Document:

exv10w5

EXHIBIT 10.5

ASSISTED LIVING CONCEPTS, INC.

DEFERRED COMPENSATION PLAN

EFFECTIVE JANUARY 1, 2005, AS AMENDED AND RESTATED DECEMBER 16, 2008

ARTICLE I

INTRODUCTION

     This document governs the terms and provisions of the Assisted Living Concepts, Inc. Deferred
Compensation Plan following the merger of the Assisted Living Concepts, Inc. Deferred Salary Plan
into the Assisted Living Concepts, Inc. Deferred Compensation Plan. This document shall govern the
operation of those prior separate plans from and after January 1, 2005, which plans had in turn
replaced the prior separate Extendicare Health Services, Inc. Deferred Compensation Plan as amended
and restated effective January 1, 2005 as applicable to employees of Assisted Living Concepts, Inc.
and the prior Extendicare Health Services, Inc. Deferred Salary Plan as amended and restated
effective January 1, 2005 with respect to employees of Assisted Living Concepts, Inc. No benefits
shall be payable to Assisted Living Concepts, Inc. employees under the terms of the Extendicare
Health Services, Inc. Deferred Compensation Plan or Extendicare Health Services, Inc. Deferred
Salary Plan, as amended and restated effective as of January 1, 2005, but, instead, the benefits
previously provided by those plans are provided for herein. This document applies only to amounts
earned or first vested after calendar year 2004. For periods prior to calendar year 2005,
Extendicare Health Services, Inc. and its participating affiliates have maintained the Extendicare
Health Services, Inc. Deferred Compensation Plan and Extendicare Health Services, Inc. Deferred
Salary Plan by means of a series of individual deferred compensation agreements with covered
executives. Amounts earned and vested prior to January 1, 2005, including past and future interest
credited thereon, shall remain subject to the terms of those individual agreements as previously in
effect (the “Frozen Agreements”) but no further amounts shall be earned and vested under the Frozen
Agreements which have been assigned by Extendicare Health Services, Inc. to, and assumed by,
Assisted Living Concepts, Inc. All amounts credited under the Frozen Agreements prior to January
1, 2005 which were not yet vested as of January 1, 2005 and all deferrals to the Deferred
Compensation Plan and Deferred Salary Plan for periods on or after January 1, 2005 (whether at the
election of participants or otherwise) shall be governed by the terms and provisions of this
document. Nothing in this document shall apply to amounts earned and vested prior to 2005 and past
and future interest credited thereon. This document is intended to comply with the provisions of
Section 409A of the Internal Revenue Code and shall be interpreted accordingly. If any provision
or term of this document would be prohibited by or inconsistent with the requirements of Section
409A of the Code, then such provision or term shall be deemed to be reformed to comply with Section
409A of the Code.

ARTICLE II

DEFINITIONS

     The following definitions shall be applicable throughout the Plan:

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     2.1 “Account” means the combination of the Participant’s Deferral Account and Matching
Account.

     2.2 “Administrator” means the committee designated by the Corporation’s Board of
Directors under Plan Section 7.1, which shall be responsible for administering and interpreting the
Plan.

     2.3 “Beneficiary” means the person, persons, or entity designated by the Participant
to receive any benefits payable under the Plan on or after the Participant’s death. Each
Participant shall be permitted to name, change or revoke the Participant’s designation of a
Beneficiary in writing on a form and in the manner prescribed by the Corporation; provided,
however, that the designation on file with the Corporation at the time of the Participant’s death
shall be controlling. Should a Participant fail to make a valid Beneficiary designation or leave
no named Beneficiary surviving, any benefits due shall be paid to such Participant’s spouse, if
living; or if not living, then any benefits due shall be paid to such Participant’s estate.

     2.4 “Code” means the Internal Revenue Code of 1986, including any subsequent
amendments.

     2.5 “Corporation” means Assisted Living Concepts, Inc., and each of its affiliates
which has adopted the Plan or may adopt the Plan; provided, however, that for purposes of the power
to amend or terminate the Plan or take any other action under or with respect to the Plan, except
for the payment of benefits, the term “Corporation” shall refer only to Assisted Living Concepts,
Inc.

     2.6 “Deferral Account” means the account credited from time to time with bookkeeping
amounts equal to the portions of a Participant’s compensation deferred pursuant to Section 3.2 and
interest credited on such amounts in accordance with Article IV.

     2.7 “Effective Date” means January 1, 2005.

     2.8 “ERISA” means the Employee Retirement Income Security Act of 1974, including any
subsequent amendments.

     2.9 “Matching Account” means the account credited from time to time with bookkeeping
amounts equal to matching contributions on behalf of the Participant pursuant to Section 3.6 and
interest credited on such amounts in accordance with Article IV. The Matching Account shall also
hold those matching contributions (and interest credited thereon) which had been credited to the
account of the Participant under a Frozen Agreement prior to 2005 which were not vested prior to
2005.

     2.10 “Participant” means a key management or highly compensated employee designated as
eligible to participate in the Plan for a Plan Year under Section 3.1 (who shall be known as
“Active Participants” for such Plan Year) and any person who previously participated in the Plan
and is entitled to benefits.

     2.11 “Plan” means the Assisted Living Concepts, Inc. Deferred Compensation Plan, as
set forth herein, and as may be amended from time to time.

