CHANGE IN CONTROL AGREEMENT
THIS CHANGE IN CONTROL AGREEMENT, dated as of October 31, 2005, is made
by and between TRACTOR SUPPLY COMPANY, a Delaware corporation (the "Company"),
and Xxxxxxx X. Xxxxxxx (the "Executive").
WHEREAS, the Company considers it essential to the best interests of its
stockholders to xxxxxx the continued employment of key management personnel; and
WHEREAS, the Board recognizes that, as is the case with many publicly
held corporations, the possibility of a Change in Control exists and that such
possibility, and the uncertainty and questions that it may raise among
management, may result in the departure or distraction of management personnel
to the detriment of the Company and its stockholders; and
WHEREAS, the Board has determined that appropriate steps should be taken
to reinforce and encourage the continued attention and dedication of certain
members of the Company's senior management, including the Executive, to their
assigned duties without distraction in the face of potentially disturbing
circumstances arising from the possibility of a Change in Control.
NOW, THEREFORE, in consideration of the premises and the mutual
covenants herein contained, the Company and the Executive hereby agree as
follows:
1. DEFINED TERMS. The definitions of capitalized terms used in this
Agreement are provided in the last Section hereof.
2. TERM OF AGREEMENT. The Term of this Agreement shall commence on
the date hereof and shall continue in effect through June 30, 2007; provided,
however, that if a Change in Control occurs during the Term, the Term shall
expire no earlier than the second anniversary of the date on which such Change
in Control occurs.
3. COMPANY'S COVENANTS. In order to induce the Executive to remain
in the employ of the Company and in consideration of the Executive's covenants
set forth in Section 4 hereof, the Company agrees, under the conditions
described herein, to pay the Executive the Severance Payments and the other
payments and benefits described herein. Except as provided in Section 5(c)
hereof, no Severance Payments or other benefits shall be payable or provided
under this Agreement unless there shall have been (or, under the terms of the
last sentence of Section 6(a) hereof, there shall be deemed to have been) a
termination of the Executive's employment with the Company following a Change in
Control and during the Term. This Agreement shall not be construed as creating
an express or implied contract of employment and, except as otherwise agreed in
writing between the Executive and the Company, the Executive shall not have any
right to be retained in the employ of the Company.
4. THE EXECUTIVE'S COVENANTS.
(a) EMPLOYMENT. The Executive agrees that, subject to the terms and
conditions of this Agreement, in the event of a Change in Control during the
Term, the Executive will remain in the employ of the Company until the earliest
of (i) a date which is six (6) months from the date of such Change in Control,
(ii) the Date of Termination by the Executive of the Executive's employment for
Good Reason or by
reason of death, Disability or Retirement, or (iii) the termination by the
Company of the Executive's employment for any reason.
(b) NONCOMPETITION, ETC. The Executive agrees that the Executive
will not, for a period of one year from the Date of Termination of the
Executive's employment by the Company (other than following a termination by the
Executive for Good Reason), (i) directly or indirectly become an employee,
director, consultant or advisor of, or otherwise affiliated with, any operator
of farm and ranch stores in the United States, (ii) directly or indirectly
solicit or hire, or encourage the solicitation or hiring of, any person who was
an employee of the Company at any time on or after such Date of Termination
(unless more than six months shall have elapsed between the last day of such
person's employment by the Company and the first date of such solicitation or
hiring), (iii) disparage the name, business reputation or business practices of
the Company or any of its officers or directors, or interfere with the Company's
existing or prospective business relationships, or (iv) without the written
consent of the Company, disclose to any person, other than as required by law or
court order, any confidential information or trade secrets obtained by the
Executive while in the employ of the Company; provided, however, that
confidential information shall not include any information known generally to
the public (other than as a result of unauthorized disclosure by the Executive)
or any specific information or type of information generally not considered
confidential by persons engaged in the same business as the Company. The
Executive acknowledges that these restrictions are reasonable and necessary to
protect the Company's legitimate interests, that the Company would not have
entered into this Agreement in the absence of such restrictions, and that any
violation of these restrictions will result in irreparable harm to the Company.
The Executive agrees that the Company shall be entitled to preliminary and
permanent injunctive relief, without the necessity of proving actual damages, as
well as an equitable accounting of all earnings, profits and other benefits
arising from any violation hereof, which rights shall be cumulative and in
addition to any other rights or remedies to which the Company may be entitled.
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5. COMPENSATION OTHER THAN SEVERANCE PAYMENTS.
(a) If the Executive's employment shall be terminated for any reason
following a Change in Control and during the Term, the Company shall pay the
Executive's full salary to the Executive through the Date of Termination at the
rate in effect immediately prior to the Date of Termination or, if higher, the
rate in effect immediately prior to the first occurrence of an event or
circumstance constituting Good Reason, together with all compensation and
benefits payable to the Executive through the Date of Termination under the
terms of the Company's compensation and benefit plans, programs or arrangements
as in effect immediately prior to the Date of Termination or, if more favorable
to the Executive, as in effect immediately prior to the first occurrence of an
event or circumstance constituting Good Reason.
