<PAGE>
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON JUNE 14, 1999
REGISTRATION NO. 333-
- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D. C. 20549
______________________
FORM S-8
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
______________________
TENNANT COMPANY
(Exact name of registrant as specified in its charter)
MINNESOTA 41-0572550
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
701 NORTH LILAC DRIVE 55440
P.O. BOX 1452 (Zip Code)
MINNEAPOLIS, MINNESOTA
(Address of principal executive offices)
TENNANT COMPANY
1999 STOCK INCENTIVE PLAN
(Full title of the plan)
JANET M. DOLAN
PRESIDENT AND CHIEF EXECUTIVE OFFICER
TENNANT COMPANY
701 NORTH LILAC DRIVE
P.O. BOX 1452
MINNEAPOLIS, MINNESOTA 55440
(Name and address of agent for service)
(612) 540-1200
(Telephone number, including area code, of agent for service)
______________________
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
Title of Amount Proposed Maximum Proposed Maximum Amount of
Securities to to be Offering Price Aggregate Offering Registration
be Registered Registered Per Share(1) Price(1) Fee
- ------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Common Stock, par
value $.375 per share 500,000
Shares $34.60 $17,300,000 $4,810
</TABLE>
(1) Estimated solely for the purpose of calculating the registration fee
pursuant to Rules 457(c) and (h)(1) under the Securities Act of 1933, based
on the average of the high and low sale prices per share of the
registrant's Common Stock on June 10, 1999, as reported on the Nasdaq
National Market System.
- --------------------------------------------------------------------------------
<PAGE>
PART II
INFORMATION REQUIRED IN THE
REGISTRATION STATEMENT
ITEM 3. INCORPORATION OF DOCUMENTS BY REFERENCE.
The following documents previously filed (File No. 0-4804) with the
Securities and Exchange Commission (the "Commission") pursuant to the Securities
Exchange Act of 1934 (the "Exchange Act") are, as of their respective dates,
incorporated by reference in this Registration Statement:
(a) The Annual Report on Form 10-K of Tennant Company (the
"Company") for the fiscal year ended December 31, 1998 (which
incorporates by reference certain portions of the Company's 1998
Annual Report to Shareholders, including financial statements and
accompanying information, and certain portions of the Company's
definitive proxy statement for the Company's 1999 Annual Meeting
of Shareholders);
(b) The Company's Quarterly Report on Form 10-Q for the
quarter ended March 31, 1999; and
(c) The description of the Company's common stock contained
in a registration statement filed pursuant to the Exchange Act,
together with any amendments or reports filed for the purpose of
updating that description.
In addition, all documents filed by the Company pursuant to Sections
13(a), 13(c), 14, or 15(d) of the Exchange Act after the date of this
Registration Statement and before the filing of a post-effective amendment that
indicates that all shares of common stock offered have been sold, or that
deregisters all shares of common stock then remaining unsold, shall be deemed to
be incorporated by reference in, and to be a part of, this Registration
Statement from the date of filing of those documents.
Any statement contained in a document incorporated, or deemed to be
incorporated, by reference herein shall be deemed to be modified or superseded
for purposes of this Registration Statement to the extent that a statement
contained herein or incorporated herein by reference or in any other
subsequently filed document that is or is deemed to be incorporated by reference
herein modifies or supersedes that statement. Any statement so modified or
superseded shall not be deemed, except as so modified or superseded, to
constitute a part of this Registration Statement.
ITEM 4. DESCRIPTION OF SECURITIES.
Not Applicable.
ITEM 5. INTERESTS OF NAMED EXPERTS AND COUNSEL.
Bruce Borgerding, Deputy General Counsel and Corporate Secretary of
the Company, beneficially owns more than $50,000 of the Company's common stock.
ITEM 6. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
Article VI of the Company's Restated By-Laws provides that the Company
shall indemnify its directors and officers to the full extent required by
Minnesota Statutes, Section 302A.521, or by other provisions of law. Section
302A.521 requires the Company to indemnify a person made or threatened to be
made a party to a
II-1
<PAGE>
proceeding by reason of the former or present official capacity of the person
with respect to the Company against judgments, penalties, fines (including,
without limitation, excise taxes assessed against the person with respect to
an employee benefit plan), settlements, and reasonable expenses, including
attorneys' fees and disbursements, incurred by the person in connection with
the proceeding, if certain criteria are met. These criteria, all of which
must be met by the person seeking indemnification, are:
(a) the person has not been indemnified by another
organization for the same judgments, penalties, fines,
settlements, and expenses;
(b) the person must have acted in good faith;
(c) no improper personal benefit was obtained by the
person and, if applicable, certain statutory conflict-of-interest
provisions have been satisfied;
(d) in the case of a criminal proceeding, the person
had no reasonable cause to believe that the conduct was
unlawful; and
(e) the person acted in a manner he or she reasonably
believed was in the best interests of the corporation or, in
certain limited circumstances, not opposed to the best
interests of the corporation.
