Document:

EX-10.1

THE ADVISORY BOARD COMPANY

2005 STOCK INCENTIVE PLAN

1. Purpose

The purpose of The Advisory Board Company 2005 Stock Incentive Plan (the “Plan”) is to advance
the interests of The Advisory Board Company (the “Company”) by stimulating the efforts of
employees, officers and, to the extent provided by Section 5(d) and Section 5(e), non-employee
directors and other service providers, in each case who are selected to be participants, by
heightening the desire of such persons to continue in working toward and contributing to the
success and progress of the Company. The Plan supersedes the Company’s 2001 Stock-Based Incentive
Compensation Plan, 1997 Stock-Based Incentive Compensation Plan and Directors’ Stock Plan with
respect to future awards, and provides for the grant of Incentive and Nonqualified Stock Options,
Stock Appreciation Rights, Restricted Stock and Restricted Stock Units, any of which may be
performance-based, and for Incentive Bonuses, which may be paid in cash or stock or a combination
thereof, as determined by the Administrator.

2. Definitions

As used in the Plan, the following terms shall have the meanings set forth below:

(a) “Administrator” means the Administrator of the Plan in accordance with Section
18.

(b) “Award” means an Incentive Stock Option, Nonqualified Stock Option, Stock
Appreciation Right, Restricted Stock, Restricted Stock Unit or Incentive Bonus granted to a
Participant pursuant to the provisions of the Plan, any of which the Administrator may structure to
qualify in whole or in part as a Performance Award.

(c) “Award Agreement” means a written agreement or other instrument as may be
approved from time to time by the Administrator implementing the grant of each Award. An Agreement
may be in the form of an agreement to be executed by both the Participant and the Company (or an
authorized representative of the Company) or certificates, notices or similar instruments as
approved by the Administrator.

(d) “Board” means the board of directors of the Company.

(e) “Code” means the Internal Revenue Code of 1986, as amended from time to time,
and the rulings and regulations issues thereunder.

(f) “Company” means The Advisory Board Company, a Delaware corporation.

(g) “Incentive Bonus” means a bonus opportunity awarded under Section 9 pursuant to
which a Participant may become entitled to receive an amount based on satisfaction of such
performance criteria as are specified in the Award Agreement.

(h) “Incentive Stock Option” means a stock option that is intended to qualify as an
“incentive stock option” within the meaning of Section 422 of the Code.

(i) “Nonemployee Director” means each person who is, or is elected to be, a member
of the Board and who is not an employee of the Company or any Subsidiary.

(j) “Nonqualified Stock Option” means a stock option that is not intended to qualify
as an “incentive stock option” within the meaning of Section 422 of the Code.

(k) “Option” means an Incentive Stock Option and/or a Nonqualified Stock Option
granted pursuant to Section 6 of the Plan.

(l) “Participant” means any individual described in Section 3 to whom Awards have
been granted from time to time by the Administrator and any authorized transferee of such
individual.

(m) “Performance Award” means an Award, the grant, issuance, retention, vesting or
settlement of which is subject to satisfaction of one or more Qualifying Performance Criteria
established pursuant to Section 13.

(n) “Plan” means The Advisory Board Company 2005 Stock Incentive Plan as set forth
herein and as amended from time to time.

(o) “Prior Plans” mean The Advisory Board Company 2001 Stock-Based Incentive
Compensation Plan, The Advisory Board Company 1997 Stock-Based Incentive Compensation Plan and The
Advisory Board Company Directors’ Stock Plan.

(p) “Qualifying Performance Criteria” has the meaning set forth in Section 13(b).

(q) “Restricted Stock” means Shares granted pursuant to Section 8 of the Plan.

(r) “Restricted Stock Unit” means an Award granted to a Participant pursuant to
Section 8 pursuant to which Shares or cash in lieu thereof may be issued in the future.

(s) “Retirement” has the meaning specified by the Administrator in the terms of an
Award Agreement or, in the absence of any such term, for Participants other than Nonemployee
Directors shall mean retirement from active employment with the Company and its Subsidiaries (i) at
or after age 55 and with the approval of the Administrator or (ii) at or after age 65. The
determination of the Administrator as to an individual’s Retirement shall be conclusive on all
parties.

(t) “Share” means a share of the Company’s common stock, par value $.01, subject to
adjustment as provided in Section 12.

(u) “Stock Appreciation Right” means a right granted pursuant to Section 7 of the
Plan that entitles the Participant to receive, in cash or Shares or a combination thereof, as
determined by the Administrator, value equal to or otherwise based on the excess of (i) the market
price of a specified number of Shares at the time of exercise over (ii) the exercise price of the
right, as established by the Administrator on the date of grant.

(v) “Subsidiary” means any corporation (other than the Company) in an unbroken chain
of corporations beginning with the Company where each of the corporations in the unbroken chain
other than the last corporation owns stock possessing at least 50 percent or more of the total
combined voting power of all classes of stock in one of the other corporations in the chain, and if
specifically determined by the Administrator in the context other than with respect to Incentive
Stock Options, may include an entity in which the Company has a significant ownership interest or
that is directly or indirectly controlled by the Company.

(w) “Termination of employment” means ceasing to serve as a full-time employee of
the Company and its Subsidiaries or, with respect to a service provider, ceasing to serve as such
for the Company, except that with respect to all or any Awards held by a Participant (i) the
Administrator may determine, subject to Section 6(d), that an approved leave of absence or approved
employment on a less than full-time basis is not considered a “termination of employment,” (ii) the
Administrator may determine that a transition of employment to service with a partnership, joint
venture or corporation not meeting the requirements of a Subsidiary in which the Company or a
Subsidiary is a party is not considered a “termination of employment,” (iii) service as a member of
the Board shall constitute continued employment with respect to Awards granted to a Participant
while he or she served as an employee and (iv) service as an employee of the Company or a
Subsidiary shall constitute continued employment with respect to Awards granted to a Participant
while he or she served as a member of the Board. The Administrator shall determine whether any
corporate transaction, such as a sale or spin-off of a division or subsidiary that employs a
Participant, shall be deemed to result in a termination of employment with the Company and its
Subsidiaries for purposes of any affected Participant’s Options, and the Administrator’s decision
shall be final and binding.

(x) “Total and Permanent Disablement” has the meaning specified by the Administrator
in the terms of an Award Agreement or, in the absence of any such term or in the case of an Option
intending to qualify as an Incentive Stock Option, the inability to engage in any substantial
gainful activity by reason of any medically determinable physical or mental impairment which can be
expected to result in death or which has lasted or can be expected to last for a continuous period
of not less than 12 months. The determination of the Administrator as to an individual’s Total and
Permanent Disablement shall be conclusive on all parties.

3. Eligibility

Any person who is a current or prospective officer or employee (including any director who is
also an employee, in his or her capacity as such) of the Company or of any Subsidiary shall be
eligible for selection by the Administrator for the grant of Awards hereunder. To the extent
provided by Section 5(d), any Nonemployee Director shall be eligible for the grant of Awards
hereunder as determined by the Administrator. In addition, to the extent provided by Section 5(e),
any service provider who has been retained to provide consulting, advisory or other services to the
Company or to any Subsidiary shall be eligible for selection by the Administrator for the grant of
Awards hereunder. Options intending to qualify as Incentive Stock Options may only be granted to
employees of the Company or any Subsidiary within the meaning of the Code, as selected by the
Administrator. For purposes of this Plan, the Chairman of the Board’s status as an employee shall
be determined by the Administrator.