(b) If the Executive's employment shall be terminated for any reason
following a Change in Control and during the Term, the Company shall pay to the
Executive the Executive's normal post-termination compensation and benefits, if
any; provided, however, that, the severance benefits provided in Section 6
hereof shall be exclusive and the Executive shall not be entitled to participate
in, or receive benefits under, any other severance plan or program that may be
adopted by the Company. Such post-termination compensation and benefits shall be
determined under, and paid in accordance with, the Company's retirement,
insurance and other compensation or benefit plans, programs and arrangements as
in effect immediately prior to the Date of Termination or, if more favorable to
the Executive, as in effect immediately prior to the occurrence of the first
event or circumstance constituting Good Reason.
(c) Notwithstanding any provision of any stock option plan, stock
incentive plan, restricted stock plan, stock option or similar plan or agreement
to the contrary, immediately upon the occurrence of a Change in Control during
the Term, and without regard to whether the Executive's employment is
terminated, the Executive shall be fully vested in all then outstanding options
to acquire stock of the Company (or if such options have been assumed by, or
replaced with options for shares of, a parent, surviving or acquiring company,
such assumed or replacement options), and all then outstanding restricted shares
of stock of the Company (or the stock of any parent, surviving or acquiring
company into which such restricted shares have been converted or for which they
have been exchanged) held by the Executive.
6. SEVERANCE PAYMENTS.
(a) SEVERANCE PAYMENTS. If the Executive's employment is terminated
following a Change in Control and during the Term, other than (A) by the Company
for Cause, (B) by reason of death or Disability, or (C) by the Executive without
Good Reason, then the Company shall pay the Executive the following amounts, and
provide the Executive the following benefits (collectively, the "Severance
Payments"), together with any Gross-Up Payment payable under Section 6(b)
hereof, in addition to any payments and benefits to which the Executive is
entitled under Section 5 hereof:
(i) In lieu of any further salary payments to the Executive
for periods subsequent to the Date of Termination and in lieu of any
severance benefit otherwise payable to the Executive, the Company shall
pay to the Executive a lump sum severance payment, in cash, equal to 1.5
times the sum of (x) the Executive's base salary as in effect
immediately prior to the Date of Termination or, if higher, in effect
immediately prior to the first occurrence of an event or circumstance
constituting Good Reason, and (y) the Executive's
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target annual bonus pursuant to any annual bonus or incentive plan
maintained by the Company in respect of the fiscal year in which occurs
the Date of Termination or, if higher, in respect of the fiscal year in
which occurs the Change in Control.
(ii) For the two year period immediately following the Date
of Termination, the Company shall arrange to provide the Executive and
his dependents life, disability, accident and health insurance benefits
substantially similar to those provided to the Executive and his
dependents immediately prior to the Date of Termination or, if more
favorable to the Executive, those provided to the Executive and his
dependents immediately prior to the first occurrence of an event or
circumstance constituting Good Reason, at no greater cost to the
Executive than the cost to the Executive immediately prior to such date
or occurrence; provided, however, that, unless the Executive consents to
a different method (after taking into account the effect of such method
on the calculation of "parachute payments" pursuant to Section 6(b)
hereof), such insurance benefits shall be provided through a third-party
insurer. Benefits otherwise receivable by the Executive pursuant to this
Section 6(a)(ii) shall be reduced to the extent benefits of the same
type are received by or made available to the Executive by a subsequent
employer of the Executive during the two year period following the
Executive's termination of employment (and any such benefits received by
or made available to the Executive shall be reported to the Company by
the Executive); provided, however, that the Company shall reimburse the
Executive for the excess, if any, of the cost of such benefits to the
Executive over such cost immediately prior to the Date of Termination
or, if more favorable to the Executive, the first occurrence of an event
or circumstance constituting Good Reason.
(iii) Notwithstanding any provision of any stock option plan,
stock incentive plan, restricted stock plan or similar plan or agreement
to the contrary, as of the Date of Termination, (x) the Executive shall
be fully vested in all outstanding options to acquire stock of the
Company (or the options of any parent, surviving our acquiring company
then held by the Executive) and all then outstanding restricted shares
of stock of the Company (or such parent, surviving or acquiring company)
held by the Executive, and (y) subject to any limitation on exercise in
any such plan or agreement that may not be amended without stockholder
approval, all options referred to in cause (x) above shall be
immediately exercisable and shall remain exercisable until the earlier
of (1) the second anniversary of the Date of Termination, or (2) the
otherwise applicable normal expiration date of such option.
