Exhibit 10.5


Execution Copy


 


PIERRE FOODS, INC.


EMPLOYMENT AGREEMENT


 


THIS EMPLOYMENT AGREEMENT is
made as of the 28th day of November, 2007 between PIERRE FOODS, INC., a North
Carolina corporation (the “Company”), and ANTHONY SCHRODER (“Employee”),
under the following circumstances:


 


A. 
Employee is an employee of the Company. 
The Company and Employee desire to continue the employment relationship.


 


B.  For
the purposes of setting forth the terms of Employee’s employment and to express
the agreement of the parties with respect to the other matters for which
provision is made in this agreement, the Company and Employee are entering into
this Agreement.


 


NOW, THEREFORE, in
consideration of the premises and mutual covenants contained herein, the
parties hereby agree as follows:


 


1.  Employment.  The Company hereby employs Employee, and
Employee hereby accepts employment by the Company, on a full-time basis as
Senior Vice President of Sales, with duties and responsibilities consistent with Employee’s position.  Employee shall report to, and shall be subject
to the direction of, the Company’s President and Chief Executive Officer (or
such other executive of the Company as the Board of Directors of the Company
from time to time may designate), and shall have such duties and
responsibilities as may be assigned to him from time to time by such
person.  While employed by the Company
pursuant to this Agreement, Employee shall devote all of his business time and
effort to the performance of his duties hereunder.


 


2.  Term. 
Unless sooner terminated in accordance with the provisions of this
Agreement, Employee’s employment under this Agreement shall commence on the
date hereof and shall continue for a period of three (3) years from such
date (the “Term”).


 


3.  Compensation.


 


(a) 
Base Salary.  Employee
shall receive as compensation for his services under this Agreement an annual
base salary of One Hundred Eighty Thousand Dollars ($180,000) pro-rated for
periods of less than twelve (12) months, as the same may be increased from time
to time by the President and Chief Executive Officer of the Company (or such
other executive of the Company as the Board of Directors of the Company from
time to time may designate).  Such base
salary shall be paid in accordance with the payroll schedule followed by the
Company (less applicable withholding and other deductions).


 

















 


(b) 
Bonus.  In addition to any other
compensation or consideration payable to Employee hereunder, Employee shall be
entitled to participate in the Company’s bonus program, if any, for similarly
situated employees of the Company.


 


4.  Other Benefits.  Employee shall be entitled to receive other
benefits, as follows:


 


(a)  Automobile.  The Company shall provide Employee with an
automobile for his use or, at the option of the President and Chief Executive
Officer of the Company (or such other executive of the Company as the Board of
Directors from time to time may designate), an automobile allowance of $750 per
month.


 


(b)  Benefits.  Employee shall be eligible to participate in
the benefit programs provided by the Company for employees of a similar level
of responsibility as Employee.


 


(c)  Expenses.  The Company shall reimburse Employee for all
reasonable travel expenses and other out-of-pocket expenses incurred by Employee
in performing services requested by the Company in accordance with normal
Company policies.


 


5.  Restricted
Stock.  In connection with the
execution of this Agreement, the Company has agreed to cause Pierre Holding
Corp., an affiliate of the Company (“Holding”) to issue and sell to
Employee, and Employee shall purchase from Holding, 5,000 shares of common
stock of Holding (the “Restricted Stock”), for $0.25 per share.  The issuance of the Restricted Stock is
contingent upon Employee executing and delivering to Holding a Restricted Stock
Agreement in the form approved by the Board of Directors of Holding (the “Restricted
Stock Agreement”).  The Restricted
Stock will be issued under the Pierre Holding Corp. 2008 Restricted Stock Plan
(the “Plan”) and will be subject to all rights, restrictions and
limitations set forth in such Plan and in such Restricted Stock Agreement.  Subject to the limitations set forth in the
Restricted Stock Agreement and the Plan, the Restricted Stock will vest daily
over a 4 year period commencing on the date of the Restricted Stock Agreement.