     2.12 “Plan Year” means the calendar year.

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     2.13 “Separation from Service”

     (a) In General. The Participant shall have a Separation from Service with the
Corporation if the Participant dies, retires, or otherwise has a termination of employment
with the Corporation. However, for purposes of this Section 2.13, the employment
relationship is treated as continuing intact while the individual is on military leave,
sick leave, or other bona fide leave of absence if the period of such leave does not exceed
six months, or if longer, so long as the individual retains a right to reemployment with
the Corporation under an applicable statute or by contract. For purposes of this paragraph
(a) of this Section 2.13, a leave of absence constitutes a bona fide leave of absence only
if there is a reasonable expectation that the Participant will return to perform services
for the Corporation. If the period of leave exceeds six months and the individual does not
retain a right to reemployment under an applicable statute or by contract, the employment
relationship is deemed to terminate on the first date immediately following such six-month
period. Notwithstanding the foregoing, where a leave of absence is due to any medically
determinable physical or mental impairment that can be expected to result in death or can
be expected to last for a continuous period of not less than six months, where such
impairment causes the Participant to be unable to perform the duties of his or her position
of employment or any substantially similar position of employment, a 29-month period of
absence may be substituted for such six-month period.

     (b) Termination of Employment. Whether a termination of employment has
occurred is determined based on whether the facts and circumstances indicate that the
Corporation and Participant reasonably anticipated that no further services would be
performed after a certain date or that the level of bona fide services the Participant
would perform after such date (whether as an employee or as an independent contractor)
would permanently decrease to no more than 20 percent of the average level of bona fide
services performed (whether as an employee or an independent contractor) over the
immediately preceding 36-month period (or, the full period of services to the Corporation
if the Participant has been providing services to the Corporation less than 36 months).
Facts and circumstances to be considered in making this determination include, but are not
limited to, whether the Participant continues to be treated as an employee for other
purposes (such as continuation of salary and participation in employee benefit programs),
whether similarly situated service providers have been treated consistently, and whether
the Participant is permitted, and realistically available, to perform services for other
service recipients in the same line of business. The Participant is presumed to have
Separated from Service where the level of bona fide services performed decreases to a level
equal to 20 percent or less of the average level of services performed by the employee
during the immediately preceding 36-month period. The Participant will be presumed not to
have Separated from Service where the level of bona fide services performed continues at a
level that is 50 percent or more of the average level of service performed by the
Participant during the immediately preceding 36-month period. No presumption applies to a
decrease in the level of bona fide services performed to a level that is more than 20
percent and less than 50 percent of the average level of bona fide services performed
during the immediately preceding 36-month period. The presumption is rebuttable by
demonstrating that the Corporation and the Participant reasonably anticipated that as of a
certain date the level of bona fide services would be reduced permanently to a level less
than or equal to 20 percent of the average level of bona fide services provided during the
immediately preceding 36-month period or the full period of services to the Corporation if
the Participant has been providing services to the Corporation less than 36 months (or that
the level of bona fide services would not be so

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reduced). For example, the Participant may demonstrate that the Corporation and the
Participant reasonably anticipated that the Participant would cease providing services, but
that, after the original cessation of services, business circumstances such as termination
of the Participant’s replacement caused the Participant to return to employment. Although
the Participant’s return to employment may cause the Participant to be presumed to have
continued in employment because the Participant is providing services at a rate equal to
the rate at which the Participant was providing services before the termination of
employment, the facts and circumstances in this case would demonstrate that at the time the
Participant originally ceased to provide services, the Corporation reasonably anticipated
that the Participant would not provide services in the future. For purposes of this
paragraph (b), for periods during which the Participant is on a paid bona fide leave of
absence (as defined in paragraph (a) of this Section 2.13) and has not otherwise terminated
employment pursuant to paragraph (a) of this Section 2.13, the Participant is treated as
providing bona fide services at a level equal to the level of services that the Participant
would have been required to perform to receive the compensation paid with respect to such
leave of absence. Periods during which the Participant is on an unpaid bona fide leave of
absence (as defined in paragraph (a) of this Section 2.13) and has not otherwise terminated
employment pursuant to paragraph (a) of this Section 2.13, are disregarded for purposes of
this paragraph (b) of this Section 2.13 (including for purposes of determining the
applicable 36-month (or shorter) period).

     (c) Asset Purchase Transactions. Where as part of a sale or other disposition
of assets by the Corporation as seller to an unrelated service recipient (buyer), a
Participant of the Corporation would otherwise experience a Separation from Service with
the Corporation, the Corporation and the buyer may retain the discretion to specify, and
may specify, whether a Participant providing services to the Corporation immediately before
the asset purchase transaction and providing services to the buyer after and in connection
with the asset purchase transaction has experienced a Separation from Service, provided
that the asset purchase transaction results from bona fide, arm’s length negotiations, all
service providers providing services to the Corporation immediately before the asset
purchase transaction and providing services to the buyer after and in connection with the
asset purchase transaction are treated consistently (regardless of position at the
Corporation) for purposes of applying the provisions of any nonqualified deferred
compensation plan, and such treatment is specified in writing no later than the closing
date of the asset purchase transaction. For purposes of this paragraph (c), references to
a sale or other disposition of assets, or an asset purchase transaction, refer only to a
transfer of substantial assets, such as a plant or division or substantially all the assets
of a trade or business.

