<PAGE>
[Tennant Logo]
TENNANT COMPANY
NOTICE OF
ANNUAL MEETING OF SHAREHOLDERS
MAY 4, 1995
TO OUR SHAREHOLDERS:
The Annual Meeting of Shareholders of Tennant Company will be held at the
corporate headquarters of Tennant Company, 701 North Lilac Drive, Minneapolis,
Minnesota, on Thursday, May 4, 1995, at 10:30 a.m., Central Daylight Time, for
the following purposes:
(1) To elect three directors for a three-year term;
(2) To approve and ratify the 1995 Stock Incentive Plan;
(3) To approve and ratify amendments to and the restatement of the
Restricted Stock Plan for Nonemployee Directors;
(4) To ratify the appointment of KPMG Peat Marwick LLP as independent
auditors of the Company;
(5) To act upon any other business that may properly come before the
meeting.
Only holders of Common Stock of record at the close of business on March 6,
1995, will be entitled to vote at the meeting or any adjournment thereof.
You are cordially invited to attend the meeting. Whether or not you plan to
come to the meeting, please sign, date and return your Proxy in the reply
envelope provided. Your cooperation in promptly signing and returning your Proxy
will help avoid further solicitation expense.
March 27, 1995 Bruce J. Borgerding, Secretary
TENNANT COMPANY
E S T A B L I S H E D 1 8 7 0
701 N. LILAC DRIVE, P.O. BOX 1452, MINNEAPOLIS, MINN. 55440
<PAGE>
[Tennant Logo]
TENNANT COMPANY
PROXY STATEMENT
This Proxy Statement is furnished in connection with the solicitation by
Tennant Company (the "Company"), on behalf of its Board of Directors, of Proxies
for the Annual Meeting of Shareholders to be held Thursday, May 4, 1995, and any
adjournment thereof. Stock represented by Proxies will be voted. Where
specification is made in the Proxy, the stock will be voted in accordance
therewith. Where no specification is made in the Proxy, the stock will be voted
for all proposals. Proxies may be revoked at any time before being voted by
giving written notice of revocation at the mailing address noted or at the
meeting, or by a later-dated Proxy delivered to an officer of the Company.
Personal attendance and voting in person does not revoke a written Proxy.
There were outstanding on March 6, 1995, the record date for shareholders
entitled to vote at the meeting, 4,938,471 shares of Common Stock, each share
being entitled to one vote.
Expenses in connection with the solicitation of Proxies will be paid by the
Company. Solicitation of Proxies will be principally by mail. In addition,
several of the officers or employees of the Company may solicit Proxies, either
personally or by telephone, or by special letter, from some of the shareholders.
The Company also will make arrangements with brokerage houses and other
custodians, nominees and fiduciaries to send Proxies and proxy material to their
principals, and will reimburse them for their expenses in so doing.
The mailing address of the principal executive office of the Company is 701
North Lilac Drive, P.O. Box 1452, Minneapolis, Minnesota 55440. This Proxy
Statement and form of Proxy enclosed are being mailed to shareholders commencing
March 27, 1995.
1
<PAGE>
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
The following table sets forth, as of February 24, 1995, certain
information with respect to all shareholders known to the Company to have been
beneficial owners of more than 5% of its Common Stock, and information with
respect to the Company's Common Stock beneficially owned by directors and the
nominee for director of the Company, the executive officers of the Company
included in the Summary Compensation Table set forth under the caption
"Executive Compensation" below and all directors and executive officers of the
Company as a group. Except as otherwise indicated, the shareholders listed in
the table have sole voting and investment powers with respect to the Common
Stock owned by them.
NAME AND ADDRESS AMOUNT AND NATURE OF PERCENT OF
OF BENEFICIAL OWNER BENEFICIAL OWNERSHIP COMMON STOCK
------------------- -------------------- ------------
First Bank System, Inc.(1) 587,460 shares(2) 11.9%
Minneapolis, MN
First Bank System, Inc. has sole
investment authority for 11,640 shares,
shared investment authority for
571,405(2) shares, sole voting authority
for 27,519 shares and shared voting
authority for 559,941(2) shares.
George T. Pennock 448,420 shares(3)(4) 9.1%
Minneapolis, MN
David L. Babson & Co., 285,500 shares 5.8%
Inc.(1)
Cambridge, MA
David L. Babson & Co., Inc.,
has sole investment authority for
285,500 shares, sole voting authority
for 166,500 shares and shared voting
authority for 119,000 shares.
Roger L. Hale 186,807 shares(5)(6) 3.8%
Douglas R. Hoelscher 10,747 shares(6) *
Richard A. Snyder 10,121 shares(6) *
Keith D. Payden 4,863 shares(6) *
Janet M. Dolan 4,464 shares(6) *
Janice D. Stoney 1,688 shares *
Andrew P. Czajkowski 1,538 shares *
David C. Cox 1,438 shares *
William A. Hodder 1,438 shares *
Arthur R. Schulze, Jr. 1,438 shares *
Vernon H. Heath 1,338 shares *
William I. Miller 1,112 shares *
2
<PAGE>
NAME AND ADDRESS AMOUNT AND NATURE OF PERCENT OF
OF BENEFICIAL OWNER BENEFICIAL OWNERSHIP COMMON STOCK
------------------- -------------------- ------------
Delbert W. Johnson 941 shares *
Arthur D. Collins, Jr. 0 shares --
All directors and executive
officers as a group
(17 persons) 310,223 shares(6) 6.3%
* An asterisk in the column listing the percentage of shares beneficially
owned indicates the person owns less than 1% of total.
(1) The information set forth above as to the Amount and Nature of Beneficial
Ownership is based upon a Schedule 13G statement filed with the Securities
and Exchange Commission reflecting beneficial ownership as of December 31,
1994.
(2) This number includes 395,907 shares held in the "unallocated" account, as
of December 31, 1994, of the Tennant Company Profit Sharing and Employee
Stock Ownership Plan and Trust, as to which an affiliate of First Bank
System, Inc. acts as trustee. The number of "allocated" shares held in such
trust (367,842 shares as of December 31, 1994) is not included in this
number. The Securities and Exchange Commission has taken the position, with
respect to similar plans, that the plan trustee is the beneficial owner of
shares held in an unallocated reserve pending allocation to participants'
accounts. The plan trustee disclaims that it or the Trust is the beneficial
owner of shares held in the unallocated account.
(3) Included are 382,400 shares in a trust established by Mr. Pennock's mother
for the equal benefit of Mr. Pennock's children and his sister. Mr.
Pennock, co-trustee with First Bank, National Association of this trust,
has sole voting and investment authority for this trust.
(4) Not included are 4,460 shares owned by certain family members of Mr.
Pennock, as to which Mr. Pennock disclaims beneficial ownership.
(5) Mr. Hale has an interest in 72,037 shares in trusts established under the
will of his mother, of which he is a beneficiary. These shares are included
in the above table.
(6) Includes shares allocated to the individual or group under the Tennant
Company Profit Sharing and Employee Stock Ownership Plan.
ELECTION OF DIRECTORS
Pursuant to the Restated Articles of Incorporation of the Company,
directors are elected for staggered terms of three years, with approximately
one-third of the directors to be elected each year.
At the meeting, three directors are to be elected. The Board of Directors
has designated Andrew P. Czajkowski, William A. Hodder and Arthur D. Collins,
Jr. as nominees for election to serve three-year terms ending at the time of the
Annual Meeting in 1998 and until their successors are elected and have
qualified. Mr. Czajkowski and Mr. Hodder are currently directors of the Company
and have previously been elected by the shareholders. Mr. Collins is being
nominated for his first term as a director of the Company. The nominees have
indicated a willingness to serve, but in case any of the nominees is not a
candidate at the Annual Meeting, it is the intention of the persons named in the
enclosed form of Proxy to vote in favor of the other nominees named and to vote
for a substitute nominee in their discretion.
3
<PAGE>
The affirmative vote of a majority of the outstanding shares of Common
Stock present and entitled to vote in person or by proxy on the election of
directors is necessary to elect each nominee. For this purpose, a shareholder
voting through a Proxy who abstains with respect to the election of directors is
considered to be present and entitled to vote on the election of directors at
the meeting, and is in effect a negative vote; but a shareholder (including a
broker) who does not give authority to a Proxy to vote, or withholds authority
to vote, on the election of directors shall not be considered present and
entitled to vote on the election of directors.
The following information is furnished with respect to each nominee for
election as a director and for each director whose term of office will continue
after the meeting:
<TABLE>
<CAPTION>
NAME, AGE AND YEAR OTHER
FIRST ELECTED DIRECTOR PRINCIPAL OCCUPATION DIRECTORSHIPS
---------------------- -------------------- -------------
Nominees for election for terms expiring in 1998 (Class III Directors):
<S> <C> <C>
Andrew P. Czajkowski President and Chief Executive
Age: 59 Officer of Blue Cross Blue Shield
Director Since 1992 of Minnesota.
St. Paul, MN.
Minnesota health care company.
Mr. Czajkowski has been an executive
officer of Blue Cross Blue Shield of
Minnesota for more than the past
five years.
William A. Hodder Chairman and Chief Executive Officer Donaldson
Age: 63 of Donaldson Company, Inc. Company, Inc.
Director Since 1975 Minneapolis, MN.
Manufacturer of filtration devices Norwest
for heavy-duty mobile diesel engines Corporation
and industrial applications. ReliaStar Financial Corp.
SUPERVALU, Inc.
Mr. Hodder has been an executive
officer of Donaldson Company, Inc.
for more than the past five years.
Arthur D. Collins, Jr. President and Chief Operating Officer Medtronic, Inc.
Age: 47 of Medtronic, Inc.
Director Nominee Minneapolis, MN
Manufacturer of therapeutic medical
devices.
Mr. Collins was named Chief Operating
Officer in January 1994 after joining
Medtronic, Inc. as Executive Vice
President and President of Medtronic
International in June 1992. For more
than five years prior to that, Mr.
Collins held various management
positions with Abbott Laboratories,
a diversified healthcare products and
services company.
<CAPTION>
Directors whose terms expire in 1996 (Class I Directors):
<S> <C> <C>
Roger L. Hale Mr. Hale has been President of Dayton Hudson
Age: 60 the Company since January 1975 Corporation
Director Since 1969 and Chief Executive Officer since First Bank System, Inc.
May 1976. He previously served as
Chief Operating Officer from January
1975 to May 1976 and as Vice President
from April 1969 to December 1974.
4
<PAGE>
<CAPTION>
NAME, AGE AND YEAR OTHER
FIRST ELECTED DIRECTOR PRINCIPAL OCCUPATION DIRECTORSHIPS
---------------------- -------------------- -------------
<S> <C> <C>
Vernon H. Heath(1) Chairman and Owner of Rosemount Medtronic, Inc.
Age: 66 Office Systems, Inc. SUPERVALU, Inc.
Director From 1979-1987 Lakeville, MN.
and Since 1989 Manufacturer of open office
furniture systems.
Retired Chairman and Chief
Executive Officer
of Rosemount, Inc.
Eden Prairie, MN.
Manufacturer of measurement
and control instruments.
Mr. Heath has been chairman and
owner of Rosemount Office Systems,
Inc., since November 1994. He was
an executive officer of Rosemount,
Inc., for more than five years prior
to his retirement in 1994. Rosemount,
Inc., is a subsidiary of Emerson
Electric Co.
Delbert W. Johnson Chairman and Chief Executive Officer Ault, Inc.
Age: 56 of Pioneer Metal Finishing. Coherenet
Director Since 1993 Minneapolis, MN. Communications
Specialist in metal finishing. Systems Corp.
First Bank System, Inc.
Mr. Johnson has been an executive Safeguard
officer of Pioneer Metal Finishing Scientifics, Inc.
for more than the past five years.
<CAPTION>
Directors whose terms expire in 1997 (Class II Directors):
<S> <C> <C>
David C. Cox President and Chief Executive Officer National Computer
Age: 57 of Cowles Media Company. Systems, Inc.
Director Since 1991 Minneapolis, MN. ReliaStar Financial Corp.
Publisher of newspapers, magazines and
related ancillary products.
Mr. Cox has been an executive officer
of Cowles Media Company for more than
the past five years.
William I. Miller Chairman of Irwin Financial Cummins Engine
Age: 38 Corporation Company, Inc.
Director Since 1994 Columbus, IN. EuroPacific Growth
Interrelated group of financial Fund
services companies. Irwin Financial
Corporation
Mr. Miller has been Chairman of Irwin New Perspective
Financial Corporation since 1990. Fund
Prior to that time, he served as
President of Irwin Management Company,
Inc., a family investment management
firm, for seven years.
5
<PAGE>
<CAPTION>
NAME, AGE AND YEAR OTHER
FIRST ELECTED DIRECTOR PRINCIPAL OCCUPATION DIRECTORSHIPS
---------------------- -------------------- -------------
<S> <C> <C>
Arthur R. Schulze, Jr. Retired Vice Chairman of the Inter-Regional
Age: 64 Board of General Mills, Inc. Financial Group, Inc.
Director Since 1982 Golden Valley, MN. Sealright Co., Inc.
A diversified consumer
products company.
Mr. Schulze was an executive
officer of General Mills, Inc.
for more than five years prior
to his retirement in 1993.
<FN>
(1) Roger L. Hale, a director and executive officer of the Company, is a first
cousin of RIchard M. Adams, a Vice President of the Company.
(2) By Board guidelines, Mr. Heath will resign from the Board of Directors
after the meeting, and before the expiration of his term as a director.
The resulting vacancy could be filled, for the balance of Mr. Heath's
term, by a majority of the remaining directors.
</TABLE>
During 1994, the Board of Directors met on five occasions. The Board of
Directors has an Audit Committee composed of Messrs. Cox, Czajkowski, Schulze
and Johnson, which met on three occasions during 1994. The primary function of
the Audit Committee is to assist the Board in fulfilling its fiduciary
responsibilities relating to the Company's internal control procedures and
accounting, financial and reporting practices. The Board has an Executive
Compensation Committee composed of Messrs. Heath, Cox, Hodder, Miller and Ms.
Stoney (who is currently a director but who is not standing for reelection at
the meeting), which met on three occasions during 1994. The primary function of
the Executive Compensation Committee is to review and develop executive
compensation plans of the Company and determine the compensation of officers.
