to supplier (including COMPANY) error, costs
of emergency delivery shall be at supplier (including COMPANY) expense,
provided that, if the supplier fails to absorb such expense, such delivery
costs shall be paid by the Operator provided DISTRIBUTOR has notified COMPANY
immediately in the event of such non-performance and Operator has approved the
additional expense in advance.   If the
emergency delivery is due to DISTRIBUTOR error, then DISTRIBUTOR will remedy
the situation in as efficient manner as possible, which may include emergency
deliveries and special freight shipments, at DISTRIBUTOR’S sole expense. If the
emergency delivery is due to Operator error, the Operator shall pay delivery
costs for such emergency delivery.  From
the moment of receipt of the Products for storage by DISTRIBUTOR until the
Products have been accepted by Operator at the Store, DISTRIBUTOR assumes all
risk of loss or 

(9)           Confidential treatment has been
requested for the redacted portion.  The
confidential, redacted portions have been filed separately with the SEC.

(10)         Confidential treatment has been
requested for the redacted portion.  The
confidential, redacted portions have been filed separately with the SEC.

(11)         Confidential treatment has been
requested for the redacted portion.  The
confidential, redacted portions have been filed separately with the SEC.

 11
 

  
  
  

damage with respect thereto, shall be directly liable to COMPANY for
any such loss or damage to the Products and the related costs and expenses for
replacing the Products and agrees to obtain and maintain adequate insurance
coverage to insure against such loss or damage.

In the event of substitution of a Proprietary Product, the substituted
Product must have been previously approved by COMPANY in writing and, if the
need for substitution was caused due to DISTRIBUTOR error, the price of the
substituted Product will be determined based on the lower of the Cost (as hereinafter
defined) of the substituted Product or the Cost of the out-of-stock Product
that it replaces.  In addition,
DISTRIBUTOR will reimburse COMPANY to the extent that COMPANY would have
realized a difference between its selling price to DISTRIBUTOR and the amount
that COMPANY would have paid for the Proprietary Product from its supplier,
unless the substitution is due to COMPANY’s error.  Upon request, COMPANY shall provide to
DISTRIBUTOR copies of invoices and other documentation reasonably necessary to
verify the amount of the difference claimed by COMPANY.  If substitution is due to supplier (including
COMPANY) error, then COMPANY shall cause supplier to, or if COMPANY is the
supplier, COMPANY shall, reimburse DISTRIBUTOR for any reasonable losses sustained
due to such error.

To the extent that DISTRIBUTOR is unable to sell to the Operators
quantities of the Proprietary Products in DISTRIBUTOR’s inventory for any
reason whatsoever, including, but not limited to, Product discontinuation,
slow-moving inventory, unused LTO Products, promotional or seasonal Products or
exceeded shelf life due to sudden decline in Product movement and not due to
DISTRIBUTOR error, COMPANY will purchase, or cause a third party to purchase,
all remaining inventory of such Proprietary Products at DISTRIBUTOR’s cost,
F.O.B. the DISTRIBUTOR distribution centers plus DISTRIBUTOR’s handling and
carrying charges, if properly approved by COMPANY in advance as outlined
below.  In such event, COMPANY will
purchase or cause to be purchased all perishable Proprietary Products within [CONFIDENTIAL](12) days after notice from DISTRIBUTOR or by
the expiration date of the Proprietary Products, whichever is earlier, and all
nonperishable Proprietary Products within [CONFIDENTIAL](13) days
after notice from DISTRIBUTOR.  In
addition, if the inventory re-purchase is necessitated for any reason other
than DISTRIBUTOR error, COMPANY shall reimburse to DISTRIBUTOR all reasonable
out-of-pocket costs and expenses (not to exceed an amount equal to [CONFIDENTIAL](14) of the Product’s Cost unless DISTRIBUTOR
receives COMPANY’S prior written consent) incurred by DISTRIBUTOR in selling,
returning or otherwise disposing of such Products.  DISTRIBUTOR shall provide COMPANY with 

(12)         Confidential treatment has been
requested for the redacted portion.  The
confidential, redacted portions have been filed separately with the SEC.

(13)         Confidential treatment has been
requested for the redacted portion.  The
confidential, redacted portions have been filed separately with the SEC.

(14)         Confidential treatment has been
requested for the redacted portion.  The
confidential, redacted portions have been filed separately with the SEC.

 12
 

  
  
  

documentation or other proof that any such costs and expenses were
incurred by DISTRIBUTOR.  In order to
allow COMPANY to monitor the supply and usage of the Proprietary Products,
DISTRIBUTOR shall provide to COMPANY a monthly obsolete and slow-moving
inventory report.

3.03                        Aged
Inventory Notification — DISTRIBUTOR will immediately notify COMPANY in
writing in the event that any quantities of its Proprietary Products are within
[CONFIDENTIAL](15) days of expiration
of product life.  If DISTRIBUTOR fails to
do so, COMPANY shall not be required to comply with the requirements set forth
in Section 3.02.

3.04                        Present
DISTRIBUTOR’s Inventory — DISTRIBUTOR agrees to purchase the existing
merchantable and saleable inventory of Proprietary Products from COMPANY’S
present distributor located in Salt Lake City, Utah and in quantities not to
exceed a [CONFIDENTIAL](16) supply of such
Products, in the aggregate, provided that DISTRIBUTOR and COMPANY have been
given an opportunity by the present distributor to inspect any such Product
prior to purchase pursuant to this Section 3.04.   DISTRIBUTOR will pay, via check, the present
distributor for Products purchased from it, within ten (10) days of the later
of DISTRIBUTOR’S receipt of the Products or the receipt of the invoice approved
by COMPANY for the Products.  
DISTRIBUTOR shall be responsible for all freight and unloading costs
associated with transporting such inventory from the existing DISTRIBUTOR’s
locations listed above. DISTRIBUTOR will not be responsible for any handling or
other fees charged by the current distributor in connection with DISTRIBUTOR’s
loading and transferring of such inventory. COMPANY and the current distributor
will be required to provide all reasonable assistance and cooperation to
DISTRIBUTOR in connection with the purchase, loading and transportation of such
inventory from the current distributor to the DISTRIBUTOR distribution center,
including the scheduling of mutually agreeable inventory inspection and pick-up
times.

In the event that the Cost of the Product, as
purchased from the existing distributor, exceeds or is less than the Cost that
DISTRIBUTOR would otherwise utilize in determining the Sell Price for such
Products obtained through suppliers, including COMPANY, DISTRIBUTOR shall
utilize the Cost designated by COMPANY in determining the Sell Price and shall
invoice, pay to COMPANY or charge the Operator, as directed by the COMPANY, in
the amount of the difference.  In the
event COMPANY directs DISTRIBUTOR to invoice the COMPANY, 

(15)         Confidential treatment has been
requested for the redacted portion.  The
confidential, redacted portions have been filed separately with the SEC.

(16)         Confidential treatment has been
requested for the redacted portion.  The
confidential, redacted portions have been filed separately with the SEC.

 13
 

  
  
  

COMPANY shall pay such invoiced amount, via check, so
that it is received by DISTRIBUTOR within [CONFIDENTIAL](17) days
of the date of the invoice.  In the case
of a rebate to COMPANY, DISTRIBUTOR shall pay the rebated amount within [CONFIDENTIAL](18) days of its determination of the amount
to be rebated.

4.             Sell Price/Payment
Terms/Financial Reporting

4.01                        Sell
Price — Beginning on the Effective Date and throughout the entire term
of this Agreement, the maximum purchase price at which DISTRIBUTOR shall sell
the Products, (the “Sell Price”), to the Operators shall be determined by
adding the “Cost” (as hereinafter defined) of the Product plus [CONFIDENTIAL](19) per case for all deliveries
(collectively, “Markup”), subject to the other provisions of this
Agreement.  For purposes of this
Agreement, the “Cost” of a Product other than a Contracted Product shall be the
sum of (a) the cost of the Product as shown on the invoices to DISTRIBUTOR from
the respective supplier, including COMPANY, plus (b) if the invoiced cost of
the Product is not a delivered price, the applicable freight charges related to
shipping the Product from the supplier to DISTRIBUTOR’S distribution center,
plus (c) the Sourcing Fees, if any, attributable to the Product, less (d)
promotional allowances reflected on supplier invoices to DISTRIBUTOR.
Applicable freight, in those cases where the invoice cost to DISTRIBUTOR for
non-proprietary Products is not a delivered cost, means that DISTRIBUTOR has
added a reasonable freight charge, agreed to in advance and in writing by
COMPANY for delivering such non-proprietary Products from suppliers to
DISTRIBUTOR.  Applicable freight for any
non-proprietary Product will not exceed the rate charged by nationally
recognized carriers operating in the same market for the same type of freight
service. Cost for any non-proprietary Product will not be reduced by discounts
for cash or prompt payment available to DISTRIBUTOR, breakage allowances or by
backhaul revenue. Fuel or other transportation surcharges indicated on the
manufacturer’s or supplier’s invoice or on freight invoices will increase Cost.
The Cost of a Contracted Product shall be determined in accordance with Section
3.01.  In no event will the Cost of
Contracted Products include amounts to be rebated to DISTRIBUTOR and therefore,
DISTRIBUTOR will not negotiate off-invoice manufacturer rebates,
labels/promotional allowances or any other “soft money” received from supplier
or freight carriers of Contracted Products. 
In order to allow verification of the foregoing commitment, DISTRIBUTOR
agrees to provide documentation substantiating the Cost of items DISTRIBUTOR
purchases from suppliers and freight carriers. 
DISTRIBUTOR agrees to limit its collection of such “soft money” to the
manufacturers of non-proprietary Products. 
The Cost 

(17)         Confidential treatment has been
requested for the redacted portion.  The
confidential, redacted portions have been filed separately with the SEC.

(18)         Confidential treatment has been
requested for the redacted portion.  The
confidential, redacted portions have been filed separately with the SEC.

(19)         Confidential treatment has been
requested for the redacted portion.  The
confidential, redacted portions have been filed separately with the SEC.

 14
 

  
  
  

                                                of
Contracted Products will not be reduced by discounts for cash or prompt payment
available to DISTRIBUTOR, breakage allowances or by backhaul revenue. Fuel or
other transportation surcharges indicated on the manufacturer’s or supplier’s
invoice or on freight invoices will increase Cost.

The invoice format to be used by DISTRIBUTOR will be
approved by COMPANY and will contain separate lines showing subtotals for
various Product categories, the total amount of R & A Charges invoiced to
the Operator for that particular delivery, applicable taxes, the date of the
ACH debit and other summary line items as detailed elsewhere in this Agreement.

Partial case shipments (also known as “splits”) shall
be permitted for the malt, maraschino cherries, chocolate sprinkles, assorted
sprinkles in which individual units of such Products are separately packaged
within each case. Notwithstanding anything else contained in this agreement to
the contrary, the Markup for the following items will be limited to [CONFIDENTIAL](20) : malt, maraschino cherries, medium
spoons, taster spoons, straws, water, chocolate sprinkles and assorted
sprinkles.

DISTRIBUTOR and COMPANY agree that the Markup for
DISTRIBUTOR’S services in connection with deliveries to Stores located in
Montana, North Dakota, South Dakota and Wyoming outside of the Territory using
VDI or such other distributor as may approved by COMPANY, shall be [CONFIDENTIAL](21) per case. 
VDI’s compensation for the Cross-Dock Stores will be [CONFIDENTIAL](22) per case except for the cases described
in the paragraph above which will be [CONFIDENTIAL](23) ,
subject to modification from time to time pursuant to Sections 2.04 and 4.04.

Any fuel surcharges collected pursuant to Section 4.03
for these Stores shall be paid to VDI. Any delivery surcharges collected
pursuant to Section 5 for these Stores shall be shared with [CONFIDENTIAL](24) of the surcharge paid to DISTRIBUTOR and [CONFIDENTIAL](25) of the surcharge paid to VDI.  These surcharges are in addition to the
Markups earned by VDI as described above.

(20)         Confidential treatment has been requested
for the redacted portion.  The
confidential, redacted portions have been filed separately with the SEC.

(21)         Confidential treatment has been
requested for the redacted portion.  The
confidential, redacted portions have been filed separately with the SEC.

(22)         Confidential treatment has been
requested for the redacted portion.  The
confidential, redacted portions have been filed separately with the SEC.

(23)         Confidential treatment has been
requested for the redacted portion.  The
confidential, redacted portions have been filed separately with the SEC.

(24)         Confidential treatment has been
requested for the redacted portion.  The
confidential, redacted portions have been filed separately with the SEC.

(25)         Confidential treatment has been
requested for the redacted portion.  The
confidential, redacted portions have been filed separately with the SEC.

