Exhibit 10.3

 

TENNANT COMPANY

(“CORPORATION”)

RESTRICTED STOCK PLAN FOR NONEMPLOYEE DIRECTORS

(“PLAN”)

(As Amended and Restated Effective May 6, 2004)

 

 

1.                                       PURPOSE.

The purpose of the Plan is to provide for the issuance of shares of the
Corporation’s common stock (“Shares”) to members of the Corporation’s board of
directors (the “Board”) who are not employees of the Corporation (“Non-employee
Directors”).  Shares shall be granted to each Nonemployee Director for each year
commencing on the day immediately after the date of each Annual Meeting of the
Corporation’s shareholders and ending on the day of the next succeeding Annual
Meeting (a “Board Year”).

 

2.                                       ISSUANCE DATE.

For purposes of the Plan, the first business day of the Board Year commencing in
2005 and the first business day of every Board Year thereafter shall each be
referred to as a “Regular Issuance Date.”

 

3.                                       ISSUANCE OF RESTRICTED SHARES.

(a)          On each Regular Issuance Date, the Corporation shall issue to each
then incumbent Nonemployee Director, 500 Restricted Shares (as hereinafter
defined) (the “Annual Grant”).

(b)         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, a prorated portion of
the Annual Grant.  The Annual Grant for any fraction of a Board Year shall be
equal to the product (rounded up to the nearest share) obtained by multiplying
500 by a fraction (x) the numerator of which is the number of days from the date
such Nonemployee Director is first elected or appointed to the Board to the date
of the next Annual Meeting of the Corporation’s shareholders and (y) the
denominator of which is 365.

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(c)          The Board may from time to time increase or decrease the number of
shares constituting the Annual Grant, provided that the Board shall not change
the amount of the Annual Grant for purposes of the Plan more frequently than
once every six months.  For purposes of the Plan, unless the Board designates
otherwise, any such increase or decrease in the Annual Grant shall be considered
to be effective on the Regular Issuance Date of the following Board Year.

 

4.                                       RESTRICTED SHARES.

Shares issued under Section 3 shall be restricted (“Restricted Shares”) and may
not be sold, assigned, pledged, hypothecated, transferred or otherwise disposed
of (including, without limitation, transfer by gift or donation.  Such
restrictions shall lapse upon the first to occur of the following events (but
only as to that number of Restricted Shares that were issued to a Nonemployee
Director as the Annual Grant):

(a)                       Death of the Nonemployee Director;

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(b)                      Disability of the Nonemployee Director preventing
continued service on the Board;

(c)                       Retirement of the Nonemployee Director from the Board
in accordance with the policy of the Corporation, if any, on retirement of
Nonemployee Directors then in effect;

(d)                      Termination of service as a director by reason of
(i) resignation at the request of the Board, (ii) resignation on the date
specified in a written notice given to the Board at least one year in advance,
(iii) 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 (iv) the
director’s removal by the shareholders of the Corporation; or

(e)                       A change in control (as defined in Section 5) 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 on or after the occurrence of
such event) shall be forfeited and revert to the Corporation.

 

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5.                                       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

 

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(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

 

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(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.

 

6.                                       FORFEITURE.

In addition to the forfeiture provided for in the final paragraph of Section 4
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 4, then all Restricted Shares issued to such
Nonemployee Director pursuant to this Plan shall be forfeited and revert to the
Corporation.

 

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7.                                       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.

 

8.                                       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.

 

9.                                       AMENDMENT; TERM; SHARES AVAILABLE.

The Board may, at any time, amend or terminate the Plan; provided that no
amendment or termination shall, without the consent of a Nonemployee Director,
reduce such Nonemployee Director’s rights in respect of Restricted Shares
previously granted. No Shares shall be issued pursuant to this Plan in lieu of
any Annual Retainer for any period commencing after the Annual Meeting of the
Corporation’s shareholders in 2011.  Not more than 125,000 Shares may be issued
under this Plan; provided, that in the event of a recapitalization,
reclassification, stock dividend, stock split, stock combination, or other
relevant change affecting the capitalization of the Corporation, the number of
shares issuable under this Plan shall be appropriately adjusted.  If at any time
there are not sufficient Shares available under this Plan to permit the issuance
of all of the Restricted Shares to be issued at such time pursuant to Section 3,
then this Plan shall automatically terminate and no further Shares shall be
issued hereunder.

 

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10.                                 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.

 

11.                                 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.

 

12.                                 EFFECTIVENESS.

The Plan originally became effective on May 7, 1993, and was amended and
restated effective January 1, 1995 and January 1, 1999.  The further amendment
and restatement of the Plan is effective May 6, 2004.

 

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