TENNANT CO (Form: 10-Q, Received: 07/30/2020 13:28:36)

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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q



☑	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended June 30, 2020



☐	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
	For the transition period from ___________ to __________

Commission File Number 1-16191

____________________________________

TENNANT COMPANY

(Exact name of registrant as specified in its charter)



Minnesota	41-0572550
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)

701 North Lilac Drive

P.O. Box 1452

Minneapolis, Minnesota 55440

(Address of principal executive offices)

(Zip Code)

(763) 540-1200

(Registrant’s telephone number, including area code)

______________________________________________

Securities registered pursuant to Section 12(b) of the Act:



Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common Stock, par value $0.375 per share	TNC	New York Stock Exchange

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.



Yes	þ	No	¨

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).



Yes	þ	No	¨

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and "emerging growth company" in Rule 12b-2 of the Exchange Act.



Large accelerated filer	þ	Accelerated filer	¨
Non-accelerated filer	¨	Smaller reporting company	☐
Emerging growth company	☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).



Yes	☐	No	þ

As of July 24, 2020, there were 18,462,466 shares of Common Stock outstanding.

TABLE OF CONTENTS



PART I - FINANCIAL INFORMATION		Page
Item 1.	Financial Statements (Unaudited)	4
	Consolidated Statements of Earnings	4
	Consolidated Statements of Comprehensive Income	5
	Consolidated Balance Sheets	6
	Consolidated Statements of Cash Flows	7
	Consolidated Statements of Equity	9
	Notes to the Consolidated Financial Statements	11
	1. Summary of Significant Accounting Policies	11
	2. Newly Adopted Accounting Pronouncements	11
	3. Revenue	11
	4. Management Actions	13
	5. Acquisition	14
	6. Inventories	14
	7. Goodwill and Intangible Assets	15
	8. Debt	15
	9. Warranty	16
	10. Derivatives	17
	11. Fair Value Measurements	19
	12. Retirement Benefit Plans	20
	13. Commitments and Contingencies	20
	14. Accumulated Other Comprehensive Loss	20
	15. Income Taxes	20
	16. Share-Based Compensation	20
	17. Earnings Attributable to Tennant Company Per Share	21
Item 2.	Management's Discussion and Analysis of Financial Condition and Results of Operations	21
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	25
Item 4.	Controls and Procedures	25
PART II - OTHER INFORMATION
Item 1.	Legal Proceedings	26
Item 1A.	Risk Factors	26
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	26
Item 6.	Exhibits	27
Signatures		28

PART I – FINANCIAL INFORMATION


Item 1.	Financial Statements

TENNANT COMPANY CONSOLIDATED STATEMENTS OF EARNINGS (Unaudited)

	Three Months Ended						Six Months Ended
(In millions, except shares and per share data)	June 30						June 30
	2020			2019			2020			2019
Net Sales	$	214.0		$	299.7		$	466.1		$	562.1
Cost of Sales	123.4			178.9			271.4			333.1
Gross Profit	90.6			120.8			194.7			229.0

Operating Expense:
Research and Development Expense	6.6			8.4			14.0			15.6
Selling and Administrative Expense	61.1			92.5			143.4			182.7
Total Operating Expense	67.7			100.9			157.4			198.3
Profit from Operations	22.9			19.9			37.3			30.7

Other Income (Expense):
Interest Income	0.8			0.9			1.7			1.7
Interest Expense	(5.6		)	(5.4		)	(10.7		)	(10.5		)
Net Foreign Currency Transaction Loss	—			(0.2		)	(4.1		)	—
Other (Expense) Income, Net	(0.2		)	1.4			—			1.3
Total Other Expense, Net	(5.0		)	(3.3		)	(13.1		)	(7.5		)

Profit Before Income Taxes	17.9			16.6			24.2			23.2
Income Tax Expense	3.6			1.8			4.7			3.0
Net Earnings Including Noncontrolling Interest	14.3			14.8			19.5			20.2
Net Earnings Attributable to Tennant Company	14.3			14.8			19.5			20.2

Net Earnings Attributable to Tennant Company per Share:
Basic	$	0.78		$	0.82		$	1.06		$	1.12
Diluted	$	0.77		$	0.81		$	1.05		$	1.10

Weighted Average Shares Outstanding:
Basic	18,347,189			18,082,492			18,317,003			18,062,591
Diluted	18,584,693			18,394,865			18,614,527			18,367,384

See accompanying Notes to the Consolidated Financial Statements.

TENNANT COMPANY CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (Unaudited)

	Three Months Ended						Six Months Ended
(In millions)	June 30						June 30
	2020			2019			2020			2019
Net Earnings Including Noncontrolling Interest	$	14.3		$	14.8		$	19.5		$	20.2
Other Comprehensive Income (Loss):
Foreign currency translation adjustments	3.8			1.3			(7.5		)	(0.9		)
Cash flow hedge	(0.5		)	1.3			4.3			2.7
Income Taxes:
Foreign currency translation adjustments	0.7			0.1			0.7			—
Cash flow hedge	0.1			(0.3		)	(1.0		)	(0.7		)
Total Other Comprehensive Income (Loss), net of tax	4.1			2.4			(3.5		)	1.1

Total Comprehensive Income Including Noncontrolling Interest	18.4			17.2			16.0			21.3
Comprehensive Income Attributable to Tennant Company	$	18.4		$	17.2		$	16.0		$	21.3

See accompanying Notes to the Consolidated Financial Statements.