4. Effective Date and Termination of Plan

This Plan was adopted by the Board as of September 22, 2005, and it will become effective (the
“Effective Date”) when it is approved by the Company’s stockholders. All Awards granted under this
Plan are subject to, and may not be exercised before, the approval of this Plan by the stockholders
prior to the first anniversary date of the effective date of the Plan, by the affirmative vote of
the holders of a majority of the outstanding Shares of the Company present, or represented by
proxy, and entitled to vote, at a meeting of the Company’s stockholders or by written consent in
accordance with the laws of the State of Delaware; provided that if such approval by the
stockholders of the Company is not forthcoming, all Awards previously granted under this Plan shall
be void. The Plan shall remain available for the grant of Awards until the tenth (10th) anniversary
of the Effective Date. Notwithstanding the foregoing, the Plan may be terminated at such earlier
time as the Board may determine. Termination of the Plan will not affect the rights and obligations
of the Participants and the Company arising under Awards theretofore granted and then in effect.

5. Shares Subject to the Plan and to Awards

(a) Aggregate Limits. The aggregate number of Shares issuable pursuant to all Awards
shall not exceed 1,600,000, plus (i) any Shares that were authorized for issuance under the Prior
Plans that, as of November 15, 2005, remain available for issuance under the Prior Plans (not
including any Shares that are subject to, as of November 15, 2005, outstanding awards under the
Prior Plans or any Shares that prior to November 15, 2005 were issued pursuant to awards granted
under the Prior Plans) and (ii) any Shares subject to outstanding awards under the Prior Plans as
of November 15, 2005 that on or after such date cease for any reason to be subject to such awards
(other than by reason of exercise or settlement of the awards to the extent they are exercised for
or settled in vested and nonforfeitable shares); provided that any Shares granted under Options or
Stock Appreciation Rights shall be counted against this limit on a one-for-one basis and any Shares
granted as Awards other than Options or Stock Appreciation Rights shall be counted against this
limit as two (2) Shares for every one (1) Share subject to such Award. The aggregate number of
Shares available for grant under this Plan and the number of Shares subject to outstanding Awards
shall be subject to adjustment as provided in Section 12. The Shares issued pursuant to Awards
granted under this Plan may be shares that are authorized and unissued or shares that were
reacquired by the Company, including shares purchased in the open market.

(b) Issuance of Shares. For purposes of Section 5(a), the aggregate number of Shares
issued under this Plan at any time shall equal only the number of Shares actually issued upon
exercise or settlement of an Award. Notwithstanding the foregoing, Shares subject to an Award
under the Plan may not again be made available for issuance under the Plan if such Shares are: (i)
Shares that were subject to a stock-settled Stock Appreciation Right and were not issued upon the
net settlement or net exercise of such Stock Appreciation Right, (ii) Shares used to pay the
exercise price of a Stock Option, (iii) Shares delivered to or withheld by the Company to pay the
withholding taxes related a Stock Option or a Stock Appreciation Right, or (iv) Shares repurchased
on the open market with the proceeds of a Stock Option exercise. Shares subject to Awards that
have been canceled, expired, forfeited or otherwise not issued under an Award and Shares subject to
Awards settled in cash shall not count as Shares issued under this Plan.

(c) Tax Code Limits. The aggregate number of Shares subject to Awards granted under
this Plan during any calendar year to any one Participant shall not exceed 500,000, which number
shall be calculated and adjusted pursuant to Section 12 only to the extent that such calculation or
adjustment will not affect the status of any Award intended to qualify as “performance based
compensation” under Section 162(m) of the Code but which number shall not count any tandem SARs (as
defined in Section 7). The aggregate number of Shares that may be issued pursuant to the exercise
of Incentive Stock Options granted under this Plan shall not exceed 1,600,000, which number shall
be calculated and adjusted pursuant to Section 12 only to the extent that such calculation or
adjustment will not affect the status of any option intended to qualify as an Incentive Stock
Option under Section 422 of the Code. The maximum amount payable pursuant to that portion of an
Incentive Bonus granted in any calendar year to any Participant under this Plan that is intended to
satisfy the requirements for “performance based compensation” under Section 162(m) of the Code
shall not exceed five million dollars ($5,000,000).

(d) Director Awards. The aggregate number of Shares subject to Options and Stock
Appreciation Rights granted under this Plan during any calendar year to any one Nonemployee
Director shall not exceed 30,000, and the aggregate number of Shares issued or issuable under all
Awards granted under this Plan other than Options or Stock Appreciation Rights during any calendar
year to any one Nonemployee Director shall not exceed 15,000; provided, however, that in the
calendar year in which a Nonemployee Director first joins the Board of Directors or is first
designated as Chairman of the Board of Directors or Lead Director, the maximum number of shares
subject to Awards granted to the Participant may be up to two hundred percent (200%) of the number
of shares set forth in the foregoing limits and the foregoing limits shall not count any tandem
SARs (as defined in Section 7).

(e) Awards to Service Providers. The aggregate number of Shares issued under this
Plan pursuant to all Awards granted to service providers shall not exceed 100,000.

6. Options

(a) Option Awards. Options may be granted at any time and from time to time prior to
the termination of the Plan to Participants as determined by the Administrator. No Participant
shall have any rights as a stockholder with respect to any Shares subject to Option hereunder until
said Shares have been issued, except that the Administrator may authorize dividend equivalent
accruals with respect to such Shares. Each Option shall be evidenced by an Award Agreement. Options
granted pursuant to the Plan need not be identical but each Option must contain and be subject to
the terms and conditions set forth below.

(b) Price. The Administrator will establish the exercise price per Share under each
Option, which, in no event will be less than the market value of the Shares on the date of grant;
provided, however, that the exercise price per Share with respect to an Option that is granted in
connection with a merger or other acquisition as a substitute or replacement award for options held
by optionees of the acquired entity may be less than 100% of the market price of the Shares on the
date such Option is granted if such exercise price is based on a formula set forth in the terms of
the options held by such optionees or in the terms of the agreement providing for such merger or
other acquisition. The exercise price of any Option may be paid in Shares, cash or a combination
thereof, as determined by the Administrator, including an irrevocable commitment by a broker to pay
over such amount from a sale of the Shares issuable under an Option, the delivery of previously
owned Shares and withholding of Shares deliverable upon exercise.

(c) No Repricing. Other than in connection with a change in the Company’s
capitalization (as described in Section 12) the exercise price of an Option may not be reduced
without stockholder approval (including canceling previously awarded Options and regranting them
with a lower exercise price).

(d) Provisions Applicable to Options. The date on which Options become exercisable
shall be determined at the sole discretion of the Administrator and set forth in an Award
Agreement. Unless provided otherwise in the applicable Award Agreement, to the extent that the
Administrator determines that an approved leave of absence or employment on a less than full-time
basis is not a Termination of employment, the vesting period and/or exercisability of an Option
shall be adjusted by the Administrator during or to reflect the effects of any period during which
the Participant is on an approved leave of absence or is employed on a less than full-time basis.

(e) Term of Options and Termination of Employment: The Administrator shall
establish the term of each Option, which in no case shall exceed a period of seven (7) years from
the date of grant. Unless an Option earlier expires upon the expiration date established pursuant
to the foregoing sentence, upon the termination of the Participant’s employment, his or her rights
to exercise an Option then held shall be only as follows, unless the Administrator specifies
otherwise:

(1) Death. Upon the death of a Participant while in the employ of the Company
or any Subsidiary or while serving as a member of the Board, all of the Participant’s
Options then held shall be exercisable by his or her estate, heir or beneficiary at any time
during the one (1) year period commencing on the date of death. Any and all of the deceased
Participant’s Options that are not exercised during the one (1) year commencing on the date
of death shall terminate as of the end of such one (1) year period.

If a Participant should die within thirty (30) days of his or her termination of
employment with the Company and its Subsidiaries, an Option shall be exercisable by his or
her estate, heir or beneficiary at any time during the one (1) year period commencing on the
date of termination, but only to the extent of the number of Shares as to which such Option
was exercisable as of the date of such termination. Any and all of the deceased
Participant’s Options that are not exercised during the one (1) year period commencing on
the date of termination shall terminate as of the end of such one (1) year period. A
Participant’s estate shall mean his or her legal representative or other person who so
acquires the right to exercise the Option by bequest or inheritance or by reason of the
death of the Participant.

