Document:

Exhibit 10.1

 

PIERRE FOODS, INC.

EMPLOYMENT
AGREEMENT

 

THIS
EMPLOYMENT AGREEMENT is made as of the 18th day of February, 2008 between
PIERRE FOODS, INC., a North Carolina corporation (the “Company”), and
CYNTHIA S. HUGHES (“Employee”), under the following circumstances:

 

A.  The Company desires to hire
Employee and Employee desires to enter into an employment relationship with the
Company.

 

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
Chief Financial Officer, 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 her from time to time by such person.  While employed by the Company pursuant to
this Agreement, Employee shall devote all of her business time and effort to
the performance of her duties hereunder.

 

2.  Term. 
The term of Employee’s employment under this Agreement shall commence on
February 18, 2008, and unless sooner terminated in accordance with the
provisions of this Agreement, Employee’s employment under this Agreement shall
continue for a period of four (4) years from such date (the “Term”).

 

3.  Compensation.

 

(a)  Base
Salary.  Employee
shall receive as compensation for her services under this Agreement an annual
base salary of Two Hundred Ten Thousand Dollars ($210,000) 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 receive a one-time
bonus of $15,000 to be paid on 

 

 

February 29, 2008, and thereafter shall be entitled to participate
in the Company’s bonus program, if any, for similarly situated employees of the
Company.

 

(c)  Vacation. 
Employee shall be entitled to receive four (4) weeks of paid
vacation for each calendar year during the Term.  Employee shall not be entitled to any
compensation for unused vacation time.

 

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

 

(a)  Automobile.  The
Company shall provide Employee with an automobile for her 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 her 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 or her reasonable good faith judgment.  Employee shall 

 

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cooperate in
all respects with the Company if a question arises as to whether she has become
disabled (including, without limitation, submitting to an examination by a
medical doctor or other 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 her express
written consent, a material change in her reporting responsibilities or title,
or any removal of Employee from the position described in Section 1,
except in connection with the termination of her employment for Cause or as a
result of her 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.

 

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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:

 

(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 she 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 her 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.

 

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(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.

 

(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 her employment with the Company for Good Reason, the Company shall
continue to pay Employee or her 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, her 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 her
employment with the Company for Good Reason, the Company shall continue to pay
Employee or her 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, her 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” 

 

5

 

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.

 

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 she (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 

 

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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.

 

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
her 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 her 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 her 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 she permit any of her 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.

 

7

 

(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 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 her rights or
delegate her 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.

 

8

 

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.

 

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/ Cynthia S. Huges

  
	
   

  	
  CYNTHIA S.
  HUGHES

  

 

9Exhibit 10.2

 

PIERRE
HOLDING CORP.

9990
Princeton Road

Cincinnati,
Ohio 45246

 

RESTRICTED STOCK
AGREEMENT

 

February 18, 2008

 

Ms. Cynthia
S. Hughes

8111
Kemper Road

Cincinnati,
Ohio  45249

 

Re:                               Purchase
of Restricted Stock in Pierre Holding Corp. (the “Company”)

 

Dear
Cindy:

 

In connection with your employment as Chief Financial Officer of Pierre
Foods, Inc., the Board of Directors has agreed to issue to you 5,000
shares of Common Stock of the Company at a purchase price of $.25 per share,
under the Pierre Holding Corp. 2008 Restricted Stock Plan (the “Plan”),
and in accordance with the terms of this Agreement (the “Restricted Shares”).

 

1.                                       Definitions.  For the purposes of this Agreement, the
following terms shall have the meanings set forth below:

 

“Affiliate” of any particular Person shall mean any other Person
controlling, controlled by or under common control with such particular Person,
where “control” means the possession, directly or indirectly, of the power to
direct the management and policies of a Person, whether through the ownership
of voting securities, by contract or otherwise.

 

“Available Shares” shall have the meaning set forth in paragraph
5(a)(ii).

 

“Available Shares Repurchase Notice” shall have the meaning set
forth in paragraph 5(a)(ii).

 

“Board” shall mean the Board of Directors of the Company.