TENNANT COMPANY CONSOLIDATED BALANCE SHEETS (Unaudited)

	June 30,			December 31,
(In millions, except shares and per share data)	2020			2019
ASSETS
Current Assets:
Cash, Cash Equivalents, and Restricted Cash	$	99.3		$	74.6
Receivables:
Trade, less Allowances of $3.9 and $3.6, respectively	180.3			216.5
Other	3.9			6.8
Net Receivables	184.2			223.3
Inventories	149.9			150.1
Prepaid and Other Current Assets	27.5			33.0
Total Current Assets	460.9			481.0
Property, Plant and Equipment	428.4			412.5
Accumulated Depreciation	(249.8		)	(239.2		)
Property, Plant and Equipment, Net	178.6			173.3
Operating Lease Assets	42.4			46.6
Goodwill	193.9			195.1
Intangible Assets, Net	126.7			137.7
Other Assets	25.7			29.2
Total Assets	$	1,028.2		$	1,062.9
LIABILITIES AND TOTAL EQUITY
Current Liabilities:
Current Portion of Long-Term Debt	$	42.5		$	31.3
Accounts Payable	77.4			94.1
Employee Compensation and Benefits	45.0			63.5
Other Current Liabilities	86.6			86.0
Total Current Liabilities	251.5			274.9
Long-Term Liabilities:
Long-Term Debt	297.5			307.5
Long-Term Operating Lease Liabilities	27.1			30.3
Employee-Related Benefits	18.0			19.4
Deferred Income Taxes	38.7			41.7
Other Liabilities	22.3			27.8
Total Long-Term Liabilities	403.6			426.7
Total Liabilities	655.1			701.6
Commitments and Contingencies (Note 13)
Equity:
Common Stock, $0.375 par value; 60,000,000 shares authorized; 18,455,462 and 18,336,010 shares issued and outstanding, respectively	6.9			6.9
Additional Paid-In Capital	49.4			45.5
Retained Earnings	357.4			346.0
Accumulated Other Comprehensive Loss	(42.0		)	(38.5		)
Total Tennant Company Shareholders' Equity	371.7			359.9
Noncontrolling Interest	1.4			1.4
Total Equity	373.1			361.3
Total Liabilities and Total Equity	$	1,028.2		$	1,062.9

See accompanying Notes to the Consolidated Financial Statements.

TENNANT COMPANY CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)

	Six Months Ended
(In millions)	June 30
	2020			2019
OPERATING ACTIVITIES
Net Earnings Including Noncontrolling Interest	$	19.5		$	20.2
Adjustments to Reconcile Net Earnings to Net Cash Provided by Operating Activities:
Depreciation	15.7			15.9
Amortization of Intangible Assets	10.0			11.5
Amortization of Debt Issuance Costs	0.7			0.6
Fair Value Step-Up Adjustment to Acquired Inventory	—			0.9
Deferred Income Taxes	(2.7		)	(4.2		)
Share-Based Compensation Expense	2.8			5.0
Allowance for Doubtful Accounts and Returns	0.7			0.9
Acquisition Contingent Consideration Adjustment	(0.3		)	2.0
Note Receivable Write-down	—			2.7
Other, Net	1.3			0.1
Changes in Operating Assets and Liabilities, Net of Assets Acquired:
Receivables, Net	38.3			(16.3		)
Inventories	(5.1		)	(23.1		)
Accounts Payable	(17.8		)	0.5
Employee Compensation and Benefits	(16.4		)	(4.4		)
Other Current Liabilities	2.3			(2.1		)
Other Assets and Liabilities	(0.5		)	0.7
Net Cash Provided by Operating Activities	48.5			10.9
INVESTING ACTIVITIES
Purchases of Property, Plant and Equipment	(18.4		)	(25.4		)
Proceeds from Disposals of Property, Plant and Equipment	0.1			—
Proceeds from Principal Payments Received on Long-Term Note Receivable	—			0.1
Acquisition of Businesses, Net of Cash, Cash Equivalents and Restricted Cash Acquired	—			(8.9		)
Purchase of Intangible Assets	(0.1		)	(0.4		)
Net Cash Used in Investing Activities	(18.4		)	(34.6		)
FINANCING ACTIVITIES
Proceeds from Borrowings	126.4			25.0
Repayments of Debt	(125.5		)	(25.9		)
Change in Finance Lease Obligations	(0.1		)	(0.1		)
Proceeds from Issuance of Common Stock	2.6			1.2
Purchase of Noncontrolling Owner Interest	—			(0.5		)
Dividends Paid	(8.1		)	(8.0		)
Net Cash Used in Financing Activities	(4.7		)	(8.3		)
Effect of Exchange Rate Changes on Cash, Cash Equivalents and Restricted Cash	(0.7		)	1.3
Net Increase (Decrease) in Cash, Cash Equivalents and Restricted Cash	24.7			(30.7		)
Cash, Cash Equivalents and Restricted Cash at Beginning of Period	74.6			86.1
Cash, Cash Equivalents and Restricted Cash at End of Period	$	99.3		$	55.4



SUPPLEMENTAL CASH FLOW INFORMATION	Six Months Ended
	June 30, 2020		June 30, 2019
Cash Paid for Income Taxes	$	0.8	$	5.6
Cash Paid for Interest	9.4		9.8
Cash Paid for Amounts Included in the Measurement of Lease Liabilities:
Operating cash flows from operating leases	9.8		11.3
Financing cash flows from finance leases	0.1		0.2
Lease assets obtained in exchange for new finance lease liabilities	—		0.1
Lease assets obtained in exchange for new operating lease liabilities	4.7		12.7
Supplemental Non-cash Investing and Financing Activities:
Capital Expenditures in Accounts Payable	$	5.4	$	1.1

See accompanying Notes to the Consolidated Financial Statements.