 


6.  Termination.  Employee’s employment under this Agreement
shall terminate prior to the expiration of the Term in the following manner:


 


(a)  By Death or
Disability.  Immediately upon the death
of Employee during the Term, or, at the option of the Company, in the event of
Employee’s disability, upon thirty (30) days notice to Employee.  Employee will be considered “disabled” if, as
a result of incapacity due to physical or mental illness or injury, Employee is
unable to perform the material duties of his position on a full time basis for
a period of two (2) consecutive months, even after reasonable
accommodations for such disability or incapacity are provided by the Company
or, if providing such accommodations would be unreasonable, as determined by
the President and Chief Executive Officer of the Company (or such other
executive of the Company as the Board of Directors of the Company from time to
time may designate) in his reasonable good faith judgment.  Employee shall cooperate in all respects with
the Company if a question arises as to whether he has become disabled
(including, without limitation, submitting to an examination by a medical
doctor or other 


 


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health care specialist selected by the
Company and authorizing such medical doctor or health care specialist to
discuss Employee’s condition with the Company).


 


(b)  For Cause.  For “Cause” immediately upon written notice
by the Company to Employee.  “Cause”
means, with respect to Employee, one or more of the following:  (A) the commission of a felony or the
commission of any other act or omission involving dishonesty or fraud with
respect to the Company or any of its subsidiaries or any of their customers or
suppliers; (B) reporting to work under the influence of alcohol or illegal
drugs, the use of illegal drugs (whether or not at the workplace) or other
repeated conduct causing the Company or any of its subsidiaries substantial
public disgrace or disrepute or substantial economic harm; (C) substantial
and repeated willful failure to perform duties consistent with this Agreement,
as reasonably directed by the President and Chief Executive Officer (or such
other executive of the Company as the Board of Directors of the Company from
time to time may designate); (D) any act or omission aiding or abetting a
competitor, supplier or customer of the Company or any of its subsidiaries to
the material disadvantage or detriment of the Company or any of its
subsidiaries; or (E) breach of fiduciary duty, gross negligence or willful
misconduct with respect to the Company or any of its subsidiaries.


 


(c)  Without Cause.
At any time, either the Company may, without Cause, or Employee may, terminate
Employee’s employment, effective upon at least fifteen (15) days’ prior written
notice from the Company to Employee or Employee to the Company, as the case may
be.


 


(d)  Resignation for
Good Reason.  By Employee upon thirty
(30) days written notice to the Company of the resignation of Employee for Good
Reason (as hereinafter defined).  For
purposes of this Agreement, “Good Reason” shall mean:


 


(i)            Without his express written consent, a material change in
his reporting responsibilities or title, or any removal of Employee from the
position described in Section 1, except in connection with the termination
of his employment for Cause or as a result of his death or disability or by
Employee other than for Good Reason;


 


(ii)           A material breach of this Agreement by the Company which
is not cured to Employee’s reasonable satisfaction within fifteen (15) days
after written notice thereof to the Company; or


 


(iii)          A relocation of Employee’s primary office from the
Cincinnati, Ohio metropolitan area without the express written consent of
Employee.


 


7.  Occurrences Upon Termination.  Upon termination of Employee’s employment
prior to the expiration of the Term in accordance with Section 6 hereof,
Employee shall be subject to the following:


 


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(a) 
Cessation of Salary and Benefits. 
All obligations of the Company to provide Employee with compensation and
benefits as provided herein shall discontinue at the termination date of
Employee’s employment, except as otherwise required herein or by law.


 


(b) 
Payment of Bonus.  Employee is
eligible to receive bonus payments under the Company’s bonus program in which
he participates, if any, only if Employee is an employee of the Company on the
date that the Company pays bonus payments to all participants of such program.


 


(c) 
Surrender of Company Property. 
Promptly upon termination of Employee’s employment prior to the
expiration of the Term, Employee or Employee’s personal representative shall
return to the Company (i) all Confidential Information (as hereinafter
defined); (ii) all other records, designs, patents, business plans,
financial statements, manuals, memoranda, lists, correspondence, reports,
records, charts, advertising materials, and other data or property delivered to
or compiled by Employee by or on behalf of the Company or any of its
subsidiaries that pertain to the business of the Company and its subsidiaries,
whether in paper, electronic or other form; and (iii) all keys, credit
cards, vehicles, and other property of the Company and its subsidiaries.  Employee shall not retain or cause or allow
to be retained any copies of the foregoing. 
Employee hereby agrees that all of the foregoing are and shall remain
the property of the Company and its subsidiaries and shall be subject at all
times to its discretion and control.