     (d) Dual Status. If a Participant provides services both as an employee of
the Corporation and as an independent contractor of the Corporation, the Participant must
separate from service both as an employee and as an independent contractor to be treated as
having Separated from Service. If a Participant ceases providing services as an
independent contractor and begins providing services as an employee, or ceases providing
services as an employee and begins providing services as an independent contractor, the
Participant will not be considered to have a Separation from Service until the Participant
has ceased providing services in both capacities. Notwithstanding the foregoing, if a
Participant provides services both as an employee of the Corporation and a member of the
board of directors of the Corporation, the services provided as a director are not taken
into account in determining whether the Participant has a Separation from Service as an
employee for purposes of this Plan unless this Plan is aggregated with any

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plan in which the Participant participates as a director under IRS Regulation Section
1.409A-1(c)(2)(ii).

     2.14 “Unforeseeable Emergency” means a severe financial hardship to a Participant
resulting from an illness or accident of the Participant or the Participant’s spouse, beneficiary
or dependent (as defined in Section 152(a) of the Code, without regard to Section 151 (b)(1),
(b)(2) and (d)(1)(B)), loss of the Participant’s property due to casualty (including the need to
rebuild a home following damage to a home not otherwise covered by insurance, for example, as a
result of a natural disaster), or other similar extraordinary and unforeseeable circumstances
arising as a result of events beyond the control of the Participant. For example, the imminent
foreclosure of or eviction from the Participant’s primary residence may constitute an Unforeseeable
Emergency. In addition, the need to pay for medical expenses, including non-refundable
deductibles, as well as for the costs of prescription drug medication, may constitute an
Unforeseeable Emergency. Finally, the need to pay for funeral expenses of a spouse, beneficiary or
a dependent (as defined in Code section 152(a), without regard to Section 151 (b)(1), (b)(2) and
(d)(1)(B)), may also constitute an Unforeseeable Emergency. Except as otherwise provided above,
the purchase of a home and the payment of college tuition are not Unforeseeable Emergencies.
Whether a Participant is faced with an Unforeseeable Emergency is to be determined based on the
relevant facts and circumstances of each case.

ARTICLE III

PARTICIPATION AND DEFERRALS

     3.1 Determination of Participants. Within a reasonable period of time prior to the
beginning of a Plan Year or at any time during a Plan Year, the Administrator will designate
employees who will be eligible to become Active Participants in the Plan for that Plan Year (or the
remainder of such Plan Year). The Plan Administrator shall also designate whether an individual is
a Group A Participant or Group B Participant. An employee designated as an Active Participant for
a Plan Year shall remain an Active Participant until the employee’s Separation from Service or the
Administrator or the Board of Directors of the Corporation takes action to terminate such
employee’s participation effective on the first day of any Plan Year subsequent to the date of such
action by the Administrator or the Board. Participation in deferral elections may be terminated,
participation in matching contributions may be terminated or both may be terminated by such action.

     3.2 Deferral Elections. An Active Participant may elect to defer up to 10% of his or
her base salary during a Plan Year by completing and filing such forms as required by the
Corporation prior to the first day of the Plan Year for which the base salary is earned.
Compensation deferred shall be retained by the Corporation credited to the Participant’s Deferral
Account pursuant to Section 4.1 and paid in accordance with the terms and conditions of the Plan.
An employee who is not already eligible to participant in any other deferred compensation plan of
the account balance type who becomes an Active Participant for the first time during a Plan Year
(for example, an employee designated by the Administrator upon hire or promotion) may make an
election to defer base salary for services to be performed subsequent to the election within 30
days after the effective date of participation. The Participant’s base salary shall be determined
before reduction by any elective deferrals to this Plan or to a plan described in Code Sections
402(g)(3), 125 and 132(f)(4). A Participant’s deferral election may provide for a specified level
of deferral to be taken from each of his base salary payments during the year or, instead, may
specify that the amount of deferrals shall be taken out disproportionately in accordance with

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specific directions provided by the Participant at the time of the deferral election; provided,
however, that the amounts taken out pursuant to a disproportionate deferral election shall never in
the aggregate exceed 10% of the Participant’s “assumed annual base salary”. A Participant’s
“assumed annual base salary” shall be the annual base salary which would be payable to him during
the Plan Year if his base salary in effect on the first day of the Plan Year remained in effect
throughout the Plan Year.

     3.3 Annual Elections. An Active Participant’s deferral election under Section 3.2
shall be irrevocable for the entirety of a Plan Year. An Active Participant must make a separate
deferral election for each Plan Year in accordance with the procedures described in Section 3.2
above.

     3.4 Unforeseeable Emergency. In the event that a Participant makes application for a
hardship distribution under Section 6.3 and the Administrator determines that an Unforeseeable
Emergency exists, all deferral elections otherwise in effect under this Article III and any other
nonqualified deferred compensation plan of the account balance type shall immediately terminate
upon such determination. To resume deferrals thereafter, a Participant must make an election
satisfying the provisions of Section 3.2 as those provisions apply to someone who is already an
Active Participant in the Plan.