TENNANT COMPANY

CONSOLIDATED STATEMENTS OF EQUITY

(Unaudited)

(In millions, except shares and per share data)



	Tennant Company Shareholders
	Common Shares	Common Stock		Additional Paid-in Capital		Retained Earnings			Accumulated Other Comprehensive Loss			Tennant Company Shareholders' Equity			Noncontrolling Interest		Total Equity
Balance, December 31, 2019	18,336,010	$	6.9	$	45.5	$	346.0		$	(38.5	)	$	359.9		$	1.4	$	361.3
Net Earnings		—		—		5.2			—			5.2			—		5.2
Other Comprehensive Loss		—		—		—			(7.6		)	(7.6		)	—		(7.6		)
Issue Stock for Directors, Employee Benefit and Stock Plans, net of related tax withholdings of 15,756 shares	98,805	—		1.1		—			—			1.1			—		1.1
Share-Based Compensation		—		2.8		—			—			2.8			—		2.8
Dividends paid $0.22 per Common Share		—		—		(4.0		)	—			(4.0		)	—		(4.0		)
Other		—		—		(0.1		)	—			(0.1		)	—		(0.1		)
Balance, March 31, 2020	18,434,815	$	6.9	$	49.4	$	347.1		$	(46.1	)	$	357.3		$	1.4	$	358.7
Net Earnings		—		—		14.3			—			14.3			—		14.3
Other Comprehensive Income		—		—		—			4.1			4.1			—		4.1
Issue Stock for Directors, Employee Benefit and Stock Plans, net of related tax withholdings of 3,399 shares	20,647	—		—		—			—			—			—		—
Dividends paid $0.22 per Common Share		—		—		(4.0		)	—			(4.0		)	—		(4.0		)
Balance, June 30, 2020	18,455,462	$	6.9	$	49.4	$	357.4		$	(42.0	)	$	371.7		$	1.4	$	373.1



	Tennant Company Shareholders
	Common Shares	Common Stock		Additional Paid-in Capital		Retained Earnings			Accumulated Other Comprehensive Loss			Tennant Company Shareholders' Equity			Noncontrolling Interest			Total Equity
Balance, December 31, 2018	18,125,201	$	6.8	$	28.5	$	316.3		$	(37.2	)	$	314.4		$	1.9		$	316.3
Net Earnings		—		—		5.4			—			5.4			—			5.4
Other Comprehensive Income		—		—		—			(1.3		)	(1.3		)	—			(1.3		)
Issue Stock for Directors, Employee Benefit and Stock Plans, net of related tax withholdings of 6,952 shares	35,338	—		0.2		—			—			0.2			—			0.2
Share-Based Compensation		—		3.3		—			—			3.3			—			3.3
Dividends paid $0.22 per Common Share		—		—		(4.0		)	—			(4.0		)	—			(4.0		)
Recognition of Noncontrolling Interests		—		—		—			—			—			0.3			0.3
Balance, March 31, 2019	18,160,539	$	6.8	$	32.0	$	317.7		$	(38.5	)	$	318.0		$	2.2		$	320.2
Net Earnings		—		—		14.8			—			14.8			—			14.8
Other Comprehensive Income		—		—		—			2.4			2.4			—			2.4
Issue Stock for Directors, Employee Benefit and Stock Plans, net of related tax withholdings of 3,310 shares	31,947	—		0.3		—			—			0.3			—			0.3
Share-Based Compensation		—		1.7		—			—			1.7			—			1.7
Dividends paid $0.22 per Common Share		—		—		(4.0		)	—			(4.0		)	—			(4.0		)
Recognition of Noncontrolling Interests		—		—		—			—			—			(0.3		)	(0.3		)
Purchase of Noncontrolling Owner Interest		—		0.5		—			—			0.5			(0.5		)	—
Other		—		—		—			—			—			0.1			0.1
Balance, June 30, 2019	18,192,486	$	6.8	$	34.5	$	328.5		$	(36.1	)	$	333.7		$	1.5		$	335.2

See accompanying Notes to the Consolidated Financial Statements.

TENNANT COMPANY

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

(In millions, except shares and per share data)


1.	Summary of Significant Accounting Policies

Basis of Presentation – The accompanying unaudited Consolidated Financial Statements have been prepared in accordance with the Securities and Exchange Commission (“SEC”) requirements for interim reporting. In our opinion, the Consolidated Financial Statements contain all adjustments (consisting of only normal recurring adjustments) necessary for the fair presentation of our financial position and results of operations.

These statements should be read in conjunction with the Consolidated Financial Statements and Notes included in our annual report on Form 10-K for the year ended December 31, 2019. The results of operations for interim periods are not necessarily indicative of the results to be expected for the full year.

