EXHIBIT 10.18

 

AMENDED AND RESTATED

EXECUTIVE EMPLOYMENT AGREEMENT

 

THIS EXECUTIVE EMPLOYMENT AGREEMENT (the “Agreement”) is made and entered into
as of March 25, 2013 (“Effective Date”), by and between Inventure Foods, Inc., a
Delaware corporation, (the “Company”), and Terry E. McDaniel (the “Executive”).

 

WITNESSETH:

 

WHEREAS, the Company desires to retain the services of Executive, and Executive
desires to be employed by the Company, on the terms and conditions of this
Agreement.

 

NOW, THEREFORE, in consideration of the premises and the mutual covenants and
agreements set forth herein, the Company and Executive, intending to be legally
bound, hereby agree as follows:

 

1.                   Employment.  The Company agrees to employ Executive as
Chief Executive Officer of the Company, and Executive accepts such employment
and agrees to perform full-time employment services for the Company, subject
always to resolutions of the Board of Directors of the Company (the “Board”),
for the period and upon the other terms and conditions set forth in this
Agreement.

 

2.                   Term.  The term of Executive’s employment hereunder (the
“Term”) shall commence on the Effective Date, and shall continue until this
Agreement is terminated upon written notice by either party as set forth in
Section 6 below, for any reason whatsoever, this being an “at will” employment
agreement.  Sections 6 and 7 of this Agreement shall govern the amount of any
compensation to be paid to Executive upon termination of this Agreement and his
employment.

 

3.                   Position and Duties.

 

3.1.                                  Service with the Company.  During the Term
of this Agreement, Executive agrees to perform such executive employment duties
as the Board shall reasonably assign to him from time to time.

 

3.2.                                  No Conflicting Duties.  Executive hereby
confirms that he is under no contractual commitments inconsistent with his
obligations set forth in this Agreement, and that during the Term of this
Agreement, he will not render or perform services, or enter into any contract to
do so, for any other corporation, firm, entity or person that are inconsistent
with the provisions of this Agreement or Executive’s fiduciary obligations to
the Company.

 

4.                   Compensation and Benefits.

 

4.1.                                  Base Salary.  As compensation for all
services to be rendered by Executive under this Agreement, the Company shall pay
to Executive an annual salary of $448,122.23 (the “Base Salary”).  The Base
Salary shall be reviewed not less than annually and subject to change at the
discretion of the Board (or its Compensation Committee), however, the Base
Salary may not be decreased without the written consent of the Executive. The
Company shall pay the Base Salary to Executive on the Company’s regularly
scheduled paydays in accordance with the Company’s normal payroll procedures and
policies.

 

4.2.                                  Bonuses.  Executive may be eligible for
bonuses as determined by the Board (or its Compensation Committee) in its
discretion.

 

4.3.                                  [Intentionally Omitted]

 

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4.4.                                  Participation in Benefit Plans.  Executive
shall be included to the extent eligible thereunder in any and all plans of the
Company providing general benefits for the Company’s executive employees,
including, without limitation, medical, dental, vision, disability, life
insurance, 401(k) plan, sick days, vacation, and holidays.  Executive’s
participation in any such plan or program shall be subject to the provisions,
rules, and regulations applicable thereto. In addition, Executive shall be
eligible to participate in all non-qualified deferred compensation and similar
compensation, bonus and stock plans offered, sponsored or established by the
Company on substantially the same or a more favorable basis as any other
employee of the Company.

 

4.5.                                  Business Expenses.  In accordance with the
Company’s policies established from time to time, the Company will pay or
reimburse Executive for all reasonable and necessary out-of-pocket expenses
incurred by him in the performance of his duties under this Agreement, subject
to the presentment of appropriate supporting documentation.

 

4.6.                                  Key Man Life Insurance.  During the Term
of this Agreement, the Company shall have the option of purchasing and paying
the premiums for a “Key Man” life insurance policy relating to Executive in a
coverage amount determined by the Company, and the Company shall be named as the
beneficiary of such policy.  Executive represents and warrants that he currently
is insurable for such policy on an unrated basis and agrees to fully cooperate
with the Company in obtaining the policy.

 

4.7.                                  Automobile Allowance.  The Company shall
pay Executive $1,000.00 per month as an automobile allowance, less any required
withholdings for tax purposes (the “Monthly Car Allowance”).  Executive shall
procure and maintain adequate insurance coverage on the automobile he uses for
Company purposes.  Executive acknowledges that he may recognize taxable income
in connection with these payments and that these amounts will be reflected on
Executive’s W-2, if required by law.

 

5.                   [Intentionally Omitted]

 

6.                   Termination.

 

6.1.                                  Disability.  At the Company’s election,
Executive’s employment and this Agreement shall terminate upon Executive’s
becoming totally or permanently disabled for a period of ninety (90) days or
more in any twelve (12) month period.  For purposes of this Agreement, the term
“totally or permanently disabled” or “total or permanent disability” means
Executive’s inability on account of sickness or accident, whether or not
job-related, to engage in regularly or to perform adequately his assigned duties
under this Agreement.  A reasonable determination by the Company of the
existence of a disability shall be conclusive for all purposes hereunder.  In
making such determination of disability, the Company may utilize such advice and
consultation as the Company deems appropriate, but there is no requirement of
procedure or formality associated with the making of a determination of
disability.