 15
 

  
  
  

 

The Markup of [CONFIDENTIAL](26) per
case has been developed by averaging the case fee for DISTRIBUTOR of [CONFIDENTIAL](27) on the cases which it will deliver directly
to the Stores, along with the [CONFIDENTIAL](28) per
case DISTRIBUTOR will be compensated for the cases for the Cross-Docked Stores
coupled with the [CONFIDENTIAL](29) case fee to be
earned by VDI on the Cross-Docked Stores. 
This average was developed based on historical information which
indicates that approximately [CONFIDENTIAL](30)
of all cases to be delivered will be handled in their entirety by DISTRIBUTOR
over a twelve (12) month period, as detailed in Schedule 8.

Notwithstanding the foregoing, any full pallet
quantities delivered by DISTRIBUTOR to Nicholas Foods will have a Markup of [CONFIDENTIAL](31)/case.

4.02                        “Cost”
for Contracted Products/ True-Up Methodology — In the case of
Contracted Products, COMPANY agrees to notify DISTRIBUTOR as soon as practical
after a change in Cost has been agreed to with a supplier.  COMPANY shall have the right to adjust the
Markup for individual Products (not including the fuel surcharge or the [CONFIDENTIAL](32) Markup on the items listed in Section
4.01 above) from time to time to an amount that is more or less than the agreed
upon Markup per case. If COMPANY exercises its right to lower DISTRIBUTOR’s
Markup on any Products, it will simultaneously and correspondingly increase the
Markup on other Products so as to provide DISTRIBUTOR continuously with an
average overall Markup of [CONFIDENTIAL](33) per
case, again subject to the other provisions of this Agreement. DISTRIBUTOR will
provide a report by Tuesday of each week for all delivery activity of the preceding
week showing the total number of cases delivered for that week, DISTRIBUTOR’s
total case fees charged, the average case fee charged and the difference for
the week and quarter-to-date between the total case fees charged and the
product obtained by multiplying the total number of cases delivered by the
Markup.

Following each calendar quarter, DISTRIBUTOR shall
provide a cumulative report that reflects: (i) the total number of cases of
Products delivered to the Stores under this Agreement during the preceding
quarter (“x”); (ii) the total of the Sell Prices charged for all Products
delivered to the 

(26)         Confidential treatment has been
requested for the redacted portion.  The
confidential, redacted portions have been filed separately with the SEC.

(27)         Confidential treatment has been
requested for the redacted portion.  The
confidential, redacted portions have been filed separately with the SEC.

(28)         Confidential treatment has been
requested for the redacted portion.  The
confidential, redacted portions have been filed separately with the SEC.

(29)         Confidential treatment has been
requested for the redacted portion.  The
confidential, redacted portions have been filed separately with the SEC.

(30)         Confidential treatment has been
requested for the redacted portion.  The
confidential, redacted portions have been filed separately with the SEC.

(31)         Confidential treatment has been
requested for the redacted portion.  The
confidential, redacted portions have been filed separately with the SEC.

(32)         Confidential treatment has been
requested for the redacted portion.  The
confidential, redacted portions have been filed separately with the SEC.

(33)         Confidential treatment has been
requested for the redacted portion.  The
confidential, redacted portions have been filed separately with the SEC.

 16
 

  
  
  

Stores under this Agreement during the preceding
quarter, excluding the effect of any Large Order Credits given Operators during
the quarter (“y”), (iii) the total of the Cost of each Product delivered to the
Stores during such quarter (“z”), and (iv) the “Average Putative Markup” for
Products delivered to the Stores, which shall be calculated as follows:
[(y-z)/x].   If the Average Putative
Markup is less than the Markup required pursuant to Section 4.01 (and as
modified pursuant to the other provisions of this Agreement), with such
deficiency being referred to herein as the “Markup Deficiency”, COMPANY shall
remit to DISTRIBUTOR, an amount equal to the number of cases delivered to the
Stores under this Agreement during the preceding quarter (“x”), multiplied by
the Markup Deficiency.  If the Average
Putative Markup exceeds the Markup required pursuant to Section 4.01 (and as
modified pursuant to the other provisions of this Agreement), with such excess
being referred to as the “Markup Excess”, DISTRIBUTOR shall remit to COMPANY an
amount equal to the number of cases delivered to the Stores under this
Agreement during that quarter (“x”), multiplied by the Markup Excess.  Payments owed by either party under this
Section 4.02 shall be made by such party to the other party, via check, within
ten (10) days of the determination of the amounts owed and, in any case, within
thirty (30) days following the end of the applicable calendar quarter for which
such payments are owed or by making adjustments to the Sell Price as mutually
agreed upon between COMPANY and DISTRIBUTOR.

4.03                        Fuel
Cost Adjustments — If the operating costs of DISTRIBUTOR are increased
or decreased as a result of fuel cost increases or decreases, DISTRIBUTOR may
adjust the Markup (as and if otherwise adjusted pursuant to the terms of this
Agreement) to compensate for such fluctuations in fuel costs, on a monthly
basis. The amount of the adjustment computed in accordance with this Section
4.03 shall also be added to or subtracted from, as applicable, the specified
price for Contracted Operator Sell Price Products described in Section
4.11.  The method for determining the
fuel surcharge or adjustment will be made monthly beginning October 1, 2006 and
will be based on the Rocky Mountain Weekly Retail On-Highway diesel fuel price
which is compiled by the Energy Information Administration. The Web site to
access this information electronically is as follows:

http://www.eia.doe.gov/pub/oil_gas/petroleum/data_publications/weekly_on_highway_diesel_prices

/current/html/diesel.html

If such publication is no longer published or available, then the
parties will mutually agree upon an acceptable alternative source.

 17
 

  
  
  

As fuel prices increase or decrease, the fuel cost adjustments will
move according to changes in the four (4) week average for the Rocky Mountain
fuel price bracket, and will take effect on the first day of the calendar month
following the applicable publication date. 
For example, the fuel cost adjustment beginning the first day in
October, if any, will be determined based on the four (4) week average ending
immediately prior to or on September 30th.

[CONFIDENTIAL](34)  [CONFIDENTIAL](35)

If the price per gallon, including taxes, exceeds [CONFIDENTIAL](36), the surcharge will equal
[CONFIDENTIAL](37) per case plus
an additional [CONFIDENTIAL](38) per
case for each [CONFIDENTIAL](39) increment
(or portion thereof) that the price per gallon exceeds [CONFIDENTIAL](40).  If the price per gallon, including taxes,
falls below [CONFIDENTIAL](41), a
credit will be issued in the amount of [CONFIDENTIAL](42)
per case plus an additional [CONFIDENTIAL](43)
per case for each ten cent increment (or portion thereof) that the
price is less than [CONFIDENTIAL](44).  Any such surcharge or credit will be shown as
a separate line item on the Operator’s invoice.

4.04                        Markup
Adjustments due to Variances from Projections.

The [CONFIDENTIAL](45)
Markup during the [CONFIDENTIAL](46)
months after the Effective Date  is
premised upon an average annual delivery size of [CONFIDENTIAL](47)
cases to the Stores serviced by DISTRIBUTOR, the expectation that [CONFIDENTIAL](48) of all cases sold by DISTRIBUTOR will be
outside of the Cross-docked stores delivered by VDI and the average case Cost
of the Products, including [CONFIDENTIAL](49).  COMPANY and DISTRIBUTOR agree to review the
service levels provided by DISTRIBUTOR as well as the average delivery 

(34)         Confidential treatment has been
requested for the redacted portion.  The
confidential, redacted portions have been filed separately with the SEC.

(35)         Confidential treatment has been
requested for the redacted portion.  The
confidential, redacted portions have been filed separately with the SEC.

(36)         Confidential treatment has been
requested for the redacted portion.  The
confidential, redacted portions have been filed separately with the SEC.

(37)         Confidential treatment has been
requested for the redacted portion.  The
confidential, redacted portions have been filed separately with the SEC.

(38)         Confidential treatment has been
requested for the redacted portion.  The
confidential, redacted portions have been filed separately with the SEC.

(39)         Confidential treatment has been
requested for the redacted portion.  The
confidential, redacted portions have been filed separately with the SEC.

(40)         Confidential treatment has been
requested for the redacted portion.  The
confidential, redacted portions have been filed separately with the SEC.

(41)         Confidential treatment has been
requested for the redacted portion.  The
confidential, redacted portions have been filed separately with the SEC.

(42)         Confidential treatment has been
requested for the redacted portion.  The
confidential, redacted portions have been filed separately with the SEC.

(43)         Confidential treatment has been
requested for the redacted portion.  The
confidential, redacted portions have been filed separately with the SEC.

(44)         Confidential treatment has been
requested for the redacted portion.  The
confidential, redacted portions have been filed separately with the SEC.

(45)         Confidential treatment has been
requested for the redacted portion.  The
confidential, redacted portions have been filed separately with the SEC.

(46)         Confidential treatment has been
requested for the redacted portion.  The
confidential, redacted portions have been filed separately with the SEC.

(47)         Confidential treatment has been
requested for the redacted portion.  The
confidential, redacted portions have been filed separately with the SEC.

(48)         Confidential treatment has been requested
for the redacted portion.  The
confidential, redacted portions have been filed separately with the SEC.

(49)         Confidential treatment has been
requested for the redacted portion.  The
confidential, redacted portions have been filed separately with the SEC.

 18
 

  
  
  

sizes [CONFIDENTIAL](50) days
after the Effective Date.  No adjustments
will be made to the Markup at that time due to a variance in average delivery
size from projections, unless the average delivery size experienced during the
first [CONFIDENTIAL](51) days is
greater than [CONFIDENTIAL](52)
adjusted for seasonality and excluding deliveries to Cross-docked Stores and
any additional deliveries made by DISTRIBUTOR during the initial transition
period pursuant to Section 2.06.  In the
event such a Markup adjustment is required, the COMPANY and DISTRIBUTOR agree
to use the schedule that follows later in Section 4.04 as soon as practical
after the review and such Markup will remain in effect for the balance of the
first year of the Agreement.

In addition to reviewing the average delivery size [CONFIDENTIAL](53) days after the Effective
Date, COMPANY and DISTRIBUTOR will also review the average case Cost of the
Products [CONFIDENTIAL](54) Charges,
but excluding any impact from the cost of inventory purchased pursuant to
Section 3.04) for this same timeframe and agree to further modify the Markup
schedule in this Section 4.04 as follows. 
The actual average case Cost experienced during the first [CONFIDENTIAL](55) days will be compared to
the projected level of [CONFIDENTIAL](56).  If the actual case Cost is higher than [CONFIDENTIAL](57), then no adjustment will
be made to the Markup at that time except as called for earlier in this Section
4.04 and in Section 4.03.  However, if
the actual average case Cost is less than [CONFIDENTIAL](58)
then the Markup will be reduced by multiplying this difference by a
factor of [CONFIDENTIAL](59) and
subtracting this amount from the Markup previously in effect (or which would
become effective if an adjustment is also required due to a variation in
average delivery size) and rounding to the nearest full cent.  For example, if the actual average case Cost
is [CONFIDENTIAL](60) (and there
is no adjustment called for due to a change in average delivery size), then the
Markup will be reduced [CONFIDENTIAL](61)  times the factor of [CONFIDENTIAL](62) or [CONFIDENTIAL](63)
In no event, however, will the Markup be 

(50)         Confidential treatment has been
requested for the redacted portion.  The
confidential, redacted portions have been filed separately with the SEC.

(51)         Confidential treatment has been
requested for the redacted portion.  The
confidential, redacted portions have been filed separately with the SEC.

(52)         Confidential treatment has been
requested for the redacted portion.  The
confidential, redacted portions have been filed separately with the SEC.

(53)         Confidential treatment has been
requested for the redacted portion.  The
confidential, redacted portions have been filed separately with the SEC.

(54)         Confidential treatment has been
requested for the redacted portion.  The
confidential, redacted portions have been filed separately with the SEC.

(55)         Confidential treatment has been
requested for the redacted portion.  The
confidential, redacted portions have been filed separately with the SEC.

(56)         Confidential treatment has been
requested for the redacted portion.  The
confidential, redacted portions have been filed separately with the SEC.

(57)         Confidential treatment has been
requested for the redacted portion.  The
confidential, redacted portions have been filed separately with the SEC.

(58)         Confidential treatment has been
requested for the redacted portion.  The
confidential, redacted portions have been filed separately with the SEC.

(59)         Confidential treatment has been requested
for the redacted portion.  The
confidential, redacted portions have been filed separately with the SEC.

(60)         Confidential treatment has been
requested for the redacted portion.  The
confidential, redacted portions have been filed separately with the SEC.

(61)         Confidential treatment has been
requested for the redacted portion.  The
confidential, redacted portions have been filed separately with the SEC.

(62)         Confidential treatment has been
requested for the redacted portion.  The
confidential, redacted portions have been filed separately with the SEC.

(63)         Confidential treatment has been
requested for the redacted portion.  The
confidential, redacted portions have been filed separately with the SEC.

