Document:

Exhibit 10.4

 

PROMISSORY
NOTE

(Facility
2 - Term  Loan)

 

	
  $756,602.56

  	
  August 19, 2005

  	
  Phoenix, Arizona

  

 

1.             Borrower’s
Promise To Pay.

 

FOR VALUE RECEIVED, POORE BROTHERS, INC., a Delaware
corporation (the “Borrower”), promises to pay to the order of U.S. BANK NATIONAL ASSOCIATION, a national banking association (the “Bank”), at 101 N. First Avenue, Suite 1600, Phoenix,
Arizona  85003, Attention: 
Commercial Banking, or at such other place as the holder of this
Note may from time to time designate, the principal sum of Seven Hundred Fifty
Six Thousand Six Hundred and Two and 56/100 Dollars ($756,602.56) (“Loan Amount”), or such lesser amount as
may be advanced and outstanding under this promissory note (the “Note”), plus
interest as specified in this Note.  Bank
shall not be required to make any advance if that would cause the outstanding
principal of this Note to exceed the Loan Amount.  This Note evidences a term
loan (“Loan”) made by Bank to Borrower
pursuant to the terms of a loan agreement (the “Loan Agreement”) between Bank
and Borrower of even date herewith.  During the availability period described in the
Loan Agreement, Borrower may repay principal amounts and reborrow them upon the
terms and conditions set forth in the Loan Agreement.

 

This
Note is secured by a certain Security Agreement (Blanket - All Business Assets) being executed by Borrower in favor
of Bank dated of even date herewith (the “Security Agreement”) and may be
secured by other collateral.  This Note and the Loan Agreement,
together with all other documents which evidence, guaranty, secure, or
otherwise pertain to the Loan collectively constitute the “Loan Documents.”  Some or
all of the Loan Documents, including the Loan Agreement, contain provisions for
the acceleration of the maturity of this Note. 
This Note is subject to the terms and conditions of the Loan
Agreement.  Capitalized terms used but
not defined herein shall have the meanings set forth in the Loan Agreement.

 

2.             Maturity
Date.  All principal and all accrued and unpaid interest and other sums due
hereunder shall be due and payable on July 1, 2006 (the “Maturity Date”).

 

3.             Interest
Rate and Payment Terms.

 

3.1          Interest
Rate.  The unpaid principal
balance will bear interest at an annual rate equal to the prime rate announced by
Bank.  The interest rate hereunder will
be adjusted each time that the prime rate changes.

 

3.2          Payment
of Principal Plus Interest. 
Borrower shall make monthly payments of principal plus interest
on the first day of each month beginning on September 1, 2005.  The
principal portion of each monthly installment is Sixty Eight
Thousand Seven Hundred Eighty Two and 05/100 Dollars ($68,782.05)

 

3.3          Principal
Prepayments.  Borrower may prepay
some or all of the principal under this Note, from time to time, without
payment of any prepayment premium or fee.

 

4.             General
Interest and Payment Terms.

 

4.1          Note Rate.  The interest rate in effect from time to time
under this note is herein referred to as the “Note Rate.”

 

1

 

4.2          Effective Contracted Rate.  Borrower
agrees to pay an effective contracted for rate of interest equal to the rate of
interest resulting from all interest payable as provided in this Note plus
the additional rate of interest resulting from (a) any loan fee(s) or other
similar fees described or defined in the Loan Documents, and (b) all Other
Sums.  For purposes hereof, the “Other
Sums” shall mean all fees, charges, goods, things in action, or any other sums
or things of value (other than interest payable as provided in this Note and
any loan fee) paid or payable by Borrower, whether pursuant to this Note, any
of the other Loan Documents, or any other document or instrument in any way
pertaining to this lending transaction, that may be deemed to be interest for
the purpose of any law of the State of Arizona, or any other applicable
law, that may limit the maximum amount of
interest to be charged with respect to this lending transaction.  The Other Sums shall be deemed to be interest
and part of the “contracted for rate of interest” for the purposes of any such
law only.

