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TENNANT COMPANY
("CORPORATION")
RESTRICTED STOCK PLAN FOR NONEMPLOYEE DIRECTORS
("PLAN")
(AS AMENDED AND RESTATED EFFECTIVE JANUARY 1, 1999)
1. COMPENSATION.
Members of the Corporation's board of directors (the "Board") who are not
employees of the Corporation ("Nonemployee Directors") have historically been
compensated by means of fees including: (i) an annual retainer designated as a
fixed dollar amount ("Annual Retainer") for the year which commences on the day
immediately after the date of each Annual Meeting of the Corporation's
shareholders and ends on the day of the next succeeding Annual Meeting ("Board
Year"); and (ii) meeting fees for attendance at meetings of the Board and
committees thereof. Commencing January 1, 1999, the Company will no longer pay
meeting fees to Nonemployee Directors but will compensate them solely by the
issuance of Restricted Shares (as hereinafter defined) pursuant to this Plan.
For the Board Year commencing on the day following the Annual Meeting of the
Corporation's Shareholders held in 1999, the Annual Retainer, which is intended
to compensate Nonemployee Directors for their services as directors, including
attendance at meetings, shall be $31,500.
2. PURPOSE; DEFINITIONS.
The purpose of the Plan is to provide for the issuance of shares of the
Corporation's common stock ("Shares") in lieu of the Annual Retainer, such
Shares generally to be subject to the restrictions provided herein and to be
issued at the beginning of cycles consisting of three Board Years in lieu of the
Annual Retainers for the three succeeding Board Years.
For purposes of the Plan: (i) the first business day of the Board Years
commencing in 1993, 1996, 1999, 2002, 2005 and 2008 shall each be referred to as
a "Regular Issuance Date"; and (ii) the Annual Retainers for the two Board Years
succeeding the Board Year in which a Regular Issuance Date occurs shall be
assumed to be in an amount equal to the Annual Retainer for the Board Year in
which such Regular Issuance Date occurs.
3. ISSUANCE OF RESTRICTED SHARES.
(a) In lieu of the Annual Retainers for the Board Year commencing in 1993
and the next two succeeding Board Years: (i) on the first business day of
the Board Year commencing in 1993, the Corporation shall issue to each then
incumbent Nonemployee Director, Restricted Shares (as hereinafter defined)
having a Fair Market Value (as hereinafter defined) equal to 100% of the
Annual Retainers for such three Board Years; and (ii) on the first business
day
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of January 1995, the Corporation shall issue to each then incumbent
Nonemployee Director Restricted Shares having a fair market value equal to
60% of the Annual Retainers for the remaining portion (pro-rated based on
the number of days remaining in such Board Year) of the Board Year
commencing in 1994 and the Board Year commencing in 1995.
(b) On the Regular Issuance Date in the year 1996, the Corporation shall
issue to each then Incumbent Nonemployee Director, in lieu of the Annual
Retainers for the Board Year then commencing and the next two succeeding
Board Years, Restricted Shares having a Fair Market Value equal to 150% of
the Annual Retainers for such three Board Years.
(c) On the Regular Issuance Date in the years 1999, 2002, 2005, and 2008,
the Corporation shall issue to each then Incumbent Nonemployee Director, in
lieu of the Annual Retainers for the Board Year then commencing and the
next two succeeding Board Years, Restricted Shares having a Fair Market
Value equal to 100% of the Annual Retainers for such three Board Years.
(d) With respect to any Nonemployee Director who is first elected or
appointed to the Board on a date other than the date of the Annual Meeting
of the Corporation's shareholders immediately preceding a Regular Issuance
Date, the Corporation shall issue to such Nonemployee Director on the date
following the date such Nonemployee Director's service commences, in lieu
of the Annual Retainer or Annual Retainers for the period from the date
such Nonemployee Director's service commences until the next Regular
Issuance Date, Restricted Shares having a Fair Market Value equal to either
(i) 100% of the Annual Retainer or Annual Retainers for such period with
respect to Nonemployee Directors first elected or appointed to the Board
after the Regular Issuance Date in 1993 and on or before January 1, 1995,
or (ii) 150% of the Annual Retainer or Annual Retainers for such period
with respect to Nonemployee Directors first elected or appointed to the
Board after January 1, 1995, and before January 1, 1999, or (iii) 100% of
the Annual Retainer or Annual Retainers for such period with respect to
Nonemployee Directors first elected or appointed to the Board on or after
January 1, 1999. For this purpose, the Annual Retainer for any fraction of
a Board Year shall be pro-rated based on the portion of the Board Year
occurring from and after the date that the Nonemployee Director's service
commences.
