Document:

Exhibit

Exhibit 10.6

FIFTH AMENDMENT TO THE
SANDERSON FARMS, INC. AND AFFILIATES
EMPLOYEE STOCK OWNERSHIP PLAN
THIS FIFTH AMENDMENT is made and entered into by Sanderson Farms, Inc. (the “Corporation”) as set forth herein.
WHEREAS, the Corporation maintains the Sanderson Farms, Inc. and Affiliates Employee Stock Ownership Plan (the “Plan”); and
WHEREAS, the Corporation desires to amend the Plan to clarify provisions regarding in-service distributions and the designation of a Beneficiary. 
NOW, THEREFORE, pursuant to the provisions of Section 12.1 of the Plan, the Plan is hereby amended, effective as of the dates set forth herein, as follows:
1.Section 7.4 is revised to read as follows, effective as of November 1, 2017:
		
	(a)
	Each Participant may designate a person or persons who shall receive a distribution payable hereunder and has the right to revoke such designation, subject to paragraph (b) below. Any such designation shall be evidenced by a written instrument filed with the Administrative Committee and signed by the Participant; provided, however, that the Administrative Committee may accept designations made electronically through a system approved by the Administrative Committee. Notwithstanding the foregoing, the Beneficiary of a Participant who is married at the date of the Participant’s death shall be the Participant’s spouse, unless the Participant has designated another beneficiary in accordance with paragraph (b) below. If a Participant designates a trust as Beneficiary, the beneficiaries of the trust with respect to the Participant's interest in the Plan shall be treated as designated Beneficiaries for purposes of Article 15 hereof if such beneficiaries are individuals and the requirements of Treasury Regulations Section 1.401(a)(9)-4, Q&A 5 are met. If no Beneficiary designation is on file with the Administrative Committee at the time of the death of an unmarried Participant, or if such designation is not effective for any reason as determined by the Administrative Committee, then payment of the distribution shall be made to the unmarried Participant’s estate.

		
	(b)
	A married Participant may designate as his or her Beneficiary a person who is not his or her spouse if either (1) (A) the spouse consents in writing to such designation, (B) the designation provides that it may not be changed without spousal consent (or the consent of the spouse expressly permits designations by the Participant without further consent by the spouse), and (C) the spouse’s consent acknowledges the effect of such election and is witnessed by a representative of the Plan or a notary public, or (2) it is established to the satisfaction of the Administrative Committee that such consent may not be obtained because the spouse cannot be located or because of such other circumstances as are prescribed by Treasury Regulations. An unmarried Participant may designate any person as his or her Beneficiary, subject to providing such proof as the Administrative Committee may require that the Participant is not married.

		
	(c)
	Notwithstanding anything in this Section to the contrary, if a Participant has designated his or her spouse as a Beneficiary, then a divorce that relates to such spouse shall revoke the Participant’s designation of the spouse as a Beneficiary, unless a qualified domestic relations order, within the meaning of Code Section 414(p), provides otherwise or a subsequent Beneficiary designation is made; the foregoing revocation shall not affect the valid designation of another Beneficiary under this Section, and the Beneficiary designation shall be administered as though the spouse had predeceased the Participant. By way of example, if prior to a divorce a Participant designated his former spouse as his primary Beneficiary and his son as his contingent Beneficiary, then following the divorce the Participant’s former spouse is no longer a Beneficiary and the Participant’s son is the sole remaining Beneficiary. By further example, if prior to a divorce a Participant designated her spouse and her two children (with the valid consent of the spouse) as equal primary Beneficiaries (i.e., each Beneficiary to receive 1⁄3 of any distributions) and her niece as the contingent Beneficiary, then following the divorce the Participant’s former spouse is no longer a Beneficiary, the Participant’s two children are the only primary Beneficiaries (i.e, each child to receive 1⁄2 of any distributions), and the Participant’s niece remains the contingent Beneficiary. Notwithstanding the foregoing, upon the marriage or remarriage of a Participant, the Participant’s surviving spouse becomes the Participant’s sole primary Beneficiary in accordance with paragraph (a) above, subject to a subsequent designation of another Beneficiary in accordance paragraph (b).

