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TENNANT COMPANY EXECUTIVE EMPLOYMENT AGREEMENT

Employee Retention Agreement

TENNANT COMPANY EXECUTIVE EMPLOYMENT AGREEMENT | Document Parties: TENNANT COMPANY You are currently viewing:
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TENNANT COMPANY

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Title: TENNANT COMPANY EXECUTIVE EMPLOYMENT AGREEMENT
Governing Law: Minnesota     Date: 3/16/2009
Industry: Misc. Capital Goods     Sector: Capital Goods

TENNANT COMPANY EXECUTIVE EMPLOYMENT AGREEMENT, Parties: tennant company
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Exhibit 10.5

TENNANT COMPANY

EXECUTIVE EMPLOYMENT AGREEMENT

 

THIS EXECUTIVE EMPLOYMENT AGREEMENT (this “Agreement”) is entered into on ________ ___, 2008 by and between Tennant Company, a Minnesota corporation (the “Company”), and [NAME] , a resident of Minnesota (“Executive”).

 

Recitals

 

A.           Executive is a key member of the management of the Company and is expected to devote substantial skill and effort to the affairs of the Company, and the Company desires to recognize the significant personal contribution that Executive makes and is expected to continue to make to further the best interests of the Company and its shareholders.

 

B.           It is desirable and in the best interests of the Company and its shareholders to continue to obtain the benefits of Executive’s services and attention to the affairs of the Company.

 

C.           It is desirable and in the best interests of the Company and its shareholders to protect confidential, proprietary and trade secret information of the Company, to prevent unfair competition by former executives of the Company following separation of their employment with the Company and to secure cooperation from former executives with respect to matters related to their employment with the Company.

 

NOW, THEREFORE, in consideration of the foregoing premises and the respective agreements of the Company and Executive set forth below, the Company and Executive, intending to be legally bound, agree as follows:

 

1.            Term .  This Agreement shall commence on the date of this Agreement and shall continue in effect until the earlier of the Expiration Date as defined below or the occurrence of a Change in Control as defined in the Management Agreement attached hereto as Exhibit B (the “Term”).  The initial Expiration Date shall be December 31, 2010. Thereafter, this Agreement shall be automatically extended for successive one-year periods, and the Expiration Date shall be the last day of each successive one-year period, except that this Agreement shall not be extended if either party gives written notice to the other party at least 60 days prior to the Expiration Date that such party elects not to extend the Term.  During the Term, the Company shall employ Executive, and Executive shall remain in the employ of the Company, upon the terms and conditions set forth in this Agreement, until such employment is terminated in accordance with Section 4 below.  If Executive remains employed by the Company after the Term ends, such continued employment shall be on such terms and conditions as may be agreed to from time to time by the parties.


 

2.            Position and Duties .

 

(a)            Employment with the Company .  During Executive’s employment with the Company hereunder, Executive shall initially hold the position of [TITLE] or such additional or alternative positions of an executive nature, and shall perform such duties and responsibilities associated with such positions, as the Chief Executive Officer of the Company shall assign to Executive from time to time consistent with Executive’s qualifications and experience.

 

(b)            Performance of Duties and Responsibilities .  Executive shall serve the Company faithfully and to the best of Executive’s ability and shall devote full working time, attention and efforts to the business of the Company during Executive’s employment with the Company.  While Executive is employed by the Company hereunder, Executive shall not accept other employment with or engage in or render services to any other business enterprise, except that Executive may participate in charitable activities and personal investment activities to a reasonable extent, and Executive may serve as a director of business organizations subject to any guidelines for such directorships that may be established by the Company from time to time, so long as such activities and directorships do not interfere with the performance of Executive’s duties and responsibilities to the Company.  Executive hereby represents and confirms that Executive is under no contractual or legal commitments that would prevent Executive from fulfilling Executive’s duties and responsibilities as set forth in this Agreement.

 

3.            Compensation .  While Executive is employed by the Company hereunder during the Term, Executive shall receive the following compensation and benefits:

 

(a)            Base Salary .  The Company shall pay to Executive for services performed on an annual basis such Base Salary as the Compensation Committee shall from time to time determine, prorated for any partial year of employment and payable in accordance with the Company’s normal payroll policies and procedures.  At the beginning of each fiscal year of Executive’s employment with the Company during the Term, the Board and/or the Compensation Committee shall conduct an annual review of Executive’s performance and Base Salary to determine whether an adjustment to Executive’s Base Salary should be made.  In no event shall Executive’s Base Salary be decreased in any fiscal year during the Term by more than 15% of the Base Salary paid to Executive for the immediately preceding fiscal year.