(2) Total and Permanent Disablement. Upon termination of employment as a
result of the Total and Permanent Disablement of any Participant, all of the Participant’s
Options then held shall be exercisable during the one (1) year period commencing on the date
of termination. Any and all Options that are not exercised during the one (1) year period
commencing on the date of termination shall terminate as of the end of such one (1) year
period.

(3) Retirement. Upon Retirement of a Participant, the Participant’s Options
then held shall be exercisable during the one (1) year period commencing on the date of
Retirement. The number of Shares with respect to which the Options shall be exercisable
shall equal the total number of Shares that were exercisable under the Participant’s Option
on the date of his or her Retirement. Any and all Options that are not exercised during the
one (1) year period commencing on the date of termination shall terminate as of the end of
such one (1) year period.

(4) Other Reasons. Upon the date of a termination of a Participant’s
employment for any reason other than those stated above in Sections 6(e)(1), (e)(2) and
(e)(3) or as described in Section 15, (A) to the extent that any Option is not exercisable
as of such termination date, such portion of the Option shall remain unexercisable and shall
terminate as of such date, and (B) to the extent that any Option is exercisable as of such
termination date, such portion of the Option shall expire on the earlier of (i) ninety (90)
days following such date and (ii) the expiration date of such Option.

(f) Incentive Stock Options. Notwithstanding anything to the contrary in this
Section 6, in the case of the grant of an Option intending to qualify as an Incentive Stock Option:
(i) if the Participant owns stock possessing more than 10 percent of the combined voting power of
all classes of stock of the Company (a “10% Shareholder”), the exercise price of such Option must
be at least 110 percent of the fair market value of the Shares on the date of grant and the Option
must expire within a period of not more than five (5) years from the date of grant, and (ii)
termination of employment will occur when the person to whom an Award was granted ceases to be an
employee (as determined in accordance with Section 3401(c) of the Code and the regulations
promulgated thereunder) of the Company and its Subsidiaries. Notwithstanding anything in this
Section 6 to the contrary, options designated as Incentive Stock Options shall not be eligible for
treatment under the Code as Incentive Stock Options (and will be deemed to be Nonqualified Stock
Options) to the extent that either (a) the aggregate fair market value of Shares (determined as of
the time of grant) with respect to which such Options are exercisable for the first time by the
Participant during any calendar year (under all plans of the Company and any Subsidiary) exceeds
$100,000, taking Options into account in the order in which they were granted, or (b) such Options
otherwise remain exercisable but are not exercised within three (3) months of Termination of
employment (or such other period of time provided in Section 422 of the Code).

7. Stock Appreciation Rights

Stock Appreciation Rights may be granted to Participants from time to time either in tandem
with or as a component of other Awards granted under the Plan (“tandem SARs”) or not in conjunction
with other Awards (“freestanding SARs”) and may, but need not, relate to a specific Option granted
under Section 6. The provisions of Stock Appreciation Rights need not be the same with respect to
each grant or each recipient. Any Stock Appreciation Right granted in tandem with an Award may be
granted at the same time such Award is granted or at any time thereafter before exercise or
expiration of such Award. All freestanding SARs shall be granted subject to the same terms and
conditions applicable to Options as set forth in Section 6 and all tandem SARs shall have the same
exercise price, vesting, exercisability, forfeiture and termination provisions as the Award to
which they relate. Subject to the provisions of Section 6 and the immediately preceding sentence,
the Administrator may impose such other conditions or restrictions on any Stock Appreciation Right
as it shall deem appropriate. Stock Appreciation Rights may be settled in Shares, cash or a
combination thereof, as determined by the Administrator and set forth in the applicable Award
Agreement. Other than in connection with a change in the Company’s capitalization (as described in
Section 12) the exercise price of Stock Appreciation Rights may not be reduced without stockholder
approval (including canceling previously awarded Stock Appreciation Rights and regranting them with
a lower exercise price).

8. Restricted Stock and Restricted Stock Units

(a) Restricted Stock and Restricted Stock Unit Awards. Restricted Stock and
Restricted Stock Units may be granted at any time and from time to time prior to the termination of
the Plan to Participants as determined by the Administrator. Restricted Stock is an award or
issuance of Shares the grant, issuance, retention, vesting and/or transferability of which is
subject during specified periods of time to such conditions (including continued employment or
performance conditions) and terms as the Administrator deems appropriate. Restricted Stock Units
are Awards denominated in units of Shares under which the issuance of Shares is subject to such
conditions (including continued employment or performance conditions) and terms as the
Administrator deems appropriate. Each grant of Restricted Stock and Restricted Stock Units shall be
evidenced by an Award Agreement. Unless determined otherwise by the Administrator, each Restricted
Stock Unit will be equal to one Share and will entitle a Participant to either the issuance of
Shares or payment of an amount of cash determined with reference to the value of Shares. To the
extent determined by the Administrator, Restricted Stock and Restricted Stock Units may be
satisfied or settled in Shares, cash or a combination thereof. Restricted Stock and Restricted
Stock Units granted pursuant to the Plan need not be identical but each grant of Restricted Stock
and Restricted Stock Units must contain and be subject to the terms and conditions set forth below.

(b) Contents of Agreement. Each Award Agreement shall contain provisions regarding
(i) the number of Shares or Restricted Stock Units subject to such Award or a formula for
determining such number, (ii) the purchase price of the Shares, if any, and the means of payment,
(iii) the performance criteria, if any, and level of achievement versus these criteria that shall
determine the number of Shares or Restricted Stock Units granted, issued, retainable and/or vested,
(iv) such terms and conditions on the grant, issuance, vesting and/or forfeiture of the Shares or
Restricted Stock Units as may be determined from time to time by the Administrator, (v) the term of
the performance period, if any, as to which performance will be measured for determining the number
of such Shares or Restricted Stock Units, and (vi) restrictions on the transferability of the
Shares or Restricted Stock Units. Shares issued under a Restricted Stock Award may be issued in the
name of the Participant and held by the Participant or held by the Company, in each case as the
Administrator may provide.

(c) Vesting and Performance Criteria. The grant, issuance, retention, vesting and/or
settlement of shares of Restricted Stock and Restricted Stock Units will occur when and in such
installments as the Administrator determines or under criteria the Administrator establishes, which
may include Qualifying Performance Criteria. The grant, issuance, retention, vesting and/or
settlement of Shares under any such Award that is based on performance criteria and level of
achievement versus such criteria will be subject to a performance period of not less than one (1)
year, and the grant, issuance, retention, vesting and/or settlement of Shares under any Restricted
Stock or Restricted Stock Unit Award that is based solely upon continued employment and/or the
passage of time may not vest or be settled in full over a period of less than three (3) years but
may be subject to pro-rata vesting over such period, except that the Administrator may provide for
the satisfaction and/or lapse of all conditions under any such Award in the event of the
Participant’s death, disability, Retirement or in connection with a change of control of the
Company, and the Administrator may provide that any such restriction or limitation will not apply
in the case of a Restricted Stock or Restricted Stock Unit Award that is issued in payment or
settlement of compensation that has been earned by the Participant. Notwithstanding anything in
this Plan to the contrary, the performance criteria for any Restricted Stock or Restricted Stock
Unit that is intended to satisfy the requirements for “performance-based compensation” under
Section 162(m) of the Code will be a measure based on one or more Qualifying Performance Criteria
selected by the Administrator and specified when the Award is granted.