 

6.2.                                  Death of Executive.  Executive’s
employment and this Agreement shall terminate immediately upon the death of
Executive.

 

6.3.                                  Termination for Cause.  The Company may
terminate Executive’s employment and this Agreement at any time for “Cause” (as
hereinafter defined) immediately upon written notice to Executive.  As used
herein, the term “Cause” shall mean a determination in good faith by the Company
of one or more of the following by Executive:

 

6.3.1.                  Committed a criminal act or a single act of fraud,
embezzlement, theft, breach of trust, or other act of gross misconduct;

 

6.3.2.                  Been arraigned, indicted, formally charged, or convicted
of any felony or any crime involving dishonesty, fraud, theft, or moral
turpitude, whether or not related to Executive’s employment with the Company;

 

6.3.3.                  Been arraigned, indicted, formally charged, or convicted
of any crime or offense that, in the reasonable good faith judgment of the
Company, has or could materially damage the reputation of the Company or would
materially interfere with Executive’s performance of services to the Company;

 

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6.3.4.                  Willful misconduct or gross negligence with regard to
the Company having a material adverse affect on the Company;

 

6.3.5.                  Violated any material written Company policy or rules of
the Company, after written notice from the Company and a reasonable opportunity
to cure (if deemed curable by the Company in its sole discretion) not to exceed
fifteen (15) days;

 

6.3.6.                  Willful and material violation of, or noncompliance
with, any securities laws or stock exchange listing rules, including, without
limitation, the Sarbanes-Oxley Act of 2002, provided that such violation or
noncompliance resulted in material economic harm to the Company;

 

6.3.7.                  Refused to, or failed to attempt in good faith to,
perform the Executive’s duties or to follow the written directions given to
Executive by the Board, after written notice from the Company and a reasonable
opportunity to cure (if deemed curable by the Company in its sole discretion)
not to exceed fifteen (15) days; or

 

6.3.8.                  Breached any covenant or obligation under this Agreement
or other agreement with the Company, after written notice from the Company and a
reasonable opportunity to cure (if deemed curable by the Company in its sole
discretion) not to exceed fifteen (15) days.

 

6.4.                                  Resignation.  Executive’s employment and
this Agreement shall terminate on the earlier of the date that is one (1) month
following the written submission of Executive’s resignation to the Company or
the date such resignation is accepted by the Company.

 

6.5.                                  Termination Without Cause.  The Company
may terminate Executive’s employment and this Agreement without cause upon
written notice to Executive.  Termination “without cause” shall mean termination
of employment on any basis (including no reason or no cause) other than
termination of Executive’s employment hereunder pursuant to Sections 6.1, 6.2,
6.3, or 6.4.

 

6.6.                                  Surrender of Records and Property.  Upon
termination of his employment with the Company or when requested at any time by
the Company, Executive shall deliver promptly to the Company all credit cards,
computer equipment, cellular telephone, records, manuals, books, blank forms,
documents, letters, memoranda, notes, notebooks, reports, data, tables,
calculations or copies thereof, that are the property of the Company and that
relate in any way to the business, strategies, products, practices, processes,
policies or techniques of the Company, and all other property, trade secrets and
confidential information of the Company, including, but not limited to, all
documents that in whole or in part contain any trade secrets or confidential
information of the Company that in any of these cases are in his possession or
under his control, and Executive shall also remove all such information from any
personal computers and other data devices that he owns or controls.

 

7.                   Compensation Upon the Termination of Executive’s
Employment.

 

7.1.                                  In the event that Executive’s employment
and this Agreement are terminated pursuant to Section 6.1 (Disability), 6.3
(Cause), or 6.4 (Resignation), then Executive shall be entitled to receive
Executive’s then current Base Salary through the date his employment is
terminated, but no other compensation of any kind or amount.

 

7.2.                                  In the event Executive’s employment and
this Agreement are terminated pursuant to Section 6.2 (Death), Executive’s
beneficiary or a beneficiary designated by Executive in writing to the Company,
or in the absence of such beneficiary, Executive’s estate, shall be entitled to
receive Executive’s then current Base Salary through the end of the month in
which his death occurs, but no other compensation of any kind or amount.

 

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7.3.                                  Unless Section 8 applies, in the event
Executive’s employment and this Agreement are terminated by the Company pursuant
to Section 6.5 (Without Cause), the Company shall pay to Executive, as a
severance allowance, the following amounts, but no other compensation or
benefits of any kind:

 

(a) Executive’s then current monthly Base Salary and Executive’s Monthly Car
Allowance for the twelve (12) month period following the date of termination
(the “Severance Period”), paid on the Company’s regular paydays throughout that
12-month period; and

 

(b) Up to $9,000.00 for outplacement services for Executive with an outplacement
firm selected by Executive.