(iv) To the extent that the full vesting of any stock option
or share of restricted stock, or the full exercisability of any stock
option, provided for in Section 5(c) or Section 6(a)(iii) should violate
any law, rule or regulation of any governmental authority or
self-regulatory organization applicable to the Company, or to the extent
otherwise determined by the Company is its sole discretion, the Company
may, in lieu of providing any vesting or exercisability rights pursuant
to Section 5(c) or 6(a)(iii), (x) cancel any or all of the Executive's
outstanding options in exchange for a lump sum payment, in cash, equal
to the excess of the fair market value of the shares of stock underlying
such options (whether or not vested or exercisable) on the Date of
Termination (as determined by the Board) over the aggregate exercise
price provided for in such stock options, and (y) repurchase any shares
of restricted stock at their fair
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market value (as determined by the Board without regard to the
restrictions on such shares of stock).
(v) The Company shall pay to the Executive a lump sum
amount, in cash, equal to the Executive's target annual bonus under any
bonus plan maintained by the Company in respect of the fiscal year in
which occurs the Date of Termination multiplied by a fraction, the
numerator of which is the number of days in such fiscal year through and
including the Date of Termination, and the denominator of which is 365.
(vi) The Company shall provide the Executive with
outplacement services suitable to the Executive's position for a period
of one year or, if earlier, until the first acceptance by the Executive
of an offer of employment.
For purposes of this Agreement, the Executive's employment shall be
deemed to have been terminated following a Change in Control by the Company
without Cause or by the Executive with Good Reason, if (x) the Executive's
employment is terminated by the Company without Cause (whether or not a Change
in Control ever occurs) and, at the time of such termination, the Company is a
party to a written agreement the consummation of which would constitute a Change
in Control, or (y) the Executive terminates his employment for Good Reason
(whether or not a Change in Control ever occurs) and, both at the time the event
occurs that constitutes Good Reason and at the time of such termination, the
Company is a party to such an agreement.
(b) GROSS-UP PAYMENT
(i) Whether or not the Executive becomes entitled to the
Severance Payments, except as otherwise provided in Section 6(b)(ii)
hereof, if any of the payments or benefits received or to be received by
the Executive in connection with a Change in Control or the Executive's
termination of employment (whether pursuant to the terms of this
Agreement or any other plan, arrangement or agreement with the Company,
with any Person whose actions result in a Change in Control or with any
Person affiliated with the Company or such Person) (such payments or
benefits, excluding the Gross-Up Payment, being hereinafter referred to
as the "Total Payments") will be subject to the Excise Tax, the Company
shall pay to the Executive an additional amount (the "Gross-Up Payment")
such that the net amount retained by the Executive, after deduction of
any Excise Tax on the Total Payments and any federal, state and local
income and employment taxes and Excise Tax upon the Gross-Up Payment,
and after taking into account the phase out of the itemized deductions
attributable to the Gross-Up Payment, shall be equal to the Total
Payments.
(ii) If the Total Payments would (but for this Section 6(b))
be subject (in whole or part) to the Excise Tax, but the aggregate value
of the portion of the Total Payments that are considered "parachute
payments" within the meaning of section 280G(b)(2) of the Code is less
than 330% of the Executive's Base Amount, then subsection (i) of this
Section 6(b) shall not apply, and the cash Severance Payments shall be
reduced (if necessary, to zero), and all other Severance Payments shall
thereafter be reduced (if necessary, to zero), to the extent necessary
to cause the Total Payments not to be subject to the Excise Tax.
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(iii) For purposes of determining whether any of the Total
Payments will be subject to the Excise Tax and the amount of such Excise
Tax, (A) all of the Total Payments shall be treated as "parachute
payments" (within the meaning of Section 280G(b)(2) of the Code) unless,
in the opinion of tax counsel ("Tax Counsel") reasonably acceptable to
the Executive and selected by the accounting firm that was, immediately
prior to the Change in Control, the Company's independent auditor (the
"Auditor"), such payments or benefits (in whole or in part) do not
constitute parachute payments, including by reason of Section
280G(b)(4)(A) of the Code, (B) all "excess parachute payments" within
the meaning of Section 280G(b)(l) of the Code shall be treated as
subject to the Excise Tax unless, in the opinion of Tax Counsel, such
excess parachute payments (in whole or in part) represent reasonable
compensation for services actually rendered (within the meaning of
Section 280G(b)(4)(B) of the Code) in excess of the Base Amount
allocable to such reasonable compensation, or are otherwise not subject
to the Excise Tax, and (C) the value of any noncash benefits or any
deferred payment or benefit shall be determined by the Auditor in
accordance with the principles of Sections 280G(d)(3) and (4) of the
Code. For purposes of determining the amount of the Gross-Up Payment,
(x) the Executive shall be deemed to pay federal income tax at the
highest marginal rate of federal income taxation in the calendar year in
which the Gross-Up Payment is to be made and state and local income
taxes at the highest marginal rate of taxation in the states and
localities of the Executive's residence and employment on the Date of
Termination, net of the maximum reduction in federal income taxes that
could be obtained from deduction of such state and local taxes, (y) the
Executive shall be deemed to pay employment taxes at the highest rates
in effect in the state and locality of the Executive's employment, and
(z) amounts actually withheld from any payment to the Executive pursuant
to Section 11 hereof with respect to income or employment taxes shall be
ignored.