(d) Discretionary Adjustments and Limits. Subject to the limits imposed under
Section 162(m) of the Code for Awards that are intended to qualify as “performance based
compensation,” notwithstanding the satisfaction of any performance goals, the number of Shares
granted, issued, retainable and/or vested under an Award of Restricted Stock or Restricted Stock
Units on account of either financial performance or personal performance evaluations may, to the
extent specified in the Award Agreement, be reduced by the Administrator on the basis of such
further considerations as the Administrator shall determine.

(e) Voting Rights. Unless otherwise determined by the Administrator, Participants
holding shares of Restricted Stock granted hereunder may exercise full voting rights with respect
to those shares during the period of restriction. Participants shall have no voting rights with
respect to Shares underlying Restricted Stock Units unless and until such Shares are reflected as
issued and outstanding shares on the Company’s stock ledger.

(f) Dividends and Distributions. Participants in whose name Restricted Stock is
granted shall be entitled to receive all dividends and other distributions paid with respect to
those Shares, unless determined otherwise by the Administrator. The Administrator will determine
whether any such dividends or distributions will be automatically reinvested in additional shares
of Restricted Stock and subject to the same restrictions on transferability as the Restricted Stock
with respect to which they were distributed or whether such dividends or distributions will be paid
in cash. Shares underlying Restricted Stock Units shall be entitled to dividends or dividend
equivalents only to the extent provided by the Administrator.

9. Incentive Bonuses

(a) General. Each Incentive Bonus Award will confer upon the Participant the
opportunity to earn a future payment tied to the level of achievement with respect to one or more
performance criteria established for a performance period of not less than one year.

(b) Incentive Bonus Document. The terms of any Incentive Bonus will be set forth in
an Award Agreement. Each Award Agreement evidencing an Incentive Bonus shall contain provisions
regarding (i) the target and maximum amount payable to the Participant as an Incentive Bonus, (ii)
the performance criteria and level of achievement versus these criteria that shall determine the
amount of such payment, (iii) the term of the performance period as to which performance shall be
measured for determining the amount of any payment, (iv) the timing of any payment earned by virtue
of performance, (v) restrictions on the alienation or transfer of the Incentive Bonus prior to
actual payment, (vi) forfeiture provisions and (vii) such further terms and conditions, in each
case not inconsistent with this Plan as may be determined from time to time by the Administrator.

(c) Performance Criteria. The Administrator shall establish the performance criteria
and level of achievement versus these criteria that shall determine the target and maximum amount
payable under an Incentive Bonus, which criteria may be based on financial performance and/or
personal performance evaluations. The Administrator may specify the percentage of the target
Incentive Bonus that is intended to satisfy the requirements for “performance-based compensation”
under Section 162(m) of the Code. Notwithstanding anything to the contrary herein, the performance
criteria for any portion of an Incentive Bonus that is intended by the Administrator to satisfy the
requirements for “performance-based compensation” under Section 162(m) of the Code shall be a
measure based on one or more Qualifying Performance Criteria (as defined in Section 13(b)) selected
by the Administrator and specified at the time the Incentive Bonus is granted. The Administrator
shall certify the extent to which any Qualifying Performance Criteria has been satisfied, and the
amount payable as a result thereof, prior to payment of any Incentive Bonus that is intended to
satisfy the requirements for “performance-based compensation” under Section 162(m) of the Code.

(d) Timing and Form of Payment. The Administrator shall determine the timing of
payment of any Incentive Bonus. Payment of the amount due under an Incentive Bonus may be made in
cash or in Shares, as determined by the Administrator. The Administrator may provide for or,
subject to such terms and conditions as the Administrator may specify, may permit a Participant to
elect for the payment of any Incentive Bonus to be deferred to a specified date or event.

(e) Discretionary Adjustments. Notwithstanding satisfaction of any performance
goals, the amount paid under an Incentive Bonus on account of either financial performance or
personal performance evaluations may, to the extent specified in the Award Agreement, be reduced by
the Administrator on the basis of such further considerations as the Administrator shall determine.

10. Deferral of Gains

The Administrator may, in an Award Agreement or otherwise, provide for the deferred delivery
of Shares upon settlement, vesting or other events with respect to Restricted Stock or Restricted
Stock Units, or in payment or satisfaction of an Incentive Bonus. Notwithstanding anything herein
to the contrary, in no event will any deferral of the delivery of Shares or any other payment with
respect to any Award be allowed if the Administrator determines, in its sole discretion, that the
deferral would result in the imposition of the additional tax under Section 409A(a)(1)(B) of the
Code.

11. Conditions and Restrictions Upon Securities Subject to Awards

The Administrator may provide that the Shares issued upon exercise of an Option or Stock
Appreciation Right or otherwise subject to or issued under an Award shall be subject to such
further agreements, restrictions, conditions or limitations as the Administrator in its discretion
may specify prior to the exercise of such Option or Stock Appreciation Right or the grant, vesting
or settlement of such Award, including without limitation, conditions on vesting or
transferability, forfeiture or repurchase provisions and method of payment for the Shares issued
upon exercise, vesting or settlement of such Award (including the actual or constructive surrender
of Shares already owned by the Participant) or payment of taxes arising in connection with an
Award. Without limiting the foregoing, such restrictions may address the timing and manner of any
resales by the Participant or other subsequent transfers by the Participant of any Shares issued
under an Award, including without limitation (i) restrictions under an insider trading policy or
pursuant to applicable law, (ii) restrictions designed to delay and/or coordinate the timing and
manner of sales by Participant and holders of other Company equity compensation arrangements, (iii)
restrictions as to the use of a specified brokerage firm for such resales or other transfers and
(iv) provisions requiring Shares to be sold on the open market or to the Company in order to
satisfy tax withholding or other obligations.

12. Adjustment of and Changes in the Stock

The number and kind of Shares available for issuance under this Plan (including under any
Awards then outstanding), and the number and kind of Shares subject to the individual limits set
forth in Section 5 of this Plan, may be adjusted by the Administrator as it determines appropriate
to reflect any reorganization, reclassification, combination of shares, stock split, reverse stock
split, spin-off, dividend or distribution of securities, property or cash (other than regular,
quarterly cash dividends), or any other event or transaction that affects the number or kind of
Shares of the Company outstanding. Such adjustment may be designed to comply with Section 425 of
the Code or, except as otherwise expressly provided in Section 5(c) of this Plan, may be designed
to treat the Shares available under the Plan and subject to Awards as if they were all outstanding
on the record date for such event or transaction or to increase the number of such Shares to
reflect a deemed reinvestment in Shares of the amount distributed to the Company’s securityholders.
The terms of any outstanding Award may also be adjusted by the Administrator as to price, number
or kind of Shares subject to such Award and other terms to reflect the foregoing events, which
adjustments need not be uniform as between different Awards or different types of Awards.

In the event there shall be any other change in the number or kind of outstanding Shares, or
any stock or other securities into which such Shares shall have been changed, or for which it shall
have been exchanged, by reason of a change of control, other merger, consolidation or otherwise,
then the Administrator shall, in its sole discretion, determine the appropriate adjustment, if any,
to be effected. In addition, in the event of such change described in this paragraph, the
Administrator may accelerate the time or times at which any Award may be exercised and may provide
for cancellation of such accelerated Awards that are not exercised within a time prescribed by the
Administrator in its sole discretion.

No right to purchase fractional shares shall result from any adjustment in Awards pursuant to
this Section 12. In case of any such adjustment, the Shares subject to the Award shall be rounded
down to the nearest whole share. The Company shall notify Participants holding Awards subject to
any adjustments pursuant to this Section 12 of such adjustment, but (whether or not notice is
given) such adjustment shall be effective and binding for all purposes of the Plan.