 

Executive shall be entitled to receive these benefits and payments only if he
complies with his continuing obligations to the Company as set forth in this
Agreement.

 

7.4.                                  In the event that Executive’s employment
and this Agreement are terminated pursuant to 6.4 (Resignation) within twelve
(12) months after a Change in Control (as defined in Section 8.1 below), the
Company shall pay, for Executive’s benefit, up to $9,000.00 for outplacement
services for Executive with an outplacement firm selected by Executive.

 

7.5.                                  For purposes of Section 409A Internal
Revenue Code, as amended (“Section 409A”), Executive hereby elects to receive,
and the Company hereby agrees to pay, each amount payable under this Agreement
at the times, and on the terms and conditions, set forth herein.

 

8.                   Change in Control.  In the event of both a Change in
Control (as defined below) and the occurrence of Good Reason (as defined below),
the Company shall, within thirty (30) days after occurrence of the last of these
conditions, pay Executive a lump sum amount equal to Executive’s then current
annual Base Salary. Executive shall be entitled to receive this payment only if
he complies with his continuing obligations to the Company as set forth in this
Agreement.

 

8.1.                                   Definition of Change in Control.  As used
herein, a “Change in Control” means both: (i) a change in the composition of the
Board, as a result of which less than a majority of the incumbent directors are
directors who either (x) had been directors of the Company on the date 24 months
prior to the date of the event that may constitute a Change in Control (the
“original directors”) or (y) were elected, or nominated for election, to the
Board with the affirmative votes of at least a majority of the aggregate of the
original directors who were still in office at the time of the election or
nomination and the directors whose election or nomination was previously so
approved; and (ii) one of the following events has occurred:  (a) the
consummation of a merger or consolidation of the Company with or into another
entity or any other corporate reorganization, if more than 30% of the combined
voting power of the continuing or surviving entity’s securities outstanding
immediately after such merger, consolidation, or other reorganization is owned
by persons who were not stockholders of the Company immediately prior to such
merger, consolidation, or other reorganization; or (b) the sale, transfer, or
other disposition of all or substantially all of the Company’s assets.  A
transaction shall not constitute a Change of Control if its sole purpose is to
change the state of the Company’s incorporation or to create a holding company
that will be owned in substantially the same proportions by the persons who held
the Company’s securities immediately before such transaction.

 

8.2.                                   Definition of Good Reason.  As used
herein, “Good Reason” means any of the following:  (i) termination by the
Company of Executive’s employment and this Agreement without cause (as that term
is defined in Section 6.5) within three (3) months before, or within twelve (12)
months after, a Change in Control; (ii) a material reduction in Executive’s
title, status, authority, or responsibility at the Company within twelve (12)
months after a Change in Control; (iii) within twelve (12) months after a Change
in Control, there is a material reduction in the benefits that were in effect
for the Executive immediately prior to the Change in Control, and comparable
reductions have not been made in the benefits of the other members of senior
management of the Company; (iv) except with Executive’s prior written consent,
the assignment to Executive by the Company of duties materially inconsistent
with Executive’s position as set forth in Section 1 hereof, or any material
reduction by the Company of Executive’s duties, except in connection with the
termination of Executive’s employment for any other reason; (v) except with
Executive’s prior written consent,

 

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relocation of Executive’s principal place of employment to a location outside
Maricopa County, Arizona within twelve (12) months following a Change in
Control; or (vi) any material breach by the Company of its material obligations
under this Agreement within twelve (12) months following a Change in Control;
provided, however, that the Company shall have 30 days following written notice
thereof to cure any event constituting Good Reason.

 

9.                   Release.  As a condition precedent to the Company’s
obligation to provide Executive with the amounts set forth in Section 7.3,
Section 7.4, or Section 8, prior to the expiration of any applicable statutory
period during which Executive is entitled to revoke such release (not to exceed
60 days), Executive must execute and deliver to the Company a legal release, in
form and substance acceptable to the Company, in which Executive releases the
Company and its affiliates, directors, officers, employees, agents, and others
affiliated with the Company from any and all claims, including claims relating
to the Executive’s employment with the Company, the termination of Executive’s
employment, if applicable, and any facts constituting Good Reason.  If
Executive’s date of termination and the last day of any applicable statutory
revocation period could fall in two separate taxable years, regardless of when
Executive actually executes and delivers the release, payments will not commence
until the later taxable year.

 

10.            Ventures.  If, during the Term of this Agreement, Executive is
engaged in or associated with the planning or implementing of any project,
program, or venture involving the Company and a third party or parties, all
rights in the project, program, or venture shall belong to the Company and shall
constitute a corporate opportunity belonging exclusively to the Company. Except
as approved in writing by the Board, Executive shall not be entitled to any
interest in such project, program, or venture or to any commission, finder’s
fee, or other compensation in connection therewith other than the Base Salary to
be paid to Executive as provided in this Agreement.