The determination as to eligibility for indemnification is made by the
members of the Company's board of directors, or a committee thereof, who are at
the time not parties to the proceedings under consideration, by special legal
counsel, by the shareholders who are not parties to the proceedings or by a
court.
Article VIII of the Company's Restated Articles of Incorporation
provides that no director shall be personally liable to the Company or its
shareholders for monetary damages for breach of fiduciary duty as director,
except:
(a) any breach of the director's duty of loyalty to
the Company or its shareholders;
(b) acts or omissions not in good faith or which
involve intentional misconduct or a knowing violation of
law;
(c) dividends, stock repurchases and other
distributions made in violation of Minnesota law or for
violations of the Minnesota securities laws;
(d) any transaction from which the director derived an
improper personal benefit; or
(e) any act or omission occurring before the effective
date of the provision in the Company's Restated Articles of
Incorporation limiting such liability.
Article VIII does not affect the availability of equitable remedies,
such as an action to enjoin or rescind a transaction involving a breach of
fiduciary duty, although, as a practical matter, equitable relief may not be
available. Nor does this Article limit the liability of directors for
violations of, or relieve them from the necessity of complying with, federal
securities laws.
ITEM 7. EXEMPTION FROM REGISTRATION CLAIMED.
Not Applicable.
II-2
<PAGE>
ITEM 8. EXHIBITS.
Exhibit Description
------- ------------
4 Rights Agreement, dated as of November 19, 1996,
between the Company and Norwest Bank Minnesota,
National Association (incorporated by reference to
Exhibit 1 to the Company's Current Report on Form 8-K
dated November 19, 1996).
5 Opinion of Bruce J. Borgerding.
23.1 Consent of Bruce J. Borgerding (included in Exhibit 5).
23.2 Consent of KPMG Peat Marwick LLP.
24 Powers of Attorney.
99 Tennant Company 1999 Stock Incentive Plan.
ITEM 9. UNDERTAKINGS.
The undersigned registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being
made, a post-effective amendment to this registration statement.
(2) That, for the purpose of determining any liability under the
Securities Act of 1933, each such post-effective amendment shall
be deemed to be a new registration statement relating to the
securities offered therein, and the offering of such securities
at that time shall be deemed to be the initial BONA FIDE offering
thereof.
(3) To remove from registration by means of a post-effective
amendment any of the securities being registered which remain
unsold at the termination of the offering.
The undersigned registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act of 1933, each filing of the
registrant's annual report pursuant to Section 13(a) or 15(d) of the Securities
Exchange Act of 1934 (and, where applicable, each filing of an employee benefit
plan's annual report pursuant to Section 15(d) of the Securities Exchange Act of
1934) that is incorporated by reference in the registration statement shall be
deemed to be a new registration statement relating to the securities offered
therein, and the offering of such securities at that time shall be deemed to be
the initial BONA FIDE offering thereof.
II-3
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the
registrant certifies that it has reasonable grounds to believe that it meets all
of the requirements for filing on Form S-8 and has duly caused this registration
statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of Minneapolis, State of Minnesota, on June 8, 1999.
TENNANT COMPANY
By /s/ Bruce J. Borgerding
----------------------------------------
Its Deputy General Counsel and Secretary
Pursuant to the requirements of the Securities Act of 1933, this
registration statement has been signed by the following persons in the
capacities and on the date indicated.
