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Exhibit 10.45
SPLIT-DOLLAR AGREEMENT
TRACTOR SUPPLY COMPANY, INC.
THIS AGREEMENT, the "Agreement," made and entered into effective as of
the date of January 27, 1998, by and between TRACTOR SUPPLY COMPANY, INC., a
corporation organized and existing under the laws of the State of Delaware, the
"Corporation", and JOSEPH H. SCARLETT, JR., the "Employee", and TARA ANNE
SCARLETT AND ANDREW SINCLAIR SCARLETT, as Co-Trustees of the Scarlett 1997
Irrevocable Trust under Agreement dated December 20, 1997, the "Trust",
WITNESSETH:
WHEREAS, the Employee is a valued employee of the Corporation and has
rendered competent and faithful efforts on behalf of the Corporation resulting
in substantial benefit to the Corporation; and,
WHEREAS, the Corporation values the efforts, abilities, and
accomplishments of the Employee and his contributions as an important member of
management, wishes to continue his employment, and is willing to assist the
Employee with his personal life insurance program by providing for payment of
the premiums on certain life insurance as an additional employment benefit for
Employee; and,
WHEREAS, the Trust is the owner of certain life insurance on the life
of Employee and Employee's wife as issued by Northwestern Mutual Life Insurance
Company,
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Policy Number 14530140, the "Policy," and the Trust alone holds and may exercise
any and all rights in and to the Policy; and,
WHEREAS, the Trust has agreed to assign the Policy to the Corporation
as collateral for the purpose of securing to the Corporation repayment of the
Corporation's Policy Interest as defined herein; and,
WHEREAS, the arrangement set forth in this Agreement among the
Corporation, the Employee, and the Trust is intended to constitute a split
dollar life insurance employee benefit plan as described in Revenue Ruling
64-328,
NOW, THEREFORE, premises considered, in consideration of the mutual
covenants and benefits set out herein, and for other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, the
parties agree as follows:
1. Indebtedness. The "Indebtedness" is defined as the greater of (i) the
cumulative amounts paid by the Corporation, including amounts paid under Article
5 of this Agreement, on the Policy, or (ii) the cash surrender value of the
Policy, including the cash surrender value of paid up additions.
2. Policy Interest. The Corporation's "Policy Interest" is defined as
an amount equal to the Indebtedness. The Trust's "Policy Interest" is defined as
all other interests in and to the Policy.
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3. Policy of Insurance. The Trust has previously acquired the Policy
as issued by Northwestern Mutual Life Insurance Company on the lives of the
Employee and the Employee's wife. The Trust is the sole owner of the policy.
4. Ownership of Policy.
(a) Simultaneously with the execution of this Agreement, the Trust
shall execute and deliver to the Corporation an assignment of the Policy to the
Corporation as collateral security for the repayment of the Corporation's Policy
Interest, the "Collateral Assignment"; such assignment shall be made using a
standard form collateral assignment agreement and shall be for the sole purpose
of securing repayment to the Corporation of its Policy Interest.
(b) The Trust shall continue to be the owner of the Policy and
alone may exercise all ownership rights granted to the owner thereof by the
terms of the Policy as the Trustee may determine, subject only to the rights and
interests of the Corporation under the Collateral Assignment.
(c) Except for the Corporation's Policy Interest and the security
therefor under the Collateral Assignment, the Trust alone shall have and be
entitled to exercise all rights as the owner of the Policy. Specifically, the
Corporation shall not take any action beyond its rights as the assignee under
the Collateral Assignment which would impair or defeat the Trust's rights in the
Policy.
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5. Application of Dividends. Any dividends declared by Insurer on the
Policy shall, at the election of the Trust:
(a) Be applied to purchase paid-up additional insurance; or
(b) Be applied to reduce the premiums payable on the Policy.
6. Trust Undertaking To Pay Indebtedness. The Trust promises and
undertakes to pay to the Corporation an amount equal to the Indebtedness,
determined as of the time of such event, promptly at the earlier of:
(a) The termination of this Agreement;
(b) The surrender or cancellation of the Policy; or,
(c) The death of the survivor of Employee and Employee's wife.
The Trust shall have the option to terminate this Agreement at any time by
payment to the Corporation of an amount equal to the indebtedness as provided in
Section 9.
7. Premium Payment.
(a) Unless Employee is terminated for cause by the Corporation or
voluntarily terminates his employment with the Corporation prior to his having
attained the age of Fifty-five (55) years, the Corporation shall pay all
premiums necessary to keep the Policy in full force and effect for so long as
Employee or Employee's wife shall live.
(b) The Corporation shall notify Employee each year of the exact
amount due of such premium payment as shall constitute additional compensation
to Employee, from Corporation, which amount shall be the lesser of (i) the PS-38
rate, while
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Employee and Employee's wife are both living, or (ii) the Insurer's current
published premium rate for annually renewable term insurance for standard risks
as insured under the Policy.
8. Collateral Assignment. In order to secure to the Corporation the
payment of its Policy Interest, the Trustee has assigned the Policy to the
Corporation as collateral using the form provided therefor by the Insurer.
Payment to the Corporation of its Policy Interest shall be made from the cash
surrender value of the Policy, as defined therein, in the event this Agreement
is terminated or in the event of the surrender or cancellation of the Policy, or
from the death proceeds of the Policy upon the death of both Employee and
Employee's wife. In no event shall the Corporation have any right or authority
to borrow against or otherwise encumber the Policy or exercise any other rights
of an owner thereunder. The Collateral Assignment shall conform to the
provisions of this Agreement.