 

11.            Restrictions.

 

11.1.                           Definitions.  For purposes of this Agreement,
the following terms shall have the following meanings:

 

11.1.1.           “Trade Secrets” means information that is not generally known
about the Company or its business, including without limitation about its
products, recipes, projects, designs, developmental or experimental work,
computer programs, data bases, know-how, processes, customers, suppliers,
business plans, marketing plans and strategies, financial or personnel
information, and information obtained from third parties under confidentiality
agreements.  “Trade Secrets” also means formulas, patterns, compilations,
programs, devices, methods, techniques, or processes that derive independent
economic value, actual or potential, from not being generally known to the
public or to other persons who can obtain economic value from its disclosure or
use, and is the subject of efforts that are reasonable under the circumstances
to maintain its secrecy.  In particular, the parties agree and acknowledge that
the following list, which is not exhaustive and is to be broadly construed,
enumerates some of the Company’s Trade Secrets, the disclosure of which would be
wrongful and would cause irreparable injury to the Company: (i) recipes for the
Company’s specialty potato chips and other salted snack foods;
(ii) manufacturing processes for the foregoing products; (iii) pricing
information; (iv) product development, marketing, sales, customer, and supplier
information related to any Company product or service available commercially or
in any stage of development during Executive’s employment with the Company; and
(v) Company marketing and business strategies, ideas, and concepts.  Executive
acknowledges that the Company’s Trade Secrets were and are designed and
developed by the Company at great expense and over lengthy periods of time, are
secret, confidential, and unique, and constitute the exclusive property of the
Company.

 

11.1.2.           “Restricted Field” means the business of manufacturing,
developing, marketing, and/or selling specialty potato chips or other salted
snack foods or other business activities in which the Company engages during the
Term.  The Company is in the business of developing, manufacturing, and selling
these products in the Business Territory.

 

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11.1.3.           “Non-Competition Period” means a period of 12 months after the
termination of Executive’s employment with the Company unless a court of
competent jurisdiction determines that that Period is unenforceable under
applicable law because it is too long, in which case the Non-Competition Period
shall be for the longest of the following periods that the court determines is
reasonable under the circumstances:  11 months, 10 months, 9 months, 8 months, 7
months, or 6 months.

 

11.1.4.           “Business Territory” means the entire United States, unless a
court of competent jurisdiction determines that that geographic scope is
unenforceable under applicable law because it is too broad, in which case the
Business Territory shall be amended by eliminating geographical areas and states
from the following list until the Business Territory is determined to be
reasonable:  Alabama, Alaska, Arizona, Arkansas, California, Colorado,
Connecticut, Delaware, District of Columbia, Florida, Georgia,
Hawaii, Idaho, Illinois, Indiana, Iowa, Kansas, Kentucky, Louisiana, Maine,
Maryland, Massachusetts, Michigan, Minnesota, Mississippi, Missouri, Montana,
Nebraska, Nevada, New Hampshire, New Jersey, New Mexico, New York, North
Carolina, North Dakota, Ohio, Oklahoma, Oregon, Pennsylvania, Rhode Island,
South Carolina, South Dakota, Tennessee, Texas, Utah, Vermont, Virginia,
Washington, Washington, District of Columbia, West Virginia, Wisconsin, Wyoming,
Maricopa County, Arizona, Phoenix, Arizona.  The parties acknowledge and agree
that if any of the geographic areas or States listed above is required by law to
be eliminated, it would be fair and appropriate to do so in the inverse order of
the volume of revenue received or projected to be received by the Company from
such area or State at the time of determination.

 

11.1.5.           “Non-Solicitation Period” means a period of 12 months after
the termination of Executive’s employment with the Company.

 

11.2.                                             Non-Disclosure Obligations. 
Executive shall not at any time, during or after the Term of this Agreement,
without the express written consent of an officer of the Company, publish,
disclose, or divulge to any person, firm or corporation, or use directly or
indirectly for the Executive’s own benefit or for the benefit of any person,
firm, corporation or entity other than the Company, any Trade Secrets of the
Company.

 

11.3.                                             Non-Competition Obligations. 
Executive acknowledges the substantial amount of time, money, and effort that
the Company has spent and will spend in developing its products and other
strategically important information (including Trade Secrets), and agrees that
during the Non-Competition Period, Executive will not, alone or with others,
directly or indirectly, as an employee, agent, consultant, advisor, owner,
manager, lender, officer, director, employee, partner, stockholder, or
otherwise, engage in any Restricted Field activities in the Business Territory,
nor have any such relationship with any person or entity that engages in
Restricted Field activities in the Business Territory; provided, however, that
nothing in this Agreement will prohibit Executive from owning a passive
investment of less than one percent of the outstanding equity securities of any
company listed on any national securities exchange or traded actively in any
national over-the-counter market so long as Executive has no other relationship
with such company in violation of this Agreement.  The Non-Competition Period
set forth in this Section 11.3 shall be tolled during any period in which the
Executive is in breach of the restriction set forth herein.