The Board has designated an Executive Committee composed of Messrs. Hale, Heath,
Hodder and Schulze, which did not meet during 1994. The primary function of the
Executive Committee is to exercise the authority of the Board of Directors and
the management of the business of the Company in the intervals between meetings
of the Board of Directors. The Executive Committee also serves as the Nominating
Committee of the Board, and in this capacity it advises and makes
recommendations to the Board on matters concerning the selection of candidates
as nominees for election as directors. Shareholders who wish to suggest
qualified candidates to the Committee should write to Bruce J. Borgerding,
Secretary of the Company, at 701 North Lilac Drive, P.O. Box 1452, Minneapolis,
Minnesota 55440, stating in detail the candidate's qualifications for
consideration by the Committee. As noted in the last paragraph of this section
of the Proxy Statement, if a shareholder wishes to nominate a director other
than a person nominated by or on behalf of the Board of Directors, he or she
must comply with certain procedures set out in the Company's Restated Articles
of Incorporation. The Board also has designated a Special Litigation Committee
composed of Mr. Czajkowski and Ms. Stoney, which did not meet during 1994. All
incumbent directors attended more than 75% of the aggregate number of meetings
of the Board and committees on which they served during 1994.
Non-management directors of the Company received an annual retainer plus
$750 for each meeting or committee meeting of the Board of Directors during
1994. Pursuant to the Tennant Company Restricted Stock Plan for Nonemployee
Directors (the "Director Plan"), the annual retainer is paid in the form of
Restricted Stock. Restricted Stock for this purpose is generally issued once
every three Board Years (as defined in the Director Plan), in an amount equal to
the anticipated annual retainer for the Board Year then commencing and the next
two succeeding Board Years, based on the then Fair Market Value (as defined in
the Director Plan) of such Restricted Stock. On May 7, 1993 each non-management
director was issued 1,035 shares of Restricted Stock, based on a Fair Market
Value of $40.578 per share, in payment of the annual retainer for the three
Board Years commencing May 7, 1993. The Director Plan provides that the
restrictions on the Restricted Stock will lapse only upon the first to occur of
(a) the death of the director, (b) the disability of the director preventing
continued service on the Board, (c) retirement of the director from the Board in
accordance with any policy on retirement of Board members then in effect, (d)
the termination of service as a director by reason of resignation at the request
of the Board, the director's failure to have been nominated for re-election to
the Board or to have been re-elected by the shareholders, or the director's
removal by the shareholders, or (e) a change in control of the Company (as
defined in the Director Plan). In no event will the restrictions lapse prior to
six months after the date of issuance.
6
<PAGE>
Upon the occurrence of an event causing the restrictions to lapse, Restricted
Stock issued to the director in payment for Board Years commencing following the
occurrence of the event is forfeited and returned to the Company. As a result
of the proposed amendments to and restatement of the Director Plan described
under "Approval of Amendments to and Restatement of Restricted Stock Plan for
Nonemployee Directors," on January 1, 1995, each non-management director was
issued an additional 203 shares of Restricted Stock, based on a Fair Market
Value of $46.15 per share, in connection with the annual retainer for the three
Board Years commencing May 7, 1993, subject to shareholder approval of such
amendments to and restatement of the Director Plan at the meeting.
Under the Company's Restated Articles of Incorporation, no person (other
than a person nominated by or on behalf of the Board of Directors) shall be
eligible for election as a director at any annual or special meeting of
shareholders unless a written request that his or her name be placed in
nomination is received from a shareholder of record by the Secretary of the
Company not less than 75 days prior to the date fixed for the meeting, together
with the written consent of such person to serve as a director.
EXECUTIVE COMPENSATION
EXECUTIVE COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
OVERVIEW AND PHILOSOPHY. The Executive Compensation Committee of the Board
of Directors is composed entirely of outside directors and is responsible for
reviewing and developing executive compensation plans of the Company. In
addition, the Executive Compensation Committee, pursuant to authority delegated
by the Board, determines on an annual basis the compensation to be paid to the
Chief Executive Officer and each of the other executive officers of the Company.
The Committee also is charged with periodically reviewing the Board of Directors
compensation and, when appropriate, recommending to the Board any changes.
The objectives of the Company's executive compensation program are to:
- Motivate executives to achieve corporate goals by placing a
significant portion of pay at risk.
- Provide a strong link between the Company's short- and long-term
goals and executive compensation.
- Provide competitive total compensation in order to attract and retain
high-caliber key executives critical to the long-term success of the
Company.
- Align the executives' interests with those of the shareholders by
providing a significant portion of compensation in Company Common
Stock.
The executive compensation program is intended to provide an overall level
of compensation opportunity that is competitive with other U.S. durable goods
manufacturing companies. To determine competitiveness, the Committee annually
uses sales volume adjusted data from a top-management compensation survey. This
data is verified every three to four years through the use of an outside
consultant which compares all aspects of the Company's executive compensation
with that of other similar companies. Actual compensation levels may be greater
or less than average competitive levels depending on annual and long-term
Company performance, individual performance against goals set at the beginning
of the year, and scope of responsibilities as compared to a similar position
within the surveys. The Executive Compensation Committee uses its discretion to
set executive compensation at levels warranted in its judgment by external,
internal or individual circumstances.
The Company does not have a policy with respect to the limit under the
Internal Revenue Code Section 162(m) on the deductibility of the qualifying
compensation paid to its executives, as it is likely for the near future that
all such compensation will be deductible by the Company.
7
<PAGE>
EXECUTIVE COMPENSATION PROGRAM. The Company's executive compensation
program is comprised of base salary, annual cash incentive compensation and
long-term incentive compensation in the form of Performance Share grants,
Restricted Stock grants and, assuming shareholder approval of the 1995 Stock
Incentive Plan, stock options (see "Approval of 1995 Stock Incentive Plan").
All of the long-term plans have a significant portion of their payout in Company
Common Stock. In addition, executives receive various benefits, including
medical and retirement plans, generally available to employees of the Company.
BASE SALARY. Base salary levels for the Company's executives are
competitively set relative to the average of other U.S. durable goods
manufacturing companies of similar size. In determining salaries, the Executive
Compensation Committee also takes into account individual experience,
performance, and scope of responsibility, although no particular weight is given
to any one factor.
ANNUAL CASH INCENTIVE COMPENSATION. The purpose of the annual cash
incentive program is to provide a direct financial incentive in the form of an
annual cash bonus to executives to achieve their business units' and/or the
Company's annual goals. Target bonus awards are set at a level consistent with
the averages of other U.S. durable goods manufacturers, after adjusting for
sales volume. In fiscal 1994, the following performance measures and weightings
were selected: Company sales growth (35%), Company return on average invested
capital (35%), Company or Business Unit expense control (10%), and Company or
Business Unit asset management (20%).
STOCK INCENTIVE PLANS. The stock incentive plans are the Company's long-
term incentive plans for executive officers and key managers. The objectives of
the program are to align executive and shareholder long-term interests by
creating a strong and direct link between executive pay and shareholder return,
and to enable executives to develop and maintain a significant, long-term
ownership position in the Company's Common Stock. In order to better define for
executives the minimum amount of stock that should be held, the Executive
Compensation Committee established in 1993 the following executive stock holding
guidelines: CEO - 6 x base salary; Vice Presidents - 4 x base salary; Operating
Management - 2 x base salary. Each year the Committee reviews the progress of
each executive towards those goals.
The 1992 Stock Incentive Plan authorizes the Executive Compensation
Committee to award executives Performance Share grants and shares of Restricted
Stock. Performance Share grants are made annually. Payout is based on Company
performance measured by return on average invested capital and sales growth
during the four-year performance period. Each of these measures are given
approximately equal weight. Restricted Stock grants are made annually and vest
100% at the end of the restriction period. Prior grants of Restricted Stock and
Performance Shares were not a factor in determining grant sizes for 1994. The
Plan provides for payout of Performance Shares in the form of Company stock and
cash. The amounts of the awards increase as a function of higher salary and
position in the Company. The size of the awards, as a percent of base salary,
is reviewed and adjusted as necessary every three to four years to ensure their
competitiveness. The last review was performed by Hewitt Associates in late
1994. This survey showed that Tennant's long-term portion of executive
compensation was substantially below market average. As a result, a new stock
incentive plan was developed, i.e., the 1995 Stock Incentive Plan, for which
shareholder approval is being requested (see "Approval of 1995 Stock Incentive
Plan"). A copy of the proposed Plan is attached as Appendix A to this Proxy
Statement. This Plan, if approved by the shareholders, gives wider latitude to
the Committee in the types of grants that can be given to executives and other
key managers, i.e., Restricted Stock, Performance Shares, Options, Stock
Appreciation Rights and Other Stock-Based Awards.
CHIEF EXECUTIVE OFFICER COMPENSATION. Mr. Hale's fiscal 1994 base salary
and incentive award were determined by the Committee in accordance with the
methodology described above.
Base Salary - Mr. Hale's base salary for fiscal 1994 was $327,132 which
approximates the market average for durable goods
manufacturing companies of similar size.
Annual Incentive - Mr. Hale's cash incentive award for fiscal 1994 was
$260,097. This amount was based on sales growth of 27%
(vs. 3% in 1993), return on average invested capital of
19% (vs. 14% in 1993), inventory turnover of 3.2 (vs.
2.8 in 1993), receivables of 51 days sales outstanding
(vs. 50 in 1993), and expense as a percent of sales of
34% (vs. 36% in 1993).
8
<PAGE>
Long-Term Performance Grants - Mr. Hale received in 1994 a non-vested
Performance Share grant equal to 50% of his
base salary, a vested performance share
grant equal to 13% of his base salary (in
lieu of a previous salary increase), and a
Restricted Stock grant equal to 10% of his
base salary.
Vernon H. Heath, Chairman David C. Cox
William A. Hodder Janice D. Stoney
William I. Miller
Members of the Executive Compensation Committee
SUMMARY COMPENSATION TABLE
The following table sets forth the cash and noncash compensation for each
of the last three fiscal years awarded to or earned by the Chief Executive
Officer of the Company and the four other most highly compensated executive
officers of the Company (the "named executive officers").
<TABLE>
<CAPTION>
LONG-TERM
COMPENSATION
------------------
ANNUAL COMPENSATION AWARDS PAYOUTS
------------------------------------------------------------------------------------------------
RESTRICTED ALL OTHER
NAME AND STOCK LTIP COMPEN-
PRINCIPAL POSITION YEAR SALARY BONUS AWARD(S)(1) PAYOUTS(2) SATION(3)
($) ($) ($) ($) ($)
-------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Roger L. Hale 1994 327,132 260,097 53,156 101,400 25,426
President and 1993 315,777 0 31,542 72,811 8,305
Chief Executive Officer 1992 313,664 92,929 33,078 157,383 11,187
Douglas R. Hoelscher 1994 182,436 84,614 18,818 34,394 30,417
Senior Vice President 1993 161,507 0 16,128 25,352 12,248
1992 162,325 28,054 16,909 56,845 17,805
Richard A. Snyder 1994 173,880 80,646 24,008 33,866 30,381
Vice President, 1993 163,449 0 16,338 24,845 12,711
Treasurer and 1992 161,692 27,944 16,909 55,893 18,884
Chief Financial Officer
Janet M. Dolan 1994 148,814 71,294 21,728 23,204 9,220
Senior Vice President 1993 125,155 0 12,516 15,008 2,328
and General Counsel 1992 117,240 20,262 12,321 20,852 4,283
Keith D. Payden 1994 149,148 69,175 22,650 12,741 25,932
Vice President 1993 131,416 0 9,828 9,177 10,123
1992 119,974 16,361 8,288 20,203 13,602
<FN>
(1) The value of the Restricted Stock awards was determined by multiplying the
fair market value of the Company's Common Stock on the date of grant by the
number of shares awarded. As of December 31, 1994, and using the fair
market value of the Company's Common Stock as of that date, the number and
value of aggregate Restricted Stock award holdings were as follows: 1,096
shares ($52,882) by Mr. Hale, 388 shares ($18,721) by Mr. Hoelscher, 495
shares ($23,884) by Mr. Snyder, 448 shares ($21,616) by Ms. Dolan, and 467
shares ($22,533) by Mr. Payden. These shares of Restricted Stock have a
two-year vesting period, from respective dates of issuance. Dividends are
paid on Restricted Stock awards at the same time and rate as paid to all
shareholders.
9
<PAGE>
(2) Amounts represent the dollar value of Performance Shares paid out in each
fiscal year. Performance Shares were paid in Common Stock on a share-for-
share basis with respect to a minimum of 60% (for 1992 payments) or 50%
(for 1993 and 1994 payments) of the Performance Shares earned (valued, for
this purpose, as of December 31 of the respective years of payment), and
the balance was paid in cash. The Tennant Company 1992 Stock Incentive
Plan allows participants to defer receipt of payments of Performance
Shares. Participants who elect such a deferral are eventually paid
entirely in Common Stock and will also receive supplemental shares in
amounts that roughly approximate dividends that were not received as a
result of the deferral. Payments thus deferred are reported in the table
for the year in which they would have been paid but for such deferral
election.
(3) Amounts represent payments under the Company's Profit Sharing and Employee
Stock Ownership Plan and the Company's Excess Benefit Plan as follows: (a)
Profit Sharing Contributions (up to 5% of certified earnings, the first 2%
of which are contributed to participants' accounts through the allocation
of Company Common Stock from the unallocated ESOP reserve, with the
remainder (if any) of such contributions paid to the participants in cash)
were paid as follows for 1992, 1993 and 1994, respectively: $4,577.20,
$2,064.07 and $12,100.87 to Mr. Hale, $3,807.58, $1,413.51 and $7,138.74 to
Mr. Hoelscher, $3,792.73, $1,430.51 and $1,944.64 to Mr. Snyder, $2,750.04,
$1,095.36 and $6,411.24 to Ms. Dolan, and $2,726.70, $1,150.15 and
$6,383.57 to Mr. Payden; (b) employer Matching Contributions relating to
employee Individual Shelter Contributions (Internal Revenue Code Section
401(k) contributions) were paid as follows for 1992, 1993 and 1994,
respectively, through the allocation of Company Common Stock from the
unallocated ESOP reserve: $3,054.80, $1,785.96 and $3,234.00 to Mr. Hale,
$1,184.78, $983.97 and $1,094.62 to Mr. Hoelscher, $2,328.87, $1,799.84 and
$2,434.32 to Mr. Snyder, $1,532.88, $1,232.19 and $1,405.89 to Ms. Dolan,
and $1,699.58, $1,445.58 and $1,959.84 to Mr. Payden; (c) Profit Related
Retirement Contributions were paid as follows for 1992, 1993 and 1994,
respectively: $12,812.51, $8,850.61 and $11,145.00 to Mr. Hoelscher,
$12,762.53, $8,957.02 and $11,145.00 to Mr. Snyder, and $9,175.35,
$7,201.60 and $11,145.00 to Mr. Payden; and (d) Excess Benefit Plan
payments were made as follows for 1992, 1993 and 1994, respectively:
$3,554.67, $4,446.60 and $10,090.43 to Mr. Hale, $0.00, $0.00 and
$11,037.80 to Mr. Hoelscher, $0.00, $523.14 and $9,856.76 to Mr. Snyder,
$0.00, $0.00 and $1,402.17 to Ms. Dolan, and $0.00, $325.67 and $6,387.57
to Mr. Payden.
