INCENTIVE STOCK OPTION
AGREEMENT
under the
TRACTOR SUPPLY COMPANY
2006 STOCK INCENTIVE PLAN
STOCK OPTION
AGREEMENT, dated as of
between TRACTOR SUPPLY COMPANY, a Delaware corporation (the
“Company”), and
(the “Optionee”).
The
Company’s Compensation Committee (the
“Committee”) has determined that the objectives of the
Company’s 2006 Stock Incentive Plan (the “Plan”)
will be furthered by granting to the Optionee an option pursuant to
the Plan.
In
consideration of the foregoing and of the mutual undertakings set
forth in this Stock Option Agreement (the “Agreement”),
the Company and the Optionee hereby agree as follows:
SECTION 1.
Grant of Option . The Company hereby grants to the Optionee
a stock option to purchase
shares of the Common Stock of the Company, at a purchase price of
per share, which option is intended to qualify for the special
incentive stock option tax treatment described in Code section
422.
The Company
cannot guarantee that the special tax treatment will apply. For
example, if the Optionee sells the Common Stock acquired pursuant
to the exercise of this option either within two years after the
date of this Agreement or within one year after the date this
option (or part thereof) is exercised, this special tax treatment
will not apply.
If the option
(or any part thereof) does not qualify for incentive stock option
treatment for any reason, then, to the extent of such
nonqualification, the option (or portion thereof) shall be treated
as a nonqualified stock option granted under the Plan, provided
that the option (or portion thereof) otherwise satisfies the terms
and conditions of the Plan generally relating to nonqualified stock
options.
SECTION 2.
Exercisability . Subject to Section 4 hereof, the
option shall be exercisable as follows:
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% of Shares
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Cumulative
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Becoming
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% of Shares
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On and
After
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Exercisable
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Exercisable
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Vesting Date = Grant Date Plus
1 year
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33-1/3
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%
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33-1/3
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%
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Vesting Date = Grant Date Plus
2 years
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33-1/3
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%
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66-2/3
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%
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Vesting Date = Grant Date Plus
3 years
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33-1/3
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%
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100.0
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%
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Through Expiration Date = Grant Date Plus
10 years
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100.0
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%
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The option
shall not be exercisable prior to the first anniversary of the date
of grant, and shall become cumulatively exercisable with respect to
33-1/3% of the shares of Common Stock subject thereto, rounded down
to the next lower full share, on the first anniversary of the date
of grant, and with respect to an additional 33-1/3% of the shares
of Common Stock subject thereto, rounded down to the next lower
full share, on the second anniversary of the date of grant, and
shall become 100% exercisable on the third anniversary of the date
of grant, and shall remain 100% exercisable until Expiration
Date plus 1 day and shall terminate and cease to be
exercisable on Expiration Date plus 1 day
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SECTION 3.
Method of Option Exercise; Involuntary Option Cash-Out
.
(a) The
option or any part thereof may be exercised only by giving to the
Company written notice of exercise in the form attached hereto as
Exhibit A. The Optionee shall exercise any options through the
Company sponsored exercise program. The Optionee shall have no
right to receive shares of Common Stock with respect to an option
exercise, prior to the option exercise date. For purposes of this
Agreement, the option exercise date shall be deemed to be the sixth
business day immediately following the date written notice of
exercise is received by the Company.
(b) At any
time after the Company’s receipt of written notice of
exercise and prior to the option exercise date, the Committee, in
its sole discretion, shall have the right, by written notice to the
Optionee, to cancel the option or any part thereof subject to the
written notice of exercise if the Committee, in its sole judgment,
determines that legal or contractual restrictions and/or blockage
and/or other market considerations would make the Company’s
acquisition of Common Stock from, and/or the Optionee’s sale
of Common Stock to, the public markets illegal, impracticable or
inadvisable if the Committee determines to so cancel the option or
any part thereof subject to the written notice of exercise, the
Company shall pay to the Optionee an amount equal to the excess (if
any) of (i) the aggregate fair market value of the shares of
Common Stock subject to the option or part thereof cancelled
(determined as of the option exercise date) over (ii) the
aggregate option exercise price of the shares of Common Stock
subject to the option or part thereof cancelled. Such amount shall
be delivered to the Optionee as soon as practicable after such
option or part thereof is cancelled.
SECTION 4.
Termination of Employment .
(a)
General Rule . The non-vested portion of any option shall
terminate and expire upon the Optionee’s termination of
employment for any reason except that upon termination of
Optionee’s employment or service as a result of
(1) death, (2) disability (as defined below), or
(3) retirement (as defined below), any unvested portion of the
option granted hereunder shall vest in full as of the date of such
termination. The vested portion shall remain exercisable following
termination of employment only under the circumstances and to the
extent provided in this Section 4.
2
(b)
Improper Activity; Quit . If the Optionee’s employment
is terminated for cause or if the Optionee quits employment,
whether or not the Optionee is a party to a written employment
contract, the option granted hereunder shall terminate and expire
on the day the Optionee’s employment terminates. For purposes
of this Section 4, an Optionee’s employment shall be
deemed to have been terminated for “cause” if he is
discharged on account of fraud or embezzlement or other unlawful or
tortuous conduct, whether or not involving or against the Company
or any Affiliate, or for violation of a policy of the Company or
any Affiliate or for serious and willful acts of misconduct
detrimental to the business or reputation of the Company or any
Affiliate (whether or not such acts constitute “cause”
pursuant to any written employment contract with the Optionee) or
if he is discharged for “cause” or any like term as
defined in any written employment contract with the
Optionee.
(c)
Regular Termination; Leaves of Absence . If the
Optionee’s employment terminates for reasons other than as
provided in subsection (b) above or subsections (d),
(e) or (f) below, the vested portion of the option
granted hereunder may be exercised until the earlier of
(i) three months after the day his employment terminates and
(ii) the date on which the option otherwise terminates or
expires in accordance with the applicable provisions of the Plan
and this Agreement; provided that the Committee may
determine, in its sole discretion, such longer or shorter period
for exercise (not to exceed the remaining term of the option) in
the case of an individual whose employment terminates for reasons
as provided herein in subsection (c), or solely because his
employer ceases to be an Affiliate or he transfers his employment
with the Company’s consent to a purcha
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