Ex-10.3



 





Exhibit 10.3




SANDERSON FARMS, INC.




SHARE PURCHASE AGREEMENT

(Management Share Purchase Plan)

(Employee Agreement)




     This SHARE PURCHASE 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 an Award of Share Purchase Rights granted 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. The term “Fiscal Year” shall mean the fiscal year of the Company which begins on
November 1 of each calendar year and ends on October 31 of the next calendar year.



     1. Rights to Purchase Restricted Stock.



          (a) Base Salary Reduction. The Participant may elect to reduce his base salary by a
specified percentage thereof (not to exceed 15%) and, in lieu of receiving such salary, receive a
number of Shares of the Company, subject to the terms, conditions and restrictions set forth herein
(“Restricted Stock”), equal to the amount of such salary reduction divided by a dollar amount equal
to the Fair Market Value of a Share on the date on which such Restricted Stock is received. In the
first year of the Participant’s eligibility to participate in the Plan, an election to reduce the
Participant’s salary for the period of that initial year of eligibility subsequent to the election
must be made within 30 days after the date that the Participant becomes eligible so to participate
(the “Initial Election Deadline”). An election so made during the initial year of eligibility
(“Initial Salary Election”) shall become irrevocable on the Initial Election Deadline and shall be
effective beginning with the first pay period that ends after the Initial Election Deadline. Any
election to reduce salary otherwise payable in a calendar year after the Participant’s initial year
of eligibility shall be effective beginning with the first pay period that ends after January 1 of
the calendar year next following the calendar year in which such election is made (and shall become
irrevocable on December 31 of the calendar year in which such election is made with respect to the
next calendar year). Any cancellation of, or other change in, any such salary reduction election
shall become effective as of the first pay period ending after January 1 of the calendar year next
following the calendar year in which notice of such cancellation or change is filed (and any such
notice shall become irrevocable on December 31 of the calendar year in which it is filed with
respect to the next calendar year).




          Any salary reduction hereunder shall apply ratably to the Participant’s salary for each pay
period covered by such election. Restricted Stock shall be issued for the account of the
Participant, or allocated to the account of the Participant from Shares previously purchased by the
Company, in respect of such salary reductions on the last business day in each calendar quarter
ending March 31, June 30, September 30 and December 31 (each such date, a “Quarterly Allocation
Date”). The number of shares of Restricted Stock issued or allocated to the Participant on each
Quarterly Allocation Date shall be based upon the aggregate salary reduction




 









 







for pay periods ending since the next preceding Quarterly Allocation Date and the Fair Market
Value of a Share on such later Quarterly Allocation Date. Fractional shares will be issued (or
purchased) where necessary.




     If a Participant who has elected salary reductions hereunder shall terminate employment before
shares of Restricted Stock are issued or allocated in respect of all such salary reductions, any
salary reduction amounts in respect of which Restricted Stock has not been granted by the date of
Participant’s termination of employment shall be returned to Participant promptly in cash, subject
to compliance with the requirements of Sections 409A(a)(2) and (3) of the Code.



     (b) Bonus Reduction. The Participant may also elect to reduce his annual bonus
compensation, if any, by a specified percentage thereof (not to exceed 75%) and, in lieu of
receiving such bonus, receive a number of shares of Restricted Stock equal to the amount of such
bonus reduction divided by a dollar amount equal to the Fair Market Value of a Share on the date on
which such Restricted Stock is received. An election for the bonus payable with respect to the
Fiscal Year ending October 31, 2005 and for the bonus payable with respect to any subsequent Fiscal
Year must be made on or before April 30 of that Fiscal Year (or if such day is not a business day,
then on or before the next preceding business day) and shall become irrevocable on that date with
respect to that Fiscal Year. Any cancellation of, or other change in, any such bonus reduction
election shall become effective with respect to the Fiscal Year in which notice of such
cancellation or change is filed if it is filed on or before April 30 of that Fiscal Year (or, if
such day is not a business day, then on or before the next preceding business day); otherwise, it
shall become effective with respect to the Fiscal Year next following the Fiscal Year in which it
is filed.