</TABLE>
LONG-TERM INCENTIVE PLAN AWARDS IN LAST FISCAL YEAR
The following table summarizes Performance Share awards made during the
last fiscal year under the Tennant Company 1992 Stock Incentive Plan for the
named executive officers.
<TABLE>
<CAPTION>
ESTIMATED FUTURE PAYOUT SUNDER
NON-STOCK PRICE-BASED PLANS(1)
----------------------------------------
NUMBER OF PERFORMANCE
SHARES, UNITS OR OTHER PERIOD
OR OTHER UNTIL MATURATION THRESHOLD TARGET MAXIMUM
NAME RIGHTS(#) OR PAYOUT ($) ($) ($)
--------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Roger L. Hale 4,385 4 years 0 211,576 492,970
Douglas R. Hoelscher 1,592 4 years 0 76,814 178,959
Richard A. Snyder 1,258 4 years 0 60,699 141,421
Janet M. Dolan 1,012 4 years 0 48,829 113,774
Keith D. Payden 1,079 4 years 0 52,062 121,301
10
<PAGE>
<FN>
(1) Payout of Performance Share awards is based on Company performance during a
four-year performance period. Payout can range from 0% to 233% of the
performance grant, which represents the threshold and maximum payouts,
respectively. Payout of 100% of the performance grant represents the
target payout. Awards are payable in Common Stock of the Company on a
share-for-share basis with respect to 50% of the Performance Shares earned
and in cash with respect to 50% of the Performance Shares earned, unless
the participant elects in advance to receive a greater portion in stock.
The value of the estimated future payouts was determined using the fair
market value of the Company's Common Stock on December 31, 1994.
The Executive Compensation Committee may provide at the time Performance
Share awards are made that all or a portion of the Performance Shares
awarded will be "Vested Performance Shares." Such Vested Performance
Shares will be earned upon termination of the participant's employment
prior to the end of the performance period, whether such termination of
employment occurs by reason of retirement, death, disability, or otherwise.
Of the total Performance Shares set forth in the table, the following
number of Performance Shares are Vested Performance Shares: Mr. Hale, 905;
Mr. Hoelscher, 427; Mr. Snyder, 407; Ms. Dolan, 327; and Mr. Payden, 349.
</TABLE>
MANAGEMENT AGREEMENTS
The Company is a party to management agreements (the "Agreements") with
certain of the executive officers of the Company. The purpose of each of the
Agreements is to encourage the executive (a) to continue to carry out his or her
duties in the event of the possibility of a change in control of the Company,
and (b) to remain in the service of the Company in order to facilitate an
orderly transition in the event of an actual change in control of the Company.
Under the terms of each of the Agreements, if, between the occurrence of a
change in control of the Company and the three-year anniversary date of such
occurrence, an executive's employment is involuntarily terminated (for any
reason other than death, disability, or for cause), the executive will be
entitled to receive severance compensation. If an executive resigns after
certain changes in the executive's duties, compensation, benefits or work
location, the executive shall be deemed to have been involuntarily terminated.
Severance compensation is payable also if the termination occurs before the
change of control but after steps to change control have been taken. Severance
compensation consists of three times the executive's average annual taxable
compensation during the five taxable years preceding the change in control plus
the continuation of certain insurance benefits, minus $1.00, subject to
reduction for payments under employee benefit plans of the Company contingent
upon a change in control of the Company and for the amount of any other
severance compensation paid by the Company to the executive under any other
agreement of the Company providing compensation in the event of involuntary
termination. As of the date of this Proxy Statement, the total severance
compensation for Mr. Hale would be $1,739,306; Mr. Hoelscher, $780,716;
Mr. Snyder, $767,360; Ms. Dolan, $460,577 and Mr. Payden, $452,027. The Company
also will reimburse an executive for legal fees and expenses incurred in
resolving disputes under the Agreement.
TENNANT COMPANY DEFINED BENEFIT RETIREMENT PLAN
The Tennant Company Defined Benefit Retirement Plan provides fixed
retirement benefits for certain employees of the Company. Based upon certain
assumptions, including continuation of the Retirement Plan as of January 1,
1995, without amendment, the following table shows the annual retirement
benefits (including the additional retirement benefits described in the second
sentence under "Tennant Company Excess Benefit Plan" below) which would be
payable as a straight life annuity to persons at various salary levels after
specified years of service.
11
<PAGE>
<TABLE>
<CAPTION>
YEARS OF CREDIT SERVICE
--------------------------------------------------------------
ANNUAL
COMPENSATION 10 15 20 25 30
------------ --------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C>
$ 50,000 $ 5,519 $ 8,279 $ 11,039 $ 13,798 $ 16,558
100,000 12,519 18,779 25,039 31,298 37,558
150,000 19,519 29,279 39,039 48,798 58,558
200,000 26,519 39,779 53,039 66,298 79,558
250,000 33,519 50,279 67,039 83,798 100,558
300,000 40,519 60,779 81,039 101,298 121,558
350,000 47,519 71,279 95,039 118,798 142,558
400,000 54,519 81,779 109,039 136,298 163,558
450,000 61,519 92,279 123,039 153,798 184,558
500,000 68,519 102,779 137,039 171,298 205,558
550,000 75,519 113,279 151,039 188,798 226,558
600,000 82,519 123,779 165,039 206,298 247,558
</TABLE>
Under the Retirement Plan, benefits are payable based upon a percentage of
a participant's final average pay excluding bonus, overtime or other special
forms of remuneration. Currently under ERISA, as amended, the maximum annual
amount that can be paid during 1995 to any individual is $120,000. Amounts in
excess of that maximum as well as amounts based on compensation that is excluded
from the Plan formula by ERISA or the terms of the Plan are covered under the
Tennant Company Excess Benefit Plan. The years of credited service under the
Retirement Plan for executive officers are: Mr. Hale 13 years and Ms. Dolan 9
years. Were Mr. Hale or Ms. Dolan to retire currently, the final average pay
used by the Plan to determine benefits payable pursuant to the above table as of
December 31, 1994 would be $411,422 for Mr. Hale and $145,471 for Ms. Dolan.
The figures above are not subject to deductions for Social Security or
other offset amounts.
TENNANT COMPANY EXCESS BENEFIT PLAN
An Excess Benefit Plan provides additional retirement benefits for highly
compensated employees participating in the Tennant Company Profit Sharing and
Employee Stock Ownership Plan or the Retirement Plan. Employees participating
in the Excess Benefit Plan will receive a retirement benefit equal to the
additional benefits which would have been provided under the Retirement Plan if
(a) the limitations imposed by Sections 401(a)(17) and 415 of the Internal
Revenue Code were not applicable, and (b) management bonuses were included in
certified earnings for the year in which they were earned. Employees
participating in the Excess Benefit Plan also receive cash payments of amounts
which would have been contributed by the Company to the Tennant Company Profit
Sharing and Employee Stock Ownership Plan as Profit Related Retirement
Contributions or Matching Contributions if various limitations imposed by the
Internal Revenue Code were not applicable.
COMPARATIVE STOCK PERFORMANCE
The graph below compares the cumulative total shareholder return on the
Common Stock of the Company for the last five fiscal years with the cumulative
total return on the Media General Composite Index and the index for NASDAQ
stocks--manufacturing machinery, non-electrical, published by the Center for
Research in Security Prices of the University of Chicago graduate School of
Business over the same period (assuming the investment of $100 in the Company's
Common Stock, the Media General Composite Index and the Center for Research in
Security Prices published Industry Index on December 31, 1989, and reinvestment
of all dividends).
12
<PAGE>
COMPARISON OF FIVE-YEAR CUMULATIVE TOTAL RETURN
[Graph]
Legend:
- Tennant Company (TANT) - Published Industry Index - Overall Stock Market
provided by the Center for Performance (Media
Research in Security Prices General Composite
(CRSP), University of Chicago Index -- Approx.
Graduate School of Business 7,000 Companies)
(CRSP Index for NASDAQ
Stocks - Manufacturing
Machinery, Non-electrical, SIC
Codes 3500 through 3599)
ASSUMES $100 INVESTED ON DECEMBER 31, 1989, WITH DIVIDENDS REINVESTED.
1989 1990 1991 1992 1993 1994
------------------------------------------------------------------------------
Tennant Company 100.0 103.3 109.8 134.5 151.7 160.5
------------------------------------------------------------------------------
Published Industry
Index 100.0 98.5 137.1 180.7 185.1 197.4
------------------------------------------------------------------------------
Overall Stock
Market Performance 100.0 93.0 120.0 124.8 143.3 142.1
------------------------------------------------------------------------------
SECTION 16(A) REPORTING
Section 16(a) of the Securities Exchange Act of 1934 requires the Company's
directors and executive officers to file initial reports of ownership and
reports of changes in ownership with the Securities and Exchange Commission.
Directors and executive officers are required by Commission regulations to
furnish the Company with copies of all Section 16(a) forms they file. Based
solely on a review of the copies of such forms furnished to the Company and
written representations from the Company's directors and executive officers, all
Section 16(a) filing requirements were met for the year ended December 31, 1994.
13
<PAGE>
APPROVAL OF 1995 STOCK INCENTIVE PLAN
INTRODUCTION
The Company's Board of Directors, following approval by the Executive
Compensation Committee of the Board, authorized the adoption of the Tennant
Company 1995 Stock Incentive Plan (the "1995 Plan") effective as of February 10,
1995, subject to the approval of the 1995 Plan by the shareholders no later than
May 31, 1995. A copy of the 1995 Plan is attached as Appendix A to this Proxy
Statement, and this discussion is qualified in its entirety by reference to the
full text of the 1995 Plan.
The Executive Compensation Committee and the Board of Directors believe
that stock-based compensation programs are a key element in achieving the
Company's continued financial and operational success. The Company's
compensation programs have been designed to motivate key personnel to produce a
superior shareholder return.
The 1995 Plan does not replace the Company's 1992 Stock Incentive Plan,
under which approximately 148,000 shares of Company Common Stock remain
available for awards. Notwithstanding approval of the 1995 Plan by the
shareholders, additional awards may be made under the 1992 Stock Incentive Plan
and the Company's Restricted Stock Plan for Nonemployee Directors (the "Director
Plan") and, assuming shareholder approval of amendments to and restatement of
the Director Plan (see "Approval of Amendments to and Restatement of Restricted
Stock Plan for Nonemployee Directors"), under the Director Plan as so amended
and restated (the "Restated Director Plan"). Grants and awards heretofore or
hereafter made under such plans will be governed by such plans.
The 1995 Plan has been designed to meet the requirements of Section 162(m)
of the Internal Revenue Code of 1986, as amended (the "Code"), regarding
deductibility of executive compensation. The basic features of the Plan are
summarized below.
PURPOSE
The purpose of the 1995 Plan is to motivate key personnel to produce a
superior return to the shareholders of the Company by offering such individuals
an opportunity to realize stock appreciation, by facilitating stock ownership,
and by rewarding them for achieving a high level of corporate performance. The
1995 Plan is also intended to facilitate recruiting and retaining key personnel
of outstanding ability.
ADMINISTRATION
The 1995 Plan will be administered by a committee (the "Committee") of
three or more directors who are "disinterested persons" within the meaning of
Rule 16b-3 ("Exchange Act Rule 16b-3") under the Securities Exchange Act of 1934
(the "Exchange Act"). The Company currently expects that the Executive
Compensation Committee of the Board of Directors will be the Committee that
administers the 1995 Plan, all of whose members are both "disinterested
directors" for purposes of Exchange Act Rule 16b-3 and "outside directors" for
purposes of Section 162(m) of the Code. The Committee will have the exclusive
power to make awards under the 1995 Plan and to determine when and to whom
awards will be granted, and the form, amount and other terms and conditions of
each award, subject to the provisions of the 1995 Plan. The Committee will have
the authority to interpret the 1995 Plan and any award or agreement made under
the 1995 Plan, to establish, amend, waive and rescind any rules and regulations
relating to the administration of the 1995 Plan, to determine the terms and
provisions of any agreements entered into under the 1995 Plan (not inconsistent
with the 1995 Plan), and to make all other determinations necessary or advisable
for the administration of the 1995 Plan. The Committee may delegate all or part
of its responsibilities under the 1995 Plan to persons who are not
"disinterested persons" within the meaning of Exchange Act Rule 16b-3 for
purposes of determining and administering awards solely to employees who are not
then subject to the reporting requirements of Section 16 of the Exchange Act.
14
<PAGE>
ELIGIBILITY AND NUMBER OF SHARES
All employees of the Company and its affiliates will be eligible to receive
awards under the 1995 Plan at the discretion of the Committee. Awards other than
incentive stock options (see "Types of Awards" below) also may be awarded by the
Committee to individuals who are not employees but who provide services to the
Company or its affiliates in the capacity of an independent contractor. The
Company and its affiliates currently have approximately 1,900 full-time
employees.
As of February 10, 1995, the effective date of the 1995 Plan, the total
number of shares of Company Common Stock available for distribution under the
1995 Plan was 250,000 (subject to adjustment for future stock splits, stock
dividends and similar changes in the capitalization of the Company, including
the two-for-one stock split that will become effective on April 26, 1995).
After the April 1995 stock split, the number of shares available for
distribution under the 1995 Plan will be adjusted to 500,000 shares (less
shares, adjusted for the stock split, that are the subject of outstanding awards
that have been made subject to shareholder approval). No participant may
receive any combination of options and stock appreciation rights relating to
more than 50,000 (100,000 split-adjusted) shares in the aggregate in any year
under the 1995 Plan. No participant may receive performance shares relating to
more than 50,000 (100,000 split-adjusted) shares pursuant to awards in any year
under the 1995 Plan. No more than 25% of all shares subject to the 1995 Plan
may be granted in the aggregate pursuant to restricted stock and other stock-
based awards (as defined in "Types of Awards" below).
