Looking for an agreement? Search from over 1 million agreements now.

Employee Stock Ownership Plan And Trust Agreement of Sanderson Farms, Inc. And Affiliates

This is an actual contract by Sanderson Farms.

Save time and money with our Premium Packages.
Buy all (8) recommended agreements for
$140.00 (50% savings)
Agreement Preview
Sectors: Food, Beverages and Tobacco
Governing Law: Mississippi, View Mississippi State Laws
Effective Date: November 01, 1997
Search This Document
EXHIBIT 10.5


SANDERSON FARMS, INC.
AND
AFFILIATES
EMPLOYEE STOCK OWNERSHIP PLAN


(AMENDED AND RESTATED EFFECTIVE NOVEMBER 1,1997)


TABLE OF CONTENTS


ARTICLE 1
PURPOSE


ARTICLE 2
DEFINITIONS


ARTICLE 3
NAMED FIDUCIARIES AND ALLOCATION OF RESPONSIBILITIES


Section 3.1 Named Fiduciaries............................................................. 11


Section 3.2 Allocation of Responsibilities, Powers and Duties Among Named Fiduciaries..... 11


Section 3.3 No Joint Fiduciary Responsibility............................................. 12


Section 3.4 Delegation of Responsibility and Employment of Advisors....................... 12


Section 3.5 Establishment of Funding Procedures........................................... 12


Section 3.6 Payment of Expenses........................................................... 13


Section 3.7 Indemnification for Liability................................................. 13


ARTICLE 4
ELIGIBILITY AND PARTICIPATION


Section 4.1 Eligible Employee............................................................. 14


Section 4.2 Participation................................................................. 14


Section 4.3 Notification of Participation................................................. 14


ARTICLE 5
CONTRIBUTIONS


Section 5.1 By Employers.................................................................. 15


Section 5.2 Amount of Contribution........................................................ 15


Section 5.3 Time and Method of Contribution............................................... 15


Section 5.4 Limitation on Allocations and Contributions................................... 15


ARTICLE 6
ACCOUNTS ALLOCATION OF BENEFITS AND ACCOUNTING


Section 6.1 Membership of Participants.................................................... 18


Section 6.2 Participants' Accounts........................................................ 18


Section 6.3 Allocation of Contributions................................................... 18


Section 6.4 Investment of Cash............................................................ 18


Section 6.5 Income, Losses and Expenses................................................... 18


Section 6.6 Voting of Shares.............................................................. 19


Section 6.7 General Accounts.............................................................. 19


Section 6.8 Annual Statements.................. .......................................... 21


ARTICLE 7
THE TRUST FUND


Section 7.1 Investments................................................................... 22


Section 7.2 Stock Dividends, Splits, Options.............................................. 22


ARTICLE 8
VESTING


Section 8.1 General....................................................................... 23


Section 8.2 Retirement, Death and Disability.............................................. 24


Section 8.3 Termination of Service for Other Reasons...................................... 24


Section 8.4 Termination of or Discontinuance of Contributions to Plan..................... 24


Section 8.5 Increase in Vesting........................................................... 24
ARTICLE 9
DISTRIBUTIONS


Section 9.1 Retirement.................................................................... 25


Section 9.2 Disability.................................................................... 25


Section 9.3 Death......................................................................... 25


Section 9.4 Other Termination of Employment............................................... 26


Section 9.5 Method and Time of Distribution............................................... 27


Section 9.6 Rollover Treatment............................................................ 32


Section 9.7 Effect of Rehiring............................................................ 33


Section 9.8 Hardship Distributions........................................................ 34


Section 9.9 Early Distributions Due to Normal Retirement, Death or Disability............. 34


Section 9.10 Missing Persons............................................................... 34


Section 9.11 Diversification of Investments.................................................. 35


Section 9.12 Cancellations of Accounts..................................................... 36


Section 9.13 No Benefit Reduction due to Plan Amendment.................................... 36


Section 9.14 In-Service Distributions...................................................... 36


ARTICLE 10
VALUATION


Section 10.1 Valuation of Qualifying Employers' Securities................................. 39