     3.5 401(k) Hardship. Any deferral elections in effect under this Article III shall be
cancelled as required due to a hardship distribution described in IRS Regulation Section
1.401(k)-1(d)(3) or any successor thereto. To resume deferrals after the required suspension
period, a Participant must make an election satisfying the provisions of Section 3.2 as those
provisions apply to someone who is already an Active Participant in the Plan.

     3.6 Matching Contributions. At the same time the Corporation credits elective
deferral contributions made pursuant to Section 3.2 to the Deferral Account of a Group A
Participant, the Corporation shall credit Matching Contributions in an amount equal to 50% of those
elective deferral contributions to the Participant’s Matching Account.

ARTICLE IV

ACCOUNTS; INTEREST

     4.1 Credits to Accounts. Bookkeeping amounts equal to the amounts deferred by a
Participant pursuant to Section 3.2 shall be credited to such Participant’s Deferral Account as
soon as practicable after the deferred compensation would otherwise have been paid to such
Participant in the absence of deferral. Bookkeeping amounts equal to the matching contributions
described in Section 3.6 shall be credited to the Participant’s Matching Account at the same time
as the deferrals to which they relate.

     4.2 Interest on Accounts. All funds credited to the Participant’s Account shall be
increased by interest monthly on the last day of each month by applying the “interest rate” to the
average of the Participant’s Account balances on each day of the month. The “interest rate” shall
be one-twelfth (1/12) of the average of the annual prime rate of U.S. Bank (or its successor) as in
effect on each day of the month.

     4.3 Bookkeeping Accounts Only. Each Participant’s Account shall be utilized solely as
a device for the measurement and determination of the amounts to be paid to such Participant under
the Plan. Participant Accounts shall be bookkeeping accounts only and no Participant or

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Beneficiary shall have any proprietary rights in any assets held by the Corporation, whether or not
held for the purpose of funding the Corporation’s obligation under this Plan. This Plan
constitutes the mere promise of the Corporation to make benefit payments in the future and the
right of any Participant or Beneficiary to receive benefits under this Plan shall be an unsecured
claim against the general assets of the Corporation. Notwithstanding the foregoing, the
Corporation may choose to finance some or all of its obligations hereunder via a trust intended to
be a grantor trust.

ARTICLE V

VESTING

     5.1 Deferral Account. The Participant shall at all time have a fully vested interest
in his Deferral Account.

     5.2 Matching Account. A Participant’s vested interest in his Matching Account shall
be the percentage of his Matching Account based on his completed years of continuous employment
with the group consisting of the Corporation and its affiliates from the date he first became
employed with that group determined as follows:

	 	 	 	 	 
	Completed Years Of Continuous Employment:	 	Vested Percentage:
	Less than 2 years
	 	 	0	%
	At least 2 years, but less than 3
	 	 	20	%
	At least 3 years, but less than 4
	 	 	40	%
	At least 4 years, but less than 5
	 	 	70	%
	5 or more years
	 	 	100	%

     5.3 Death or Disability. Notwithstanding Section 5.2 above, the Participant shall be
fully vested in his Matching Account if the Participant’s Separation from Service is by reason of
death or disability. For this purpose, the Participant shall be considered to be disabled if the
Administrator finds the Participant, on the basis of a written medical opinion, furnished by a
licensed physician appointed by the Administrator, to be incapable of engaging in the Participant’s
regular occupation with the Corporation at the location where the Participant last worked, and
that, to a reasonable medical probability, such incapacity will continue to exist during the
remainder of the Participant’s life.

     5.4 Special Vesting Calculation. For purposes of determining the vested percentage in
the Matching Account of a Participant whose Matching Account includes amounts originally credited
prior to 2005 under a Frozen Agreement but which were not vested prior to 2005, the Participant’s
vested interest in his Matching Account shall equal P(AB+O)-O. For purposes of applying this
formula: P is the vested percentage at the relevant time determined under Section 5.2; AB is the
Matching Account balance at the relevant time and O is the Participant’s vested account balance in
the Frozen Agreement on December 31, 2004. (The Frozen Agreements continue to govern all amounts
earned and vested by the Participant under the Frozen Agreements prior to January 1, 2005 (and
interested credited on such amounts).)

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ARTICLE VI

MANNER AND TIMING OF DISTRIBUTION

     6.1 Payment of Benefits.

     ii) After a Participant’s Separation from Service for any reason (including retirement,
death, disability or other termination), the Participant’s vested interest in his Account
will be determined and paid to the Participant (or in the event of the Participant’s death,
to the Participant’s Beneficiary). Payment shall be made in one of the following forms as
specified in the Participant’s payment election pursuant to Section 6.2:

     (i) A single sum distribution of the vested balance of the Account on the
first day of the seventh month following the Participant’s Separation from Service;
or

     (ii) The total value of the vested balance of the Account shall be paid in
five (5) annual installments with the first of such installments to be paid on the
first day of the seventh month following the Participant’s Separation from Service.
The amount of each installment shall be the Participant’s vested Account balance
as determined on the day prior to distribution multiplied by a fraction of which
the numerator is one and the denominator is the number of payments remaining to be
made to the Participant (including the payment being made currently). The interest
provided for in Section 4.2 shall continue to accrue on the vested balance
remaining in the Account; or