2.Section 7.12(b) is revised to read as follows, effective as of November 1, 2017:
The schedule of payments shall be as follows:

	
		
	Age of Participant at the end of the  
Plan Year in which an election to  
receive a distribution is made

	

Distribution shall be made in

	62
	Four (4) annual installments calculated as one-fourth (1⁄4), one-third (1⁄3), one-half (1⁄2) and one (1) respectively, times the Participant’s Account balances at the end of the Plan Year.

	63
	Three (3) annual installments calculated as one-third (1⁄3), one-half (1⁄2) and one (1), respectively, times the Participant’s Account balances at the end of the Plan Year.

	64
	Two (2) annual installments, calculated as one-half (1⁄2) and one (1), respectively, times the Participant’s Account balances at the end of the Plan Year.

	65 and older
	One (1) installment of the entire amount in the Participant’s Account balances at the end of the Plan Year.

Following the installment(s) made pursuant to the foregoing provisions, annual installments of the entire amount of the Participant’s Account balances at the end of each successive Plan Year shall continue to be made in accordance with this Section 7.12.
3.The following language is added as a new Section 7.13, effective as of November 1, 2017:
Section 7.13    Distribution Policy.  Notwithstanding any other provision of this Article 7 to the contrary, all distributions under this Article shall be made subject to the provisions of any distribution policy adopted by the Employer, which, when properly adopted, is hereby incorporated by reference and made a part of the Plan. Such distribution policy may be modified or amended in writing from time to time.
4.Except as otherwise provided in this Fifth Amendment, the provisions of the Plan shall remain in full force and effect.
IN WITNESS WHEREOF, the undersigned has executed this Fifth Amendment to the Plan on this 19th day of October, 2017, effective as set forth herein.

SANDERSON FARMS, INC.

                    

By: /s/ D. Michael Cockrell

1Exhibit

Exhibit 10.20

                                

SANDERSON FARMS, INC.

PERFORMANCE SHARE AGREEMENT
                    
This PERFORMANCE SHARE AGREEMENT (this "Agreement"), made and entered into as of the 1st day of November, 2017 (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 Performance Share Award issued pursuant to the Sanderson Farms, Inc. and Affiliates Stock Incentive Plan, as amended and restated on February 11, 2016 (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 Issuance of Performance Shares; Definition of Restricted Period.
              
(a)     As a reward for past service and 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, the right to receive at the end of the Restricted Period (hereinafter defined) that certain number of shares of the Company’s common stock, par value $1.00 per share (the "Performance Shares"), determined in accordance with Section 2 below, subject to the further terms and conditions set forth herein and in the Plan.  The right to receive Performance Shares 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 “Performance Period” means the two (2) fiscal years of the Company commencing November 1, 2017.  The “Restricted Period” means the three (3) fiscal years of the Company commencing November 1, 2017. 

(b)     Except as otherwise provided in this Agreement or the Plan, the right to receive Performance Shares shall vest and no longer be subject to forfeiture or any transfer restrictions hereunder at the end of the Restricted Period, 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) Participant’s termination of employment with the Company after Participant’s attainment of eligibility for retirement (as determined by the Board from time to time) by reason of retirement, or (iii) a Change of Control prior to the end of the Restricted Period, the Participant shall be entitled to receive, at the end of the Restricted Period, a pro rata portion of the number of Performance Shares to which Participant otherwise would have been entitled, determined in accordance with the ratio that the number of months the Participant was employed with the Company during the Performance Period bears to the total number of months in the Performance Period.  If the Participant’s employment with the Company is terminated for any other reason, voluntarily or involuntarily, prior to the expiration of the Restricted Period, then the right to receive Performance Shares at the end of the Restricted Period shall immediately be forfeited.