 

(b)            Incentive Compensation .  Executive shall be entitled to participate in the STIP, subject to the terms of such plan and as such plan may be amended from time to time.

 

(c)            Employee Benefits .  The Company shall provide to Executive and Executive’s dependents such medical, dental and life insurance and disability, retirement savings, vacation, sick leave and other employee and fringe benefits as are provided from time to time by the Company to its senior executives and their

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dependents, in accordance with the general benefits practices of and the eligibility and other terms and conditions of the applicable benefit plans and programs of the Company then in effect.

 

(d)            Expenses .  The Company shall reimburse Executive for all reasonable and necessary out-of-pocket business, travel and entertainment expenses incurred by Executive in the performance of Executive’s duties and responsibilities hereunder, subject to the Company’s normal policies and procedures for expense verification and documentation.

 

4.            Termination of Employment .   The Executive’s employment with the Company hereunder shall terminate and be effective:

 

(a)           on the date set forth in a written notice from the Company to Executive of the termination of Executive’s employment, which date shall be at least three business days following the date of such notice;

 

(b)           upon Executive’s abandonment of employment;

 

(c)           upon receipt by the Company of written notice from Executive of Executive’s resignation;

 

(d)           upon Executive’s Disability; or

 

(e)           upon Executive’s death.

 

Any notice pursuant to Section 4(a) or 4(c) shall, as applicable, specify whether such termination by the Company is with or without Cause, or resignation by Executive is with or without Good Reason, and, if with Cause or Good Reason, shall set forth in reasonable detail the basis therefor.  Upon termination of employment, Executive shall receive, in addition to any amounts owed pursuant to Section 5 of this Agreement, any Base Salary, earned and unused vacation time, and STIP for the preceding year, to the extent such amounts are fully earned but unpaid as of the Termination Date, in accordance with the Company’s payroll practices and any applicable plans or programs.

 

5.            Payments upon Involuntary Termination or Resignation for Good Reason .   If Executive’s employment terminates during the Term by reason of (x) an Involuntary Termination by the Company without Cause or (y) the resignation of Executive for Good Reason such that Executive’s Termination Date occurs within one year   of the first occurrence of a condition giving rise to Good Reason as set forth in Section 11(i)(i) or (ii), then the Company shall provide to Executive the benefits set forth in Section 5(a) below, subject to the limitations and conditions in Sections 5(b) and 8:

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(a)            Severance Benefits .  If Executive’s employment terminates during the Term by reason of an Involuntary Termination by the Company without Cause or a resignation by the Executive for Good Reason, then:

 

(i)           The Company shall pay to Executive, in accordance with the Company’s regular payroll practices, Executive’s then-current Base Salary for a period of 12 consecutive months after the Termination Date.

 

(ii)           If the Termination Date is any day other than the last day of the STIP plan year, the Company shall pay to Executive an amount equal to a pro rata portion (based on the number of days in the STIP plan year occurring on or before, and after, the Termination Date) of the award that would have been payable to Executive under the STIP based on actual performance of objectives under the STIP for such plan year had Executive remained employed for the entire plan year; provided, however, that such award amount (before pro ration) shall not exceed an award based on target performance.  The payment shall be made on the date awards under the STIP for such plan year are or would have been paid to other participants in the STIP, but in any event not later than 2-1/2 months after the end of such plan year.

 

(iii)           If Executive (and/or Executive’s covered dependents) is eligible and properly elects under COBRA to continue group medical, group dental, and/or basic group life insurance coverage, as in place immediately prior to the Termination Date, the Company shall continue to pay the Company’s portion of any such premiums or costs of coverage for a period of up to 12 months following the Termination Date.  The Company will stop paying its portion of the medical, dental and/or life insurance premiums, as applicable, prior to the end of the 12-month period if Executive (and Executive’s covered dependents) is no longer eligible for COBRA coverage or fails to timely pay the employee portion of such premiums.  All Company-provided medical, dental and/or life premiums under this Section 5(a)(iii) shall be paid directly to the insurance carrier or other provider.

 

(b)             Limitations .  Notwithstanding anything above to the contrary, the benefits payable to Executive under Section 5(a)(i) shall not exceed two times the lesser of:

 

 

(i)

The Code § 401(a)(17) compensation limit for the year in which the Termination Date occurs; or

 

 

(ii)

Executive’s annual compensation (as defined in Treas. Reg. § 1.415-2(d)) for services to the Company for the calendar year prior to the calendar year in which the Termination Date occurs.

