Sample Business Contracts


Retention Agreement - Poore Brothers Inc. and EVEREN Securities Inc.

Services Forms


                                                                 August 18, 1998

Poore Brothers, Inc.
3500 South La Cometa
Goodyear, AZ 85338

Attention:        Eric Kufel
                  President and Chief Executive Officer

Dear Eric:

         We are  pleased  to set  forth  the  terms of the  retention  of EVEREN
Securities,  Inc.  ("EVEREN") by Poore  Brothers,  Inc.  (collectively  with its
affiliates,  the  "Acquiror") to assist the Acquiror as its exclusive  financial
advisor and exclusive agent in connection with the Acquiror's efforts to acquire
certain  business  entities  ("Acquisition  Candidates").  This  Agreement  will
confirm  EVEREN's  engagement  by  the  Acquiror  on  the  following  terms  and
conditions:

         l.  Description  of  Engagement.  EVEREN will advise the  Acquiror on a
variety of subjects  relating to Acquisition  Candidates and any Transaction (as
defined below), including, but not limited to:

         (a)      the market value of the  Acquisition  Candidates,  taking into
                  account competitive factors;

         (b)      the pricing of acquisition proposals;

         (c)      the  form  and  terms  of  consideration  to  be  utilized  in
                  acquisition proposals; and

         (d)      strategies to be utilized in approaches and negotiations;

EVEREN will use its best  efforts to  identify  Acquisition  Candidates  meeting
Acquirors  criteria,  and assist the Acquiror in providing advisory support from
the  negotiation  process  through  closing and, if  requested,  will assist the
Acquiror in obtaining any financing it may need to  consummate  the  Transaction
("the Financing").

         2.  Definition  of  Transaction.  As used in this  Agreement,  the term
"Transaction"   shall  mean  an  acquisition   (a)  by  merger,   consolidation,
reorganization,  recapitalization,  business  combination  or other  transaction
pursuant to which an  Acquisition  Candidate is acquired by or combined with the
Acquiror, or (b) the acquisition, directly or indirectly, by the Acquiror (or by
one or more persons  acting  together  with the  Acquiror  pursuant to a written
agreement or otherwise) in a single  Transaction or a series of  Transactions of
(i) any  subsidiary,  business  segment or operation  divisions or assets of the
Acquisition  Candidate  or  (ii)  25% or  more  of the  Acquisition  Candidate's
outstanding  stock  (whether  by way of tender or  exchange  offer,  open market
purchases, negotiated purchases or otherwise).

         3.  Information.   In  connection  with  EVEREN's   activities  on  the
Acquiror's  behalf,  the Acquiror  will  cooperate  with EVEREN and will furnish
EVEREN with all reasonable  information  and data  concerning the Acquiror,  any
Transaction  and, to the extent  available  to the  Acquiror,  each  Acquisition
Candidate (the  "Information")  which EVEREN deems  appropriate and will provide
EVEREN with access to the Acquiror's officers, directors, employees, independent
accountants and legal counsel. To the extent that the Acquiror has access to the
officers, directors, employees, independent accountants and legal counsel of any
Acquisition  Candidate,  it will  provide  such access to EVEREN.  The  Acquiror
represents and warrants that all Information (a) made available to EVEREN by the
Acquiror  or (b)  contained  in any  filing  by the  Acquiror  with any court or
governmental  regulatory agency,  commission or instrumentality  with respect to
any Transaction will, at all times during the period of the engagement of EVEREN
hereunder, be complete and correct in all material respects and will not contain
any  untrue  statement  of a  material  fact or omit to  state a  material  fact
necessary in order to make the statements therein not misleading in the light of
the  circumstances  under which such  statements are made. The Acquiror  further
represents and warrants that any projections  provided by it to EVEREN will have
been prepared in good faith and will be based upon  assumptions  which, in light
of the  circumstances  under which they are made, are  reasonable.  The Acquiror
acknowledges and agrees that, in rendering its services  hereunder,  EVEREN will
be using and relying on the Information (and  information  available from public
sources  and other  sources  deemed  reliable  by  EVEREN)  without  independent
verification thereof by EVEREN or independent  appraisal by EVEREN of any of the
Acquiror's  or the  Acquisition  Candidate's  assets.  EVEREN  does  not  assume
responsibility  for the accuracy or completeness of the Information or any other
information   regarding  the  Acquiror,   any   Acquisition   Candidate  or  any
Transaction. Any advice rendered by EVEREN pursuant to this Agreement may not be
disclosed  publicly  without  EVEREN's prior written  consent,  except as may be
required by applicable law.