The 1995 Plan provides that all awards are to be evidenced by written
agreements containing the terms and conditions of the awards. Such agreements
are subject to amendment, including unilateral amendment by the Company (with
the approval of the Committee) unless such amendments are deemed by the
Committee to be materially adverse to the recipient and are not required as a
matter of law. Any shares of Company Common Stock subject to an award under the
1995 Plan which are not used because the award expires without all shares
subject thereto having been issued or because the terms and conditions of the
award are not met may again be used for an award under the 1995 Plan. Any
shares that are the subject of awards which are subsequently forfeited to the
Company pursuant to the restrictions applicable to such award also may again be
used for an award under the 1995 Plan. Moreover, if a participant exercises a
stock appreciation right, any shares covered by the stock appreciation right in
excess of the number of shares issued (or, in the case of a settlement in cash
or any other form of property, in excess of the number of shares equal in value
to the amount of such settlement, based on the fair market value, as defined in
the 1995 Plan, of such shares on the date of such exercise) may again be used
for an award under the 1995 Plan. If, in accordance with the 1995 Plan, a
participant uses shares to pay a purchase or exercise price, including an option
exercise price, or to satisfy tax withholdings, such shares may again be used
for an award under the 1995 Plan.
TYPES OF AWARDS
The types of awards that may be granted under the 1995 Plan include
incentive and nonqualified stock options, stock appreciation rights, restricted
stock, performance shares and other stock-based awards (awards of, or based on,
stock other than options, stock appreciation rights, restricted stock or
performance shares). Subject to certain restrictions applicable to incentive
stock options, awards will be exercisable by the recipients at such times as are
determined by the Committee, but in no event may the term of an award be longer
than ten years after the date of grant.
In addition to the general characteristics of all of the awards described
in this Proxy Statement, the basic characteristics of awards that may be granted
under the 1995 Plan are as follows:
INCENTIVE AND NONQUALIFIED STOCK OPTIONS. Both incentive and nonqualified
stock options may be granted to recipients at such exercise prices as the
Committee may determine but not less than 100% of their fair market value (as
defined in the 1995 Plan) as of the date the option is granted. Stock options
may be granted and exercised at such times as the Committee may determine,
except that, unless applicable federal tax laws are modified, (a) no incentive
stock options may be granted more than ten years after the effective date of the
1995 Plan, (b) an incentive stock option shall not be exercisable more than ten
years after the date of grant and (c) the
15
<PAGE>
aggregate fair market value of the shares of Company Common Stock with respect
to which incentive stock options may first become exercisable in any calendar
year for any employee may not exceed $100,000 under the 1995 Plan or any other
plan of the Company. Additional restrictions apply to an incentive stock option
granted to an individual who beneficially owns more than 10% of the combined
voting power of all classes of stock of the Company.
The purchase price payable upon exercise of options may be paid in cash,
or, if the Committee permits, by reducing the number of shares delivered to the
participant or by delivering stock already owned by the participant (where the
fair market value of the shares withheld or delivered on the date of exercise is
equal to the option price of the stock being purchased), or in a combination of
cash and such stock, unless otherwise provided in the related agreement. The
participants may simultaneously exercise options and sell the stock purchased
upon such exercise pursuant to brokerage or similar relationships and use the
sale proceeds to pay the purchase price. The agreement relating to any option
may provide for the issuance of "reload" options pursuant to which, subject to
the terms and conditions established by the Committee and any applicable
requirements of Exchange Act Rule 16b-3 or any other applicable law, the
participant will, either automatically or subject to subsequent Committee
approval, be granted a new option when the payment of the exercise price of the
original option, or the payment of tax withholdings, is made through the
delivery to the Company of shares held by such participant. The reload option
will be an option to purchase the number of shares provided as consideration for
the exercise price and in payment of taxes in connection with the exercise of
the original option and will have a per share exercise price equal to the fair
market value of a share as of the date of exercise of the original option.
STOCK APPRECIATION RIGHTS AND PERFORMANCE SHARES. The value of a stock
appreciation right granted to a recipient is determined by the appreciation in
Company Common Stock, subject to any limitations upon the amount or percentage
of total appreciation that the Committee may determine at the time the right is
granted. The recipient receives all or a portion of the amount by which the
fair market value of a specified number of shares, as of the date the stock
appreciation right is exercised, exceeds a price specified by the Committee at
the time the right is granted. The price specified by the Committee must be at
least 100% of the fair market value of the specified number of shares of Company
Common Stock to which the right relates determined as of the date the stock
appreciation right is granted. A stock appreciation right may be granted in
connection with a previously or contemporaneously granted option, or independent
of any option. No stock appreciation right may be exercised less than six
months from the date it is granted unless the recipient dies or becomes
disabled.
Performance shares entitle the recipient to payment in amounts determined
by the Committee based upon the achievement of specified performance targets
during a specified term. With respect to recipients who are "covered employees"
under Section 162(m) of the Code, such performance targets will consist of one
or any combination of two or more of earnings or earnings per share before
income tax (profit before taxes), net earnings or net earnings per share
(profits after taxes), inventory, total, or net operating asset turnover,
operating income, total shareholder return, return on equity, pre-tax and pre-
interest expense return on average invested capital, which may be expressed on a
current value basis, or sales growth, and any such targets may relate to one or
any combination of two or more of corporate, group, unit, division, affiliate or
individual performance. The value in dollars is determined when the award is
earned based on the fair market value of a share on the last day of the
performance period.
Payments with respect to stock appreciation rights and performance shares
may be paid in cash, shares of Company Common Stock or a combination of cash and
shares as determined by the Committee, provided that at least 25% of the value
of vested performance shares must be distributed in the form of stock. The
Committee may require or permit participants to defer the issuance of shares or
the settlement of awards in cash under such rules and procedures as it may
establish under the 1995 Plan.
RESTRICTED STOCK AND OTHER STOCK-BASED AWARDS. Company Common Stock
granted to recipients may contain such restrictions as the Committee may
determine, including provisions requiring forfeiture and imposing restrictions
upon stock transfer. Awards of restricted stock may, in the discretion of the
Committee, provide the participant with dividends and voting rights prior to
vesting. No award of restricted stock may vest earlier than one year from the
date of grant, except in the circumstances provided in the applicable agreement.
The Committee may also from time to time grant awards of unrestricted stock or
other stock-based awards such as awards denominated in stock units, securities
convertible into stock and phantom securities.
16
<PAGE>
TRANSFERABILITY
During the lifetime of a participant to whom an award is granted, only such
participant (or such participant's legal representative or, if so provided in
the applicable agreement in the case of a nonqualified stock option, a permitted
transferee as hereafter described) may exercise an option or stock appreciation
right or receive payment with respect to performance shares or any other award.
No award of restricted stock (prior to the expiration of the restrictions),
options, stock appreciation rights, performance shares or other award (other
than an award of stock without restrictions) may be sold, assigned, transferred,
exchanged, or otherwise encumbered, and any attempt to do so will not be
effective, except that an agreement may provide that (a) an award may be
transferable to a successor in the event of a participant's death and (b) a
nonqualified stock option may be transferable to any member of a participant's
"immediate family" (as such term is defined in Rule 16a-1(e) under the Exchange
Act) or to a trust whose beneficiaries are members of such participant's
"immediate family" or partnerships in which such family members are the only
partners, provided that the participant receives no consideration for the
transfer and such transferred nonqualified stock option will remain subject to
the same terms and conditions as were applicable to such option immediately
prior to its transfer.
ACCELERATION OF AWARDS, LAPSE OF RESTRICTIONS
The Committee may accelerate vesting requirements, performance periods and
the expiration of the applicable term or restrictions, and adjust performance
targets and payments, upon such terms and conditions as are set forth in the
participant's agreement, or otherwise in the Committee's discretion, which may
include, without limitation, acceleration resulting from a "change in control"
or a "fundamental change" (as those terms are defined in the 1995 Plan), or the
participant's death, disability or retirement.
DURATION, ADJUSTMENTS, MODIFICATIONS, TERMINATION
The 1995 Plan will remain in effect until all stock subject to it is
distributed or all awards have expired or lapsed, whichever occurs later, or the
1995 Plan is terminated as described below.
In the event of a "fundamental change," recapitalizations, stock dividends,
stock splits or other relevant changes, the Committee has the discretion to
adjust the number and type of shares available for awards or the number and type
of shares and amount of cash subject to outstanding awards, the option exercise
price of outstanding options, and outstanding awards of performance shares and
payments with regard thereto. Adjustments in performance targets and payments
on performance shares are also permitted upon the occurrence of such events as
may be specified in the related agreements, which may include a "change in
control."
The 1995 Plan also gives the Board the right to amend, modify, terminate or
suspend the Plan, except that amendments to the Plan are subject to shareholder
approval if needed to comply with Exchange Act Rule 16b-3, the incentive stock
option provisions of the Code, their successor provisions, or any other
applicable law or regulation.
Under the 1995 Plan, the Committee may cancel outstanding options and stock
appreciation rights generally in exchange for cash payments to the recipients in
the event of a "fundamental change" (defined as certain dissolutions,
liquidations, mergers, consolidations, statutory share exchanges or other
similar events Involving the Company).
FEDERAL TAX CONSIDERATIONS
The Company has been advised by its counsel that awards made under the 1995
Plan generally will result in the following tax events for United States
citizens under current United States federal income tax laws.
17
<PAGE>
INCENTIVE STOCK OPTIONS. A recipient will realize no taxable income, and
the Company will not be entitled to any related deduction, at the time an
incentive stock option is granted under the 1995 Plan. If certain statutory
employment and holding period conditions are satisfied before the recipient
disposes of shares acquired pursuant to the exercise of such an option, then no
taxable income will result upon the exercise of such option and the Company will
not be entitled to any deduction in connection with such exercise. Upon
disposition of the shares after expiration of the statutory holding periods, any
gain or loss realized by a recipient will be a capital gain or loss. The
Company will not be entitled to a deduction with respect to a disposition of the
shares by a recipient after the expiration of the statutory holding periods.
Except in the event of death, if shares acquired by a recipient upon the
exercise of an incentive stock option are disposed of by such recipient before
the expiration of the statutory holding periods (a "disqualifying disposition"),
such recipient will be considered to have realized as compensation, taxable as
ordinary income in the year of disposition, an amount, not exceeding the gain
realized on such disposition, equal to the difference between the exercise price
and the fair market value of the shares on the date of exercise of the option.
The Company will be entitled to a deduction at the same time and in the same
amount as the recipient is deemed to have realized ordinary income. Any gain
realized on the disposition in excess of the amount treated as compensation or
any loss realized on the disposition will constitute capital gain or loss,
respectively. If the recipient pays the option price with shares that were
originally acquired pursuant to the exercise of an incentive stock option and
the statutory holding periods for such shares have not been met, the recipient
will be treated as having made a disqualifying disposition of such shares, and
the tax consequences of such disqualifying disposition will be as described
above.
The foregoing discussion applies only for regular tax purposes. For
alternative minimum tax purposes an incentive stock option will be treated as if
it were a nonqualified stock option, the tax consequences of which are discussed
below.
NONQUALIFIED STOCK OPTIONS. A recipient will realize no taxable income,
and the Company will not be entitled to any related deduction, at the time a
nonqualified stock option is granted under the 1995 Plan. At the time of
exercise of a nonqualified stock option, the recipient will realize ordinary
income, and the Company will be entitled to a deduction, equal to the excess of
the fair market value of the stock on the date of exercise over the option
price. Upon disposition of the shares, any additional gain or loss realized by
the recipient will be taxed as a capital gain or loss.
STOCK APPRECIATION RIGHTS AND PERFORMANCE SHARES. Generally (a) the
recipient will not realize income upon the grant of a stock appreciation right
or performance share award, (b) the recipient will realize ordinary income, and
the Company will be entitled to a corresponding deduction, in the year cash,
shares of Common Stock or a combination of cash and shares are delivered to the
recipient upon exercise of a stock appreciation right or in payment of the
performance share award and (c) the amount of such ordinary income and deduction
will be the amount of cash received plus the fair market value of the shares of
Common Stock received on the date of issuance. The federal income tax
consequences of a disposition of unrestricted shares received by the recipient
upon exercise of a stock appreciation right or in payment of a performance share
award are the same as described below with respect to a disposition of
unrestricted shares.
RESTRICTED AND UNRESTRICTED STOCK. Unless the recipient files an election
to be taxed under Section 83(b) of the Code, (a) the recipient will not realize
income upon the grant of restricted stock, (b) the recipient will realize
ordinary income, and the Company will be entitled to a corresponding deduction,
when the restrictions have been removed or expire, and (c) the amount of such
ordinary income and deduction will be the fair market value of the restricted
stock on the date the restrictions are removed or expire. If the recipient
files an election to be taxed under Section 83(b) of the Code, the tax
consequences to the recipient and the Company will be determined as of the date
of the grant of the restricted stock rather than as of the date of the removal
or expiration of the restrictions.
With respect to awards of unrestricted stock, (a) the recipient will
realize ordinary income and the Company will be entitled to a corresponding
deduction upon the grant of the unrestricted stock, and (b) the amount of such
ordinary income and deduction will be the fair market value of such unrestricted
stock on the date of grant.
18
<PAGE>
When the recipient disposes of restricted or unrestricted stock, the
difference between the amount received upon such disposition and the fair market
value of such shares on the date the recipient realizes ordinary income will be
treated as a capital gain or loss.
WITHHOLDING
The 1995 Plan permits the Company to withhold from awards an amount
sufficient to cover any required withholding taxes. In lieu of cash, a
participant may elect to cover withholding obligations through a reduction in
the number of shares to be delivered to such participant or by delivery of
shares already owned by the participant. Unless otherwise permitted by the
Committee, the use of stock to satisfy withholding obligations is subject to
certain restrictions if the participant is subject to the reporting requirements
of Section 16 of the Exchange Act.
NEW PLAN BENEFITS
The awards of nonqualified stock options shown below were granted by the
Executive Compensation Committee in February 1995, subject to approval of the
1995 Plan by the shareholders at the 1995 Annual Meeting of Shareholders. The
size of the stock option awards was determined by the Executive Compensation
Committee based on the amount necessary to bring executives up to a level
consistent with the averages of other U.S. durable goods manufacturers, after
adjusting for sales volume.
1995 STOCK OPTION AWARDS TO EMPLOYEES
<TABLE>
<CAPTION>
POTENTIAL REALIZABLE VALUE
AT ASSUMED ANNUAL RATES
OF STOCK PRICE APPRECIATION
FOR THE OPTION TERM
--------------------------------
OPTIONS EXERCISE EXPIRATION
NAME AND POSITION GRANTED PRICE DATE 0% 5%(2) 10%(2)
(#) ($/SH)(1) ($) ($) ($)
----------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Roger L. Hale 18,500 47.375 2/10/05 0 551,187 1,396,816
President and
Chief Executive Officer
Douglas R. Hoelscher 2,900 47.375 2/10/05 0 86,402 218,960
Senior Vice President
Richard A. Snyder 2,900 47.375 2/10/05 0 86,402 218,960
Vice President, Treasurer and
Chief Financial Officer
Janet M. Dolan 3,000 47.375 2/10/05 0 89,382 226,511
Senior Vice President
and General Counsel
Keith D. Payden 1,700 47.375 2/10/05 0 50,650 128,356
Vice President
All executive officers
as a group 33,450 47.375 2/10/05 0 996,605 2,525,594
All non-executive officer 17,280 47.375 2/10/05 0 514,838 1,304,701
employees as a group
19
<PAGE>
<FN>
(1) The fair market value of a share on February 10, 1995, the date of grant of
the options. Pursuant to the 1995 Plan, such fair market value was
$47.375, the closing sale price of a share on the NASDAQ National Market
System on February 9, 1995. The closing price of the Company's Common
Stock on March 13, 1995, was $50.00 per share.