 19
 

  
  
  

reduced by more than [CONFIDENTIAL](64)
due to this provision during the first [CONFIDENTIAL](65)
months from the Effective Date nor by more than [CONFIDENTIAL](66)
thereafter.  This Markup reduction will
be put into effect as soon as practical after the reduction has been determined
and it will remain in effect for the balance of the current year of the
Agreement.

 

DISTRIBUTOR agrees that COMPANY may also decide in its sole discretion
to change its procedures for collecting [CONFIDENTIAL](67).  If these changes are such that DISTRIBUTOR is
no longer required to pay [CONFIDENTIAL](68) these
charges until at least ten (10) days after the Operator has been invoiced for
them by DISTRIBUTOR, then COMPANY will be entitled to present DISTRIBUTOR with
its best estimate of the impact such changes will have on DISTRIBUTOR’s  average case Cost and DISTRIBUTOR agrees to
implement a Markup reduction in accordance with the calculation format called
for above, i.e., a reduction of [CONFIDENTIAL](69)
times the estimated reduction in average case Cost and this
reduction will become effective on the first of the month following the date
the COMPANY implements such a change in its collection procedure.  COMPANY and DISTRIBUTOR agree to review the
accuracy of COMPANY’s estimated impact on average case Cost with actual results
[CONFIDENTIAL](70) days after it
has gone into effect and to make adjustments reasonably agreed to between the
parties to reflect the actual average case Cost resulting from this change..

After the first [CONFIDENTIAL](71) months
of service and after each [CONFIDENTIAL](72) month
period thereafter the Markup for the Stores including the Cross-docked Stores
for the next [CONFIDENTIAL](73) months
will be based on the actual average delivery size for the previous [CONFIDENTIAL](74) months as calculated
below and according to the following schedule:

[CONFIDENTIAL](75)

[CONFIDENTIAL](76)            [CONFIDENTIAL](77)

(64)         Confidential treatment has been
requested for the redacted portion.  The
confidential, redacted portions have been filed separately with the SEC.

(65)         Confidential treatment has been
requested for the redacted portion.  The
confidential, redacted portions have been filed separately with the SEC.

(66)         Confidential treatment has been
requested for the redacted portion.  The
confidential, redacted portions have been filed separately with the SEC.

(67)         Confidential treatment has been
requested for the redacted portion.  The
confidential, redacted portions have been filed separately with the SEC.

(68)         Confidential treatment has been
requested for the redacted portion.  The
confidential, redacted portions have been filed separately with the SEC.

(69)         Confidential treatment has been
requested for the redacted portion.  The
confidential, redacted portions have been filed separately with the SEC.

(70)         Confidential treatment has been
requested for the redacted portion.  The
confidential, redacted portions have been filed separately with the SEC.

(71)         Confidential treatment has been
requested for the redacted portion.  The
confidential, redacted portions have been filed separately with the SEC.

(72)         Confidential treatment has been
requested for the redacted portion.  The
confidential, redacted portions have been filed separately with the SEC.

(73)         Confidential treatment has been
requested for the redacted portion.  The
confidential, redacted portions have been filed separately with the SEC.

(74)         Confidential treatment has been
requested for the redacted portion.  The
confidential, redacted portions have been filed separately with the SEC.

(75)         Confidential treatment has been
requested for the redacted portion.  The
confidential, redacted portions have been filed separately with the SEC.

(76)         Confidential treatment has been
requested for the redacted portion.  The
confidential, redacted portions have been filed separately with the SEC.

(77)         Confidential treatment has been
requested for the redacted portion.  The
confidential, redacted portions have been filed separately with the SEC.

 20
 

  
  
  

 

The average delivery size will be calculated by summing up all of the
cases delivered to the Stores serviced by DISTRIBUTOR in the Territory for the
previous [CONFIDENTIAL](78) months
(with each partial case or “split” counting as a full case) and dividing the
total number of cases delivered by the total number of deliveries made by DISTRIBUTOR
as modified below.  The number of
deliveries made by DISTRIBUTOR shall not include deliveries made by third
parties arranged by DISTRIBUTOR, including Cross-docked Stores, nor deliveries
to correct errors made by DISTRIBUTOR or suppliers, nor shall it include
deliveries for which DISTRIBUTOR has received the [CONFIDENTIAL](79) special delivery fee in accordance with
Section 2.05.

In the event the average delivery size for the previous [CONFIDENTIAL](80) months falls outside of
the ranges described above, COMPANY and DISTRIBUTOR will negotiate a new Markup
for that DISTRIBUTOR facility in good faith. 
In the event COMPANY and DISTRIBUTOR fail to agree on such a Markup
adjustment within [CONFIDENTIAL](81) days
after the commencement of negotiations under this Section 4.04, then both
COMPANY and DISTRIBUTOR will have the right to terminate this Agreement with
180 days written notice to the other party in accordance with Section 6.02
(b)(ii).

In addition to the adjustment for a change in average case drops per
delivery, after the first [CONFIDENTIAL](82)  months
of service and every [CONFIDENTIAL](83) months
thereafter, COMPANY and DISTRIBUTOR will also review the percentage of total
cases sold and delivered by DISTRIBUTOR to the total sold and delivered by
DISTRIBUTOR plus the amount sold to the Cross-docked Stores.  In the event this percentage is greater than [CONFIDENTIAL](84) or less than [CONFIDENTIAL](85) for the previous [CONFIDENTIAL](86) month period, COMPANY
and DISTRIBUTOR will further adjust the Markup for the next [CONFIDENTIAL](87) months based on the
actual percentage for the previous [CONFIDENTIAL](88)
months, further adjusted to permit the Operators or DISTRIBUTOR, as
the case may be, to recover any loss or gain from the Markup of the previous
year.  This 

(78)         Confidential treatment has been
requested for the redacted portion.  The
confidential, redacted portions have been filed separately with the SEC.

(79)         Confidential treatment has been
requested for the redacted portion.  The
confidential, redacted portions have been filed separately with the SEC.

(80)         Confidential treatment has been
requested for the redacted portion.  The
confidential, redacted portions have been filed separately with the SEC.

(81)         Confidential treatment has been requested
for the redacted portion.  The
confidential, redacted portions have been filed separately with the SEC.

(82)         Confidential treatment has been
requested for the redacted portion.  The
confidential, redacted portions have been filed separately with the SEC.

(83)         Confidential treatment has been
requested for the redacted portion.  The
confidential, redacted portions have been filed separately with the SEC.

(84)         Confidential treatment has been
requested for the redacted portion.  The
confidential, redacted portions have been filed separately with the SEC.

(85)         Confidential treatment has been
requested for the redacted portion.  The
confidential, redacted portions have been filed separately with the SEC.

(86)         Confidential treatment has been
requested for the redacted portion.  The
confidential, redacted portions have been filed separately with the SEC.

(87)         Confidential treatment has been
requested for the redacted portion.  The
confidential, redacted portions have been filed separately with the SEC.

(88)         Confidential treatment has been
requested for the redacted portion.  The
confidential, redacted portions have been filed separately with the SEC.

 21
 

  
  
  

calculation will be based on the Markup called for above, the case fee
of [CONFIDENTIAL](89) for
DISTRIBUTOR for cases delivered to the Cross-docked Stores and the compensation
for VDI in effect as of that time.

4.05                        Payment
Terms/Markup Adjustments due to Payment Methodology

(a)          Standard Payment
Terms.  Except as noted below,
DISTRIBUTOR and COMPANY have agreed that payments to DISTRIBUTOR for Products
delivered to the Operators (including Contract Feeders as defined below) shall
be received by ACH debit entry initiated by DISTRIBUTOR, so that the amount is
credited to DISTRIBUTOR’s account no sooner than [CONFIDENTIAL](90) days after the date of delivery.  DISTRIBUTOR may also accept payment by check
if so requested by Operator and approved by DISTRIBUTOR.  All new Operators will initially receive credit
terms of [CONFIDENTIAL](91) days,
provided that they satisfy DISTRIBUTOR’S credit criteria for such terms, as
such criteria is uniformly applied among all similarly situated Operators, in
light of all relevant facts and circumstances. 
Payment terms will be extended only to those Operators that are
creditworthy as shall have been solely determined by DISTRIBUTOR. DISTRIBUTOR
may, in its sole discretion, provide alternate payment terms to those Operators
not meeting DISTRIBUTOR’s standards for creditworthiness.  DISTRIBUTOR will provide email or fax notice
to each Operator at least two (2) days prior to the ACH debit entry actually
taking place, advising Operator of the amount of the ACH debit, along with the
invoice number and any credits posted during the prior seven (7) days.

Notwithstanding the foregoing, DISTRIBUTOR agrees to
provide extended credit terms to Operators performing as Contract Feeders (as
defined below) in non-traditional locations provided that they satisfy
DISTRIBUTOR’s credit criteria for such terms, as such criteria is uniformly
applied among all similarly situated Operators in light of all relevant facts
and circumstances. To qualify for such credit terms, each location operated by
a Contract Feeder in the Territory must be approved by COMPANY in writing and
the Contract Feeder must comply with these extended credit terms.  “Contract Feeders” are Operators who operate
non-traditional food service locations in facilities such as airports, sports
facilities, travel plazas, universities, tech centers, etc.

(89)         Confidential treatment has been requested
for the redacted portion.  The
confidential, redacted portions have been filed separately with the SEC.

(90)         Confidential treatment has been
requested for the redacted portion.  The
confidential, redacted portions have been filed separately with the SEC.

(91)         Confidential treatment has been
requested for the redacted portion.  The
confidential, redacted portions have been filed separately with the SEC.

 22
 

  
  
  

 

(b)                                 No
Set-Off/Late Fees/Collection Costs. 
No deductions or set offs from payments due to DISTRIBUTOR may be made
by Operators for any reason without the prior written authorization of
DISTRIBUTOR.  Failure of the Operator to
make any payment required when due shall result in DISTRIBUTOR having the right
to impose more stringent credit or payment terms, such as, without limitation,
cash in advance, cash on delivery, delivery of acceptable letters of credit or
third party guaranties, or additional collateral, or, after three (3) business
days’ prior notice to COMPANY and the affected Operator, to suspend all
deliveries, and declare the entire unpaid balance of the Operator’s account
immediately due and payable. The COMPANY shall pay, and shall use its
commercially reasonable efforts to cause each Operator to pay, all reasonable
costs of collection, including reasonable attorneys fees incurred or paid by
DISTRIBUTOR, but only to the extent related to their respective accounts.
DISTRIBUTOR will have the right to charge interest at the maximum rate
permitted by law but not exceeding [CONFIDENTIAL](92)
per annum on all unpaid amounts due or owing by Operators and/or
COMPANY to DISTRIBUTOR.

(c)                                  COMPANY’S
Liability for Payments. COMPANY agrees that it shall be liable for all
liabilities of COMPANY expressly set forth in this Agreement.  COMPANY will not be liable for the debts or
obligations of Operators unless otherwise agreed to in writing by COMPANY.

(d)                                 Payments
to COMPANY as Supplier.  COMPANY
purchases its frozen yogurt Products and resells them to DISTRIBUTOR after
adding the [CONFIDENTIAL](93). [CONFIDENTIAL](94).
 COMPANY reserves the right to
alter [CONFIDENTIAL](95) on its
frozen yogurt Products in its discretion but no more frequently than
quarterly.  COMPANY will invoice
DISTRIBUTOR for these products as shipped from the manufacturer and will
designate the [CONFIDENTIAL](96) as
separate line items for each Product. 
DISTRIBUTOR agrees to pay these invoices within [CONFIDENTIAL](97). 

COMPANY will also invoice DISTRIBUTOR for [CONFIDENTIAL](98) on its frozen cake and
pie Products at the maximum rate [CONFIDENTIAL](99)
for each Product as 

(92)         Confidential treatment has been
requested for the redacted portion.  The
confidential, redacted portions have been filed separately with the SEC.

(93)         Confidential treatment has been
requested for the redacted portion.  The
confidential, redacted portions have been filed separately with the SEC.

(94)         Confidential treatment has been
requested for the redacted portion.  The
confidential, redacted portions have been filed separately with the SEC.

(95)         Confidential treatment has been
requested for the redacted portion.  The
confidential, redacted portions have been filed separately with the SEC.

(96)         Confidential treatment has been
requested for the redacted portion.  The
confidential, redacted portions have been filed separately with the SEC.

(97)         Confidential treatment has been
requested for the redacted portion.  The
confidential, redacted portions have been filed separately with the SEC.

(98)         Confidential treatment has been
requested for the redacted portion.  The
confidential, redacted portions have been filed separately with the SEC.

(99)         Confidential treatment has been
requested for the redacted portion.  The
confidential, redacted portions have been filed separately with the SEC.