(iv) In the event that the Excise Tax is Finally Determined
to be less than the amount taken into account hereunder in calculating
the Gross-Up Payment and, after giving effect to such Finally Determined
amount, the Severance Payments are to be reduced pursuant to Section
6(b)(ii) hereof, then the Executive shall repay to the Company, within
five (5) business days following the date that the amount of such
reduction in the Severance Payments is Finally Determined, the Gross-Up
Payment previously paid to the Executive and the amount of such
reduction in the Severance Payments, plus interest on the amount of such
repayments at 120% of the rate provided in Section 1274(b)(2)(B) of the
Code.
(v) In the event that the Excise Tax is Finally Determined
to be less than the amount taken into account hereunder in calculating
the Gross-Up Payment, but, after giving effect to such Finally
Determined amount, no reduction of the Severance Payments is required
pursuant to Section 6(b)(ii) hereof, then the Executive shall repay to
the Company, within five (5) business days following the time that the
amount of such reduction in the Excise Tax is Finally Determined, the
portion of the Gross-Up Payment attributable to such reduction (plus
that portion of the Gross-Up Payment attributable to the Excise Tax and
federal, state and local income and employment taxes imposed on the
Gross-Up Payment being repaid by the Executive), to the extent that such
repayment results in a reduction in the Excise Tax and a
dollar-for-dollar reduction in the Executive's taxable income and wages
for purposes of federal, state and local income and employment taxes,
plus interest on the amount of
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such repayment at 120% of the rate provided in Section 1274(b)(2)(B) of
the Code.
(vi) Except as otherwise provided in Section 6(b)(vii) below,
in the event that the Excise Tax is Finally Determined to exceed the
amount taken into account hereunder in calculating the Gross-Up Payment
(including by reason of any payment the existence or amount of which
cannot be determined at the time of the Gross-Up Payment), the Company
shall, within five (5) business days following the time that the amount
of such excess is Finally Determined, (A) make an additional Gross-Up
Payment in respect of such excess and a Gross-Up Payment in respect of
any amounts paid pursuant to clause (B) or (C) of this Section 6(b)(vi)
(plus any interest, penalties or additions payable by the Executive with
respect to such amounts), (B) if the Severance Payments were reduced
pursuant to Section 6(b)(ii) hereof, but after giving effect to such
final determination, the Severance Payments should not have been so
reduced, the amount by which the Severance Payments were reduced
pursuant to Section 6(b)(ii) hereof, and (C) interest on such amounts at
120% of the rate provided in Section 1274(b)(2) of the Code.
(vii) In the event that the Severance Payments were reduced
pursuant to Section 6(b)(ii) hereof and the value of the Total Payments
that are considered "parachute payments" within the meaning of Section
280G(b)(2) of the Code is Finally Determined to differ from the amount
taken into account hereunder in calculating the Gross-Up Payment, but
such Finally Determined value still does not exceed 330% of the
Executive's Base Amount, then, within five (5) business days following
the date on which such value is Finally Determined, (x) the Company
shall pay to the Executive the amount (if any) by which the reduced
Severance Payments (after taking the Finally Determined value into
account) exceeds the amount of the reduced Severance Payments actually
paid to the Executive, plus interest on the amount of such payment at
120% of the rate provided in Section 1274(b) of the Code, or (y) the
Executive shall pay to the Company the amount (if any) by which the
reduced Severance Payments actually paid to the Executive exceeds the
amount of the reduced Severance Payments (after taking the Finally
Determined value into account), plus interest on the amount of such
payment at 120% of the rate provided in Section 1274(b) of the Code.
(c) The payments provided for in Section 6(a)(i) and (b)(i) hereof
shall be made not later than the fifth business day following the Date of
Termination; provided, however, that if the amounts of such payments cannot be
Finally Determined on or before such day, the Company shall pay to the Executive
on such day an estimate, as determined in good faith by the Company or, in the
case of payments under Section 6(b)(i) hereof, in accordance with Section 6(b)
hereof, of the minimum amount of such payments to which the Executive is clearly
entitled and shall pay the remainder of such payments (together with interest on
the unpaid remainder (or on all such payments to the extent the Company fails to
make such payments when due) at 120% of the rate provided in section
1274(b)(2)(B) of the Code) as soon as the amount thereof can be determined but
in no event later than the sixtieth (60th) day after the Date of Termination. At
the time that payments are made under this Agreement, the Company shall provide
the Executive with a written statement setting forth the manner in which such
payments were calculated and the basis for such calculations including, without
limitation, any opinions or other advice the Company has received from Tax
Counsel, the Auditor or other advisors or consultants (and any such opinions or
advice which are in writing shall be attached to the statement).
