Document:

Exhibit 10.1

 

Execution Version

 

Certain identified information has been excluded from this exhibit because it is both not material and would likely cause competitive harm to the registrant if publicly disclosed.

 

 

Share Purchase Agreement

 

 

GDS (Shanghai) Investment Co., Ltd.

 

Beijing Zhong Cheng Fu Jing Technology Co., Ltd.

 

Beijing Lan Ting Data Technology Co., Ltd.

 

Beijing Zheng He Tian Ye Economic and Trade Co., Ltd.

 

Jun He

 

And

 

Lanting (Beijing) Information Science and Technology Co., Ltd.

 

Lanting Xuntong (Beijing) Science and Technology Co., Ltd.

 

December 4, 2019

 

 

TABLE OF CONTENTS

 

	
RECITALS
    	
2
    
	
 
    	
 
    	
 
    
	
1
    	
DEFINITION
    	
3
    
	
 
    	
 
    	
 
    
	
2
    	
SALE AND PURCHASE OF SHARES
    	
6
    
	
 
    	
 
    	
 
    
	
3
    	
PURCHASE PRICE AND ITS PAYMENT
    	
6
    
	
 
    	
 
    	
 
    
	
4
    	
CLOSING
    	
9
    
	
 
    	
 
    	
 
    
	
6
    	
WARRANTIES
    	
14
    
	
 
    	
 
    	
 
    
	
7
    	
PRE-CLOSING COVENANTS
    	
15
    
	
 
    	
 
    	
 
    
	
8
    	
POST-CLOSING COVENANTS
    	
17
    
	
 
    	
 
    	
 
    
	
9
    	
EXCLUSIVITY
    	
22
    
	
 
    	
 
    	
 
    
	
10
    	
CONFIDENTIALITY
    	
22
    
	
 
    	
 
    	
 
    
	
11
    	
LIABILITIES FOR BREACH
    	
22
    
	
 
    	
 
    	
 
    
	
12
    	
MISCELLANEOUS
    	
23
    
	
 
    	
 
    	
 
    
	
EXHIBIT A
    	
33
    
	
 
    	
 
    
	
EXHIBIT B CLOSING DELIVERABLES
    	
35
    
	
 
    	
 
    
	
EXHIBIT C WARRANTIES
    	
37
    
	
 
    	
 
    
	
EXHIBIT D FIXED ASSET LIST
    	
55
    
	
 
    	
 
    
	
EXHIBIT E STATEMENTS OF FACTS
    	
91
    
	
 
    	
 
    
	
EXHIBIT F LIST OF CONTACTS
    	
96
    
	
 
    	
 
    
	
EXHIBIT G
    	
99
    
	
 
    	
 
    
	
EXHIBIT H OPERATION AND MAINTENANCE   OUTSOURCING AGREEMENT
    	
100
    
	
 
    	
 
    
	
EXHIBIT I SITE SERVICE AGREEMENT
    	
114
    

 

1

 

This Share Purchase Agreement (this “Agreement”), dated as of December 4, 2019 is entered into by and among:

 

(1)                                GDS (Shanghai) Investment Co., Ltd., a company incorporated and existing under the laws of the PRC, whose registered office is at Room 1046A, No. 55 Xili Road, China (Shanghai) Pilot Free Trade Zone (the “GDS”);

 

(2)                                Beijing Zhong Cheng Fu Jing Technology Co., Ltd., a company incorporated and existing under the laws of the PRC, whose registered office is at Room 5895, Guojie Building, Yun Hui Li Jin Ya Yuan, Haidian District, Beijing (the “Zhong Cheng Fu Jing”);

 

(3)                                Beijing Lan Ting Data Technology Co., Ltd., a company incorporated and existing under the laws of the PRC, whose registered office is at 3rd Floor, Building 4A, High-tech Industrial Park, No. 1 Middle Lai Guang Ying Road Jia, Chaoyang District, Beijing (the “Lan Ting Data”);

 

(4)                                Beijing Zheng He Tian Ye Economic and Trade Co., Ltd., a company incorporated and existing under the laws of the PRC, whose registered office is at Room 516, 5th Story, 21st Floor, No. 64 Wai Avenue, Yongding Gate, Dongcheng District, Beijing (the “Zheng He Tian Ye”);

 

(5)                                Jun He, a citizen of the PRC, whose ID Number is [REDACTED], (“Jun He”, together with Zhong Cheng Fu Jing, Lan Ting Data and Zheng He Tian Ye, the “Sellers”, and each a “Seller”);

 

(6)                                Lanting (Beijing) Information Science and Technology Co., Ltd., a company incorporated and existing under the laws of the PRC, whose registered office is at No.1 Niuhui Street, Niulanshan Town, Shunyi District, Beijing (the “Target Company”); and

 

(7)                                Lanting Xuntong (Beijing) Science and Technology Co., Ltd., a company incorporated and existing under the laws of the PRC, whose registered office is at Building 2, No.1 Niuhui Street, Niulanshan Town, Shunyi District, Beijing (the “Target Company Subsidiary”).

 

The above mentioned parties are hereinafter collectively referred to as the “Parties” and each a “Party”.

 

RECITALS

 

The Target Company is a company incorporated and existing under the laws of the PRC (the particulars of which are set out in Part One of Exhibit A), which owns the business of an independent data center (the “Data Center”) in No.2, No.3 Factory Building, High Warehouse of the Storage Center, West of the North Street of the Circle, Niulanshan, Shunyi District, Beijing (the particulars of which are set out in Part Two of Exhibit A, the “Business”).  As of the Signing Date of this Agreement, phase one and phase two of the Data Center project has been completed and been in operation and phase three of the Data Center project is in the process of construction.

 

Subject to and in accordance with the terms and conditions of this Agreement, the Sellers intend to sell and transfer, and GDS or its designated Affiliate (the “Purchaser”) intends to purchase and acquire, in reliance upon, inter alia, the representations, warranties, covenants

 

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and undertakings set out in this Agreement, the shares owned by the Target Company representing one hundred percent (100%) of the registered capital of the Target Company (the “Shares”), and indirectly own hundred percent (100%) of the registered capital of the Target Company Subsidiary (the transaction, the “Proposed Transaction”).

 

AGREEMENT

 

NOW, THEREFORE, the Parties hereto hereby agree as follows:

 

1                 Definition

 

1.1                     Certain Defined Terms

 

In this Agreement, unless the context otherwise requires, the below capitalized terms shall have the following meanings:

 

“Warranties” means the representations and warranties made by the Sellers set out in Exhibit C, and each a “Warranty”.

 

“Security Deposit” has the meaning set forth in Section 3.3 (2).

 

“Supplemental Deposit” has the meaning set forth in Section 3.3 (3).

 

“Electrical Power Rights Agreements” has the meaning set forth in Section 8.12.

 

“Extra Electrical Power Arrangement” has the meaning set forth in Section 8.12.

 

“Earn Out Amount for the Extra Electrical Power” has the meaning set forth in Section 8.12.

 

“Encumbrance” means any mortgage, charge, pledge, lien, option, restriction, right of first refusal, right of pre-emption, third-party right or interest, other encumbrance or security interest of any kind, or another type of preferential arrangement (including a title transfer or retention arrangement) having similar effect.

 

“Affiliate” means, with respect to any given Person, any other Person that directly or indirectly, through one or more intermediaries, Controls, is Controlled by, or is under common Control with the first mentioned Person.

 

“SAIC” means the State Administration of Industry and Commerce and/or its local counterparts, as the case may be.

 

“Closing” mean completion of the Proposed Transaction.

 

“Closing Date” has the meaning set forth in Section 4.1.

 

“Purchase Price Payable for Closing” has the meaning set forth in Section 3.3 (1).

 

“Accounts Receivable for Closing” has the meaning set forth in Section 3.1.

 

“Long-Stop Date” has the meaning set forth in Section 4.2.

 

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“CIETAC” has the meaning set forth in Section 12.2.

 

“Transaction Documents” means any and all agreements, contracts, instruments, memoranda, certificates or other documents executed for or in relation to the Proposed Transaction contemplated in this Agreement including but not limited to the “Cooperation Agreement” dated September 18, 2019 among GDS, the Sellers and the Target Company.

 

“Customer Contracts” has the meaning set forth in Section 5.1 (12).

 

“Control” means (i) the power or authority, whether exercised or not, to direct the business, management and policies of such Person, directly or indirectly, whether through the ownership of voting securities, by contract or otherwise, (ii) which power or authority shall conclusively be presumed to exist upon possession of beneficial ownership or power to direct the vote of more than fifty percent (50%) of the votes entitled to be cast at a meeting of the shareholders of such Person or (iii) power to control the composition of a majority of the board of directors of such Person; the term “Controlled” has meaning correlative to the foregoing.

 

“Performance Arrangement” has the meaning set forth in Section 5.1 (23).

 

“Purchaser Payable” has the meaning set forth in Section 3.4.

 

“Closing Liquidated Damages for Purchaser” has the meaning set forth in Section 4.2.

 

“Closing Liquidated Damages for Sellers” has the meaning set forth in Section 4.2.

 

“Exclusivity Period” has the meaning set forth in Section 9. “Disclosure Schedule” means the disclosure schedule made by the Sellers in Exhibit C.

 

“Signing Date” means the date written on the first page of this Agreement.

 

“RMB” means the lawful currency of the PRC.

 

“Person” means any natural person, corporation, limited liability company, joint stock company, joint venture, partnership, enterprise, trust, unincorporated organization or any other entity or organization.

 

“Financial Lease Contracts” means the five “Financial Lease Contracts” signed between the Target Company and CITIC Financial Lease Co., Ltd. (Number: CITICFL-C-2018-0028, CITICFL-C-2018-0043, CITICFL-C-2018-0104, CITICFL-C-2019-0004, CITICFL-C-2019-0083).

 

[REDACTED]

 

“Application Date” has the meaning set forth in Section 6.3.

 

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“Purchase Price” has the meaning set forth in Section 3.1.

 

“Taxation” means any and all applicable tax or taxes and fees charged and collected by Government Entity concerned.

 

“Applicable Law” means, with respect to any Person, any and all provisions of any law, regulation, rule and regulatory documents publicly promulgated by any Government Entity, whether in effect as of the date hereof or thereafter and in each case as amended, applicable to such Person or its Affiliates or their respective assets.

 

“Consent” means any consent, approval, authorization, waiver, permit, grant, franchise, concession, agreement, license, exemption or order of, registration, certificate, declaration or filing with, or report or notice to, any Person, including any Government Entity.

 

“Property” means the property where the Data Center is located, each in No.2, No.3 Factory Building, High Warehouse of the Storage Center, West of the North Street of the Circle, Niulanshan, Shunyi District, Beijing (be separately or integrally used according to the case).

 

[REDACTED]

 

“Earn Out Amount for the Lease” has the meaning set forth in Section 8.7.

 

“Conditions Precedent” has the meaning set forth in Section 5.1.

 

“Business Day” means any day that is not a Saturday, Sunday, legal holiday in the PRC.

 

“Landlord” means Beijing Shun Xin Qian Shou Co., Ltd., a company incorporated and existing under the laws of the PRC, whose registered office is at West of the North Street of the Circle, Niulanshan, Shunyi District, Beijing; and/or Beijing Qian Shou Vegetable and Beverage Co., Ltd., a company incorporated and existing under the laws of the PRC, whose registered office is at Building 1 and 2, No.1 Niuhui Street, Shunyi District, Beijing, as the owner of the property and the right of use of the land where Data Center is located (be separately or integrally used according to the case).

 

“Deposit” has the meaning set forth in Section 3.1.

 

[REDACTED]

 

“Intellectual Property” means (i) copyright, patents, know-how, confidential information, database rights, rights in trademarks, domain names and designs (whether registered or unregistered); (ii) any application and rights to apply for any of the foregoing and (iii) any other intellectual property or protected right similar to the foregoing in any country.

 

“Material Adverse Effect” means with respect to the Target Company and/or the Target Company Subsidiary any event, occurrence, fact, condition, change or development,

 

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individually or in the aggregate with any other circumstance, that is or could be reasonably expected to be materially adverse to the prospects, operations, financial condition, assets or liabilities of any of the Target Company and/or the Target Company Subsidiary, or material impairment of the ability to perform the material obligations of any other contract of the Target Company and the Target Company Subsidiary.

 

“Government Entity” means any government or any agency, bureau, board, commission, court, department, political subdivision or tribunal of any government or its division or sub-division that exercises any power or authority customarily exercised by any governmental agency.

 

“Total Liabilities” has the meaning set forth in Section 3.1.