13. Qualifying Performance-Based Compensation

(a) General. The Administrator may establish performance criteria and level of
achievement versus such criteria that shall determine the number of Shares to be granted, retained,
vested, issued or issuable under or in settlement of or the amount payable pursuant to an Award,
which criteria may be based on Qualifying Performance Criteria or other standards of financial
performance and/or personal performance evaluations. In addition, the Administrator may specify
that an Award or a portion of an Award is intended to satisfy the requirements for
“performance-based compensation” under Section 162(m) of the Code, provided that the performance
criteria for such Award or portion of an Award that is intended by the Administrator to satisfy the
requirements for “performance-based compensation” under Section 162(m) of the Code shall be a
measure based on one or more Qualifying Performance Criteria selected by the Administrator and
specified at the time the Award is granted. The Administrator shall certify the extent to which any
Qualifying Performance Criteria has been satisfied, and the amount payable as a result thereof,
prior to payment, settlement or vesting of any Award that is intended to satisfy the requirements
for “performance-based compensation” under Section 162(m) of the Code. Notwithstanding satisfaction
of any performance goals, the number of Shares issued under or the amount paid under an award may,
to the extent specified in the Award Agreement, be reduced by the Administrator on the basis of
such further considerations as the Administrator in its sole discretion shall determine.

(b) Qualifying Performance Criteria. For purposes of this Plan, the term “Qualifying
Performance Criteria” shall mean any one or more of the following performance criteria, either
individually, alternatively or in any combination, applied to either the Company as a whole or to a
business unit or Subsidiary, either individually, alternatively or in any combination, and measured
either annually or cumulatively over a period of years, on an absolute basis or relative to a
pre-established target, to previous years’ results or to a designated comparison group, in each
case as specified by the Administrator: (i) cash flow (before or after dividends), (ii) earnings
per share (including earnings before interest, taxes, depreciation and amortization), (iii) stock
price, (iv) return on equity, (v) total stockholder return, (vi) return on capital (including
return on total capital or return on invested capital), (vii) return on assets or net assets,
(viii) market capitalization, (ix) economic value added, (x) debt leverage (debt to capital), (xi)
revenue, (xii) income or net income, (xiii) operating income, (xiv) operating profit or net
operating profit, (xv) operating margin or profit margin, (xvi) return on operating revenue, (xvii)
cash from operations, (xviii) operating ratio, (xix) operating revenue, or (xx) customer service.
To the extent consistent with Section 162(m) of the Code, the Administrator (A) shall appropriately
adjust any evaluation of performance under a Qualifying Performance Criteria to eliminate the
effects of charges for restructurings, discontinued operations, extraordinary items and all items
of gain, loss or expense determined to be extraordinary or unusual in nature or related to the
disposal of a segment of a business or related to a change in accounting principle all as
determined in accordance with standards established by opinion No. 30 of the Accounting Principles
Board (APA Opinion No. 30) or other applicable or successor accounting provisions, as well as the
cumulative effect of accounting changes, in each case as determined in accordance with generally
accepted accounting principles or identified in the Company’s financial statements or notes to the
financial statements, and (B) may appropriately adjust any evaluation of performance under a
Qualifying Performance Criteria to exclude any of the following events that occurs during a
performance period: (i) asset write-downs, (ii) litigation, claims, judgments or settlements, (iii)
the effect of changes in tax law or other such laws or provisions affecting reported results, (iv)
accruals for reorganization and restructuring programs and (v) accruals of any amounts for payment
under this Plan or any other compensation arrangement maintained by the Company.

14. Transferability

Each Award may not be sold, transferred, pledged, assigned, or otherwise alienated or
hypothecated by a Participant other than by will or the laws of descent and distribution, and each
Option or Stock Appreciation Right shall be exercisable only by the Participant during his or her
lifetime. Notwithstanding the foregoing, to the extent permitted by the Administrator, the person
to whom an Award is initially granted (the “Grantee”) may transfer an Award to any “family member”
of the Grantee (as such term is defined in Section 1(a)(5) of the General Instructions to Form S-8
under the Securities Act of 1933, as amended (“Form S-8”)), to trusts solely for the benefit of
such family members and to partnerships in which such family members and/or trusts are the only
partners; provided that, (i) as a condition thereof, the transferor and the transferee must execute
a written agreement containing such terms as specified by the Administrator, and (ii) the transfer
is pursuant to a gift or a domestic relations order to the extent permitted under the General
Instructions to Form S-8. Except to the extent specified otherwise in the agreement the
Administrator provides for the Grantee and transferee to execute, all vesting, exercisability and
forfeiture provisions that are conditioned on the Grantee’s continued employment or service shall
continue to be determined with reference to the Grantee’s employment or service (and not to the
status of the transferee) after any transfer of an Award pursuant to this Section 14, and the
responsibility to pay any taxes in connection with an Award shall remain with the Grantee
notwithstanding any transfer other than by will or intestate succession.

15. Suspension or Termination of Awards

Except as otherwise provided by the Administrator, if at any time (including after a notice of
exercise has been delivered or an award has vested) the Chief Executive Officer or any other person
designated by the Administrator (each such person, an “Authorized Officer”) reasonably believes
that a Participant may have committed an Act of Misconduct as described in this Section 15, the
Authorized Officer, Administrator or the Board may suspend the Participant’s rights to exercise any
Option, to vest in an Award, and/or to receive payment for or receive Shares in settlement of an
Award pending a determination of whether an Act of Misconduct has been committed.

If the Administrator or an Authorized Officer determines a Participant has committed an act of
embezzlement, fraud, dishonesty, nonpayment of any obligation owed to the Company or any
Subsidiary, breach of fiduciary duty, violation of Company ethics policy or code of conduct, or
deliberate disregard of the Company or Subsidiary rules resulting in loss, damage or injury to the
Company or any Subsidiary, or if a Participant makes an unauthorized disclosure of any Company or
Subsidiary trade secret or confidential information, solicits any employee or service provider to
leave the employ or cease providing services to the Company or any Subsidiary, breaches any
intellectual property or assignment of inventions covenant, engages in any conduct constituting
unfair competition, breaches any non-competition agreement, induces any Company or Subsidiary
customer to breach a contract with the Company or any Subsidiary or to cease doing business with
the Company or any Subsidiary, or induces any principal for whom the Company or any Subsidiary acts
as agent to terminate such agency relationship (any of the foregoing acts, an “Act of Misconduct”),
then except as otherwise provided by the Administrator, (i) neither the Participant nor his or her
estate nor transferee shall be entitled to exercise any Option or Stock Appreciation Right
whatsoever, vest in or have the restrictions on an Award lapse, or otherwise receive payment of an
Award, (ii) the Participant will forfeit all outstanding Awards and (iii) the Participant may be
required, at the Administrator’s sole discretion, to return and/or repay to the Company any then
unvested Shares previously issued under the Plan. In making such determination, the Administrator
or an Authorized Officer shall give the Participant an opportunity to appear and present evidence
on his or her behalf at a hearing before the Administrator or its designee or an opportunity to
submit written comments, documents, information and arguments to be considered by the
Administrator. Any dispute by a Participant or other person as to the determination of the
Administrator shall be resolved pursuant to Section 23 of the Plan.

16. Compliance with Laws and Regulations

This Plan, the grant, issuance, vesting, exercise and settlement of Awards thereunder, and the
obligation of the Company to sell, issue or deliver Shares under such Awards, shall be subject to
all applicable foreign, federal, state and local laws, rules and regulations, stock exchange rules
and regulations, and to such approvals by any governmental or regulatory agency as may be required.
The Company shall not be required to register in a Participant’s name or deliver any Shares prior
to the completion of any registration or qualification of such shares under any foreign, federal,
state or local law or any ruling or regulation of any government body which the Administrator shall
determine to be necessary or advisable. To the extent the Company is unable to or the Administrator
deems it infeasible to obtain authority from any regulatory body having jurisdiction, which
authority is deemed by the Company’s counsel to be necessary to the lawful issuance and sale of any
Shares hereunder, the Company and its Subsidiaries shall be relieved of any liability with respect
to the failure to issue or sell such Shares as to which such requisite authority shall not have
been obtained. No Option shall be exercisable and no Shares shall be issued and/or transferable
under any other Award unless a registration statement with respect to the Shares underlying such
Option is effective and current or the Company has determined that such registration is
unnecessary.