New Accounting Pronouncements – In March 2020, the Financial Accounting Standards Board ("FASB") issued Accounting Standard Update (“ASU”) No. 2020-04, Reference Rate Reform (Topic 848). This ASU provides optional expedients to applying generally accepted accounting principles to certain contract modifications, hedging relationships, and other transactions affected by the reference rate reform, which affects the London Inter-bank Offered Rate, if certain criteria are met. The amendments are effective as of March 12, 2020 through December 31, 2022. We are evaluating whether to apply any of the expedients and/or exceptions.

Further details regarding the adoption of new accounting standards are discussed in Note 2.

We documented the summary of significant accounting policies in the Notes to the Consolidated Financial Statements of our annual report on Form 10-K for the fiscal year ended December 31, 2019. Other than the accounting policies noted above, there have been no material changes to our accounting policies since the filing of that report.


2.	Newly Adopted Accounting Pronouncements

Financial Instruments

On January 1, 2020, we adopted ASU No. 2016-13, Financial Instruments-Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments, and all related amendments. This ASU improves financial reporting by requiring more timely recording of credit losses on loans and other financial instruments held by financial institutions and other organizations. Under the new guidance, the ASU requires an organization to measure all expected credit losses for financial assets held at the reporting date based on historical experience, current conditions, and reasonable supportable forecasts. We evaluated the impact of this amended guidance on our consolidated financial statements and related disclosures and concluded that it is immaterial.

We estimate an allowance for doubtful accounts using a loss rate method. We considered the following in determining the expected loss rate: (1) historical loss rate, (2) macroeconomic factors, and (3) creditworthiness of customers.

The historical loss rate is calculated by taking the yearly write-off expense, net of collections, as a percentage of the annual average balance of trade receivables for each of the past three years.

A reconciliation of the beginning and ending allowance for doubtful accounts is as follows:



	Allowance for Doubtful Accounts:
December 31, 2019 balance	$	3.6
Charged to costs and expenses	0.8
Deductions^(a)	(0.5		)
June 30, 2020 balance	$	3.9


^(a)	Includes accounts determined to be uncollectible and charged against reserves.

3. Revenue

Disaggregation of Revenue

The following tables illustrate the disaggregation of revenue by geographic area, groups of similar products and services and sales channels for the three and six months ended June 30, 2020 and 2019:

Net Sales by geographic area



	Three Months Ended				Six Months Ended
	June 30				June 30
	2020		2019		2020		2019
Americas	$	136.3	$	189.5	$	298.9	$	350.3
Europe, Middle East and Africa	54.8		80.9		126.8		158.9
Asia Pacific	22.9		29.3		40.4		52.9
Total	$	214.0	$	299.7	$	466.1	$	562.1

Net Sales are attributed to each geographic area based on the end user country and are net of intercompany sales.

Net Sales by groups of similar products and services



	Three Months Ended				Six Months Ended
	June 30				June 30
	2020		2019		2020		2019
Equipment	$	134.6	$	200.0	$	288.7	$	362.9
Parts and Consumables	43.2		55.4		97.5		111.3
Specialty Surface Coatings	5.2		7.1		11.3		13.3
Service and Other	31.0		37.2		68.6		74.6
Total	$	214.0	$	299.7	$	466.1	$	562.1

For the three months ended June 30, 2019, we reclassified $7.8 million from Parts and Consumables to Equipment and $3.8 million from Service and Other to Equipment. For the six months ended June 30, 2019, we reclassified $7.7 million from Parts and Consumables to Equipment and $5.3 million from Service and Other to Equipment.

Net Sales by sales channel



	Three Months Ended				Six Months Ended
	June 30				June 30
	2020		2019		2020		2019
Sales Direct to Consumer	$	143.3	$	201.4	$	310.9	$	373.8
Sales to Distributors	70.7		98.3		155.2		188.3
Total	$	214.0	$	299.7	$	466.1	$	562.1

Contract Liabilities

Sales Returns

The right of return may exist explicitly or implicitly with our customers. When the right of return exists, we adjust the transaction price for the estimated effect of returns. We estimate the expected returns using the expected value method by assessing historical sales levels and the timing and magnitude of historical sales return levels as a percent of sales and projecting this experience into the future.

Sales Incentives

Our sales contracts may contain various customer incentives, such as volume-based rebates or other promotions. We reduce the transaction price for certain customer programs and incentive offerings that represent variable consideration. Sales incentives given to our customers are recorded using the most likely amount approach for estimating the amount of consideration to which the Company will be entitled. We forecast the most likely amount of the incentive to be paid at the time of sale, update this forecast quarterly, and adjust the transaction price accordingly to reflect the new amount of incentives expected to be earned by the customer. A majority of our customer incentives are settled within one year. We record our accruals for volume-based rebates and other promotions in Other Current Liabilities on our Consolidated Balance Sheets.