 

4.3          Usury Savings Clause.  It is expressly stipulated and agreed to be
the intent of Borrower and Bank at all times to comply with applicable state
law or applicable United States federal law (to the extent that it permits Bank
to contract for, charge, take, reserve, or receive greater amount of interest
than under state law) and that this Section shall control every other covenant
and agreement in this Note and the other Loan Documents.  If applicable state or federal law should at
any time be judicially interpreted so as to render usurious any amount charged,
taken, reserved, or received with respect to the Loan, or if Bank’s exercise of
the option to accelerate the Maturity Date, or if any prepayment by Borrower,
results in Borrower having paid any interest in excess of that permitted by
applicable law, then it is Bank’s express intent that all such excess amounts
theretofore collected by Bank shall be credited to the principal balance of
this Note and all other indebtedness, and that the provisions of this Note and
the other Loan Documents shall immediately be deemed reformed and the amounts
thereafter collectible hereunder and thereunder reduced, without the necessity
of the execution of any new documents, so as to comply with the applicable law,
but so as to permit the recovery of the fullest amount otherwise called for
hereunder or thereunder.  All sums paid
or agreed to be paid to Bank for the use, forbearance, or detention of the Loan
shall, to the extent not prohibited by applicable law, be amortized, prorated,
allocated, and spread throughout the full stated term of the Loan until payment
in full so that the rate or amount of interest on account of the Loan does not
exceed the maximum lawful rate from time to time in effect and applicable to
the Loan for so long as the Loan is outstanding.

 

4.4          Calculation of Interest.  Interest will be computed for the actual days
elapsed on the basis of a three hundred sixty (360) day year, which results in
more interest than if a three hundred sixty-five (365) day year method were
used.

 

4.5          Payments.  Except as otherwise provided herein, all amounts payable under this Note are payable in
lawful money of the United States during normal business hours on a Banking
Day.  For purposes hereof, “Banking Day”
means a day, other than a Saturday or Sunday, on which Bank is open for
business for all banking functions in Phoenix,
Arizona.  Checks and drafts constitute
payment only when collected.  All payments
made under this Note shall be made without offset, demand, counter-claim,
deduction or recoupment (each of which is hereby waived), and acceptance by
Bank of any payment in an amount less than the amount then due shall be deemed
an acceptance on account only, notwithstanding any notation on or accompanying
such partial payment to the contrary, and shall not constitute a waiver by Bank
of any Event of Default.  Except as
otherwise set forth herein or in any other Loan Document, payments shall be
applied in such order and manner as Bank may determine in its sole and absolute
discretion.

 

5.             Late
Payments; Default Rate

 

5.1          Late
Charge for Overdue Payments. If Bank has not received the full amount
of any payment scheduled to be made under
this Note, other than the final principal payment, by the end of ten
(10) calendar days after the date it is due, Borrower shall pay a late charge
to Bank in the amount of five percent (5%) of the overdue payment; provided,
however, in no event shall any late charge be payable hereunder without
Bank first having provided Borrower with any notice required by applicable
law.  Borrower shall pay this late charge
only once on any late payment.  This late
charge shall not be construed as in any way extending the due date of any payment,
and is in addition to, and not in lieu of, any other remedy Bank may have.

 

2

 

5.2          Default
Rate. Upon the occurrence of any
Event of Default (subject to any applicable notice and cure periods),
the unpaid balance of the Loan shall bear interest at the rate which is five
percent (5%) above the then applicable Note Rate as it may thereafter change
pursuant to the terms of this Note (the “Default Rate”).  Additionally, from and after the Maturity
Date, or such earlier date as all sums owing on this Note become due and
payable by acceleration or otherwise, the Loan shall bear interest at the
Default Rate.  Accrued interest, at the
Note Rate, if not paid when due, shall accrue interest at the Default Rate, as hereinabove
provided, which may result in compounding of interest.  Except as
otherwise set forth herein or in any other Loan Document, payments under
this Note or under any other Loan Document that are due on demand, shall bear
interest at the Default Rate (i) from the date costs or expenses are incurred
by Bank that give rise to the demand or (ii) if there is no such date, then
from the date of demand, until Borrower pays the full amount of such payment,
including interest.

 

6.             Events
of Default.  If any of the
following “Events of Default” occur, any obligation of the holder to make
advances under this Note terminates and, at the holder’s option, exercisable in
its sole and absolute discretion, all sums of principal and interest under this
note immediately become due and payable without notice of default, presentment,
demand for payment, protest, or notice of nonpayment or dishonor, or other
notices or demands of any kind or character:

 

6.1          Borrower
fails to perform any obligation under this Note to pay principal or interest
when due; or

 

6.2          Borrower
fails to perform any other obligation under this Note to pay money when due; or

 

6.3          Under
any of the Loan Documents, a default or Event of Default occurs, except as
provided in Section 7 below.