 

“PRC” means the People’s Republic of China, solely for purposes of this Agreement, excluding the Hong Kong, the Macau Special Administrative Region and Taiwan.

 

“Total Estimate Valuation” has the meaning set forth in Section 3.1.

 

“Confirmation Documents” has the meaning set forth in Section 5.1(7).

 

1.2                     Interpretation

 

(1)         Headings.  Headings are included for convenience only and shall not affect the construction of any provision of this Agreement.

 

(2)         Sections, Schedules and Others.  References to this Agreement shall include any Schedules to it and references to Sections and Schedules are to sections of and schedules to this Agreement.

 

(3)         A reference to a Party having a right.  For the avoidance of doubt, a reference in this Agreement to a Party having a right to do an act or thing shall be construed so that the Party shall not have an obligation to do that act or thing.

 

(4)         Including not Limiting.  “Include”, “including” and similar expressions are not expressions of limitation and shall be construed as if followed by the words “without limitation”.

 

2                 Sale and Purchase of Shares

 

2.1                     Subject to the provisions of this Agreement, the Sellers shall sell and the Purchaser shall purchase, the Shares of the Target Company, together with all rights attaching to the Shares at and after the Closing Date.  For the avoidance of doubt, the Purchaser shall be entitled to all undistributed profits of the Target Company attaching to the Shares at and after the Closing Date.  The Sellers shall waive their rights of first refusal or other restrictive rights upon the Shares and shall procure any other Person to waive such rights for the transfer of Shares no later than the Closing Date.

 

2.2                     The Purchaser shall not be obligated to complete the purchase of any of the Shares unless the purchase of all Shares is completed simultaneously in accordance with this Agreement.

 

3                 Purchase Price and Its Payment

 

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3.1                     Purchase Price

 

Subject to Section 3 and Section 4 of this Agreement, the total amount of the Purchase Price for the Target Company’s shares should be RMB600,105,000 (the “Purchase Price”), the Purchaser shall pay the Purchase Price to the Sellers in accordance with Section 3.3 of this Agreement, among which, the Purchaser shall pay thirty percent (30%) of the Purchase Price to Zhong Cheng Fu Jing, thirty percent (30%) of the Purchase Price to Lan Ting Data, ten percent (10%) of the Purchase Price to Zheng He Tian Ye and thirty percent (30%) of the Purchase Price to Jun He.

 

All Parties confirm that, subject to Section 3 of this Agreement, the amount of the Purchase Price is determined according to the following calculation formula upon the total estimate valuation of the Target Company (the “Total Estimate Valuation”), all liabilities of the Target Company as of the Closing Date (including without limitation, costs, operation capital, accounts payable, financing loans and other liabilities to be borne by the Target Company after the Closing Date as a result of facts and actions related to the operation of the Data Center before the Closing Date (the payment obligations of such liabilities have not occurred before the Closing Date and are not reflected in the Target Company’s financial books) (the “Total Liabilities”), the Target Company’s accounts receivable as of the Closing Date (calculated on the accrual basis, including the accounts that will be collected by the Target Company after the Closing Date due to the facts and actions related to the operation of the Data Center before the Closing Date, even if the payment obligation of such accounts has not occurred before the Closing Date and is not reflected in the Target Company’s financial accounts, as well as the deposits under the Lease Agreement and Financial Lease Contracts that have been paid by the Target Company (the “Deposit”) ( the “Accounts Receivable for Closing”).

 

The calculation formula of the Purchase Price is:

 

Purchase Price = Total Estimate Valuation - Total Liabilities + Accounts Receivable for Closing

 

All Parties confirm that the Purchase Price provided in Section 3.1 is provisional based on the Total Estimated Valuation of the Target Company of RMB 2,305,000,000 and all liabilities and accounts receivables of the Target Company as of August 31, 2019 of RMB [REDACTED] and RMB [REDACTED], respectively, which should be subject to the adjustment based on the final amount of the Total Estimate Valuation, the Total Liabilities and Accounts Receivable for Closing confirmed in accordance with Section 3.2 of this Agreement.

 

3.2                     Purchase Price Adjustment

 

(1)             All Parties acknowledge the estimate premises of the above mentioned Total Estimate Valuation of the Target Company include: (1) all Conditions Precedent under Section 5.1 of this Agreement have been fulfilled; (2) [REDACTED].  The Purchaser shall confirm the final amount of the Total Estimate Valuation according to the confirmation results of the estimate premises of the Total Estimate Valuation as of the Closing Date.

 

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(2)             All Parties agree that all liabilities of the Target Company as of the Closing Date (including without limitation, costs, operation capital, accounts payable, financing loans and other liabilities to be borne by the Target Company after the Closing Date as a result of facts and actions related to the operation of the Data Center before the Closing Date (the payment obligations of such liabilities have not occurred before the Closing Date and are not reflected in the Target Company’s financial accounts), the Target Company’s accounts receivable as of the Closing Date (calculated on the accrual basis, including the accounts that will be collected by the Target Company after the Closing Date due to the facts and actions related to the operation of the Data Center before the Closing Date, even if the payment obligation of such accounts has not occurred before the Closing Date and is not reflected in the Target Company’s financial accounts, as well as the Deposit should be confirmed by the accountant employed by the Purchaser.  The Purchaser shall confirm the final amount of the Total Liabilities and the Accounts Receivable for Closing according to the above confirmation results.

 

(3)             The Purchase Price shall be adjusted according to the final amount of the Total Estimate Valuation, Total Liabilities and Accounts Receivable for Closing according to the calculation formula in Section 3.1 of this Agreement.

 

3.3                     Payment Term

 

(1)             Subject to Section 3, Section 4 and Section 5, the Purchaser shall pay the Purchase Price following the provisions below:

 

(i)                 the Purchaser shall, within [REDACTED] Business Days after the Closing Date, pay the amount of the Purchase Price after deducting the Accounts Receivable for Closing (excluding the Deposit) (the “Purchase Price Payable for Closing”) by remittance to each Sellers’ bank account (the “Sellers’ Account”) designated at least five (5) Business Days before the Closing Date in a lump sum and in proportion to each Seller, and the Purchaser shall provide the Sellers with scanned copies of the documents issued by the bank proving that the Purchaser has completed the settlement procedures of the aforesaid payable amount; the the Accounts Receivable for Closing shall be paid in accordance with the provisions of Section (ii) below; for the avoidance of doubt, the Purchase Price Payable for Closing in accordance with this Agreement shall include the Deposit;

 

(ii)              for the Accounts Receivable for Closing (excluding the Deposit) of the Purchase Price, the exact payable amount of the Accounts Receivable for Closing (excluding the Deposit) shall be determined by the amount actually received by the Target Company before the expiration date of eighteen (18) months after the Closing Date, and such amount shall be settled quarterly and paid to the Sellers after the Closing Date.  Specifically, the Purchaser shall, upon the expiration of the third (3), sixth (6), ninth (9), twelfth (12), fifteenth (15) and eighteenth (18) months after the Closing Date, respectively, confirm the corresponding amount of the Accounts Receivable for Closing (excluding the Deposit) received by the Target Company and not yet paid by the Purchaser at that time, and within [REDACTED] Business Days after the above time nodes, the confirmed amount shall be paid to the Seller’s Account in a lump sum by remittance. The parties agree that if the Target Company has not received the corresponding amount of all or part of the Accounts Receivable for Closing (excluding the Deposit)  before the expiration of the [REDACTED] month after the Closing Date, the Purchaser shall not be obligated to pay the Sellers the

 

8

 

amount that has not been received.

 

(2)             Within [REDACTED] Business Days after the Sellers receive the Purchase Price Payable for Closing, RMB [REDACTED] (the “Security Deposit”) paid by GDS in accordance with the letter of intention among GDS, the Target Company and the Sellers dated September 18, 2019 shall be immediately paid by the Target Company in a lump sum by remittance to the bank account designated by the Purchaser at least five (5) Business Days in advance.

 

(3)             Within [REDACTED] Business Days after the Signing Date of this Agreement, the Purchaser shall pay a supplemental security deposit (the “Supplemental Deposit”) of RMB [REDACTED] to the bank account designated by the Sellers at least five (5) Business Days in advance by means of remittance.  All Parties confirm that all application materials to be submitted for the cancellation of the Target Company’s VAT licenses shall be provided to and confirmed by the Purchaser before the Target Company formally submits the above cancellation application.

 

The Sellers shall, within five (5) Business Days after receiving the Purchase Price Payable for Closing, pay the Supplemental Deposit by immediately available funds to the bank account designated by the Purchaser at least five (5) Business Days in advance by means of remittance in full and in a lump sum.

 

(4)             The Purchaser and the Sellers shall be respectively responsible for any and all income tax and other taxes payable in connection with the Proposed Transaction as required by Applicable Laws.

 

3.4                     Deduction

 

For any amount payable by the Sellers to the Purchaser as a result of the Proposed Transaction, including but not limited to the amount of compensation for the Purchaser’s losses caused by the Sellers, the Target Company and/or the Target Company Subsidiary’s breach of any obligation or guarantee under the Transaction Documents, and the liability of the Target Company and/or the Target Company Subsidiary for the non-compliance or non-performance of the Sellers’ obligations under the Transaction Documents, the Purchaser shall be entitled to deduct any amount from the amount payable to the Sellers under this Agreement (the “Purchaser Payable”) before the Sellers make full payment to the Purchaser.  Notwithstanding the foregoing and subject to the second clause below, the Purchaser shall make the aforesaid deduction on a reasonable basis, and shall obtain the Sellers’ written consent in advance before making the deduction; the amount of deduction determined by the Purchaser shall be subject to the Sellers’ written consent in advance, but the Sellers shall not unreasonably refuse the amount of deduction.

 

Notwithstanding the foregoing, if the Purchase and/or its Affiliates suffer any losses due to the reason in relation to that the disclosure of related parties and third parties’ loan of the Target Company made by the Sellers in accordance with this Agreement is inaccurate, incomplete, untrue or misleading (including the breach of the relevant Warranty), the Purchaser shall have the right to deduct the same amount of the losses from the Purchaser Payable by notice to the Sellers but without their consent in advance.

 

4                 Closing

 

4.1  Closing

 

9

 

Subject to the satisfaction of all the Conditions Precedent set out in Section 5.1, the Closing shall take place remotely via the exchange of the documents and signatures set out in Exhibit B in [REDACTED] months after the Signing Date of this Agreement or on a date otherwise agreed by the Parties in writing (the date of the Closing, the “Closing Date”).

 

4.2  Obligations on the Closing Date

 

On or prior to the Closing Date, the Parties shall procure that the Conditions Precedent specified in Section 5.1, as well as the obtaining or delivery of closing deliverables specified in Exhibit B, are fulfilled.  If one or more of the Conditions Precedent set forth in Section 5.1 are not fulfilled or satisfied, the Parties agree that the Purchaser shall have the right to:

 

(1)             waive such Condition(s) Precedent in its sole discretion in accordance with Section 5.2; or

 

(2)             postpone the Closing Date till such one or more of the Conditions Precedent are fulfilled or satisfied.

 

If the Closing has not been occurred in [REDACTED] months from the Signing Date (the “Long-Stop Date”), unless the Parties otherwise agree in writing, either of the Purchaser and the Sellers has the right to notify the other Parties to terminate this Agreement; but if either of the Purchaser or the Sellers fails to comply with this Agreement, the defaulting Party shall not be entitled to terminate this Agreement in accordance with the foregoing clause.  The Parties agree that if this Agreement is terminated in accordance with Section 4.2, in five (5) Business Days from the termination date, the Target Company shall pay the Security Deposit to the Purchaser’s bank account designated by the Purchaser within five (5) Business Days in advance, and the Sellers shall, jointly and severally, be liable for this.  In addition, the Parties shall provide necessary assistance to procure that the Customer Contracts (if any) transferred to the Affiliate designated by the Purchaser according to Section 5.1 (12) shall be transferred back to the Target Company or any third party designated by the Target Company.