     (iii) The total value of the vested balance of the Account shall be paid in
ten (10) annual installments with the first of such installments to be paid on the
first day of the seventh month following the Participant’s Separation from Service.
The amount of each installment shall be the Participant’s vested Account balance
as determined on the day prior to installment multiplied by a fraction of which the
numerator is one and the denominator is the number of payments remaining to be made
to the Participant (including the payment being made currently). The interest
provided for in Section 4.2 shall continue to accrue on the vested balance
remaining in the Account; or

     (iv) The total value of the vested balance of the Account shall be paid in
twenty (20) annual installments with the first of such installments to be paid on
the first day of the seventh month following the Participant’s Separation from
Service. The amount of each installment shall be the Participant’s vested Account
balance as determined on the day prior to distribution multiplied by a fraction of
which the numerator is one and the denominator is the number of payments remaining
to be made to the Participant (including the payment being made currently). The
interest factor provided for in Section 4.2 shall continue to accrue on the vested
balance remaining in the Account.

In the case of the installment payments, subsequent installments shall be made on
an anniversary of the first installment.

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     (b) Notwithstanding paragraph (a) above, in the case of a Participant whose Separation
from Service was due to death, payment shall commence under the applicable payment option
on the first day of the first month following the Participant’s Separation from Service
rather than on the first day of the seventh month following the Participant’s Separation
from Service.

     6.2 Payment Election. An individual who first becomes an Active Participant at the
beginning of a Plan Year shall, prior to his date of participation, complete a payment election
form specifying the form of payment applicable to such Participant’s Account under the Plan.
Absent an actual election by such Participant by the effective date of participation, the
Participant shall be deemed to have elected payment in the single sum payment form. An individual
who first becomes an Active Participant other than on the first day of a Plan Year shall, no later
than 30 days after the effective date of participation, complete a payment election form specifying
the form of payment applicable to such Participant’s Account. In the event such a Participant does
not make an actual election within such 30 day period, payment will be made in the single sum
payment form; provided, however, that if such Participant is already a Participant in any other
nonqualified plan or plans sponsored by the Corporation of the account balance type, the most
recent payment election with respect to any one of those plans shall be the payment election form
deemed elected under this Plan regardless of whether the individual elects a different payment
election form during that initial 30 day period. A Participant may change the form of payment by
completing and filing a new payment election form with the Corporation, and the payment election
form on file with the Corporation as of the date of the Participant’s Separation from Service shall
be controlling. Notwithstanding the foregoing, a payment election form changing the Participant’s
form of payment shall not be effective if the Participant has a Separation from Service within
twelve months after the date on which the election change is filed with the Corporation. Any
change in payment method must have the effect of delaying the commencement of payments to a date
which is at least five (5) years following the initially scheduled commencement date of payment
previously in effect. For purposes of compliance with Section 409A of the Internal Revenue Code, a
series of five year installment payments, ten year installment payments and twenty year installment
payments are each designated as a single payment rather than a right to a series of separate
payments; therefore, a Participant who has elected (or is deemed to have elected) any option under
Section 6.1 may substitute any of the other options for the option originally elected as long as
the foregoing one-year and five year rules are satisfied. The five year delay rule does not apply
if the revised payment method applies only upon the Participant’s death.

     6.3 Financial Hardship. A partial or total distribution of the Participant’s Account
shall be made prior to Separation from Service upon the Participant’s request and a demonstration
by the Participant of severe financial hardship as a result of an Unforeseeable Emergency. Such
distribution shall be made in a single sum as soon as administratively practicable following the
Administrator’s determination that the foregoing requirements have been met. In any case, a
distribution due to Unforeseeable Emergency may not be made to the extent that such emergency is or
may be relieved through reimbursement or compensation from insurance or otherwise, by liquidation
of the Participant’s assets, to the extent the liquidation of such assets would not cause severe
financial hardship, or by cessation of deferrals as provided in Section 3.4. Distributions because
of an Unforeseeable Emergency must be limited to the amount reasonably necessary to satisfy the
emergency need (which may include amounts necessary to pay any Federal, state, or local income
taxes or penalties reasonably anticipated to result from the distribution). Determinations of
amounts reasonably necessary to satisfy the emergency need must take into account any additional
compensation that is available because of cancellation of a deferral election as provided in
Section 3.4 upon a payment due to an Unforeseeable Emergency. The

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payment may be made from any arrangement in which the Participant participates that provides for
payment upon an Unforeseeable Emergency, provided that the arrangement under which the payment was
made must be designated at the time of payment.

     6.4 Delayed Distribution.

     (a) A payment otherwise required to be made pursuant to the provisions of this Article
VI shall be delayed if the Corporation reasonably anticipates that the Corporation’s
deduction with respect to such payment would be limited or eliminated by application of
Code Section 162(m); provided, however that such payment shall be made on the earliest date
on which the Corporation anticipates that the deduction of the payment of the amount will
not be limited or eliminated by application of Code Section 162(m). In any event, such
payment shall be made no later than the last day of the calendar year in which occurs the
six month anniversary of the date on which the Participant has a Separation from Service.

     (b) A payment otherwise required under this Article VI shall be delayed if the
Corporation reasonably determines that the making of the payment will jeopardize the
ability of the Corporation to continue as a going concern; provided, however, that payments
shall be made on the earliest date on which the Corporation reasonably determines that the
making of the payment will not jeopardize the ability of the Corporation to continue as a
going concern.