 

“Code” shall mean the Internal Revenue Code of 1986, as amended,
and any successor statute.

 

“Committee” shall mean the Compensation Committee of the Board,
or if no such committee is in existence, the Board itself.

 

“Common Stock” shall mean the Company’s Common Stock, par value
$0.01 per share, or, in the event that the outstanding Common Stock is
hereafter changed into or exchanged for different stock or securities of the
Company, such other stock or securities.

 

 

“Company” shall mean Pierre Holding Corp., a Delaware
corporation.

 

“Fair Market Value” of the Common Stock shall be determined in
good faith by the Committee taking into account all relevant factors
determinative of value (including the lack of liquidity of such Common Stock
due to the Company’s status as a privately held corporation, but without regard
to any discounts for minority interests).

 

“Independent Third Party” shall mean any Person who, immediately
prior to the contemplated transaction, does not own in excess of 5% of the
Common Stock on a fully-diluted basis (a “5% Owner”), who is not
controlling, controlled by or under common control with any such 5% Owner and
who is not the spouse or descendant (by birth or adoption) of any such 5% Owner
or a trust for the benefit of such 5% Owner and/or such other Persons.

 

“MDCP” shall mean Madison Dearborn Capital Partners IV, L.P. and
its Affiliates.

 

“Original Cost” shall have the meaning set forth in paragraph
2(a).

 

“Person” shall mean a natural person, partnership (whether
general or limited), limited liability company, trust, estate, association,
corporation, custodian, nominee or any other individual or entity in its own or
any representative capacity.

 

“Pierre Foods, Inc.” shall mean Pierre Foods, Inc., a
North Carolina corporation and Subsidiary of the Company.

 

“Public Sale” shall mean any sale of Common Stock to the public
pursuant to an offering registered under the Securities Act or to the public
through a broker, dealer or market maker pursuant to the provisions of Rule 144
adopted under the Securities Act.

 

“Registration Agreement” shall mean that certain Registration
Agreement dated as of June 30, 2004 between the Company and certain
Investors (as defined therein).

 

“Restricted Shares” shall mean the 5,000 shares of Common Stock
purchased by you in accordance with paragraph 2(a) of this Agreement and
any Common Stock issued to you by way of stock dividend or stock split or in
connection with any conversion, merger, consolidation or recapitalization or
other reorganization affecting the Restricted Shares.  Restricted Shares shall continue to be
Restricted Shares in the hands of any holder other than you (except for the
Company or MDCP and, to the extent that you are permitted to transfer
Restricted Shares pursuant to the Stockholders Agreement, purchasers pursuant
to a public offering under the Securities Act), and each such transferee
thereof shall succeed to the rights and obligations of a holder of Restricted
Shares hereunder.

 

“Sale of the Company” shall mean the sale of the Company to an
Independent Third Party or group of Independent Third Parties pursuant to which
such party or parties acquire (i) capital stock of the Company possessing
the voting power under normal circumstances (without regard to the occurrence
of any contingency) to elect a majority of the Company’s board of directors
(whether by merger, consolidation or sale or transfer of the Company’s capital
stock) or (ii) all or substantially all of the Company’s assets determined
on a consolidated basis.

 

 

“Stockholders Agreement” shall mean that certain Stockholders
Agreement dated June 30, 2004 between the Company and certain of its
stockholders.

 

“Securities Act” shall mean the Securities Act of 1933, as amended,
and any successor statute.

 

“Subsidiary” shall mean, with respect to any Person, any
corporation, limited liability company, partnership, association or other
business entity of which (i) if a corporation, a majority of the total
voting power of shares of stock entitled (without regard to the occurrence of
any contingency) to vote in the election of directors, managers or trustees
thereof is at the time owned or controlled, directly or indirectly, by that
Person, one or more Subsidiaries of that Person or a combination thereof, or (ii) if
a limited liability company, partnership, association or other business entity,
a majority of the partnership or other similar ownership interest thereof is at
the time owned or controlled, directly or indirectly, by any Person, one or
more Subsidiaries of that person or a combination thereof.  For purposes hereof, a Person or Persons
shall be deemed to have a majority ownership interest in a limited liability
company, partnership, association or other business entity if such Person or
Persons shall be allocated a majority of limited liability company,
partnership, association or other business entity gains or losses or shall be
or shall control the managing general partner of such limited liability
company, partnership, association or other business entity.