 

If the Closing has not been occurred as of the Long-Stop Date for reasons not attributable to the Purchaser and this Agreement is terminated in accordance with Section 4.2 (2), or the Sellers breach the provisions of Section 7.5 or Section 9 of this Agreement, the Sellers and the Target Company shall be, jointly and severally, liable to pay liquidated damages in an amount equal to RMB[REDACTED] (the “Closing Liquidated Damages for Sellers”).  The Sellers and the Target Company (if applicable) shall pay the Closing Liquidated Damages for Sellers to the Purchaser in full and in a lump sum within ten (10) Business Days after the termination or after the receipt of the notification from the Purchaser (applicable in accordance with specific conditions).  The Parties agree and acknowledge that the amount of the Closing Liquidated Damages for Sellers has precisely reflected the reasonable calculation of any potential losses the Purchaser may suffer due to the reason that the Closing has not been completed or due to the Sellers’ above mentioned breaches, and therefore shall not be regarded as punitive damages.  Notwithstanding the foregoing, if the Sellers have made their best efforts to assist the transfer of the Customer Contracts as required by Section 5.1 (12) and have made the necessary revisions as required by the Purchaser, while the Closing does not occur merely due to the reason that the transfer of the foregoing contracts or the revision has not been completed and this Agreement is terminated in accordance with Section 4.2 (2), the Purchaser shall not claim the payment of the Closing Liquidated Damages for Sellers from the Sellers or the Target Company based on the foregoing reasons.

 

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Notwithstanding the foregoing, if the Purchaser claims the Closing Liquidated Damages for Sellers after the Closing Date, the Target Company shall not undertake any responsibility of the payment with respect to the Closing Liquidated Damages for Sellers, and the Sellers shall undertake the full responsibility of the foregoing payment.

 

If all the Conditions Precedent have been fulfilled, while the Purchaser fails to complete the Closing and pay the Purchase Price, the Purchaser shall undertake liquidated damages (the “Closing Liquidated Damages for Purchaser”) in amount equal to RMB [REDACTED]. The Purchaser shall pay the Sellers the Closing Liquidated Damages for Purchaser in full and in a lump sum within ten (10) Business Days after the receipt of the notification from the Sellers.  The Parties agree and acknowledge that the amount of the Closing Liquidated Damages for Purchaser has precisely reflected the reasonable calculation of any potential losses the Sellers may suffer due to the reason that the Closing has not been completed or due to the Purchaser’s above mentioned breaches, and therefore shall not be regarded as punitive damages.

 

After the termination of this Agreement in accordance with this Section 4.2, none of the Parties shall have any claim against the other Parties with respect to this Agreement, save for any claim arising from non-compliance of this Agreement prior to such termination.  However, the Parties agree that notwithstanding anything to the contrary in this Agreement, Section 10.2 and Section 12.2 shall survive the termination of this Agreement, and be of continuing binding effect upon the Parties.

 

5. Conditions to Closing

 

5.1 Conditions Precedent

 

Closing of the transactions contemplated by this Agreement shall be conditional upon the fulfillment of the following conditions (the “Conditions Precedent”):

 

(1)             Completion of Due Diligence: The Sellers shall have provided information and assistance in accordance with the requirements of the Purchaser, and the Purchaser shall have completed technical, legal and financial due diligence review;

 

(2)             Delivery of Closing Deliverables: The Sellers and the Purchaser shall have delivered or procured the delivery to each other of the required closing deliverables as listed in Exhibit B, and the deliverables shall be in the form and substance reasonably satisfactory to the Purchaser.

 

(3)             Warranties: All the Warranties are true, accurate, complete and not misleading on the date of this Agreement and remain to be true, accurate, complete and not misleading by reference to the facts and circumstances as at the Closing Date;

 

(4)             Performance: The Sellers, the Target Company and the Target Company Subsidiary shall have performed and complied with all agreements, covenants, obligations and conditions contained in each Transaction Document where such parties are required to perform or comply with on or prior to the Closing Date;

 

(5)             No Material Adverse Effect: There shall be no and no reasonable expectation of the occurrence of any Material Adverse Effect up to the Closing Date;

 

(6)             Consents: The Target Company shall have properly obtained all the Consents as required under the Applicable Law or agreements, or fulfilled its relevant obligations with

 

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respect to the achievement of the Proposed Transaction (including the Consents of the competent Government Entity, [REDACTED]);

 

(7)             [REDACTED].

 

(8)    [REDACTED]

 

(9)             Approvals for the Data Center’s Construction and Operation: The Target Company or the Target Company Subsidiary shall have obtained all government approvals/filings for the Data Center’s construction and operation required by the Applicable Law, including but not limited to, fixed asset investment project filing, fixed asset energy conservation examination, construction permit and acceptance filing, construction project environment impact filing and fire-fighting acceptance filing.

 

(10)      [REDACTED].

 

(11)      [REDACTED].

 

(12)      [REDACTED].

 

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(13)      [REDACTED].

 

(14)      Network for the Data Center: The network channels inside the campus where the Data Center is located shall have achieved the mutual connection, and all facilities could meet the requirements of the customers of the Data Center with respect to the network services.

 

(15)      [REDACTED]

 

(16)      [REDACTED]

 

(17)      [REDACTED]

 

(18)      Employees: The employment contracts of all employees of the Target Company and its subsidiary shall have been terminated in accordance with the Applicable Law, and the Target Company and the Target Company Subsidiary shall have no employees.

 

(19)      [REDACTED]

 

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(20)      Insurance: The Target Company shall have obtained the relevant insurance with respect to the interruption of the business and the social liability in accordance with the instruction of the Purchaser, and the corresponding costs shall be borne by the Purchaser or any third-party designated by the Purchaser.

 

(21)      Share Pledge Release: The existing share pledge registration of the Target Company shall have been released in accordance with the Applicable Law;

 

(22)      Settlement of Related Party and Third Party Loan: The Target Company shall have disclosed all detailed information in relation to its related parties’ and third parties’ loans, and the arrangement for such loans shall be satisfactory to the Purchaser; and

 

(23)      Contract Fulfillment: The Target Company shall have fulfilled all the duties under contracts where it is a party, or have achieved the relevant performance arrangement with the counter parties in the form and substance satisfactory to the Purchaser (“Performance Arrangement”), and all evidence documents shall have been provided to the Purchaser (including but not limited to any potential default liability that has been waived by the counter parties such as the default in the payment (if applicable)).

 

5.2 Non-satisfaction/Waiver

 

The Purchaser, in its sole discretion, shall have the right to, by sending a notice to the Sellers, waive any one or more of the Conditions Precedent, in whole or in part, conditionally or unconditionally.  For the avoidance of doubt, a waiver of any one or more of the Conditions Precedent shall not impair either of the Purchaser’s right to claim for any losses it may incur as a result of the non-satisfaction of such condition under this Agreement.

 

6                 Warranties

 

6.1                              The Sellers warrant to the Purchaser that each Warranty contained in Exhibit C as attached hereto is true, accurate, complete and not misleading at the date of this Agreement.  Immediately before the Closing, the Sellers are deemed to warrant to the Purchaser that each Warranty is true, accurate, complete and not misleading by reference to the facts and circumstances as at the Closing Date.  For this purpose only, where there is an express or implied reference in a Warranty to the “Signing Date of this Agreement”, that reference is to be construed as a reference to the Closing Date.  Each Warranty is to be construed independently and (unless otherwise provided in this Agreement) is not limited by a provision of this Agreement or another Warranty.

 

All parties hereby acknowledge that for all warranties contained in Exhibit C, where there is an express or implied reference to the Target Company, that reference is to be construed as including a reference to the Target Company and/or the Target Company Subsidiary (subject to necessary adjustments as applicable), unless otherwise stipulated in the relevant Warranty.

 

6.2                     The Sellers acknowledge that:

 

(1)             the Purchaser is entering into this Agreement in reliance upon each Warranty under this Agreement; and

 

(2)             all information relating to the Target Company, Target Company Subsidiary and the Business which would be material to the Purchaser’s valuation of the Sellers’ Shares,

 

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the Business or assets of the Target Company has been contained in this Agreement.

 

6.3                     [REDACTED].

 

7                 Pre-Closing Covenants

 

7.1                     The Sellers shall procure that, from the Signing Date to the Closing Date:

 

(1)             The Target Company and the Target Company Subsidiary shall use their best efforts to: (i) conduct the business in the ordinary course with a view to growth, [REDACTED]; (ii) preserve intact its present business organization; (iii) maintain in effect and no change of all of the Consents that have been obtained [REDACTED]; (iv) maintain satisfactory relationships with the related parties having material business relationships with it; (v) maintain books and records in accordance with past practice, and (vi) comply with all its signed contracts and agreements (if any).

 

(2)             Without limiting the generality of the foregoing, except with the written consent of the Purchaser (If the Purchaser fails to make any written reply to the Target Company or the Target Company Subsidiary within [REDACTED] Business Day after receiving the written application from the Target Company or the Target Company Subsidiary, the Purchaser shall be deemed to have agreed on the application), the Target Company and the Target Company Subsidiary shall not prior to the Closing Date:

 

(i)                           change its corporate management structure;

 

(ii)                        increase or decrease its registered capital or share capital;

 

(iii)                     declare, make or pay any dividend or other distribution or do or allow to be done anything which renders its financial position less favorable than at the date of this Agreement;

 

(iv)                    incur any capital expenditures or any obligations or liabilities or any supply credit;

 

(v)                       acquire (by merger, consolidation, acquisition of stock or assets or

 

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otherwise), directly or indirectly, any assets, securities, properties, interests or businesses;

 

(vi)                    sell, lease or otherwise transfer, or create or incur any Encumbrance on, any of its equity interests, assets, properties, interests or businesses;

 

(vii)                 make any loans, advances or capital contributions to, or investments in, any other Person;

 

(viii)              create, incur, assume, suffer to exist or otherwise be liable with respect to any indebtedness for borrowed money or guarantees;

 

(ix)                    change any consent that has been obtained in connection with the construction and operation of the Data Center, or conduct any other act that may cause such consent to change or be affected (except for the de-registration of value-added telecommunication business license for the purpose of satisfying the Conditions Precedent);

 

(x)                       do any act or thing which may result in any material change in its nature or scope of the operations;

 

(xi)                    enter into any agreement or arrangement that limits or otherwise restricts it or any successor to it or that could, after the Closing, limit or restrict it, the Purchaser or any Affiliates of the Purchaser, from engaging or competing in any line of business, in any location or with any Person;

 

(xii)                 sign, modify, amend or terminate any contract (other than for the purpose of satisfying the Conditions Precedent);

 

(xiii)              delay making payment of any trade debt beyond the date of expiry of the credit period authorized by the relevant creditors (or (if different) the period extended by creditors in which to make payment);

 

(xiv)             settle, or offer or propose to settle, (1) any litigation, investigation, arbitration, proceeding or other claim involving or against it, (2) any shareholder litigation or dispute against it or any of its officers or directors or (3) any litigation, arbitration, proceeding or dispute that relates to the transactions contemplated hereby;

 

(xv)                change the policies and methods of accounting, except as required by concurrent changes in the PRC GAAP; and

 

(xvi)             do any act or thing that would have Material Adverse Effect on the operation or financial condition of the Target Company and/or Target Company Subsidiary;

 

The Parties agree that the Purchaser shall indemnify the Target Company or the Target Company Subsidiary in respect of any loss suffered by the Target Company or the Target Company Subsidiary as a result of the Purchaser’s failure to consent.

 

(3)             From the Signing Date to the Closing Date, the Sellers shall not:

 

(i)                           dispose of any interest in the Sellers’ Shares or do any act or thing that may

 

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subject the Sellers’ Shares to any Encumbrance;

 

(ii)                        pass any resolution or matter that is or will be in violation to this Agreement; and

 

(iii)                     do or omit to do or cause or allow to be done or omitted to be done any act or thing which would result (or be likely to result) in a breach of any of the Warranties if the Warranties were repeated at the Closing Date.

 

7.2                     The Sellers, the Target Company and the Target Company Subsidiary shall procure that the Purchaser, their agents and representatives are given full access to the assets, operation and books and records of the Target Company and the Target Company Subsidiary from the Signing Date of this Agreement to the Closing Date.  The Sellers, Target Company and Target Company Subsidiary shall provide such information regarding the businesses and affairs of the Target Companies as the Purchaser may require.

 

7.3                     After the Signing Date, the Seller, the Target Company and the Target Company Subsidiary shall make reasonable efforts to assist the counterparty of the contract to which the Target Company and/or the Target Company Subsidiary is a party to continue to perform the contract in accordance with the terms and conditions of such contract and cooperate before the Closing Date to meet reasonable requirements of the Purchaser on maintaining the normal operation of the Target Company and the Target Company Subsidiary after the Closing Date, including without limitation, to procure the counterparty of the contract with payment obligation to the Target Company and/or the Target Company Subsidiary to cooperate with the Purchaser to complete the relevant vendor audit process (including without limitation, to provide the information of such counterparty, fill in the form, require the vendor to sign the letter of commitment and integrity agreement, etc., for the purpose of anti-corruption audit.).