     (c) A payment otherwise required under this Article VI shall be delayed if the
Corporation reasonably anticipates that the making of the payment will violate federal
securities laws or other applicable law; provided, however, that payments shall
nevertheless be made on the earliest date on which the Corporation reasonably anticipates
that the making of the payment will not cause such violation. (The making of a payment
that would cause inclusion in gross income or the applicability of any penalty provision or
other provision of the Code is not treated as a violation of applicable law.)

     (d) A payment otherwise required under this Article VI shall be delayed upon such
other events and conditions as the Internal Revenue Service may prescribe in generally
applicable guidance published in the Internal Revenue Bulletin.

     6.5 Inclusion in Income Under Section 409A. Notwithstanding any other provision of
this Article VI, in the event this Plan fails to satisfy the requirements of Code Section 409A and
regulations thereunder with respect to any Participant, there shall be distributed to such
Participant as promptly as possible after the Administrator becomes aware of such fact of
noncompliance such portion of the Participant’s Account balance hereunder as is included in income
as a result of the failure to comply, but no more.

     6.6 Domestic Relations Order. Notwithstanding any other provision of this Article VI,
payments shall be made from an account of a Participant in this Plan to such individual or
individuals (other than the Participant) and at such times as are necessary to comply with a
domestic relations order (as defined in Code Section 414(p)(1)(B)).

     6.7 De Minimis Amounts. Notwithstanding any other provision this Article VI, a
Participant’s Account entire balance under this Plan and all other nonqualified deferred
compensation plans of the account balance type shall automatically be distributed to the
Participant on or before the later of December 31 of the calendar year in which occurs the

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Participant’s Separation from Service or the 15th day of the third month following the
Participant’s Separation from Service if the total amount in such Account balance at the time of
distribution, when aggregated with all other amounts payable to the Participant under all
arrangements benefiting the Participant described in Section 1.409A-1(c) or any successor thereto,
do not exceed the amount described in Code Section 402(g)(1)(B). The foregoing lump sum payment
shall be made automatically and any other distribution elections otherwise applicable with respect
to the individual in the absence of this provision shall not apply.

ARTICLE VII

ADMINISTRATION

     7.1 Administrator. The Plan shall be administered by the Administrator, which shall
be a committee designated or created by the Corporation’s Board of Directors for this purpose. The
Administrator shall have all authority that may be appropriate for administering the Plan,
including the authority to adopt rules and regulations for the conduct of its affairs and for
implementing, amending and carrying out the Plan, interpreting the provisions of the Plan and
determining a Participant’s entitlement to benefits hereunder. The Administrator shall be entitled
to rely upon the Corporation’s records as to information pertinent to calculations or
determinations made pursuant to the Plan.

     The Administrator may also delegate any of its clerical or other administrative duties to one
or more officers or employees of the Corporation, who may assist the Administrator in the
performance of any of its functions hereunder. In the event of such delegation, a reference to the
Administrator shall be deemed to refer to such officer(s) or employee(s).

     7.2 Authority of Administrator. The Administrator shall have full and complete
discretionary authority to determine eligibility for benefits under the Plan, to construe the terms
of the Plan and to decide any matter presented through the claims procedure. Any final
determination by the Administrator shall be binding on all parties and afforded the maximum
deference allowed by law. If challenged in court, such determination shall not be subject to
de novo review and shall not be overturned unless proven to be arbitrary and capricious
based upon the evidence considered by the Administrator at the time of such determination.

     7.3 Administrator Actions. The Administrator may authorize one or more of its members
to execute on its behalf instructions or directions to any interested party, and any such
interested party may rely upon the information contained therein. The members may also act at a
meeting or by unanimous written consent. A majority of the members shall constitute a quorum for
the transaction of business and shall have full power to act hereunder. All decisions shall be
made by vote of the majority present at any meeting at which a quorum is present, except for
actions in writing without a meeting, which must be unanimous.

     7.4 Conflict of Interest. Any person who is on the committee which has been
designated by the Corporation’s Board of Directors as the Administrator who is covered under the
Plan may not vote or decide upon any matter relating solely to himself or vote in any case in which
his individual right to any benefit under the Plan is particularly involved. Decisions shall be
made by remaining members. Any such person shall not become an Active Participant the Plan unless
and until designated as a member by the Corporation’s Board of Directors. Further, any such person
shall not be removed from active participation in the Plan except pursuant to action taken by the
Board of Directors.

46

 

     7.5 Minor or Incompetent Payees. If a person to whom a benefit is payable is a minor
or is otherwise incompetent by reason of a physical or mental disability, the Corporation may cause
the payments due to such person to be made to another person for the first person’s benefit without
any responsibility to see to the application of such payment. Such payments shall operate as a
complete discharge of the obligations to such person under the Plan.

     7.6 No Liability. Except as otherwise provided by law, neither the Administrator, nor
any member thereof, nor any director, officer or employee of the Corporation involved in the
administration of the Plan shall be liable for any error of judgment, action or failure to act
hereunder or for any good faith exercise of discretion, excepting only liability for gross
negligence or willful misconduct. The Corporation shall hold harmless and defend any individual in
the employment of the Corporation and any director of the Corporation against any claim, action or
liability asserted against him in connection with any action or failure to act regarding the Plan,
except as and to the extent that any such liability may be based upon the individual’s own gross
negligence or willful misconduct. This indemnification shall not duplicate but may supplement any
coverage available under any applicable insurance.