The change in our sales incentive accrual balance for the six months ended June 30, 2020 and 2019 was as follows:



	Six Months Ended
	June 30
	2020			2019
Beginning balance	$	13.7		$	16.7
Additions to sales incentive accrual	9.1			14.6
Contract payments	(11.8		)	(19.4		)
Foreign currency fluctuations	(0.1		)	0.1
Ending balance	$	10.9		$	12.0

Deferred Revenue

We sell separately priced prepaid contracts to our customers where we receive payment at the inception of the contract and defer recognition of the consideration received because we have to satisfy future performance obligations. Our deferred revenue balance is primarily attributed to prepaid maintenance contracts on our machines ranging from 12 months to 60 months. In circumstances where prepaid contracts are bundled with machines, we use an observable price to determine stand-alone selling price for separate performance obligations.

The change in the deferred revenue balance for the six months ended June 30, 2020 and 2019 was as follows:



	Six Months Ended
	June 30
	2020			2019
Beginning balance	$	10.7		$	8.5
Increase in deferred revenue representing our obligation to satisfy future performance obligations	7.2			5.9
Deferred revenue addition from the acquisition of Gaomei	—			1.4
Decrease in deferred revenue for amounts recognized in Net Sales for satisfied performance obligations	(7.3		)	(5.9		)
Foreign currency fluctuations	(0.2		)	—
Ending balance	$	10.4		$	9.9

At June 30, 2020, $6.9 million and $3.5 million of deferred revenue was reported in Other Current Liabilities and Other Liabilities, respectively, on our Consolidated Balance Sheets. Of this, we expect to recognize the following approximate amounts in Net Sales in the following periods:



Remaining 2020	$	5.5
2021	2.4
2022	1.4
2023	0.7
2024	0.3
Thereafter	0.1
Total	$	10.4

At December 31, 2019, $6.8 million and $3.9 million of deferred revenue was reported in Other Current Liabilities and Other Liabilities, respectively, on our Consolidated Balance Sheets.


4.	Management Actions

Restructuring Actions

In the first quarter of 2020, we implemented a restructuring action in an effort to streamline our operating model in Japan. In the second quarter of 2020, we recorded a pre-tax charge of $0.7 million, which included severance-related and other costs primarily associated with lease break fees. The pre-tax charge of $1.5 million in the first six months of 2020 consisted of $1.1 million of severance-related costs and $0.4 million of other costs. These costs were included in Selling and Administrative Expense in the Consolidated Statements of Earnings. We expect to incur up to $2 million of costs related to this restructuring. The charge impacted our Asia Pacific (APAC) operating segment. We estimate the savings will offset the pre-tax charge approximately one year from the date of the action.

During 2019, we implemented a restructuring action to further our integration efforts related to the IPC Group. The pre-tax charge of $4.8 million consisted of severance, with $0.3 million in Cost of Sales and $4.5 million in Selling and Administrative Expense in the Consolidated Statements of Earnings. The charge impacted our Europe, Middle East and Africa (EMEA) as well as our Americas operating segments. We expect no further charges related to this restructuring action. We estimate the savings have offset the pre-tax charges incurred to date.

A reconciliation of the beginning and ending liability balances is as follows:



	Severance and Related Costs
December 31, 2018 balance	$	2.2
2019 charges and utilization:
New charges	6.1
Cash payments	(2.5		)
Adjustments to accrual	(1.3		)
December 31, 2019 balance	$	4.5
2020 charges and utilization:
New charges	1.1
Cash payments	(2.2		)
Adjustment to accrual	(0.4		)
June 30, 2020 balance	$	3.0

Other Actions

In 2019, we made the decision to discontinue certain product lines. During the six months ended June 30, 2020, we recorded an additional $1.7 million in Cost of Sales in the Consolidated Statements of Earnings to reflect our estimate of inventory that will not be sold, all of which was recorded in the first quarter of 2020.


5.	Acquisition

On January 4, 2019, we completed the acquisition of Hefei Gaomei Cleaning Machines Co., Ltd. and Anhui Rongen Environmental Protection Technology Co., Ltd. (collectively "Gaomei"), privately held designers and manufacturers of commercial cleaning solutions based in China. The financial results for Gaomei have been included in the consolidated financial results since the date of closing.

The fair value measurements were final as of December 31, 2019.

The total purchase price includes the following:


•	$11.3 million was paid during the first quarter of 2019 upon close of the transaction;


•	$11.3 million which was paid in the fourth quarter of 2019;

•

$4.7 million which represents the estimated fair value of contingent consideration at the acquisition date. In April 2020, the earnout agreement was modified. The final payment is based on a fixed payment plus variable payments contingent on achieving certain levels of gross profit and achieving integration milestones. Consideration of $1.4 million to $3.1 million will be paid in March 2021 if the targets are met. As of June 30, 2020, the contingent consideration had a fair value of $1.8 million based on a probability-weighted analysis of achieving targets; and


•	$(0.2) million which represents a working capital purchase price adjustment.

None of the goodwill is expected to be deductible for income tax purposes. The expected lives of the acquired amortizable intangible assets range from 10 years to 15 years and are being amortized on a straight-line basis.


6.	Inventories

Inventories are valued at the lower of cost or net realizable value. Inventories at June 30, 2020 and December 31, 2019 consisted of the following:



	June 30, 2020			December 31, 2019
Inventories carried at LIFO:
Finished goods	$	53.0		$	50.9
Raw materials, production parts and work-in-process	26.0			32.5
Excess of FIFO over LIFO cost^(a)	(31.6		)	(33.4		)
Total LIFO inventories	47.4			50.0
Inventories carried at FIFO:
Finished goods	62.9			60.1
Raw materials, production parts and work-in-process	39.6			40.0
Total FIFO inventories	102.5			100.1
Total inventories	$	149.9		$	150.1


^(a)	The difference between replacement cost and the stated LIFO inventory value is not materially different from the reserve for the LIFO valuation method.