 

“Supplemental Repurchase Notice” shall have the meaning set
forth in paragraph 5(a)(ii).

 

“Termination” shall have the meaning set forth in paragraph
5(a).

 

“Termination Date” shall have the meaning set forth in paragraph
5(a).

 

“Unvested Shares” shall have the meaning set forth in paragraph
5(a).

 

“Unvested Share Repurchase Option” shall have the meaning set
forth in paragraph 5(a).

 

“Vested Shares” shall have the meaning set forth in paragraph
5(a).

 

“Vested Share Repurchase Option” shall have the meaning set
forth in paragraph 5(a).

 

2.                                       Purchase
of Restricted Shares.

 

(a)                                  Upon
execution of this Agreement, you shall purchase 5,000 Restricted Shares from
the Company for $.25 per Share (the “Original Cost”), which shares shall
be subject to the vesting and forfeiture provisions set forth in this
Agreement.  The Original Cost shall be
paid by you by check payable to the Company. 
As soon as practicable after the execution of this Agreement, the
Company shall direct that a stock certificate representing the Restricted
Shares be registered in your name and issued to you.  Such certificate shall be held in the custody
of the Company or its designee until such Restricted Shares are no longer
considered restricted and are released to you in accordance with paragraph
2(c).

 

 

(b)                                 By
executing this Agreement, you hereby irrevocably appoint the President, each
Vice President, and the Secretary of the Company, and each of them, as your
true and lawful attorney-in-fact, with power (i) to sign in your name and
on your behalf stock certificates and stock powers covering the Restricted
Shares and such other documents and instruments as the Committee deems
necessary or desirable to carry out the terms of this Agreement, and (ii) to
take such other action as the Committee deems necessary or desirable to
effectuate the terms of this Agreement. 
This power, being couple with an interest, is irrevocable.  You agree to execute such stock powers and
documents as may be reasonably requested from time to time by the Committee to
effectuate the terms of this Agreement.

 

(c)                                  As
soon as practicable following the vesting of all Restricted Shares in
accordance with this Agreement, and upon satisfaction of all other applicable
conditions with respect to the Restricted Shares, the Company shall deliver or
cause to be delivered to you a certificate or certificates for the Restricted
Shares.  Upon your written request to the
Company prior to the vesting of all Restricted Shares, the Company shall
deliver or cause to be delivered to you a certificate or certificates
representing the number of vested Restricted Shares, if any, as of the date of
such request.

 

(d)                                 Within
30 days following the date hereof, you shall make an effective election with
the Internal Revenue Service under Section 83(b) of the Internal
Revenue Code and the regulations promulgated thereunder in the form of Annex A
attached hereto.

 

(e)                                  All
of your vested Restricted Shares shall be subject to, and shall be “Stockholder
Shares” under the Stockholders Agreement and “Registrable Securities” under the
Registration Agreement, and shall be subject to restrictions on transfer and
the other provisions of such agreements; provided, however, that the repurchase
rights of the Company and MDCP in paragraph 5 hereof shall not be considered a “Transfer”
for purposes of Section 3 of the Stockholders Agreement.  As a condition to the Company’s issuance of
the Restricted Shares to you in accordance with paragraph 2, you agree to
execute a joinder to each of the Stockholders Agreement and the Registration
Agreement to evidence your becoming a party to such Agreements with respect to
the Restricted Shares.