In the event an Award is granted to or held by a Participant who is employed or providing
services outside the United States, the Administrator may, in its sole discretion, modify the
provisions of the Plan or of such Award as they pertain to such individual to comply with
applicable foreign law or to recognize differences in local law, currency or tax policy. The
Administrator may also impose conditions on the grant, issuance, exercise, vesting, settlement or
retention of Awards in order to comply with such foreign law and/or to minimize the Company’s
obligations with respect to tax equalization for Participants employed outside their home country.

17. Withholding

To the extent required by applicable federal, state, local or foreign law, a Participant shall
be required to satisfy, in a manner satisfactory to the Company, any withholding tax obligations
that arise by reason of an Option exercise, disposition of Shares issued under an Incentive Stock
Option, the vesting of or settlement of an Award, an election pursuant to Section 83(b) of the Code
or otherwise with respect to an Award. The Company and its Subsidiaries shall not be required to
issue Shares, make any payment or to recognize the transfer or disposition of Shares until such
obligations are satisfied. The Administrator may provide for or permit these obligations to be
satisfied through the mandatory or elective sale of Shares and/or by having the Company withhold a
portion of the Shares that otherwise would be issued to him or her upon exercise of the Option or
the vesting or settlement of an Award, or by tendering Shares previously acquired.

18. Administration of the Plan

(a) Administrator of the Plan. The Plan shall be administered by the Administrator
who shall be the Compensation Committee of the Board or, in the absence of a Compensation
Committee, the Board itself. Any power of the Administrator may also be exercised by the Board,
except to the extent that the grant or exercise of such authority would cause any Award or
transaction to become subject to (or lose an exemption under) the short-swing profit recovery
provisions of Section 16 of the Securities Exchange Act of 1934 or cause an Award designated as a
Performance Award not to qualify for treatment as performance-based compensation under Section
162(m) of the Code. To the extent that any permitted action taken by the Board conflicts with
action taken by the Administrator, the Board action shall control. The Compensation Committee may
by resolution authorize one or more officers of the Company to perform any or all things that the
Administrator is authorized and empowered to do or perform under the Plan, and for all purposes
under this Plan, such officer or officers shall be treated as the Administrator; provided, however,
that the resolution so authorizing such officer or officers shall specify the total number of
Awards (if any) such officer or officers may award pursuant to such delegated authority, and any
such Award shall be subject to the form of Option agreement theretofore approved by the
Compensation Committee. No such officer shall designate himself or herself as a recipient of any
Awards granted under authority delegated to such officer. In addition, the Compensation Committee
may delegate any or all aspects of the day-to-day administration of the Plan to one or more
officers or employees of the Company or any Subsidiary, and/or to one or more agents.

(b) Powers of Administrator. Subject to the express provisions of this Plan, the
Administrator shall be authorized and empowered to do all things that it determines to be necessary
or appropriate in connection with the administration of this Plan, including, without limitation:
(i) to prescribe, amend and rescind rules and regulations relating to this Plan and to define terms
not otherwise defined herein; (ii) to determine which persons are Participants, to which of such
Participants, if any, Awards shall be granted hereunder and the timing of any such Awards; (iii) to
grant Awards to Participants and determine the terms and conditions thereof, including the number
of Shares subject to Awards and the exercise or purchase price of such Shares and the circumstances
under which Awards become exercisable or vested or are forfeited or expire, which terms may but
need not be conditioned upon the passage of time, continued employment, the satisfaction of
performance criteria, the occurrence of certain events (including events which the Board or the
Administrator determine constitute a change of control), or other factors; (iv) to establish and
verify the extent of satisfaction of any performance goals or other conditions applicable to the
grant, issuance, exercisability, vesting and/or ability to retain any Award; (v) to prescribe and
amend the terms of the agreements or other documents evidencing Awards made under this Plan (which
need not be identical) and the terms of or form of any document or notice required to be delivered
to the Company by Participants under this Plan; (vi) to determine whether, and the extent to which,
adjustments are required pursuant to Section 12; (vii) to interpret and construe this Plan, any
rules and regulations under this Plan and the terms and conditions of any Award granted hereunder,
and to make exceptions to any such provisions in good faith and for the benefit of the Company; and
(viii) to make all other determinations deemed necessary or advisable for the administration of
this Plan.

(c) Determinations by the Administrator. All decisions, determinations and
interpretations by the Administrator regarding the Plan, any rules and regulations under the Plan
and the terms and conditions of or operation of any Award granted hereunder, shall be final and
binding on all Participants, beneficiaries, heirs, assigns or other persons holding or claiming
rights under the Plan or any Award. The Administrator shall consider such factors as it deems
relevant, in its sole and absolute discretion, to making such decisions, determinations and
interpretations including, without limitation, the recommendations or advice of any officer or
other employee of the Company and such attorneys, consultants and accountants as it may select.

(d) Subsidiary Awards. In the case of a grant of an Award to any Participant
employed by a Subsidiary, such grant may, if the Administrator so directs, be implemented by the
Company issuing any subject Shares to the Subsidiary, for such lawful consideration as the
Administrator may determine, upon the condition or understanding that the Subsidiary will transfer
the Shares to the Participant in accordance with the terms of the Award specified by the
Administrator pursuant to the provisions of the Plan. Notwithstanding any other provision hereof,
such Award may be issued by and in the name of the Subsidiary and shall be deemed granted on such
date as the Administrator shall determine.

19. Amendment of the Plan or Awards

The Board may amend, alter or discontinue this Plan and the Administrator may amend, or alter
any agreement or other document evidencing an Award made under this Plan but, except as provided
pursuant to the provisions of Section 12, no such amendment shall, without the approval of the
stockholders of the Company:

(a) increase the maximum number of Shares for which Awards may be granted under this
Plan;

(b) reduce the price at which Options may be granted below the price provided for in
Section 6(a);

(c) reduce the exercise price of outstanding Options;

(d) extend the term of this Plan;

(e) change the class of persons eligible to be Participants;

(f) otherwise amend the Plan in any manner requiring stockholder approval by law or
under the NASDAQ National Market listing requirements; or

(g) increase the individual maximum limits in Sections 5(c) and (d).

No amendment or alteration to the Plan or an Award or Award Agreement shall be made which
would impair the rights of the holder of an Award, without such holder’s consent, provided that no
such consent shall be required if the Administrator determines in its sole discretion and prior to
the date of any change of control (as defined in the applicable Award Agreement) that such
amendment or alteration either is required or advisable in order for the Company, the Plan or the
Award to satisfy any law or regulation or to meet the requirements of or avoid adverse financial
accounting consequences under any accounting standard.

20. No Liability of Company

The Company and any Subsidiary or affiliate which is in existence or hereafter comes into
existence shall not be liable to a Participant or any other person as to: (i) the non-issuance or
sale of Shares as to which the Company has been unable to obtain from any regulatory body having
jurisdiction the authority deemed by the Company’s counsel to be necessary to the lawful issuance
and sale of any Shares hereunder; and (ii) any tax consequence expected, but not realized, by any
Participant or other person due to the receipt, exercise or settlement of any Award granted
hereunder.

21. Non-Exclusivity of Plan

Neither the adoption of this Plan by the Board nor the submission of this Plan to the
stockholders of the Company for approval shall be construed as creating any limitations on the
power of the Board or the Administrator to adopt such other incentive arrangements as either may
deem desirable, including without limitation, the granting of restricted stock or stock options
otherwise than under this Plan or an arrangement not intended to qualify under Code Section 162(m),
and such arrangements may be either generally applicable or applicable only in specific cases.