7.	Goodwill and Intangible Assets

The changes in the carrying value of Goodwill for the six months ended June 30, 2020 were as follows:



	Goodwill			Accumulated Impairment Losses			Total
Balance as of December 31, 2019	$	235.1		$	(40.0	)	$	195.1
Additions	—			—			—
Foreign currency fluctuations	(3.3		)	2.1			(1.2		)
Balance as of June 30, 2020	$	231.8		$	(37.9	)	$	193.9

The balances of acquired Intangible Assets, excluding Goodwill, as of June 30, 2020 and December 31, 2019, were as follows:



	Customer Lists			Trade Names			Technology			Total
Balance as of June 30, 2020
Original cost	$	153.2		$	31.8		$	16.9		$	201.9
Accumulated amortization	(57.2		)	(9.8		)	(8.2		)	(75.2		)
Carrying value	$	96.0		$	22.0		$	8.7		$	126.7
Weighted average original life (in years)	15			11			11
Balance as of December 31, 2019
Original cost	$	154.1		$	31.8		$	17.1		$	203.0
Accumulated amortization	(49.8		)	(8.2		)	(7.3		)	(65.3		)
Carrying value	$	104.3		$	23.6		$	9.8		$	137.7
Weighted average original life (in years)	15			11			11

Amortization expense on Intangible Assets for the three and six months ended June 30, 2020 was $5.0 million and $10.0 million, respectively. Amortization expense on Intangible Assets for the three and six months ended June 30, 2019 was $5.8 million and $11.5 million, respectively.

Estimated aggregate amortization expense based on the current carrying value of amortizable Intangible Assets for each of the five succeeding years and thereafter is as follows:



Remaining 2020	$	10.2
2021	18.9
2022	16.9
2023	15.3
2024	13.8
Thereafter	51.6
Total	$	126.7


8.	Debt

Financial Covenants

In 2017, the Company and certain of our foreign subsidiaries entered into a secured Credit Agreement (the "2017 Credit Agreement") with JPMorgan, as administrative agent, Goldman Sachs Bank USA, as syndication agent, Wells Fargo National Association, U.S. Bank National Association, and HSBC Bank USA, National Association, as co-documentation agents, and the lenders (including JPMorgan) from time to time party thereto. The 2017 Credit Agreement contains customary representations, warranties and covenants, including, but not limited to, covenants restricting the Company’s ability to incur indebtedness and liens and merge or consolidate with another entity, and expires in April 2022. The 2017 Credit Agreement also contains financial covenants requiring us to maintain a net leverage ratio of consolidated net indebtedness to consolidated earnings before income, taxes, depreciation and amortization, subject to certain adjustments ("Adjusted EBITDA") of not greater than 4.00 to 1, as well as requiring us to maintain an interest coverage ratio of consolidated Adjusted EBITDA to consolidated interest expense of no less than 3.50 to 1 for the quarter ended June 30, 2020. The 2017 Credit Agreement also contains a financial covenant requiring us to maintain a senior secured net leverage ratio of consolidated senior secured net indebtedness to consolidated Adjusted EBITDA ratio of not greater than 3.50 to 1. These financial covenants may restrict our ability to pay dividends and purchase outstanding shares of our common stock. We were in compliance with our financial covenants at June 30, 2020.

Senior Notes Guarantees

Our Senior Notes (the "Notes") are unconditionally and jointly and severally guaranteed by Tennant Coatings, Inc. and Tennant Sales and Service Company (collectively, the "Guarantors" or "Guarantor Subsidiaries"), which are 100% owned subsidiaries of the Company.

The Notes and the guarantees constitute senior unsecured obligations of the Company and the Guarantors, respectively. The Notes and the guarantees, respectively, are: (a) equal in right of payment with all of the Company's and the Guarantors' senior debt, without giving effect to collateral arrangements; (b) senior in right of payment to all of the Company's and the Guarantors' future subordinated debt, if any; (c) effectively subordinated in right of payment to all of the Company's and the Guarantors' debt and obligations that are secured, including borrowings under the Company's senior secured credit facilities for so long as the senior secured credit facilities are secured, to the extent of the value of the assets securing such liens, and (d) structurally subordinated in right of payment to all liabilities (including trade payables) of the Company's and the Guarantors' subsidiaries that do not guarantee the Notes.

In the second quarter of 2020, the Company early adopted the SEC's rule titled "Financial Disclosures about Guarantors and Issuers of Guaranteed Securities and Affiliates Whose Securities Collateralize a Registrant's Securities," which simplifies the disclosure requirements related to the Notes under Rule 3-10 of Regulation S-X. Under this amended rule, the Company is not required to disclose separate financial statements for the guarantees as it no longer has a reporting requirement. The Company has filed a Form 15 for the Guarantors to suspend the Company's duty to file reports on the guarantor financial statements.