 

7.             Insolvency.  It is an “Event of Default” under this Note
if Borrower becomes the subject of any bankruptcy or other voluntary or
involuntary proceeding, in or out of court, for the adjustment of
debtor-creditor relationships (“Insolvency Proceeding”), and as to any involuntary
Insolvency Proceeding, it either: (i) is consented to or (ii) has not been
dismissed within ninety (90) days.  Upon
such an Event of Default, all sums of principal and interest under this Note
automatically become immediately due and payable without notice of default,
presentment or demand for payment, protest or notice of nonpayment or dishonor,
or other notices or demands of any kind or character.  If Borrower becomes the subject of any
Insolvency Proceeding, any obligation of the holder to make advances under this
Note shall automatically terminate, and in the case of an involuntary
Insolvency Proceeding which is dismissed within ninety (90) days, the holder’s
obligation to make advances under this Note shall resume upon the dismissal
thereof.

 

8.             Waiver
of Jury Trial.  TO THE EXTENT NOT
PROHIBITED BY APPLICABLE LAW, BORROWER WAIVES TRIAL BY JURY IN ANY ACTION OR
PROCEEDING TO WHICH BORROWER AND BANK MAY BE PARTIES, ARISING OUT OF, IN
CONNECTION WITH OR IN ANY WAY PERTAINING TO, THIS NOTE, THE LOAN AGREEMENT, OR
ANY OF THE OTHER LOAN DOCUMENTS.  IT IS
AGREED AND UNDERSTOOD THAT THIS WAIVER CONSTITUTES A WAIVER OF TRIAL BY JURY OF
ALL CLAIMS AGAINST ALL PARTIES TO SUCH ACTION OR PROCEEDINGS, INCLUDING CLAIMS
AGAINST PARTIES WHO ARE NOT PARTIES TO THIS NOTE.  THIS WAIVER IS KNOWINGLY, WILLINGLY AND
VOLUNTARILY MADE BY BORROWER, AND BORROWER HEREBY REPRESENTS THAT NO
REPRESENTATIONS OF FACT OR OPINION HAVE BEEN MADE BY ANY INDIVIDUAL TO INDUCE
THIS WAIVER OF TRIAL BY JURY OR TO IN ANY WAY MODIFY OR NULLIFY ITS
EFFECT.  BORROWER FURTHER REPRESENTS AND
WARRANTS THAT IT HAS BEEN REPRESENTED IN THE SIGNING OF THIS NOTE AND IN THE
MAKING OF THIS WAIVER BY INDEPENDENT LEGAL COUNSEL, OR HAS HAD THE OPPORTUNITY
TO BE REPRESENTED BY INDEPENDENT LEGAL COUNSEL SELECTED OF ITS OWN FREE WILL,
AND THAT IT HAS HAD THE OPPORTUNITY TO DISCUSS THIS WAIVER WITH COUNSEL.

 

3

 

9.             Miscellaneous.

 

9.1          Waivers.  Borrower hereby waives presentment, demand,
notice of dishonor, notice of default or delinquency, notice of acceleration,
notice of nonpayment, notice of costs, expenses, or losses and interest
thereon; and notice of interest on interest and late charges.

 

9.2          Delay
In Enforcement.  If Bank delays
in exercising or fails to exercise any of its rights under this Note, that
delay or failure does not constitute a waiver of any of Bank’s rights, or of
any breach, default or failure of condition of or under this Note.  No waiver by Bank of any of its rights, or of
any breach, default or failure of condition is effective, unless the waiver is
expressly stated in writing by Bank.

 

9.3          Joint
and Several Liability.  If more
than one person or entity is signing this Note as Borrower, their obligations
under this Note shall be joint and several.  
As to any Borrower that is a partnership, the obligations of Borrower
under this Note are the joint and several obligations of each general partner
thereof.  Any married person signing this
Note agrees that recourse may be had against community property assets and
against his or her separate property for the satisfaction of all obligations
contained herein.

 

9.4          Heirs,
Successors, and Assigns; Participations.  This Note inures to and binds the heirs,
legal representatives, successors and assigns of Borrower and Bank; provided,
however, Borrower may not assign this Note or any Loan funds, or assign
or delegate any of its rights or obligations, without the prior written consent
of Bank in each instance, which consent is at the sole and absolute discretion
of Bank.  Bank, in its sole and absolute
discretion, may transfer this Note, and may sell or assign participations or
other interests in all or part of the Loan, on the terms and subject to the
conditions of the Loan Documents, all without notice to or the consent of
Borrower.  Without notice to or the
consent of Borrower, Bank may disclose to any actual or prospective purchaser
of any securities issued or to be issued by Bank or its affiliates, and to any
actual or prospective purchaser or assignee of any participation or other
interest in this Note, the Loan, or any other loans made by Bank to Borrower
(whether evidenced by this Note or otherwise), any financial or other
information, data or material in Bank’s possession relating to Borrower, or the
Loan.  If Bank so requests, Borrower
shall sign and deliver a new note, in the form and substance of this Note, to
be issued in exchange for this Note.