(2) The hypothetical potential appreciation shown in these columns reflects the
required calculations at annual rates of 5% and 10% set by the Securities
and Exchange Commission, and therefore are not intended to represent either
historical appreciation or anticipated future appreciation of the Company's
Common Stock price.
</TABLE>
VOTING REQUIREMENTS; RECOMMENDATION
The affirmative vote of the holders of a majority of the outstanding shares
of Common Stock of the Company entitled to vote on this item and present in
person or by proxy at the Annual Meeting is required for approval of the 1995
Plan. Proxies solicited by the Board of Directors will be voted for approval of
the 1995 Plan, unless shareholders specify otherwise in their proxies.
For this purpose, a shareholder voting through a Proxy who abstains with
respect to approval of the 1995 Plan is considered to be present and entitled to
vote on the approval of the 1995 Plan at the Annual Meeting, and is in effect a
negative vote, but a shareholder (including a broker) who does not give
authority to a Proxy to vote, or withholds authority to vote, on the approval of
the 1995 Plan shall not be considered present and entitled to vote on the
proposal.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR APPROVAL OF THE 1995 STOCK
INCENTIVE PLAN.
APPROVAL OF AMENDMENTS TO AND RESTATEMENT OF
RESTRICTED STOCK PLAN FOR NONEMPLOYEE DIRECTORS
The Board of Directors of the Company adopted, and the shareholders
approved effective May 7, 1993, the Tennant Company Restricted Stock Plan for
Nonemployee Directors (the "Director Plan"). The Board has adopted, effective
January 1, 1995, subject to shareholder approval, and recommends that the
shareholders vote in favor of approval and ratification of, certain amendments
to and restatement of the Director Plan (the "Restated Director Plan"). A copy
of the Restated Director Plan is attached hereto as Appendix B, and the
following discussion is qualified in its entirety by reference to the full text
of the Restated Director Plan. The object of the Restated Director Plan is to
facilitate ownership of Company Common Stock by the Company's nonemployee
directors. Eight of the Company's nine current directors are not employees of
the Company.
The designated amount of the annual retainer for nonemployee directors is
currently $14,000. The Director Plan provided that each participant would
receive all of his or her annual retainer in the form of shares of restricted
stock ("Restricted Shares"). The Restricted Shares were to be awarded on the
first business day of the Board Year (defined in the Director Plan and the
Restated Director Plan as the period beginning on the day following each annual
meeting and ending on the day of the next succeeding annual meeting) commencing
in 1993, and on the first business day of each third Board Year thereafter
through the Board Year commencing in 2002. Each award of Restricted Shares
under the Director Plan was to equal 100% of the anticipated amount of the
annual retainer for the next three successive years following the issuance date.
The number of Restricted Shares to be issued was based upon the Fair Market
Value of such Restricted Shares, which is defined by both the Director Plan and
the Restated Director Plan as the average closing price of shares of Company
Common Stock on the NASDAQ National Market System on the last ten trading days
preceding the day on which such Restricted Shares are issued. Nonemployee
directors who were elected or appointed to the Board on a date other than a
regular issuance date (i.e., the first business day of the Board Years
commencing in 1993, 1996, 1999 and 2002) would receive a pro-rated number of
Restricted Shares.
20
<PAGE>
The Restated Director Plan continues to provide that each participating
nonemployee director will receive Restricted Shares in lieu of his or her annual
retainer, but provides that the number of Restricted Shares shall be that number
of shares that has a Fair Market Value equal to 150% of the annual retainer for
the periods in question. Under the Restated Director Plan, nonemployee
directors elected to the Board at the annual meeting of shareholders held in
1993, and any nonemployee director first elected or appointed to the Board after
the annual meeting of shareholders in 1993 and on or before January 1, 1995, has
been issued Restricted Shares having a Fair Market Value equal to 100% of his or
her annual retainer through the end of the Board Year ending on the date of the
annual meeting of shareholders of the Company to be held in 1996. In addition,
under the Restated Director Plan, subject to shareholder approval of the
Restated Director Plan, on the first business day of January 1995, each then
incumbent nonemployee director was granted Restricted Shares having a Fair
Market Value equal to 50% of his or her annual retainer for the period from
January 1, 1995, through the end of the Board Year ending on the date of the
annual meeting of shareholders of the Company in 1996.
Under the Restated Director Plan: each nonemployee director first elected
or appointed to the Board after January 1, 1995, and before the annual meeting
of shareholders of the Company to be held in 1996 will be issued in lieu of his
or her annual retainer for the period from the date he or she was first elected
or appointed to the Board through the end of the Board Year ending with the
annual meeting of shareholders of the Company in 1996, Restricted Shares having
a Fair Market Value equal to 150% of the anticipated amount of the annual
retainer for such period; each nonemployee director elected to the Board at the
annual meetings of shareholders of the Company in 1996, 1999, and 2002 will be
issued, on the day following such meeting date, in lieu of his or her annual
retainer for the next three successive years following the issuance date,
Restricted Shares having a Fair Market value equal to 150% of the anticipated
amount of the annual retainer for such three year period; and each nonemployee
director first elected or appointed to the Board after the annual meeting of
shareholders of the Company in 1996 and on a date other than a regular issuance
date will be issued, in lieu of his or her annual retainer for the period from
such election or appointment through the end of the Board Year ending on the
date of the annual meeting of shareholders of the Company immediately preceding
the next regular issuance date, Restricted Shares having a Fair Market Value
equal to 150% of the anticipated amount of the annual retainer for such period.
As did the Director Plan, the Restated Director Plan provides that the
restrictions on the Restricted Shares will lapse upon the first of the following
events: (a) death of the participant; (b) disability of the participant
preventing continued service on the Board; (c) retirement of the participant
from the Board in accordance with the policy, if any, on retirement of Board
members 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 reelection to the Board or to have been reelected by the
shareholders of the Company, or (iii) the director's removal by the shareholders
of the Company; or (e) a change in control (described below) of the Company
shall occur. Notwithstanding any of the above events, in no event shall
restrictions on Restricted Shares under both the Director Plan and the Restated
Director Plan lapse prior to the expiration of six months after the date of
issuance of the Restricted Shares. Under both the Director Plan and the
Restated Director Plan: during the restriction period, the participant has the
right to vote the Restricted Shares, the right to receive dividends and all
other rights as a shareholder with respect to the Restricted Shares but may not
transfer or encumber the Restricted Shares; upon the occurrence of an event
causing the restrictions on the Restricted Shares to lapse, Restricted Shares
issued to the participant in payment of the annual retainer for Board Years
commencing following the occurrence of the event shall be forfeited and revert
to the Company; and if a participant ceases to be a director of the Company
within six months after the date of an issuance of Restricted Shares for any
reason, or thereafter for any reason other than the events set forth above,
Restricted Shares issued to the participant shall be forfeited and revert to the
Company.
The definition of change in control, as well as the consequences of the
occurrence of such an event, are the same in the Director Plan and the Restated
Director Plan. Both provide that upon the occurrence of a change in control,
the restrictions on the Restricted Shares issued for the then current and all
previous Board Years shall lapse. A change in control includes beneficial
ownership of 30% or more of the outstanding voting stock of the Company by any
persons or group (other than the Company or a subsidiary); the majority of the
directors of the Company being persons other than persons for whose election
proxies shall have been solicited by the Board of Directors, subject to certain
exceptions; or approval by the shareholders of a merger or consolidation of the
Company with or into another corporation (other than a merger or consolidation
with a subsidiary or a merger in which the Company survives and its outstanding
voting stock is not converted or its shareholders have more than
21
<PAGE>
70% of the voting interest and Common Stock interest in the surviving
corporation or its parent), a disposition of substantially all assets of the
Company, a liquidation or dissolution of the Company, or a statutory exchange of
voting stock of the Company held by then existing shareholders.
Both the Director Plan and the Restated Director Plan provide that the
Company shall have the right to require participants to remit to the Company an
amount sufficient to satisfy any applicable federal, state and local withholding
state requirements.
The Restated Director Plan provides that if the annual retainer is
decreased, there shall be no adjustment in the number of Restricted Shares
previously issued pursuant to the Restated Director Plan. If the annual
retainer is increased effective as of any date other than a regular issuance
date then 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) shall be issued, 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 for such period was increased. For this purpose, the
annual retainer for any fraction of a Board Year shall be pro-rated. For
purposes of the Restated Director Plan, the annual retainer may not be changed
more than once every six months.
The Director Plan provided that no Restricted Shares would be issued
pursuant thereto in payment of any annual retainer for any period commencing
after the annual meeting of the Company's shareholders in 2003. The Restated
Director Plan provides that no Restricted Shares shall be issued in lieu of any
annual retainer for any period commencing after the annual meeting of the
Company's shareholders in 2005. Under the Restated Director Plan, nonemployee
directors elected to the Board at the annual meeting of the Company's
shareholders in 2002 will be issued Restricted Shares in lieu of the annual
retainer for the full three Board Year period commencing on the day following
the date of the annual meeting of the Company's shareholders in 2002.
The Restated Director Plan provides that the number of shares available for
issuance pursuant thereto shall be adjusted in the event of stock dividends,
stock splits and other recapitalizations, mergers and similar corporate changes;
and, following the effectiveness of the Company's two-for-one stock split that
will become effective on April 26, 1995, 50,000 shares (less shares previously
issued) will be available for issuance pursuant to the Restated Director Plan.
To date, 7,657 (pre-split) Restricted Shares have been issued under the Director
Plan and an additional 1,624 (pre-split) Restricted Shares have been issued,
subject to shareholder approval, under the Restated Director Plan. The Fair
Market Value used to determine the number of Restricted Shares issued (subject
to shareholder approval) on January 1, 1995, was $46.15, based upon the average
closing price of a share of Common Stock of the Company on the NASDAQ National
Market System on the ten trading days preceding January 1, 1995.
See "Approval of 1995 Stock Incentive Plan" for a current market price of
the Company's Common Stock.
The affirmative vote of the holders of a majority of the outstanding shares
of Common Stock of the Company entitled to vote on this item and present in
person or by proxy at the Annual Meeting is required for approval of the
amendment and restatement of the Director Plan. Proxies solicited by the Board
of Directors will be voted for approval of the amendment and restatement of the
Director Plan, unless shareholders specify otherwise in their proxies.
For this purpose, a shareholder voting through a Proxy who abstains with
respect to approval of the amendment and restatement of the Director Plan is
considered to be present and entitled to vote on the approval of the amendment
and restatement of the Director Plan at the Annual Meeting, and is in effect a
negative vote, but a shareholder (including a broker) who does not give
authority to a Proxy to vote, or withholds authority to vote, on the approval of
the amendment and restatement of the Director Plan shall not be considered
present and entitled to vote on the proposal.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR APPROVAL OF THE AMENDMENT AND
RESTATEMENT OF THE RESTRICTED STOCK PLAN FOR NONEMPLOYEE DIRECTORS.
22
<PAGE>
APPOINTMENT OF AUDITORS
At the meeting, a vote will be taken on a proposal to ratify the
appointment of KPMG Peat Marwick LLP as independent auditors of the Company for
the year ending December 31, 1995. KPMG Peat Marwick LLP are independent
accountants and auditors who have audited the accounts of the Company annually
since 1954. The Company has been advised that a representative of the firm will
attend the shareholders' meeting. The representative will be available to
respond to appropriate questions and will be given the opportunity to make a
statement if the firm desires to do so.
SHAREHOLDER PROPOSALS
Any shareholder proposal intended to be presented at the next Annual
Meeting should be sent to the Secretary of the Company at 701 North Lilac Drive,
P.O. Box 1452, Minneapolis, Minnesota 55440, and must be received on or before
November 27, 1995, to be eligible for inclusion in the Company's Proxy Statement
and form of Proxy relating to that meeting.
OTHER MATTERS
So far as the management is aware, no matters other than those described in
this Proxy Statement will be acted upon at the meeting. If, however, any other
matters properly come before the meeting, it is the intention of the persons
named in the enclosed Proxy to vote the same in accordance with their judgment
on such other matters.
March 27, 1995 By Order of the Board of Directors
Bruce J. Borgerding, Secretary
23
<PAGE>
Appendix A
TENNANT COMPANY
1995 STOCK INCENTIVE PLAN
(EFFECTIVE FEBRUARY 10, 1995)
1. PURPOSE. The purpose of this 1995 Stock Incentive Plan (the "Plan")
is to motivate key personnel to produce a superior return to the shareholders of
Tennant Company (the "Company") and its Affiliates by offering such individuals
an opportunity to realize Stock appreciation, by facilitating Stock ownership,
and by rewarding them for achieving a high level of corporate performance. This
Plan is also intended to facilitate recruiting and retaining key personnel of
outstanding ability.
2. DEFINITIONS. The capitalized terms used in this Plan have the
meanings set forth below.
(a) "Affiliate" means any corporation that is a "parent corporation"
or "subsidiary corporation" of the Company, as those terms are defined in
Sections 424(e) and (f) of the Code, or any successor provision, and, for
purposes other than the grant of Incentive Stock Options, any joint venture
in which the Company or any such "parent corporation" or "subsidiary
corporation" owns an equity interest.
(b) "Agreement" means a written contract entered into between the
Company or an Affiliate and a Participant containing the terms and
conditions of an Award in such form (not inconsistent with this Plan) as
the Committee approves from time to time, together with all amendments
thereof, which amendments may be unilaterally made by the Company (with the
approval of the Committee) unless such amendments are deemed by the
Committee to be materially adverse to the Participant and are not required
as a matter of law.
(c) "Award" means a grant made under this Plan in the form of
Options, Stock Appreciation Rights, Restricted Stock, Performance Shares or
any Other Stock-Based Award.
(d) "Board" means the Board of Directors of the Company.