         4. Compensation. In consideration of EVEREN's services pursuant to this
Agreement,  EVEREN shall be entitled to receive,  and the Acquiror agrees to pay
EVEREN, the following compensation:

         (a)      Upon  execution of this  Agreement,  the Acquiror shall pay to
                  EVEREN an  initial  cash fee of  $25,000,  the amount of which
                  shall  be  credited  to  any  fees  payable  to  EVEREN  under
                  subparagraphs (c) and (d) below.

         (b)      Upon  execution of this  Agreement and for every 90 day period
                  thereafter  until  the  termination  of  this  Agreement,  the
                  Acquiror  shall pay EVEREN,  a cash fee of $5,000 on the first
                  of such 90-day period,  the aggregate amount of which shall be
                  credited to any fees payable to EVEREN under subparagraphs (c)
                  and (d) below.

         (c)      If a  Transaction  is  consummated  during  the  term  of this
                  Agreement,  then the  Acquiror  shall  pay  EVEREN,  upon such
                  consummation,  cash fee  equal to 2% of the value of the total
                  consideration  paid  by the  Acquiror  in the  Transaction  in
                  respect  of (i)  assets  of the  Acquisition  Candidate,  (ii)
                  capital stock of the Acquisition Candidate (and any securities
                  convertible  into,  or options,  warrants  or other  rights to
                  acquire,   such  capital  stock)  and  (iii)  the  assumption,
                  directly or indirectly (by operation of law or otherwise),  or
                  repayment  of  indebtedness  (including,  without  limitation,
                  indebtedness secured by assets of the Acquisition  Candidate),
                  less amounts paid pursuant to (a) and (b) above.  The value of
                  total  consideration paid will be calculated as the sum of the
                  following values at closing:

                  (i)      Cash  and  cash  equivalents  paid to an  Acquisition
                           Candidate or its shareholders;

                  (ii)     Market  value  of  any  common  stock  issued  to  an
                           Acquisition Candidate or its shareholders;

                  (iii)    The  liquidation  preference of any  preferred  stock
                           issued   to   an   Acquisition   Candidate   or   its
                           shareholders,   unless   market   value   is   easily
                           determinable;

                  (iv)     The face value of any notes issued to an  Acquisition
                           Candidate or its shareholders, unless market value is
                           easily determinable;

                  (v)      Consideration  paid or payable under covenants not to
                           compete,  earn-outs  (determinable upon consummation)
                           and  consulting   arrangements  (such  terms  not  to
                           encompass standard employment agreements).

                  (vi)     The face  value of any debt owed or  preferred  stock
                           issued   by   an   Acquisition   Candidate   or   its
                           shareholders which is assumed and/or forgiven, unless
                           market value is easily determinable; and

                  (vii)    The  difference  between  the  exercise  price of any
                           stock  options and the fair market value per share of
                           common stock even though such differences may be paid
                           to the  option  holder in cash  rather  than  through
                           exercise of the options.

         (d)      Upon the closing of each and any part of a Financing  obtained
                  by EVEREN or negotiation  with the  assistance of EVEREN,  the
                  Acquiror shall pay EVEREN a cash fee equal to:

                  (i)      1.0% of the aggregate  principal amount of any senior
                           debt Financing raised: plus

                  (ii)     3%  of  the   aggregate   principal   amount  of  any
                           subordinated debt Financing raised: plus

                  (iii)    3% of any preferred equity Financing raised: plus

                  (iv)     7% of the  aggregate of any common  equity  Financing
                           raised,

                  less the amounts paid pursuant to (a) and (b) above.

                  Any   financing   involving   a  public   offering  of  senior
                  subordinated  debt to be based  on  terms as may from  time to
                  time be agreed upon by EVEREN and the Acquiror.