 

9.5          Cumulative
Remedies.  All of Bank’s remedies
in connection with this Note or under applicable law are cumulative, and Bank’s
exercise of any one or more of those remedies shall not constitute an election
of remedies.

 

9.6          Governing
Law.  This Note shall be governed
by, and construed in accordance with, the laws of the State of Arizona, without
regard to the choice of law rules of that State, except to the extent that any
of such laws may now or hereafter be preempted by Federal law.  Borrower consents to the jurisdiction of any
Federal or State court within the State of Arizona, submits to venue in such
state, and also consents to service of process by any means authorized by
Federal law or the law of such state.  Without limiting the generality of the foregoing,
Borrower hereby waives and agrees
not to assert by way of motion, defense, or otherwise in such suit, action, or
proceeding, any claim that (i) Borrower is not subject to the jurisdiction of the courts of the
above-referenced state or the United States District Court for such state, or
(ii) such suit, action, or proceeding is brought in an inconvenient forum, or
(iii) the venue of such suit, action, or proceeding is improper.

 

9.7          Attorney’s
Fees and Costs.  In any lawsuit
or arbitration arising out of or relating to this Note, the Loan Documents or
the Loan, the prevailing party will be entitled to recover from each other
party such sums as the court or arbitrator adjudges to be reasonable attorneys’
fees in the action or arbitration, in addition to costs and expenses otherwise
allowed by law.  In all other actions or
proceedings, including any matter arising out of or relating to any Insolvency
Proceeding, Borrower agrees to pay all of Bank’s costs and expenses, including
reasonable attorneys’ fees, incurred in enforcing or protecting Bank’s rights
or interests.  From the time(s) incurred
until paid in full to Bank, all such sums shall bear interest at the Default
Rate.  Whenever
Borrower is obligated to pay or reimburse Bank for any attorneys’ fees, those
fees shall include the allocated costs for services of in-house counsel.

 

4

 

9.8          Holder’s
Rights.  Borrower agrees that the holder of this Note may accept additional or
substitute security for this Note, or release any security or any party liable
for this Note, or extend or renew this Note, all without notice to Borrower and
without affecting the liability of Borrower.

 

9.9          Interpretation.  As used
in this Note, the terms “Bank,” “holder” and “holder of this Note” are
interchangeable.  As used in this Note,
the word “include(s)” means “include(s), without limitation,” and the word “including”
means “including, but not limited to.”

 

9.10        Time
of the Essence.  Time is of the essence with regard to all payment
obligations under this Note.

 

9.11        Amendments.  This Note may not be modified or amended except
by a written agreement signed by the parties.

 

9.12        Counterparts.  This Note may be executed in counterparts,
and all counterparts constitute but one and the same document.

 

IN WITNESS WHEREOF,
Borrower has duly executed and delivered this Note to Bank as of the date first
above written.

 

	
  BORROWER:

  	
   

  
	
   

  	
   

  
	
  POORE
  BROTHERS, INC.,

  	
  Address
  for notices to Borrower:

  

  Poore Brothers, Inc.,

  3500 S La Cometa Drive

  Goodyear, Arizona  85338

  Attention:  Rick Finkbeiner

  

  Tax I.D. # 86-0786101

  
	
  a Delaware corporation

  
	
   

  
	
  By:

  	
  /s/ Rick Finkbeiner

  	
   

  
	
   

  	
  Rick Finkbeiner, Senior
  Vice President,

  Chief Financial Officer, Secretary, and

  Treasurer

  
				

 

5Exhibit
10.5

 

EXECUTIVE
EMPLOYMENT AGREEMENT

 

THIS EXECUTIVE EMPLOYMENT
AGREEMENT (the “Agreement”) is made and entered into as of Executive’s date of
hire, August 1, 2005 (the “Effective Date”), by and between Poore Brothers, Inc., a Delaware corporation, (the “Company”),
and Steven Sklar, (the “Executive”).