 

7.4                     The Sellers shall notify the Purchaser in writing of any changes or potential changes in respect of the information set forth in the Warranties as attached hereto as Exhibit C within five (5) Business Days from the time when the Sellers are aware of any of such changes or potential changes.

 

7.5                     The Parties agree that, from the Signing Date to the Closing Date, if the Target Company and/or the Target Company Subsidiary change any Consent related to the construction and operation of the Data Center that has been obtained by the Target Company without the Purchaser’s prior written consent, or engage in any other act that may cause such Consent be changed or be affected (except for the de-registration of value-added telecommunication business license for the purpose of satisfying the Condition Precedent), the Sellers shall immediately terminate such breach and ensure the restoration of such Consent.

 

7.6                     The Parties agree that prior to the Closing Date, the Sellers and the Target Company shall continue to be responsible for all work related to the operation of the Data Center, unless otherwise required by the Purchaser in writing.  In the event that the Purchaser or the Purchaser’s designated Affiliates suffer any loss before the Closing Date due to reasons related to the operation of the Data Center, the Sellers undertake to bear corresponding liability for compensation to the Purchaser, except that such loss is caused by the Purchaser or force majeure.

 

8                 Post-Closing Covenants

 

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8.1                     General Covenant after the Closing

 

All Parities covenant to continue fully performing any of their obligations and undertakings set out in this Agreement, including without limitation, to comply with PRC anti-corruption related laws and U.S Foreign Corrupt Practices Act during the process of fulfilling the foregoing obligations and undertakings, and to provide all necessary assistance and cooperation to give effect to such obligations and undertakings after the Closing. The Parties further agree to execute, make, acknowledge, and deliver such instruments, agreements and other documents as may be reasonably required or mandatory under the Applicable Law to effectuate the purposes of this Agreement.

 

8.2                     Non-Solicitation

 

(1)             The Sellers covenant to the Purchaser that it shall not and shall procure that their Affiliates shall not:

 

(i)                           for a period of three (3) years from the Closing induce or attempt to induce any director or key employee of the Target Company or the Target Company Subsidiary to leave his/her employment with the Target Company or the Target Company Subsidiary;

 

(ii)                        for a period of three (3) years from the Closing induce or attempt to induce any supplier of the Target Company or the Target Company Subsidiary to cease to supply, or to restrict or vary the terms of supply, to the Target Company or the Target Company Subsidiary; and

 

(iii)                     make use of or (save as required by, or to comply with, Applicable Law) disclose or divulge to any third party any information of a secret or confidential nature relating to the business or affairs of the Target Companies.

 

(2)             Each of the restrictions in each paragraph or article above shall be enforceable independently of each of the others and its validity shall not be affected if any of the others is invalid. If any of the restrictions is void but would be valid if some part of the restrictions were deleted, the restriction in question shall apply with such modification as may be necessary to make it valid.

 

(3)             In the event the Sellers breach any of the covenants set forth in this Section 8.2, the Sellers shall be deemed as having committed a material breach of this Agreement and should compensate the Purchaser for any loss incurred.

 

8.3                     Non-Compete

 

The Sellers undertake that, without the written consent of the Purchaser, from the Signing Date of this agreement, the Sellers shall not directly and indirectly invest in, manage, own, control, provide any financial support and/or services, or provide security to any third party that engages or intend to engage in any business activities competing with the Target Company and/or its subsidiary within [REDACTED].

 

8.4                     Waiver of Claims; Release

 

The Sellers hereby and procure its Affiliates to release and forever discharge the Target

 

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Company and Target Company Subsidiary of and from any and all actions, causes of action, suits, debts, covenants, contracts, controversies, agreements, promises, claims of damages, judgments, executions, claims and demands of every type and nature whatsoever, whether asserted, unasserted, absolute, contingent, known or unknown, that the Sellers or their Affiliates ever had, now have or may have in the future, to the extent arising from or in connection with the Transaction Documents and the transactions contemplated thereby or any act, omission or state of facts taken or existing on or prior to the Closing Date or otherwise in relation to the Business.

 

8.5                     Statement of Facts

 

The Sellers acknowledge that the content of the statement of facts contained in Exhibit E of this Agreement is an integral part of the Warranty.  The Sellers acknowledge and confirm that if the statement of facts is untrue or inaccurate in any aspect that may have a material adverse effect on the Purchaser, the Target Company, the Target Company Subsidiary or the Data Center (for the purpose of this provision, the definition applies to the Data Center and the Purchaser), the Sellers shall compensate the Purchaser for any loss suffered by the Purchaser.

 

8.6                    Liabilities of Agreement Breach

 

From the Closing Date, if the Target Company, the Target Company Subsidiary and/or the Purchaser suffer any loss due to the Target Company and/or the Target Company Subsidiary’s failure to perform the contractual obligations in accordance with the contract to which the Target Company and/or the Target Company Subsidiary is a party before the Closing Date, the Sellers undertake to compensate the Target Company, the Target Company Subsidiary and/or the Purchaser.

 

Notwithstanding the foregoing, if the above mentioned loss is caused by the Target Company’s breach of the Performance Arrangement after the Closing Date, the Sellers shall not be required to make compensation in accordance with the provisions under this section.

 

[REDACTED]

 

(1)             Within thirty-six (36) months after the Closing Date, if the Sellers have assisted the Target Company to [REDACTED], the Purchaser shall pay the earn-out amount for the lease equal to RMB135,000,000 [REDACTED] 

 

(2)             [REDACTED]

 

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For the avoidance of doubt, 1) if the Purchaser has paid part of the Earn Out Amount [REDACTED] to the Sellers in accordance with Section (2) above, after which the Sellers have assisted the Target Company to meet the requirements set out in Section (1) above, the Purchaser shall only be obligated to continue to pay the Sellers the difference between the Earn Out Amount [REDACTED] and the amount that has been paid, which is RMB 30,000,000; 2) If the conditions set out in Section (1) or Section (2) above fail to be fulfilled before the expiration of thirty-six (36) months after the Closing Date, the Purchaser shall not be obligated to pay any Earn Out Amount [REDACTED] to the Sellers, [REDACTED].

 

8.8                     Data Center Construction Approval

 

If the Target Company, the Target Company Subsidiary and/or the Purchaser suffer any loss after the Closing Cate due to the failure of the Data Center to complete or obtain all Consents related to the construction and operation of the Data Center in accordance with the Applicable Law before the Closing Date, the Sellers undertake to compensate the Target Company, the Target Company Subsidiary and/or the Purchaser.

 

8.9                     Arrangement in the Handover Period of the Operation and Maintenance

 

The Sellers agree that within the period of three (3) months after the Closing Date, they should make every reasonable effort to assist the Purchase and its Related Parties to complete the operation and maintenance handover of the Data Center.  If the Data Center fails to provide services in accordance with the requirements of the Customer Contract during the above handover period due to the reasons of the Sellers or its Related Parties, the Sellers undertakes to compensate the Target Company and/or the Purchaser for any loss incurred in this regard.]

 

8.10              Business Operation

 

If the Target Company, the Target Company Subsidiary and/or the Purchaser suffer any loss within [REDACTED] after the Closing Date as a result of the failure of the Target Company, the Target Company Subsidiary and/or the Purchaser to conduct business in accordance with the Applicable Law prior to the Closing Date, the Sellers undertake to indemnify Target Company, the Target Company Subsidiary and/or the Purchaser.  Notwithstanding the foregoing, the Sellers’ liabilities of compensation shall not be limited or restricted whether the loss occurred within [REDACTED] years after the Closing Date for any loss suffered by the Target Company, the Target Company Subsidiary and/or the Purchaser as a result of fraud, wilful misconduct or wilful concealment of the Target Company, the Target Company Subsidiary and/or the Seller.

 

8.11              Relationship Maintenance

 

Within [REDACTED] after the Closing Date, the Sellers undertake to provide the Purchaser and the Target Company with the necessary and reasonable assistance to maintain the good relationship between the Target Company and the related parties with

 

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significant business relationship with the Target Company after the Closing Date, and to the Purchaser with necessary assistance in the application process of the subsequent Data Center business development, project implementation and related consent (if any) of the target company.

 

8.12              Extra Electrical Power Arrangement

 

[REDACTED] The Parties agree that if such Extra Electrical Power Arrangement has been realized within twelve (12) months after the Closing Date, the Purchaser shall pay the earn out amount for the extra electrical power equal to RMB 50, 000,000 to the Sellers (the “Earn Out Amount for the Extra Electrical Power”). [REDACTED]

 

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9                 Exclusivity

 

During the period between the Signing date and the Closing Date or the next day of the Long-Stop Date (whichever is earlier) or other dates determined by the Parities in writing (the “Exclusivity Period”), the Sellers shall conduct the Proposed Transaction with the Purchaser on an exclusive basis.  The Sellers hereby represent and warrant that the Sellers are not be subject to any transactions (including without limitation to the transactions in relation to the Target Company, the Target Company Subsidiary or the Data Center) in relation to the Proposed Transaction with the Purchaser, including but not limited to the potential sale, transfer and/or financing arrangement, or any limitations in other agreements in relation to the Proposed Transaction.  The Sellers also undertake that they will not voluntarily solicit the interest, initiate any discussion, make any agreement or conduct any other acts with the similar nature with any other third parties with respect of any transactions in relation to the Proposed Transaction (including without limitation, any transactions in relation to the Target Company, the Target Company Subsidiary or the Data Center) with the Purchaser, including but not limited to the sale and/or transfer of the whole or part of the assets, the change of controller and/or financing arrangement, or any substantially similar arrangement.

 

10          Confidentiality

 

10.1              Each Party may make available to the other Parties such information reasonably required by each Party to complete the Proposed Transaction.

 

10.2              The terms of this Agreement, as well as discussions conducted in connection with the Proposed Transaction, are strictly confidential; provided that the terms of the Agreement may be disclosed to professional advisers, suppliers, employees and affiliates on a need-to-know basis; provided further that, first they shall be apprised of their confidential nature and those advisers, suppliers, employees and affiliates are subject to similar confidentiality obligations.  Except as required by Applicable Law or legal process, neither Party hereto nor any of their respective representatives, will make any public statements, announcements or press releases with respect to the matters contemplated by this Agreement, or otherwise in connection with the Proposed Transaction, without the prior written consent of the other Parties, consultation in advance with the other Parties concerning the reasons for and content of such announcements, statements or releases, and without first having a draft thereof approved by the other Parties.

 

10.3              Notwithstanding any provision mentioned above, after the Closing Date, the Purchaser may make any announcement concerning the Target Companies or the operation, business or assets thereof with prior consultation with the Sellers, while the Sellers shall not make unreasonable rejection or request.

 

11          Liabilities for Breach

 

The Sellers and their Affiliates shall, jointly and severally, indemnify and hold harmless the Purchasers for all losses, damages, claims, liabilities, costs and expenses, interest, awards, judgments and penalties (including attorneys’ and consultants’ fees and expenses incurred prior to the Closing) suffered or incurred by the Purchaser arising out

 

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of or relating to any breach by the Sellers and the Target Companies of any representations, warranties, covenants, undertakings, agreements or obligations set forth in this Agreement or any other Transaction Documents.  If the Sellers fail to pay the Supplemental Deposit in time to the Purchaser in accordance with the provisions of Section 3.3 of this Agreement, the Sellers shall pay the penalty to the Purchaser in addition to continuing to pay the Supplemental Deposit to the Purchaser.  The penalty interest shall be calculated by multiplying the overdue amount of the Supplemental Deposit at an interest rate of five ten thousandths by the overdue days.

 

The Purchaser and its Affiliates shall, jointly and severally, indemnify and hold harmless the Sellers for all losses, damages, claims, liabilities, costs and expenses, interest, awards, judgments and penalties (including attorneys’ and consultants’ fees and expenses incurred prior to the Closing) suffered or incurred by the Sellers arising out of or relating to any breach by the Purchaser any representations, warranties, covenants, undertakings, agreements or obligations set forth in this Agreement or any other Transaction Documents.  If the Purchaser fails to perform the payment obligation in time in accordance with Section 3 of this agreement, the Purchaser shall continue to pay the Purchase Price to the Sellers and pay the Closing Liquidated Damages for Sellers in accordance with Section 4 of this Agreement, as well as the penalty interest to the Sellers.  The penalty interest shall be calculated by multiplying the overdue amount of the Purchase Price at an interest rate of five ten thousandths by the overdue days.

 

12          Miscellaneous

 

12.1              Binding Effect; Assignment

 

This Agreement shall be binding upon and shall be enforceable by each party, its successors and permitted assigns.  Neither Party hereto shall assign all or part of its rights and/or obligations under this Agreement without prior written consent from the other Parties.