 


(d) 
Benefits.  With respect to any
benefit plans or programs in which Employee is participating at the time of
termination of his employment, Employee’s rights and benefits under each such
plan or program shall be determined in accordance with the terms, conditions,
and limitations of the plan or program and any separate agreement executed by
Employee and the Company which may then be in effect.


 


(e) 
Termination Without Cause; Death/Disability; Resignation for Good Reason; or
Nonrenewal.


 


(i) 
Definitions. 
For purposes of this Section and elsewhere in this
Agreement, the following terms shall have the following meanings:


 


(A)          “Sale of the Company” shall
have the meaning given that term in the Restricted Stock Agreement, except that
for purposes of this Agreement only, the term “Company” as used in such
definition shall be deemed to mean Pierre Foods, Inc., Holding, and PF
Management, Inc. as if each such entity was the “Company” as used in such
definition.


 


(B)           “Independent Third Party”
shall have the meaning given that term in the Restricted Stock Agreement,
except that for purposes of this Agreement only, the term “Company” as used in
such definition shall be deemed to mean Pierre Foods, Inc., Holding, and
PF Management, Inc. as if each such entity was the “Company” as used in
such definition.


 


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(ii)           Termination Prior to a
Sale of the Company.  Provided
that a Sale of the Company shall not have occurred or is pending, during the
Term, if Employee’s employment is terminated by the Company without Cause, if
Employee’s employment is terminated by reason of death or disability, or if
Employee voluntarily terminates his employment with the Company for Good
Reason, the Company shall continue to pay Employee or his estate as special
severance payments hereunder Employee’s then current base salary as provided in
Section 3(a) payable in regular installments over a period of one (1) year
after termination in accordance with the normal payroll practices of the
Company, but if and only if, Employee or, in the event of Employee’s death or
disability, his executor or other personal representative, has executed and
delivered to the Company a general release (“Release”) in form and
substance reasonably satisfactory to the Company, and the Release has become
effective, and only so long as Employee has not revoked or breached the
provisions of the Release or breached the provisions of Section 8, 9 or 10
hereof.  In addition, notwithstanding Section 7(d) hereof,
for the term of the one-year period after such termination, subject to the
limitations described immediately above and subject to Employee’s election of
“COBRA” continuation coverage during such period, the Company shall reimburse
Employee an amount equal to the employer portion of the heath insurance premium
paid by the Company on behalf of Employee immediately prior to termination of
Employee’s employment; provided, however, that any such payments shall cease if
Employee becomes eligible for coverage under another employer’s health
insurance plan.  Employee shall be
responsible for the remainder of the COBRA payments over and above such
reimbursement.


 


(iii)          Termination After a Sale
of the Company.  If a Sale of
the Company shall have occurred or is pending, during the Term, and if
Employee’s employment is terminated by the Company without Cause, if Employee’s
employment is terminated by reason of death or disability, or if Employee
voluntarily terminates his employment with the Company for Good Reason, the
Company shall continue to pay Employee or his estate as special severance
payments hereunder Employee’s then current base salary as provided in Section 3(a) payable
in regular installments over a period (the “Severance Period”) equal to
the greater of (x) two (2) years following the date of such Sale of
the Company, or (y) one (1) year after termination of Employee’s
employment.  Such payments shall be made
in accordance with the normal payroll practices of the Company, but if and only
if, Employee or, in the event of Employee’s death or disability, his executor
or other personal representative, has executed and delivered to the Company a
Release in form and substance reasonably satisfactory to the Company, and the
Release has become effective, and only so long as Employee has not revoked or
breached the provisions of the Release or breached the provisions of Section 8,
9 or 10 hereof.  In addition,
notwithstanding Section 7(d) hereof, during the Severance Period,
subject to the limitations described immediately above and subject to
Employee’s election of “COBRA” continuation coverage during such period, the
Company shall reimburse Employee an amount equal to the employer portion of the
heath insurance premium paid by the Company on behalf of Employee immediately
prior to termination of Employee’s employment; provided, however, that any such
payments shall cease if Employee becomes eligible for coverage under another
employer’s health insurance plan. 
Employee 


 


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shall be responsible for the
remainder of the COBRA payments over and above such reimbursement.