 

11.4.                                             Agreement Not to Solicit
Customers.  Executive agrees that during Executive’s employment with the Company
hereunder and during the Non-Solicitation Period, Executive will not, either
directly or indirectly, on Executive’s own behalf or in the service or on behalf
of others, solicit, divert, or appropriate, or attempt to solicit, divert, or
appropriate, to any business that engages in Restricted Field activities in the
Business Territory (i) any person or entity whose account with the Company was
sold or serviced by or under the supervision of Executive during the twelve (12)
months preceding the termination of such employment, or (ii) any person or
entity whose account with the Company has been directly solicited at least twice
by the Company within the year preceding the termination of employment (the
“Customers”).  The Non-Solicitation Period set forth in this Section 11.4 shall
be tolled during any period in which the Executive is in breach of the
restriction set forth herein.

 

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11.5.                                             Agreement Not to Solicit
Employees.  Executive agrees that during Executive’s employment with the Company
hereunder and during the Non-Solicitation Period, Executive will not, either
directly or indirectly, on Executive’s own behalf or in the service or on the
behalf of others solicit, divert, or hire away, or attempt to solicit, divert,
or hire away any person then employed by the Company, nor encourage anyone to
leave the Company’s employ.  The Non-Solicitation Period set forth in this
Section 11.5 shall be tolled during any period in which the Executive is in
breach of the restriction set forth herein.

 

11.6.                                             Non-Disparagement.  Executive
agrees that during Executive’s employment with the Company hereunder and
thereafter, he will not, either directly or indirectly, disparage, defame, or
besmirch the reputation, character, or image of the Company or its products,
services, employees, directors, or officers.

 

11.7.                                             Reasonableness.  Executive and
the Company agree that the covenants set forth in this Agreement are appropriate
and reasonable when considered in light of the nature and extent of the
Company’s business.  Executive further acknowledges and agrees that (i) the
Company has a legitimate interest in protecting the Company’s business
activities and its current, pending, and potential Trade Secrets; (ii) the
covenants set forth herein are not oppressive to Executive and contain
reasonable limitations as to time, scope, geographical area, and activity;
(iii) the covenants do not harm in any manner whatsoever the public interest;
(iv) Executive’s chosen profession, trade, or business is in manufacturing,
developing, and marketing retail food products (the “Profession”); (v) the
Restricted Field is only a very small or limited part of the Profession, and
Executive can work in many different jobs in Executive’s Profession besides
those in the Restricted Field; (vi) the covenants set forth herein do not
completely restrain Executive from working in Executive’s Profession, and
Executive can earn a livelihood in Executive’s Profession without violating any
of the covenants set forth herein; (vii) Executive has received and will receive
substantial consideration for agreeing to such covenants, including without
limitation the consideration to be received by Executive under this Agreement;
(viii) if Executive were to work for a competing company that engages in
activities in the Restricted Field, there would be a substantial risk that
Executive would inevitably disclose Trade Secrets to that company; (ix) the
Company competes with other companies that engage in Restricted Field Activities
in the Business Territory, and if Executive were to engage in prohibited
activities in the Restricted Field within the Business Territory, it would harm
the Company; (x) the Company expends considerable resources on hiring, training,
and retaining its employees and if Executive were to engage in prohibited
activities during the Non-Solicitation Period, it would harm the Company; and
(xi) the Company expends considerable resources acquiring, servicing, and
retaining its Customers and if Executive were to engage in prohibited activities
during the Non-Solicitation Period, it would harm the Company.

 

12.            Other Agreements.  Executive reaffirms Executive’s obligations
set forth in the Employee Proprietary Rights Agreement attached hereto as
Exhibit B.  Executive further acknowledges and agrees that he will comply with
all other Company policies and procedures, including, without limitation, the
Company’s Insider Trading policy.

 

13.            Assignment.  This Agreement shall not be assignable, in whole or
in part, by either party without the written consent of the other party, except
that the Company may, without the consent of Executive, assign its rights and
obligations under this Agreement to any corporation, firm or other business
entity (i) with or into which the Company may merge or consolidate, (ii) to
which the Company may sell or transfer all or substantially all of its assets or
(iii) of which 30% or more of the equity investment and of the voting control is
owned, directly or indirectly, by, or is under common ownership with, the
Company.  Upon such assignment by the Company, the Company shall attempt to
obtain the assignees’ written agreement enforceable by Executive to assume and
perform, from and after the date of such assignment, the terms, conditions, and
provisions imposed by this Agreement upon the Company.  After any such
assignment by the Company and such written agreement by the assignee, the
Company shall be discharged from all further liability hereunder and such
assignee shall thereafter be deemed to be the Company for the purposes of all
provisions of this Agreement including this Section 13.

 

14.            Other Provisions.

 

14.1.                           Governing Law.  This Agreement is made under and
shall be governed by and construed in accordance with the laws of the State of
Arizona without reference to conflicts of law provisions thereof.