ARTICLE 11
SPECIAL PROVISIONS RELATING TO LOANS


ARTICLE 12
CLAIMS PROCEDURE AND REVIEW


Section 12.1 Claims for Benefits........................................................... 45


Section 12.2 Review of Claims.............................................................. 45


Section 12.3 Miscellaneous................................................................. 45


ARTICLE 13
TRUST FUND AND TRUSTEES


ARTICLE 14
ADMINISTRATIVE COMMITTEE


Section 14.1 Appointment of Committee...................................................... 48


Section 14.2 Powers of Administrative Committee............................................ 48


Section 14.3 Organization and Operation of Administrative Committee........................ 48


Section 14.4 Expenses of Administrative Committee.......................................... 48


Section 14.5 Indemnity..................................................................... 49


ARTICLE 15
DOMESTIC AFFILIATE(S)


Section 15.1 Joinder of Plan............................................................... 50


ARTICLE 16
MODIFICATIONS FOR TOP HEAVY PLANS


Section 16.1 Application of Article........................................................ 51


Section 16.2 Definitions................................................................... 51


Section 16.3 Amounts Included for Computation Purposes..................................... 52


Section 16.4 Accelerated Vesting........................................................... 52


Section 16.5 Minimum Contributions......................................................... 52


ARTICLE 17
AMENDMENT; MERGER, CONSOLIDATION OR TRANSFER OF ASSETS;
TERMINATION OR DISCONTINUANCE


Section 17.1 Amendment..................................................................... 54


Section 17.2 Merger, Consolidation, or Transfer of Assets.................................. 54


Section 17.3 Termination; Discontinuance of Contributions.................................. 54


Section 17.4 Duration of Trust............................................................. 55


ARTICLE 18
MISCELLANEOUS


Section 18.1 Nonalienation of Benefits........ ............................................ 56


Section 18.2 Domestic Relations Orders..................................................... 56


Section 18.3 Authorization to Withhold Taxes............................................... 58


Section 18.4 Delegation of Authority by Employers.......................................... 58


Section 18.5 Number and Gender............................................................. 58


Section 18.6 Legal Actions................................................................. 58


Section 18.7 Delays in Distribution........................................................ 58


Section 18.8 Plan Document Location........................................................ 59


Section 18.9 Plan Terms Control............................................................ 59


Section 18.10 Severability.................................................................. 59


Section 18.11 Governing Law................................................................. 59


Section 18.12 Multiple Execution............................................................ 59


ARTICLE 19
CONCERNING QUALIFIED MILITARY SERVICE


SANDERSON FARMS, INC.
AND
AFFILIATES
EMPLOYEE STOCK OWNERSHIP PLAN


This Plan is adopted as of the 22nd day of October, 2002, effective November 1, 1997, unless otherwise specified in certain Plan sections, by Sanderson Farms, Inc. and its affiliates, Sanderson Farms, Inc. (Production Division), Sanderson Farms, Inc. (Processing Division) and Sanderson Farms, Inc. (Foods Division), each a corporation duly organized under the laws of the State of Mississippi and having their principal places of business in Laurel, Mississippi ("Employers").


WITNESSETH:


WHEREAS, Sanderson Farms, Inc. and its affiliates desire to promote in their Employees a stronger interest in the successful operation of their businesses, greater loyalty to the Employers and increased efficiency in their work by providing for the Employees' greater financial security; and


WHEREAS, Employers desire to recognize the contributions made to the successful operation of their businesses by their Employees and to reward such contributions for those Employees who shall qualify as Participants hereunder and for the beneficiaries designated by such Participants;


WHEREAS, Employers desire to encourage stock ownership by Participants and thereby to promote an increased attachment to and participation in the Employers' success;


WHEREAS, this Plan and its related Trust constitute a conversion of the qualified Profit Sharing Retirement Plan and Trust ("Profit Sharing Plan"), adopted by Sanderson Farms, Inc. and Sanderson Farms, Inc. (Processing Division) on June 21, 1972, effective January 1, 1972, and amended on August 10, 1972, effective January 1, 1972, into a qualifying Employee Stock Ownership Plan for the Employers;