 23
 

  
  
  

shown on [CONFIDENTIAL](100).  Company reserves the right to
alter [CONFIDENTIAL](101) on its
frozen cake and pie Products in its discretion but no more frequently than
quarterly.  Distributor shall pay all
invoices for [CONFIDENTIAL](102) on
its frozen cake and pie Products when invoiced by the COMPANY within [CONFIDENTIAL](103) days of invoice date,
which date will be no earlier than the date of receipt of the applicable
Products by the DISTRIBUTOR.

Each month, DISTRIBUTOR will provide a report and
invoice to COMPANY showing the amount of [CONFIDENTIAL](104)
billed to each Store compared with the amount paid on these same
Products by DISTRIBUTOR in accordance with Schedule 7 and the amount owed to
DISTRIBUTOR BY COMPANY.  COMPANY agrees
to pay this invoice within [CONFIDENTIAL](105)
days of receipt.

In the event COMPANY decides to establish a new
procedure for new and or established Stores to bill and collect [CONFIDENTIAL](106) such that the [CONFIDENTIAL](107) are billed and
collected from the Stores by DISTRIBUTOR, DISTRIBUTOR agrees to remit such fees
each Friday via ACH credit for all sales made the previous week.

4.06                        Sourcing Fees.  COMPANY may, from time to time, collect
compensation from the Operators for services that each of them provide to such
Operators, either by increasing the Cost of a Product supplied by either of
them to DISTRIBUTOR for distribution under this Agreement, or through the
assessment of an additional fee (a “Sourcing Fee”) that COMPANY instructs
DISTRIBUTOR to add in the calculation of the Sell Price of Products not
purchased from COMPANY.  Any changes in
the Sourcing Fees shall occur no more frequently than monthly.  COMPANY specifically represents and warrants
that such Sourcing Fees (or increases in the invoiced Cost) have been and will
continue to be disclosed to all Operators, and that the charging and collection
of such Sourcing Fees (or increased Cost) is permitted under its or its
affiliates’ agreements with the Operators and does not violate any applicable
laws.  COMPANY shall indemnify, defend
and hold harmless DISTRIBUTOR, its affiliates, and each of their respective
officers, agents, directors, shareholders, or employees for any claims, loss,
liability or expense 

(100)       Confidential treatment has been requested
for the redacted portion.  The confidential,
redacted portions have been filed separately with the SEC.

(101)       Confidential treatment has been requested
for the redacted portion.  The
confidential, redacted portions have been filed separately with the SEC.

(102)       Confidential treatment has been requested
for the redacted portion.  The
confidential, redacted portions have been filed separately with the SEC.

(103)       Confidential treatment has been requested
for the redacted portion.  The
confidential, redacted portions have been filed separately with the SEC.

(104)       Confidential treatment has been requested
for the redacted portion.  The
confidential, redacted portions have been filed separately with the SEC.

(105)       Confidential treatment has been requested
for the redacted portion.  The
confidential, redacted portions have been filed separately with the SEC.

(106)       Confidential treatment has been requested
for the redacted portion.  The
confidential, redacted portions have been filed separately with the SEC.

(107)       Confidential treatment has been requested
for the redacted portion.  The
confidential, redacted portions have been filed separately with the SEC.

 24
 

  
  
  

 

(including reasonable attorney’s fees and
disbursements) arising from a breach of this representation and warranty.

DISTRIBUTOR shall pay all Sourcing Fees to COMPANY via
initiation of an ACH credit entry each Friday with respect to those Products
delivered to the Operators during the preceding week and on which a Sourcing
Fee was assessed.   The COMPANY shall repay
to DISTRIBUTOR any Sourcing Fees paid to the COMPANY by DISTRIBUTOR that the
Operators fail to pay DISTRIBUTOR. This repayment obligation shall only apply
to those Sourcing Fees incurred and unpaid by Operators during the first [CONFIDENTIAL](108) day period from the
point in time that Operator was last current with DISTRIBUTOR.  For example, if Operator fails to pay
DISTRIBUTOR for invoices/indebtedness incurred and unpaid over [CONFIDENTIAL](109) day period [CONFIDENTIAL](110), DISTRIBUTOR will be
liable for paying COMPANY the Sourcing Fees for those Products purchased for
the last [CONFIDENTIAL](111) deliveries.

4.07                        Financial
Information  DISTRIBUTOR may
request balance sheets, income statements and such further financial
information from each Operator from time to time as will enable DISTRIBUTOR to
accurately assess the Operators’ financial condition. The COMPANY may require
DISTRIBUTOR to supply annual unaudited balance sheets and such further
financial information from time to time as will enable COMPANY to accurately
assess DISTRIBUTOR’S financial condition.

4.08                        Price
Verifications-Audit — COMPANY will be allowed to perform electronic
Purchase Price verifications for purchases made under this Agreement on a
weekly basis and DISTRIBUTOR will supply the necessary files and information to
COMPANY for these audit purposes on a timely basis and in a form acceptable to
COMPANY and DISTRIBUTOR.  As part of this
electronic auditing procedure, COMPANY may also audit the payments made to it
for accuracy as well.  If any such audit
reveals net pricing, delivery surcharge or COMPANY payment errors (overcharges
set off by undercharges) in excess of [CONFIDENTIAL](112)
in the aggregate during the audited period (not to exceed a twelve
(12) month period) COMPANY shall have the right to conduct additional audits,
at its option and at DISTRIBUTOR’S reasonable expense, until the aggregate net
pricing errors disclosed by an such additional audits are less than [CONFIDENTIAL](113) for the applicable
audit period.  For any audit conducted
pursuant to this Section 4.08 that discloses that Operators 

(108)       Confidential treatment has been requested
for the redacted portion.  The
confidential, redacted portions have been filed separately with the SEC.

(109)       Confidential treatment has been requested
for the redacted portion.  The
confidential, redacted portions have been filed separately with the SEC.

(110)       Confidential treatment has been requested
for the redacted portion.  The
confidential, redacted portions have been filed separately with the SEC.

(111)       Confidential treatment has been requested
for the redacted portion.  The
confidential, redacted portions have been 

(112)       Confidential treatment has been requested
for the redacted portion.  The
confidential, redacted portions have been filed separately with the SEC.

(113)       Confidential treatment has been requested
for the redacted portion.  The
confidential, redacted portions have been filed separately with the SEC.

 

 25
 

  
  
  

were either overcharged or undercharged for Products,
or that COMPANY was overpaid or overcharged during the audited period,
DISTRIBUTOR and COMPANY agree to correct the overcharge, undercharge,
overpayment or underpayment, as the case may be.  The form and method for making these
adjustments will be mutually agreed upon by DISTRIBUTOR and COMPANY; provided,
however, in any event the remittance of any such adjustments shall be made by
either party within [CONFIDENTIAL](114) days
from the final determination of the undercharge or overcharge, as applicable.

 

4.09                        DISTRIBUTOR
Operator Support — DISTRIBUTOR agrees to provide the following Operator
support to COMPANY.

(a)                                  DISTRIBUTOR
will support the System by participating in the supplier show at its own
expense.  In addition, DISTRIBUTOR will
pay COMPANY an annual support payment equal to [CONFIDENTIAL](115) payable within [CONFIDENTIAL](116) days of written request by COMPANY.  COMPANY may submit such requests [CONFIDENTIAL](117) during each calendar
year and a total of [CONFIDENTIAL](118) such
requests during the term of this Agreement.

(b)                                 DISTRIBUTOR
will support COMPANY in terms of activating product recalls in accordance with
DISTRIBUTOR’S standard product recall policies.

(c)                                  DISTRIBUTOR
will adhere to the following HACCP requirements for monitoring of temperature
controls for perishable products both in the DISTRIBUTOR distribution center
and in DISTRIBUTOR’S transportation equipment.

	
  ITEM

  	
   

  	
  FORM

  	
   

  	
  TEMPERATURE 

  REQUIREMENTS IN 

  DISTRIBUTION 

  CENTER

  	
   

  	
  UPPER TEMP. 

  RANGE WHILE 

  TRANSPORTED TO 

  STORES

  	
   

  
	
  Soft Serve
  Frozen Yogurt

  	
   

  	
  Frozen

  	
   

  	
  -10o or lower

  	
   

  	
  0

  	
  o

  
	
  Hand-Dipped
  Frozen Yogurt

  	
   

  	
  Frozen

  	
   

  	
  -10o or lower

  	
   

  	
  0

  	
  o

  
	
  Yogurt Cakes and
  Pies

  	
   

  	
  Frozen

  	
   

  	
  -10o or lower

  	
   

  	
  0

  	
  o

  
	
  Various Toppings

  	
   

  	
  Refrigerated

  	
   

  	
  34o to 36o

  	
   

  	
  38

  	
  o

  
	
  Nuts and Liquid
  Toppings

  	
   

  	
  Frozen

  	
   

  	
  0 or lower

  	
   

  	
  0

  	
  o

  
	
  Various Toppings

  	
   

  	
  Dry

  	
   

  	
  Above 38

  	
   

  	
  Above 38

  	
   

  

 

(114)       Confidential treatment has been requested
for the redacted portion.  The
confidential, redacted portions have been filed separately with the SEC.

(115)       Confidential treatment has been requested
for the redacted portion.  The confidential,
redacted portions have been filed separately with the SEC.

(116)       Confidential treatment has been requested
for the redacted portion.  The
confidential, redacted portions have been filed separately with the SEC.

(117)       Confidential treatment has been requested
for the redacted portion.  The
confidential, redacted portions have been 

(118)       Confidential treatment has been requested
for the redacted portion.  The
confidential, redacted portions have been filed separately with the SEC.

 26
 

  
  
  

(d)         DISTRIBUTOR will provide
COMPANY with periodic EDI file transfers to include the following:

Weekly invoice register
by store outlining the SKU’s and quantity purchased

Weekly inventory levels,
age of inventory, sales and pending orders and delivery dates by item

Weekly report of Current
Stores

Weekly report of average
drop sizes for each store

Monthly delivery
performance report with on-time performance, fill rates and clean invoice
percentages

Daily out-of-stock report
and stores so affected

Monthly costing detail on
all Products used by the SYSTEM

Such additional reports as may be reasonable requested
by the COMPANY

4.10                  Taxes — Franchisees
and COMPANY shall each be responsible for their applicable sales and use
taxes.  DISTRIBUTOR shall collect
applicable taxes from each responsible party and be responsible for remitting
all taxes to the proper state and local taxing authorities.  COMPANY shall only be responsible for paying
those taxes on the Stores under its control and operation.  DISTRIBUTOR agrees to indemnify and defend
COMPANY pursuant to Section 8.01 of this Agreement should Company receive a
claim for the DISTRIBUTOR’s failure to pay taxes.  Neither party will pay a claim which is
allegedly the responsibility of the other without first notifying the other and
giving the other the opportunity to contest the claim.

4.11            Special Pricing
Arrangements — Products that are governed by national billing agency or
other programs for which the price at which the DISTRIBUTOR must sell the
Product to the Operator is prescribed by agreements between COMPANY, or any
other franchisor or group purchasing organization, on the one hand, and the
supplier or manufacturer of such Products, on the other, are referred to in
this Agreement as “Contracted Operator Sell Price Products”.  Notwithstanding Section 4.01, the Sell Price
for Contracted Operator Sell Price Products shall be the amount prescribed (or
calculated in accordance with) the above-described programs or agreements and
COMPANY will receive full credit under the true-up calculation required in
Section 4.02 for all funds actually received or which could have been received
from the suppliers of such Contracted Operator Sell Price Products as if
DISTRIBUTOR maximized such funds, including credit for all payment discounts
whether or not actually taken by DISTRIBUTOR. 
Contracted 

 27
 

  
  
  

                        Operator
Sell Price Products include, but are not limited to, soft drink syrup products
including, without limitation, the following Coca Cola Products:  Coke Bag in Box (“BiB”), Diet Coke BiB,
Sprite BiB and Barq’s Root Beer BIB.

5.              Minimum
Deliveries — The Operators will be required to order Products in
minimum quantities of [CONFIDENTIAL](119)
cases of Products per delivery unless due to DISTRIBUTOR or supplier
error.  In addition, Operator will be required
to pay DISTRIBUTOR a [CONFIDENTIAL](120) handling
fee per order for orders of less than [CONFIDENTIAL](121)
cases and [CONFIDENTIAL](122) handling
fee per order for orders of less than [CONFIDENTIAL](123)
cases but equal to or greater than [CONFIDENTIAL](124)
cases unless due to DISTRIBUTOR or supplier including failure to fulfill the
order in its entirety. Products with a Markup of [CONFIDENTIAL](125) pursuant to Section 4.01 will be counted
as cases for determining the applicability and amount of these handling
fees.  These handling fees will be
credited to COMPANY for purposes of the true-up calculation required in Section
4.02.  However, the [CONFIDENTIAL](126) special delivery fees
in Section 2.05 will not be credited to COMPANY for purposes of the true-up
calculation required in Section 4.02.