 

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14.2.                           Injunctive Relief.  Executive agrees that it
would be difficult to compensate the Company fully for damages for any violation
of the provisions of this Agreement.  Accordingly, Executive specifically agrees
that the Company shall be entitled to temporary and permanent injunctive relief
to enforce the provisions of this Agreement.  This provision with respect to
injunctive relief shall not, however, diminish the right of the Company to claim
and recover damages in addition to injunctive relief

 

14.3.                           Prior Agreements.  This Agreement contains the
entire agreement of the parties relating to the subject matter hereof and
supersedes all prior agreements and understanding with respect to such subject
matter, and the parties hereto have made no agreements, representations, or
warranties relating to the subject matter of this Agreement which are not set
forth herein.

 

14.4.                           Taxes.

 

(a)               Withholding Taxes and Right of Offset.  The Company may
withhold from all payments and benefits under this Agreement all federal, state,
city, or other taxes as shall be required pursuant to any law or governmental
regulation or ruling.  Executive agrees that the Company may offset any payments
owed to Executive pursuant to this Agreement or otherwise against any amounts
owed by the Executive to the Company.

 

(b)               Section 409A of Internal Revenue Code.  Notwithstanding any
provision in this Agreement to the contrary:

 

(i)                   If any payment under this Agreement is determined to be
subject to Section 409A of the Code, this Agreement shall be interpreted and
administered so that such payments comply to the fullest extent possible with
Section 409A of the Code.  The payment (or commencement of a series of payments)
of any nonqualified deferred compensation (within the meaning of Section 409A of
the Code) upon a termination of employment shall be delayed until such time as
Executive have also undergone a “separation from service” as defined in Treas.
Reg. 1.409A-1(h), at which time such nonqualified deferred compensation
(calculated as of the date of Executive’s termination of employment) shall be
paid (or commence to be paid) to Executive on the schedule set forth in this
Agreement as if Executive had undergone such termination of employment (under
the same circumstances) on the date of Executive’s ultimate “separation from
service.”

 

(ii) Any payment otherwise required to be made to Executive hereunder at any
date as a result of the termination of Executive’s employment shall be delayed
for such period of time as may be necessary to meet the requirements of
Section 409A(a)(2)(B)(i) of the Code (the “Delay Period”).  On the first
business day following the expiration of the Delay Period, Executive shall be
paid, in a single cash lump sum, an amount equal to the aggregate amount of all
payments delayed pursuant to the preceding sentence and any remaining payments
not so delayed shall continue to be paid pursuant to the payment schedule set
forth herein.

 

(iii) Each payment hereunder shall be deemed to be a separate and distinct
payment for purposes of Section 409A of the Code.

 

(iv) To the extent that any right to reimbursement of expenses or payment of any
benefit in-kind under this Agreement constitutes nonqualified deferred
compensation (within the meaning of Section 409A of the Code), (A) any such
expense reimbursement shall be made by the Company no later than the last day of
the taxable year following the taxable year in which such expense was incurred
by Executive, (B) the right to reimbursement or in-kind benefits shall not be
subject to liquidation or exchange for another benefit, and (C) the amount of
expenses eligible for reimbursement or in-kind benefits provided during any
taxable year shall not affect the expenses eligible for reimbursement or in-kind
benefits to be provided in any other taxable year; provided that the foregoing
clause shall not be violated with regard to expenses reimbursed under any
arrangement covered by Section 105(b) of the Code solely because such expenses
are subject to a limit related to the period the arrangement is in effect.

 

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14.5.                           Amendments.  No amendment or modification of
this Agreement shall be deemed effective unless made in writing signed by
Executive and the Company.

 

14.6.                           No Waiver.  No term or condition of this
Agreement shall be deemed to have been waived nor shall there be any estoppel to
enforce any provisions of this Agreement, except by a statement in writing
signed by the party against whom enforcement of the waiver or estoppel is
sought.  Any written waiver shall not be deemed a continuing waiver unless
specifically stated, shall operate only as to the specific term or condition
waived, and shall not constitute a waiver of such term or condition for the
future or as to any act other than that specifically waived.

 

14.7.                           Severability.  To the extent any provision of
this Agreement shall be invalid or unenforceable, it shall be considered deleted
from this Agreement and the remainder of such provision and of this Agreement
shall be unaffected and shall continue in full force and effect.

 

14.8.                           Survivability.  Sections 7, 8, 9, 11, 12, 13,
and 14 of this Agreement shall survive the termination of this Agreement and the
termination of Executive’s employment with the Company.

 

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

 

“Company”:

 

Inventure Foods, Inc.

 

 

 

/s/ Bryce Edmonson

 

Bryce Edmonson

 

Chairman, Compensation Committee

 

 

“Executive”:

 

 

 

/s/ Terry E. McDaniel

 

Terry E. McDaniel

 

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Exhibit B

 

Inventure Foods, Inc. Proprietary Rights Agreement

 

THIS AGREEMENT CREATES IMPORTANT OBLIGATIONS WHICH ARE BINDING.  PLEASE READ IT
IN FULL BEFORE YOU SIGN.