9. Release of Collateral Assignment.
(a) The Trust shall have the right and option to obtain the
release of the Collateral Assignment at any time by payment to the Corporation
of an amount equal to the Corporation's Policy Interest. Upon payment to the
Corporation of such amount, the Corporation shall promptly release the
Collateral Assignment and shall have no further interests in the Policy.
(b) In the event of a termination of this Agreement other than on
account of the death of Employee and Employee's wife, unless the Trust shall pay
the
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Corporation an amount equal to the Corporation's Policy Interest, the Trust
shall execute and deliver such documents and instruments as may reasonably be
required in order to transfer the Policy to the Corporation. Should the Trust
elect to surrender the Policy to the Corporation, then the Corporation may hold,
maintain, surrender, or otherwise dispose of the Policy as it may desire and the
Trust shall have no further interests in the Policy.
10. Trust's Right in Policy.
(a) The Trust shall take no action with respect to the policy
which would in any way impair or compromise the Corporation's Policy Interest
without the prior written consent of the Corporation.
(b) The Trust may pledge or assign the Policy, subject to the
Collateral Assignment in favor of the Corporation, in order to secure a loan
from the Insurer or from a third party not in excess of the then cash surrender
value of the Policy. Interest charges and other costs of any such borrowings
shall be the responsibility of the Trust.
(c) The Trust shall have the sole right to surrender or cancel the
Policy and to make any elections allowed under the Policy, subject always to the
rights of the Corporation under the Collateral Assignment. Upon the surrender or
cancellation of the Policy, however, the Corporation shall have the unqualified
right to be paid its Policy Interest.
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(d) The Trust shall have the right at any time to terminate this
Agreement and obtain the release of the Collateral Assignment as provided in
Section 9 hereof.
11. Death of Employee.
(a) Upon the death of the survivor of the Employee and Employee's
wife, the Trust shall promptly take all action necessary to obtain the death
benefit provided under the Policy.
(b) The Corporation shall have the unqualified right to be paid an
amount equal to its Policy Interest.
(c) The balance of any death benefit provided under the Policy
shall be paid to the Trust in the manner and in the amount or amounts provided
in the beneficiary designation provision of the Policy.
12. Release of Insurer. Insurer shall be fully discharged from its
obligations under the Policy by payment of the Policy death benefit to the
beneficiary or beneficiaries named in the Policy and the Collateral Assignment.
In no event shall Insurer be considered a party to this Agreement or to any
modification or amendment hereof. No provision of this Agreement, nor of any
modification or amendment hereof, shall in any way be construed as enlarging,
changing, varying, or in any other way modifying the obligations of Insurer as
expressly provided in the Policy, except as and to the extent the provisions of
the Collateral Assignment.
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13. Special Provision. The following provisions are intended to meet
the requirements of the Employee Retirement Income Security Act of 1974.
(a) The Secretary of the Corporation shall be the named fiduciary.
(b) The funding policy is that all premiums on the Policy shall
be remitted to the issuer when due.
(c) Direct payment by the insurer is the basis of payment of
benefits, such benefits being in turn based upon the payment of premiums as
provided herein.
(d) For claims purposes, the "Claims Manager" shall be an officer
of the Corporation.
(i) If for any reason a claim for benefits hereunder is denied
by the Corporation, the Claims Manager shall provide a written explanation
setting forth the reasons for the denial, pertinent references to this Agreement
on which such denial is based, and such other data and materials as may be
pertinent, together with information of the procedures to be followed in
obtaining a review of the claim, written in a manner calculated to be understood
by claimant. For this purpose, (a) a claim shall be deemed filed when presented
orally or in writing to the Claims Manager, and (B) the explanation of the
Claims Manager shall be in writing and shall be delivered to the claimant within
Ninety (90) days of the date the claim was filed.
(ii) The claimant shall have Sixty (60) days following receipt
of a denial of his claim to file with the Claims Manager a written request for
review of the
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denial. For such review, the claimant may submit pertinent documents and written
issues and comments.
14. Amendment. This Agreement may not be amended, altered, or modified
except by a written instrument signed by the parties hereto, or their respective
successors or assigns, and may not be otherwise terminated except as provided
herein.
15. Binding Effect. This Agreement shall be binding upon and insure to
the benefit of the Corporation, the Employee, and the Trustee, and their
respective successors, assigns, heirs, executors, administrators, and
beneficiaries.
16. Notice. Any notice, consent, or demand required or permitted to be
given under the provisions of this Agreement shall be in a writing signed by the
party giving or making the same. Such notice, consent, or demand may be
delivered by hand or may be mailed by United States certified mail, postage
prepaid, addressed to such party's last known address. Such notice, consent, or
demand shall be effective upon receipt.
17. Captions. The captions appearing in this Agreement are for
convenience only, and do not in any way define, limit, or describe the scope of
this Agreement, or the intent or content of any provision hereof.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement, in
duplicate, as of the day and year first above written.
CORPORATION:
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TRACTOR SUPPLY COMPANY, INC.
BY: /s/ Michael J. Kincaid
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its: Vice President
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EMPLOYEE:
/s/ Joseph H. Scarlett, Jr.
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JOSEPH H. SCARLETT, JR.
TRUST:
SCARLETT 1997 IRREVOCABLE TRUST
UNDER AGREEMENT DATED 12/__/97
By: /s/ Tara Anne Scarlett
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Tara Anne Scarlett, Co-Trustee
By: /s/ Andrew Sinclair Scarlett
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Andrew Sinclair Scarlett,
Co-Trustee
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