Exhibit 10.3
SANDERSON FARMS, INC.
SHARE
PURCHASE AGREEMENT
(Management Share Purchase Plan)
(Employee Agreement)
This SHARE PURCHASE AGREEMENT (this
“Agreement”), made and entered into as of the
day of
, 20 (the “Grant
Date”), by and between
(the “Participant”) and Sanderson Farms, Inc. (together
with its subsidiaries and affiliates, the “Company”),
sets forth the terms and conditions of an Award of Share Purchase
Rights granted pursuant to the Sanderson Farms, Inc. and Affiliates
Stock Incentive Plan, adopted on February 17, 2005 (the
“Plan”) and this Agreement. Any capitalized term used
but not defined herein shall have the meaning ascribed to such term
in the Plan. The term “Fiscal Year” shall mean the
fiscal year of the Company which begins on November 1 of each
calendar year and ends on October 31 of the next calendar
year.
1. Rights to Purchase Restricted
Stock.
(a)
Base Salary Reduction . The Participant may elect to reduce
his base salary by a specified percentage thereof (not to exceed
15%) and, in lieu of receiving such salary, receive a number of
Shares of the Company, subject to the terms, conditions and
restrictions set forth herein (“Restricted Stock”),
equal to the amount of such salary reduction divided by a dollar
amount equal to the Fair Market Value of a Share on the date on
which such Restricted Stock is received. In the first year of the
Participant’s eligibility to participate in the Plan, an
election to reduce the Participant’s salary for the period of
that initial year of eligibility subsequent to the election must be
made within 30 days after the date that the Participant
becomes eligible so to participate (the “Initial Election
Deadline”). An election so made during the initial year of
eligibility (“Initial Salary Election”) shall become
irrevocable on the Initial Election Deadline and shall be effective
beginning with the first pay period that ends after the Initial
Election Deadline. Any election to reduce salary otherwise payable
in a calendar year after the Participant’s initial year of
eligibility shall be effective beginning with the first pay period
that ends after January 1 of the calendar year next following the
calendar year in which such election is made (and shall become
irrevocable on December 31 of the calendar year in which such
election is made with respect to the next calendar year). Any
cancellation of, or other change in, any such salary reduction
election shall become effective as of the first pay period ending
after January 1 of the calendar year next following the calendar
year in which notice of such cancellation or change is filed (and
any such notice shall become irrevocable on December 31 of the
calendar year in which it is filed with respect to the next
calendar year).
Any
salary reduction hereunder shall apply ratably to the
Participant’s salary for each pay period covered by such
election. Restricted Stock shall be issued for the account of the
Participant, or allocated to the account of the Participant from
Shares previously purchased by the Company, in respect of such
salary reductions on the last business day in each calendar quarter
ending March 31, June 30, September 30 and
December 31 (each such date, a “Quarterly Allocation
Date”). The number of shares of Restricted Stock issued or
allocated to the Participant on each Quarterly Allocation Date
shall be based upon the aggregate salary reduction
for pay
periods ending since the next preceding Quarterly Allocation Date
and the Fair Market Value of a Share on such later Quarterly
Allocation Date. Fractional shares will be issued (or purchased)
where necessary.
If a Participant who has elected
salary reductions hereunder shall terminate employment before
shares of Restricted Stock are issued or allocated in respect of
all such salary reductions, any salary reduction amounts in respect
of which Restricted Stock has not been granted by the date of
Participant’s termination of employment shall be returned to
Participant promptly in cash, subject to compliance with the
requirements of Sections 409A(a)(2) and (3) of the
Code.
(b) Bonus Reduction .
The Participant may also elect to reduce his annual bonus
compensation, if any, by a specified percentage thereof (not to
exceed 75%) and, in lieu of receiving such bonus, receive a number
of shares of Restricted Stock equal to the amount of such bonus
reduction divided by a dollar amount equal to the Fair Market Value
of a Share on the date on which such Restricted Stock is received.
An election for the bonus payable with respect to the Fiscal Year
ending October 31, 2005 and for the bonus payable with respect
to any subsequent Fiscal Year must be made on or before
April 30 of that Fiscal Year (or if such day is not a business
day, then on or before the next preceding business day) and shall
become irrevocable on that date with respect to that Fiscal Year.
Any cancellation of, or other change in, any such bonus reduction
election shall become effective with respect to the Fiscal Year in
which notice of such cancellation or change is filed if it is filed
on or before April 30 of that Fiscal Year (or, if such day is
not a business day, then on or before the next preceding business
day); otherwise, it shall become effective with respect to the
Fiscal Year next following the Fiscal Year in which it is
filed.
Restricted
Stock shall be issued or allocated to the account of the
Participant in respect of any such bonus reduction on the date that
such bonus is otherwise payable.
If a
Participant who has elected a bonus reduction hereunder shall
terminate employment before shares of Restricted Stock are issued
or allocated in respect of such bonus reduction, such election
shall be deemed canceled and any bonus compensation due to the
Participant shall be paid in cash, subject to compliance with the
requirements of Sections 409A(a)(2) and (3) of the
Code.
2. Company Matching
Contribution.
For
each four shares of Restricted Stock acquired by the Participant
pursuant to Section 1 above, whether in respect of base salary
or bonus reductions, the Company shall simultaneously issue or
allocate to the account of the Participant, for no additional
consideration, one additional share of Restricted Stock (the
“Company Match”), including fractional shares where
necessary.
3. Terms of Restricted
Stock.
(a) The
Restricted Stock is subject to forfeiture as provided herein and,
during the Restriction Period defined below, may not be sold,
exchanged, transferred, pledged, hypothecated or otherwise disposed
of by the Participant, other than by will or by the laws of descent
and distribution of the state in which the Participant resides on
the date of his death. The
2
period
during which the Restricted Stock is not vested and is subject to
transfer restrictions is referred to herein as the
“Restriction Period.”
(b) Except as otherwise provided
in this Agreement or the Plan, each share of Restricted Stock shall
vest and no longer be subject to forfeiture or any transfer
restrictions hereunder on the third anniversary of its acquisition
by the Participant, so long as the Participant has remained
continuously employed by the Company from such acquisition date
through such third anniversary.
(c) In the event of (i) the
Participant’s termination of employment with the Company by
reason of death or Disability (for purposes of this Section 3,
“Disability” shall have the meaning set forth in
Section 409A(a)(2)(C) of the Code at any time such definition
is more restrictive than the Plan definition of
“Disability”), (ii) his termination of employment
with the Company on or after his attainment of eligibility for
retirement (as determined by the Board from time to time), or
(iii) a Change in Control (provided that such Change in
Control also constitutes a “change in ownership or effective
control” of the Company within the meaning of
Section 409A(a)(2)(A)(v) of the Code), any portion of the
Restricted Stock that has not vested shall immediately vest and no
longer be subject to forfeiture or any transfer restrictions
hereunder; provided that in the case of a Participant who is a
“specified employee” within the meaning of
Section 409A(a)(2)(B) of the Code, such Restricted Stock shall
not vest before the date which is six months after the date of the
Participant’s separation from service (or, if earlier, the
date of his death). If the Participant’s employment with the
Company is terminated for any other reason, voluntarily or
involuntarily, prior to the expiration of the Restriction Period
for any shares of Restricted Stock acquired pursuant to this
Agreement by the Participant, then (X) any portion of the
Restricted Stock acquired by the Participant pursuant to the
Company Match that has not vested as of the date of employment
termination shall immediately be forfeited, ownership shall be
transferred back to the Company (and any dividends or other
distributions with respe
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