 

I recognize the importance of protecting the Company’s relationships and its
rights to inventions, discoveries, ideas, confidential information and other
intellectual property, and for good and valuable consideration which I have
received, including my engagement to provide services to the Company as an
independent contractor or at-will employee (in either event referred to
hereinafter as my “Relationship with the Company,”) or the continuation of my
Relationship with the Company, I agree to the following:

 

1.                                      DEFINITIONS.  For the purposes of this
Agreement:

 

(a)                                                         “Company” means
Inventure Foods, Inc., and its subsidiaries.

 

(b)                                                         “Creation” means any
invention, discovery, idea, concept, design, process, work of authorship,
development or improvement (whether or not subject to copyright or patent
protection and whether or not reduced to practice by me):  (i) relating to any
past, present or reasonably anticipated business of the Company and which is or
was created or otherwise developed during my Relationship with the Company,
(ii) which is or was created or otherwise developed while performing work for
the Company, or (iii) which is or was created or otherwise developed at any time
using equipment, supplies, facilities, information or proprietary rights or
other property of the Company.

 

(c)                                                         
“Computer Information” means all information and communications created,
received, or stored on or passed through the Company’s computer and
communications systems.  Among other things, Computer Information includes all
of my files, voice mail and e-mail.

 

(d)                                                         “Confidential
Information” means information (including information created by me) which is
not generally known about the Company or its business, including without
limitation about its products, projects, designs, developmental or experimental
work, computer programs, software, data bases, know-how, processes, formulas,
recipes, manufacturing processes, customers, suppliers, business plans,
marketing plans and strategies, finances, or personnel, and information obtained
from third parties under confidentiality agreements.

 

2.                                      OWNERSHIP OF CREATIONS

 

(a)                                                         Inventions
Retained.  I represent that all matters which I have created or otherwise
developed prior to my Relationship with the Company or my signing this
Agreement, which I wish to exclude from my obligations to the Company under this
agreement, are listed below.  If no items are listed below, I represent that
there are no such matters to be excluded.

 

(b)                                                         Assignment of
Creations.  I hereby agree to hold in trust for the sole right and benefit of
the Company and assign to the Company all my right, title and interest in and to
any and all Creations created or otherwise developed, alone or in conjunction
with others.  I further agree to assign to any third party, including the United
States government, all my right, title and interest in and to any and all
Creations whenever such assignment is requested by a contract between the
Company and such third party.

 

(c)                                                          Maintenance of
Records.  I agree to keep and maintain adequate and current written records of
all Creations made by me, in the form of notes, sketches, drawings and other
notations which may be specified by the Company, which records shall be
available to and remain the sole property of the Company at all times.

 

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(d)                                                         Disclosure of
Creations and Filings.  I agree to promptly disclose to the Company in writing
all Creations created or otherwise developed by me alone or in conjunction with
others, as well as any and all patent applications or copyright registrations
filed by me during and within one (1) year after termination of my Relationship
with the Company.

 

(e)                                                          Assistance.  During
and after the period of my Relationship with the Company, I agree that I will
give the Company all assistance it reasonably requires (at the Company’s
expense) to file for, maintain, protect and enforce the Company’s patents,
copyrights, trademarks, trade secrets and other rights in Creations, in any and
all countries.  To that end I will sign documents and do other acts which the
Company may determine necessary or desirable including, without limitation,
giving evidence and testimony in support of the Company’s rights hereunder.

 

(f)                                                           Intellectual
Property Rights in Works of Authorship.  I acknowledge and agree that any
intellectual property rights in Creations which are works of authorship belong
to the Company and are “works made for hire” within the definition of
section 101 of the United States Copyright Acts of 1976, Title 17, United States
Code.  The Company or any of its direct or indirect licensees shall not be
obligated to designate me as author of any design, software, firmware, related
documentation, or any other work of authorship when distributed publicly or
otherwise, nor to make any distribution.

 

3.                                      CONFIDENTIAL INFORMATION

 

(a)                                                         Ownership of
Confidential Information.  All Confidential Information which I create or
otherwise develop or which comes into my possession or that previously came into
my possession shall be and remain the exclusive property of the Company.

 

(b)                                                         No Disclosure of
Confidential Information.  Unless authorized in writing by the Company, I will
maintain all Confidential Information in confidence and, except as necessary in
conjunction with my work for the Company, will not copy or make notes of,
divulge to anyone outside the Company or use any of the Confidential Information
for my own or another’s benefit, either during or after the term of my
Relationship with the Company.  I agree that I will promptly disclose to the
Company all Confidential Information developed by me.  I will abide by any
policies and procedures adopted from time to time by the Company to facilitate
such disclosures.