          Restricted Stock shall be issued or allocated to the account of the Participant in respect of
any such bonus reduction on the date that such bonus is otherwise payable.




          If a Participant who has elected a bonus reduction hereunder shall terminate employment before
shares of Restricted Stock are issued or allocated in respect of such bonus reduction, such
election shall be deemed canceled and any bonus compensation due to the Participant shall be paid
in cash, subject to compliance with the requirements of Sections 409A(a)(2) and (3) of the Code.




     2. Company Matching Contribution.



          For each four shares of Restricted Stock acquired by the Participant pursuant to Section 1
above, whether in respect of base salary or bonus reductions, the Company shall simultaneously
issue or allocate to the account of the Participant, for no additional consideration, one
additional share of Restricted Stock (the “Company Match”), including fractional shares where
necessary.




     3. Terms of Restricted Stock.



          (a) The Restricted Stock is subject to forfeiture as provided herein and, during the
Restriction Period defined below, 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




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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, each share of Restricted Stock
shall vest and no longer be subject to forfeiture or any transfer restrictions hereunder on the
third anniversary of its acquisition by the Participant, so long as the Participant has remained
continuously employed by the Company from such acquisition date through such third anniversary.



     (c) In the event of (i) the Participant’s termination of employment with the Company by reason
of death or Disability (for purposes of this Section 3, “Disability” shall have the meaning set
forth in Section 409A(a)(2)(C) of the Code at any time such definition is more restrictive than the
Plan definition of “Disability”), (ii) his termination of employment with the Company on or after
his attainment of eligibility for retirement (as determined by the Board from time to time), or
(iii) a Change in Control (provided that such Change in Control also constitutes a “change in
ownership or effective control” of the Company within the meaning of Section 409A(a)(2)(A)(v) of
the Code), any portion of the Restricted Stock that has not vested shall immediately vest and no
longer be subject to forfeiture or any transfer restrictions hereunder; provided that in the case
of a Participant who is a “specified employee” within the meaning of Section 409A(a)(2)(B) of the
Code, such Restricted Stock shall not vest before the date which is six months after the date of
the Participant’s separation from service (or, if earlier, the date of his death). If the
Participant’s employment with the Company is terminated for any other reason, voluntarily or
involuntarily, prior to the expiration of the Restriction Period for any shares of Restricted Stock
acquired pursuant to this Agreement by the Participant, then (X) any portion of the Restricted
Stock acquired by the Participant pursuant to the Company Match that has not vested as of the date
of employment termination shall immediately be forfeited, ownership shall be transferred back to
the Company (and any dividends or other distributions with respect thereto paid to the Participant
shall be returned to the Company) and the Restricted Stock shall become authorized but unissued
Shares, and (Y) any portion of the Restricted Stock acquired by the Participant in respect of
salary or bonus reductions that has not vested as of the date of the employment termination may, at
the Company’s option, be repurchased by the Company at the price paid by the Participant for such
Restricted Stock, less the amount of dividends received by the Participant (and the Company may pay
such purchase price in whole or in part by cancellation of any indebtedness owed by the Participant
to the Company).



     (d) If the Board determines in good faith that the Participant has engaged in any Detrimental
Activity during the period that the Participant is employed by the Company or during the two-year
period following the Participant’s voluntary termination of employment or his termination by the
Company for Cause, then (X) any portion of the Restricted Stock acquired by the Participant
pursuant to the Company Match that has not vested as of the date of the Board’s determination shall
immediately be forfeited, ownership shall be transferred back to the Company (and any dividends or
other distributions with respect thereto paid to the Participant shall be returned to the Company)
and the Restricted Stock shall become authorized but unissued Shares, and (Y) any portion of the
Restricted Stock acquired by the Participant in respect of salary or bonus reductions that has not
vested as of the date of the Board’s determination may, at the Company’s option, be repurchased by
the Company at the price paid by the Participant for such Restricted Stock less the amount of
dividends received by the Participant (and the Company may pay such purchase price in whole or in
part by cancellation of any indebtedness owed by the Participant to the Company). If, at the time
of such determination, shares of Restricted Stock



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acquired by the Participant pursuant to the Company Match have already vested, the Participant
shall repay to the Company the Fair Market Value of such Shares as of the date(s) that they were
issued or allocated to the Participant (and any dividends or other distributions with respect
thereto paid to the Participant shall be returned to the Company).