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(d) The Executive and the Company shall each reasonably cooperate
with the other in connection with any administrative or judicial proceedings
concerning the existence or amount of liability for Excise Tax with respect to
the Total Payments. The Company shall pay to the Executive all legal fees and
expenses incurred by the Executive in disputing in good faith any issue
hereunder relating to the termination of the Executive's employment, in seeking
in good faith to obtain or enforce any benefit or right provided by this
Agreement or in connection with any tax audit or proceeding to the extent
attributable to the application of Section 4999 of the Code to any payment or
benefit provided hereunder. Such payments shall be made within five (5) business
days after delivery of the Executive's written requests for payment accompanied
with such evidence of fees and expenses incurred as the Company reasonably may
require.
7. TERMINATION PROCEDURES AND COMPENSATION DURING DISPUTE.
(a) NOTICE OF TERMINATION. After a Change in Control and during the
Term, any purported termination of the Executive's employment (other than by
reason of death) shall be communicated by written Notice of Termination from one
party hereto to the other party hereto in accordance with Section 10 hereof. For
purposes of this Agreement, a "Notice of Termination" shall mean a notice which
shall indicate the specific termination provision in this Agreement relied upon
and shall set forth in reasonable detail the facts and circumstances claimed to
provide a basis for termination of the Executive's employment under the
provision so indicated. Further, a Notice of Termination for Cause is required
to include an invitation to attend a meeting of the Board, to be held no sooner
than fifteen (15) days and no later than thirty (30) days following the date of
such Notice of Termination for the purpose of considering whether Cause existed
for the Executive's termination. If the Executive elects to attend the meeting,
the Executive and his or her counsel shall be given the opportunity to address
the Board. At the conclusion of the meeting, the Board shall vote whether the
Executive was guilty of conduct giving rise to Cause hereunder, which vote shall
require not less than three-quarters (3/4) of the entire membership of the Board
in order to confirm the Executive's termination for Cause. If the Board fails to
confirm the Executive's termination for Cause, the Board may elect to reinstate
the Executive or treat the termination as a termination without Cause for
purposes of this Agreement. The Company shall have no liability to the Executive
with respect to any benefit other than cash compensation that is denied the
Executive during the period between the delivery of a Notice of Termination for
Cause and the Board's subsequent failure to confirm that Cause existed. Notice
of Termination due to a Good Reason must be provided by the Executive to the
Company within six months of the Executive becoming aware that the basis for
such Good Reason exists.
(b) DATE OF TERMINATION. The "Date of Termination," with respect to
any termination of the Executive's employment after a Change in Control and
during the Term, shall mean the date specified in the Notice of Termination
which, except in the case of a termination for Cause, shall not be less than
fifteen (15) days from the date such Notice of Termination is given.
Notwithstanding the foregoing, the Company shall have the right to restrict the
Executive's access to company facilities and properties, and to terminate the
Executive's authority to act on behalf of the Company, in such manner as the
Company, in its sole discretion, shall deem appropriate during the period
between the delivery of such a Notice of Termination and the Date of
Termination. The Date of Termination with respect to a termination for Cause
shall be the date the Notice of Termination is delivered to the Executive or
such later date as the Company shall expressly provide; provided, however, that
if a Notice of Termination for Cause is delivered to the Executive and the Board
subsequently determines pursuant
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to Section 7(a) hereof that Cause did not exist but does not reinstate the
Executive, the Date of Termination shall be deemed to be the date of such Board
determination.
8. NO MITIGATION. The Company agrees that, if the Executive's
employment with the Company terminates during the Term, the Executive is not
required to seek other employment or to attempt in any way to reduce any amounts
payable to the Executive by the Company pursuant to Section 6 hereof. Further,
the amount of any payment or benefit provided for in this Agreement shall not be
reduced by any compensation earned by the Executive as the result of employment
by another employer, by retirement benefits, by offset against any amount
claimed to be owed by the Executive to the Company, or otherwise except as
expressly provided herein.
9. SUCCESSORS; BINDING AGREEMENT.
(a) In addition to any obligations imposed by law upon any successor
to the Company, the Company will require any successor (whether direct or
indirect, by purchase, merger, consolidation or otherwise) to all or
substantially all of the business or assets of the Company to expressly assume
and agree to perform this Agreement in the same manner and to the same extent
that the Company would be required to perform it if no such succession had taken
place. Failure of the Company to obtain such assumption and agreement prior to
or upon the effectiveness of any such succession shall be a breach of this
Agreement and shall entitle the Executive to compensation from the Company in
the same amount and on the same terms as the Executive would be entitled to
hereunder if the Executive were to terminate the Executive's employment for Good
Reason after a Change in Control, except that, for purposes of implementing the
foregoing, the date on which any such succession becomes effective shall be
deemed the Date of Termination. If the Company successfully obtains such
assumption and agreement prior to or upon the effectiveness of any such
succession and the successor extends an offer of employment to the Executive,
any termination of the Executive's employment with the Company incident to such
succession shall be ignored for purposes of this Agreement; provided that
nothing contained in this Section 9(a) shall limit the Executive's right to
terminate employment with the successor for Good Reason if the succession
constitutes a Change in Control and the successor takes any action subsequent to
such succession that would constitute Good Reason hereunder.