     7.7 Plan Expenses. All costs and expenses incurred in connection with the
administration and operation of the Plan shall be borne by the Corporation and/or any trust
established by the Corporation to assist it in meeting its obligations under the Plan.

     7.8 Claims Procedure.

     (a) If the Participant or the Participant’s Beneficiary (hereinafter referred to as a
“Claimant”) is denied all or a portion of an expected benefit under the Plan for any
reason, he or she may file a claim with the Administrator or its designee. The
Administrator or its designee shall notify the Claimant within 60 days of allowance or
denial of the claim, unless the Claimant receives written notice prior to the end of the
sixty (60) day period stating that special circumstances require an extension of the time
for decision and specifying the expected date of decision. The notice of the such decision
shall be in writing, sent by mail to the Claimant’s last known address, and if a denial of
the claim, must contain the following information:

     (i) the specific reasons for the denial;

     (ii) specific reference to pertinent provisions of the Plan on which the
denial is based; and

     (iii) if applicable, a description of any additional information or material
necessary to perfect the claim, an explanation of why such information or material
is necessary, and an explanation of the claims review procedure.

     (iv) a description of the Plan’s claims review procedure, including a
statement of the Claimant’s right to bring a civil action under Section 502 of
ERISA if the Claimant’s claim is denied upon review.

     (b) A Claimant is entitled to request a review of any denial of his claim. The
request for review must be submitted in writing to the Administrator within 60 days after
receipt of the notice of the denial. The timely filing of such a request is necessary to
preserve any legal recourse which may be available to the Claimant and, absent the
submission of request for review within the 60-day period, the claim will be deemed to be

47

 

conclusively denied. Upon submission of a written request for review, the Claimant or his
representative shall be entitled to review all pertinent documents, and to submit issues
and comments in writing for consideration by the Administrator.

     The Administrator shall fully and fairly review the matter and shall consider all
information submitted in the review request, without regard to whether or not such
information was submitted or considered in the initial claim determination. The
Administrator shall promptly respond to the Claimant, in writing, of its decision within 60
days after receipt of the review request. However, due to special circumstances, if no
response has been provided within the first 60 days, and notice of the need for additional
time has been furnished within such period, the review and response may be made within the
following 60 days. The Administrator’s decision shall include specific reasons for the
decision, including references to the particular Plan provisions upon which the decision is
based, notification that the Claimant can receive or review copies of all documents,
records and information relevant to the claim, and information as to the Claimant’s right
to file suit under Section 502(a) of ERISA.

     (c) If a determination of disability for purposes of Section 5.2, 6.1(b) or 6.2
becomes necessary and if such determination is considered to be with respect to a claim for
benefits based on disability for purposes of 29 CFR Section 2560.503-1, then the
Administrator shall adopt and administer a special procedure for considering such
disability claims meeting the requirements of 29 CFR Section 2560.503-1 for disability
benefit claims.

ARTICLE VIII

MISCELLANEOUS

     8.1 Amendment or Termination. The Corporation (through its Board of Directors or
authorized officers or employees) reserves the right to alter or amend the Plan, or any part
thereof, in such manner as it may determine, at any time and for any reason. Further, the Board of
Directors of the Corporation reserves the right to terminate the Plan, at any time and for any
reason. Notwithstanding the foregoing, in no event shall any amendment or termination deprive any
Participant or Beneficiary of any amounts credited to him under this Plan as of the date of such
amendment or termination; provided, however, that the Corporation may prospectively change the rate
at which interest is credited or discontinue the crediting of interest and, further, the
Corporation may make any amendment it deems necessary or desirable for purposes of compliance with
the requirements of Code Section 409A and regulations thereunder.

     If the Plan is amended to freeze benefit accruals, no additional deferrals or contributions
shall be credited to any Participant Account hereunder. Following such a freeze of benefit
accruals, Participants’ Accounts shall be paid at such time and in such form as provided under
Article VI of the Plan. If the Corporation terminates the Plan and if the termination is of the
type described in regulations issued by the Internal Revenue Service pursuant to Code Section 409A,
then the Corporation shall distribute the then existing Account balances of Participants and
beneficiaries in a lump sum within the time period specified in such regulations and, following
such distribution, there shall be no further obligation to any Participant or beneficiary under
this Plan. However, if the termination is not of the type described in such regulations, then
following Plan termination Participants’ Accounts shall be paid at such time and in such form as
provided under Article VI of the plan.

48

 

     8.2 Applicable Law. This Plan shall be governed by the laws of the State of
Wisconsin, except to the extent preempted by the provisions of ERISA or other applicable federal
law.

     8.3 Relationship to Other Programs. Participation in the Plan shall not affect a
Participant’s rights to participate in and receive benefits under any other plans of the
Corporation, nor shall it affect the Participant’s rights under any other agreement entered into
with the Corporation, unless expressly provided otherwise by such plan or agreement. Any amount
credited under or paid pursuant to this Plan shall not be treated as wages, salary or any other
type of compensation or otherwise taken into account in the determination of the Participant’s
benefits under any other plans of the Corporation, unless expressly provided otherwise by such
plan.