22. Governing Law

This Plan and any agreements or other documents hereunder shall be interpreted and construed
in accordance with the laws of the Delaware and applicable federal law. Any reference in this Plan
or in the agreement or other document evidencing any Awards to a provision of law or to a rule or
regulation shall be deemed to include any successor law, rule or regulation of similar effect or
applicability.

23. Arbitration of Disputes

In the event a Participant or other holder of an Award or person claiming a right under an
Award or the Plan believes that a decision by the Administrator with respect to such person or
Award was arbitrary or capricious, the person may request arbitration with respect to such
decision. The review by the arbitrator shall be limited to determining whether the Participant or
other Award holder has proven that the Administrator’s decision was arbitrary or capricious. This
arbitration shall be the sole and exclusive review permitted of the Administrator’s decision.
Participants, Award holders and persons claiming rights under an Award or the Plan explicitly waive
any right to judicial review.

Notice of demand for arbitration shall be made in writing to the Administrator within thirty
(30) days after the applicable decision by the Administrator. The arbitrator shall be selected by
those members of the Board who are neither members of the Compensation Committee of the Board nor
employees of the Company or any Subsidiary. If there are no such members of the Board, the
arbitrator shall be selected by the Board. The arbitrator shall be an individual who is an attorney
licensed to practice law in the jurisdiction in which the Company’s headquarters are then located.
Such arbitrator shall be neutral within the meaning of the Commercial Rules of Dispute Resolution
of the American Arbitration Association; provided, however, that the arbitration shall not be
administered by the American Arbitration Association. Any challenge to the neutrality of the
arbitrator shall be resolved by the arbitrator whose decision shall be final and conclusive. The
arbitration shall be administered and conducted by the arbitrator pursuant to the Commercial Rules
of Dispute Resolution of the American Arbitration Association. Each side shall bear its own fees
and expenses, including its own attorney’s fees, and each side shall bear one half of the
arbitrator’s fees and expenses. The decision of the arbitrator on the issue(s) presented for
arbitration shall be final and conclusive and may be enforced in any court of competent
jurisdiction.

24. No Right to Employment, Reelection or Continued Service

Nothing in this Plan or an Award Agreement shall interfere with or limit in any way the right
of the Company, its Subsidiaries and/or its affiliates to terminate any Participant’s employment,
service on the Board or service for the Company at any time or for any reason not prohibited by
law, nor shall this Plan or an Award itself confer upon any Participant any right to continue his
or her employment or service for any specified period of time. Neither an Award nor any benefits
arising under this Plan shall constitute an employment contract with the Company, any Subsidiary
and/or its affiliates. Subject to Sections 4 and 19, this Plan and the benefits hereunder may be
terminated at any time in the sole and exclusive discretion of the Board without giving rise to any
liability on the part of the Company, its Subsidiaries and/or its affiliates.

25. Unfunded Plan

The Plan is intended to be an unfunded plan. Participants are and shall at all times be
general creditors of the Company with respect to their Awards. If the Administrator or the Company
chooses to set aside funds in a trust or otherwise for the payment of Awards under the Plan, such
funds shall at all times be subject to the claims of the creditors of the Company in the event of
its bankruptcy or insolvency.First Amendment to Credit Agreement between Pilgrim's Pride Corporation and
      CoBank ACB

    FIRST
      AMENDMENT TO CREDIT AGREEMENT

     

    Parties:

     

    “CoBank”: CoBank,
      ACB

    5500
      South Quebec Street 

    Greenwood
      Village, Colorado 80111

    

    “Borrower”: Pilgrim’s
      Pride Corporation

    110
      South
      Texas Street

    Pittsburg,
      Texas 75686

    

    “Syndication
      Parties”: Whose
      signatures appear below

    

    Execution
      Date:
      September 22, 2005

     

     

    Recitals:

     

    A.  CoBank
      (in its capacity as the Administrative Agent (“Agent”)
      and as
      a Syndication Party) and Borrower have entered into that certain 2004 Amended
      and Restated Credit Agreement (Convertible Revolving Loan) dated as of April
      7,
      2004 (as amended, modified, or supplemented from time to time, the “Credit
      Agreement”)
      pursuant to which CoBank and any entity which becomes a “Syndication Party” has
      extended certain credit facilities to Borrower under the terms and conditions
      set forth in the Credit Agreement.

     

    B.  Borrower
      has requested that the Agent and the Syndication Parties broaden Borrower’s
      authority to make Investments, which the Agent and the Syndication Parties
      are
      willing to do under the terms and conditions as set forth in this First
      Amendment to Credit Agreement (“First
      Amendment”).

     

     

    Agreement:

     

    Now,
      therefore, in consideration of the mutual covenants and agreements herein
      contained and other good and valuable consideration, the receipt and adequacy
      of
      which are hereby acknowledged, the parties hereto hereby agree as
      follows:

     

    1.  Amendments
      to Credit Agreement.
      The
      Credit Agreement is amended as of the Effective Date as follows:

     

    1.1  Section
      10.8 is hereby amended in its entirety to read as follows:

     

    10.8 Investments.
      Borrower shall not (nor shall it permit any of its Subsidiaries to) own,
      purchase or acquire any stock, obligations or securities of, or any other
      interest in, or make any capital contribution to, any Person, except that
      Borrower and the Subsidiaries may own, purchase or acquire:

     

    (a) commercial
      paper maturing not in excess of one year from the date of acquisition and rated
      P1 by Moody’s Investors Service, Inc. or A1 by Standard & Poor’s Corporation
      on the date of acquisition;

     

    (b) certificates
      of deposit in North American commercial banks rated C or better by Keefe,
      Bruyette & Woods, Inc. or 3 or better by Cates Consulting Analysts, maturing
      not in excess of one year from the date of acquisition;

     

    (c) obligations
      of the United States government or any agency thereof, the obligations of which
      are guaranteed by the United States government, maturing, in each case, not
      in
      excess of one year from the date of acquisition; 

     

    (d) repurchase
      agreements of any bank or trust company incorporated under the laws of the
      United States of America or any state thereof and fully secured by a pledge
      of
      obligations issued or fully and unconditionally guaranteed by the United States
      government; 

     

    (e) banker’s
      acceptances maturing within one year issued by any bank or trust company
      organized under the laws of the United States or any state thereof and having
      capital, surplus and undivided profits of at least $50,000,000;

     

    (f) Eurodollar
      time deposits maturing within six months purchased directly from a bank meeting
      the requirements of 10.8(b);

     

    (g) direct
      obligations issued by any state of the United States or any political
      subdivision of any such state or public instrumentality thereof maturing within
      one year and having, at the time of acquisition, the highest rating obtainable
      from either Standard & Poor’s Ratings Group, a division of McGraw Hill, Inc.
      or Moody's Investors Service, Inc.;

     

    (h) investments
      in mutual funds that invest not less than 95% of their assets in cash and cash
      equivalents or investments of the kinds described in clauses (a) through (g)
      above;

     

    (i) investments
      in an aggregate amount of up to $8,000,000.00 in deposits maintained with the
      Pilgrim Bank of Pittsburg;

     

    (j) corporate
      bonds rated investment grade by Standard & Poor’s Ratings Group, a division
      of McGraw Hill, Inc. or by Moody’s Investors Service, Inc.;

     

    (k) Investments
      permitted under Sections 10.5, 10.6, 10.7, and 10.9;

     

    (l) Investments
      made prior to the Effective Date in Persons, which are not Subsidiaries, and
      which are identified on Exhibit
      10.8
      hereto;

     

    (m) Investments
      in the Subsidiaries; 

     

    (n) Investments
      in Intercompany Bonds;

     

    (o) Investments
      in Southern Hens, Inc. in an aggregate amount not to exceed $5,000,000.00;
      

     

    (p) Investments
      from time to time made after the Effective Date in Food Processors Water
      Cooperative, Inc. and the Greater Shenandoah Valley Development Company in
      accordance with past practice and their respective organizational documents
      as
      in effect on the date hereof; 

     

    (q) Investments
      described in, or similar to those described in, the attached Exhibit
      10.8(q),
      so long
      as at the time of purchase such Investments (other than those described in
      clauses (B) and (D) of Exhibit 10.8(q)) had a long-term senior unsecured debt
      rating of not less than Baa3 by Moody’s Investors Service, Inc. and not less
      than BBB by Standard & Poor’s Ratings Group, a division of McGraw Hill,
      Inc.; and

     

    (r) Investments
      not covered by clauses (a) through q) above, in an amount not to exceed at
      any
      time an aggregate of $50,000,000.00.