         (e)      In no event shall the aggregate fees earned by EVEREN pursuant
                  to this  Agreement  for  Transactions  consummated  during the
                  first two years after the date of this Agreement, be less than
                  $100,000;  provided,  however,  that such minimum required fee
                  amount  shall be  reduced  pro  rata in the  event  that  this
                  Agreement is  terminated  by EVEREN for any reason at any time
                  prior to the expiration of such two-year period.

         (f)      EVEREN shall receive from the Acquiror warrants to purchase up
                  to 2.5% of the fully  diluted  shares  of common  stock of the
                  Acquiror upon execution of this Agreement.  Such warrants will
                  have an  aggregated  exercise  price to be no greater than the
                  fair market value of the  underlying  common stock,  and shall
                  have  such  other  terms   (including,   without   limitation,
                  customary    anti-dilution   and   piggy   back   registration
                  provisions) as shall be mutually  agreed upon in good faith by
                  EVEREN and the Acquiror. The above warrants will have a 5 year
                  term, be issued effective upon execution of this Agreement and
                  vest as follows:  50% when the Acquiror's  annual Sales are at
                  $50,000,000  on a pro forma basis and the  additional 50% when
                  the Acquiror's annual sales are at $100,000,000 on a pro forma
                  basis.

                  For purposes of this  subparagraph  4(f),  "Acquiror's  Sales"
                  shall mean sales of the  businesses  owned by  Acquiror on the
                  date  hereof,  plus  sales  of the  businesses  acquired  in a
                  Transaction   pursuant  to  which   EVEREN  is  eligible   for
                  compensation pursuant to subparagraph 4(c) above,

         (g)      EVEREN  shall  be  entitled  to  the  fees  enumerated  in any
                  preceding subparagraph of this Paragraph 4 with respect to any
                  event  specified  in any such  subparagraph  if both:  (i) the
                  transaction is  consummated  during the term of this Agreement
                  or  within  one year  after  the date of  termination  of this
                  Agreement; and (ii) prior to the termination of this Agreement
                  EVEREN, at the request of the Acquiror, participates and plays
                  a  material  role  in  connection  with  the   identification,
                  analysis, structuring and/or negotiation of such Transaction.

         (h)      If a Transaction is not consummated, but the Acquiror receives
                  a  "break-up"  fee or any  other  payment  as a result  of the
                  termination  or  cancellation  of an  Acquisition  Candidate's
                  efforts to effect a Transaction, a judgment for damages, or an
                  amount in settlement of any dispute  relating to a Transaction
                  or  Alternate  Transaction,  then the  Acquiror  shall  pay to
                  EVEREN a cash fee equal to 25% of such fee, payment,  judgment
                  or amount,  not to exceed the fee EVEREN would  otherwise have
                  received if the Transaction had been consummated.

          (i)     For purposes of this paragraph 4, the term "Acquiror" includes
                  any person  acting  together  with the Acquiror  pursuant to a
                  written agreement or otherwise.

         5. No Assurances.  EVEREN makes no representations,  express or implied
that EVEREN will succeed in its efforts to assist the Acquiror in consummating a
Transaction.

         6. Right of First Refusal.  (a) If the Acquiror  requires  Financing to
consummate the Transaction during the term of this Agreement,  then EVEREN shall
have the right to act as the Acquiror's  sole managing  underwriter or exclusive
agent, as the case may be, in connection with raising such financing, subject to
approval of EVEREN's Capital Commitment Committee and the good faith negotiation
of customary and mutually agreeable terms;  provided that EVEREN's  compensation
in  connection  with such  engagement  shall be as set forth on  Paragraph  4(d)
hereof.

         7.  Expenses.  In addition to the fees  described  above,  the Acquiror
agrees to promptly  reimburse  EVEREN,  upon request from time to time,  for all
reasonable   out-of-pocket   expenses  incurred  by  EVEREN  (including  without
limitation,  fees and  disbursements  of counsel,  and of other  consultants and
advisors retained by EVEREN) in connection with the matters contemplated by this
Agreement.  Such expenses shall not exceed $5,000 in the aggregate without prior
approval of the Acquiror, which approval shall not be unreasonably withheld.