 

3.                                       Vesting.  Your Restricted Shares shall vest as follows:
Between the date of this Agreement and February 18, 2012, provided you are
continuously employed by the Company, Pierre Foods, Inc. or its
Subsidiaries from the date of this Agreement through the date of determination,
your Restricted Shares will vest on a daily pro rata basis such that, on the
date of determination, the amount of your Restricted Shares which shall have
vested as of that date shall be equal to (rounded to the nearest whole share)
the product of (A) 5,000 multiplied by (B) a fraction, the
numerator of which shall be the number of calendar days from the date of this
Agreement through the date of determination, inclusive, and the denominator of
which shall be 1,460.  Notwithstanding
the foregoing, if you have been continuously employed by the Company, Pierre
Foods, Inc. or its Subsidiaries from the date of this Agreement until a
Sale of the Company or until your Restricted Shares are transferred in a Public
Sale, the portion of your Restricted Shares which has not become vested at the
date of such event and which is transferred in such event shall vest
immediately prior to the consummation of the Sale of the Company or a Public
Sale, as applicable.

 

4.                                       Restrictions.  You shall have all rights and privileges of a
shareholder of the Company with respect to the Restricted Shares, including the
right to vote and receive dividends 

 

 

or other distributions
with respect to the Restricted Shares, except that the following restrictions
shall apply:

 

(i)                                     You
shall not be entitled to delivery of the certificate or certificates for the
Restricted Shares until such Restricted Shares have vested and upon
satisfaction of all other applicable conditions;

 

(ii)                                  Restricted
Shares may not be sold, transferred or assigned or subject to any encumbrance,
pledge or charge or disposed of for any reason until such Restricted Shares
have vested;

 

(iii)                               All
vested and unvested Restricted Shares shall be subject to repurchase by the
Company and/or MDCP in accordance with paragraph 5; and

 

(iv)                              Any
attempt to dispose of any Restricted Shares or any interest in such shares in a
manner contrary to this Agreement shall be void and of no effect.

 

5.                                       Repurchase
of Restricted Shares.

 

(a)                                  Repurchase
of Restricted Shares.  If your
employment by the Company, Pierre Foods, Inc. or its Subsidiaries shall
cease for any reason whatsoever, including but not limited to, upon your death,
disability, resignation or termination with or without cause (such cessation of
service a “Termination” and the date on which such cessation occurs
being referred to as the “Termination Date”), the Company and/or MDCP
shall have the option to repurchase your unvested Restricted Shares (the “Unvested
Shares”) and vested Restricted Shares (the “Vested Shares”), in
accordance with this paragraph 5(a), at the price determined in accordance with
the provisions of paragraph 5(c) (the option to purchase Unvested Shares
is referred to herein as the “Unvested Share Repurchase Option” and the
option to purchase Vested Shares is referred to herein as the “Vested Share
Repurchase Option”).

 

(i)                                     The
Company may elect to purchase all or any portion of your Restricted Shares by
delivery of a Repurchase Notice to you (and with respect to Vested Shares, any
other holder(s) of Vested Shares) within 30 days after the date that is
six months after the applicable Termination Date.  The Repurchase Notice shall set forth the
number of Vested Shares and/or Unvested Shares to be acquired from you and such
other holder(s), the aggregate consideration to be paid for such shares and the
time and place for the closing of the transaction.  The number of Vested Shares to be repurchased
by the Company shall first be satisfied, to the extent possible, from the
Vested Shares held by you at the time of delivery of the Repurchase Notice.  If the number of Vested Shares then held by
you is less than the total number of Vested Shares the Company has elected to
purchase, then the Company shall purchase the remaining shares elected to be
purchased from the other holders thereof, pro rata according to the number of
shares held by each such holder at the time of delivery of such Repurchase
Notice (determined as close as practical to the nearest whole share).

