Exhibit 99
TENNANT COMPANY
NON-EMPLOYEE DIRECTOR STOCK OPTION PLAN
1. PURPOSE. The purpose of this Non-Employee Director Stock Option Plan
(the "Plan") is to promote the interests of Tennant Company, a Minnesota
corporation (the "Company"), and its shareholders by providing non-employee
directors of the Company with an opportunity to acquire a proprietary interest
in the Company and thereby provide an additional incentive to put forth maximum
effort for the continued success and growth of the Company. In addition, the
opportunity to acquire a proprietary interest in the Company will aid in
attracting and retaining non-employee directors of outstanding ability.
2. ADMINISTRATION.
(a) GENERAL. This Plan shall be administered by the Company's Board
of Directors (the "Board"). The Board shall have the power,
subject to the limitations contained in this Plan, to fix any
terms and conditions for the grant or exercise of any award under
this Plan. Subject to the provisions of this Plan, the Board may
from time to time adopt such rules for the administration of this
Plan as it deems appropriate. The decision of the Board on any
matter affecting this Plan or the rights and obligations arising
under this Plan or any award granted hereunder, shall be final,
conclusive and binding upon all persons, including without
limitation the Company, shareholders and optionees.
(b) INDEMNIFICATION. To the full extent permitted by law, (i) no
member of the Board shall be liable for any action or
determination taken or made in good faith with respect to this
Plan or any award granted hereunder and (ii) the members of the
Board shall be entitled to indemnification by the Company against
and from any loss incurred by such member or person by reason of
any such actions and determinations.
3. SHARES. The shares that may be made subject to options granted under
this Plan shall be authorized and unissued shares of Common Stock of the
Company, par value $.375 per share ("Shares," and each individually a "Share"),
and they shall not exceed 150,000 Shares in the aggregate, subject to adjustment
as provided in paragraph 12, below, except that, if any option lapses or
terminates for any reason before such option has been completely exercised, the
Shares covered by the unexercised portion of such option may again be made
subject to options granted under this Plan.
4. ELIGIBLE PARTICIPANTS. Stock options may be granted under this Plan
to any director of the Company who is not an employee of the Company or any
parent or subsidiary thereof (a "non-employee director"). References herein to
"employed," "employment" and similar terms (except "employee") shall refer to
the providing of services as a director.
5. TERMS AND CONDITIONS OF DIRECTOR OPTIONS.
(a) DISCRETIONARY GRANTS. Subject to the terms and conditions of
this Plan, the Board may, from time to time during the term of
this Plan, grant to any non-employee director options to purchase
such number of Shares of the Company on such terms and conditions
as the Board may determine. In determining the non-employee
directors to whom options shall be granted and the number of
Shares to be covered by each option, the Board may take into
account the nature of the services rendered by the respective
non-employee directors, their present and potential contributions
to the success of the Company, and such other factors as the
Board in its sole discretion may deem relevant. The date and
time of approval by the Board of the granting of an option shall
be considered the date and the time of the grant of such option.
The maximum number of Shares subject to options that may be
granted to any one non-employee director under the Plan in any
fiscal year of the Company (including options granted under
subparagraph 5(b)) may not exceed 10,000 Shares (subject to
adjustment pursuant to paragraph 12 hereof).
(b) SCHEDULED GRANTS. Effective January 1, 1997, the Company shall
grant to each non-employee director who is serving in such
capacity on January 1, 1997, an option to purchase 1,000 Shares.
On the day following each annual meeting of the shareholders of
the Company (commencing with the annual meeting to be held in
1997), the Company shall grant to each then incumbent
non-employee director an option to purchase 2,000 Shares. With
respect to any non-employee director who is elected or appointed
to the Board on a date other than the date of an annual meeting
of shareholders, the Company shall grant to such non-employee
director on the day following his or her first being so elected
or appointed to the Board an option to purchase a number of
shares equal to the product (rounded up to the next 100 shares)
obtained by multiplying 2,000 by a fraction (x) the numerator of
which is the number of days from the date such non-employee
director is first elected or appointed to the Board to the date
of the next scheduled annual meeting of shareholders and (y) the
denominator of which is 365. Subject to the limitation contained
in subparagraph 5(a) as to the maximum annual aggregate grant to
any one individual, the Board may increase or decrease the number
of shares to be granted to non-employee directors on any date
pursuant to this said paragraph 5(b).
(c) PURCHASE PRICE. The purchase price of each Share subject to an
option granted pursuant to this paragraph 5 shall be 100% of the
Fair Market Value of a Share on the date of grant.