(e) The Board may from time to time increase or decrease the designated
fixed dollar amount of the Annual Retainer, provided that the Board shall
not change the amount of the Annual Retainer for purposes of the Plan more
frequently than once every six months. For purposes of the Plan, unless the
Board designates a subsequent effective date, any such increase or decrease
in the Annual Retainer shall be considered to be effective on the business
day
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immediately following the date on which the Board action was taken
resulting in such increase or decrease. If the Annual Retainer is
decreased, there shall be no adjustment in the number of Restricted Shares
previously issued pursuant to the Plan. If the Annual Retainer is increased
effective as of any date other than a Regular Issuance Date, then the
Corporation shall, on the date such increased Annual Retainer becomes
effective, issue to each then Incumbent Nonemployee Director (other than a
Nonemployee Director first elected or appointed to the Board on the date
preceding the date such increased Annual Retainer became effective), in
lieu of such increased amount of Annual Retainer for the period from the
date such increased Annual Retainer became effective until the next Regular
Issuance Date, Restricted Shares having a Fair Market Value equal to, (i)
with respect to any increased Annual Retainer for periods prior to January
1, 1999, 150% of the amount, and (ii) with respect to any increased Annual
Retainer for periods on or after January 1, 1999, 100% of the amount by
which the Annual Retainer or Annual Retainers for such period was
increased. For this purpose, the annual retainer for any fraction of a
Board Year shall be pro-rated based on the portion of the Board Year
occurring from and after the date that the increased Annual Retainer became
effective.
(f) In order to compensate Nonemployee Directors for meeting fees that
would otherwise have been paid between January 1, 1999, and the date of the
Annual Meeting of the Corporation's Shareholders held in 1999, each
Nonemployee Director shall be issued Restricted Shares having a fair market
value as of January 1, 1999, equal to $3,500.
4. FAIR MARKET VALUE.
For purposes of converting dollar amounts to a number of Restricted Shares:
the Fair Market Value of each Restricted Share shall be equal to the average
closing price of one share of the Corporation's Shares on the NASDAQ National
Market System on the ten trading days preceding the date on which such
Restricted Shares are issued; and Restricted Shares shall be rounded to the
nearest whole share.
5. RESTRICTED SHARES.
Shares issued under Section 3 shall be restricted ("Restricted Shares") and
may not be sold, assigned, pledged, hypothecated, transferred or otherwise
disposed of (including, without limitation, transfer by gift or donation). Such
restrictions shall lapse upon the first to occur of the following events (but
only as to that number of Restricted Shares that were issued to a Nonemployee
Director in payment of the Annual Retainer for Board Years commencing prior to
such event):
(a) Death of the Nonemployee Director;
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(b) Disability of the Nonemployee Director preventing continued service on
the Board;
(c) Retirement of the Nonemployee Director from the Board in accordance
with the policy of the Corporation, if any, on retirement of Nonemployee
Directors then in effect;
(d) Termination of service as a director by reason of (i) resignation at
the request of the Board, (ii) the director's failure to have been
nominated for re-election to the Board or to have been re-elected by the
shareholders of the Corporation or (iii) the director's removal by the
shareholders of the Corporation; or
(e) A change in control (as defined in Section B) of the Corporation shall
occur.
The certificates for Shares which are subject to this Section may, at the
option of the Secretary of the Corporation, be held by the Corporation
until the lapse of restrictions as provided in this Section, provided,
however, the Nonemployee Director shall be entitled to all voting, dividend
and distribution rights for such Shares.
Upon the occurrence of an event causing the restrictions on Restricted
Shares held by a Nonemployee Director to lapse, those Restricted Shares
held by such Nonemployee Director as to which the restrictions do not lapse
(that is, the number of Restricted Shares issued to such Nonemployee
Director in payment of the Annual Retainer for Board Years commencing on or
after the occurrence of such event) shall be forfeited and revert to the
Corporation.
6. CHANGE IN CONTROL.
For purposes of this Plan, "change in control" means:
(a) A majority of the directors of the Corporation shall be persons other
than persons
(i) For whose election proxies shall have been solicited by the Board,
or
(ii) Who are then serving as directors appointed by the Board to fill
vacancies on the Board caused by death or resignation (but not by
removal) or to fill newly created directorships,
(b) 30% or more of the outstanding voting stock of the Corporation is
acquired or beneficially owned (as defined in Rule 13d-3 under the
Securities Exchange Act of 1934, as amended, or any successor rule thereto)
by any
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person (other than the Corporation or a subsidiary of the Corporation) or
group of persons acting in concert (other than the acquisition and
beneficial ownership by a parent corporation or its wholly owned
subsidiaries, as long as they remain wholly owned subsidiaries, of 100% of
the outstanding voting stock of the Corporation as a result of a merger
which complies with paragraph (c)(i)(2) hereof in all respects), or
(c) The shareholders of the Corporation approve a definitive agreement or
plan to
(i) Merge or consolidate the Corporation with or into another
corporation other than
(1) a merger or consolidation with a subsidiary of the
Corporation or
(2) a merger in which
(A) the Corporation is the surviving corporation,
(B) no outstanding voting stock of the Corporation (other
than fractional shares) held by shareholders immediately
prior to the merger is converted into cash, securities, or
other property (except (I) voting stock of a parent
corporation owning directly, or indirectly through wholly
owned subsidiaries, both beneficially and of record 100% of
the voting stock of the Corporation immediately after the
merger and (II) cash upon the exercise by holders of voting
stock of the Corporation of statutory dissenters' rights).