 

WITNESSETH:

 

WHEREAS, Executive is not
currently employed with the Company and the Company desires to attract and
retain the services of Executive, and Executive desires to become 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
Senior Vice President, Marketing 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 or the President 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.                              Annual
Review and Base Salary.  The
Executive will receive annual performance and merit reviews effective at the
beginning of March each year.  As
compensation

 

 

for all services to be rendered by Executive under this Agreement, the
Company shall pay to Executive an annual salary of $200,000.00 (the “Base Salary”). 
The Base Salary shall be subject to
review and 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.

 

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

 

4.2.2                        Executive
is eligible for a hiring bonus of $20,000.00, subject to the appropriate
withholding taxes, payable on the Effective Date if the Executive (i) submits
his resignation letter in writing to his current employer not later than June
24, 2005, and (ii) commences his employment with the Company not later than
August 1, 2005.

 

4.3.                              Restricted
Stock Award.  Within thirty (30) days after the Effective Date, the Company and
Executive will enter into a Restricted Stock Award Agreement (the “Award
Agreement”), in the form attached hereto as Exhibit A, pursuant to which
the Company shall grant to Executive, under the Company’s 2005 Equity Incentive
Plan, rights to purchase $175,000 in market value of shares of the Company’s
Common Stock, on the terms and conditions set forth in the Award Agreement and
the 2005 Equity Incentive Plan.  The
Board of Directors (or its Compensation Committee) in their sole discretion annually
evaluates Executives and other Associates for eligibility to receive additional
equity incentive grants.

 

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, during the Term of this Agreement, Executive shall be eligible to
participate in all non-qualified deferred compensation and similar
compensation, bonus and stock plans offered, sponsored or established by
Company on a commensurate basis as any other Executive 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.                              Other Benefits.  During the Term of this
Agreement, the Company shall furnish to Executive the following benefits:

 

2

 

4.6.1.                     Automobile Allowance.  The Company
shall pay Executive $650.00 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.

 

4.6.2.                     Cellular Telephone.  The Company shall furnish to Executive a
mobile or cellular telephone for Executive’s use and shall pay all charges in
connection therewith (except Executive shall reimburse the Company for the
charges each month that are in excess of $200 of charges in such month that are
not accounted for by Executive as charges for the purposes of the
Company).  The telephone to be furnished
to Executive shall be agreed upon by the Company and Executive from time to
time.

 

5.                                       Relocation.  Poore Brothers will provide you with a
one-time non-accountable pre-tax lump sum relocation allowance of $75,000.  Taxes will be withheld from this payment
exclusive of 6.2% FICA taxes.  In
addition, the Company will pay directly or you will be reimbursed for
reasonable moving expenses (acceptable documentation required) related to your
physical move from the Boston area not to exceed $19,000.

 

Poore Brothers requires
Associates who receive relocation assistance to remain voluntarily employed by
the Company for a period of one year from the date of the relocation
payment.  Should you voluntarily leave
the Company for any reason during your first year of employment or if you
family fails to move permanently to the Phoenix area within one hundred and
twenty (120) days of your start date, you will be required to immediately repay
the Company for the full amount of the relocation assistance provided to you.

 

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
that Executive

 

3

 

shall have in the reasonable judgment of the Board (i) committed a
criminal act or a single act of fraud, embezzlement, breach of trust, or an act
of gross misconduct, or (ii) violated any material written Company policy or rules
of the Company, unless cured by Executive within 30 days following written
notice thereof to Executive, or (iii) Executive’s 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, or (iv) refused
to follow the reasonable written directions given by the Board or its designee
or breached any covenant or obligation under this Agreement or other agreement
with the Company, unless cured by Executive within 30 days following written
notice thereof to Executive.

 

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, 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
electronic 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.

 

4

 

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) his then
current monthly Base Salary and Executive’s Monthly Car Allowance for the nine
(9) month period following the date of termination, paid on the Company’s regular
paydays throughout that 9-month period; (b) for Executive’s benefit, up to
$10,000.00 for outplacement services for Executive with an outplacement firm
selected by Executive; (c) within thirty (30) days after termination of
Executive’s employment, any amounts payable under any bonus plans for which
Executive is eligible to participate as of the date of the termination of his
employment, after pro rating all targets, quotas, and bonus payments as of the
termination date, regardless when such bonus may be due under the bonus
plan.  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 $10,000.00 for outplacement services for Executive with an
outplacement firm selected by Executive.