6.              Term and
Termination

6.01                        Term
— The initial term of this Agreement shall commence on the Effective Date
and shall continue until exactly three (3) years after the commencement of full
service to all Stores to be serviced in the Territory (“Initial Term”), unless
sooner terminated as provided in Section 6.02. 
This Agreement shall automatically renew for one (1) additional year
upon the completion of the Initial Term unless one party notifies the other in
writing at least one hundred eighty (180) days before the expiration of the
Initial Term of its desire to terminate the relationship.

6.02        Termination

(a)           Either party shall
have the right, upon prior written notice, to immediately terminate this
Agreement if the other party fails to make payment of any amounts due and
payable under this Agreement, and such failure shall have continued for a
period of ten (10) days from and after the date of written notice to the
defaulting party or in the event the other party files a voluntary 

(119)       Confidential treatment has been requested
for the redacted portion.  The
confidential, redacted portions have been filed separately with the SEC.

(120)       Confidential treatment has been requested
for the redacted portion.  The
confidential, redacted portions have been filed separately with the SEC.

(121)       Confidential treatment has been requested
for the redacted portion.  The
confidential, redacted portions have been filed separately with the SEC.

(122)       Confidential treatment has been requested
for the redacted portion.  The
confidential, redacted portions have been filed separately with the SEC.

(123)       Confidential treatment has been requested
for the redacted portion.  The
confidential, redacted portions have been 

(124)       Confidential treatment has been requested
for the redacted portion.  The
confidential, redacted portions have been filed separately with the SEC.

(125)       Confidential treatment has been requested
for the redacted portion.  The
confidential, redacted portions have been filed separately with the SEC.

(126)       Confidential treatment has been requested
for the redacted portion.  The
confidential, redacted portions have been filed separately with the SEC.

 28
 

  
  
  

petition or consents to the filing of a petition against it in bankruptcy
or any similar insolvency or debtor relief action, or if the other party makes
a general assignment for the benefit of creditors, or in the event a receiver
is appointed or any proceeding is demanded or initiated by, for or against the
other party under any provision of the Federal Bankruptcy Act or any amendment
thereof.

(b)           Either party shall
have the right to terminate this Agreement upon 180 days written notice under
any of the following conditions:

(i)            Upon
the occurrence of any material breach or material default by the other party,
which remains uncured after expiration of the applicable Cure Period (as herein
defined), of any of the terms, obligations, covenants, representations and
warranties under this Agreement (except for a default specified in Section 6.02
(a) above) which is not waived in writing by the non-defaulting party.  In such case, the non-defaulting party shall
notify the other of such alleged beach or default and the other party shall have
a period of thirty (30) days to cure the same (the “Cure Period”). If the
defaulting party cures its breach or default within any applicable Cure Period
to the reasonable satisfaction of the non-defaulting party, the notice shall be
void and this Agreement shall continue; otherwise, it shall terminate in
accordance with the notice.

or

(ii)           In
the event the parties fail to agree on a Markup adjustment pursuant to Section
4.04.

6.03                        Effect
of Expiration/Termination — Upon expiration or sooner termination of
this Agreement, for any reason, COMPANY shall promptly purchase or arrange for
the purchase from DISTRIBUTOR at DISTRIBUTOR’s cost (including freight costs),
F.O.B. DISTRIBUTOR’s distribution center, all of DISTRIBUTOR’s inventory of the
Proprietary Products and any labeling and packaging materials used in
connection with the Proprietary Products. 
COMPANY will purchase or cause to be purchased perishable Proprietary
Products within [CONFIDENTIAL](127) days
after the effective date of termination of this Agreement or by the expiration
date of such Proprietary Product, whichever is earlier, and all nonperishable
Proprietary Products within thirty [CONFIDENTIAL](128)
after the effective date of termination 

(127)       Confidential treatment has been requested
for the redacted portion.  The confidential,
redacted portions have been filed separately with the SEC.

(128)       Confidential treatment has been requested
for the redacted portion.  The
confidential, redacted portions have been filed separately with the SEC.

 29
 

  
  
  

of this Agreement. In addition, if this agreement is terminated due to
COMPANY’s breach or default, COMPANY shall reimburse to DISTRIBUTOR all other
reasonable out-of-pocket costs and expenses (not to exceed an amount equal to [CONFIDENTIAL](129) of the Markup on each
Product unless DISTRIBUTOR receives COMPANY’s prior written consent) incurred
by DISTRIBUTOR in selling, returning or otherwise disposing of such Proprietary
Products. DISTRIBUTOR shall provide COMPANY with documentation or other proof
that any such costs and expenses were incurred by DISTRIBUTOR. Termination of
this Agreement shall not relieve either party of any obligation or liability
which accrues prior to the effective date of termination (including, but not
limited to, obligations related to the payment of COMPANY’s accounts receivable
or accounts payable and the purchase of excess inventories). Notwithstanding
the foregoing provisions of this Section 6.03 to the contrary, if this
Agreement is terminated due to DISTRIBUTOR’s breach or default or expires in
accordance with the provisions of Section 6.01, COMPANY shall have the
obligation to purchase, or shall direct the replacing distributor or other
suitable purchaser to purchase, from DISTRIBUTOR only such inventory of the
Proprietary Products which is merchantable and saleable but COMPANY shall have
no obligation to reimburse DISTRIBUTOR for its out-of-pocket costs and expenses
related to selling, returning or otherwise disposing of such Proprietary
Products.

7.                                      Trademarks and Trade Names — COMPANY
hereby represents and warrants that it is the owner of, or has the right to use
under license or sublicense, all trademarks, logos, trade names, and other
markings used on the Proprietary Product’s packaging and labels (the “Trademarks”).
COMPANY hereby grants to DISTRIBUTOR the right to use the Trademarks solely in
connection with the approved sale and distribution of the Proprietary Products
in accordance with the provisions of this Agreement and only for as long as
this Agreement remains in effect. COMPANY also grants to DISTRIBUTOR the right
and license to use the Trademarks in advertising and promotional materials when
the Trademarks are used therein to identify the Proprietary Products, subject
to COMPANY’s prior written approval of form and content. Provided DISTRIBUTOR
is using the Trademarks in accordance with the terms and provisions of this
Agreement, COMPANY shall indemnify, defend and hold DISTRIBUTOR and its
subsidiaries, affiliates, officers, shareholders, directors, employees,
members, managers, agents, successors and assigns harmless from and against any
and all claims, demands, liabilities, causes of action, damages, costs
(including reasonable attorneys’ fees and disbursements) and judgments made or
incurred by or found against any of them resulting from or arising out of any
claim or suit alleging infringement by COMPANY or its affiliates, through any
of the Trademarks or otherwise.

8.             Indemnification

(129)       Confidential treatment has been requested
for the redacted portion.  The
confidential, redacted portions have been filed separately with the SEC.

 30
 

  
  
  

 

8.01                        Indemnification
by DISTRIBUTOR — DISTRIBUTOR agrees to indemnify, defend and hold
COMPANY, its subsidiaries, affiliates, officers, directors, members, managers,
stockholders, employees, agents, successors and assigns harmless from and
against any and all claims, demands, liabilities, causes of action, damages,
costs (including reasonable attorneys’ fees and disbursements) and judgments
made or incurred by or found against any of them, resulting from or arising out
of:

(a)                                  Any
breach or default by DISTRIBUTOR of any term or provision of this Agreement; or

(b)                                 Any
negligent act or negligent omission or willful misconduct of DISTRIBUTOR in
respect of DISTRIBUTOR’s performance of its obligations under this Agreement.

8.02                        Indemnification
by COMPANY — COMPANY agrees to indemnify, defend and hold DISTRIBUTOR,
it subsidiaries, affiliates, officers, directors, members, managers,
stockholders, employees, agents, successors and assigns harmless from and
against any and all claims, demands, liabilities, causes of action, damages,
costs (including reasonable attorney’s fees and disbursements) and judgments
made or incurred by or found against any of them resulting from or arising out
of:

(a)                                  Any
breach or default by COMPANY of any term or provision of this Agreement.

(b)                                 Any
breach or default by COMPANY of any term or provision of any agreement between
COMPANY, on the one part, and an Operator or a supplier of the Proprietary
Products, on the other part, or any negligent or willful act or omission of
COMPANY, or any of its employees or agents, in respect of the purchase, resale,
distribution, storage or delivery of the Proprietary Products or the COMPANY’s
performance of its obligations under this Agreement; and

(c)                                  Claims
by any franchisee of COMPANY and/or Operator that may arise from DISTRIBUTOR
ceasing further sales to such franchisee or other Operator under this Agreement
at the direction of COMPANY.

(d)                                 Claims
by any franchisee of COMPANY and/or Operator that may arise from COMPANY’s role
in the distribution/product procurement process or the use or allocation of
funds collected by COMPANY from DISTRIBUTOR.

 31
 

  
  
  

 

8.03                        Limitation
of Liability; Disclaimer of Warranties — NOTWITHSTANDING SECTIONS 8.01
AND 8.02 TO THE CONTRARY, NEITHER PARTY SHALL IN ANY EVENT BE LIABLE IN
CONTRACT, TORT, STRICT LIABILITY OR OTHERWISE, 
TO THE OTHER PARTY OR ITS RESPECTIVE SUBSIDIARIES, AFFILIATES,
FRANCHISEES OR OTHER OPERATORS FOR ANY TYPE OF INCIDENTAL, CONSEQUENTIAL OR
PUNITIVE DAMAGES (SUCH AS, BUT NOT LIMITED TO, LOSS OF PROFITS OR BUSINESS
OPPORTUNITY) ARISING FROM A PARTY’S PERFORMANCE OR FAILURE TO PERFORM UNDER ANY
OF THE TERMS AND PROVISIONS OF THIS AGREEMENT OR OTHERWISE, INCLUDING, WITHOUT
LIMITATION, ANY SUCH DAMAGES ATTRIBUTABLE TO A BREACH OF ANY TERM OR PROVISION
OF THIS AGREEMENT.

COMPANY ACKNOWLEDGES AND AGREES THAT DISTRIBUTOR IS
NOT THE MANUFACTURER OR PRODUCER OF THE PRODUCTS SUPPLIED BY DISTRIBUTOR.  IN NO EVENT SHALL DISTRIBUTOR BE LIABLE WITH
RESPECT TO ANY CONDITIONS, DEFECTS, DEFICIENCIES, DANGERS, FAULTS OR FAILURES,
OF ANY KIND, IN OR RELATING TO ANY PRODUCTS SUPPLIED BY DISTRIBUTOR EXCEPT,
SUBJECT TO THE LIMITATIONS STATED IN THIS AGREEMENT, TO THE EXTENT OF
DISTRIBUTOR’S ACTUAL NEGLIGENCE IN ITS HANDLING OF SUCH PRODUCTS.  EXCEPT AS EXPLICITLY
PROVIDED IN THIS AGREEMENT,  DISTRIBUTOR MAKES NO
WARRANTIES, EXPRESS OR IMPLIED, INCLUDING WITHOUT LIMITATION ANY WARRANTY OF
MERCHANTABILITY OR FITNESS FOR ANY PARTICULAR PURPOSE.

8.04                        Third
Party Claims — The indemnities in this Section 8 are contingent upon:
(i) the indemnified party promptly notifying the indemnifying party in writing
of any action or other proceeding which may give rise to a claim for
indemnification hereunder; unless such failure to promptly notify does not
materially prejudice the claim; (ii) the indemnifying party being allowed to
control the defense and settlement of such claim; and (iii) the indemnified
party reasonably cooperating with the indemnifying party (at the indemnifying
party’s expense) in providing information relevant to the defense or settlement
of a claim. The indemnified party shall have the right, at its option and
expense, to participate in the defense of any action or proceeding through
counsel of its own choosing.

9.                                      Insurance

 32
 

  
  
  

 

9.01                        DISTRIBUTOR’s
Insurance — During the term of this Agreement and for a period of one
(1) year thereafter, DISTRIBUTOR shall purchase and maintain, at its sole cost
and expense, the following insurance coverages:

(a)                                  commercial
general liability insurance and products liability coverage with broad form
vendor endorsement, which specifically insures all liabilities of DISTRIBUTOR
to COMPANY and Operator under this Agreement, to the extent afforded by normal
ISO policy forms and definitions, with all such insurance coverages providing
for combined single limit bodily injury/property damage liability of not less
than [CONFIDENTIAL](130); and

(b)                                 commercial
automobile liability insurance coverage providing for combined single limit
bodily injury/property damage liability of not less than [CONFIDENTIAL](131).

All such insurance shall be provided by insurance
companies which are licensed and authorized to do business in the United States
of America, shall be occurrence based policies and which insurance companies
are reasonably satisfactory to COMPANY. 
DISTRIBUTOR agrees to deliver to COMPANY, on or prior to the Effective
Date, certificates of insurance evidencing the existence of all the above
insurance coverages and naming COMPANY as an additional insured under such
policies.  The certificates shall contain
an agreement by the insurance carrier to notify COMPANY, in writing, at least
thirty (30) days prior to the date of any cancellation or change in such
insurance coverage.