Debt Outstanding

Debt outstanding at June 30, 2020 and December 31, 2019 consisted of the following:



	June 30, 2020			December 31, 2019
Bank Borrowings	$	1.4		$	—
Senior Unsecured Notes	300.0			300.0
Credit Facility Borrowings	40.0			40.0
Secured Borrowings	2.0			2.4
Finance Lease Liabilities	0.1			0.2
Unamortized Debt Issuance Costs	(3.5		)	(3.8		)
Total Debt	340.0			338.8
Less: Current Portion of Long-Term Debt^(a)	(42.5		)	(31.3		)
Long-Term Debt	$	297.5		$	307.5


^(a)	Current portion of long-term debt as of June 30, 2020 includes a $40.0 million anticipated repayment on credit facility borrowings under our 2017 Credit Agreement, $1.4 million of current maturities, $1.0 million of current maturities of secured borrowings and $0.1 million of current maturities of finance lease liabilities.

As of June 30, 2020, we had outstanding borrowings under our Senior Unsecured Notes of $300.0 million. In addition, we had outstanding borrowings of $40.0 million under our revolving facility and had letters of credit and bank guarantees outstanding in the amount of $3.3 million, leaving approximately $156.7 million of unused borrowing capacity on our revolving facility. Commitment fees on unused lines of credit for the six months ended June 30, 2020 were $0.3 million. The overall weighted average cost of debt is approximately 5.2% and net of a related cross-currency swap instrument is approximately 4.3%. Further details regarding the cross-currency swap instrument are discussed in Note 10.


9.	Warranty

We record a liability for warranty claims at the time of sale. The amount of the liability is based on the trend in the historical ratio of claims to sales, the historical length of time between the sale and resulting warranty claim, new product introductions and other factors. Warranty terms on machines generally range from one to four years. However, the majority of our claims are paid out within the first six to nine months following a sale. The majority of the liability for estimated warranty claims represents amounts to be paid out in the near term for qualified warranty issues, with immaterial amounts reserved to be paid for older equipment warranty issues.

The changes in warranty reserves for the six months ended June 30, 2020 and 2019 were as follows:



	Six Months Ended
	June 30
	2020			2019
Beginning balance	$	12.7		$	13.1
Additions charged to expense	3.7			5.4
Foreign currency fluctuations	—			0.1
Claims paid	(5.3		)	(5.9		)
Ending balance	$	11.1		$	12.7


10.	Derivatives

Hedge Accounting and Hedging Programs

We recognize all derivative instruments as either assets or liabilities in our Consolidated Balance Sheets and measure them at fair value. Gains and losses resulting from changes in fair value are accounted for depending on the use of the derivative and whether it is designated and qualifies for hedge accounting.

We evaluate hedge effectiveness on our hedges that are designated and qualify for hedge accounting at the inception of the hedge prospectively, as well as retrospectively, and record any ineffective portion of the hedging instruments along with the time value of purchased contracts in the same line item of the income statement as the item being hedged on our Consolidated Statements of Earnings. In prior years, ineffective portions of hedging instruments and time value of purchased contracts were recorded in Net Foreign Currency Transaction Loss on our Consolidated Statements of Earnings.

Our hedging policy establishes maximum limits for each counterparty to mitigate any concentration of risk.

Balance Sheet Hedging

Hedges of Foreign Currency Assets and Liabilities

We hedge our net recognized foreign currency denominated assets and liabilities with foreign exchange forward contracts to reduce the risk that the value of these assets and liabilities will be adversely affected by changes in exchange rates. These contracts hedge assets and liabilities that are denominated in foreign currencies and are carried at fair value as either assets or liabilities on the Consolidated Balance Sheets with changes in the fair value recorded to Net Foreign Currency Transaction Loss in our Consolidated Statements of Earnings. These contracts do not subject us to material balance sheet risk due to exchange rate movements because gains and losses on these derivatives are intended to offset gains and losses on the assets and liabilities being hedged. At June 30, 2020 and December 31, 2019, the notional amounts of foreign currency forward exchange contracts outstanding not designated as hedging instruments were $51.0 million and $41.9 million, respectively.

Cash Flow Hedging

Hedges of Forecasted Foreign Currency Transactions

In countries outside the U.S., we transact business in U.S. dollars and in various other currencies. We may use foreign exchange option contracts or forward contracts to hedge certain cash flow exposures resulting from changes in these foreign currency exchange rates. These foreign exchange contracts, carried at fair value, have maturities of up to one year. We enter into these foreign exchange contracts to hedge a portion of our forecasted foreign currency denominated revenue in the normal course of business, and accordingly, they are not speculative in nature. The notional amounts of outstanding foreign currency forward contracts designated as cash flow hedges were $2.4 million as of June 30, 2020 and $3.0 million as of December 31, 2019. The notional amounts of outstanding foreign currency option contracts designated as cash flow hedges were $8.4 million and $9.8 million as of June 30, 2020 and December 31, 2019, respectively.

Foreign Currency Derivatives

We use foreign currency exchange rate derivatives to hedge our exposure to fluctuations in exchange rates for anticipated intercompany cash transactions between Tennant Company and its subsidiaries. We entered into Euro to U.S. dollar foreign exchange cross-currency swaps for all of the anticipated cash flows associated with an intercompany loan from a wholly-owned European subsidiary. We enter into these foreign exchange cross-currency swaps to hedge the foreign currency denominated cash flows associated with this intercompany loan, and accordingly, they are not speculative in nature. These cross-currency swaps are designated as cash flow hedges. The hedged cash flows as of June 30, 2020 and December 31, 2019 included €163.2 million and €166.8 million of total notional values, respectively. As of June 30, 2020, the aggregate scheduled interest payments over the course of the loan and related swaps amounted to €13.2 million. The scheduled maturity and principal payment of the loan and related swaps of €150.0 million are due in April 2022. There were no new cross-currency swaps designated as cash flow hedges as of June 30, 2020.