<TABLE>
<CAPTION>
Signature Title
- --------- -------
<S> <C>
/s/ Janet M. Dolan * President and Chief Executive Officer
- ---------------------- (Principal Executive Officer)
Janet M. Dolan
/s/ John T. Pain * Vice President, Treasurer, and Chief Financial Officer
- ---------------------- (Principal Financial Officer)
John T. Pain
/s/ Dean A. Niehus * Corporate Controller
- ---------------------- (Principal Accounting Officer)
Dean A. Niehus
Arthur D. Collins, Jr. )
David C. Cox )
Andrew P. Czajkowski )
Janet M. Dolan ) A majority of the Board of Directors*
Roger L. Hale )
William I. Miller )
Edwin L. Russell )
</TABLE>
* Bruce J. Borgerding, by signing his name hereto, hereby signs this document
on behalf of each of the above-named officers or directors of the Registrant
under powers of attorney executed by those persons.
By /s/ Bruce J. Borgerding
---------------------------------------
Bruce J. Borgerding
Deputy General Counsel and Secretary,
Attorney-in-Fact
II-4
<PAGE>
INDEX TO EXHIBITS
<TABLE>
<CAPTION>
EXHIBIT DESCRIPTION
-------- ------------
<S> <C> <C>
4 Rights Agreement, dated as of November 19, 1996, between the
Company and Norwest Bank Minnesota, National Association
(incorporated by reference to Exhibit 1 to the Company's
Current Report on Form 8-K dated November 19, 1996).......... Incorporated by Reference
5 Opinion of Bruce J. Borgerding............................... Filed Electronically
23.1 Consent of Bruce J. Borgerding (included in Exhibit 5)
23.2 Consent of KPMG Peat Marwick LLP............................. Filed Electronically
24 Powers of Attorney........................................... Filed Electronically
99 Tennant Company 1999 Stock Incentive Plan.................... Filed Electronically
</TABLE>
II-5
<PAGE>
Exhibit 5
[Letterhead of Tennant Company]
June 8, 1999
Tennant Company
701 North Lilac Drive
P.O. Box 1452
Minneapolis, Minnesota 55440
Ladies and Gentlemen:
In connection with the Registration Statement on Form S-8 under the
Securities Act of 1933 (the "Registration Statement") relating to the offering
of up to 500,000 shares of common stock, par value $.375 per share (the
"Shares"), of Tennant Company, a Minnesota corporation (the "Company"), pursuant
to the Company's 1999 Stock Incentive Plan, I have examined such corporate
records and other documents, including the Registration Statement, and have
reviewed such matters of law as I have deemed relevant hereto, and, based upon
this examination and review, it is my opinion that all necessary corporate
action on the part of the Company has been taken to authorize the issuance and
sale of the Shares and that, when issued and sold as contemplated in the
Registration Statement, the Shares will be legally issued, fully paid and
nonassessable under the current laws of the State of Minnesota.
I am admitted to the practice of law in the State of Minnesota and the
foregoing opinions are limited to the laws of that state and the federal laws of
the United States of America.
I consent to the filing of this opinion as an exhibit to the Registration
Statement.
Very truly yours,
/s/ Bruce J. Borgerding
-------------------------------
Bruce J. Borgerding
Deputy General Counsel
<PAGE>
Exhibit 23.2
[Letterhead of KPMG Peat Marwick LLP]
To Board of Directors
Tennant Company:
We consent to the use of our reports included or incorporated herein by
reference.
/s/ KPMG Peat Marwick LLP
- -------------------------------
KPMG Peat Marwick LLP
Minneapolis, Minnesota
June 14, 1999
<PAGE>
Exhibit 24
TENNANT COMPANY
Power of Attorney
of Director and/or Officer
The undersigned director and/or officer of Tennant Company, a Minnesota
corporation, does hereby make, constitute and appoint Janet M. Dolan, James H.
Moar and Bruce J. Borgerding, and each or any one of them, his or her true and
lawful attorneys-in-fact, with power of substitution, for the undersigned and in
his or her name, place and stead, to sign and affix the undersigned's name as
director and/or officer of the Company to a Registration Statement or
Registration Statements, on Form S-8 or other applicable form, and all
amendments (including post-effective amendments) thereto, to be filed by the
Company with the Securities and Exchange Commission, in connection with the
registration under the Securities Act of 1933, as amended, of shares of Common
Stock or other securities proposed to be issued or sold by the Company pursuant
to the Tennant Company 1999 Stock Incentive Plan, and to file the same with the
SEC, granting unto these attorneys-in-fact, and each of them, full power and
authority to do and perform any and all acts necessary or incidental to the
performance and execution of the powers herein expressly granted.
IN WITNESS WHEREOF, the undersigned has hereunto set his hand this 3rd day
of June, 1999.