9.02                        COMPANY’s
Insurance — During the term of this Agreement, and for a period of one
(1) year thereafter, COMPANY shall purchase and maintain, at its sole cost and
expense, commercial general liability insurance and products liability
coverage, and a contractual liability endorsement which specifically insures
all liabilities of COMPANY to DISTRIBUTOR under this Agreement, to the extent
afforded by normal ISO policy forms and definitions, with all such insurance
coverages providing for combined single limit bodily injury/property damage
liability of not less than [CONFIDENTIAL](132). All such insurance shall be provided by
insurance companies which are licensed and authorized to do business in the
United States of America, and which are reasonably satisfactory to DISTRIBUTOR.
COMPANY agrees to deliver to DISTRIBUTOR, on or prior to the Effective Date, a
certificate of insurance evidencing the existence of all the above insurance
coverages and naming DISTRIBUTOR as an additional insured under such policies. 

(130)       Confidential treatment has been requested
for the redacted portion.  The
confidential, redacted portions have been filed separately with the SEC.

(131)       Confidential treatment has been requested
for the redacted portion.  The
confidential, redacted portions have been filed separately with the SEC.

(132)       Confidential treatment has been requested
for the redacted portion.  The
confidential, redacted portions have been filed separately with the SEC.

 33
 

  
  
  

                                                The
certificate shall contain an agreement by the insurance carrier to notify
DISTRIBUTOR, in writing, at least thirty (30) days prior to the date of any
change in such insurance coverage.

10.          Representations and Warranties

10.01                 Representations
and Warranties of DISTRIBUTOR — DISTRIBUTOR hereby represents and
warrants to COMPANY as follows:

(a)                                  DISTRIBUTOR
is a corporation duly organized, validly existing and in good standing under
the laws of the State of Colorado. DISTRIBUTOR has the requisite power to own
properties, to carry on its business as now being conducted by it, and to
execute, deliver and perform this Agreement.

(b)                                 This
Agreement is, when executed and delivered by DISTRIBUTOR and by the COMPANY,
the valid and binding obligation of DISTRIBUTOR enforceable against it in
accordance with its terms, except as may be limited by applicable bankruptcy,
reorganization, insolvency, moratorium or other similar laws affecting
creditors’ rights generally, and further subject to general equity principles.

(c)                                  The
execution, delivery and performance by DISTRIBUTOR of this Agreement and the
consummation of the transactions contemplated hereby do not and will not
violate, conflict with, result in a breach or termination of, or constitute a
default under (or an event which with due notice or lapse of time, or both,
would constitute a breach of or default under), (i) the certificate of
incorporation, as amended to date, of DISTRIBUTOR, (ii) any judgment, order,
decree, ruling or injunction applicable to DISTRIBUTOR, or (iii) any contract
or agreement between DISTRIBUTOR and any third party.

(d)                                 There
is no action, suit or proceeding pending or, to the knowledge of DISTRIBUTOR,
threatened against DISTRIBUTOR which, if decided adversely to DISTRIBUTOR, may
prevent the consummation of the transactions contemplated by this Agreement.

10.02      Representations
and Warranties of COMPANY  — COMPANY hereby represents and
warrants to DISTRIBUTOR as follows:

(a)                                  COMPANY
is a limited liability COMPANY duly organized, validly existing in good
standing under the laws of the State of Delaware. COMPANY has the corporate
power 

 34
 

  
  
  

                                                to
own properties, to carry on its business as now being conducted by it, and to
execute, deliver and perform this Agreement.

(b)                                 This
Agreement is, when executed and delivered by COMPANY and DISTRIBUTOR, the valid
and binding obligation of COMPANY enforceable against it in accordance with its
terms, except as may be limited by applicable bankruptcy, reorganization,
insolvency, moratorium or other similar laws affecting creditors’ rights
generally, and further subject to general equity principles.

(c)                                  The
execution, delivery and performance by COMPANY of this Agreement and the
consummation of the transactions contemplated hereby do not and will not
violate, conflict with, result in a breach or termination of, or constitute a
default under (or an event which with due notice or lapse of time, or both,
would constitute a breach of or default under), (i) the certificate of
formation or operating agreement, as amended to date, of COMPANY, (ii) any
judgment, order, decree, ruling or injunction applicable to COMPANY, or (iii) any
contract or agreement between COMPANY and any third party.

(d)                                 There
is no action, suit or proceeding pending or, to the knowledge of COMPANY,
threatened against COMPANY which, if decided adversely to COMPANY, may prevent
the consummation of the transactions contemplated by this Agreement.

(e)                                  The
details of the purchasing arrangement, including the purchase and resale of
products by COMPANY, have been disclosed to its Operators as required by law.

11.                               Notices
— Any notice or other communication to be given under this Agreement by one
party to the other shall be in writing and delivered by overnight messenger
service, or delivered by telecopy or facsimile transmission, or sent by United
States registered or certified mail, postage prepaid, addressed as follows:

	
  If to DISTRIBUTOR:

  	
   

  	
  Yancey’s Food Service Company, Inc.

  
	
   

  	
   

  	
  5820 Piper Drive

  
	
   

  	
   

  	
  Loveland, CO
  80538

  
	
   

  	
   

  	
  Attention: Chris
  Boyd

  
	
   

  	
   

  	
  Vice President

  
	
   

  	
   

  	
  FAX: (970) 613-4334

  

 35
 

  
  
  

 

	
  If to COMPANY:

  	
   

  	
  TCBY Systems, LLC

  
	
   

  	
   

  	
  2855 E.
  Cottonwood Parkway, Suite 400

  
	
   

  	
   

  	
  Salt Lake City,
  UT 84121-7050

  
	
   

  	
   

  	
  Attention:
  Purchasing Director

  
	
   

  	
   

  	
  FAX: (801)
  736-5941

  

 

or to such other addresses as may be communicated in writing by either
party to the other as provided hereunder. 
Notices shall be deemed to have been given when received.

12.                               Force Majeure — Notwithstanding any
term or provision contained in this Agreement to the contrary, it is understood
and agreed that DISTRIBUTOR will not be responsible or liable in any manner
whatsoever for the failure by it to sell and/or deliver the Products or
otherwise perform any obligation under this Agreement or otherwise, and COMPANY
will not be responsible or liable in any manner whatsoever for the failure by
it to purchase and accept, the Products, if such failure is due to fire,
strike, accident, explosion, riot, rebellion, terrorist action or threat,
flood, embargo, war, interruption or delay in transportation, epidemic,
pandemic, shortage of raw materials, acts of God or government (including, but
not limited to, laws, regulations and restrictions of all kinds), or any other
causes or contingencies of any character (other than lack of funds) beyond the
reasonable control of DISTRIBUTOR or COMPANY. 
Nothing expressed or implied in this Section 12 shall excuse the
non-performance or delay in performance of any payment obligation of the
COMPANY or DISTRIBUTOR, any affiliate or any Operator.

13.                               Relationship of Parties — This
Agreement is not intended and shall not be construed to constitute either party
as the joint venturer, partner, agent or legal representative of the
other.  Neither party has any authority,
whether express, implied, or apparent, to assume or create any obligations on
behalf of the other.

14.                               Entire
Agreement; Modifications — This Agreement and the Schedules attached
hereto and made a part hereof, constitute the entire agreement and
understanding of the parties with respect to the subject matter hereof, and
supersede all prior proposals, negotiations, communications, representations,
written or oral agreements and understandings between the parties with respect
to the subject matter hereof. No modification of any term or provision of this
Agreement shall be enforceable unless embodied in a writing executed by all
parties to this Agreement.

15.                               Severability
— The provisions of this Agreement are severable, and the invalidity or
unenforceability of any term or provision hereof shall not operate to
invalidate or render unenforceable the remaining terms and provisions which are
valid and enforceable.

 36
 

  
  
  

 

16.                               Waivers
— The waiver by either party hereto of any of its rights or breaches of the
other party under this Agreement in a particular instance shall not be
construed as a waiver of the same or different rights or breaches in subsequent
instances. All remedies, rights, undertakings and obligations, hereunder shall
be cumulative and none shall operate as a limitation of any other remedy,
right, undertaking or obligation hereof.

17.                               Assignment:
Successors and Assigns — Except as hereinafter set forth, neither of
the parties may assign this Agreement without the prior written consent of the
other, except that either party shall have the right to assign this Agreement
to a parent, subsidiary or affiliated COMPANY, or may assign this Agreement in
conjunction with the sale or transfer of all or substantially all of its stock
or assets by way of a sale of stock or assets, a merger or other business
reorganization, without the prior consent of the other party; provided,
however, that any such assignment shall not relieve the assigning party from
any liability or obligation under this Agreement that accrues prior to the
assignment and notice thereof to the other party and provided further, that in
the event of a transfer of all or substantially all of the stock or assets of a
party or merger or other business reorganization, the surviving entity or
transferee is at least as financially strong as the assigning or original
party.  The assigning party shall give
notice of such assignment to the other party. The provisions of this Agreement
will be binding upon and will inure to the benefit of the parties and their
respective successors and assigns. 
DISTRIBUTOR may assign its accounts receivables, and related contract
rights, in connection with its accounts receivable financing and
securitization.

18.                               No
Offer — The submission by DISTRIBUTOR to COMPANY of this Agreement
shall have no binding force or effect, shall not constitute an offer to sell
the Products, nor confer any right or impose any obligation upon either party
until executed by both parties.

19.                               Confidentiality
— Any proprietary information supplied by either party to the other party
(whether set forth in writing, on any data base or in any other medium),
including, but not limited to information on customer and supplier identity or
any other customer or supplier information, purchasing volumes and history,
pricing, purchasing specifications, and product market results (the “Confidential
Information”), is and shall remain confidential and proprietary information of
the disclosing party, and valuable trade secrets owned solely by the disclosing
party. The recipient party of any Confidential Information shall not disclose
any such Confidential Information to any third person or entity without the
prior written consent of the disclosing party in every instance, and shall not
use any such Confidential Information, nor permit any such Confidential
Information to be used, for any reason other than to fulfill the terms of this
Agreement; provided, however, that either party and its respective successors
and assigns may (i) disclose any Confidential Information to the extent
compelled by law, regulation, rule, subpoena, or other process of law and (ii)
provide invoices, and any information relating to historical payments or
payments due or to 

 37
 

  
  
  

                                                become
due from franchisees or Operators hereunder to its auditors and legal counsel,
and to present and potential financing sources and rating agencies  and their respective auditors and legal
counsel). The parties’ obligations under this Section 19 shall not apply to any
of the Confidential Information delivered or made available to them by the
other party which the recipient of the Confidential Information can reasonably
establish (a) was known to the recipient party at the time the Confidential
Information was disclosed or made available to the recipient party; (b) was
known to the public at the time the Confidential Information was disclosed or
made available to the recipient party; (c) becomes known to the public after
the date the Confidential Information was disclosed or made available to the
recipient party through no fault or breach of this Section 19 by the recipient
party; (d) is given to or made available to the recipient party by a third
party who has a lawful right to disclose the Confidential Information to the
recipient party; or, (e) is independently developed by the Recipient party
without reference to the Confidential Information.

20.                               Arbitration —
All actions, disputes, claims or controversy with the exception of seeking an
injunction, now existing or hereafter arising between DISTRIBUTOR and COMPANY,
including, but not limited to any action, dispute, claim or controversy arising
out of this Agreement or the delivery by DISTRIBUTOR of any Products to
COMPANY  (a “Dispute”) shall be resolved
by binding arbitration in Salt Lake City, Utah, in accordance with the
Commercial Arbitration Rules of the American Arbitration Association and, to
the maximum extent applicable, the Federal Arbitration Act.  Arbitrations shall be conducted before one
arbitrator mutually agreeable to COMPANY and DISTRIBUTOR.  If the parties cannot agree on an arbitrator
within thirty (30) days after the request for an arbitration, then each
party will select an arbitrator and the two arbitrators will select a third who
shall act as the sole arbitrator of the dispute.  Judgment on any award rendered by an
arbitrator may be entered in any court having jurisdiction.  All fees of the arbitrator and other costs
and expenses of the arbitration shall be paid by DISTRIBUTOR and COMPANY
equally unless otherwise awarded by the arbitrator.  Disputes between DISTRIBUTOR and any Operator
other than COMPANY shall not be subject to arbitration under this section 20.

21.                               Governing Law  — This Agreement shall be
deemed executed in Salt Lake City, Utah and shall be governed by the construed
in accordance with the laws of the State of Utah as applicable therein.

22.                             Miscellaneous
— The section and paragraph headings contained in this Agreement are for
reference only and shall not be considered as substantial parts of this
Agreement. The use of the singular or plural from in this Agreement shall
include the other form and the use of the masculine, feminine or neuter gender
shall include the other gender.