 

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 the sum
of (a) 200% of Executive’s then current annual Base Salary; (b) Executive’s
Monthly Car Allowance for twelve (12) months; and (c) any amounts payable under
any bonus plans for which Executive is eligible to participate as of the date
of the Change of Control, after pro rating all targets, quotas, and bonus
payments as of the date of the Change in Control, regardless when such bonus
may be due under the bonus plan.  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.

 

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

 

5

 

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, 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 (v) any material breach by the Company of its
material obligations under this Agreement within twelve (12) months following a
Change in Control.

 

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, Executive must first 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.

 

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,

 

6

 

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, other salted snack foods, and other food products; (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 food products in any of the food categories in which the Company
operates upon Executive’s termination of employment with the Company.  The Company is in the business of developing,
manufacturing, and selling these products in the Business Territory.

 

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 after the termination of Executive’s employment with the
Company.

 

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 are 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 in the prior
twelve (12) months by the Company from such area or State at the time of determination.

 

7

 

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.

 

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,

 

8

 

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 Stock 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

 

9

 

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.

 

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.                        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.

 

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.

 

10

 

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”:

  	
  Poore Brothers, Inc.

  
	
   

  	
   

  
	
   

  	
  /s/ Rick Finkbeiner

  	
   

  
	
   

  	
  By: Rick Finkbeiner

  
	
   

  	
  Title: SVP and CFO

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  “Executive”:

  	
  /s/ Steven Sklar

  	
   

  
	
   

  	
  Steven
  Sklar

  

 

11

 

Exhibit A

 

OFFICER
AWARD

AGREEMENT

 

12

 

POORE BROTHERS, INC.

RESTRICTED STOCK AGREEMENT

 

Poore Brothers, Inc. (the “Company”) hereby grants
you,                                                   
(“Employee”), a grant of restricted stock. The date of this Agreement is                       ,
2005. Subject to the provisions set forth in this Agreement and the provisions
of the Company’s 2005 Equity Incentive Plan, a copy of which is attached hereto
as Exhibit A (the “Plan”), the principal features of this grant are as follows:

 

	
  NUMBER OF SHARES
  OF RESTRICTED STOCK:

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  PURCHASE PRICE PER SHARE:

  	
   

  	
  $

  	
  0.01

  	
   

  
					

 

	
  SCHEDULED VESTING DATES

  	
   

  	
  NUMBER OF SHARES

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
                       ,
  2006

  	
   

  	
   

  	
   

  
	
                       ,
  2007

  	
   

  	
   

  	
   

  
	
                       ,
  2008

  	
   

  	
   

  	
   

  

 

Employee
understands that under Section 83 of the Internal Revenue Code of 1986, as
amended (the “Code”), as the Shares vest, the fair value of such Shares will be
reportable as ordinary income at that time. 
Employee further understands that instead of being taxed when and as the
Shares vest, Employee may elect to be taxed as of the purchase date of the
Shares with respect to the fair value of all Shares on such date less the
purchase price paid for the Shares.  Such
election may only be made under Section 83(b) of the Code with the I.R.S.
within thirty (30) days after the Grant Date. 
The form for making this election may be provided by the Company for
Employee’s convenience only.  Employee
understands that failure to make this filing within the thirty (30) day period
will result in the recognition of ordinary income as the Shares vest.  EMPLOYEE ACKNOWLEDGES THAT IT IS EMPLOYEE’S SOLE
RESPONSIBILITY, AND NOT THE COMPANY’S, TO FILE A TIMELY ELECTION UNDER SECTION
83(b), EVEN IF EMPLOYEE REQUESTS THE COMPANY OR ITS REPRESENTATIVES TO MAKE
THIS FILING ON EMPLOYEE’S BEHALF. 
EMPLOYEE IS RELYING SOLELY ON EMPLOYEE’S ADVISORS WITH RESPECT TO THE
DECISION AS TO WHETHER OR NOT TO FILE AN 83(b) ELECTION.

 

Your
signature below indicates your agreement and understanding that this grant is
subject to all of the terms and conditions contained in this Agreement and the
Plan attached hereto as Exhibit A, including without limitation provisions
relating to vesting and forfeiture of shares covered by this grant.  PLEASE BE SURE TO READ THIS AGREEMENT AND THE
PLAN IN THEIR ENTIRETY.