     

    1.2  Exhibit
      10.8(q) attached to this First Amendment shall be Exhibit
      10.8(q)
      to the
      Credit Agreement.

     

    2.  Conditions
      to Effectiveness of this First Amendment.
      The
      effectiveness of this First Amendment is subject to satisfaction, in the
      Administrative Agent’s sole discretion, of each of the following conditions
      precedent (the date on which all such conditions precedent are so satisfied
      shall be the “Effective
      Date”):

     

    2.1  Delivery
      of Executed Loan Documents.
      Borrower shall have delivered to the Administrative Agent, for the benefit
      of,
      and for delivery to, the Administrative Agent and the Syndication Parties,
      the
      following documents, each duly executed by Borrower and any other party
      thereto:

     

    A.  This
      First Amendment

     

    2.2  Representations
      and Warranties.
      The
      representations and warranties of Borrower in the Credit Agreement shall be
      true
      and correct in all material respects on and as of the Effective Date as though
      made on and as of such date.

     

    2.3  No
      Event of Default.
      No
      Event of Default shall have occurred and be continuing under the Credit
      Agreement as of the Effective Date of this First Amendment.

     

    2.4  Payment
      of Fees and Expenses.
      Borrower shall have paid the Administrative Agent, by wire transfer of
      immediately available federal funds (a) all fees presently due under the Credit
      Agreement (as amended by this First Amendment); and (b) all expenses owing
      as of
      the Effective Date pursuant to Section 17.1 of the Credit
      Agreement.

     

    3.  General
      Provisions.

     

    3.1  No
      Other Modifications.
      The
      Credit Agreement, as expressly modified herein, shall continue in full force
      and
      effect and be binding upon the parties thereto.

     

    3.2  Successors
      and Assigns.
      This
      First Amendment shall be binding upon and inure to the benefit of Borrower,
      Agent, and the Syndication Parties, and their respective successors and assigns,
      except that Borrower may not assign or transfer its rights or obligations
      hereunder without the prior written consent of all the Syndication
      Parties.

     

    3.3  Definitions.
      Capitalized terms used, but not defined, in this First Amendment shall have
      the
      meaning set forth in the Credit Agreement.

     

    3.4  Severability.
      Should
      any provision of this First Amendment be deemed unlawful or unenforceable,
      said
      provision shall be deemed several and apart from all other provisions of this
      First Amendment and all remaining provision of this First Amendment shall be
      fully enforceable.

     

    3.5  Governing
      Law.
      To the
      extent not governed by federal law, this First Amendment and the rights and
      obligations of the parties hereto shall be governed by, interpreted and enforced
      in accordance with the laws of the State of Colorado.

     

    3.6  Headings.
      The
      captions or headings in this First Amendment are for convenience only and in
      no
      way define, limit or describe the scope or intent of any provision of this
      First
      Amendment.

     

    3.7  Counterparts.
      This
      First Amendment may be executed by the parties hereto in separate counterparts,
      each of which, when so executed and delivered, shall be an original, but all
      such counterparts shall together constitute one and the same instrument. Each
      counterpart may consist of a number of copies hereof, each signed by less
      than all, but together signed by all, of the parties hereto. Copies of documents
      or signature pages bearing original signatures, and executed documents or
      signature pages delivered by a party by telefax, facsimile, or e-mail
      transmission of an Adobe® file format document (also known as a PDF file) shall,
      in each such instance, be deemed to be, and shall constitute and be treated
      as,
      an original signed document or counterpart, as applicable. Any
      party
      delivering an executed counterpart of this
      First
      Amendment
      by
      telefax, facsimile,
      or
      e-mail transmission of an Adobe® file format document
      also
      shall deliver an original executed counterpart of this
      First
      Amendment,
      but the
      failure to deliver an original executed counterpart shall not affect the
      validity, enforceability, and binding effect of this
      First
      Amendment.

     

    [Signatures
      to follow on next page.]

    

    
      
        
          7

          

        

        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    IN
      WITNESS WHEREOF, the parties hereto have caused this First Amendment to be
      executed as of the Effective Date.

     

    ADMINISTRATIVE
      AGENT: CoBank,
      ACB

    

    By:
       

    Name: Jim
      Stutzman

    Title: Vice
      President

    

    

    BORROWER: Pilgrim’s
      Pride Corporation

    

    By:
       

    Name: Richard
      A. Cogdill

    Title: Exe.
      VP,
      CFO, Sec & Treas.

    

    

    SYNDICATION
      PARTIES: CoBank,
      ACB

    

    By:
       

    Name: Jim
      Stutzman

    Title: Vice
      President

    

    

    Agriland,
      FCS

    

    By:
       

    Name: Steve
      Ogletree

    Title: Chief
      Executive Officer

    

     

    Deere
      Credit, Inc.

    

    By:
       

    Name: Raymond
      L. Murphey

    Title: Senior
      Account Credit Manager

    

    

     

    

    
      
        
          7

          

        

        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    EXHIBIT
      10.8(q) TO CREDIT AGREEMENT

    

    CORPORATE
      CASH INVESTMENT POLICY

    

    Each
      of
      the following Investments, provided that at the time of purchase such Investment
      (other than Items B and D below) shall have a long-term senior unsecured debt
      rating of not less than Baa3 by Moody’s Investors Service, Inc. (“Moody’s”) and
      not less than BBB by Standard & Poor’s Ratings Group, a division of McGraw
      Hill, Inc. (“S&P”): 

    

    A. Obligations
      of, or those guaranteed or insured by, the U.S. government or U.S. government
      sponsored enterprises or agencies; 

    

    B. Commercial
      paper rated P1 by Moody’s or A1 by S&P, which matures within one year of
      issuance thereof; 

    

    C. Direct
      obligations and securities issued by any state of the U.S. or any political
      subdivision of any such state or public instrumentality thereof; 

    

    D. Repurchase
      agreements fully collateralized by U.S. government and/or agency securities
      with
      a maximum maturity of seven days; 

    

    E. Other
      corporate notes, medium term notes and Rule 144A private placements;

    

    F. Asset
      backed securities; 

    

    G. Mortgage
      backed securities and commercial mortgage backed securities; 

    

    H. Collateralized
      mortgage obligations; 

    

    I. Obligations
      of sovereign and supranational entities; 

    

    J. Other
      municipal debt obligations; 

    

    K. Remarketed
      or auction rate preferred shares of closed end mutual funds; 

    

    L. Money
      market mutual funds with a minimum $1billion average asset size for the previous
      12 months;

    

    M. Common
      stock listed on a U.S. exchange or traded in the over-the-counter market up
      to a
      maximum of 10% of the portfolio at the time of purchase; and

    

    N. Debt
      obligations of non-U.S. governments, sovereign entities, supranational agencies
      or foreign corporations.

    

    

    

    3453401_2.DOC

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