23.                               Counterparts;
Facsimile — This agreement may be executed in one or more counterparts,
each of which shall constitute an original but all of which, when taken
together, shall constitute but one agreement 

 38
 

  
  
  

                                                binding
on all parties hereto, notwithstanding that all of the parties are not
signatory to an original or same counterpart. 
The parties may execute and deliver this Agreement by facsimile
transmission.

[Remainder
of page intentionally blank.  Signature
page and Schedules follow.]

 39
 

  
  
  

 

IN
WITNESS WHEREOF, each of the parties hereto has caused this
Agreement to be executed and delivered by its duly authorized officers on the
day and year first above written.

	
  TCBY SYSTEMS, LLC

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  By:

  	
  /s/ Michael Ward

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Its:

  	
  Executive Vice President

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  YANCEY’S FOOD
  SERVICE COMPANY, INC.

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  By:

  	
  /s/ Chris Boyd

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Its:

  	
  Vice President

  	
   

  	
   

  	
   

  

 

 40
 

  
  
  

 

SCHEDULE
1

Product
Categories

Frozen Yogurts — Soft
Serve and Hand Dipped

Hand Dipped Ice Creams (to be replaced with Hand Dipped Yogurts)

Yogurt Cakes and Pies

Confectionary Fruits, Nuts, Toppings and Cones

Miscellaneous Dessert Items

Snacks

Beverages including Fountain Syrup

Packaging & Paper Items

Cleaning Supplies

Miscellaneous Items — as agreed to by and between Company and Distributor

 41
 

  
  
  

 

Schedule
2 — YFS Agreement

 

8-May-06

 

 

	
  State

  	
   

  	
  County

  	
   

  	
  State

  	
   

  	
  County

  	
   

  
	
  CO

  	
   

  	
  Weld

  	
   

  	
  UT

  	
   

  	
  Davis

  	
   

  
	
  CO

  	
   

  	
  Denver

  	
   

  	
  UT

  	
   

  	
  Weber

  	
   

  
	
  CO

  	
   

  	
  Denver

  	
   

  	
  UT

  	
   

  	
  Utah

  	
   

  
	
  CO

  	
   

  	
  Denver

  	
   

  	
  UT

  	
   

  	
  Box Elder

  	
   

  
	
  CO

  	
   

  	
  Arapahoe

  	
   

  	
  UT

  	
   

  	
  Utah

  	
   

  
	
  CO

  	
   

  	
  Boulder

  	
   

  	
  UT

  	
   

  	
  Salt Lake

  	
   

  
	
  CO

  	
   

  	
  La Plata

  	
   

  	
  UT

  	
   

  	
  Salt Lake

  	
   

  
	
  CO

  	
   

  	
  Mesa

  	
   

  	
  UT

  	
   

  	
  Salt Lake

  	
   

  
	
  CO

  	
   

  	
  Larimer

  	
   

  	
  UT

  	
   

  	
  Salt Lake

  	
   

  
	
  CO

  	
   

  	
  Arapahoe

  	
   

  	
  UT

  	
   

  	
  Salt Lake

  	
   

  
	
  CO

  	
   

  	
  Boulder

  	
   

  	
  UT

  	
   

  	
  Salt Lake

  	
   

  
	
  CO

  	
   

  	
  Adams

  	
   

  	
  UT

  	
   

  	
  Salt Lake

  	
   

  
	
  CO

  	
   

  	
  Larimer

  	
   

  	
  WY

  	
   

  	
  Natrona

  	
   

  
	
  CO

  	
   

  	
  Garfield

  	
   

  	
  WY

  	
   

  	
  Fremont

  	
   

  
	
  CO

  	
   

  	
  Montrose

  	
   

  	
  WY

  	
   

  	
  Laramie

  	
   

  
	
  CO

  	
   

  	
  Gunnison

  	
   

  	
  WY

  	
   

  	
  Laramie

  	
   

  
	
  CO

  	
   

  	
  Moffat

  	
   

  	
  WY

  	
   

  	
  Albany

  	
   

  
	
  CO

  	
   

  	
  Routt

  	
   

  	
  WY

  	
   

  	
  Converse

  	
   

  
	
  CO

  	
   

  	
  Larimer

  	
   

  	
  WY

  	
   

  	
  Natrona

  	
   

  
	
  CO

  	
   

  	
  Chaffee

  	
   

  	
  WY

  	
   

  	
  Natrona

  	
   

  
	
  ID

  	
   

  	
  Bannock

  	
   

  	
  WY

  	
   

  	
  Platte

  	
   

  
	
  NE

  	
   

  	
  Thomas

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  NE

  	
   

  	
  Dawes

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  NE

  	
   

  	
  Red Willow

  	
   

  	
   

  	
   

  	
   

  	
   

  

 

 42
 

  
  
  

 

	
  District

  	
   

  	
  FBC

  	
   

  	
  Region

  	
   

  	
  Company [CONFIDENTIAL](133)

  	
   

  
	
  62

  	
   

  	
  Chuck Webb

  	
   

  	
  350

  	
   

  	
  1001

  	
   

  
	
  63

  	
   

  	
  Kim Kowalczik

  	
   

  	
  350

  	
   

  	
  1001

  	
   

  
	
  63

  	
   

  	
  Kim Kowalczik

  	
   

  	
  350

  	
   

  	
  1001

  	
   

  
	
  63

  	
   

  	
  Kim Kowalczik

  	
   

  	
  350

  	
   

  	
  1001

  	
   

  
	
  62

  	
   

  	
  Chuck Webb

  	
   

  	
  350

  	
   

  	
  1001

  	
   

  
	
  31

  	
   

  	
  Dan Cataldo

  	
   

  	
  250

  	
   

  	
  1001

  	
   

  
	
  31

  	
   

  	
  Dan Cataldo

  	
   

  	
  250

  	
   

  	
  1001

  	
   

  
	
  31

  	
   

  	
  Dan Cataldo

  	
   

  	
  250

  	
   

  	
  1001

  	
   

  
	
  62

  	
   

  	
  Chuck Webb

  	
   

  	
  350

  	
   

  	
  1001

  	
   

  
	
  65

  	
   

  	
  Alex Hakim

  	
   

  	
  350

  	
   

  	
  1001

  	
   

  
	
  62

  	
   

  	
  Chuck Webb

  	
   

  	
  350

  	
   

  	
  1001

  	
   

  
	
  31

  	
   

  	
  Dan Cataldo

  	
   

  	
  250

  	
   

  	
  1001

  	
   

  
	
  62

  	
   

  	
  Chuck Webb

  	
   

  	
  350

  	
   

  	
  1001

  	
   

  
	
  65

  	
   

  	
  Alex Hakim

  	
   

  	
  350

  	
   

  	
  1001

  	
   

  
	
  65

  	
   

  	
  Alex Hakim

  	
   

  	
  350

  	
   

  	
  1001

  	
   

  
	
  65

  	
   

  	
  Alex Hakim

  	
   

  	
  350

  	
   

  	
  1001

  	
   

  
	
  65

  	
   

  	
  Alex Hakim

  	
   

  	
  350

  	
   

  	
  1001

  	
   

  
	
  65

  	
   

  	
  Alex Hakim

  	
   

  	
  350

  	
   

  	
  1001

  	
   

  
	
  65

  	
   

  	
  Alex Hakim

  	
   

  	
  350

  	
   

  	
  1001

  	
   

  
	
  65

  	
   

  	
  Alex Hakim

  	
   

  	
  350

  	
   

  	
  1001

  	
   

  
	
  65

  	
   

  	
  Alex Hakim

  	
   

  	
  350

  	
   

  	
  1001

  	
   

  
	
  65

  	
   

  	
  Alex Hakim

  	
   

  	
  350

  	
   

  	
  1001

  	
   

  
	
  65

  	
   

  	
  Alex Hakim

  	
   

  	
  350

  	
   

  	
  1001

  	
   

  
	
  65

  	
   

  	
  Alex Hakim

  	
   

  	
  350

  	
   

  	
  1001

  	
   

  
	
  31

  	
   

  	
  Dan Cataldo

  	
   

  	
  250

  	
   

  	
  1001

  	
   

  
	
  31

  	
   

  	
  Dan Cataldo

  	
   

  	
  250

  	
   

  	
  1001

  	
   

  
	
  31

  	
   

  	
  Dan Cataldo

  	
   

  	
  250

  	
   

  	
  1001

  	
   

  
	
  31

  	
   

  	
  Dan Cataldo

  	
   

  	
  250

  	
   

  	
  1001

  	
   

  
	
  31

  	
   

  	
  Dan Cataldo

  	
   

  	
  250

  	
   

  	
  1001

  	
   

  
	
  31

  	
   

  	
  Dan Cataldo

  	
   

  	
  250

  	
   

  	
  1001

  	
   

  
	
  67

  	
   

  	
  Lawana Smith

  	
   

  	
  400

  	
   

  	
  1001

  	
   

  
	
  67

  	
   

  	
  Lawana Smith

  	
   

  	
  400

  	
   

  	
  1001

  	
   

  
	
  67

  	
   

  	
  Lawana Smith

  	
   

  	
  400

  	
   

  	
  1001

  	
   

  
	
  67

  	
   

  	
  Lawana Smith

  	
   

  	
  400

  	
   

  	
  1001

  	
   

  
	
  67

  	
   

  	
  Lawana Smith

  	
   

  	
  400

  	
   

  	
  1001

  	
   

  
	
  62

  	
   

  	
  Chuck Webb

  	
   

  	
  350

  	
   

  	
  1001

  	
   

  
	
  65

  	
   

  	
  Alex Hakim

  	
   

  	
  350

  	
   

  	
  1001

  	
   

  
	
  31

  	
   

  	
  Dan Cataldo

  	
   

  	
  250

  	
   

  	
  1001

  	
   

  
	
  65

  	
   

  	
  Alex Hakim

  	
   

  	
  350

  	
   

  	
  1001

  	
   

  
	
  65

  	
   

  	
  Alex Hakim

  	
   

  	
  350

  	
   

  	
  1001

  	
   

  
	
  65

  	
   

  	
  Alex Hakim

  	
   

  	
  350

  	
   

  	
  1001

  	
   

  
	
  65

  	
   

  	
  Alex Hakim

  	
   

  	
  350

  	
   

  	
  1001

  	
   

  
	
  65

  	
   

  	
  Alex Hakim

  	
   

  	
  350

  	
   

  	
  1001

  	
   

  
	
  65

  	
   

  	
  Alex Hakim

  	
   

  	
  350

  	
   

  	
  1001

  	
   

  

 

(133)       Confidential treatment has been requested
for the redacted portion.  The
confidential, redacted portions have been filed separately with the SEC.

 

 43
 

  
  
  

 

Schedule 3A

Stores to be
Cross-Docked by VDI

 

	
  District

  	
   

  	
  FBC

  	
   

  	
  Region

  	
   

  	
  Company [CONFIDENTIAL](134)

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  62

  	
   

  	
  Chuck Webb

  	
   

  	
  350

  	
   

  	
  1001

  	
   

  	
   

  
	
  62

  	
   

  	
  Chuck Webb

  	
   

  	
  350

  	
   

  	
  1001

  	
   

  	
   

  
	
  65

  	
   

  	
  Alex Hakim

  	
   

  	
  350

  	
   

  	
  1001

  	
   

  	
   

  
	
  65

  	
   

  	
  Alex Hakim

  	
   

  	
  350

  	
   

  	
  1001

  	
   

  	
   

  
	
  65

  	
   

  	
  Alex Hakim

  	
   

  	
  350

  	
   

  	
  1001

  	
   

  	
   

  
	
  67

  	
   

  	
  Lawana Smith

  	
   

  	
  400

  	
   

  	
  1001

  	
   

  	
   

  
	
  67

  	
   

  	
  Lawana Smith

  	
   

  	
  400

  	
   

  	
  1001

  	
   

  	
   

  
	
  67

  	
   

  	
  Lawana Smith

  	
   

  	
  400

  	
   

  	
  1001

  	
   

  	
   

  
	
  67

  	
   

  	
  Lawana Smith

  	
   

  	
  400

  	
   

  	
  1001

  	
   

  	
   

  
	
  67

  	
   

  	
  Lawana Smith

  	
   

  	
  400

  	
   

  	
  1001

  	
   

  	
   

  
	
  67

  	
   

  	
  Lawana Smith

  	
   

  	
  400

  	
   

  	
  1001

  	
   

  	
   

  
	
  65

  	
   

  	
  Alex Hakim

  	
   

  	
  350

  	
   

  	
  1001

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
  1040

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  Grand Total

  	
   

  	
   

  
	
   

  	
   

  	
  Kaleel

  	
   

  	
  297

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Rice Vistar

  	
   

  	
  79

  	
   

  	
  Count

  	
   

  	
   

  
	
   

  	
   

  	
  SWT

  	
   

  	
  318

  	
   

  	
  Weekly # of Orders

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
  694

  	
   

  	
  Avg Drop

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  Revised Orders >[CONFIDENTIAL](135)

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  Revised Avg Drop

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  Original Orders Minus Adj Orders

  	
   

  	
   

  

 

(135)       Confidential treatment has been requested
for the redacted portion.  The
confidential, redacted portions have been filed separately with the SEC.