WHEREAS, the Employers completely amended, restated and continued the Plan without a break or lapse in coverage, time or effect which would have caused any Participant to become fully vested or entitled to distribution, in order to (a) effect numerous technical changes for the benefit of Eligible Employees, Participants and beneficiaries and (b) to ensure the Plan's qualification under the applicable provisions of the Internal Revenue Code of 1986, as amended ("IRC") and the Employee Retirement Income Security Act of 1974, as amended ("ERISA"), such amendment, restatement and continuation being adopted by the Boards of Directors of the Employers on February 24,1994, effective November 1,1989;


WHEREAS, this Plan and its related Trust constitute a merger or consolidation of the General Employees' Profit Sharing - Retirement Plan and Trust of Sanderson Farms, Inc. and Affiliates, adopted by the Boards of Directors of the Employers on April 23, 1976, executed by


1


the Employers on June 17, 1976, effective January 1, 1976, restated on July 23, 1985, effective November 1, 1984, and restated on February 24, 1994, effective November 1, 1989, into this Plan and its related Trust, such merger or consolidation being adopted by the Boards of Directors of the Employers on April 28, 1994, effective November 1, 1993;


WHEREAS, such merger or consolidation constituted a "merger" or "consolidation" as defined by IRC Section 414(1) and Treasury Regulation Section 1.414(1)-1(b)(2);


WHEREAS, such merger or consolidation satisfied and/or shall satisfy the requirements of IRC Section 414(1) and accompanying regulations in that: a) the sum of the account balances in each plan prior to the merger equals or shall equal the fair market value of the assets of the resulting merged single plan; b) the assets of each plan are or will be combined to form the assets of the resulting merged single plan; and c) immediately after the merger, each participant in the resulting merged single plan has or will have an account balance equal to the sum of the account balances the participant had in both plans immediately prior to the merger;


WHEREAS, the Employers desire to further amend and restate the Plan,-effective as of November 1,1997, to comply with certain changes in federal law.


NOW THEREFORE, the Employers adopt the Plan effective as of November 1,1997, as follows, subject to the following provisos:


(1)The amendments to the Plan provided for hereinabove shall not have the effect of eliminating or reducing any early retirement benefit or retirement type subsidy (as defined in regulations promulgated by the Secretary of the Treasury) or eliminating an optional form of benefit.


(2)Unless specified otherwise herein, such amendment and restatement shall not apply to a Participant who is not credited with at least one Hour of Service on or after November 1, 1997.


2


ARTICLE 1


PURPOSE


Section 1.1 The principal purpose of this Plan is to recognize the contributions made to the successful operation of the Employers by their Employees and to reward such contributions for those Employees who qualify as Participants hereunder and for the beneficiaries designated by such Participants. Another purpose of the Plan is to encourage stock ownership by Participants, and thereby to promote an increased attachment to and participation in the Employers' success. To this end, the Plan shall whenever possible and prudent acquire and invest primarily in Qualifying Employers' Securities, as hereinafter defined.


Section 1.2 The Employers shall make contributions pursuant to the requirements of Section 5.2 of the Plan and may also bear expenses of the administration of the Plan. In connection with the adoption of this Plan, the Employers shall enter into a Trust Agreement with one or more individual fiduciaries or a corporate fiduciary, or a combination of both, hereinafter referred to as the "Trustees" and all contributions made hereunder shall be paid to the order of the Trustees.


Section 1.3 This Plan is established for the exclusive benefit of the Participants and their beneficiaries. This Plan is to be interpreted in a manner consistent with this intent and with the intention that it be recognized as a qualifying plan under IRC Section 401 (a). In no event shall any part of the principal or income of the Trust Fund or any of the contributions made by the Employers to the Trustees be paid to or revested in the Employers or be used for any purpose whatsoever other than the exclusive benefit of the Employees and their beneficiaries. Nothing herein shall prevent the Trustees, however, from purchasing Qualifying Employers' Securities from the Employers where it is prudent to do so, or from paying fees, taxes and other expenses incurred in the administration of the Plan, where such expenses are not borne or paid by the Employers.


Section 1.4 Except as otherwise provided by law and as provided herein, the adoption of this Plan shall not be construed as giving any Employee or any other person any legal or equitable right against the Employers, or any officer or Employee thereof, the Administrative Committee established in connection herewith, the Trustees or the principal and income of the Trust Fund or any equity or interest in the assets, business or affairs of the Employers, unless such right, equity or interest is specifically provided for in this Plan, nor shall it be construed as giving any Employee the right to be retained in the service of the Employers.