(d) VESTING. With respect to any option granted under
subparagraph 5(a), the option agreement provided for in
paragraph 6 relating to such option shall specify when such
option shall become exercisable. With respect to any option
granted under subparagraph 5(b), such option shall become
exercisable cumulatively as to 25% of the shares subject thereto
on the date of each of the first through the fourth annual
meetings of shareholders of the Company following the date of
grant thereof or, with respect to options granted on any date
other than the day following an annual meeting of shareholders,
on each of the first through the fourth anniversaries of the date
of grant. Notwithstanding the foregoing or the provisions of any
option agreement, the Board may, in its sole discretion, declare
at any time that any option granted under this Plan shall be
immediately exercisable.
(e) TERMINATION. Each option granted pursuant to this paragraph 5
shall expire, and all rights to purchase Shares thereunder shall
terminate, on the earliest of:
(i) ten years after the date such option is granted or on such
date prior thereto as may be fixed by the Board on or before
the date such option is granted;
(ii) the expiration of the period after the termination of the
optionee's service as a non-employee director within which
the option is exercisable as specified in paragraph 9(b)
(provided that the Board may, in any option agreement
provided for in paragraph 6 or by Board action with respect
to any outstanding option, extend the periods specified in
paragraph 9(b)); or
(iii)the date, if any, fixed for cancellation pursuant to
paragraph 10(c) or 11 below.
6. OPTION AGREEMENTS. All options granted under this Plan shall be
evidenced by a written agreement in such form or forms as the Board may from
time to time determine.
7. FAIR MARKET VALUE. For purposes of this Plan, the "Fair Market Value"
of a Share at a specified date shall, unless otherwise expressly provided in
this Plan, mean the closing sale price of a Share on the date immediately
preceding such date or, if no sale of Shares shall have occurred on that date,
on the next preceding day on which a sale of Shares occurred, on the Composite
Tape for New York Stock Exchange listed shares or, if Shares are not quoted on
the Composite Tape for New York Stock Exchange listed shares, on the NASDAQ
National Market or any similar system then in use or, if Shares are not included
in the NASDAQ National Market or any similar system then in use, the mean
between the closing "bid" and the closing "asked" quotation of a Share on the
date immediately preceding the date as of which such Fair Market Value is being
determined, or, if no closing bid or asked quotation is made on that
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date, on the next preceding day on which a quotation is made, on the NASDAQ
SmallCap Market or any similar system then in use, provided that if the Shares
in question are not quoted on any such system, Fair Market Value shall be what
the Board determines in good faith to be 100% of the market value of a Share as
of the date in question. Notwithstanding anything stated in this paragraph 7,
if the applicable securities exchange or system has closed for the day by the
time the determination is being made, all references in this paragraph to the
date immediately preceding the date in question shall be deemed to be references
to the date in question.
8. MANNER OF EXERCISE OF OPTIONS. A person entitled to exercise an
option granted under this Plan may, subject to its terms and conditions and the
terms and conditions of this Plan, exercise it in whole at any time, or in part
from time to time, by delivery to the Company at its principal executive office,
to the attention of its Vice President, Personnel Resources, of written notice
of exercise, specifying the number of Shares with respect to which the option is
being exercised. The purchase price of the Shares with respect to which an
option is being exercised shall be payable in full at the time of exercise,
provided that, to the extent permitted by law, the holder of an option may
simultaneously exercise an option and sell all or a portion of the Shares
thereby acquired pursuant to a brokerage or similar relationship and use the
proceeds from such sale to pay the purchase price of such Shares. The purchase
price of each Share on the exercise of any option shall be paid in full in cash
(including check, bank draft or money order) or, at the discretion of the person
exercising the option, by delivery to the Company of unencumbered Shares, by a
reduction in the number of Shares delivered upon exercise of the option, or by a
combination of cash and such Shares (in each case such Shares having an
aggregate Fair Market Value on the date of exercise equal to the amount of the
purchase price being paid through such delivery or reduction of Shares);
provided, however, that no person shall be permitted to pay any portion of the
purchase price with Shares if the Board, in its sole discretion, determines that
payment in such manner is undesirable. The granting of an option to a person
shall give such person no rights as a shareholder except as to Shares issued to
such person.