 44
 

  
  
  

 

Schedule 4

Product Listing

[Confidential
Treatment has been requested for this Schedule. 
The confidential redacted portions have

been filed separately with the SEC]

 45
 

  
  
  

Schedule 5

Loveland Inbound
Quantity Matrix

[Confidential
Treatment has been requested for this Schedule. 
The confidential redacted portions have

been filed separately with the SEC]

 46
 

  
  
  

Schedule 6

[Confidential
Treatment has been requested for this Schedule. 
The confidential redacted portions have

been filed separately with the SEC]

 47
 

  
  
  

Schedule 7

YFS Agreement

[Confidential
Treatment has been requested for this Schedule. 
The confidential redacted portions have

been filed separately with the SEC]

 48
 

  
  
  

Schedule 8

YFS Agreement

Blended Case Rate
Calculation

[Confidential
Treatment has been requested for this Schedule. 
The confidential redacted portions have

been filed separately with the SEC]

 

 49Exhibit 10.1

ENPATH MEDICAL, INC. 1999
INCENTIVE STOCK OPTION PLAN

(as amended through April 27, 2006)

1.             Purpose.   The purpose of this Plan is
to further the growth and general prosperity of Enpath Medical, Inc. (the “Company”),
by enabling the employees of the Company, who have been or will be given
responsibility for the affairs of the Company, to acquire shares of its common
stock under the terms and conditions and in the manner set forth by this Plan,
increasing their personal involvement in the Company and to enable the Company
to obtain and retain the services of those employees.

2.             Administration.  This
Plan will be administered by a Committee of at least two directors who are
non-employee directors within the meaning of Section 16 of the Securities
Exchange Act of 1934 and the rules, regulations and interpretations promulgated
thereunder, including Rule 16b-3.

The
Committee will have the power and authority to award stock options or
restricted stock to eligible participants under the Plan, and each award will
be evidenced by a written agreement (Stock Option Agreement or Restricted Stock
Agreement) and a document containing the terms and conditions of this Plan.

3.             Eligibility and Participation. 
Employees eligible to receive options or restricted stock under the Plan
will be key personnel including officers of the Company and directors who are
also employees of the Company. The Committee may allot to such participant
options to purchase shares or restricted stock grants as the Committee will
from time to time determine: provided, however, that no employee may be
allotted an option unless the option exercise price not less than the fair
market value of the stock on the date of grant, and the option is, by its
terms, not exercisable after six years from the date of grant.

4.             Shares Subject to Plan. 
Subject to adjustment as provided in Section 5, an aggregate of up to
1,100,000(1) shares of the Common Stock of the Company will be subject to the
Plan and the Committee is authorized to grant options hereunder with respect to
such number of shares. Any unsold shares subject to an option under the Plan,
which for any reason expires or otherwise terminates may again be made subject
to option under the Plan at the discretion of the Committee.

5.             Adjustments Upon Changes in Capitalization.  In
the event of a merger, consolidation, reorganization, stock dividend, stock
split, or any other change in corporate structure or capitalization affecting
the Company’s common shares, appropriate adjustment will be made in the maximum
number of shares available under the Plan or to any one individual and in the
number, kind, option, price, etc. of shares subject to options or restricted
stock awarded under the Plan.

6.             Terms and Conditions of Options.  The
Committee will have power subject to the limitations contained in the Plan, to
prescribe any terms and conditions in respect to the granting or exercise of
any option under the Plan and in particular will prescribe the following terms
and conditions:

(1)    The Plan originally authorized
400,000 shares of Common Shares for issuance. 
An amendment to the Plan to increase the number of shares under the Plan
by 300,000 was authorized by the Board on February 6, 2003 and approved by the
shareholders on April 24, 2003.  An
amendment to the Plan to increase the number of shares under the Plan by
200,000 was authorized by the Board of Directors on July 21, 2003 and was
approved by shareholders on October 23, 2003.  An amendment to the Plan to increase the
number of shares under the Plan by 200,000 was authorized by the Board of
Directors on February 16, 2006 and was approved by shareholders on April 27,
2006.

 

(a)           Each option will state the number of shares
to which it pertains.

(b)           Each option will be granted within ten years
of the date the Plan is adopted.

(c)           Each option will be exercisable only within
six years of the date of grant.

(d)           The purchase price, which will be at least
100% of the fair market value of the shares at such time as the option is
granted and will not be less than the par value of the shares sold.

(e)           An option may be exercised at any time after
the date of grant, subject to the provisions of section 6(f) of the Plan and to
such other terms and conditions specified in the Stock Option Agreement, with
respect to all or part of the shares covered by the option. An option may not
be exercised for fractional shares of stock.

In the event the Company or the stockholders of the Company enter into
an agreement to dispose of all or substantially all of the assets or stock of
the Company by means of a sale, merger, reorganization, liquidation or
otherwise, an option will become immediately exercisable with respect to the
full number of shares.

(f)            An option will be exercised when written
notice of such exercise has been given to the Company at its principle business
office by the person entitled to exercise the option and full payment for the
shares has been received by the Company. Until the stock certificates are
issued, no right to vote, receive dividends, or any other rights as a
shareholder will exist with respect to optioned shares, notwithstanding the
exercise of the option.

(g)           An option may be exercised by the optionee
only while he is, and has continually been, since the date of the grant of the
option, an employee of the Company or within three months following termination
of employment (for reasons other than death, disability or termination for
cause).

If the continuous employment
of an optionee terminates by reason of his death, options which the deceased
employee would be entitled to exercise as of the date of death may be exercised
within one year following the date of death by the person to whom his rights
under such option will have passed by will or by the laws of descent and
distribution, but in no event later than the expiration of the option.  If the continuous employment of an optionee
terminates by reason of disability, options which the disabled employee would
be entitled to exercise as of the date of termination of employment may be
exercised within one year following the date of termination, but in no event
later than the expiration of the option.

If the continuous employment
of an optionee terminates for cause, any options which have not been exercised
as of the date of termination will be cancelled.

7.             Options Not Transferable.  No
option granted under the Plan will be transferable by the optionee, either
voluntarily or involuntarily, except by will or the laws of descent and
distribution, and then only to the extent provided in Section 6 hereof, or pursuant
to a qualified domestic relations order (as defined by the Internal Revenue
Code of 1986, as amended, or Title I of the Employee Retirement Income Security
Act and the rules thereunder.)

 2
 

 

8.             Terms and Conditions of Restricted Stock
Awards.

(a)           Administration. 
Shares of restricted stock may be issued either alone or in addition to
other awards granted under the Plan.  The
Committee has the right to determine to whom, and the time or times at which,
restricted stock awards will be made, the number of shares to be awarded, the
time or times within which such awards may be subject to forfeiture, and all
other conditions of the awards.  The
Committee may also condition the grant of restricted stock upon the attainment
of specified performance goals.  The
provisions of restricted stock awards need not be the same with respect to each
recipient.

(b)           Awards and Certificates.  The
prospective recipient of an award of shares of restricted stock will not have
any rights with respect to such award, unless and until the  recipient has executed a restricted stock
agreement evidencing the award and has delivered a fully executed copy thereof
to the Company, and has otherwise complied with the then applicable terms and
conditions.

(i)            Each participant will be issued a stock
certificate in respect of shares of restricted stock awarded under the
Plan.  The certificate will be registered
in the name of the participant, and will bear an appropriate legend referring
to the terms, conditions, and restrictions applicable to such award,
substantially in the following form:

“The transferability of this
certificate and the shares of stock represented hereby are subject to the terms
and conditions (including forfeiture) of the Enpath Medical, Inc. 1999
Incentive Stock Option Plan and an Agreement entered into between the
registered owner and Enpath Medical, Inc. 
Copies of such Plan and Agreement are on file in the offices of Enpath
Medical, Inc., 15301 Hwy 55 West, Plymouth, MN 55447.”

(ii)           The Committee must require that the stock
certificates evidencing such shares be held in custody by the Company until the
restrictions thereon have lapsed, and that, as a condition of any restricted
stock award, the participant will have delivered a stock power, endorsed in
blank, relating to the Common Stock covered by such award.

(c)           Restrictions and Conditions.  The
shares of restricted stock awarded pursuant to the Plan will be subject to the
following restrictions and conditions:

(i)            Subject to the provisions of this Plan and
the award agreement, during a period set by the Committee commencing with the
date of such award (the “Restriction Period”), the participant will not be
permitted to sell, transfer, pledge or assign shares of restricted stock
awarded under the Plan.  Within these
limits, the Committee may provide for the lapse of such restrictions in
installments where deemed appropriate.

(ii)           Except as provided in paragraph (c)(i) of
this Section 8, the participant will have, with respect to the shares of
restricted stock, all of the rights of a shareholder of the Company, including
the right to vote the shares and the right to receive any cash dividends.  The Committee, in its sole discretion, may
permit or require the payment of cash dividends to be deferred and, if the
Committee so determines, 

 3
 

 

reinvested
in additional shares of restricted stock (to the extent shares are available
under Section 4 and subject to Section 10 below).

 

(iii)          Subject
to the provisions of the award agreement and paragraph (c)(iv) of this Section
8, upon termination of employment for any reason during the Restriction Period,
all shares still subject to
restriction will be forfeited by the participant.

(iv)          In the event of special hardship
circumstances of a participant whose employment is terminated (other than for
cause), including death, disability or retirement, or in the event of an
unforeseeable emergency of a participant still in service, the Committee may,
in its sole discretion, when it finds that a waiver would be in the best
interest of the Company, waive in whole or in part any or all remaining
restrictions with respect to such participant’s shares of restricted stock.

(v)           Notwithstanding the foregoing, in the event
of the sale by the Company of substantially all of its assets and the
consequent discontinuance of its business, or in the event of a merger,
exchange, consolidation or liquidation of the Company, the Board will, in its
sole discretion, in connection with the Board’s adoption of the plan for sale,
merger, exchange, consolidation or liquidation, provide for one or more of the
following with respect to restricted stock awards that are, on such date, still
subject to a Restriction Period:  (i) the
removal of the restrictions on any or all outstanding restricted stock awards;
(ii) the complete termination of this Plan and forfeiture of outstanding
restricted stock awards prior to a date specified by the Board; and (iii) the
continuance of the Plan with respect to the restricted stock award which were
outstanding as of the date of adoption by the Board of such plan for sale,
merger, exchange, consolidation or liquidation and provide to participants
holding restricted stock awards the right to an equivalent number of restricted
shares of stock of the corporation succeeding the Company by reason of such
sale, merger, exchange, consolidation or liquidation.  The grant of a restricted stock award
pursuant to the Plan will not limit in any way the right or power of the
Company to make adjustments, reclassifications, reorganizations or changes of
its capital or business structure or to merge, exchange or consolidate or to
dissolve, liquidate, sell or transfer all or any part of its business or
assets.

9.             Amendment or Termination of the Plan.  The
Board of Directors may amend the Plan from time to time as it deems advisable.
The Board of Directors may at any time terminate the Plan, provided that any
termination of the Plan will not affect options already granted. The options
will remain in full force and effect as if the Plan had not been terminated.

10.           Agreement and Representation of Employee.  As a
condition to the exercise of any option (or portion thereof) or grant of
restricted stock, the Company may require the participant represent and warrant
at the time of any exercise or grant that the shares are being purchased only
for investment and without any present intention to sell or distribute the
shares if in the opinion of counsel for the Company such representation is
required under the Securities Act of 1933, or any other applicable law,
regulation or rule of any governmental agency.

In
the event legal counsel to the Company renders an opinion to the Company that
the shares for options exercised pursuant to this Plan cannot be issued to the
participant because such act would violate the applicable Federal or State
securities law, then and in that event, the optionee agrees that the Company
will not be required to issue the shares to the optionee tendered to the
Company upon exercise

 4
 

 

of the option.

11.           Effectiveness and Termination of the Plan.   The
Plan will become effective upon adoption by the Board of Directors and will be
subject to approval of the stockholders of Enpath Medical, Inc. within 12
months of adoption.  The Plan will
terminate on the earliest of:

(a)           the date when all the common shares available
under the Plan will have been acquired through exercising the options granted
under the Plan,

(b)           August 1, 2009,

(c)           such other date as the Board may determine.

12.           Form of Awards. 
Options may be issued by the execution of an Enpath Medical, Inc. form
entitled “Stock Option Agreement” and restricted stock awards may be issued by
execution of an Enpath Medical, Inc. form entitled “Restricted Stock Agreement.”

 5

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