(C) the persons who were the beneficial owners,
respectively, of the outstanding common stock and
outstanding voting stock of the Corporation immediately
prior to such merger beneficially own, directly or
indirectly, immediately after the merger, more than 70% of,
respectively, the then outstanding common stock and the then
outstanding voting stock of the surviving corporation or its
parent corporation, and
(D) If voting stock of the parent corporation is exchanged
for voting stock of the Corporation in the merger, all
holders of any class or series of voting stock of the
Corporation immediately prior to the merger have the right
to receive substantially the same per share
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consideration in exchange for their voting stock of the
Corporation as all other holders of such class or series,
(ii) exchange, pursuant to a statutory exchange of shares of voting
stock of the Corporation held by shareholders of the Corporation
immediately prior to the exchange, shares of one or more classes or
series of voting stock of the Corporation for cash, securities, or
other property,
(iii) sell or otherwise dispose of all or substantially all of the
assets of the Corporation (in one transaction or a series of
transactions), or
(iv) liquidate or dissolve the Corporation.
7. FORFEITURE.
In addition to the forfeiture provided for in the final paragraph of
Section 5 hereof, if a Nonemployee Director ceases to be a Director of the
Corporation within six months after the date of an issuance of Restricted Shares
for any reason or thereafter for any reason other than upon the occurrence of
one of the events described in Section 5, then all Restricted Shares issued to
such Nonemployee Director pursuant to this Plan shall be forfeited and revert to
the Corporation.
8. FRACTIONS OF SHARES.
The Corporation shall not be required to issue fractions of Shares.
Whenever under the terms of the Plan a fractional Share would be required to be
issued, an amount in lieu thereof shall be paid in cash for such fractional
Share based upon the same Fair Market Value as was utilized to determine the
number of Shares to be issued on the relevant issuance date.
9. WITHHOLDING TAXES.
Whenever under the Plan Shares are to be issued, restrictions are to be
changed or eliminated or, in the judgment of the Corporation, it is appropriate,
the Corporation shall have the right to require the recipient to remit to the
Corporation an amount in cash sufficient to satisfy any applicable federal,
state and local withholding tax requirements.
10.GENERAL RESTRICTION.
The issuance of Shares or the delivery of certificates for such Shares to
Nonemployee Directors hereunder shall be subject to the requirement that, if at
any time the Secretary of the Corporation shall reasonably determine, in his or
her discretion, that the listing, registration or qualification of such Shares
upon any securities exchange or under any
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state or federal law, or the consent or approval of any government regulatory
body, is necessary or desirable as a condition of, or in connection with, such
issuance or delivery hereunder, such issuance or delivery shall not take place
unless such listing, registration, qualification, consent or approval shall have
been effected or obtained free of any conditions not reasonably acceptable to
the Secretary.
11.AMENDMENT; TERM; SHARES AVAILABLE.
The Board may, at any time, amend or terminate the Plan; provided that no
amendment or termination shall, without the consent of a Nonemployee Director,
reduce such Nonemployee Director's rights in respect of Restricted Shares
previously granted. No Shares shall be issued pursuant to this Plan in lieu of
any Annual Retainer for any period commencing after the Annual Meeting of the
Corporation's shareholders in 2011. Not more than 125,000 Shares may be issued
under this Plan; provided, that in the event of a recapitalization,
reclassification, stock dividend, stock split, stock combination, or other
relevant change affecting the capitalization of the Corporation, the number of
shares issuable under this Plan shall be appropriately adjusted. If at any time
there are not sufficient Shares available under this Plan to permit the issuance
of all of the Restricted Shares to be issued at such time pursuant to Section 3,
then this Plan shall automatically terminate and no further Shares shall be
issued hereunder.
12.RIGHTS UNDER PLAN.
The Plan confers no right to be nominated or elected to the Board nor does
it confer any rights to continue to serve on the Board independent of the
Corporation's by-laws and applicable public law. Prior to actual issuance of
Shares, no rights to dividends or voting rights are conferred by the Plan.
13.CONSTRUCTION AND ADMINISTRATION.
The Plan shall be construed and interpreted in accordance with Minnesota
law. The ministerial duties of administering this Plan are delegated to the
Secretary.
14.EFFECTIVENESS.
The Plan originally became effective on May 7, 1993, and was amended and
restated effective January 1, 1995. The further amendment and restatement of the
Plan shall be effective January 1, 1999; provided, however, that the amendment
and restatement of the Plan effective January 1, 1999, and the issuance of
additional shares pursuant thereto shall be subject to approval by the
Corporation's shareholders at the Annual Meeting thereof in the year 1999. If
the Plan, as amended and restated effective January 1, 1999, is not approved by
the shareholders of the Corporation at the Annual Meeting thereof in the year
1999, then the amendment and restatement of the Plan effective January 1, 1999,
shall be null and void and
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any additional Restricted Shares issued pursuant thereto, together with any
dividends or distributions thereon, shall be forfeited and revert to the
Corporation.
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