Section 1.5 The Plan is designed and intended to qualify under IRC Section 401(a) so that (i) the Employers' contributions are currently deductible; (ii) all income of the Trust is exempt from tax; and (iii) Participants and their beneficiaries will not be taxed on their interest in the Plan until they have received distribution of Plan benefits, and all of the provisions of this Plan and its related Trust shall be interpreted in a way to give effect to this intent. Notwithstanding any other provision of the Plan, the Boards of Directors reserve the right:


3


(a) At any time to amend the Plan retroactively to its effective date in any way necessary to obtain an initial determination letter from the Internal Revenue Service that the Plan qualifies under IRC Section 401(a).


(b) To revoke the Plan and Trust if the Internal Revenue service refuses to issue an initial favorable determination letter or issues an unfavorable one and to reinstate the former Profit Sharing - Retirement Plan and Trust for continuation or subsequent termination or merger thereof with a comparable plan.


4


ARTICLE 2


DEFINITIONS


The following terms have the meanings herein which are specified below unless the context otherwise requires:


Section 2.1 "Administrative Committee" means the Administrative Committee appointed by the Employers as provided in Section 14.1. The persons constituting the Administrative Committee are herein referred to as "Administrative Committee Members."


Section 2.2 "Allocation Date" means the last day of a Plan Year.


Section 2.3 "Annual Additions" means the sum of the following amounts credited to a Participant's account for the Limitation Year:


(a) Employer contributions;


(b) forfeitures; and


(c) the lesser of (i) one-half (1/2) of the nondeductible employee contributions or (ii) the nondeductible employee contributions in excess of six percent (6%) of the Participant's Section 415 Compensation for the Limitation Year. For this purpose, any Excess Amount applied under subsections (d) or (h) in the Limitation Year to reduce Employer contributions will be considered Annual Additions for such Limitation Year.


Allocations to Participants' accounts of assets withdrawn from the unallocated stock account when securities are released from encumbrance pertaining to exempt loan transactions shall be included in the limitations prescribed in the preceding paragraph of this subsection. For purposes of applying the limitations of IRC Section 415, to such allocations, contributions used by the Plan to pay the exempt loan are treated as Annual Additions to Participants' accounts.


Section 2.4 "Annual Compensation" shall mean for a Participant during a Plan Year "compensation," as defined in Section 1.415-2(d)(ll)(2) of the Income Tax Regulations, increased by any amounts that are not currently includable in the Participant's gross income by reason of IRC Sections 125, 132(f), 402(a)(8), 402(h)(1)(B) or 403(b). No Participant shall be deemed to have Annual Compensation for a Plan Year in an amount in excess of $150,000 as adjusted in accordance with the provisions of IRC Sections 401(a)(17). In the case of a Participant who becomes such on a day other than the first day of the Plan Year, Compensation shall not include amounts paid prior to the date he becomes a Participant.


Section 2.5 "Boards" means the Boards of Directors of the Employers.


Section 2.6 "Break-in-Service" for purposes of determining eligibility for participation means an eligibility computation period during which the Employee fails to complete more than 500 Hours of Service with the Employers.


5


Section 2.7 "Casual Laborer" means each Employee who is classified as a "casual laborer" under the normal payroll practices of the Employers.


Section 2.8 "Compensation" of any Participant means all taxable remuneration received, except performance incentive awards, from the Employers in the whole or part of a Plan Year in which the Employee participates in the Plan and as further defined in Subparagraph 5.4(i)(6) of the Plan. Compensation of any Participant shall not include any part of the Employers' contributions to the Trust Fund hereunder, or to any other employee pension benefit plan or employee welfare benefit plan or trust in connection therewith, now or hereafter adopted or any amounts in respect of any options to purchase stock granted Employees. No Participant shall be deemed to have Compensation for a Plan Year in excess of $150,000 as adjusted in accordance with the provisions of IRC Section 401(a)(17).


Section 2.9 "Effective Date" shall be November 1, 1997, except as otherwise provided in certain Plan sections.