 

12.2              Governing Law and Dispute Resolution

 

(1)                       This Agreement shall be governed by, and construed in accordance with, the laws of the PRC.

 

(2)                       If a dispute arises among the Parties in connection with this Agreement, the Parties shall use their reasonable endeavors to resolve the matter amicably upon any of the Parties’ written request.  In the event that the dispute cannot be resolved within thirty (30) days after the serving of the written request, any Party may submit such dispute to China International Economic and Trade Arbitration Commission (the “CIETAC”) for arbitration and shall be conducted in accordance with the CIETAC’s arbitration rules in effect at the time of applying for arbitration.  The seat of arbitration shall be Beijing and the arbitral tribunal shall consist of three arbitrators. The arbitration proceeding shall be conducted in Chinese.  The arbitral award is final and binding upon all Parties.  The costs of arbitration, including fees for legal counsel, shall be borne by the losing Party, unless otherwise determined by the arbitration award.

 

12.3              Amendments

 

Except as otherwise permitted herein, this Agreement and its provisions may be amended, changed, waived, discharged or terminated only in writing signed by each of

 

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the Parties.

 

12.4              Notices

 

All notices, claims, certificates, requests, demands and other communications under this Agreement shall be made in writing and shall be delivered to any Party hereto by hand or sent by facsimile, or sent, postage prepaid, by reputable overnight courier services at the address given for such Party below in this Section 12.4 or any other address specified by such Party by serving a notice to all other Parties, and shall be deemed given when so delivered by hand, or if sent by facsimile, upon receipt of a confirmed transmittal receipt, or if sent by overnight courier, five (5) calendar days after delivery to or pickup by the overnight courier service.

 

Notices under this Agreement shall be sent to the Parties at the address and for the attention of the individual set out below:

 

Purchasers

 

Address: 2nd Floor, Building No.2, Youyou Century Park, No. 428 South Yanggao Road, Pudong New Area, Shanghai, China

 

Telephone: 13816884759

 

Email: alex.zhang@gds-services.com

 

Recipient: Alex Zhang

 

Sellers, Target Company and Target Company Subsidiary

 

Address: 2nd Floor, Building No. 16, Yard No. 18, Chaolai High-tech Industrial Park, Ziyue Road, Chaoyang District, Beijing, China

 

Telephone: 13601294920

 

Recipient: Chen Jian

 

12.5              Further Assurances

 

Each Party shall do and perform, or cause to be done and performed, all such further acts and things and shall execute and deliver all such other agreements, certificates, instruments and documents as any other Party may reasonably request to give effect to the terms and intent of this Agreement (including but not limited to the relevant agreements in terms of the Proposed Transaction signed between GDS (as the Purchaser) and the Sellers).

 

12.6              Entire Agreement

 

This Agreement (including its exhibits) and the rest of the Transaction Documents constitutes the entire agreement among the Parties with respect to the subject matter hereof and supersedes all prior written or oral understandings or agreements.  This Agreement shall prevail over any latter agreement or documents prepared solely for the purpose of completing the transfer of the Shares (if applicable).

 

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12.7              Severability

 

If any provision of this Agreement shall be held invalid or unenforceable to any extent, the remainder of this Agreement shall not be affected thereby and shall be enforced to the fullest extent permitted by Applicable Law.  Any invalid or unenforceable provision of this Agreement shall be replaced with a provision, which is valid and enforceable and most nearly gives effect to the original intent of unenforceable provision.

 

12.8              Remedies Cumulative

 

The rights and remedies available under this Agreement or otherwise available shall be cumulative of all other rights and remedies and may be exercised successively.

 

12.9              Counterpart Execution

 

This Agreement may be executed in one or more counterparts, each of which shall be deemed an original but all of which together shall constitute one and the same instrument.

 

12.10       Expenses

 

Unless expressly provided for otherwise in this Agreement, each Party hereto shall bear its own legal and professional fees, Taxation, costs and expenses incurred in the negotiation, preparation, execution and closing of this Agreement and all documents and transactions contemplated hereunder.

 

12.11       Language

 

This Agreement shall be executed in Chinese.

 

12.12       Force Majeure

 

“Force Majeure” under this Agreement means earthquake, flood, war and other not objective situations which cannot be reasonably expected and avoided.  If any Party under this Agreement cannot fulfill this Agreement partially or entirely due to force majeure, such Party shall send a written notice to other Parties in five (5) days after the force majeure happened, and shall provide details related to force majeure and certification documents from Government Entities or notarization institutions which prove that this Agreement cannot be fulfilled partially or entirely.  If any Party cannot fulfill this Agreement partially or entirely due to force majeure, such Party shall not bear liabilities for breach but to take any necessary and appropriate measures to reduce the losses which could be caused to any other Party.  Notwithstanding the foregoing, if the force majeure events are due to delayed performance for the obligations of one of the Parties under this Agreement, such Party’s liabilities shall not be exempted due to incapability of performance or delayed performance.  If the force majeure happens, each of the Parties can negotiate to change or terminate this Agreement in terms of the impact of force majeure on the fulfillment of this Agreement.

 

[Intentionally Left Blank]

 

25

 

IN WITNESS WHEREOF the parties hereto have caused their duly authorized representatives to execute this Agreement as of the first date written above.

 

 

	
 
    	
GDS (Shanghai)   Investment Co., Ltd. (Chop)
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
Signature:
    	
/s/ William Wei Huang
    
	
 
    	
 
    
	
 
    	
Name:
    
	
 
    	
Title:
    

 

26

 

IN WITNESS WHEREOF the parties hereto have caused their duly authorized representatives to execute this Agreement as of the first date written above.

 

	
 
    	
Beijing Zhong Cheng   Fu Jing Technology Co., Ltd. (Chop)
    
	
 
    	
 
    
	
 
    	
Signature:
    	
/s/ Zhiyu Liu (chop)
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
Name:
    
	
 
    	
 
    	
Title:
    

 

27

 

IN WITNESS WHEREOF the parties hereto have caused their duly authorized representatives to execute this Agreement as of the first date written above.

 

	
 
    	
Jun He
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
Signature:
    	
/s/ Jun He
    

 

28

 

IN WITNESS WHEREOF the parties hereto have caused their duly authorized representatives to execute this Agreement as of the first date written above.

 

	
 
    	
Beijing Lan Ting   Data Technology Co., Ltd. (Chop)
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
Signature:
    	
/s/ Chunlian Yu (chop)
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
Name:
    
	
 
    	
 
    	
Title:
    

 

29

 

IN WITNESS WHEREOF the parties hereto have caused their duly authorized representatives to execute this Agreement as of the first date written above.

 

	
 
    	
Beijing Zheng He Tian Ye Economic and Trade   Co., Ltd. (Chop)
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
Signature:
    	
/s/ Yuxin Xu   (chop)
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
Name:
    
	
 
    	
 
    	
Title:
    

 

30

 

IN WITNESS WHEREOF the parties hereto have caused their duly authorized representatives to execute this Agreement as of the first date written above.

 

	
 
    	
Lanting (Beijing)   Information Science and Technology Co., Ltd. (Chop)
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
Signature:
    	
/s/ Jun He (chop)
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
Name:
    
	
 
    	
 
    	
Title:
    

 

31

 

IN WITNESS WHEREOF the parties hereto have caused their duly authorized representatives to execute this Agreement as of the first date written above.

 

	
 
    	
Lanting Xuntong   (Beijing) Science and Technology Co., Ltd. (Chop)
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
Signature:
    	
/s/ Jun He (chop)
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
Name:
    
	
 
    	
 
    	
Title:
    

 

32

 

[REDACTED]Document

EMPLOYMENT AGREEMENT

This EMPLOYMENT AGREEMENT (“Agreement”) is entered into as of December 4th, 2019 by and between Tractor Supply Company, a Delaware corporation (the “Company”), and Harry A. Lawton III (the “Executive”) to be effective as of January 13, 2020 (the “Effective Date”).

W I T N E S S E T H:

WHEREAS, the Company desires the Executive to serve as the Company’s President and Chief Executive Officer and the Executive desires to serve and be so employed by the Company in such capacity; and

WHEREAS, the Company and the Executive wish to establish the terms of the Executive’s employment with the Company, the financial obligations of the Company to the Executive and to specify certain rights, responsibilities and duties of the Executive.

NOW, THEREFORE, based upon the premises set forth herein and for other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, the parties agree as follows:

ARTICLE I. RESPONSIBILITIES

The Executive shall serve as President and Chief Executive Officer of the Company, performing duties commensurate with such positions and such additional duties as the Board of Directors of the Company (the “Board”) shall reasonably determine from time to time during the term of this Agreement.  The Executive shall report directly to the Board.  The Executive accepts employment upon the terms set forth in this Agreement and will perform diligently to the best of his abilities those duties contemplated by this Agreement in a manner that promotes the interests and goodwill of the Company.  The Executive will faithfully devote his commercially reasonable efforts and all his working time to and for the benefit of the Company.  The Executive may devote reasonable time and attention to civic, charitable, business or social organizations or speaking engagements so long as such activities do not interfere with the performance of the Executive’s responsibilities under this Agreement and provided the Executive may, with the Board’s prior approval, serve as a director for one publicly traded company (in addition to the Company).  The Executive agrees to serve, if requested and without any additional compensation, as a director on the board of directors of the Company or any subsidiary of the Company and/or in one or more officer positions with any subsidiary of the Company.  If the Executive’s employment is terminated for any reason, whether such termination is voluntary or involuntary, the Executive shall resign, as applicable, as a director and officer of the Company and any of the Company’s subsidiaries, such resignation to be effective no later than the date of termination of the Executive’s employment with the Company. The permanent place of employment of the Executive shall be the corporate headquarters of the Company which shall be located within thirty (30) miles of the metropolitan Nashville, Tennessee area. The Executive shall not be required to relocate his place of employment outside of such area at any time during the Term without his prior consent, which consent may be withheld by the Executive for any reason he deems appropriate. The Executive will be required to conduct reasonable travel in the course of the performance of his duties on behalf of the Company.

ARTICLE II. TERM

Subject to termination pursuant to Article IV hereof, Executive’s employment by the Company pursuant to this Agreement (as the same may be extended, the “Term”) shall begin on the Effective Date and continue until the third anniversary of the Effective Date. 

ARTICLE III. COMPENSATION

Section 3.1 General Terms.

(a)Base Salary.  The Company shall pay the Executive base salary at the rate of $1,125,000 per annum (“Minimum Base Salary”), payable in accordance with the Company’s ordinary payroll policies.  Executive’s base salary shall be reviewed annually by the Compensation Committee of the Board and may be increased in the sole discretion of the Board (such base salary, as the same may be increased, is hereinafter referred to as the “Base Salary”); provided, however that the Base Salary shall at no time during the Term be below the Minimum Base Salary.  Any increases in Base Salary that are memorialized in the minutes of the Board shall be incorporated herein by reference without further action by the Executive or the Company.

(b)Bonus.  The Executive shall be eligible to participate in such bonus plans during the Term as the Board may determine appropriate for executive officers of the Company. Throughout the Term, the Executive’s annual target bonus percentage shall be no less than 125% of the Minimum Base Salary; provided, however, that payment of any bonus shall remain subject to such performance and other criteria as may be established by the Board in accordance with the applicable plan or arrangement.

(c)Equity.  

(i)  At the first Board meeting following the Effective Date, the Executive will receive the following equity awards:

•a restricted stock unit award with a fair value, as determined by the Board, of $1,500,000.  Such restricted stock unit shall vest on the first anniversary of the grant date provided that Executive has been continuously employed by the Company through such date.

•performance share units having a fair value, as determined by the Board, of $2,500,000.  The performance targets for the performance share units shall be the same as the targets included in the Company’s performance share unit awards granted in 2019 and shall have the same performance period as those awards.

•restricted stock units, having a fair value, as determined by the Board, of $1,925,000.

•performance share units having a fair value, as determined by the Board, of $1,925,000.

•stock options having a fair value, as determined by the Board, of $1,650,000.

(ii)  The Executive shall be eligible to participate in such equity incentive plans during the Term as the Compensation Committee may determine appropriate for executive officers of the Company beginning in 2021.

(d)Signing Bonus; Clawback.  The Executive shall be paid a signing bonus in cash in the amount of $1,000,000 (the “Signing Bonus”) payable within thirty (30) days of the Effective Date.  The Signing Bonus will vest on the second anniversary of the Effective Date, and Executive shall be required to repay the full amount of the Signing Bonus if Executive voluntarily terminates his employment with the Company on or before the second anniversary of the Effective Date.

