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.
(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
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:
(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:
|
|
|
The Code §
401(a)(17) compensation limit for the year in which the Termination
Date occurs; or
|
|
|
|
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.
|
(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.
(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
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
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
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:
|
|
|
the
Company’s material breach of this Agreement; or
|
|
|
|
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
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.
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]