(e) "Change in Control" means:
(i) a majority of the directors of the Company shall be persons
other than persons
(A) for whose election proxies shall have been
solicited by the Board or
(B) 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,
(ii) 30% or more of the (1) combined voting power of the then
outstanding voting securities of the Company entitled to vote
generally in the election of directors ("Outstanding Company
Voting Securities") or (2) the then outstanding Shares of Stock
("Outstanding Company Common Stock") is acquired or beneficially
owned (as defined in Rule 13d-3 under the Exchange Act, or any
successor rule thereto) by any individual, entity or group
(within the meaning of Section 13(d)(3) or 14(d)(2) of the
Exchange Act), provided, however, that the following acquisitions
and beneficial ownership shall not constitute Changes in Control
pursuant to this paragraph 2(e)(ii):
(A) any acquisition or beneficial ownership by the
Company or a Subsidiary, or
1
<PAGE>
(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 the
Participant or any group that includes the Participant, or
(D) any acquisition or beneficial ownership by a
Parent or its wholly owned subsidiaries, as long as they
shall remain wholly owned subsidiaries, of 100% of the
Outstanding Company Voting Securities as a result of a
merger or statutory share exchange which complies with
paragraph 2(e)(iii)(A)(2) or the exception in paragraph
2(e)(iii)(B) hereof in all respects,
(iii) the shareholders of the Company approve a definitive
agreement or plan to
(A) merge or consolidate the Company with or into
another corporation (other than (1) a merger or
consolidation with a Subsidiary or (2) a merger in which
(a) the Company is the surviving corporation,
(b) no Outstanding Company Voting Securities or
Outstanding Company Common Stock (other than fractional
shares) held by shareholders of the Company immediately
prior to the merger is converted into cash, securities,
or other property (except (i) voting stock of a Parent
owning directly, or indirectly through wholly owned
subsidiaries, both beneficially and of record 100% of
the Outstanding Company Voting Securities immediately
after the Merger or (ii) cash upon the exercise by
holders of Outstanding Company Voting Securities of
statutory dissenters' rights),
(c) the persons who were the beneficial owners,
respectively, of the Outstanding Company Voting
Securities and Outstanding Company Common Stock
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 voting power of the then
outstanding voting securities of the surviving
corporation or its Parent entitled to vote generally in
the election of directors, and
(d) if voting securities of the Parent are
exchanged for Outstanding Company Voting Securities in
the merger, all holders of any class or series of
Outstanding Company Voting Securities immediately prior
to the merger have the right to receive substantially
the same per share consideration in exchange for their
Outstanding Company Voting Securities as all other
holders of such class or series),
(B) exchange, pursuant to a statutory share exchange,
Outstanding Company Voting Securities of any one or more
classes or series held by shareholders of the Company
immediately prior to the exchange for cash, securities or
other property, except for (a) voting stock of a Parent
owning directly, or indirectly through wholly owned
subsidiaries, both beneficially and of record 100% of the
Outstanding Company Voting Securities immediately after the
statutory share exchange if (i) the persons who were the
beneficial owners, respectively, of the Outstanding Company
Voting Securities and Outstanding Company Common Stock
immediately prior to such statutory share exchange own,
directly or indirectly, immediately after the statutory
share exchange more
2
<PAGE>
than 70% of, respectively, the then outstanding common stock
and the voting power of the then outstanding voting
securities of such Parent entitled to vote generally in the
election of directors, and (ii) all holders of any class or
series of Outstanding Company Voting Securities immediately
prior to the statutory share exchange have the right to
receive substantially the same per share consideration in
exchange for their Outstanding Company Voting Securities as
all other holders of such class or series or (b) cash with
respect to fractional shares of Outstanding Company Voting
Securities or payable as a result of the exercise by holders
of Outstanding Company Voting Securities of statutory
dissenters' rights,
(C) sell or otherwise dispose of all or substantially
all of the assets of the Company (in one transaction or a
series of transactions), or
(D) liquidate or dissolve the Company,
unless a majority of the voting stock (or the voting equity
interest) of the surviving corporation or its parent corporation
or of any corporation (or other entity) acquiring all or
substantially all of the assets of the Company (in the case of a
merger, consolidation or disposition of assets) or the Company or
its Parent (in the case of a statutory share exchange) is,
immediately following the merger, consolidation, statutory share
exchange or disposition of assets, beneficially owned by the
Participant or a group of persons, including the Participant,
acting in concert.
(f) "Code" means the Internal Revenue Code of 1986, as amended and in
effect from time to time, or any successor statute.
(g) "Committee" means three or more Disinterested Persons designated
by the Board to administer this Plan under Section 3 hereof and constituted
so as to permit this Plan to comply with Exchange Act Rule 16b-3.
(h) "Company" means Tennant Company, a Minnesota corporation, or any
successor to all or substantially all of its businesses by merger,
consolidation, purchase of assets or otherwise.
(i) "Disability" means the disability of a Participant such that the
Participant is considered disabled under any retirement plan of the Company
which is qualified under Section 401 of the Code, or as otherwise
determined by the Committee.
(j) "Disinterested Person" means a member of the Board who is
considered a disinterested person within the meaning of Exchange Act Rule
16b-3.
(k) "Employee" means any full-time or part-time employee (including
an officer or director who is also an employee) of the Company or an
Affiliate. Except with respect to grants of Incentive Stock Options,
"Employee" shall also include other individuals and entities who are not
"employees" of the Company or an Affiliate but who provide services to the
Company or an Affiliate in the capacity of an independent contractor.
References in this Plan to "employment" and related terms shall include the
providing of services in any such capacity.
(l) "Exchange Act" means the Securities Exchange Act of 1934, as
amended; "Exchange Act Rule 16b-3" means Rule 16b-3 promulgated by the
Securities and Exchange Commission under the Exchange Act as in effect with
respect to the Company or any successor regulation.
(m) "Fair Market Value" as of any date means, unless otherwise
expressly provided in this Plan:
3
<PAGE>
(i) the closing sale price of a Share (A) on the National
Association of Securities Dealers, Inc. Automated Quotation System
National Market System, or (B) if the Shares are not traded on such
system, on the composite tape for New York Stock Exchange ("NYSE")
listed shares, or (C) if the Shares are not quoted on the NYSE
composite tape, on the principal United States securities exchange
registered under the Exchange Act on which the Shares are listed, in
any case on the date immediately preceding that 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, or
(ii) if clause (i) is not applicable, what the Committee
determines in good faith to be 100% of the fair market value of a
Share on that date.
However, if the applicable securities exchange or system has closed
for the day at the time the event occurs that triggers a determination of
Fair Market Value, all references in this paragraph to the "date
immediately preceding that date" shall be deemed to be references to "that
date." In the case of an Incentive Stock Option, if such determination of
Fair Market Value is not consistent with the then current regulations of
the Secretary of the Treasury, Fair Market Value shall be determined in
accordance with said regulations. The determination of Fair Market Value
shall be subject to adjustment as provided in Section 12(f) hereof.
(n) "Fundamental Change" means a dissolution or liquidation of the
Company, a sale of substantially all of the assets of the Company, a merger
or consolidation of the Company with or into any other corporation,
regardless of whether the Company is the surviving corporation, or a
statutory share exchange involving capital stock of the Company.
(o) "Incentive Stock Option" means any Option designated as such and
granted in accordance with the requirements of Section 422 of the Code or
any successor to such section.
(p) "Non-Qualified Stock Option" means an Option other than an
Incentive Stock Option.
(q) "Other Stock-Based Award" means an Award of Stock or an Award
based on Stock other than Options, Stock Appreciation Rights, Restricted
Stock or Performance Shares.
(r) "Option" means a right to purchase Stock, including both Non-
Qualified Stock Options and Incentive Stock Options.
(s) "Parent" means a "parent corporation," as that term is defined in
Section 424(e) of the Code, or any successor provision.
(t) "Participant" means an Employee to whom an Award is made.
(u) "Performance Period" means the period of time as specified in an
Agreement over which Performance Shares are to be earned.
(v) "Performance Shares" means a contingent award of a specified
number of Performance Shares, with each Performance Share equivalent to one
Share, a variable percentage of which may vest depending upon the extent of
achievement of specified performance objectives during the applicable
Performance Period.
(w) "Plan" means this 1995 Stock Incentive Plan, as amended and in
effect from time to time.
(x) "Restricted Stock" means Stock granted under Section 10 hereof so
long as such Stock remains subject to one or more restrictions.
4
<PAGE>
(y) "Retirement" means termination of employment on or after age 55,
provided the Employee has been employed by the Company and/or one or more
Affiliates for at least ten years, or termination of employment on or after
age 62, provided in either case that the Employee has given the Company at
least six months' prior written notice of such termination, or as otherwise
determined by the Committee.
(z) "Share" means a share of Stock.
(aa) "Stock" means the common stock, $.375 par value per share (as
such par value may be adjusted from time to time), of the Company.
(bb) "Stock Appreciation Right" means a right, the value of which is
determined relative to appreciation in value of Shares pursuant to an Award
granted under Section 8 hereof.
(cc) "Subsidiary" means a "subsidiary corporation," as that term is
defined in Section 424(f) of the Code, or any successor provision.
(dd) "Successor" with respect to a Participant means the legal
representative of an incompetent Participant and, if the Participant is
deceased, the legal representative of the estate of the Participant or the
person or persons who may, by bequest or inheritance, or under the terms of
an Award or of forms submitted by the Participant to the Committee under
Section 12(i) hereof, acquire the right to exercise an Option or Stock
Appreciation Right or receive cash and/or Shares issuable in satisfaction
of an Award in the event of a Participant's death.
(ee) "Term" means the period during which an Option or Stock
Appreciation Right may be exercised or the period during which the
restrictions placed on Restricted Stock or any other Award are in effect.
Except when otherwise indicated by the context, reference to the
masculine gender shall include, when used, the feminine gender and any term
used in the singular shall also include the plural.
3. ADMINISTRATION.
(a) AUTHORITY OF COMMITTEE. The Committee shall administer this
Plan. The Committee shall have exclusive power to make Awards and to
determine when and to whom Awards will be granted, and the form, amount and
other terms and conditions of each Award, subject to the provisions of this
Plan. The Committee may determine whether, to what extent and under what
circumstances Awards may be settled, paid or exercised in cash, Shares or
other Awards or other property, or canceled, forfeited or suspended. The
Committee shall have the authority to interpret this Plan and any Award or
Agreement made under this Plan, to establish, amend, waive and rescind any
rules and regulations relating to the administration of this Plan, to
determine the terms and provisions of any Agreements entered into hereunder
(not inconsistent with this Plan), and to make all other determinations
necessary or advisable for the administration of this Plan. The Committee
may correct any defect, supply any omission or reconcile any inconsistency
in this Plan or in any Award in the manner and to the extent it shall deem
desirable. The determinations of the Committee in the administration of
this Plan, as described herein, shall be final, binding and conclusive.
(b) DELEGATION OF AUTHORITY. The Committee may delegate all or any
part of its authority under this Plan to persons who are not Disinterested
Persons for purposes of determining and administering Awards solely to
Employees who are not then subject to the reporting requirements of Section
16 of the Exchange Act.
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(c) RULE 16B-3 COMPLIANCE. It is intended that this Plan and all
Awards granted pursuant to it shall be administered by the Committee so as
to permit this Plan and Awards to comply with Exchange Act Rule 16b-3. If
any provision of this Plan or of any Award would otherwise frustrate or
conflict with the intent expressed in this Section 3(c), that provision to
the extent possible shall be interpreted and deemed amended in the manner
determined by the Committee so as to avoid such conflict. To the extent of
any remaining irreconcilable conflict with such intent, the provision shall
be deemed void as applicable to Participants who are then subject to the
reporting requirements of Section 16 of the Exchange Act to the extent
permitted by law and in the manner deemed advisable by the Committee.
(d) INDEMNIFICATION. To the full extent permitted by law, each
member and former member of the Committee and each person to whom the
Committee delegates or has delegated authority under this Plan shall be
entitled to indemnification by the Company against and from any loss,
liability, judgment, damage, cost and reasonable expense incurred by such
member, former member or other person by reason of any action taken,
failure to act or determination made in good faith under or with respect to
this Plan.
4. SHARES AVAILABLE; MAXIMUM PAYOUTS.
(a) SHARES AVAILABLE. The number of Shares available for
distribution under this Plan is 250,000, based upon the authorized shares
of the Company on February 10, 1995, the effective date of this Plan
(subject to adjustment under Section 12(f) hereof).
(b) SHARES AGAIN AVAILABLE. Any Shares subject to the terms and
conditions of an Award under this Plan which are not used because the Award
expires without all Shares subject to such Award having been issued or
because the terms and conditions of the Award are not met may again be used
for an Award under this Plan. Any Shares that are the subject of Awards
which are subsequently forfeited to the Company pursuant to the
restrictions applicable to such Award may again be used for an Award under
this Plan. If a Participant exercises a Stock Appreciation Right, any
Shares covered by the Stock Appreciation Right in excess of the number of
Shares issued (or, in the case of a settlement in cash or any other form of
property, in excess of the number of Shares equal in value to the amount of
such settlement, based on the Fair Market Value of such Shares on the date
of such exercise) may again be used for an Award under this Plan. If, in
accordance with the Plan, a Participant uses Shares to (i) pay a purchase
or exercise price, including an Option exercise price, or (ii) satisfy tax
withholdings, such Shares may again be used for an Award under this Plan.
(c) UNEXERCISED AWARDS. Any unexercised or undistributed portion of
any terminated, expired, exchanged, or forfeited Award or any Award settled
in cash in lieu of Shares (except as provided in Section 4(b) hereof) shall
be available for further Awards.
(d) NO FRACTIONAL SHARES. No fractional Shares may be issued under
this Plan; fractional Shares will be rounded to the nearest whole Share.
(e) MAXIMUM PAYOUTS. No more than 25% of all Shares subject to this
Plan may be granted in the aggregate pursuant to Restricted Stock and Other
Stock-Based Awards.
5. ELIGIBILITY. Awards may be granted under this Plan to any Employee at
the discretion of the Committee.
6. GENERAL TERMS OF AWARDS.
(a) AWARDS. Awards under this Plan may consist of Options (either
Incentive Stock Options or Non-Qualified Stock Options), Stock Appreciation
Rights, Performance Shares, Restricted Stock and Other Stock-Based Awards.
Awards of Restricted Stock may, in the discretion of the Committee, provide
the Participant with dividends or dividend equivalents and voting rights
prior to vesting (whether vesting is based on a period of time, the
attainment of specified performance conditions or otherwise).
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(b) AMOUNT OF AWARDS. Each Agreement shall set forth the number of
Shares of Restricted Stock, Stock or Performance Shares subject to such
Agreement, or the number of Shares to which the Option applies or with
respect to which payment upon the exercise of the Stock Appreciation Right
is to be determined, as the case may be, together with such other terms and
conditions applicable to the Award (not inconsistent with this Plan) as
determined by the Committee in its sole discretion.