(e)Relocation Expenses.  Executive shall permanently relocate to Nashville, Tennessee within eight months of the Effective Date. Executive shall be reimbursed reasonable relocation costs and temporary housing costs for a period not to exceed eight months in accordance with Company policy.  

Section 3.2 Reimbursement.

It is acknowledged by the parties that the Executive, in connection with the services to be performed by him pursuant to the terms of this Agreement, will be required to make payments for travel, entertainment of business associates and similar business related expenses.  The Company will reimburse the Executive for all reasonable, documented expenses of types authorized by the Company and incurred by the Executive in the performance of his duties hereunder.  The Executive will comply with such budget limitations and approval and reporting requirements with respect to expenses as the Company may establish from time to time.

Section 3.3 Employee Benefits.

(a)General.  During the Term, the Company shall provide the Executive with employee and fringe benefits under any and all employee benefit plans and programs which are from time to time generally made available to the executive officers of the Company.  Nothing in this Agreement shall require the Company to maintain such plans or programs nor prohibit the Company from terminating, amending or modifying such plans and programs, as the Company, in its sole direction, may deem advisable.  In all events, including, but not limited to, the funding, operation, management, participation, vesting, termination, amendment or modification of such plans and programs, the rights and benefits of the Executive shall be governed solely by the terms of the plans and programs, as provided in such plans, programs or any contract or agreement related thereto.  Nothing in this Agreement shall be deemed to amend or modify any such plan or program.

(b)Vacation Leave.  During the Term, the Executive shall be entitled to paid vacation in accordance with the Company’s standard vacation policies for its executive officers as may be in effect from time to time.

ARTICLE IV. TERMINATION

The Executive’s employment by the Company pursuant to this Agreement shall not be terminated prior to the end of the Term hereof except as set forth in this Article IV.

Section 4.1 By Mutual Consent.

The Executive’s employment pursuant to this Agreement may be terminated at any time by the mutual written agreement of the Company and the Executive.  In the event that the Executive’s employment is terminated pursuant to this Section 4.1, the Executive shall receive Base Salary and benefits to be paid or provided to the Executive under this Agreement through the Date of Termination (as defined in Section 4.8 hereof) and any other unpaid benefits to which the Executive is otherwise entitled under any plan, policy or program of the Company (including any bonus plan) applicable to the Executive as of the Date of Termination, in accordance with the terms of such plan, policy or program.

Section 4.2 Death.

The Executive’s employment pursuant to this Agreement shall be terminated upon the death of the Executive, in which event the Executive’s heirs shall receive, when the same would have been paid to the Executive, (i) all Base Salary and benefits to be paid or provided to the Executive under this Agreement through the Date of Termination, (ii) an amount equal to the pro rata portion of the actual cash bonus earned for the year in which the Date of Termination occurs, and (iii) any other unpaid benefits (including death benefits) to which he is entitled under any other plan, policy or program of the Company applicable to the Executive as of the Date of Termination, in accordance with the terms of such plan, policy or program.  In addition, the Executive shall be fully vested in all then outstanding options to acquire stock of the Company, and, subject to the last sentence of this Section 4.2, all then outstanding restricted shares of stock and restricted stock units of the Company held by the Executive and any such options shall remain exercisable until the earlier of (x) the second anniversary of the Date of Termination and (y) the otherwise applicable normal expiration date of such option. The foregoing provision shall not apply to extend the expiration date of any option that is outstanding (whether vested or unvested) as of the date hereof and that is intended to qualify as an “incentive stock option” under Section 422 of the Internal Revenue Code of 1986, as amended (the “Code”). For the avoidance of doubt, settlement of any restricted stock units, the vesting of which is accelerated pursuant to this Agreement, shall occur upon vesting pursuant to this Section 4.2, subject to any previous legally binding deferral election or contrary payment date provided for in the applicable award agreement regarding such units. Anything to the contrary herein notwithstanding, the vesting of any performance share units or performance-based restricted stock or performance-based restricted stock unit awards shall vest according to the terms of the applicable award agreement.

Section 4.3 Disability.

The Executive’s employment pursuant to this Agreement may be terminated by written notice to the Executive by the Company or to the Company by the Executive (“Notice of Termination”) in the event that the Executive is unable, as reasonably determined by the Board, to perform his regular duties and responsibilities due to physical or mental illness or injury that has lasted (or can reasonably be expected to last) for a period of six (6) consecutive months.  In the event the Executive’s employment is terminated pursuant to this Section 4.3, the Executive shall be entitled to receive, when the same would have been paid to the Executive, (i) any unpaid Base Salary and benefits to be paid or provided to the Executive under this Agreement through the Date of Termination, (ii) an amount equal to the pro rata portion of the 

actual cash bonus earned for the year in which the Date of Termination occurs, and (iii) any other unpaid benefits (including disability benefits) to which he is otherwise entitled under any other plan, policy or program of the Company applicable to the Executive as of the Date of Termination, in accordance with the terms of such plan, policy or program.  In addition, subject to the last sentence of this Section 4.3, the Executive shall be fully vested in all then outstanding options to acquire stock of the Company, and all then outstanding restricted shares of stock and restricted stock units of the Company held by the Executive and any such options shall remain exercisable until the earlier of (x) the second anniversary of the Date of Termination and (y) the otherwise applicable normal expiration date of such option. The foregoing provision shall not apply to extend the expiration date of any option that is outstanding (whether vested or unvested) as of the date hereof and that is intended to qualify as an “incentive stock option” under Section 422 of the Code. For the avoidance of doubt, settlement of any restricted stock units, the vesting of which is accelerated pursuant to this Agreement, shall occur upon vesting pursuant to this Section 4.3, subject to any previous legally binding deferral election or contrary payment date provided for in the applicable award agreement regarding such units.  Anything to the contrary herein notwithstanding, the vesting of any performance share units or performance-based restricted stock or performance-based restricted stock unit awards shall vest according to the terms of the applicable award agreement.

Section 4.4 By the Company for Cause.

The Executive’s employment pursuant to this Agreement may be terminated by the Company at any time by delivery of a Notice of Termination to the Executive upon the occurrence of any of the following events (each of which shall constitute “Cause” for termination):  (i) failure or refusal to carry out the lawful directions of the Company, which are reasonably consistent with the responsibilities of the Executive’s position, where such failure or refusal is not cured within thirty (30) days after notice to the Executive; (ii) a material act of dishonesty or disloyalty related to the business of the Company; (iii) conviction of a felony, a lesser crime against the Company, or any crime involving dishonest conduct; (iv) habitual or repeated misuse or habitual or repeated performance of the Executive’s duties under the influence of alcohol or controlled substances; (v) any incident materially compromising the Executive’s reputation or ability to represent the Company with the public; (vi) a material breach or violation of any of the Company’s policies, where such breach or violation is curable and is not cured within thirty (30) days after notice to the Executive; or (vii) any act or omission by the Executive that substantially impairs the Company’s business, good will or reputation.  In the event the Executive’s employment is terminated pursuant to this Section 4.4, the Executive shall be entitled to receive all Base Salary and benefits to be paid or provided to the Executive under this Agreement through the Date of Termination, and any other unpaid benefits to which he is otherwise entitled under any plan, policy or program of the Company (not including any bonus plan) applicable to the Executive as of the Date of Termination, in accordance with the terms of such plan, policy or program.  

Section 4.5 By the Company Without Cause.

The Executive’s employment pursuant to this Agreement may be terminated by the Company upon thirty (30) days’ prior written notice without Cause by delivery of a Notice of Termination to the Executive.  In the event that the Executive’s employment is terminated pursuant to this Section 4.5 during the Term, the Executive shall be entitled to receive: (i) Base Salary to be provided to the Executive under this Agreement through the second anniversary of the Date of Termination payable in accordance with the Company’s ordinary payroll policies (whether or not the Term shall have expired during such period) with such payments commencing on the first Company payroll period occurring after the thirtieth (30th) day following the Executive’s Date of Termination; (ii) an amount equal to two (2) times Executive’s target cash bonus for such year multiplied by the average of the bonus percentage applied to other executive 

officers’ target cash bonuses for the prior three (3) fiscal years pursuant to any cash bonus plan maintained by the Company in respect of the fiscal years preceding the Date of Termination, payable over the twenty-four (24) months following the Date of Termination in accordance with the Company’s ordinary payroll practices with such payments commencing on the first Company payroll period occurring after the thirtieth (30th) day following the Executive’s Date of Termination; (iii) in lieu of any benefits continuation following Termination, the Company shall pay a lump sum payment, in cash, equal to the estimated cost of procuring for the Executive and his dependents: life, disability, accident and health insurance benefits for a period of two years following the Date of Termination, with such payment to be paid on the first Company payroll period occurring after the thirtieth (30th) day following the Executive’s Date of Termination; and (iv) any other unpaid benefits to which the Executive is otherwise entitled under any other plan, policy or program of the Company applicable to the Executive as of the Date of Termination, in accordance with the terms of such plan, policy or program.  In addition, subject to the last sentence of this Section 4.5, the vesting of all then outstanding options to acquire stock of the Company and all then outstanding restricted shares of stock and restricted stock units of the Company held by the Executive and scheduled to vest during the 12 month period following the Date of Termination shall be accelerated, and any such options shall remain exercisable until the earlier of (x) the second anniversary of the Date of Termination and (y) the otherwise applicable normal expiration date of such option (these rights together with the payments and benefits enumerated in subsection (i) through (iv) above and the preceding sentence shall be referred to as the “Severance Payments”).  The foregoing provision shall not apply to extend the expiration date of any option that is outstanding (whether vested or unvested) as of the date hereof and that is intended to qualify as an “incentive stock option” under Section 422 of the Code. For the avoidance of doubt, settlement of any restricted stock units, the vesting of which is accelerated pursuant to this Agreement, shall occur upon vesting pursuant to this Section 4.5, subject to any previous legally binding deferral election or contrary payment date provided for in the applicable award agreement regarding such units. As conditions precedent to receiving the Severance Payments contemplated by this Section 4.5, (a) the Executive agrees to sign, at the time of termination of his employment, a customary release of all claims in favor of the Company, its directors and officers and (b) all applicable revocation periods shall have ended prior to the scheduled receipt of any Severance Payment. Anything to the contrary herein notwithstanding, the vesting of any performance share units or performance-based restricted stock or performance-based restricted stock unit awards shall vest according to the terms of the applicable award agreement.

Section 4.6 By the Executive for Good Reason.

The Executive’s employment pursuant to this Agreement may be terminated by the Executive by written notice of his resignation (“Notice of Resignation”) delivered within ninety (90) days after the occurrence of (i) the assignment to the Executive of any duties materially inconsistent with the Executive’s status as a senior executive officer of the Company; (ii) a substantial adverse alteration in the nature or status of the Executive’s responsibilities; or (iii) a material breach of this Agreement by the Company, in any case, that remains uncured by the Company for a period of sixty (60) days after written notice by the Executive to the Board specifying such assignment, alteration or breach and specifically referencing this section of this Agreement (each of which shall constitute “Good Reason” for resignation).  In the event that the Executive resigns for Good Reason pursuant to this Section 4.6 during the Term, the Executive shall be entitled to receive the Severance Payments as described in Section 4.5 above.  As conditions precedent to receiving the Severance Payments contemplated by this Section 4.6, (a) the Executive agrees to sign, at the time of termination of his employment, a customary release of all claims in favor of the Company, its directors and officers and (b) all applicable revocation periods shall have ended prior to the scheduled receipt of any Severance Payment.  Anything to the contrary herein notwithstanding, the vesting of any performance share units or performance-based restricted stock or 

performance-based restricted stock unit awards shall vest according to the terms of the applicable award agreement.

Section 4.7 By the Executive Without Good Reason.

The Executive’s employment pursuant to this Agreement may be terminated by the Executive at any time by delivery of a Notice of Resignation to the Company.  In the event that the Executive’s employment is terminated pursuant to this Section 4.7, the Executive shall receive Base Salary and benefits to be paid or provided to the Executive under this Agreement through the Date of Termination and any other unpaid benefits to which the Executive is otherwise entitled under any plan, policy or program of the Company (not including any bonus or incentive plan) applicable to the Executive as of the Date of Termination, in accordance with the terms of such plan, policy or program.

Section 4.8 Date of Termination.