 

(ii)                                  If
for any reason the Company does not elect to purchase all of your Restricted
Shares pursuant to the Vested Repurchase Option and/or the Unvested Repurchase
Option, then MDCP shall be entitled to exercise the Company’s Vested Repurchase
Option and/or Unvested Repurchase Option in the manner set forth in this 

 

 

paragraph 5(a)(ii) for all or any portion of the
number of Restricted Shares the Company has not elected to purchase (the “Available
Shares”).  As soon as practicable
after the Company has determined that there shall be Available Shares, but in
any event within 30 days after the applicable expiration date in accordance
with paragraph 5(a)(i), the Company shall deliver written notice (the “Available
Share Repurchase Notice”) to MDCP setting forth the number of Available
Shares and the price for each Available Share. 
MDCP may elect to purchase any number of Available Shares by delivering
written notice to the Company within 45 days after receipt of the Available
Share Repurchase Notice from the Company. 
As soon as practicable, and in any event within 15 days after the
expiration of such 45-day period, the Company shall notify you (and any other
holder(s) of Vested Shares) as to the number of Restricted Shares being
purchased from you (and such other holder(s) of Vested Shares) by MDCP
(the “Supplemental Repurchase Notice”). 
At the time the Company delivers the Supplemental Repurchase Notice to
you (and such other holder(s) of Vested Shares), MDCP shall also receive
written notice from the Company setting forth the number of shares the Company
is entitled to purchase, the aggregate purchase price and the time and place of
the closing of the transaction.  The
number of Unvested Shares and Vested Shares to be repurchased hereunder shall
be allocated among the Company and MDCP pro rata according to the number of
shares of Restricted Stock to be purchased by each of them.

 

(b)                                 Closing
of Repurchase of Restricted Shares. 
Any repurchase of Restricted Shares pursuant to this paragraph 5 shall
be closed at the Company’s executive offices within 45 days after the delivery
of the applicable Repurchase Notice or Supplemental Repurchase Notice referred
to in paragraphs 5(a)(i) or 5(a)(ii), as applicable.  At the closing, the purchaser or purchasers
shall pay the purchase price in the manner specified in paragraph 5(d) and
you and any other holder of Vested Shares being purchased shall deliver the certificate
or certificates representing such shares to the purchaser or purchasers or
their nominees, accompanied by duly executed stock powers.  Any purchaser of Restricted Shares under this
paragraph 5 shall be entitled to receive customary representations and
warranties from you and any other selling holders of Restricted Shares
regarding the sale of such shares (including representations and warranties
regarding good title to such shares, free and clear of any liens or
encumbrances).

 

(c)                                  Purchase
Price.  The purchase price per share
to be paid for Unvested Shares purchased by the Company and/or MDCP pursuant to
paragraph 5(a) shall be the Original Cost (set forth in paragraph 2(a))
for such Unvested Shares.  The purchase
price per share to be paid for the Vested Shares purchased by the Company
and/or MDCP pursuant to paragraph 5(a) shall be the Fair Market Value of
such Vested Shares as of the time of the exercise of the Vested Share
Repurchase Option.

 

(d)                                 Manner
of Payment.  The Company shall pay
the purchase price for all Unvested Shares repurchased pursuant to the Unvested
Share Repurchase Option by certified check or wire transfer to you.  If the Company elects to purchase all or any
part of the Vested Shares, including Vested Shares held by one or more
transferees, the Company shall pay for such shares: (i) first, by
certified check or wire transfer of funds to the extent such payment would not
cause the Company to violate the General Corporation Law of the State of
Delaware and would not cause the Company or its Subsidiaries to breach any
agreement to which they are a party relating to the indebtedness for borrowed
money or other material agreement; and (ii) thereafter, with a
subordinated promissory note of the Company. 
Such subordinated promissory note shall bear interest at the rate of 5%
per annum (which shall be payable annually in cash unless 

 

 

otherwise prohibited),
shall have all principal payment due on the third anniversary of the date of
issuance and shall be subordinated on terms and conditions satisfactory to the
holders of the Company’s or its Subsidiaries’ indebtedness for borrowed
money.  If MDCP elects to purchase all or
any portion of the Available Shares, MDCP shall pay for that portion of such
Available Shares by certified check or wire transfer of funds.