         8.  Indemnification.  The Acquiror hereby agrees to indemnify EVEREN in
accordance   with   the   indemnification   provisions   (the   "Indemnification
Provisions") attached to this Agreement,  which  Indemnification  Provisions are
incorporated herein and made a part hereof.

         9.  Termination;  Survival.  Either  party  hereto may  terminate  this
Agreement  at any time upon written  notice,  without  liability  or  continuing
obligation except as set forth in the following  sentence.  Neither  termination
nor completion of this assignment shall affect:  (i) any compensation  earned by
EVEREN up to the date of termination or completion, or after termination, as the
case may be, pursuant to the paragraph herein entitled "Compensation",  (ii) the
reimbursement  of expenses  incurred by EVEREN up to the date of  termination or
completion,  as the case  may be,  pursuant  to the  paragraph  herein  entitled
"Expenses",   (iii)  the  attached  Indemnification  Provisions,  and  (iv)  the
provisions of the paragraphs herein entitled  "Governing Law;  Jurisdiction" and
"Successors and Assigns" of this Agreement,  all of which shall remain operative
and in full force and effect.

         10. Governing Law;  Jurisdiction.  The validity and  interpretation  of
this agreement shall be governed by the laws of the State of Illinois applicable
to agreements made and to be fully performed therein.  The Acquiror  irrevocably
submits to the  jurisdiction of any court of the State of Illinois or the United
States District Court for the Northern District of the State of Illinois for the
purpose of any suit, action or other proceeding arising out of this Agreement or
any of the agreements or transactions  contemplated  hereby, which is brought by
or against the Acquiror,  and (i) hereby  irrevocably  agrees that all claims in
respect of any such suit,  action or proceeding  may be heard and  determined in
any such  court  and (ii) to the  extent  that the  Acquiror  has  acquired,  or
hereafter may acquire,  any immunity from jurisdiction of any such court or from
any legal process  therein,  the Acquiror  hereby waives,  to the fullest extent
permitted by law, such  immunity.  The Acquiror  hereby waives and agrees not to
assert in any such suit, action or proceeding,  in each case, the fullest extent
permitted by  applicable  law, any right to trial by jury and any claim that (a)
the Acquiror is not personally  subject to the  jurisdiction  of any such court,
(b) the Acquiror is immune from any legal process  (whether  through  service or
notice, attachment prior to judgment, attachment in aid of execution,  execution
or  otherwise)  with  respect to the  Acquiror's  property or (c) any such suit,
action or proceeding is brought in an inconvenient forum.

         11. Assignment.  This agreement shall be binding upon and insure to the
benefit of the parties hereto and their  respective  successors,  but the rights
and  obligations of the parties shall not be assignable by either of the parties
hereto without the prior written consent of the other party.

         12. Advertisement. EVEREN or the Acquiror may publish an advertisement,
at its own expense with prior approval of the other party,  which approval shall
not be unreasonably  withheld, or issue a press release announcing the hiring of
EVEREN or the  completion of a  Transaction  and EVEREN's role therein after the
consummation of such event.

         13. Conflicts.  EVEREN  acknowledges their professional  responsibility
regarding  conflicts of interest and agrees that EVEREN will act  accordingly in
representing other premium food companies.

         14. Counterparts;  Amendments.  For the convenience of the parties, any
number of  counterparts of this Agreement may be executed by the parties hereto.
Each  such  counterpart  shall  be,  and  shall be  deemed  to be,  an  original
instrument,  but all such  counterparts  taken together shall constitute one and
the same  Agreement.  This  Agreement  may not be modified or amended  except in
writing signed by the parties hereto.

         If the foregoing  correctly sets forth our  Agreement,  please sign the
enclosed copy of this letter in the space provided and return it to us.

                                Very truly yours,

                                EVEREN SECURITIES, INC.

                                By: /s/ Larry C. Bain
                                    ------------------------------
                                Lawrence D. Bain
                                Managing Director - Corporate Finance

Accepted and Agreed to this 18th day of August, 1998.

POORE BROTHERS, INC.

By: /s/ Eric J. Kufel
    ------------------------------
Name: Eric J. Kufel
Title: President and Chief Executive Officer


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