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Exhibit 10.20

(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 (2) year period following the Participant’s voluntary termination of employment or Participant’s termination by the Company for Cause, then as of the date of the Board determination the Participant’s right to receive Performance Shares shall be forfeited or, if the Performance Shares have already been issued, the Participant shall repay to the Company the fair market value of the Performance Shares as of their issue date.  
          
2.      Issuance of Performance Shares.

(a)     The Participant’s Performance Share Award is a function of Participant’s “Target ROE Award” and Participant’s “Target ROS Award,” calculated as set forth below.  The Participant’s Target ROE Award is _____ Shares.  The Participant’s Target ROS Award is ____ Shares.

(b)      At the end of the Performance Period, the Board (or its permitted delegate) will calculate the Company’s Return on Equity for each of its fiscal years during the Performance Period and divide the sum by that number of years (the “Average ROE”).  “Return on Equity” means (i) the Company’s net after-tax income for the fiscal year in question, divided by (ii) the average of the shareholders’ equity as of the end of the preceding fiscal year and the shareholders’ equity as of the end of the fiscal year in question, in each case as shown in the Company’s audited financial statements (provided that if there is any change in accounting standards used by the Company after the Grant Date, Return on Equity will be calculated without regard to such change).  The Participant’s “Threshold ROE” is 8.0 percent; Participant’s “Target ROE” is 14.8 percent; and Participant’s “Maximum ROE” is 24.4 percent.  If, at the end of the Performance Period, the Company’s Average ROE is equal to the Threshold ROE, the Participant will be entitled to receive fifty percent (50%) of the Target ROE Award; if the Company’s Average ROE is equal to the Target ROE, the Participant will be entitled to receive one hundred percent (100%) of the Target ROE Award; and if the Company’s Average ROE is equal to or greater than the Maximum ROE, the Participant will be entitled to receive two hundred percent (200%) of the Target ROE Award.  If the Company’s Average ROE is otherwise between the Threshold ROE and the Maximum ROE, the number of Performance Shares that the Participant is entitled to receive will be calculated using a straight-line interpolation.  If the Company’s Average ROE is less than the Threshold ROE, the Participant will not be entitled to receive any Shares as part of his Target ROE Award.  In no event will the Participant be entitled to receive pursuant to this Agreement more than two hundred percent (200%) of the Target ROE Award.

(c)      Likewise, at the end of the Performance Period, the Board (or its permitted delegate) will calculate the Company’s Return on Sales for each of its fiscal years during the Performance Period and divide the sum by that number of years (the “Average ROS”).  “Return on Sales” means the Company’s net after-tax income for the fiscal year in question divided by its net sales for such fiscal year, in each case as shown in the Company’s audited financial statements (provided that if there is any change in accounting standards used by the Company after the Grant Date, Return on Sales will be calculated without regard to such change).  The Participant’s “Threshold ROS” is 1.7 percent; his “Target ROS” is 4.0 percent; and his “Maximum ROS” is 6.6 percent.  If, at the end of 

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Exhibit 10.20

the Performance Period, the Company’s Average ROS is equal to the Threshold ROS, the Participant will be entitled to receive fifty percent (50%) of the Target ROS Award; if the Company’s Average ROS is equal to the Target ROS, the Participant will be entitled to receive one hundred percent (100%) of the Target ROS Award; and if the Company’s Average ROS is equal to or greater than the Maximum ROS, the Participant will be entitled to receive two hundred percent (200%) of the Target ROS Award.  If the Company’s Average ROS is otherwise between the Threshold ROS and the Maximum ROS, the number of Performance Shares that the Participant is entitled to receive will be calculated using a straight-line interpolation.  If the Company’s Average ROS is less than the Threshold ROS, the Participant will not be entitled to receive any Shares as part of his Target ROS Award.  In no event will the Participant be entitled to receive pursuant to this Agreement more than two hundred percent (200%) of the Target ROS Award.