 

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(c)            Excess Lump Sum Payment .  If application of the maximum limitations under Section 5(b) results in a reduction of the severance amount that would otherwise be payable under Section 5(a)(i), then the Company shall pay to Executive the difference between the amount payable under Section 5(a)(i) and the maximum amount payable after application of Section 5(b).  Such excess shall be payable in a cash lump sum no later than 2 1/2 months after the Termination Date.

 

(d)            No Deferral of Compensation .  The Company and Executive intend  Sections 5(a)(i) and 5(b) to be a “separation pay plan due to involuntary separation from service” under Treas. Reg. § 1.409A-1(b)(9)(iii).  The parties also intend that the Company’s payments under Sections 5(a)(ii) and 5(c) will not be considered a deferral of compensation by application of Treas. Reg. § 1.409A-1(b)(4).  The parties further intend that the Company’s payments of insurance premiums under Section 5(a)(iii) will not be considered a deferral of compensation by application of Treas. Reg. § 1.409A-1(a) and § 1.409A-1(b)(9)(v).

 

6.            Payments in the Case of Death or Disability .  If Executive’s Termination of Employment is due to Executive’s death or Disability, the Company shall pay to Executive (or Executive’s legal representative), in accordance with the Company’s regular payroll practices, Executive’s current Base Salary through and including the last day of the calendar month in which the Termination Date occurs.

 

7.            Other Agreements .

 

(a)            Employee Agreement .  At the same time as they sign this Agreement, the parties are entering into the Employee Agreement attached hereto as Exhibit A.

 

(b)            Management Agreement .  At the same time as they sign this Agreement, the parties are entering into the Management Agreement attached hereto as Exhibit B.

 

8.            Withholding of Taxes, Other Limitations.

 

(a)            Taxes .  All payments to Executive hereunder are subject to withholding of income and employment taxes and all other amounts required by law.  Employee shall be solely responsible for the payment of all taxes due and owing with respect to wages, benefits and other compensation provided hereunder.

 

(b)            Offsets .  Notwithstanding any other provision of this Agreement, any payments required by Section 5 shall be reduced by any severance pay that Executive is eligible to receive from the Company, its subsidiaries or its successors under any policy, plan or agreement of the Company, other than this Agreement (“Other Severance Pay”), in the event of the Company’s termination of Executive’s employment with the Company.

 

(c)            Release Requirement .  Notwithstanding any other provision of this Agreement, the Company shall not be obligated to make any payments to Executive

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 under Section 5 hereof unless Executive shall have signed a release of claims in favor of the Company in a form to be prescribed by the Company, all applicable consideration periods and rescission periods provided by law shall have expired and Executive is in strict compliance with the terms of this Agreement and the Employee Agreement as of the dates of the payments.

 

(d)            Effect of Management Agreement .  If a termination of employment occurs upon or after the expiration of the Term of this Agreement, Executive shall not be entitled to receive any compensation or benefits under this Agreement, but may be entitled to compensation and benefits, if any, in accordance with the terms and conditions of the Management Agreement.

 

(e)            Code Section 409A .  This Agreement is intended to satisfy, or be exempt from, the requirements of Code § 409A(a)(2), (3) and (4), including current and future guidance and regulations interpreting such provisions, and should be interpreted accordingly.

 

(f)            No Mitigation.   Executive shall not be required to mitigate the amount of any payment or other benefit provided for in Section 5 by seeking employment with another employer or otherwise; nor shall the amount of any payment or other benefit provided for in Section 5 be reduced by any compensation earned by Executive as the result of Executive’s subsequent employment by another employer, except as otherwise expressly provided in this Agreement.

 

9.            Return of Property .  Upon termination of Executive’s employment with the Company, Executive shall promptly deliver to the Company any and all Company records and any and all Company property in Executive’s possession or under Executive’s control, including without limitation manuals, books, blank forms, documents, letters, memoranda, notes, notebooks, reports, printouts, computer disks, computer tapes, electronic media, source codes, data, tables or calculations and all copies thereof, documents that in whole or in part contain any trade secrets or confidential, proprietary or other secret information of the Company and all copies thereof, and keys, access cards, access codes, passwords, credit cards, computers, telephones and other electronic equipment belonging to the Company.

 

10.            Directors’ and Officers’ Indemnification; Stock Based Compensation .  While Executive is employed by the Company hereunder, the Company shall not, without the prior written consent of Executive, amend its articles of incorporation or by-laws to prohibit or limit the indemnification of, or advances of expenses to, its directors and officers or to impose conditions on such indemnification or advances of expenses in addition to those provided by law.  While Executive is employed by the Company hereunder, the Company shall not modify any stock based incentive plan or agreement to which Executive is a party (or is subject) to limit or otherwise affect the acceleration of vesting or exercisability of stock options of Executive in the event of a change in control, the lapse of restrictions on restricted stock of Executive in the event

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of a change in control, or any other acceleration of, or increase in benefits under, any stock based benefit in the event of a change in control.