 


8.  Covenant Not to Disclose Confidential
Information.  As a result of
Employee’s employment by the Company, Employee has and will become acquainted
with confidential and proprietary information of the Company and its
subsidiaries, in whatever form, whether oral, written, or electronic including,
but not limited to, manner of operation, manufacturing processes and know-how,
plant design, customer names and representatives, customer files, customer
lists, customer specifications and requirements, product recipes, product
pricing, special customer matters, sales methods and techniques, merchandising
concepts and plans, business plans, sources of supply and vendors, terms and
conditions of business relationships with vendors, agents and brokers,
promotional materials and information, financial matters, mergers,
acquisitions, personnel matters and confidential processes, designs, formulas,
ideas, plans, devices and materials and other similar matters that are kept
confidential by the Company (any and all such information being referred to
herein as “Confidential Information”). 
The parties agree that the use of Confidential Information by Employee
other than in furtherance of the business of the Company and its subsidiaries
will seriously damage the business of the Company and its subsidiaries.  Accordingly, Employee agrees that he
(individually or in concert with others) during or after the Term:


 


(a)  Shall not,
directly or indirectly, use any Confidential Information for any purpose other
than to benefit the Company and its subsidiaries, except with the prior written
consent of the Company or as required by law;


 


(b)  Shall not, directly
or indirectly, divulge, publish or otherwise reveal or allow to be revealed any
Confidential Information to any individual or entity except with the prior
written consent of the Company or as required by law;


 


(c)  Shall refrain from
any action or conduct that might reasonably or foreseeably be expected to
compromise the confidentiality or proprietary nature of any Confidential
Information; and


 


(d)  Shall have no
rights to apply for, or to obtain any patent, copyright or other form of
intellectual property protection regarding, any Confidential Information.


 


This restriction shall not
apply to any Confidential Information that (i) becomes known generally to
the public through no fault of Employee; (ii) is required by applicable
law, legal process, or any order or mandate of a court or other governmental
authority to be disclosed; or (iii) is reasonably believed by Employee,
based upon the advice of legal counsel, to be required to be disclosed in
defense of a lawsuit or other legal or administrative action brought against
Employee; provided, that in the case of clauses (ii) and (iii), Employee
shall give the Company reasonable advance written notice of the Confidential
Information intended to be disclosed and the reasons and circumstances
surrounding such disclosure, in order to permit the Company to seek a
protective order or other appropriate confidential treatment of the applicable
Confidential Information.


 


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9.  Inventions.


 


(a)  Employee shall disclose promptly to the Company all
significant conceptions and ideas for inventions, improvements, and valuable
discoveries, whether patentable or not, that are conceived or made by Employee,
solely or jointly with another, during the period of employment or within one (1) year
thereafter, and that are directly related to the business or activities of the
Company or any of its subsidiaries and that Employee conceives as a result of
his employment by the Company or its subsidiaries, regardless of whether or not
such ideas, inventions, or improvements qualify as “works for hire.”  Employee hereby assigns and agrees to assign
all his interests therein to the Company or its nominee.  Whenever requested to do so by the Company,
Employee shall execute any and all applications, assignments, or other
instruments that the Company shall deem necessary to apply for and obtain
patent registrations in the United States or any foreign country or to
otherwise protect the Company’s and its subsidiaries’ interest therein.


 


(b)  Executive is
hereby advised that this Section 9 regarding the Company’s and its
subsidiaries’ ownership of inventions does not apply to any invention for which
no equipment, supplies, facilities or trade secret information of the Company
or any of its subsidiaries was used and which was developed entirely on
Employee’s own time, unless (i) the invention relates to the business of
the Company or any subsidiary of the Company or to the Company’s or any of its
subsidiary’s actual or demonstrably anticipated research or development, or (ii) the
invention results from any work performed by Employee for the Company or any
subsidiary of the Company.


 


10.  Covenant
Not to Compete.


 


(a)  During the Term
and for a period of one (1) year thereafter, Employee shall not and shall
not permit any of affiliates to, directly or indirectly (whether as a
principal, proprietor, consultant, partner, lender, licensor, or holder of debt
or equity securities or otherwise), engage, assist, or have any interest in any
person, firm, corporation or other business entity (other than a publicly-held
corporation of which they collectively hold less than 1% of the voting power)
which is engaged in a business that competes with the business of the Company
or any of its subsidiaries within a 200 mile radius of the Company’s principal
office.