The Executive’s Date of Termination shall be (i) if the Executive’s employment is terminated pursuant to Section 4.1, the date mutually agreed to by the Company and the Executive, (ii) if the Executive’s employment is terminated pursuant to Section 4.2, the last day of the calendar month in which the Executive’s death occurs, (iii) if the Executive’s employment is terminated pursuant to Section 4.3, the last day of the calendar month in which a Notice of Termination is given, (iv) if Executive’s employment is terminated pursuant to Section 4.4, the date on which a Notice of Termination is given, (v) if the Executive’s employment is terminated pursuant to Section 4.5, thirty (30) days after the date Notice of Termination is given, (vi) if the Executive’s employment is terminated pursuant to Section 4.6, within ten (10) days of the expiration of the “Cure Period” provided for in Section 4.6 and (vii) if the Executive’s employment is terminated pursuant to Section 4.7, thirty (30) days after the date Notice of Resignation is given.

Section 4.9 Offset; Termination of Obligation.

(a) Notwithstanding anything contained in this Article IV to the contrary, in the event the Company terminates the Executive’s employment pursuant to Section 4.5 or the Executive terminates his employment pursuant to Section 4.6 and the Executive accepts other employment or provides consulting, advisory or other services during the period in which the Company is required to make payments pursuant to Section 4.5 or Section 4.6, the Executive shall notify the Company in writing that he has accepted such employment or agreed to provide such consulting, advisory or other services and the terms of his employment or engagement. To the extent permitted by Section 409A of the Code, the Company’s obligation to make payments pursuant to Section 4.5 or Section 4.6 shall be reduced dollar-for-dollar by the amount of compensation earned by the Executive from such other employment or for providing such services during the period in which the Company is required to make payments pursuant to Section 4.5 or Section 4.6.
(b) Notwithstanding anything contained in this Article IV to the contrary, the Company’s obligation to make payments pursuant to Section 4.5 or Section 4.6 shall immediately terminate in the event the Executive violates in any material respect the provisions of Article V or Article VI of this Agreement.

Section 4.10 Section 409A. 

(a)Notwithstanding anything herein to the contrary, to the maximum extent permitted by applicable law, the Severance Payments to be made to the Executive pursuant to Article IV shall be made in reliance upon Treasury Regulations promulgated under Section 409A of the Code, including Section 1.409A-1(b)(9) of the Treasury Regulations (including any exceptions from the application of Section 409A thereunder) or Section 1.409A-1(b)(4) of the Treasury Regulations.  For this purpose, each Severance Payment shall be considered a separate and distinct payment for purposes of Section 409A of the Code.  However, to the extent any such payments are treated as non-qualified deferred compensation subject to Section 409A of the Code, then (a) no amount shall be payable pursuant to this Article IV unless Executive’s termination of employment constitutes a “separation from service” within the meaning of Section 1.409A-1(h) of the Treasury Regulations and (b) if Executive is deemed at the time of his separation from service to be a “specified employee” for purposes of Section 409A(a)(2)(B)(i) of the Code, then to the extent delayed commencement of any portion of the Severance Payments to which Executive is entitled under this Agreement is required in order to avoid a prohibited distribution under Section 409A(a)(2)(B)(i) of the Code, such portion of Executive’s Severance Payments shall not be provided to Executive prior to the earlier of (x) the expiration of the six-month period measured from the date of the Executive’s “separation from service” with the Company (as such term is defined in Section 1.409A-1(h) of the Treasury Regulations) or (y) the date of Executive’s death.  Upon the earlier of such dates, all payments deferred pursuant to this paragraph shall be paid in a lump sum to the Executive, and any remaining payments due under the Agreement shall be paid as otherwise provided herein.  The determination of whether the Executive is a “specified employee” for purposes of Section 409A(a)(2)(B)(i) of the Code as of the time of his separation from service shall be made by the Company in accordance with the terms of Section 409A of the Code and applicable guidance thereunder (including without limitation Section 1.409A-1(i) of the Treasury Regulations and any successor provision thereto).  Notwithstanding any other provision of this Agreement, if any Release consideration and revocation period begins and ends in separate years, the payment or commencement of any payments contingent upon the return and non-revocation of the Release, shall be made or commence in the subsequent year in all events.

(b)Certain Reductions in Payment.

(1)Notwithstanding anything contained in this Agreement to the contrary, if any payment or benefit the Executive would receive from the Company pursuant to this Agreement or otherwise (“Payment”, “Payments” in the aggregate) would, as determined by tax counsel to the Company reasonably acceptable to the Executive (“Tax Counsel”), (i) constitute a “parachute payment” within the meaning of Section 280G of the Code, and (ii) but for this Section 4.10, be subject to the excise tax imposed by Section 4999 of the Code (the “Excise Tax”), then the Payments will be adjusted to equal the Reduced Amount.  The “Reduced Amount” will be either (1) the largest portion of the Payments that would result in no portion of the Payments (after reduction) being subject to the Excise Tax or (2) the entire amount of the Payments, whichever amount after taking into account all applicable federal, state and local employment taxes, income taxes, and the Excise Tax (all computed at the highest applicable marginal rate, net of the maximum reduction in federal income taxes which could be obtained from a deduction of such state and local taxes), results in the Executive’s receipt, on an after-tax basis, of the greatest amount of the Payments.  If a reduction in Payments is to be made so that the Payments equal the Reduced Amount, (x) the Payments will be paid only to the extent permitted under the Reduced Amount alternative, and the Executive will have no rights to any additional payments and/or benefits constituting the Payments.  In no event will the Company or any stockholder be liable to the Executive for any amounts not paid as a result of the operation of this Section 4.10.  No portion of any Payment shall be taken into account which in the opinion of Tax Counsel does not constitute a “parachute payment” within the meaning of Code Section 280G(b)(2).

(2)The Company shall reduce or eliminate the Payments by (i) first reducing or eliminating those payments or benefits which are payable in cash and (ii) then reducing or eliminating non-cash payments. Any reduction made pursuant to the preceding sentence shall take precedence over the provisions of any other plan, arrangement or agreement governing Executive’s rights and entitlements to any benefits or compensation.  In applying these principles, any reduction or elimination of the Payments shall be made in a manner consistent with the requirements of Section 409A of the Code and where two economically equivalent amounts are subject to reduction but payable at different times, such amounts shall be reduced on a pro rata basis but not below zero.

(c)Except as otherwise provided herein, the payments provided for in Article IV (as adjusted by Section 4.10 hereof) shall be made not later than the tenth business day following the Date of Termination, with the payment date determined by the Company in its sole discretion.

(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 Payments.  The Company shall pay to the Executive all legal fees and expenses incurred by the Executive 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, provided that, in either case, Executive prevails on the merits of such action.  Such amounts shall be paid in accordance with Section 409A of the Code, including Sections 1.409A-1(b)(11), 1.409A-3(g) and 1.409A-3(i)(1)(v) of the Treasury Regulations.  In the event of a claim as to which Executive only obtains partial recovery or relief, Executive shall be considered to have prevailed if Executive should receive more than 50% of the amount or relief claimed.  Such payments shall be made within five (5) business days after the later of (y) delivery of the Executive's written requests for payment accompanied with such evidence of fees and expenses incurred as the Company reasonably may require delivered within 20 days of a final, non-appealable judgment from a court of competent jurisdiction or the binding conclusion of an audit, investigation or proceeding by the IRS or applicable agency and (z) a final, non-appealable judgment from a court of competent jurisdiction or the binding conclusion of an audit, investigation or proceeding by the IRS or applicable agency.

(e)All reimbursements and in-kind benefits described in this Agreement shall be made in accordance with Treasury Reg. § 1.409A-3(i)(1)(iv) to the extent applicable, including the amount of expenses eligible for reimbursement, and the in-kind benefits provided, during any year pursuant to this Agreement shall not affect the expenses eligible for reimbursement, or in-kind benefits to be provided in any other year, the reimbursement is made on or before the last day of the calendar year following the calendar year the expense was incurred, and the right to reimbursement or in kind benefit is not subject to liquidation or exchange for another benefit.

(f)Notwithstanding any other provision to the contrary, in no event shall any payment under this Agreement that constitutes “deferred compensation” for purposes of Section 409A of the Code and the Treasury Regulations promulgated thereunder be subject to offset by any other amount unless otherwise permitted by Section 409A of the Code.

(g)For the avoidance of doubt, the parties acknowledge that the amount of any Company-paid premiums for the health insurance benefits provided pursuant to this Article IV shall be taxable to the Executive and included in the Executive’s gross income, and that none of the amounts payable hereunder are intended to reimburse Executive for any income taxes payable with respect to such income.

ARTICLE V. COVENANTS OF THE EXECUTIVE

Section 5.1 Definitions.  

(a)“Company Property” means all records, data, files, manuals, memoranda, documents, supplies, computer materials, equipment, inventory and other materials that have been created, used or obtained by the Company, including but not limited to pagers, databases, security cards and badges, insurance cards, keys, computer manuals, company or employee manuals, credit cards, computers, laptops, printers, fax machines, cellular and landline phones, and copiers, as well as Confidential and Proprietary Information and Technology and all business revenues and fees produced or transacted through the efforts of the Company.

(b)“Confidential and Proprietary Information” means all information, not generally known to the public, that relates to the business, technology, manner of operation, subscribers, customers, finances, employees, plans, proposals or practices of the Company or of any third parties doing business with the Company, and includes, without limitation, the identities of and other information regarding the Company’s subscribers, customers and prospects, supplier lists, employee information, business plans and proposals, software programs, marketing plans and proposals, technical plans and proposals, research and development, budgets and projections, nonpublic financial information, all other information the Company designates as “confidential,” and all other information and matters not generally known to the public. Excluded from the definition of Confidential and Proprietary Information is information (A) that is or becomes part of the public domain, other than through the breach of this Agreement by the Executive or (B) regarding the Company’s business or industry properly acquired by the Executive in the course of his career as an executive in the Company’s industry and independent of his employment by the Company.  For this purpose, information known or available generally within the trade or industry of the Company or any subsidiary of the Company shall be deemed to be known to the public.

(c)“Disparage the Company” means, except in the good faith performance of the Executive’s duties, conduct by which he criticizes, denigrates or otherwise speaks adversely, or discloses negative information about, the operations, management or performance of the Company, an affiliate of the Company, or about any director, officer, employee or agent of any of the above.

(d)“Solicitation” means (A) the direct or indirect solicitation of, inducement of, or attempt to induce, any employees, agents, or consultants of the Company or any of its subsidiaries to leave the employ of, or stop providing services to, the Company or such subsidiary; (B) the direct or indirect offering or aiding another to offer employment to, or interfere or attempt to interfere with, the Company’s or such subsidiary’s relationship with any employees or consultants of the Company or such subsidiary; or (C) the direct or indirect solicitation, or assistance to any entity or person in solicitation of, any subscribers or customers of the Company to discontinue doing business with the Company.

(e)“Technology” means all inventions, discoveries, designs, developments, improvements, copyrightable materials, trade secrets, new concepts, new ideas and expressions of ideas (including computer programs and software), which relate to the Company’s present or prospective businesses or have been created using Company property, Confidential or Proprietary Information of the Company, the advice or help of other Company employees, independent contractors or other third parties, or other resources of the Company.  The Executive understands and agrees that this definition of “Technology” applies even if a patent or copyright cannot be issued or claimed, and even if the Company does not intend to exploit, work or develop the Technology.  

Section 5.2 Nondisclosure of Confidential and Proprietary Information.  

The Executive understands and agrees that Confidential and Proprietary Information will be considered the trade secrets of the Company and will be entitled to all protections given by law to trade secrets and that the provisions of this Agreement apply to every form in which Confidential and Proprietary Information exists, including, without limitation, written or printed information, films, tapes, computer disks or data, or any other form of memory device, media or method by which information is stored or maintained.  The Executive acknowledges that in the course of employment with the Company, he has received and may receive Confidential and Proprietary Information of the Company.  The Executive further acknowledges that Confidential and Proprietary Information is a valuable, unique and special asset belonging to the Company.  For these reasons, and except as otherwise directed by the Company, the Executive agrees, during his employment, and at all times after the termination of his employment with the Company, that he will not disclose or disseminate to anyone outside the Company, nor use for any purpose other than his work for the Company, nor assist anyone else in any such disclosure or use of, any Confidential or Proprietary Information of the Company.

The Executive further agrees, during his employment and for a period of two (2) years after his employment terminates, that he will not engage in any activities or accept any employment or work assignment that would compromise the confidentiality, or result in the direct or indirect disclosure or use, of any Confidential and Proprietary Information of the Company.

Section 5.3 Company Technology/Assignment of Inventions.