(b) This Agreement shall inure to the benefit of and be enforceable
by the Executive's personal or legal representatives, executors, administrators,
successors, heirs, distributees, devisees and legatees. If the Executive shall
die while any amount would still be payable to the Executive hereunder (other
than amounts which, by their terms, terminate upon the death of the Executive)
if the Executive had continued to live, all such amounts, unless otherwise
provided herein, shall be paid in accordance with the terms of this Agreement to
the executors, personal representatives or administrators of the Executive's
estate.
10. NOTICES. For the purpose of this Agreement, notices and all
other communications provided for in the Agreement shall be in writing and shall
be deemed to have been duly given when delivered or mailed by United States
registered mail, return receipt requested, postage prepaid, addressed, if to the
Executive, to the address inserted below the Executive's signature on the final
page hereof and, if to the Company, to the address set forth below, or to such
other address as either party may have furnished to the other in writing in
accordance herewith, except that notice of change of address shall be effective
only upon actual receipt:
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To the Company:
Tractor Supply Company
000 Xxxxxx Xxxxx
Xxxxxxxxx, Xxxxxxxxx 00000
Attention: Corporate Secretary
11. MISCELLANEOUS. No provision of this Agreement may be modified,
waived or discharged unless such waiver, modification or discharge is agreed to
in writing and signed by the Executive and such officer as may be designated by
the Board. No waiver by either party hereto at any time of any breach by the
other party hereto of, or of any lack of compliance with, any condition or
provision of this Agreement to be performed by such other party shall be deemed
a waiver of similar or dissimilar provisions or conditions at the same or at any
prior or subsequent time. The validity, interpretation, construction and
performance of this Agreement shall be governed by the laws of the State of
Tennessee. All references to sections of the Exchange Act or the Code shall be
deemed also to refer to any successor provisions to such sections. Any payments
provided for hereunder shall be paid net of any applicable withholding required
under federal, state or local law and any additional withholding to which the
Executive has agreed. The obligations of the Company and the Executive under
this Agreement which by their nature may require either partial or total
performance after the expiration of the Term (including, without limitation,
those under Sections 6 and 7 hereof) shall survive such expiration.
12. VALIDITY. The invalidity or unenforceability of any provision of
this Agreement shall not affect the validity or enforceability of any other
provision of this Agreement, which shall remain in full force and effect.
13. COUNTERPARTS. This Agreement may be executed in several
counterparts, each of which shall be deemed to be an original but all of which
together will constitute one and the same instrument.
14. SETTLEMENT OF DISPUTES. Except as otherwise provided by law or
the specific terms of any employee benefit plan of the Company, all claims by
the Executive for benefits under this Agreement shall be directed to and
determined by the Board and shall be in writing. The Executive shall provide the
Board with all materials and information reasonably requested by the Board in
connection with its review of any such claim. Any denial by the Board of a claim
for benefits under this Agreement shall be delivered to the Executive in writing
and shall set forth the specific reasons for the denial and the specific
provisions of this Agreement relied upon. The Board shall afford a reasonable
opportunity to the Executive for a review of the decision denying a claim and
shall further allow the Executive to appeal to the Board a decision of the Board
within sixty (60) days after notification by the Board that the Executive's
claim has been denied.
15. DEFINITIONS. For purposes of this Agreement, the following terms
shall have the meanings indicated below:
(a) "Affiliate" shall have the meaning set forth in Rule 12b-2
promulgated under Section 12 of the Exchange Act.
(b) "Auditor" shall have the meaning set forth in Section 6(b)
hereof.
(c) "Base Amount" shall have the meaning set forth in section
280G(b)(3) of the Code.
10
(d) "Beneficial Owner" shall have the meaning set forth in Rule
13d-3 under the Exchange Act.
(e) "Board" shall mean the Board of Directors of the Company.