/s/ Janet M. Dolan
---------------------------
<PAGE>
TENNANT COMPANY
Power of Attorney
of Director and/or Officer
The undersigned director and/or officer of Tennant Company, a Minnesota
corporation, does hereby make, constitute and appoint Janet M. Dolan, James H.
Moar and Bruce J. Borgerding, and each or any one of them, his or her true and
lawful attorneys-in-fact, with power of substitution, for the undersigned and in
his or her name, place and stead, to sign and affix the undersigned's name as
director and/or officer of the Company to a Registration Statement or
Registration Statements, on Form S-8 or other applicable form, and all
amendments (including post-effective amendments) thereto, to be filed by the
Company with the Securities and Exchange Commission, in connection with the
registration under the Securities Act of 1933, as amended, of shares of Common
Stock or other securities proposed to be issued or sold by the Company pursuant
to the Tennant Company 1999 Stock Incentive Plan, and to file the same with the
SEC, granting unto these attorneys-in-fact, and each of them, full power and
authority to do and perform any and all acts necessary or incidental to the
performance and execution of the powers herein expressly granted.
IN WITNESS WHEREOF, the undersigned has hereunto set his hand this 3rd day
of June, 1999.
/s/ John T. Pain
------------------------------
<PAGE>
TENNANT COMPANY
Power of Attorney
of Director and/or Officer
The undersigned director and/or officer of Tennant Company, a Minnesota
corporation, does hereby make, constitute and appoint Janet M. Dolan, James H.
Moar and Bruce J. Borgerding, and each or any one of them, his or her true and
lawful attorneys-in-fact, with power of substitution, for the undersigned and in
his or her name, place and stead, to sign and affix the undersigned's name as
director and/or officer of the Company to a Registration Statement or
Registration Statements, on Form S-8 or other applicable form, and all
amendments (including post-effective amendments) thereto, to be filed by the
Company with the Securities and Exchange Commission, in connection with the
registration under the Securities Act of 1933, as amended, of shares of Common
Stock or other securities proposed to be issued or sold by the Company pursuant
to the Tennant Company 1999 Stock Incentive Plan, and to file the same with the
SEC, granting unto these attorneys-in-fact, and each of them, full power and
authority to do and perform any and all acts necessary or incidental to the
performance and execution of the powers herein expressly granted.
IN WITNESS WHEREOF, the undersigned has hereunto set his hand this 2nd day
of June, 1999.
/s/ Dean A. Niehus
----------------------------
<PAGE>
TENNANT COMPANY
Power of Attorney
of Director and/or Officer
The undersigned director and/or officer of Tennant Company, a Minnesota
corporation, does hereby make, constitute and appoint Janet M. Dolan, James H.
Moar and Bruce J. Borgerding, and each or any one of them, his or her true and
lawful attorneys-in-fact, with power of substitution, for the undersigned and in
his or her name, place and stead, to sign and affix the undersigned's name as
director and/or officer of the Company to a Registration Statement or
Registration Statements, on Form S-8 or other applicable form, and all
amendments (including post-effective amendments) thereto, to be filed by the
Company with the Securities and Exchange Commission, in connection with the
registration under the Securities Act of 1933, as amended, of shares of Common
Stock or other securities proposed to be issued or sold by the Company pursuant
to the Tennant Company 1999 Stock Incentive Plan, and to file the same with the
SEC, granting unto these attorneys-in-fact, and each of them, full power and
authority to do and perform any and all acts necessary or incidental to the
performance and execution of the powers herein expressly granted.
IN WITNESS WHEREOF, the undersigned has hereunto set his hand this 5th day
of June, 1999.
/s/ Arthur D. Collins, Jr.
-------------------------------------
<PAGE>
TENNANT COMPANY
Power of Attorney
of Director and/or Officer
The undersigned director and/or officer of Tennant Company, a Minnesota
corporation, does hereby make, constitute and appoint Janet M. Dolan, James H.
Moar and Bruce J. Borgerding, and each or any one of them, his or her true and
lawful attorneys-in-fact, with power of substitution, for the undersigned and in
his or her name, place and stead, to sign and affix the undersigned's name as
director and/or officer of the Company to a Registration Statement or
Registration Statements, on Form S-8 or other applicable form, and all
amendments (including post-effective amendments) thereto, to be filed by the
Company with the Securities and Exchange Commission, in connection with the
registration under the Securities Act of 1933, as amended, of shares of Common
Stock or other securities proposed to be issued or sold by the Company pursuant
to the Tennant Company 1999 Stock Incentive Plan, and to file the same with the
SEC, granting unto these attorneys-in-fact, and each of them, full power and
authority to do and perform any and all acts necessary or incidental to the
performance and execution of the powers herein expressly granted.