 

6.                                       Rights
of Participants.  Nothing in this
Agreement shall interfere with or limit in any way the right of the Company,
Pierre Foods, Inc., or its Subsidiaries to terminate your employment at
any time (with or without Cause), nor confer upon you any right to continue in
the employ of the Company, Pierre Foods, Inc., or any of its Subsidiaries
for any period of time or to continue you present (or any other) rate of
compensation, and in the event of the termination of your employment
(including, but not limited to, termination by the Company without Cause), any
Unvested Shares shall expire and be forfeited, except as otherwise provided
herein.  Nothing in this Agreement shall
confer upon you any right to be selected again as a Plan participant, and
nothing the Plan or this Agreement shall provide for any adjustment to the
number of Restricted Shares upon the occurrence of subsequent events except as
specifically provided in the Plan.

 

7.                                       Restrictions
on Transfer.

 

(a)                                  Other
Agreements; Legends.  You agree that
any certificates evidencing the Restricted Shares shall bear the following
legend and such other legend or legends as the Company deems necessary or
desirable in connection with the restrictions on transfer applicable to such Restricted
Shares under the Stockholders Agreement.

 

“THE SECURITIES
REPRESENTED BY THIS CERTIFICATE WERE ORIGINALLY ISSUED AS OF FEBRUARY 18, 2008,
HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “ACT”),
OR UNDER ANY STATE SECURITIES LAWS AND MAY NOT BE SOLD OR TRANSFERRED IN
THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT UNDER THE ACT AND APPLICABLE
STATE SECURITIES LAWS OR AN EXEMPTION FROM REGISTRATION THEREUNDER. THE
SECURITIES REPRESENTED BY THIS CERTIFICATE ARE ALSO SUBJECT TO CERTAIN TERMS
AND CONDITIONS (INCLUDING FORFEITURE) SET FORTH IN THAT CERTAIN RESTRICTED
STOCK AGREEMENT DATED FEBRUARY 18, 2008 BETWEEN CYNTHIA S. HUGHES AND PIERRE
HOLDING CORP., AND THAT CERTAIN STOCKHOLDERS AGREEMENT BETWEEN THE COMPANY AND
CERTAIN STOCKHOLDERS OF THE COMPANY FROM TIME TO TIME A PARTY THERETO.  A COPY OF EACH OF THESE AGREEMENTS MAY BE
OBTAINED BY THE HOLDER HEREOF AT THE COMPANY’S PRINCIPAL PLACE OF BUSINESS
WITHOUT CHARGE.”

 

(b)                                 Opinion
of Counsel.  You may not sell,
transfer or dispose of any Restricted Shares (except pursuant to an effective
registration statement under the Securities Act) without first delivering to
the Company an opinion of counsel reasonably acceptable in form and substance
to the Company that registration under the Securities Act or any applicable
state securities law is not required in connection with such transfer.

 

 

8.                                       Conformity
with Plan.  This Agreement is
intended to conform in all respects with, and is subject to all applicable
provisions of the Plan (which is incorporated herein by reference).  Inconsistencies between this Agreement and
the Plan shall be resolved in accordance with the terms of the Plan.  By executing and returning a copy of this
Agreement, you acknowledge your receipt of this Agreement and the Plan and
agree to be bound by all of the terms of this Agreement and the Plan.

 

9.                                       Withholding
of Taxes.  The Company, Pierre Foods, Inc.,
or any of its Subsidiaries shall be entitled to withhold from any amounts due
and payable by the Company, Pierre Foods, Inc., or any of its Subsidiaries
to you, the amount of any federal, state, local or other tax which, in the
opinion of the Company, is required to be withheld in connection with the
delivery or vesting of your Restricted Shares or the receipt of dividends
thereon.  To the extent that the amounts
available to the Company, Pierre Foods, Inc., or any of its Subsidiaries
for such withholding are insufficient, it shall be a condition to the delivery
or vesting, as applicable, of the Restricted Shares that you make arrangements
satisfactory to the Company for the payment of the balance of such taxes
required to be withheld.

 

10.                                 Remedies.  Each party hereto (and MDCP as third-party
beneficiary) shall be entitled to enforce its rights under this Agreement
specifically, to recover damages by reason of any breach of any provision of
this Agreement and to exercise all other rights existing in its favor.  The parties hereto acknowledge and agree that
money damages would not be an adequate remedy for any breach of the provisions
of this Agreement and that any party hereto (and MDCP as a third-party
beneficiary) shall be entitled to specific performance and/or injunctive relief
(without posting bond or other security) from any court of law or equity of competent
jurisdiction in order to enforce or prevent any violation of the provisions of
this Agreement.

