Exhibit 10.4
SANDERSON FARMS, INC.
RESTRICTED STOCK AGREEMENT
(Non-Employee Director)
     This RESTRICTED STOCK AGREEMENT (this “Agreement”), made and entered into
as of the            day of                                         ,
20           (the “Grant Date”), by and between                        
                                     (the “Participant”) and Sanderson Farms,
Inc. (together with its subsidiaries and affiliates, the “Company”), sets forth
the terms and conditions of a Restricted Stock Award issued pursuant to the
Sanderson Farms, Inc. and Affiliates Stock Incentive Plan, adopted on
February 17, 2005 (the “Plan”) and this Agreement. Any capitalized term used but
not defined herein shall have the meaning ascribed to such term in the Plan.
     1. Grant and Vesting of Restricted Stock.
     (a) As a reward for past service or in consideration of and as an incentive
to the Participant’s continued service as a non-employee director on the
Company’s Board, and for no additional consideration, the Company hereby grants
to the Participant, as of the Grant Date,                      shares of the
Company’s common stock, par value $1.00 per share (the “Restricted Stock”),
subject to the terms and conditions set forth herein and in the Plan. The
Restricted Stock is subject to forfeiture as provided herein and may not be
sold, exchanged, transferred, pledged, hypothecated or otherwise disposed of by
the Participant, other than by will or by the laws of descent and distribution
of the state in which the Participant resides on the date of his death. The
period during which the Restricted Stock is not vested and is subject to
transfer restrictions is referred to herein as the “Restriction Period.”
     (b) Except as otherwise provided in this Agreement or the Plan, the
Restricted Stock shall vest and no longer be subject to forfeiture or any
transfer restrictions hereunder upon the expiration of the Participant’s current
term as a director on the Company’s Board, so long as the Participant has served
as a director continuously through the full term.
     (c) If the Participant separates from service as a director on the
Company’s Board by reason of death or Disability, or if there is a Change of
Control, the Restricted Stock that has not vested shall immediately vest and no
longer be subject to forfeiture or any transfer restrictions hereunder. If the
Participant separates from service as a director for any other reason,
voluntarily or involuntarily, prior to the expiration of the Restriction Period,
then the Restricted Stock that has not vested as of the separation date shall
immediately be forfeited, ownership shall be transferred back to the Company and
the Restricted Stock shall become authorized but unissued Shares.
     2. Issuance of Shares.

 

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     Certificates representing the Restricted Stock shall be registered in the
Participant’s name (or an appropriate book entry shall be made). Certificates,
if issued, may, at the Company’s option, either be held by the Company in escrow
until the Restriction Period expires or until the restrictions thereon otherwise
lapse and/or be issued to the Participant and registered in the name of the
Participant, bearing an appropriate restrictive legend that refers to this
Agreement and remaining subject to appropriate stop-transfer orders. The
Participant agrees to deliver to the Board, upon request, one or more stock
powers endorsed in blank relating to the Restricted Stock. If and when the
Restricted Stock vests and is no longer subject to forfeiture or transfer
restrictions, unlegended certificates for such Restricted Stock shall be
delivered to the Participant (subject to Section 6 pertaining to the withholding
of taxes and Section 14 pertaining to the Securities Act of 1933, as amended
(the “Securities Act”)); provided, however, that the Board may cause such legend
or legends to be placed on any such certificates as it may deem advisable under
Applicable Law.
     3. Rights as a Stockholder.
     Except as otherwise provided in this Agreement or the Plan, during the
Restriction Period the Participant shall have, with respect to the Restricted
Stock, all of the rights of a stockholder of the Company, including the right to
vote the Restricted Stock and the right to receive any dividends or other
distributions with respect thereto.
     4. Adjustments.
     If any change in corporate capitalization, such as a stock split, reverse
stock split, stock dividend, or any corporate transaction such as a
reorganization, reclassification, merger or consolidation or separation,
including a spin-off of the Company or sale or other disposition by the Company
of all or a portion of its assets, any other change in the Company’s corporate
structure, or any distribution to stockholders (other than a cash dividend)
results in the outstanding Shares, or any securities exchanged therefor or
received in their place, being exchanged for a different number or class of
shares or other securities of the Company, or for shares of stock or other
securities of any other corporation, or new, different or additional shares or
other securities of the Company or of any other corporation being received by
the holders of outstanding Shares, then the shares of Restricted Stock granted
pursuant to this Agreement shall be treated in the same manner as other
outstanding Shares of the Company.
     5. Validity of Share Issuance.
     The shares of Restricted Stock have been duly authorized by all necessary
corporate action of the Company and are validly issued, fully paid and
non-assessable.
     6. Taxes and Withholding.