(f) "Cause" for termination by the Company of the Executive's
employment shall mean (i) the willful and continued failure by the Executive to
substantially perform the Executive's duties with the Company (other than any
such failure resulting from the Executive's incapacity due to physical or mental
illness or any such actual or anticipated failure after the issuance of a Notice
of Termination for Good Reason by the Executive pursuant to Section 7(a) hereof)
that has not been cured within 30 days after a written demand for substantial
performance is delivered to the Executive by the Board, which demand
specifically identifies the manner in which the Board believes that the
Executive has not substantially performed the Executive's duties, or (ii) the
willful engaging by the Executive in conduct which is demonstrably and
materially injurious to the Company or its subsidiaries, monetarily or
otherwise. For purposes of clauses (i) and (ii) of this definition, no act, or
failure to act, on the Executive's part shall be deemed "willful" if done, or
omitted to be done, by the Executive in good faith and with a reasonable belief
that the Executive's act, or failure to act, was in the best interest of the
Company.
(g) "Change in Control" shall be deemed to have occurred if:
(i) Any Person (including a "group" as defined in Section
14(d) of the Exchange Act) other than an Exempt Person is or becomes the
Beneficial Owner, directly or indirectly, of securities of the Company
representing more than 30% of the combined voting power of the Company's then
outstanding securities; provided, however, that no Change of Control shall be
deemed to have occurred as a result of a change in ownership percentage
resulting solely from an acquisition of securities by the Company; or
(ii) During any two (2) consecutive years during the Term,
individuals who at the beginning of such two (2) year period constitute the
Board and any new director whose election to the Board or nomination for
election by the Company's stockholders was approved by a vote of at least
two-thirds of the directors then still in office who either were directors at
the beginning of the period or whose election or nomination for election was
previously so approved (such individuals and any such new director being
referred to as the "Incumbent Board") cease for any reason to constitute at
least a majority of the Board; provided, however, that no individual shall be
considered a member of the Incumbent Board if such individual initially assumed
office as a result of either an actual or threatened "Election Contest" (as
described in Rule 14a-11 promulgated under the Exchange Act) or other actual or
threatened solicitation of proxies or consents by or on behalf of a Person other
than the Board (a "Proxy Contest") including by reason of any agreement intended
to avoid or settle any Election Contest or Proxy Contest; or
(iii) Consummation of a reorganization, merger or
consolidation of the Company (a "Business Combination"), in each case, unless,
following such Business Combination, all or substantially all of the individuals
and entities who were the beneficial owners of outstanding voting securities of
the Company immediately prior to such Business Combination beneficially own,
directly or indirectly, more than 50% of the combined voting power of the then
outstanding voting securities entitled to vote generally in the election of
directors of the company resulting
11
from such Business Combination (including, without limitation, a company which,
as a result of such transaction, owns the Company or all or substantially all of
the Company's assets either directly or through one or more subsidiaries) in
substantially the same proportions as their ownership immediately prior to such
Business Combination of the outstanding voting securities of the Company; or
(iv) A sale or other disposition of all or substantially all
of the assets of the Company (other than in a transaction in which all or
substantially all of the individuals and entities who were the Beneficial Owners
of outstanding voting securities of the Company immediately prior to such sale
or other disposition beneficially own, directly or indirectly, substantially all
of the combined voting power of the then outstanding voting securities entitled
to vote generally in the election of directors of the acquirer of such assets
(either directly or through one or more subsidiaries) in substantially the same
proportions as their ownership immediately prior to such sale or other
disposition), or the approval by the stockholders of the Company of a complete
liquidation or dissolution of the Company.
(h) "Code" shall mean the Internal Revenue Code of 1986, as amended
from time to time.
(i) "Company" shall mean Tractor Supply Company and, except in
determining whether or not any Change in Control of the Company has occurred,
shall include any successor to its business or assets which assumes and agrees
to perform this Agreement by operation of law, or otherwise.
(j) "Date of Termination" shall have the meaning set forth in
Section 7(b) hereof.
(k) "Disability" shall be deemed the reason for the termination by
the Company of the Executive's employment, if, as a result of the Executive's
incapacity due to physical or mental illness, the Executive shall have been
absent from the full-time performance of the Executive's duties with the Company
for a period of six (6) consecutive months, the Company shall have given the
Executive a Notice of Termination for Disability, and, within thirty (30) days
after such Notice of Termination is given, the Executive shall not have returned
to the full-time performance of the Executive's duties.
(l) "Exchange Act" shall mean the Securities Exchange Act of 1934,
as amended from time to time.
(m) "Excise Tax" shall mean any excise tax imposed under Section
4999 of the Code.
(n) "Executive" shall mean the individual named in the preamble to
this Agreement.
(o) "Exempt Person" shall mean Xxxxxx X. Xxxxxxxx, Xx., his spouse,
his children and their spouses, and his grandchildren (or the legal
representative of any such person) and each trust for the benefit of any such
person.
(p) "Finally Determined" shall mean, with respect to any amount used
in the computation of a Gross-Up Payment, that such amount has been the subject
of an audit adjustment by the Internal Revenue Service that is either (i) agreed
to by both the Executive and the Company, such agreement not to be unreasonably
withheld,
12
or (ii) sustained by a court of competent jurisdiction in a decision with which
the Executive and the Company concur, such concurrence not to be unreasonably
withheld, or with respect to which the period within which an appeal may be
filed has lapsed without a notice of appeal being filed or there is no further
right of appeal.