     4. Registration of Shares.



     Certificates representing the number of shares of Restricted Stock purchased from time to time
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 applicable Restriction Period expires or until the restrictions thereon otherwise lapse
and/or be delivered 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 shares of Restricted
Stock vest and are no longer subject to forfeiture or transfer restrictions, unlegended
certificates for such Restricted Stock shall be delivered to the Participant (subject to Section 8
pertaining to the withholding of taxes and Section 16 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.



          If the Company elects to hold certificates in escrow, then it shall deliver to the Participant
not less often than every six months a statement of the aggregate number of shares of Restricted
Stock held for his account and the applicable acquisition dates and purchase prices of shares of
Restricted Stock acquired by the Participant since the last such statement.




     5. Rights as a Stockholder.



     Except as otherwise provided in this Agreement or the Plan, during the Restriction Period
applicable to any Restricted Stock, 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.



     6. 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



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outstanding Shares, then the shares of Restricted Stock acquired pursuant to this Agreement shall
be treated in the same manner as other outstanding Shares of the Company.



     7. Validity of Share Issuance.



     Upon the issuance or Restricted Stock pursuant to the terms of this Agreement, such shares of
Restricted Stock will be duly authorized by all necessary corporate action of the Company and will
be validly issued, fully paid and non-assessable.



     8. Taxes and Withholding.



     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 the acquisition
of Restricted Stock pursuant to this Agreement, 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



     9. 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.



     10. 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 base salary or bonus reductions under this Agreement to be includible in a Plan
participant’s gross income pursuant to Section 409A(a)(1) of the Code, as determined by the Board,
such provision shall be construed or deemed amended to conform to Applicable Law and to qualify the
Plan, this Agreement and the income pursuant hereto for the desired benefits of the laws with which
they are intended to qualify 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.




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          (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.




     11. Incorporation of Plan.



     This Agreement , the Share Purchase Rights awarded pursuant hereto and the Restricted Stock
acquired 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 Share Purchase Rights in particular. The Board has the right to interpret, construe and
administer the Plan, this Agreement and the Share Purchase Rights awarded and the Restricted Stock
acquired 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.



     12. No Implied Rights.



     Neither this Agreement nor the award of Share Purchase Rights nor the acquisition of any
Restricted Stock shall confer on the Participant any right with respect to continuance of
employment or other service with the Company. 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.



     13. 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.



     14. Counterparts.



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     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.



     15. Amendments; Termination.



     The Board may, at any time, without consent of or receiving further consideration from the
Participant, amend this Agreement and the Restricted Stock acquired 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 Agreement and the
Restricted Stock acquired pursuant hereto otherwise with the written consent of the Participant.



     The Company may suspend or terminate this Agreement at any time, provided that no such
suspension or termination may adversely affect the Participant’s rights with respect to any
Restricted Stock previously acquired pursuant to this Agreement, unless his written consent is
obtained.



     16. Securities Act.



          (a) The issuance and delivery of the Share Purchase Rights 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 Prospectus dated July 27, 2005, relating to the Plan.




          (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.




          17. Arbitration.




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     Any controversy or claim arising out of or relating to this Share Purchase 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.



     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:
	 	D. Michael Cockrell
	 	 
	 

	 	 	 	Title:
	 	Treasurer& CFO	 	 
	 
	 	 	 	 	 	 	 	 
	 	 	 	 	 
	 	 	Participant	 	 







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