 


(b)  During the Term
and for a period of one (1) year thereafter, Employee shall not, nor shall
he permit any of his affiliates to, directly or indirectly, solicit, induce or
influence any employee of the Company or any of its subsidiaries to leave the
employment of the Company or such subsidiary.


 


(c)  Employee agrees
that the restrictions set forth herein are fair and reasonably required for the
protection of the Company and its subsidiaries and are legally binding and
enforceable and the enforcement thereof will not impair Employee’s ability to
earn a livelihood.  It is the intention
of the parties that the provisions of this Section 10 shall be enforced to
the fullest extent permissible under the laws and public policies applied in
each jurisdiction in which enforcement is sought.  Accordingly, to the extent that the 


 


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restrictions on competition hereunder are
adjudicated to be invalid or unenforceable in any jurisdiction, the court
making such determination shall have the power to limit, construe or reduce the
duration, scope, activity and/or area of such provisions to the extent
necessary to render such provisions enforceable to the maximum extent permitted
by applicable law, such limited form to apply only with respect to the
enforceability of this Section in the particular jurisdiction in which
such adjudication is made.


 


11.  Remedies.  Any failure by Employee to comply with the
terms of Section 8, 9 or 10 may cause irreparable damages to the Company
or its subsidiaries.  Accordingly, in the
event of a breach of any provision of Section 8, 9 or 10, the Company
shall have the immediate right to secure an order enjoining such breach,
without posting bond, in addition to any of the other remedies which may be
available at law or in equity.


 


12.  Notices.  Any notice under this Agreement shall be
deemed sufficiently given if in writing and either personally delivered or sent
by registered, certified, or first class mail, postage prepaid, addressed to
the party at the address set forth below, or at such other address as the party
subsequently may designate by notice given in accordance with this
Section.  Notices and communications to
the Company shall be directed to the principal executive office of the Company
(attention: President and Chief Executive Officer) or to such other address as
the Company may direct.  Notices and
communications to Employee shall be directed to the address or facsimile number
of Employee appearing on the employment records of the Company.


 


13.  Amendment; Waiver.  No modification, amendment or waiver of any
provision of this Agreement shall be valid and binding unless it is in writing
and signed by both of the parties hereto. 
A waiver of any provision of this Agreement shall be effective only in
the specific instance and for the particular purpose for which it was
given.  No failure to exercise, and no
delay in exercising, any right or power under this Agreement shall operate as a
waiver of such right or power.


 


14.  Assignment.  Employee may not assign his rights or
delegate his duties or obligations hereunder without the prior written consent
of the Company.  Any assignment in
violation of this provision shall be void.


 


15.  Confidentiality; Covenant Not to Disparage.  Each party covenants and agrees with the
other not to disclose the existence of the terms of this Agreement to any
person at any time for any purpose, except that (a) either party may make
such disclosures confidentially to such 
party’s lawyers and accountants in connection with the rendition of
their professional services or as otherwise required by law; and (b) the
Company may make such disclosures as it deems to be required by applicable
securities laws.  Each party covenants
and agrees with the other not to disparage the reputation of the other.


 


16.  Withholding.  All payments made under this Agreement shall
be reduced by (a) the amount of any income, unemployment, withholding,
social security or other taxes which the Company may be required to deduct by
applicable law, and (b) any amounts authorized by Employee to be withheld.


 


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17.  Entire Agreement.  This Agreement contains the entire agreement
between the parties with respect to Employee’s employment by the Company and
supersedes all prior agreements and understandings, oral or written, with
respect to such employment.


 


18.  Governing Law.  This Agreement shall be construed and
enforced in accordance with the laws of the State of Ohio, as applicable to
agreements executed and entirely performed in such state.


 


IN WITNESS WHEREOF, the
parties have duly executed this Agreement as of the date and year first above
written.


 


	
   

  	
  PIERRE FOODS, INC.

  
	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By

  	
  /s/ Norbert E. Woodhams

  
	
   

  	
   

  	
  Name:

  	
  Norbert E. Woodhams

  
	
   

  	
   

  	
  Title:

  	
  President and Chief Executive Officer

  
	
   

  	
   

  	
   

  
	
   

  	
  “Employee

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  /s/ Anthony Schroder

  
	
   

  	
  ANTHONY SCHRODER

  



 


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