     8.4 Non-Assignability. No Participant or Beneficiary shall have any right to commute,
sell, assign, pledge, convey, or otherwise transfer any rights or claims to receive benefits
hereunder, nor shall such rights or claims be subject to garnishment, attachment, execution or levy
of any kind except to the extent otherwise required by law.

     8.5 Status of Plan Under ERISA. The Plan is intended to be an unfunded plan
maintained by the Corporation primarily for the purpose of providing deferred compensation for a
select group of management or highly compensated employees, as described in Section 201(2), Section
301(a)(3), Section 401(a)(1) and Section 4021(b)(6) of ERISA.

     8.6 Withholding. The Corporation shall comply with all applicable tax and
governmental withholding requirements. To the extent required by law, the Corporation shall
withhold any taxes required to be withheld by the federal or any state or local government from
payments made hereunder or from any other amounts paid to a Participant by the Corporation. If
FICA taxes must be withheld in connection with amounts credited hereunder before payments are
otherwise due hereunder and if there are no other wages from which to withhold them, the
Corporation shall pay such FICA taxes generated by such payment (and taxes under Code Section 3401
triggered thereby and additional taxes under Section 3401 attributable to pyramiding of Section
3401 wages and taxes) but no more and the Participant’s Account hereunder shall be reduced by an
amount equal to the payments made by the Corporation.

     8.7 Limited Liability. In no event will the Corporation’s liability to pay benefits
to a Participant or his Beneficiary under Article VI ever exceed the Participant’s vested interest
in his Account under the Plan.

     8.8 No Right to Continued Employment. Neither participation in this Plan, nor the
payment of any benefit hereunder, shall be construed as giving to a Participant any right to be
retained in the service of the Corporation, or limiting in any way the right of the Corporation to
terminate the Participant’s service at any time. Nor does participation in this Plan guarantee the
Participant the right to be continued in service in any particular position or at any particular
rate of compensation.

     8.9 Special Rules for 2005-2008. Notwithstanding the usual rules required regarding
the deferral elections and distribution elections:

     (a) A Participant who has previously made an election for deferral of base salary, may
on or before March 15, 2005 modify that election as it would apply to base salary payments
made with respect to services rendered after the date the Participant makes such election.

49

 

     (b) On or before December 31, 2008, a Participant may make an election as to
distribution of his Account from among the choices described at Section 6.1 hereof without
complying with the rules described in Section 6.2 hereof as long as the effect of the
election made in any year is not to accelerate payments into that year or to defer payments
which would otherwise have been made in that year to a subsequent year. In order to
subsequently change any such special election after December 31, 2008, the requirements of
Section 6.2 hereof must be satisfied. (This election will not apply to distribution of the
Participant’s accounts holding amounts earned and vested prior to January 1, 2005, if any,
(and interest credited thereon) since such accounts are not governed by this document but
are governed by the Frozen Agreements.)

     8.10 Cessation of Affiliation. Each Corporation sponsors the Plan as to its own
employees and not with respect to the employees of any other Corporation which sponsors the Plan.
If a Corporation which sponsors the Plan ceases to be affiliated with the other Corporations which
sponsor the Plan, then that Corporation shall continue to maintain the Plan with respect to its own
employees, shall adopt replacement documents which are substantively identical to this document by
which to continue its obligations which had been created hereunder and, thereafter, its obligations
to its employees shall be governed by such successor document and this document shall cease to
apply to that Corporation and its employees.

50EX-10.2

Exhibit 10.2

SANDERSON FARMS, INC.

RESTRICTED STOCK AGREEMENT

(Management Employee)

     This RESTRICTED STOCK AGREEMENT (this “Agreement”), made and entered into as of the
29th day of January, 2009 (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 performance of future services on behalf of the Company, 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 on the fourth
anniversary of the Grant Date, so long as the Participant has remained continuously employed by the
Company from the Grant Date through such date.

          (c) In the event of (i) the Participant’s termination of employment with the Company by reason
of death or Disability, (ii) the participants termination of employment with the Company after his
attainment of eligibility for retirement (as determined by the Board for time to time) or, (iii) 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’s employment with
the Company is terminated 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
termination date shall immediately be forfeited, ownership shall be transferred back to the Company
and the Restricted Stock shall become authorized but unissued Shares.

          (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 the Restricted Stock that has not vested as of the date of the Board
determination shall immediately be forfeited, ownership shall be transferred back to the Company
and the Restricted Stock shall become authorized but unissued Shares or, if the Restricted Stock
has already vested, the Participant shall repay to the Company the fair market value of the Shares
as of the Grant Date. For purposes of this Section 1(d), the parties hereto agree that the fair
market value of the Shares as of the Grant Date is $38.24 per share.

1

 

     2. Issuance of Shares.

     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 therefore 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.

     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.

2

 

     8. Legal Construction.

          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.

          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.

          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 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.
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.

3

 

     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 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 Prospectus dated February 23, 2006, 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.

          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:
	 	          Mike Cockrell
	 

	 	 	 	 	 	 
	 

	 	 	 	Title:
	 	          CFO and Treasurer
	 

	 	 	 	 	 	 
	 
	 	 	 	 	 	 
	 

	 	 	 	 	 	PARTICIPANT
	 
	 	 	 	 	 	 
	 

	 	 	 	 	 	 

4

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