 

(c)                                                          Returning the
Company Documents and Tangible Property.  Upon request of the Company and, in
any event, upon termination of my Relationship with the Company, I will promptly
surrender and deliver to the Company (and will not keep in my possession or
deliver to anyone else) and agree not to use any Confidential Information,
records, data, notes, reports, proposals, lists, correspondence, computer code,
specifications, drawings, blueprints, sketches, flow diagrams, materials, 
equipment, devices or any other documents or property (including photocopies or
other reproductions of any of the aforesaid items) of the Company.

 

(d)                                                         Confidential
Information of Third Parties.  During my Relationship with the Company I may
receive, under non-disclosure agreements agreed to by authorized representatives
of the Company, information claimed by third parties to be their confidential
information.  I agree that I will respect such agreements and will not disclose
such information to any person or organization, except as is necessary in
carrying out my work for the Company consistent with the Company’s agreement
with such third parties.  At the request of the Company and, in any event, upon
the termination of my Relationship with the Company, I will promptly surrender
to the Company any such information.

 

4.                                      NON-USE OF PROPERTY OF THIRD PARTIES.
 During my Relationship with the Company, I will not improperly use or disclose
any confidential or proprietary information or property of any third party
(including any former employer).

 

5.                                      NO PRIOR RESTRICTIONS.  I hereby
represent and warrant that I am free to enter into or continue my Relationship
with the Company and that there are no contracts or restrictive covenants
preventing full performance of my duties.

 

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6.                                      LIMITATIONS ON COMPETITIVE ACTIVITIES
DURING RELATIONSHIP.  During my Relationship with the Company, I will not, alone
or with others, directly or indirectly, work on, plan, prepare for, organize or
engage in any consulting, employment or other business activity (whether or not
for compensation) that is competitive with the business in which the Company is
involved or may hereafter become involved, nor will I engage in any other
activity that conflicts with my obligations to the Company.  Prior to working
on, planning, preparing for, organizing or engaging in any consulting,
employment or other business activity outside my Relationship with the
Company, I will consult my manager or supervisor to ensure that no conflict of
interest with the Company exists.

 

7.                                      PUBLISHING.  Unless approved by the
Company in writing, I will not publish anything in the Company’s business areas
of interest during my Relationship with the Company.

 

8.                                      NO GUARANTEE OF EMPLOYMENT.  I expressly
acknowledge and agree that this is not an agreement by the Company to employ me,
or otherwise engage my services, for any period, and unless otherwise expressly
agreed in writing between me and the Company, my Relationship with the Company
may be terminated at any time, with or without cause by either me or the
Company.  All of the terms of this Agreement shall survive any termination of my
Relationship with the Company.

 

9.                                      NO EXPECTATION OF PRIVACY.  The Company
retains the right, with or without cause or notice to me, to access or monitor
all Computer Information, including but not limited to my e-mail and voice
mail.  I agree that I have no reasonable expectation of privacy in the Computer
Information and expressly waive any right of privacy or similar right in the
Computer Information.  I agree that Computer Information is the sole and
exclusive property of the Company.  Any of my files, e-mail or other Computer
Information stored on the Company’s computer and/or communications systems shall
become the property of the Company.  I agree that I shall not install or use
encryption software on any of the Company’s computers without first obtaining
written permission from my manager or supervisor.  I agree that I shall not use
passwords or encryption keys that are unknown to my manager or supervisor.

 

10.                               MISCELLANEOUS

 

(a)                                                         Severability. If any
provision of this Agreement or portion thereof is determined by a court of
competent jurisdiction to be wholly or partially unenforceable for any reason,
such provision or portion thereof shall be considered separate from the
remainder of this Agreement, which shall remain in full force and effect.

 

(b)                                                         Waiver.  The
Company’s waiver or failure to enforce any violation or provision of this
Agreement shall not constitute a waiver of its rights hereunder with respect to
any other or continuing violation or provision of this Agreement, and shall be
effective only if in writing, signed by the Company, and then only in the
specific instance and for the specific purpose given.

 

(c)                                                          Governing Law. This
agreement shall be governed by and construed and enforced in accordance with the
laws of the State of Arizona.  I agree that suit to enforce any provision of
this Agreement or to obtain any remedy with respect hereto may be brought in
Superior Court, Maricopa County, Arizona, and for this purpose I hereby
expressly and irrevocably consent to the jurisdiction of this court.

 

(d)                                                         Successors.  This
Agreement shall be for the benefit of and be binding upon:  i) my executors,
heirs, legatees and personal representatives, and ii) the successors and assigns
of the Company.

 

(e)                                                          Entirety of
Agreement.  This Agreement supersedes all prior agreements concerning Creations,
Computer Information, Confidential Information, and the other matters referred
to herein between me and the Company.  No amendment or modification of this
Agreement shall be deemed effective unless made in writing signed by me and the
Company.

 

 

 

 

/s/ Terry McDaniel

 

INVENTURE FOODS, INC.

Terry E. McDaniel

 

/s/ Bryce Edmonson

 

 

Bryce Edmonson

 

 

Chairman, Compensation Committee

 

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