9. TRANSFERABILITY AND TERMINATION OF EMPLOYMENT.
(a) TRANSFERABILITY. During the lifetime of an optionee, only such
optionee or his or her guardian or legal representative may
exercise options granted under this Plan, and no option granted
under this Plan shall be assignable or transferable by the
optionee otherwise than by will or the laws of descent and
distribution or pursuant to a domestic relations order as defined
by the Code or Title I of the Employee Retirement Income Security
Act, or the rules thereunder; provided, however, that any
optionee may transfer a non-statutory stock option granted under
this Plan to a member or members of his or her immediate family
(i.e., his or her children, grandchildren and spouse) or to one
or more trusts for the benefit of such family members or
partnerships in which such family members are the only partners,
if (i) the option agreement with respect to such options
expressly so provides either at the time of initial grant or by
amendment to an outstanding option agreement and (ii) the
optionee does not receive any consideration for the transfer.
Any options held by any such transferee shall continue to be
subject to the same terms and conditions that were applicable to
such options immediately prior to their transfer and may be
exercised by such transferee only as and to the extent that such
option has become exercisable and has not terminated in
accordance with the provisions of the Plan and the applicable
option agreement. For purposes of any provision of this Plan
relating to notice to an optionee or to vesting or termination of
an option upon the death, disability or termination of employment
of an optionee, the references to "optionee" shall mean the
original grantee of an option and not any transferee.
(b) TERMINATION OF EMPLOYMENT. In the event that an optionee ceases
to be employed as a non-employee director by reason of
(i) death,
(ii) disability preventing continued service,
(iii) retirement from the Board in accordance with the policy of
the Company, if any, on retirement of non-employee
directors then in effect, or
(iv) termination of service as a non-employee director by
reason of (x) resignation at the request of the Board
(other than for gross misconduct, as determined by the
Board) (y) the. director's
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failure to have been nominated for re-election to the Board
(unless such failure results from the non-employee
director's unwillingness to continue to serve) or to have
been re-elected by the shareholders of the Company, or
(v) the director's removal by the shareholders of the Company
then any option granted to such optionee that was not previously
exercisable shall become immediately exercisable in full if the
optionee shall have been continuously employed by the Company or
a parent or subsidiary thereof between the date such option was
granted and the date of such termination of service and such
option shall continue to be exercisable for five years after
termination of such optionee's employment. If an optionee's
employment terminates in any manner other than as provided for in
the preceding sentence, any option granted to such optionee shall
terminate immediately upon such termination of employment.
(c) RIGHT TO TERMINATE EMPLOYMENT. Nothing contained in this Plan,
or in any option granted pursuant to this Plan, shall confer upon
any optionee any right to continued employment by the Company or
limit in any way the right of the Company to terminate such
optionee's employment at any time.
(d) EXPIRATION DATE. In no event shall any option be exercisable at
any time after the time it shall have expired in accordance with
paragraph 5(e) of this Plan. When an option is no longer
exercisable, it shall be deemed to have lapsed or terminated and
will no longer be outstanding.
10. CHANGE IN CONTROL.
(a) For purposes of this Plan, a "Change in Control" of the Company
shall be deemed to occur if any of the following occur:
(i) Any "person" (as such term is used in Sections 13(d) and
14(d) of the Securities Exchange Act of 1934, as amended
(the "Exchange Act")) acquires or becomes a "beneficial
owner" (as defined in Rule 13d-3 or any successor rule under
the Exchange Act), directly or indirectly, of securities of
the Company representing 30% or more of the combined voting
power of the Company's then outstanding securities entitled
to vote generally in the election of directors ("Voting
Securities"), provided, however, that the following shall
not constitute a Change in Control pursuant to this
paragraph (a)(1):
(A) any acquisition or beneficial ownership by the Company
or a Subsidiary;
(B) any acquisition or beneficial ownership by any employee
benefit plan (or related trust) sponsored or maintained
by the Company or one or more of its Subsidiaries;
(C) any acquisition or beneficial ownership by any
corporation with respect to which, immediately
following such acquisition, more than 70% of both the
combined voting power of the Company's then outstanding
Voting Securities and the Shares of the Company is then
beneficially owned, directly or indirectly, by all or
substantially all of the persons who beneficially owned
Voting Securities and Shares of the Company immediately