IN WITNESS WHEREOF, the undersigned has hereunto set his hand this 3rd day
of June, 1999.
/s/ David C. Cox
------------------------
<PAGE>
TENNANT COMPANY
Power of Attorney
of Director and/or Officer
The undersigned director and/or officer of Tennant Company, a Minnesota
corporation, does hereby make, constitute and appoint Janet M. Dolan, James H.
Moar and Bruce J. Borgerding, and each or any one of them, his or her true and
lawful attorneys-in-fact, with power of substitution, for the undersigned and in
his or her name, place and stead, to sign and affix the undersigned's name as
director and/or officer of the Company to a Registration Statement or
Registration Statements, on Form S-8 or other applicable form, and all
amendments (including post-effective amendments) thereto, to be filed by the
Company with the Securities and Exchange Commission, in connection with the
registration under the Securities Act of 1933, as amended, of shares of Common
Stock or other securities proposed to be issued or sold by the Company pursuant
to the Tennant Company 1999 Stock Incentive Plan, and to file the same with the
SEC, granting unto these attorneys-in-fact, and each of them, full power and
authority to do and perform any and all acts necessary or incidental to the
performance and execution of the powers herein expressly granted.
IN WITNESS WHEREOF, the undersigned has hereunto set his hand this 7th day
of June, 1999.
/s/ Andrew P. Czajkowski
------------------------------
<PAGE>
TENNANT COMPANY TENNANT COMPANY
Power of Attorney
of Director and/or Officer
The undersigned director and/or officer of Tennant Company, a Minnesota
corporation, does hereby make, constitute and appoint Janet M. Dolan, James H.
Moar and Bruce J. Borgerding, and each or any one of them, his or her true and
lawful attorneys-in-fact, with power of substitution, for the undersigned and in
his or her name, place and stead, to sign and affix the undersigned's name as
director and/or officer of the Company to a Registration Statement or
Registration Statements, on Form S-8 or other applicable form, and all
amendments (including post-effective amendments) thereto, to be filed by the
Company with the Securities and Exchange Commission, in connection with the
registration under the Securities Act of 1933, as amended, of shares of Common
Stock or other securities proposed to be issued or sold by the Company pursuant
to the Tennant Company 1999 Stock Incentive Plan, and to file the same with the
SEC, granting unto these attorneys-in-fact, and each of them, full power and
authority to do and perform any and all acts necessary or incidental to the
performance and execution of the powers herein expressly granted.
IN WITNESS WHEREOF, the undersigned has hereunto set his hand this 3rd day
of June, 1999.
/s/ Roger L. Hale
------------------------
<PAGE>
TENNANT COMPANY
Power of Attorney
of Director and/or Officer
The undersigned director and/or officer of Tennant Company, a Minnesota
corporation, does hereby make, constitute and appoint Janet M. Dolan, James H.
Moar and Bruce J. Borgerding, and each or any one of them, his or her true and
lawful attorneys-in-fact, with power of substitution, for the undersigned and in
his or her name, place and stead, to sign and affix the undersigned's name as
director and/or officer of the Company to a Registration Statement or
Registration Statements, on Form S-8 or other applicable form, and all
amendments (including post-effective amendments) thereto, to be filed by the
Company with the Securities and Exchange Commission, in connection with the
registration under the Securities Act of 1933, as amended, of shares of Common
Stock or other securities proposed to be issued or sold by the Company pursuant
to the Tennant Company 1999 Stock Incentive Plan, and to file the same with the
SEC, granting unto these attorneys-in-fact, and each of them, full power and
authority to do and perform any and all acts necessary or incidental to the
performance and execution of the powers herein expressly granted.
IN WITNESS WHEREOF, the undersigned has hereunto set his hand this 7th day
of June, 1999.
/s/ William I. Miller
------------------------
<PAGE>
TENNANT COMPANY
Power of Attorney
of Director and/or Officer
The undersigned director and/or officer of Tennant Company, a Minnesota
corporation, does hereby make, constitute and appoint Janet M. Dolan, James H.