(d)      Within thirty (30) days of the end of the Restricted  Period, certificates representing the Performance Shares that the Participant is entitled to receive shall be registered in the Participant’s name and be delivered to the Participant (or an appropriate book entry shall be made), 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.  Fractional shares will be issued where necessary.  Upon issuance, Performance Shares will be fully vested and transferable, except to the extent that their transfer is restricted by Applicable Law. 

(e)      If this Performance Share Award is intended to satisfy the requirements of Section 162(m) of the Internal Revenue Code of 1986, as amended (the “Code”), then prior to the issuance of the Performance Shares, the Compensation Committee of the Board shall certify in writing that the performance goals and any other material terms of the Award were in fact satisfied. 

3.       No Rights as a Stockholder.
              
Except as otherwise provided in this Agreement or the Plan, until the issuance of Performance Shares to Participant, the Participant shall have, with respect to the Performance Shares, none of the rights of a stockholder of the Company, including the right to vote the Performance Shares and the right to receive any dividends or other distributions with respect thereto.  

4.       Adjustments.
          
If any change in corporate capitalization, such as a stock split, reverse stock split, stock dividend, or any corporate transaction such as a reorganization, reclassification, merger or consolidation or separation, including a spin-off of the Company or sale or other disposition by the Company of all or a portion of its assets, any other change in the Company’s corporate structure, or any distribution to stockholders (other than a cash dividend) results in the outstanding Shares, or any securities exchanged therefor or received in their place, being exchanged for a different number or class of shares or other securities of the Company, or for shares of stock or other securities of any other corporation, or new, different or additional shares or other securities of the Company or of any other corporation being received by the holders of outstanding Shares, then the number 

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Exhibit 10.20

of Performance Shares to which the Participant is entitled pursuant to this Agreement shall be adjusted in the same manner as other outstanding Shares of  the Company.

5.       Validity of Share Issuance.
              
The Performance Shares have been duly authorized by all necessary corporate action of the Company and when issued will be 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 Performance Shares, 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 Performance Shares 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 therewith, as determined by the Board. 

7.       Notices.
              
Any notice to the Company provided for in this Agreement shall be in writing and shall be addressed to it in care of its Secretary at its principal executive offices, and any notice to the Participant shall be addressed to the Participant at the current address shown on the payroll records of the Company.  Any notice shall be deemed to be duly given if and when properly addressed and posted by registered or certified mail, postage prepaid.

8.      Legal Construction.
              
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 Code, 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.

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Exhibit 10.20

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 Performance Share Award made pursuant hereto, if any, 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 Performance Share Awards in particular.  The Board has the right to interpret, construe and administer the Plan, this Agreement and the Performance Share Award made pursuant hereto.  All acts, determinations and decisions of the Board (including its Compensation Committee) 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 and the calculation of the Average ROE, Average ROS, and the number of Performance Shares that the Participant is entitled to receive pursuant to this Agreement, 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 Participant has received a copy of the Plan.

10.      No Implied Rights.
          
Neither this Agreement nor the issuance of any Performance Shares 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. 

13.      Amendments.
              

5

Exhibit 10.20

The Board may, at any time, without consent of or receiving further consideration from the Participant, amend this Agreement and the Performance Share 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 Performance Share Award made pursuant hereto otherwise with the written consent of the Participant.
  
14.      Securities Act. 
    
(a)    The issuance and delivery of the Performance Share Award 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 11, 2016, as supplemented by the Supplement dated November 1, 2017, relating to the Performance Share Award.

(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 Performance Shares 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(b)(1), 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 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 Participant’s own behalf, thereby representing that Participant 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.

                                                   

6

Exhibit 10.20

SANDERSON FARMS, INC.

By:_________________________________
       Name:  Mike Cockrell            
       Title:    CFO and Treasurer

                        

PARTICIPANT
                        

____________________________________

7

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