prior to such acquisition in substantially the same
proportions as their ownership of such Voting
Securities and Shares, as the case may be, immediately
prior to such acquisition;
(ii) A majority of the members of the Board of Directors of the
Company shall not be Continuing Directors. "Continuing
Directors" shall mean: (A) individuals who, on the date
hereof, are directors of the Company, (B) individuals
elected as directors of the Company subsequent to the date
hereof for whose election proxies shall have been solicited
by the Board of Directors of the Company or (C) any
individual elected or appointed by the Board of Directors
of the
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Company to fill vacancies on the Board of Directors of the
Company caused by death or resignation (but not by removal)
or to fill newly-created directorships;
(iii) Approval by the shareholders of the Company of a
reorganization, merger, or consolidation of the Company or a
statutory exchange of outstanding Voting Securities of the
Company, unless immediately following such reorganization,
merger, consolidation, or exchange, all or substantially all
of the persons who were the beneficial owners, respectively,
of Voting Securities and Shares of the Company immediately
prior to such reorganization, merger, consolidation, or
exchange beneficially own, directly or indirectly, more than
70% of, respectively, the combined voting power of the then
outstanding voting securities entitled to vote generally in
the election of directors and the then outstanding shares of
common stock, as the case may be, of the corporation
resulting from such reorganization, merger, consolidation,
or exchange in substantially the same proportions as their
ownership, immediately prior to such reorganization, merger,
consolidation, or exchange, of the Voting Securities and
Stock of the Company, as the case may be; or
(iv) Approval by the shareholders of the Company of (x) a
complete liquidation or dissolution of the Company or
(y) the sale or other disposition of all or substantially
all of the assets of the Company (in one or a series of
transactions), other than to a corporation with respect to
which, immediately following such sale or other disposition,
more than 70% of, respectively, the combined voting power of
the then outstanding voting securities of such corporation
entitled to vote generally in the election of directors and
the then outstanding shares of common stock of such
corporation is then beneficially owned, directly or
indirectly, by all or substantially all of the persons who
were the beneficial owners, respectively, of the Voting
Securities and Shares of the Company immediately prior to
such sale or other disposition in substantially the same
proportions as their ownership, immediately prior to such
sale or other disposition, of the Voting Securities and
Shares of the Company, as the case may be.
(b) ACCELERATION OF VESTING. Notwithstanding anything in
subparagraph 5(d) above to the contrary, if a Change of Control
of the Company shall occur, then, without any action by the
Board, each option granted under this Plan and not already
exercised in full or otherwise terminated, expired or canceled
shall become immediately exercisable in full.
(c) CASH PAYMENT. If a Change in Control of the Company shall occur,
then, so long as a majority of the members of the Board are
Continuing Directors, the Board, in its sole discretion, and
without the consent of the holder of any option affected thereby,
may determine that some or all outstanding options shall be
canceled as of the effective date of any such Change in Control
and that the holder or holders of such canceled options shall
receive, with respect to some or all of the Common Shares subject
to such options, as of the date of such cancellation, cash in an
amount, for each Share subject to an option, equal to the excess
of the per Share Fair Market Value of such Shares immediately
prior to such Change in Control of the Company over the exercise
price per Share of such options.
(d) LIMITATION ON CHANGE IN CONTROL PAYMENTS. Notwithstanding
anything in subparagraph 10(b) or 10(c) above or paragraph 11
below to the contrary, if, with respect to an optionee, the
acceleration of the exercisability of an option or the payment of
cash in exchange for all or part of an option as provided in
subparagraph 10(b) or 10(c) above or paragraph 11 (which
acceleration or payment could be deemed a "payment" within the
meaning of Section 280G(b)(2) of the Code), together with any
other payments which such optionee has the right to receive from
the Company or any corporation which is a member of an
"affiliated group" (as defined in Section 1504(a) of the Code
without regard to Section 1504(b) of the Code) of which the
Company is a member, would constitute a "parachute payment" (as
defined in Section 280G(b)(2) of the Code), then such
acceleration of exercisability and payments pursuant to
subparagraph 10(b) or 10(c) above or
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paragraph 11 shall be reduced to the largest amount as, in the
sole judgment of the Board, will result in no portion of such
payments being subject to the excise tax imposed by Section 4999
of the Code.