 

11.                                 Amendment.  Except as otherwise provided herein, any
provision of this Agreement may be amended or waived only with the prior
written consent of you and the Company; provided that no provision of paragraph
5, 7, 10, or of this paragraph 11 (including the definitions of the defined
terms used therein) may be amended or waived without the prior written consent
of MDCP.

 

12.                                 Successors
and Assigns.  Except as otherwise
expressly provided herein, all covenants and agreements contained in this
Agreement by or on behalf of any of the parties hereto shall bind and inure to
the benefit of the respective successors and permitted assigns of the parties
hereto whether so expressed or not.

 

13.                                 Severability.  Whenever possible, each provision of this
Agreement shall be interpreted in such manner as to be effective and valid
under applicable law, but if any provision of this Agreement is held to be
prohibited by or invalid under applicable law, such provision shall be
ineffective only to the extent of such prohibition or invalidity, without
invalidating the remainder of this Agreement.

 

14.                                 Counterparts.  This Agreement may be executed simultaneously
in two or more counterparts, each of which shall constitute an original, but
all of which taken together shall constitute one and the same Agreement.

 

15.                                 Descriptive
Headings.  The descriptive headings
of this Agreement are inserted for convenience only and do not constitute a
part of this Agreement.

 

 

16.                                Governing
Law.  All questions concerning the
construction, validity and interpretation of this Agreement shall be governed
by the internal law, and not the law of conflicts, of Delaware.

 

17.                                Notices.  All notices, demands or other communications
to be given or delivered under or by reason of the provisions of this Agreement
shall be in writing and shall be deemed to have been given when delivered
personally or mailed by certified or registered mail, return receipt requested
and postage prepaid, to the recipient. 
Such notices, demands and other communications shall be sent to you at
the then current address of record in the Company’s files and to the Company
and MDCP at the addresses indicated below:

 

If
to the Company:

Pierre
Holding Corp.

9990
Princeton Road

Cincinnati,
Ohio 45246

Attn:
Board of Directors

 

If
to MDCP:

Madison
Dearborn Partners IV, L.P.

Three
First National Plaza

Suite 3800

Chicago, IL 60602

Telephone:  312-895-1000

Attention:  Robin
P. Selati

 

With a
copy (which shall not constitute notice) to :

 

Kirkland &
Ellis LLP

200
East Randolph Drive

Chicago,
IL 60601

Telecopy:  (312) 861-2200

Attention:  Michael D. Paley

 

or to
such other address or to the attention of such other person as the recipient
party has specified by prior written notice to the sending party.

 

18.                                Third
Party Beneficiary.  The Company and
you acknowledge that MDCP is a third-party beneficiary under this Agreement.

 

19.                                Entire
Agreement.  This Agreement
constitutes the entire understanding between you and the Company, and supersede
all other agreements, whether written or oral, with respect to the acquisition
by you of Restricted Shares.

 

 

Please execute the
extra copy of this Agreement in the space below and return it to the Company’s
Secretary at its executive offices to confirm your understanding and acceptance
of the agreements contained in this Agreement.

 

	
   

  	
  Very truly
  yours,

  
	
   

  	
   

  
	
   

  	
  PIERRE HOLDING
  CORP.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By

  	
    /s/ Norbert E. Woodhams

  
	
   

  	
   

  	
  Name: Norbert E.
  Woodhams

  
	
   

  	
   

  	
  Title: President
  and Chief Executive Officer

  

 

Enclosure:                                        (1)                                  Extra
copy of this Agreement

 

The undersigned hereby acknowledges having read this
Agreement and hereby agrees to be bound by all provisions set forth herein.

 

	
   

  	
  /s/ Cynthia S. Hughes

  
	
   

  	
  Name: CYNTHIA S. HUGHES

  
	
   

  	
   

  
	
   

  	
  Date: February 14, 2008

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