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     As soon as practicable on or after the date as of which an amount first
becomes includible in the gross income of the Participant for federal income tax
purposes with respect to this Award of Restricted Stock, the Participant shall
pay to the Company, or make arrangements satisfactory to the Company regarding
the payment of, or the Company may deduct or withhold from any cash or property
payable to the Participant, an amount equal to all federal, state, local and
foreign taxes that are required by Applicable Law to be withheld with respect to
such includible amount. Notwithstanding anything to the contrary contained
herein, the Participant may, if the Company consents, discharge this withholding
obligation by directing the Company to withhold shares of Restricted Stock
having a Fair Market Value on the date that the withholding obligation is
incurred equal to the amount of tax required to be withheld in connection with
such vesting, as determined by the Board.
     7. Notices.
     Any notice to the Company provided for in this Agreement shall be in
writing and shall be addressed to it in care of its Secretary at its principal
executive offices, and any notice to the Participant shall be addressed to the
Participant at the current address shown on the payroll records of the Company.
Any notice shall be deemed to be duly given if and when properly addressed and
posted by registered or certified mail, postage prepaid.
     8. Legal Construction.
     (a) Severability. If any provision of this Agreement is or becomes or is
deemed invalid, illegal or unenforceable in any jurisdiction, or would
disqualify the Plan or this Agreement under any law with respect to which the
Plan or this Agreement is intended to qualify, or would cause compensation
deferred under the Plan to be includible in a Plan participant’s gross income
pursuant to Section 409A(a)(1) of the Internal Revenue Code of 1986, as amended,
as determined by the Board, such provision shall be construed or deemed amended
to conform to Applicable Law or, if it cannot be construed or deemed amended
without, in the determination of the Board, materially altering the intent of
the Plan or the Agreement, it shall be stricken and the remainder of this
Agreement shall remain in full force and effect.
     (b) Gender and Number. Where the context admits, words in any gender shall
include the other gender, words in the singular shall include the plural and
words in the plural shall include the singular.
     (c) Governing Law. To the extent not preempted by federal law, this
Agreement shall be construed in accordance with and governed by the laws of the
State of Mississippi.
     9. Incorporation of Plan.
     This Agreement and the Restricted Stock Award made pursuant hereto are
subject to, and this Agreement hereby incorporates and makes a part hereof, all
terms and conditions of the Plan that are applicable to Agreements and Awards
generally and to Restricted Stock Awards in

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particular. The Board has the right to interpret, construe and administer the
Plan, this Agreement and the Restricted Stock Award made pursuant hereto. All
acts, determinations and decisions of the Board made or taken pursuant to grants
of authority under the Plan or with respect to any questions arising in
connection with the administration and interpretation of the Plan, including the
severability of any and all of the provisions thereof, shall be in the Board’s
sole discretion and shall be conclusive, final and binding upon all parties,
including the Company, its stockholders, Participants, Eligible Participants and
their estates, beneficiaries and successors. The Participant acknowledges that
he has received a copy of the Plan.
     10. No Implied Rights.
     Neither this Agreement nor the issuance of any Restricted Stock shall
confer on the Participant any right with respect to continuance of employment or
other service with the Company. If the Participant is an employee of the
Company, then except as may otherwise be limited by a written agreement between
the Company and the Participant, and acknowledged by the Participant, the right
of the Company to terminate at will the Participant’s employment with it at any
time (whether by dismissal, discharge, retirement or otherwise) is specifically
reserved by the Company.
     11. Integration.
     This Agreement and the other documents referred to herein, including the
Plan, or delivered pursuant hereto, contain the entire understanding of the
parties with respect to their subject matter. There are no restrictions,
agreements, promises, representations, warranties, covenants or undertakings
with respect to the subject matter hereof other than those expressly set forth
herein and restrictions imposed by the Securities Act and applicable state
securities laws. This Agreement, including the Plan, supersedes all prior
agreements and understandings between the parties with respect to its subject
matter.
     12. Counterparts.
     This Agreement may be executed in two or more counterparts, each of which
shall be deemed an original, but which together constitute one and the same
instrument.
     13. Amendments.
     The Board may, at any time, without consent of or receiving further
consideration from the Participant, amend this Agreement and the Restricted
Stock Award made pursuant hereto in response to, or to comply with changes in,
Applicable Law. To the extent not inconsistent with the terms of the Plan, the
Board may, at any time, amend this Agreement in a manner that is not unfavorable
to the Participant without the consent of the Participant. The Board may amend
this

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Agreement and the Restricted Stock Award made pursuant hereto otherwise with the
written consent of the Participant.
     14. Securities Act.
     (a) The issuance and delivery of the Restricted Stock to the Participant
have been registered under the Securities Act by a Registration Statement on
Form S-8 that has been filed with the Securities and Exchange Commission (“SEC”)
and has become effective. The Participant acknowledges receipt from the Company
of its current Prospectus relating to the Restricted Stock.
     (b) If the Participant is an “affiliate” of the Company, which generally
means a director, executive officer or holder of 10% or more of its outstanding
shares, at the time certificates representing Restricted Stock are delivered to
the Participant, such certificates shall bear the following legend, or other
similar legend then being generally used by the Company for certificates held by
its affiliates:
“THESE SHARES MUST NOT BE OFFERED FOR SALE, SOLD, ASSIGNED OR TRANSFERRED EXCEPT
IN A TRANSACTION WHICH, IN THE OPINION OF COUNSEL FOR THE ISSUER, IS EXEMPT FROM
REGISTRATION THROUGH COMPLIANCE WITH RULE 144 OR WITH ANOTHER EXEMPTION FROM
REGISTRATION.”
     The Company shall remove such legend upon request by the Participant if, at
the time of such request, the shares are eligible for sale under SEC
Rule 144(k), or any provision that has replaced it, in the opinion of the
Company’s counsel.
     15. Arbitration.
     Any controversy or claim arising out of or relating to this Restricted
Stock Agreement shall be settled by arbitration administered by the American
Arbitration Association under its Commercial Arbitration Rules and judgment upon
the award rendered by the arbitrator(s) may be entered in any court having
jurisdiction thereof.

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     IN WITNESS WHEREOF, the Participant has executed this Agreement on his own
behalf, thereby representing that he has carefully read and understands this
Agreement and the Plan as of the day and year first written above, and the
Company has caused this Agreement to be executed in its name and on its behalf,
all as of the day and year first written above.

                      SANDERSON FARMS, INC.    
 
               
 
  By:                          
 
      Name:        
 
      Title:  
 
   
 
         
 
   
 
                              Participant    

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