(c) TERM. Each Agreement, other than those relating solely to Awards
of Stock without restrictions, shall set forth the Term of the Award and
any applicable Performance Period for Performance Shares, as the case may
be, but in no event shall the Term of an Award or the Performance Period be
longer than ten years after the date of grant. An Agreement with a
Participant may permit acceleration of vesting requirements and of the
expiration of the applicable Term upon such terms and conditions as shall
be set forth in the Agreement, which may, but need not, include, without
limitation, acceleration resulting from the occurrence of a Change in
Control, a Fundamental Change, or the Participant's death, Disability or
Retirement. Acceleration of the Performance Period of Performance Shares
shall be subject to Section 9(b) hereof.
(d) AGREEMENTS. Each Award under this Plan shall be evidenced by an
Agreement setting forth the terms and conditions, as determined by the
Committee, which shall apply to such Award, in addition to the terms and
conditions specified in this Plan.
(e) TRANSFERABILITY. During the lifetime of a Participant to whom an
Award is granted, only such Participant (or such Participant's legal
representative or, if so provided in the applicable Agreement in the case
of a Non-Qualified Stock Option, a permitted transferee as hereafter
described) may exercise an Option or Stock Appreciation Right or receive
payment with respect to Performance Shares or any other Award. No Award of
Restricted Stock (prior to the expiration of the restrictions), Options,
Stock Appreciation Rights, Performance Shares or other Award (other than an
award of Stock without restrictions) may be sold, assigned, transferred,
exchanged, or otherwise encumbered, and any attempt to do so shall be of no
effect. Notwithstanding the immediately preceding sentence, (i) an
Agreement may provide that an Award shall be transferable to a Successor in
the event of a Participant's death and (ii) an Agreement may provide that a
Non-Qualified Stock Option shall be transferable to any member of a
Participant's "immediate family" (as such term is defined in Rule 16a-1(e)
promulgated under the Exchange Act, or any successor rule or regulation) or
to one or more trusts whose beneficiaries are members of such Participant's
"immediate family" or partnerships in which such family members are the
only partners; provided, however, that (1) the Participant receives no
consideration for the transfer and (2) such transferred Non-Qualified Stock
Option shall continue to be subject to the same terms and conditions as
were applicable to such Non-Qualified Stock Option immediately prior to its
transfer.
(f) TERMINATION OF EMPLOYMENT. Except as otherwise determined by the
Committee or provided by the Committee in an applicable Agreement, in case
of termination of employment, the following provisions shall apply:
(1) OPTIONS AND STOCK APPRECIATION RIGHTS.
(i) DEATH. If a Participant who has been granted an
Option or Stock Appreciation Rights shall die before such Option
or Stock Appreciation Rights have expired, the Option or Stock
Appreciation Rights shall become exercisable in full, and may be
exercised by the Participant's Successor at any time, or from
time to time, within five years after the date of the
Participant's death.
(ii) DISABILITY OR RETIREMENT. If a Participant's
employment terminates because of Disability or Retirement, the
Option or Stock Appreciation Rights shall become exercisable in
full, and the Participant may exercise his or her Options or
Stock Appreciation Rights at any time, or from time to time,
within (x) five years after the date of such termination if such
termination results from the Participant's disability or (y)
within three months, or such longer period as the Committee may
permit, after the date of such termination if such termination
results from the Participant's retirement.
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(iii) REASONS OTHER THAN DEATH, DISABILITY OR RETIREMENT.
If a Participant's employment terminates for any reason other
than death, Disability or Retirement, the unvested or unexercised
portion of any Award held by such Participant shall terminate at
the date of termination of employment.
(iv) EXPIRATION OF TERM. Notwithstanding the foregoing
paragraphs (i)-(iii), in no event shall an Option or a Stock
Appreciation Right be exercisable after expiration of the Term of
such Award.
(2) PERFORMANCE SHARES. If a Participant's employment with the
Company or any of its Affiliates terminates during a Performance
Period because of death, Disability or Retirement, or under other
circumstances provided by the Committee in its discretion in the
applicable Agreement, the Participant shall be entitled to a payment
of Performance Shares at the end of the Performance Period based upon
the extent to which achievement of performance targets was satisfied
at the end of such period (as determined at the end of the Performance
Period) and prorated for the portion of the Performance Period during
which the Participant was employed by the Company or any Affiliate.
Except as provided in this Section 6(f)(2) or in the applicable
Agreement, if a Participant's employment terminates with the Company
or any of its Affiliates during a Performance Period, then such
Participant shall not be entitled to any payment with respect to that
Performance Period.
(3) RESTRICTED STOCK. Unless otherwise provided in the
applicable Agreement, in case of a Participant's death, Disability or
Retirement, the Participant shall be entitled to receive that number
of shares of Restricted Stock under outstanding Awards which has been
pro rated for the portion of the Term of the Awards during which the
Participant was employed by the Company or any Affiliate, and with
respect to such Shares all restrictions shall lapse.
(g) RIGHTS AS SHAREHOLDER. A Participant shall have no rights as a
shareholder with respect to any securities covered by an Award until the
date the Participant becomes the holder of record.
7. STOCK OPTIONS.
(a) TERMS OF ALL OPTIONS. Each Option shall be granted pursuant to an
Agreement as either an Incentive Stock Option or a Non-Qualified Stock
Option. Only Non-Qualified Stock Options may be granted to Employees who
are not employees of the Company or an Affiliate. The purchase price of
each Share subject to an Option shall be determined by the Committee and
set forth in the Agreement, but shall not be less than 100% of the Fair
Market Value of a Share as of the date the Option is granted. The purchase
price of the Shares with respect to which an Option is exercised shall be
payable in full at the time of exercise, provided that, to the extent
permitted by law, Participants may simultaneously exercise Options and sell
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 may be paid in cash or, if the Committee so
permits, through a reduction of the number of Shares delivered to the
Participant upon exercise of the Option or delivery to the Company of
Shares held by such Participant (in each case, such Shares having a Fair
Market Value as of the date the Option is exercised equal to the purchase
price of the Shares being purchased pursuant to the Option), or a
combination thereof, unless otherwise provided in the Agreement. If the
Committee so determines, the Agreement relating to any Option may provide
for the issuance of "reload" Options pursuant to which, subject to the
terms and conditions established by the Committee and any applicable
requirements of Exchange Act Rule 16b-3 or any other applicable law, the
Participant will, either automatically or subject to subsequent Committee
approval, be granted a new Option when the payment of the exercise price of
the original Option, or the payment of tax withholdings pursuant to Section
12(d) hereof, is made through the delivery to the Company of Shares held by
such Participant, such new "reload" Option (i) being an Option to purchase
the number of Shares provided as consideration for the exercise price and
in payment of taxes in connection with the exercise of the original Option,
and (ii) having a per Share
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exercise price equal to the Fair Market Value as of the date of exercise of
the original Option. Each Option shall be exercisable in whole or in part
on the terms provided in the Agreement. In no event shall any Option be
exercisable at any time after its Term. When an Option is no longer
exercisable, it shall be deemed to have lapsed or terminated. No
Participant may receive any combination of Options to purchase and Stock
Appreciation Rights relating to more than 50,000 Shares in the aggregate
pursuant to Awards in any year under this Plan.
(b) INCENTIVE STOCK OPTIONS. In addition to the other terms and
conditions applicable to all Options:
(i) the aggregate Fair Market Value (determined as of the date
the Option is granted) of the Shares with respect to which Incentive
Stock Options held by an individual first become exercisable in any
calendar year (under this Plan and all other incentive stock option
plans of the Company and its Affiliates) shall not exceed $100,000 (or
such other limit as may be required by the Code), if such limitation
is necessary to qualify the Option as an Incentive Stock Option, and
to the extent an Option or Options granted to a Participant exceed
such limit, such Option or Options shall be treated as a Non-Qualified
Stock Option;
(ii) an Incentive Stock Option shall not be exercisable and the
Term of the Award shall not be more than ten years after the date of
grant (or such other limit as may be required by the Code) if such
limitation is necessary to qualify the Option as an Incentive Stock
Option;
(iii) the Agreement covering an Incentive Stock Option shall
contain such other terms and provisions which the Committee determines
necessary to qualify such Option as an Incentive Stock Option; and
(iv) notwithstanding any other provision of this Plan to the
contrary, no Participant may receive an Incentive Stock Option under
this Plan if, at the time the Award is granted, the Participant owns
(after application of the rules contained in Section 424(d) of the
Code, or its successor provision) Shares possessing more than ten
percent of the total combined voting power of all classes of stock of
the Company or its subsidiaries, unless (A) the option price for such
Incentive Stock Option is at least 110% of the Fair Market Value of
the Shares subject to such Incentive Stock Option on the date of grant
and (B) such Option is not exercisable after the date five years from
the date such Incentive Stock Option is granted.
8. STOCK APPRECIATION RIGHTS. An Award of a Stock Appreciation Right
shall entitle the Participant, subject to terms and conditions determined by the
Committee, to receive upon exercise of the Stock Appreciation Right all or a
portion of the excess of (i) the Fair Market Value of a specified number of
Shares as of the date of exercise of the Stock Appreciation Right over (ii) a
specified price which shall not be less than 100% of the Fair Market Value of
such Shares as of the date of grant of the Stock Appreciation Right. A Stock
Appreciation Right may be granted in connection with a previously or
contemporaneously granted Option, or independent of any Option. If issued in
connection with an Option, the Committee may impose a condition that exercise of
a Stock Appreciation Right cancels the Option with which it is connected and
exercise of the connected Option cancels the Stock Appreciation Right. Each
Stock Appreciation Right may be exercisable in whole or in part on the terms
provided in the Agreement. Notwithstanding anything to the contrary stated in
this Plan, no Stock Appreciation Right shall be exercisable prior to six months
from the date of grant except in the event of the death or Disability of the
Participant. No Stock Appreciation Right shall be exercisable at any time after
its Term. When a Stock Appreciation Right is no longer exercisable, it shall be
deemed to have lapsed or terminated. Except as otherwise provided in the
applicable Agreement, upon exercise of a Stock Appreciation Right, payment to
the Participant (or to his or her Successor) shall be made in the form of cash,
Stock or a combination of cash and Stock as promptly as practicable after such
exercise. The Agreement may provide for a limitation upon the amount or
percentage of the total appreciation on which payment (whether in cash and/or
Stock) may be made in the event of the exercise of a Stock Appreciation Right.
As specified in Section 7(a) hereof, no Participant may receive any combination
of Options to purchase and Stock Appreciation Rights relating to more than
50,000 Shares in the aggregate pursuant to Awards in any year under this Plan.
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9. PERFORMANCE SHARES.
(a) INITIAL AWARD. An Award of Performance Shares shall entitle a
Participant (or a Successor) to future payments based upon the achievement
of performance targets established in writing by the Committee. Payment
shall be made in Stock, or a combination of cash and Stock, as determined
by the Committee, provided that at least 25% of the value of the vested
Performance Shares shall be distributed in the form of Stock. With respect
to those Participants who are "covered employees" within the meaning of
Section 162(m) of the Code and the regulations thereunder, such performance
targets shall consist of one or any combination of two or more of earnings
or earnings per share before income tax (profit before taxes), net earnings
or net earnings per share (profits after tax), inventory, total, or net
operating asset turnover, operating income, total shareholder return,
return on equity, pre-tax and pre-interest expense return on average
invested capital, which may be expressed on a current value basis, or sales
growth, and any such targets may relate to one or any combination of two or
more of corporate, group, unit, division, Affiliate or individual
performance. The Agreement may establish that a portion of the maximum
amount of a Participant's Award will be paid for performance which exceeds
the minimum target but falls below the maximum target applicable to such
Award. The Agreement shall also provide for the timing of such payment.
Following the conclusion or acceleration of each Performance Period, the
Committee shall determine the extent to which (i) performance targets have
been attained, (ii) any other terms and conditions with respect to an Award
relating to such Performance Period have been satisfied, and (iii) payment
is due with respect to a Performance Share Award. No Participant may
receive Performance Shares relating to more than 50,000 Shares pursuant to
Awards in any year under this Plan.
(b) ACCELERATION AND ADJUSTMENT. The Agreement may permit an
acceleration of the Performance Period and an adjustment of performance
targets and payments with respect to some or all of the Performance Shares
awarded to a Participant, upon such terms and conditions as shall be set
forth in the Agreement, upon the occurrence of certain events, which may,
but need not, include without limitation a Change in Control, a Fundamental
Change, the Participant's death, Disability or Retirement, a change in
accounting practices of the Company or its Affiliates, or, with respect to
payments in Stock for Performance Share Awards, a reclassification, stock
dividend, stock split or stock combination as provided in Section 12(f)
hereof.
(c) VALUATION. Each Performance Share earned after conclusion of a
Performance Period shall have a value equal to the Fair Market Value of a
Share on the last day of such Performance Period.
10. RESTRICTED STOCK. Subject to Section 4(e), Restricted Stock may be
granted in the form of Shares registered in the name of the Participant but held
by the Company until the end of the Term of the Award. Any employment
conditions, performance conditions and the Term of the Award shall be
established by the Committee in its discretion and included in the applicable
Agreement. The Committee may provide in the applicable Agreement for the lapse
or waiver of any such restriction or condition based on such factors or criteria
as the Committee, in its sole discretion, may determine. No Award of Restricted
Stock may vest earlier than one year from the date of grant, except as provided
in the applicable Agreement.
11. OTHER STOCK-BASED AWARDS. Subject to Section 4(e), the Committee may
from time to time grant Awards of Stock, and other Awards under this Plan
(collectively herein defined as "Other Stock-Based Awards"), including without
limitation those Awards pursuant to which Shares may be acquired in the future,
such as Awards denominated in Stock units, securities convertible into Stock and
phantom securities. The Committee, in its sole discretion, shall determine the
terms and conditions of such Awards provided that such Awards shall not be
inconsistent with the terms and purposes of this Plan. The Committee may, in
its sole discretion, direct the Company to issue Shares subject to restrictive
legends and/or stop transfer instructions which are consistent with the terms
and conditions of the Award to which such Shares relate.
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12. GENERAL PROVISIONS.
(a) EFFECTIVE DATE OF THIS PLAN. This Plan shall become effective as
of February 10,1995, provided that this Plan is approved and ratified by
the affirmative vote of the holders of a majority of the outstanding Shares
of Stock 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, 1995.
If this Plan is not so approved by such holders, any Awards granted under
this Plan subject to such approval shall be null and void.