 

	POORE BROTHERS, INC.
	EMPLOYEE

	 
	 

	By:
	 
	 
	 
	 

	Print Name:
	 
	 
	Print Name:
	 
	 

	Print Title:
	 
	 
	Date:
	 
	 

	Date:
	 
	 
	 

										

 
13

 

TERMS AND CONDITIONS

 

1.                                       Incorporation of the Plan.  The
Plan attached hereto is incorporated by reference into this Agreement, and any
capitalized term not defined in this Agreement shall have the meaning ascribed
to such term under the Plan.  To the
extent that any provisions of this Agreement violates or is inconsistent with
the Plan, the Plan shall govern and any inconsistent provision in this
Agreement shall be of no force or effect.

 

2.                                       Grant.  The Company hereby grants to
the Employee the right to purchase               
shares (the “Shares”) of the Company’s Common Stock, $0.01 par value per share
(the “Common Stock”) at a purchase price of $0.01 per Share, subject to all of
the terms and conditions in this Agreement. The Employee has until                   ,
2005 to make such purchase after which date he will have no further right to
purchase the Shares under this Agreement.

 

3.                                       Shares Held in Escrow. Unless and until the Shares have vested in
the manner set forth in paragraphs 4 or 5, such Shares will be issued in the
name of the Employee and held by the Secretary of the Company as escrow agent
(the “Escrow Agent”), and cannot be sold, transferred or otherwise disposed of,
nor pledged or otherwise hypothecated. The Company may instruct the transfer
agent for its Common Stock to place a legend on the certificates representing
the Shares or otherwise note its records as to the restrictions on transfer set
forth in this Agreement. The certificate or certificates representing such
Shares will not be delivered by the Escrow Agent to the Employee unless and
until the Shares have vested and all other terms and conditions in this
Agreement have been satisfied.

 

4.                                       Vesting Schedule. Except as provided in Section 5, and
subject to Section 6,                 
Shares subject to this grant will vest on                             ,
2006,                 
Shares subject to this grant will vest on                             ,
2007 and                 
Shares subject to this grant will vest on                             ,
2008; provided, however, that vesting will occur only if the Company employs
the Employee through the applicable vesting date.

 

5.                                       Board Discretion. The Board, in its discretion, may
accelerate the vesting of the balance, or some lesser portion of the balance,
of the unvested Shares at any time. If so accelerated, such Shares will be
considered as having vested as of the date specified by the Board.

 

6.                                       Forfeiture.  Notwithstanding any contrary
provision of this Agreement, the balance of the Shares that have not vested
pursuant to paragraphs 4 or 5 will thereupon be 
forfeited and automatically transferred to and reacquired by the Company
at no cost to the Company upon the date the Employee’s employment with the
Company terminates for any reason. The Employee will not be entitled to a
refund of the price paid for any Shares returned to the Company pursuant to
this paragraph 6. The Employee hereby appoints the Escrow Agent with full power
of substitution, as the Employee’s true and lawful attorney-in-fact with
irrevocable power and authority in the name and on behalf of the Employee to
take any action and execute all documents and instruments, including, without
limitation, stock powers which may be necessary to transfer the certificate or
certificates evidencing such unvested Shares to the Company upon such
termination.

 

7.                                       Death of Employee. Any distribution or delivery to be made to
the Employee under this Agreement will, if the Employee is then deceased, be
made to the Employee’s designated beneficiary, or if no beneficiary survives
the Employee, to the administrator or executor of the Employee’s estate. Any
such transferee must furnish the Company with (a) written notice of his or her
status as transferee, and (b) evidence satisfactory to the Company to establish
the validity of the transfer and compliance with any laws or regulations
pertaining to said transfer.

 

14

 

8.                                       Withholding.  Notwithstanding any contrary
provision of this Agreement, no certificate representing the Shares may be
released from the escrow established pursuant to paragraph 3 unless and until
satisfactory arrangements (as determined by the Board) will have been made by
the Employee with respect to the payment of income and employment taxes which
the Company determines must be withheld with respect to such Shares.

 

9.                                       Rights as Shareholder.  Employee shall have all rights of a
shareholder prior to the vesting of the Shares, including the right to vote the
Shares and receive all dividends and other distributions paid or made with
respect thereto.

 

10.                                 No Effect on Employment.  Only
the terms of any written employment agreement between the Company and Employee’s
(and not this Agreement) shall govern the terms of Employee’s employment, and
nothing in this Agreement shall constitute any assurance of employment of
Employee by the Company for any period, including any period necessary for the
Shares to vest.  The Company or the
Affiliate will have the right, which is hereby expressly reserved, to terminate
or change the terms of the employment of the Employee at any time for any
reason whatsoever, with or without good cause, subject to the terms of any such
written employment agreement..