 

11.            Definitions .   When used in this Agreement with initial capitalized letters, the following terms have the meanings indicated below, unless context requires otherwise:

 

(a)             Base Salary .  “Base Salary” means Executive’s annual base salary established by the Board and/or Compensation Committee in accordance with Section 3(a).

 

(b)             Board .  “Board” means the Board of Directors of the Company.

 

(c)            Cause .  “Cause” means:

 

(i)           Executive’s material breach of this Agreement, which is not remedied within 30 days after receipt of written notice thereof;

 

(ii)           an act or acts of dishonesty undertaken by Executive and intended to result in gain or personal enrichment of Executive at the expense of the Company;

 

(iii)           persistent failure by Executive to perform the duties of Executive’s employment, which failure is demonstrably willful and deliberate on the part of Executive and constitutes gross neglect of duties by Executive and which is not remedied within 90 days after receipt of written notice thereof; or

 

(iv)           the indictment or conviction of Executive for a felony if the act or acts constituting the felony are substantially detrimental to the Company or its reputation.

 

(d)             COBRA .  “COBRA” means the benefit continuation provisions under the Consolidated Omnibus Budget Reconciliation Act of 1986.  For purposes of this Agreement, COBRA is deemed to include the group term life insurance continuation requirements under Minnesota law.

 

(e)            Code .  “Code” means the Internal Revenue Code of 1986, as amended.

 

(f)            Compensation Committee .  “Compensation Committee” means the compensation committee of the Board.

 

(g)             Disability .  “Disability” means a continuing condition of Executive that has been determined to meet the criteria set forth in the Tennant Company Long Term Disability Plan, or similar successor plan, to render Executive eligible for long-term disability benefits under said plan, whether or not Executive is in fact covered by such

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plan.  The determination shall be made by the insurer of the plan or, if Executive is not covered by the plan, by the Company in its sole discretion.

 

(h)            Employee Agreement .  “Employee Agreement” means the Employee Agreement between Executive and the Company of even date herewith and attached to this Agreement as Exhibit A.

 

(i)            Good Reason .  “Good Reason” means the existence of either of the following conditions, without Executive’s consent, that is not remedied by the Company within 30 days after receipt of written notice thereof, where such notice is provided by Executive within 90 days of the initial existence of the condition:

 

 

(i)

the Company’s material breach of this Agreement; or

 

 

(ii)

a material diminution in the Executive’s authority, duties, or responsibilities, other than for Cause or on account of Disability.

 

(j)             Involuntary Termination .  “Involuntary Termination” means a termination of employment instigated by the Company without the consent or agreement of Executive, or which is otherwise considered an involuntary separation from service under Code § 409A and guidance thereunder.

 

(k)             Management Agreement .  “Management Agreement” means the Management Agreement between Executive and the Company of even date herewith and attached to this Agreement as Exhibit B.

 

(l)             STIP .  “STIP” means the Company’s Short-Term Incentive Plan, as may be  amended from time to time, or any successor plan.

 

(m)             Termination Date .  “Termination Date” means the date on which Executive’s employment by the Company ends, as defined in Section 4.  For purposes of Section 5 of this Agreement only, the Termination Date shall mean the date on which a “separation from service” has occurred for purposes of Code Section 409A.

 

12.            Successors and Assigns .  This Agreement is binding on and inures to the benefit of Executive and Executive’s heirs, legal representatives and permitted assigns, and on the Company and its successors and permitted assigns.  No rights or obligations of Executive or the Company hereunder may be assigned, pledged, disposed of or transferred by such party to any other person or entity without the prior written consent of the other party, except that the Company may assign its rights and obligations under this Agreement to any affiliate of the Company and Executive hereby consents to any such assignment by the Company.

 

 

13.            Separate Representation .  Executive hereby acknowledges that Executive has the right to and/or has been advised to seek and receive independent advice from counsel of Executive’s own selection in connection with this Agreement and has not

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relied to any extent on any officer, director or shareholder of, or counsel to, the Company in deciding to enter into this Agreement.

 

14.            Governing Law .  All matters relating to the interpretation, construction, application, validity and enforcement of this Agreement shall be governed by the laws of the State of Minnesota without giving effect to any choice or conflict of law provision or rule, whether of the State of Minnesota or any other jurisdiction, that would cause the application of laws of any jurisdiction other than the State of Minnesota.