Moar and Bruce J. Borgerding, and each or any one of them, his or her true and
lawful attorneys-in-fact, with power of substitution, for the undersigned and in
his or her name, place and stead, to sign and affix the undersigned's name as
director and/or officer of the Company to a Registration Statement or
Registration Statements, on Form S-8 or other applicable form, and all
amendments (including post-effective amendments) thereto, to be filed by the
Company with the Securities and Exchange Commission, in connection with the
registration under the Securities Act of 1933, as amended, of shares of Common
Stock or other securities proposed to be issued or sold by the Company pursuant
to the Tennant Company 1999 Stock Incentive Plan, and to file the same with the
SEC, granting unto these attorneys-in-fact, and each of them, full power and
authority to do and perform any and all acts necessary or incidental to the
performance and execution of the powers herein expressly granted.
IN WITNESS WHEREOF, the undersigned has hereunto set his hand this 5th day
of June, 1999.
/s/ Edwin L. Russell
------------------------
<PAGE>
Exhibit 99
TENNANT COMPANY
1999 STOCK INCENTIVE PLAN
(EFFECTIVE JANUARY 1, 1999)
1. PURPOSE. The purpose of this 1999 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 directly or indirectly
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
<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
-2-
<PAGE>
Stock immediately prior to such statutory share exchange own,
directly or indirectly, immediately after the statutory share
exchange more 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, except that it
shall not constitute a Change in Control with respect to any
Participant if 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 Non-Employee Directors 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) "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.
(k) "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.
(l) "Fair Market Value" as of any date means, unless otherwise
expressly provided in this Plan:
(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
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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.
(m) "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.
(n) "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.
(o) "Non-Employee Director" means a member of the Board who is
considered a non-employee director within the meaning of Exchange Act
Rule 16b-3.
(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 1999 Stock Award 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.
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(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
Non-Employee Directors 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 500,000, based upon the authorized
shares of the Company on January 1, 1999, 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,
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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).
(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 the
Participant receives no consideration for the transfer. Any
Non-Qualified Stock Option held by a permitted transferee shall
continue to be subject to the same terms and conditions that were
applicable to such Non-Qualified Stock Option immediately prior to its
transfer and may be exercised by such permitted transferee as and to
the extent that such Non-Qualified Stock Option has become exercisable
and has not terminated in accordance with the provisions of this Plan
and the applicable Agreement. For purposes of any provision of this
Plan relating to notice to a Participant or to vesting or termination
of a Non-Qualified Stock Option upon the termination of employment of
a Participant, the references to "Participant" shall mean the original
grantee of the Non-Qualified Stock Option and not any permitted
transferee.
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(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.
(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 or otherwise, 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. Any shares of Restricted Stock as
to which restrictions do not lapse under the preceding sentence
shall terminate at the date of the Participant's termination of
employment and such shares of Restricted Stock shall be forfeited
to the Company.
(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.
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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 or tender 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 or tender 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 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 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,
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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. 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 and Stock Appreciation Rights
relating to more than 50,000 Shares in the aggregate pursuant to Awards in any
year under this Plan.
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. 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 (profit 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
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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.
12. GENERAL PROVISIONS.
(a) EFFECTIVE DATE OF THIS PLAN. This Plan shall become effective as
of January 1,1999, 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, 1999. If this plan is not so approved by such holders,
any Awards granted under this Plan subject to such approval shall be
cancelled and 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,
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the Committee may, in the applicable Agreement or otherwise, permit
a person to cover all or any part of the required withholdings, and
to cover any additional withholdings up to the amount needed to cover
the person'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 person or a
delivery or tender to the Company of Shares held by such person, in
each case valued in the same manner as used in computing the
withholding taxes under applicable laws.
(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 or permitted
transferee under an Award granted before the date of termination,
suspension or modification, unless otherwise provided in an 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 or other person under an Award.
(f) ADJUSTMENT FOR CHANGES IN CAPITALIZATION. Appropriate
adjustments in the aggregate number and type of securities available
for Awards under this Plan, in the limitations on the number and type
of securities that may be issued to an individual Participant, in the
number and type of securities 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, spin-off 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
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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 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 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 te 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 terminated,
expired or been cancelled. 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.
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(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.
(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 PLANS. 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 and 1995 Stock Incentive
Plan, as the same may have been amended from time to time (the "Prior Plans"),
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 Prior Plans. All grants and awards heretofore
or hereafter made under the Prior Plans shall be governed by the terms of the
Prior Plans.
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