The Executive recognizes and agrees that all present and future Technology, whether conceived, developed or reduced to practice during his employment by others or by himself, solely or jointly, is and will become the property of the Company.  To the extent permitted under the U.S. Copyright Act (17 U.S.C. § 101 et seq.) and any successor statute thereto, the Executive agrees that any copyrightable materials that he has created or creates during his employment that directly relate to the Company’s then current or anticipated business, operations or plans will constitute “works made for hire,” and the ownership of such materials will vest in the Company at the time they are created.  The Executive agrees to assign and does hereby assign to the Company (or any person or entity designated by the Company) all his rights, title and interests in and to all Technology and all related patents, patent applications, copyrights and copyright applications.  The Executive further agrees, both while employed by the Company and at the time his employment with the Company is terminated, to disclose promptly to the Company all Technology that has been made or conceived by him while employed by the Company.  Both during and at all times after his employment with the Company is terminated, the Executive will, upon 

request, assist the Company to protect the Company’s ownership of Technology and to obtain and protect any and all patents and copyrights covering any Technology.  To this end, the Executive agrees to sign all papers, including, without limitation, copyright applications, patent applications, declarations, oaths, formal assignments, assignment of priority rights, and powers of attorney that the Company may deem necessary or desirable in order to protect its rights and interests in any Technology. 

The Executive understands that his obligation to assign will not apply to any Technology that he develops or developed entirely on his own time without using the Company’s equipment, supplies, facilities, or Confidential and Proprietary Information, unless the Technology (a) relates at the time of conception or reduction to practice directly to the Company’s business or actual or demonstrably anticipated research or development of the Company, or (b) results from any work performed by him for the Company.

Section 5.4 Company Property.

The Executive agrees to preserve, use and hold Company Property, which is and remains the property of the Company, only for the benefit of the Company to carry out the Company’s business.  The Executive agrees that, on or before the day on which his employment with the Company is terminated, he will deliver or return to the Company all the Company Property, including all copies of the Company Property, in his possession or control.  The Executive further agrees not to use any computer access code or password belonging to the Company and not to access any computer or database in the possession or control of the Company after his employment with the Company is terminated.

Section 5.5 Nondisparagement.

During the Term and thereafter, the Executive will not Disparage the Company.  This Section 5.5 shall not be deemed breached unless the violation is willful, with the intent to damage, in a public forum or intended to become public, and is of a material nature.

ARTICLE VI. NONCOMPETITION AND NONSOLICITATION

Section 6.1 Noncompetition.  

In consideration for the benefits the Executive is receiving hereunder, the Executive hereby acknowledges, and for other good and valuable consideration, agrees that during the Executive’s employment and for two (2) years following the termination of his employment, and without the prior written consent of the Company, the Executive will not, in any manner, directly or indirectly, own any interest in, operate, join, control or participate as a partner, director, principal, officer or agent or, enter into the employment of, act as a consultant to, or perform any services for any retailer principally in the farm and ranch, pet or animal products and services sectors.

Section 6.2 Nonsolicitation.

During the Executive’s employment and for two (2) years following the termination of his employment, he will not engage in any Solicitation, provided that Solicitation will not be considered to have occurred by the general advertising for hiring of employees by entities with which the Executive is associated, as long as he does not directly or indirectly induce employees to leave the Company.

Section 6.3 Reformation and Severance.

If a judicial determination is made that any of the provisions of the restrictions contained in this Article VI constitute an unreasonable or otherwise unenforceable restriction against the Executive, it shall be rendered void only to the extent that such judicial determination finds such provisions to be unreasonable or otherwise unenforceable.  In this regard, the parties hereby agree that any judicial authority construing this Agreement shall be empowered to sever any portion of the prohibited business activity from the coverage of this restriction and to apply the restriction to the remaining portion of the business activities not so severed by such judicial authority.

ARTICLE VII. ARBITRATION

Section 7.1 Scope.  

The Company and the Executive acknowledge and agree that any claim or controversy arising out of or relating to Article IV of this Agreement shall be settled by binding arbitration in Nashville, Tennessee, in accordance with the National Rules of the American Arbitration Association for the Resolution of Employment Disputes in effect on the date of the event giving rise to the claim or controversy.  The Company and the Executive further acknowledge and agree that either party must request arbitration of any claim or controversy within ninety (90) days of the date of the event giving rise to the claim or controversy by giving written notice of the party’s request for arbitration.  Failure to give notice of any claim or controversy within ninety (90) days of the event giving rise to the claim or controversy shall constitute waiver of the claim or controversy.

Section 7.2 Procedures.  

All claims or controversies subject to arbitration shall be submitted to arbitration within six months from the date that a written notice of request for arbitration is effective.  All claims or controversies shall be resolved by a panel of three arbitrators who are licensed to practice law in the State of Tennessee and who are experienced in the arbitration of employment disputes.  These arbitrators shall be selected in accordance with the National Rules of the American Arbitration Association for the Resolution of Employment Disputes in effect at the time the claim or controversy arises.  The arbitrators shall issue a written decision with respect to all claims or controversies within 30 days from the date the claims or controversies are submitted to arbitration.  The parties shall be entitled to be represented by legal counsel at any arbitration proceedings.  The Executive and the Company acknowledge and agree that the non-prevailing party (as determined by the arbitrators) in such arbitration will bear the cost of the arbitration proceeding, and each party shall be responsible for paying its own attorneys’ fees, if any, unless the arbitrators determine otherwise. To the extent applicable, the arbitration provisions of this Agreement shall comply with Section 409A of the Code.

Section 7.3 Enforcement.  

The Company and the Executive acknowledge and agree that the arbitration provisions in this Agreement may be specifically enforced by either party and that submission to arbitration proceedings may be compelled by any court of competent jurisdiction.  The Company and the Executive further acknowledge and agree that the decision of the arbitrators may be specifically enforced by either party in any court of competent jurisdiction.

Section 7.4 Limitations.  

Notwithstanding the arbitration provisions set forth herein, Employee and the Company acknowledge and agree that nothing in this Agreement shall be construed to require the arbitration of any claim or controversy arising under Articles V or VI of this Agreement.  These provisions shall be enforceable by any court of competent jurisdiction and shall not be subject to arbitration except by mutual written consent of the parties signed after the dispute arises, any such consent, and the terms and conditions thereof, then becoming binding on the parties.  The Executive and the Company further acknowledge and agree that nothing in this Agreement shall be construed to require arbitration of any claim for workers’ compensation or unemployment compensation.

ARTICLE VIII. GENERAL TERMS

Section 8.1 Notices.  

All notices and other communications hereunder will be in writing or by written telecommunication, and will be deemed to have been duly given if delivered personally or if sent by overnight courier or by written telecommunication, to the relevant address set forth below, or to such other address as the recipient of such notice or communication will have specified to the other party hereto in accordance with this Section 8.1:

If to the Company, to:

Tractor Supply Company
5401 Virginia Way  
Brentwood, Tennessee  37027
Attention:  General Counsel

If to the Executive, to:

Harry A. Lawton III
_________________
_________________

Section 8.2 Withholding.  

All payments required to be made by the Company under this Agreement to the Executive will be subject to the withholding of such amounts, if any, relating to federal, state and local taxes as may be required by law.

Section 8.3 Entire Agreement; Modification.

The Company and Executive intend to enter into a Change in Control Agreement on or about the Effective Date (as such agreement may be extended, modified, amended or restated from time to time, the “Change in Control Agreement”).  Anything to the contrary contained herein notwithstanding, in the event that Executive is entitled to severance or other benefits following a Change in Control (as defined in the Change in Control Agreement) and during the Term of the Change in Control Agreement, other than (A) by the Company for Cause, (B) by reason of death, Disability or Retirement, or (C) by the Executive without Good Reason (each as defined in the Change in Control Agreement), pursuant to the Change in 

Control Agreement, the terms of the Change in Control Agreement shall govern, and Executive shall not be entitled to Severance Payments or other benefits pursuant to this Agreement including Section 4.5 or Section 4.6 hereof.  This Agreement and the Change of Control Agreement constitute the complete and entire agreement between the parties with respect to the subject matter hereof and supersede all prior agreements between the parties.  The parties have executed this Agreement based upon the express terms and provisions set forth herein and have not relied on any communications or representations, oral or written, which are not set forth in this Agreement. 

Section 8.4 Amendment.  

The covenants or provisions of this Agreement may not be modified by an subsequent agreement unless the modifying agreement:  (i) is in writing; (ii) contains an express provision referencing this Agreement; (iii) is signed and executed on behalf of the Company by an officer of the Company other than the Executive; (iv) is approved by resolution of the Board; (v) is signed by the Executive; and (vi) to the extent applicable, complies with Section 409A of the Code.

Section 8.5 Legal Consultation.  

Both parties have been accorded a reasonable opportunity to review this Agreement with legal counsel prior to executing this Agreement.

Section 8.6 Choice of Law. 

This Agreement and the performance hereof will be construed and governed in accordance with the laws of the State of Delaware, without regard to its choice of law principles.

Section 8.7 Successors and Assigns.

(a) The obligations, duties and responsibilities of the Executive under this Agreement are personal and shall not be assignable.  In the event of the Executive’s death or disability, this Agreement shall be enforceable by the Executive’s estate, executors or legal representatives.

(b) 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 accordance with its terms.  Failure of the Company to obtain such assumption and agreement prior to or upon the effectiveness of any such succession shall constitute a material breach of this Agreement.  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, to the extent consistent with Section 409A of the Code.

Section 8.8 Waiver of Provisions.

Any waiver of any terms and conditions hereof must be in writing and signed by the parties hereto.  The waiver of any of the terms and conditions of this Agreement shall not be construed as a waiver of any subsequent breach of the same or any other terms and conditions hereof.

Section 8.9 Severability.

The provisions of this Agreement shall be deemed severable, and if any portion shall be held invalid, illegal or enforceable for any reason, the remainder of this Agreement shall be effective and binding upon the parties provided that the substance of the economic relationship created by this Agreement remains materially unchanged.

Section 8.10 Remedies.  

The parties hereto acknowledge and agree that upon any breach by the Executive of his obligations under Articles V or VI hereof, the Company would suffer irreparable injury and will have no adequate remedy at law. Accordingly, the Company will be entitled to seek specific performance and other appropriate injunctive and equitable relief without the necessity of proving actual damages.  No remedy set forth in this Agreement or otherwise conferred upon or reserved to any party shall be considered exclusive of any other remedy available to any party, but the same shall be distinct, separate and cumulative and may be exercised from time to time as often as occasion may arise or as may be deemed expedient. The Executive represents that enforcement of a remedy by way of injunction will not prevent him from earning a livelihood.  The Executive further represents and admits that time periods contained in Article VI are reasonably necessary to protect the interest of the Company and would not unfairly or unreasonably restrict the Executive.

Section 8.11 Counterparts.  

This Agreement may be executed in multiple counterparts, each of which will be deemed an original, and all of which together will constitute one and the same instrument.

Section 8.12 Compliance with Section 409A.  

The parties acknowledge and agree that, to the extent applicable, this Agreement shall be interpreted in accordance with, and the parties agree to use their best efforts to achieve timely compliance with, Section 409A of the Code and the Treasury Regulations and other interpretive guidance issued thereunder, including without limitation any such regulations or other guidance that may be issued after the Effective Date. Notwithstanding any provision of this Agreement to the contrary, in the event that the Company determines that any compensation or benefits payable or provided under this Agreement may be subject to Section 409A of the Code, the Company may, with the consent of the Executive, adopt such limited amendments to this Agreement and appropriate policies and procedures, including amendments and policies with retroactive effect, that the Company reasonably determines are necessary or appropriate to (i) exempt the compensation and benefits payable under this Agreement from Section 409A of the Code and/or preserve the intended tax treatment of the compensation and benefits provided with respect to this Agreement or (ii) comply with the requirements of Section 409A of the Code.  By accepting this agreement, Executive hereby agrees and acknowledges that the Company makes no representations with respect to the application of  Section 409A of the Code to any tax, economic, or legal consequences of any payments payable to Executive hereunder (including, without limitation, payments pursuant to Article IV above) and, by the acceptance of this Agreement, Executive agree to accept the potential application of Section 409A of the Code to the tax and legal consequences of payments payable to Employee hereunder (including, without limitation, payments pursuant to Article IV above).  

[Signature page follows]

IN WITNESS WHEREOF, the Company and the Executive have caused this Agreement to be executed as of the day and year first written above.

EXECUTIVE:

/s/ Harry A. Lawton III   
Harry A. Lawton III

COMPANY:

TRACTOR SUPPLY COMPANY

By: /s/ C. T. Jamison    
Its: Director, Chairman of the Board

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