 

15.            Dispute Resolution .  The parties shall endeavor to resolve any dispute arising out of or relating to this Agreement, Executive’s employment with the Company or the termination of such employment (except for any dispute arising under the Management Agreement or the Employee Agreement) (a “Dispute”) by mediation and, if such mediation is not successful, by final and binding arbitration.  Disputes and claims encompassed by this Agreement include all applicable federal, state and local employment-related claims, whether based on common law (such as breach of contract or defamation) or statutes (such as the Americans With Disabilities Act, Title VII of the Civil Rights Act of 1964, the Age Discrimination in Employment Act, and the Minnesota Human Rights Act).  The parties shall first attempt in good faith to resolve any Dispute by confidential mediation before a qualified mediator mutually agreed upon by the parties.  If the Dispute is not resolved by mediation within 45 days after initial notice of the Dispute, then the Dispute shall be finally resolved by arbitration before a single arbitrator in accordance with the then most recent Employment Dispute Resolution Rules of the American Arbitration Association.  Any mediation or arbitration hereunder shall be conducted in Minneapolis, Minnesota.  The decision of the arbitrator shall be final and binding, and any court of competent jurisdiction may enter judgment upon the award.  All fees and expenses of the arbitrator shall be paid by the Company. The arbitrator shall have the jurisdiction and authority to interpret and apply the provisions of this Agreement and relevant federal, state and local laws, rules and regulations insofar as necessary to the determination of the Dispute and to remedy any breaches of the Agreement or violations of applicable laws, but shall not have jurisdiction or authority to alter in any way the provisions of this Agreement.  The parties hereby agree that this arbitration provision shall be in lieu of any requirement that either party exhaust such party’s administrative remedies under federal, state or local law.  Executive and the Company acknowledge and agree that this arbitration provision is beneficial to both parties because it provides a quick, less expensive and confidential manner of resolving finally any dispute or claim.  All mediation and arbitration proceedings hereunder shall be confidential and the parties, mediator and arbitrator shall keep confidential the existence and nature of any Dispute and all related proceedings.  Notwithstanding anything to the contrary provided in this Section 15 and without prejudice to the above procedures, either party may apply to any court of competent jurisdiction for temporary injunctive or other provisional judicial relief if in such party’s sole judgment such action is necessary to avoid irreparable damage or to preserve the status quo until such time as the arbitration award is rendered or the controversy is otherwise resolved.

 

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16.            Notices .  All notices hereunder shall be delivered by hand or sent by registered or certified mail, return receipt requested, postage prepaid, to the party to receive the same at the address set forth with the signature of such party hereto or at such other address as may have been furnished to the sender by notice hereunder.

 

17.            Counterparts .  This Agreement may be executed in counterparts, each of which when so executed shall be deemed to be an original, and such counterparts shall together constitute but one and the same instrument.

 

18.            Entire Agreement .  This Agreement, the Employee Agreement, the Management Agreement, and the other documents and instruments referred to herein contain the entire understanding of the parties hereto with respect to the employment of Executive by the Company.

 

19.            Amendments and Waivers .  No provision hereof may be altered, amended, modified, waived or discharged in any way whatsoever except by written agreement executed by both parties.  No delay or failure of either party to insist, in any one or more instances, upon performance of any of the terms and conditions of this Agreement or to exercise any rights or remedies hereunder shall constitute a waiver or a relinquishment of such rights or remedies or any other rights or remedies hereunder.

 

20.            Severability; Survival . In the event that any portion of this Agreement is held to be invalid or unenforceable for any reason, it is hereby agreed that such invalidity or unenforceability shall not affect the other portions of this Agreement and that the remaining covenants, terms and conditions or portions hereof shall remain in full force and effect, and any court of competent jurisdiction or arbitrator, as the case may be, may so modify the objectionable provision as to make it valid, reasonable and enforceable.  The obligations and rights of the parties hereunder that by their terms continue beyond the Term shall survive the termination of this Agreement.

 

21.            Replacement of Prior Agreement(s) .  This Agreement, the Employee Agreement, and the Management Agreement replace and supersede all agreements between the Company and Executive of any nature whatsoever, which agreements, if any, shall be of no further force or effect.

 

IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed on the date and year first above written.

 

EXECUTIVE                                                                                     TENNANT COMPANY

 

 

 

Name:   [NAME]                                                                            Name:   [NAME]

 

Address:                       [ADDRESS]                                                                 Title:                       [TITLE]

 

7036v1

 

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