11. DISSOLUTION, LIQUIDATION, MERGER. In the event of (a) the proposed
dissolution or liquidation of the Company; (b) a proposed sale of substantially
all of the assets of the Company; or (c) a proposed merger, consolidation of
the Company with or into any other entity, regardless of whether the Company is
the surviving corporation, or a proposed statutory share exchange with any other
entity (the actual effective date of the dissolution, liquidation, sale, merger,
consolidation or exchange being herein called an "Event"), the Board may, but
shall not be obligated to, either (i) if the Event is a merger, consolidation or
statutory share exchange, make appropriate provision for the protection of
outstanding options granted under this Plan by the substitution, in lieu of such
options, of options to purchase appropriate voting common stock (the "Survivor's
Stock") of the corporation surviving any such merger or consolidation or, if
appropriate, the parent corporation of the Company or such surviving
corporation, or, alternatively, by the delivery of a number of shares of the
Survivor's Stock which has a Fair Market Value as of the effective date of such
merger, consolidation or statutory share exchange equal to the product of
(x) the excess of (A) the Event Proceeds per Share (as hereinafter defined)
covered by the option as of such effective date over (B) the exercise price per
Share of the Shares subject to such option, times (y) the number of Shares
covered by such option or (ii) declare, at least twenty days prior to the Event,
and provide written notice to each optionee of the declaration, that each
outstanding option, whether or not then exercisable, shall be canceled at the
time of, or immediately prior to the occurrence of, the Event (unless it shall
have been exercised prior to the occurrence of the Event). In connection with
any declaration pursuant to clause (ii) of the preceding sentence, the Board
may, but shall not be obligated to, cause payment to be made, within twenty days
after the Event, in exchange for each canceled option to each holder of an
option that is canceled, of cash equal to the amount (if any), for each Share
covered by the canceled option, by which the Event Proceeds per Share (as
hereinafter defined) exceeds the exercise price per Share covered by such
option. At the time of any declaration pursuant to clause (ii) of the first
sentence of this paragraph 11, each option that has not previously expired
pursuant to subparagraph 5(e)(i) or 5(e)(ii) of this Plan or been canceled
pursuant to paragraph 10(c) of this Plan shall immediately become exercisable in
full and each holder of an option shall have the right, during the period
preceding the time of cancellation of the option, to exercise his or her option
as to all or any part of the Shares covered thereby. In the event of a
declaration pursuant to clause (ii) of the first sentence of this paragraph 11,
each outstanding option granted pursuant to this Plan that shall not have been
exercised prior to the Event shall be canceled at the time of, or immediately
prior to, the Event, as provided in the declaration, and this Plan shall
terminate at the time of such cancellation, subject to the payment obligations
of the Company provided in this paragraph 11. Notwithstanding the foregoing, no
person holding an option shall be entitled to the payment provided in this
paragraph 11 if such option shall have expired pursuant to subparagraph 5(e)(i)
or 5(e)(ii) of this Plan or been canceled pursuant to paragraph 10(c) of this
Plan. For purposes of this paragraph 11, "Event Proceeds per Share" shall mean
the cash plus the market value, as determined in good faith by the Board, of the
non-cash consideration to be received per Share by the shareholders of the
Company upon the occurrence of the Event.
12. ADJUSTMENTS. In the event of any reorganization, merger,
consolidation, recapitalization, liquidation, reclassification, stock dividend,
stock split, combination of shares, rights offering, or extraordinary dividend
or divestiture (including a spin-off), or any other change in the corporate
structure or Shares of the Company, the Board (or if the Company does not
survive any such transaction, the Board of Directors of the surviving
corporation) may, without the consent of any holder of an option, make such
adjustment as it determines in its discretion to be appropriate as to the number
and kind of securities subject to and reserved under this Plan and, in order to
prevent dilution or enlargement of rights of participants in this Plan, the
number and kind of securities issuable upon exercise of outstanding options and
the exercise price thereof.
13. COMPLIANCE WITH LEGAL REQUIREMENTS. No certificate for Shares
distributable under this Plan shall be issued and delivered unless the issuance
of such certificate complies with all applicable legal requirements including,
without limitation, compliance with the provisions of applicable state
securities laws, the Securities Act of 1933, as amended, and the Exchange Act.
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14. GOVERNING LAW. To the extent that federal laws do not otherwise
control, this Plan and all determinations made and actions taken under this Plan
shall be governed by the laws of the State of Minnesota, without regard to the
conflicts of law provisions thereof, and construed accordingly.
15. AMENDMENT AND DISCONTINUANCE OF PLAN. The Board may at any time
amend, suspend or discontinue this Plan; provided, however, that no amendment to
this Plan shall, without the consent of the holder of the option, alter or
impair any option previously granted under this Plan. To the extent considered
necessary to comply with applicable provisions of the Code, any such amendments
to this Plan may be made subject to approval by the shareholders of the Company.
16. TERM.
(a) EFFECTIVE DATE. This Plan shall be effective as of January 1,
1997, provided that this Plan is approved and ratified by the
affirmative vote of the holders of a majority of the outstanding
Shares present or represented and entitled to vote in person or
by proxy at a meeting of the shareholders of the Company no later
than May 31, 1997. Any options granted hereunder prior to such
shareholder approval shall be subject to such shareholder
approval. If this Plan is not so approved by such holders, any
options granted under this Plan subject to such approval shall be
null and void and this Plan shall not take effect.
(b) TERMINATION. This Plan shall remain in effect until all Shares
subject to it are distributed or this Plan is terminated under
paragraph 15 above.
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