(b) DURATION OF THIS PLAN. This Plan shall remain in effect until
all Stock subject to it shall be distributed or all Awards have expired or
lapsed, whichever is latest to occur, or this Plan is terminated pursuant
to Section 12(e) hereof. No Award of an Incentive Stock Option shall be
made more than ten years after the effective date provided in Section 12(a)
hereof (or such other limit as may be required by the Code) if such
limitation is necessary to qualify the Option as an Incentive Stock Option.
The date and time of approval by the Committee of the granting of an Award
shall be considered the date and time at which such Award is made or
granted, notwithstanding the date of any Agreement with respect to such
Award; provided, however, that the Committee may grant Awards other than
Incentive Stock Options to be effective and deemed to be granted on the
occurrence of certain specified contingencies.
(c) RIGHT TO TERMINATE EMPLOYMENT. Nothing in this Plan or in any
Agreement shall confer upon any Participant who is an Employee the right to
continue in the employment of the Company or any Affiliate or affect any
right which the Company or any Affiliate may have to terminate or modify
the employment of the Participant with or without cause.
(d) TAX WITHHOLDING. The Company may withhold from any payment of
cash or Stock to a Participant or other person under this Plan an amount
sufficient to cover any required withholding taxes, including the
Participant's social security and Medicare taxes (FICA) and federal, state
and local income tax with respect to income arising from payment of the
Award. The Company shall have the right to require the payment of any such
taxes before issuing any Stock pursuant to the Award. In lieu of all or
any part of a cash payment from a person receiving Stock under this Plan,
the individual may elect to cover all or any part of the required
withholdings, and to cover any additional withholdings up to the amount
needed to cover the individual's full FICA and federal, state and local
income tax with respect to income arising from payment of the Award,
through a reduction of the number of Shares delivered to such individual or
a subsequent return to the Company of Shares held by the Participant or
other person, in each case valued in the same manner as used in computing
the withholding taxes under the applicable laws, subject to the limitations
of the following sentence. Unless the Committee otherwise permits, such
elections are subject to the following limitations if, and to the extent,
such limitations are necessary to comply with Exchange Act Rule 16b-3 or
any successor provision:
(1) Except as set forth in clause (iii) below, any such election
by a Participant who is then subject to the reporting requirements of
Section 16 of the Exchange Act or any successor provision ("Section
16") or a Successor of such a Participant shall be subject to the
conditions set forth in clauses (i) and (ii) below:
(i) (A) the election shall be made during the period
beginning on the third business day following the date of public
release of the Company's quarterly or annual summary statements
of sales and earnings and ending on the twelfth business day
following such date, or (B) the election shall be made at least
six months prior to the date the Award is paid to the
Participant;
(ii) a period of at least six months shall elapse between
the date of grant of the Award to which the payment relates and
the date such Award is paid to the Participant; provided,
however, that such restriction does not apply in the event death
or Disability of the Participant occurs prior to such election
and during that six-month period;
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(iii) notwithstanding the foregoing, a Participant who
tenders previously owned Shares to the Company in payment of the
purchase price of Shares in connection with exercise of an Option
may also tender previously owned Shares to the Company in
satisfaction of any tax withholding obligations in connection
with such Option exercise without regard to the time periods set
forth in clauses (i) and (ii) above.
The foregoing restrictions do not apply to any Participant who is not
subject to the reporting requirements of Section 16 at the time of the
election.
(2) Any such election by a Participant who is subject to the
reporting requirements of Section 16 at the time is irrevocable and is
subject to approval by the Committee. The Committee's approval may be
granted in advance but is subject to revocation by the Committee at
any time.
(e) AMENDMENT, MODIFICATION AND TERMINATION OF THIS PLAN. Except as
provided in this Section 12(e), the Board may at any time amend, modify,
terminate or suspend this Plan. Except as provided in this Section 12(e),
the Committee may at any time alter or amend any or all Agreements under
this Plan to the extent permitted by law. Amendments are subject to
approval of the shareholders of the Company only if such approval is
necessary to maintain this Plan in compliance with the requirements of
Exchange Act Rule 16b-3, Section 422 of the Code, their successor
provisions, or any other applicable law or regulation. No termination,
suspension or modification of this Plan may materially and adversely affect
any right acquired by any Participant (or a Participant's legal
representative) or any Successor under an Award granted before the date of
termination, suspension or modification, unless otherwise agreed by the
Participant in the Agreement or otherwise or required as a matter of law.
It is conclusively presumed that any adjustment for changes in
capitalization provided for in Section 9(b) or 12(f) hereof does not
adversely affect any right of a Participant under an Award.
(f) ADJUSTMENT FOR CHANGES IN CAPITALIZATION. Appropriate
adjustments in the aggregate number and type of Shares available for Awards
under this Plan, in the limitations on the number and type of Shares that
may be issued to an individual Participant, in the number and type of
Shares and amount of cash subject to Awards then outstanding, in the Option
exercise price as to any outstanding Options and, subject to Section 9(b)
hereof, in outstanding Performance Shares and payments with respect to
outstanding Performance Shares may be made by the Committee in its sole
discretion to give effect to adjustments made in the number or type of
Shares through a Fundamental Change (subject to Section 12(g) hereof),
recapitalization, reclassification, stock dividend, stock split, stock
combination, or other relevant change, provided that fractional Shares
shall be rounded to the nearest whole Share.
(g) FUNDAMENTAL CHANGE. In the event of a proposed Fundamental
Change: (a) involving a merger, consolidation or statutory share exchange,
unless appropriate provision shall be made (which the Committee may, but
shall not be obligated to, make) for the protection of the outstanding
Options and Stock Appreciation Rights by the substitution of options, stock
appreciation rights and appropriate voting common stock of the corporation
surviving any such merger or consolidation or, if appropriate, the Parent
of such surviving corporation, to be issuable upon the exercise of options
or used to calculate payments upon the exercise of stock appreciation
rights in lieu of Options, Stock Appreciation Rights and capital stock of
the Company, or (b) involving the dissolution or liquidation of the
Company, the Committee may, but shall not be obligated to, declare, at
least twenty days prior to the occurrence of the Fundamental Change, and
provide written notice to each holder of an Option or Stock Appreciation
Right of the declaration, that each outstanding Option and Stock
Appreciation Right, whether or not then exercisable, shall be canceled at
the time of, or immediately prior to the occurrence of, the Fundamental
Change in exchange for payment to each holder of an Option or Stock
Appreciation Right, within 20 days after the Fundamental Change, of cash
equal to (i) for each Share covered by the canceled Option, the amount, if
any, by which the Fair Market Value (as defined in this Section 12(g)) per
Share exceeds the exercise price per Share covered by such Option or (ii)
for each Stock Appreciation Right, the price determined pursuant to Section
8 hereof, except that Fair Market Value of the Shares as of the date of
exercise of the Stock Appreciation Right, as used in clause (i) of Section
8, shall be deemed to mean Fair Market Value for each Share with respect to
which the Stock Appreciation Right is calculated
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determined in the manner hereinafter referred to in this Section 12(g). At
the time of the declaration provided for in the immediately preceding
sentence, each Stock Appreciation Right that has been outstanding for at
least six months and each Option shall immediately become exercisable in
full and each person holding an Option or a Stock Appreciation Right shall
have the right, during the period preceding the time of cancellation of the
Option or Stock Appreciation Right, to exercise the Option as to all or any
part of the Shares covered thereby or the Stock Appreciation Right in whole
or in part, as the case may be. In the event of a declaration pursuant to
this Section 12(g), each outstanding Option and Stock Appreciation Right
that shall not have been exercised prior to the Fundamental Change shall be
canceled at the time of, or immediately prior to, the Fundamental Change,
as provided in the declaration. Notwithstanding the foregoing, no person
holding an Option or Stock Appreciation Right shall be entitled to the
payment provided for in this Section 12(g) if such Option or Stock
Appreciation Right shall have expired pursuant to an Agreement. For
purposes of this Section 12(g) only, "Fair Market Value" per Share means
the cash plus the fair market value, as determined in good faith by the
Committee, of the non-cash consideration to be received per Share by the
shareholders of the Company upon the occurrence of the Fundamental Change,
notwithstanding anything to the contrary provided in this Plan.
(h) OTHER BENEFIT AND COMPENSATION PROGRAMS. Payments and other
benefits received by a Participant under an Award shall not be deemed a
part of a Participant's regular, recurring compensation for purposes of any
termination, indemnity or severance pay laws and shall not be included in,
nor have any effect on, the determination of benefits under any other
employee benefit plan, contract or similar arrangement provided by the
Company or an Affiliate, unless expressly so provided by such other plan,
contract or arrangement or the Committee determines that an Award or
portion of an Award should be included to reflect competitive compensation
practices or to recognize that an Award has been made in lieu of a portion
of competitive cash compensation.
(i) BENEFICIARY UPON PARTICIPANT'S DEATH. To the extent that the
transfer of a Participant's Award at death is permitted by this Plan or
under an Agreement, (i) a Participant's Award shall be transferable to the
beneficiary, if any, designated on forms prescribed by and filed with the
Committee and (ii) upon the death of the Participant, such beneficiary
shall succeed to the rights of the Participant to the extent permitted by
law and this Plan. If no such designation of a beneficiary has been made,
the Participant's legal representative shall succeed to the Awards, which
shall be transferable by will or pursuant to laws of descent and
distribution to the extent permitted by this Plan or under an Agreement.
(j) UNFUNDED PLAN. This Plan shall be unfunded and the Company shall
not be required to segregate any assets that may at any time be represented
by Awards under this Plan. Neither the Company, its Affiliates, the
Committee, nor the Board shall be deemed to be a trustee of any amounts to
be paid under this Plan nor shall anything contained in this Plan or any
action taken pursuant to its provisions create or be construed to create a
fiduciary relationship between the Company and/or its Affiliates, and a
Participant or Successor. To the extent any person acquires a right to
receive an Award under this Plan, such right shall be no greater than the
right of an unsecured general creditor of the Company.
(k) LIMITS OF LIABILITY.
(i) Any liability of the Company to any Participant with
respect to an Award shall be based solely upon contractual obligations
created by this Plan and the Agreement.
(ii) Except as may be required by law, neither the Company nor
any member or former member of the Board or of the Committee, nor any
other person participating (including participation pursuant to a
delegation of authority under Section 3(b) hereof) in any
determination of any question under this Plan, or in the
interpretation, administration or application of this Plan, shall have
any liability to any party for any action taken, or not taken, in good
faith under this Plan.
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(l) COMPLIANCE WITH APPLICABLE LEGAL REQUIREMENTS. No certificate
for Shares distributable pursuant to 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 in effect from time to time or any successor
statute, the Exchange Act and the requirements of the exchanges, if any, on
which the Company's Shares may, at the time, be listed.
(m) DEFERRALS AND SETTLEMENTS. The Committee may require or permit
Participants to elect to defer the issuance of Shares or the settlement of
Awards in cash under such rules and procedures as it may establish under
this Plan. It may also provide that deferred settlements include the
payment or crediting of interest on the deferral amounts.
13. GOVERNING LAW. To the extent that federal laws do not otherwise
control, this Plan and all determinations made and actions taken pursuant to
this Plan shall be governed by the laws of Minnesota and construed accordingly.
14. SEVERABILITY. In the event any provision of this Plan shall be held
illegal or invalid for any reason, the illegality or invalidity shall not affect
the remaining parts of this Plan, and this Plan shall be construed and enforced
as if the illegal or invalid provision had not been included.
15. PRIOR PLAN. Notwithstanding the adoption of this Plan by the Board
and approval of this Plan by the Company's shareholders as provided by Section
12(a) hereof, the Company's 1992 Stock Incentive Plan, as amended (the
"Incentive Plan"), shall remain in effect and the Committee may continue to make
grants of performance shares, restricted stock and any other awards pursuant to
and subject to the limitations of the Incentive Plan. All grants and awards
heretofore or hereafter made under the Incentive Plan shall be governed by the
terms of the Incentive Plan.
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Appendix B
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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<PAGE>
(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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<PAGE>
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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<PAGE>
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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<PAGE>
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.
5
<PAGE>
[Tennant Logo]
PROXY
TENNANT COMPANY
701 NORTH LILAC DRIVE
P.O. BOX 1452
MINNEAPOLIS, MN 55440
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby appoints Roger L. Hale, William A. Hodder and Arthur R.
Schulze, Jr., and each of them, as Proxies, each with the power to appoint his
substitute, and hereby authorizes them or any of them to represent and to vote,
as designated below, all the shares of Common Stock of Tennant Company held of
record by the undersigned on March 6, 1995, at the Annual Meeting of
Shareholders to be held on May 4, 1995, or any adjournment thereof.
1. ELECTION OF DIRECTORS
FOR all nominees listed below
(EXCEPT AS MARKED TO THE CONTRARY BELOW) / /
WITHHOLD AUTHORITY
To vote for all nominees listed below / /
(INSTRUCTION: IF YOU DO NOT WISH TO VOTE FOR ANY INDIVIDUAL NOMINEE, MARK
THE FOR BOX AND STRIKE A LINE THROUGH THE NOMINEE'S NAME IN THE LIST BELOW.)
Andrew P. Czajkowski William A. Hodder Arthur D. Collins, Jr.
If elected, the nominees will serve for a term of three years.
2. TO APPROVE AND RATIFY THE TENNANT COMPANY 1995 STOCK INCENTIVE PLAN.
/ / FOR / / AGAINST / / ABSTAIN
3. TO APPROVE AND RATIFY AMENDMENTS TO AND RESTATEMENT OF THE RESTRICTED STOCK
PLAN FOR NONEMPLOYEE DIRECTORS.
/ / FOR / / AGAINST / / ABSTAIN
4. PROPOSAL TO RATIFY THE APPOINTMENT OF KPMG PEAT MARWICK LLP as the
independent public accountants of the corporation.
/ / FOR / / AGAINST / / ABSTAIN
5. IN THEIR DISCRETION, the PROXIES are authorized to vote upon such other
business as may properly come before the meeting.
<PAGE>
THIS PROXY, WHEN PROPERLY EXECUTED, WILL BE VOTED IN THE MANNER
DIRECTED HEREIN BY THE UNDERSIGNED SHAREHOLDER. IF NO DIRECTION IS MADE,
THIS PROXY WILL BE VOTED FOR ALL PROPOSALS.
Please sign exactly as name appears below. When shares are held by joint
tenants, both should sign. When signing as attorney, executor, administrator,
trustee or guardian, please give full title as such. If a corporation, please
sign in full corporate name by President or other authorized officer. If a
partnership, please sign in partnership name by authorized person.
_______________________________
Signature
Dated:___________________, 1995
PLEASE MARK, SIGN, DATE AND
RETURN THE PROXY PROMPTLY USING
THE ENCLOSED ENVELOPE.