 

11.                                 Entire Agreement; Amendment.  This Agreement
embodies the entire understanding and agreement of the parties in relation to
the subject matter hereof, and no promise, condition, representation or
warranty, expressed or implied, not herein stated, shall bind either party
hereto.  This Agreement may be amended
only by a writing executed by the Company and Employee that specifically states
that it is amending this Agreement.  Notwithstanding the foregoing, this
Agreement may be amended solely by the Board by a writing which specifically
states that it is amending this Agreement, so long as a copy of such amendment
is delivered to Employee, and provided that no such amendment adversely affects
the rights of Employee hereunder without Employee’s written consent. 
Without limiting the foregoing, the Board reserves the right to change, by
written notice to Employee, the provisions of the Shares or this Agreement in
any way it may deem necessary or advisable to carry out the purpose of the
grant as a result of any change in applicable laws or regulations or any future
law, regulation, ruling or judicial decisions, provided that any such change
shall be applicable only to the Shares which are than subject to restrictions
as provided herein.

 

12.                                 Severability.  If all or any part of this Agreement
is declared by any court or government authority to be unlawful or invalid,
such unlawfulness or invalidity shall not invalidate any portion of this
Agreement not declared to be unlawful or invalid.  Any Section of this
Agreement so declared to be unlawful or invalid shall, if possible, be
construed in a manner that will give effect to the terms of such Section to the
fullest extent possible while remaining lawful and valid.

 

13.                                 Binding Effect and Benefit.  This Agreement shall be binding upon
and, subject to the conditions hereof, inure to the benefit of the Company, its
successors and assigns, and Employee and Employee’s successors and assigns.

 

14.                                 Governing Law.  This Agreement shall be governed by,
and construed in accordance with, the laws of the State of Arizona without
regard to principles of conflicts of law.

 

15

 

Form of 83(b) Election

 

Election to Include Value of Restricted Property in Gross Income

in Year of Transfer under Code § 83(b)

 

The
undersigned hereby makes an election pursuant to § 83(b) of the Internal
Revenue Code (the “Code”) with respect to the property described below and
supplies the following information in accordance with the regulations
promulgated thereunder:

 

1.                                      The name, address and taxpayer
identification number of the undersigned are:

 

Social Security No.                                   

 

2.                                      Description of property with
respect to which the election is being made:

 

                            
(                )
restricted shares of                           
Stock (the “Property”), $          
par value, of Poore Brothers, Inc. (the “Company”).

 

3.                                      The date on which property was
transferred is                                     .

 

The
taxable year to which this election relates is calendar year 20    .

 

4.                                      The nature of the restriction(s)
to which the property is subject is:

 

The
Property is subject to certain restrictions set forth in that certain
Restricted Stock Award Agreement dated as of                     .

 

5.                                      Fair market value:

 

The
fair market value at time of transfer (determined without regard to any
restrictions other than restrictions which by their terms will never lapse) of
the property with respect to which this election is being made is $                
($             per
share).

 

6.                                      Amount paid for property:

 

Taxpayer
paid a total of $                  
($0.01 per share) for the Property.

 

7.                                      Furnishing statement to employer:

 

A
copy of this statement has been furnished to the Company.

 

	
  DATED:

  	
   

  	
   

  	
  Signature:

  	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  Print Name:

  

 

16

 

Exhibit B

 

Poore Brothers, 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 Poore Brothers, 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.

 

17

 

 

 

 

(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.

 

(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

 

18

 

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.

 

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 myself 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.

 

19

 

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

 

	
   

  	
  Employee or Independent
  Contractor:

  
	
   

  	
   

  
	
   

  	
  /s/ Steven Sklar

  	
   

  
	
   

  	
  Signature

  	
   

  
	
   

  	
  Steven Sklar

  	
   

  
	
   

  	
  Print Name

  	
   

  
	
   

  	
  8/1/05

  	
   

  
	
   

  	
  Date

  	
   

  
	
   

  	
   

  
	
  Accepted and agreed:

  	
   

  
	
   

  	
   

  
	
  Poore Brothers, Inc.

  	
   

  
	
   

  	
   

  
	
  By:

  	
  /s/ Rick Finkbeiner

  	
   

  	
   

  
	
  Name: Rick Finkbeiner

  	
   

  
	
  Its: SVP and CFO

  	
   

  
					

 

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