Section 2.10 "Eligible Employee" means each Employee eligible to become a Participant in the Plan as described in ARTICLE 4 hereof.


Section 2.11 "Employee" means each person who is employed by the Employers.


Section 2.12 "Employee Contributions" means contributions made voluntarily to the Plan by Participants in the Plan. This Plan does not permit Employee Contributions.


Section 2.13 "Employers" means Sanderson Farms, Inc., Sanderson Farms, Inc. (Production Division), Sanderson Farms, Inc. (Processing Division) and Sanderson Farms, Inc. (Foods Division), all of which are Mississippi corporations. All employees of all corporations which are members of a controlled group of corporations (as defined in IRC Section 414(b)) and all employees of all trades or businesses (whether or not incorporated) which are under common control (as defined in IRC Section 414(c)) shall be treated as employed by one single employer.


Section 2.14 "Excess Amount" means the excess of the Participant's Annual Additions for the Limitation Year over the Maximum Permissible Amount.


Section 2.15 "Family and Medical Leave Absences." In the case of an Employee who is absent from work for reasons authorized by The Family and Medical Leave Act of 1993 or other statutory leave, the provisions of Section 2.17 of the Plan shall apply.


Section 2.16 "Highly Compensated Employee" means an Employee who:


(a) during the current Plan Year of the preceding Plan Year, owned (or was considered as owning) more than five percent (5%) of the outstanding stock of an Employer or Related Employer or stock possessing more than five percent (5%) of the total combined voting power of all stock of an Employer or Related Employer, or


(b) during the preceding Plan Year, received Annual Compensation from the Employer and Related Employer in excess of $80,000 multiplied by the Adjustment Factor.


6


For purposes of this Section 2.16, the following rules shall apply:


(c) For purposes of applying IRC Section 318 to paragraph (b) above, IRC Section 318(a)(2) shall be applied by substituting "5 percent" for "50 percent."


(d)The term "Highly Compensated Employee" also includes, for a Plan Year, a former Employee who had a Separation Year prior to the Plan Year and who met the requirements of paragraphs (a) through (c) above for either such Separation Year or any Plan Year ending on or after his 55th birthday. For purposes of this paragraph, an individual who is, or has previously been, an Employee and who performs no services for an Employer during a Plan Year shall be treated as a former Employee (including, for example, an Employee who performed no services for an Employer during a Plan Year by reason of an Authorized Leave of Absence). A former Employee who is treated as a Highly Compensated Employee for a Plan Year shall not be taken into account in determining the group consisting of the top twenty percent (20%) of all Employees when ranked on the basis of Annual Compensation for the Plan Year for purposes of paragraph (b) above.


Section 2.17 "Hour of Service" means


(a) an Hour of Service is each hour for which an Employee is paid, or entitled to payment, for the performance of duties for the Employers during the applicable computation period;


(b) an Hour of service is each hour for which an Employee is paid, or entitled to payment, by the Employers on account of a period of time during which no duties are performed (irrespective of whether the employment relationship has terminated) due to vacation, holiday, illness, incapacity (including disability), layoff, jury duty, military duty or leave of absence. Notwithstanding the preceding sentence, no more than 501 Hours of Service are required to be credited under this paragraph to an Employee on account of any single continuous period during which the Employee performs no duties (whether or not such period occurs in a single computation period).


(c) An Hour of Service is each hour for which back pay, irrespective of mitigation of damages, is either awarded or agreed to by the Employers. The same Hours of Service shall not be credited both under paragraph (a) or paragraph (b), as the case may be, and under this paragraph (c).


(d) Labor Regulations Section 2530.200b-2(b) and (c) are incorporated by reference.


(e) Hours of Service will be credited for employment with any of the Employers.


(f) Solely for purposes of determining whether an individual has incurred a Break in Service each hour of such individual's customary work period during an absence that begins after December 31, 1984, and that is due to


(1) pregnancy of the individual;


7


(2) birth of a child of the individual;


(3) placement of a child in connection with the adopt
-- End of Preview --
Home| About Us| FAQ| Subscription | Contact Us |

Privacy Policy   Terms of Service  54.204.127.56