TENNANT COMPANY
("CORPORATION")
RESTRICTED STOCK PLAN FOR NONEMPLOYEE DIRECTORS
("PLAN")
(As Amended and Restated Effective January 1, 1995)
1. COMPENSATION.
Members of the Corporation's board of directors (the "Board") who are
not employees of the Corporation ("Nonemployee Directors") are 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.
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 issued at the commencement of every third Board Year 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
Year commencing in 1993 and the first business day of every third Board Year
thereafter 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 of
January, 1995, the Corporation shall issue to each then incumbent Nonemployee
Director Restricted Shares having a fair market value equal to 50% 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 years 1996, 1999 and 2002,
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) 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. 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.
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(d) 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
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 150% 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.
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.
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:
(a) Death of the Nonemployee Director;
(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 6) of the Corporation
shall occur.
Notwithstanding the foregoing, in no event shall the restrictions on
the Shares lapse prior to the expiration of six months after the date of the
issuance of the Restricted Shares pursuant to this Plan. 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 following the occurrence of
such event) shall be forfeited and revert to the Corporation.
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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 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 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.
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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, the Restricted Shares issued to such
Nonemployee Director 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 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, and provided further that provisions relating to
grants made pursuant to Section 3 may not be amended more often than once every
six months other than to comport with changes in the Internal Revenue Code, the
Employee Retirement Income Security Act, or the rules thereunder. 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
2005. Not more than 25,000 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.
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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 the Plan, as
Amended and Restated, shall be effective January 1, 1995; provided, however,
that the amendment and restatement of the Plan 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 1995. If the Plan, as
Amended and Restated, is not approved by the shareholders of the Corporation at
the Annual Meeting thereof in the year 1995, then the amendment and restatement
of the Plan shall be null and void and 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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