(q) "Good Reason" for termination by the Executive of the
Executive's employment shall mean the occurrence (without the Executive's
express written consent) after any Change in Control, of any one of the
following acts by the Company, or failures by the Company to act, unless, in the
case of any act or failure to act described in paragraph (i), (v) or (vi) below,
such act or failure to act is corrected prior to the Date of Termination
specified in the Notice of Termination given in respect thereof:
(i) the assignment to the Executive of any duties
inconsistent with the Executive's status as a senior executive officer
of the Company or a substantial adverse alteration in the nature or
status of the Executive's responsibilities from those in effect
immediately prior to the Change in Control;
(ii) a reduction by the Company in the Executive's annual
base salary as in effect on the date hereof or as the same may be
increased from time to time;
(iii) the relocation of the Executive's principal place of
employment to a location more than 50 miles from the Executive's
principal place of employment immediately prior to the Change in Control
or the Company's requiring the Executive to be based anywhere other than
such principal place of employment (or permitted relocation thereof)
except for required travel on the Company's business to an extent
substantially consistent with the Executive's present business travel
obligations;
(iv) the failure by the Company to pay to the Executive any
portion of the Executive's current compensation, or to pay to the
Executive any portion of an installment of deferred compensation under
any deferred compensation program of the Company, within seven (7) days
of the date such compensation is due;
(v) the failure by the Company to continue in effect any
compensation plan in which the Executive participates immediately prior
to the Change in Control which is material to the Executive's total
compensation, unless an equitable arrangement (embodied in an ongoing
substitute or alternative plan) has been made with respect to such plan,
or the failure by the Company to continue the Executive's participation
therein (or in such substitute or alternative plan) on a basis not
materially less favorable, both in terms of the amount or timing of
payment of benefits provided and the level of the Executive's
participation relative to other participants, as existed immediately
prior to the Change in Control; or
(vi) the failure by the Company to continue to provide the
Executive with benefits substantially similar to those enjoyed by the
Executive under any of the Company's pension, savings, life insurance,
medical, health and accident, or disability plans in which the Executive
was participating immediately prior to the Change in Control (except for
across the board changes similarly affecting all senior executives of
the Company and all senior executives of any Person in control of the
Company), the taking of any other
13
action by the Company which would directly or indirectly materially
reduce any of such benefits or deprive the Executive of any material
fringe benefit enjoyed by the Executive at the time of the Change in
Control, or the failure by the Company to provide the Executive with the
number of paid vacation days to which the Executive is entitled in
accordance with the Company's normal vacation policy in effect at the
time of the Change in Control.
The Executive's right to terminate the Executive's employment for Good
Reason shall not be affected by the Executive's incapacity due to physical or
mental illness. The Executive's continued employment shall not constitute
consent to, or a waiver of rights with respect to, any act or failure to act
constituting Good Reason hereunder.
(r) "Gross-Up Payment" shall have the meaning set forth in Section
6(b) hereof.
(s) "Notice of Termination" shall have the meaning set forth in
Section 7(a) hereof.
(t) "Person" shall have the meaning given in Section 3(a)(9) of the
Exchange Act, as modified and used in Sections 13(d) and 14(d) thereof, except
that such term shall not include (i) the Company or any of its Affiliates, (ii)
a trustee or other fiduciary holding securities under an employee benefit plan
of the Company or any of its subsidiaries, (iii) an underwriter temporarily
holding securities pursuant to an offering of such securities or (iv) a
corporation owned, directly or indirectly, by the stockholders of the Company in
substantially the same proportions as their ownership of stock of the Company
(u) "Retirement" shall be deemed the reason for the termination by
the Executive of the Executive's employment if such employment is terminated in
accordance with the Company's retirement policy, including early retirement,
generally applicable to its salaried employees.
(v) "Severance Payments" shall have the meaning set forth in Section
6(a) hereof.
(w) "Tax Counsel" shall have the meaning set forth in Section 6(b)
hereof.
(x) "Term" shall mean the period of time described in Section 2
hereof (including any extension, continuation or termination described therein).
(y) "Total Payments" shall mean those payments so described in
Section 6(b) hereof.
14
IT WITNESS WHEREOF, the parties have executed this Agreement as of the
date first above written.
TRACTOR SUPPLY COMPANY
By: /s/ Xxxxx X. Xxxxxx
--------------------
Name: Xxxxx X. Xxxxxx
Title: Chief Executive Officer
EXECUTIVE
/s/ Xxxxxxx X. Xxxxxxx
----------------------
Name: Xxxxxxx X. Xxxxxxx
Address:
000 Xxxxxxxxxxx Xxxxx
Xxxxxxxxx, Xxxxxxxxx 00000
----------------------------------
(Please print carefully)
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