The fair value of derivative instruments on our Consolidated Balance Sheets as of June 30, 2020 and December 31, 2019 was as follows:



	Derivative Assets					Derivative Liabilities
	Balance Sheet Location	June 30, 2020		December 31, 2019		Balance Sheet Location	June 30, 2020		December 31, 2019
Derivatives designated as hedging instruments:
Foreign currency option contracts	Other Current Assets	$	0.1	$	—	Other Current Liabilities	$	—	$	—
Foreign currency forward contracts	Other Current Assets	2.6		2.5		Other Current Liabilities	—		—
Foreign currency forward contracts	Other Assets	—		—		Other Liabilities	8.7		12.6
Derivatives not designated as hedging instruments:
Foreign currency forward contracts	Other Current Assets	$	1.4	$	0.6	Other Current Liabilities	$	0.2	$	0.3

As of June 30, 2020, we anticipate reclassifying approximately $2.5 million of gains from Accumulated Other Comprehensive Loss to net earnings during the next 12 months.

The following tables include the amounts in the Consolidated Statements of Earnings in which the effects of cash flow hedges are recorded and the effects of cash flow hedge activity on these line items for the three and six months ended June 30, 2020 and June 30, 2019:



	Three Months Ended											Six Months Ended
	June 30											June 30
	2020					2019						2020						2019
	Total		Amount of Gain (Loss) on Cash Flow Hedge Activity			Total			Amount of Gain (Loss) on Cash Flow Hedge Activity			Total			Amount of Gain (Loss) on Cash Flow Hedge Activity			Total		Amount of Gain (Loss) on Cash Flow Hedge Activity
Interest Income	$	0.8	$	0.8		$	0.9		$	0.7		$	1.7		$	1.5		$	1.7	$	1.4
Net Foreign Currency Transaction Gain (Loss)	—		(3.0		)	(0.2		)	(2.1		)	(4.1		)	(0.3		)	—		1.0

The effect of foreign currency derivative instruments designated as hedges and of foreign currency derivative instruments not designated as hedges in our Consolidated Statements of Earnings for the three and six months ended June 30, 2020 was as follows:



	Three Months Ended						Six Months Ended
	June 30, 2020						June 30, 2020
	Foreign Currency Option Contracts			Foreign Currency Forward Contracts			Foreign Currency Option Contracts	Foreign Currency Forward Contracts
Derivatives in cash flow hedging relationships:
Net (loss) gain recognized in Other Comprehensive Income (Loss), net of tax^(a)	$	(0.3	)	$	(1.8	)	—	4.2
Net gain reclassified from Accumulated Other Comprehensive Loss into earnings, net of tax, effective portion to Interest Income	—			0.6			—	1.1
Net loss reclassified from Accumulated Other Comprehensive Loss into earnings, net of tax, effective portion to Net Foreign Currency Transaction Loss	—			(2.3		)	—	(0.2	)
Derivatives not designated as hedging instruments:
Net (loss) gain recognized in earnings^(b)	$	—		$	(1.6	)	—	0.6



	Three Months Ended						Six Months Ended
	June 30, 2019						June 30, 2019
	Foreign Currency Option Contracts			Foreign Currency Forward Contracts			Foreign Currency Option Contracts			Foreign Currency Forward Contracts
Derivatives in cash flow hedging relationships:
Net (loss) gain recognized in Other Comprehensive Income (Loss), net of tax^(a)	$	(0.1	)	$	—		$	(0.2	)	$	4.1
Net gain reclassified from Accumulated Other Comprehensive Loss into earnings, net of tax, effective portion to Interest Income	—			0.6			—			1.1
Net (loss) gain reclassified from Accumulated Other Comprehensive Loss into earnings, net of tax, effective portion to Net Foreign Currency Transaction (Loss) Gain	—			(1.6		)	—			0.8
Derivatives not designated as hedging instruments:
Net loss recognized in earnings^(b)	$	—		$	(0.6	)	—			(0.8		)


^(a)	Net change in the fair value of the effective portion classified in Other Comprehensive Income (Loss).


^(b)	Classified in Net Foreign Currency Transaction Loss.


11.	Fair Value Measurements

Estimates of fair value for financial assets and financial liabilities are based on the framework established in the accounting guidance for fair value measurements. The framework defines fair value, provides guidance for measuring fair value and requires certain disclosures. The framework discusses valuation techniques, such as the market approach (comparable market prices), the income approach (present value of future income or cash flow) and the cost approach (cost to replace the service capacity of an asset or replacement cost). The framework utilizes a fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value into three broad levels. The following is a brief description of those three levels:


•	Level 1: Observable inputs such as quoted prices (unadjusted) in active markets for identical assets or liabilities.


•	Level 2: Inputs other than quoted prices that are observable for the asset or liability, either directly or indirectly. These include quoted prices for similar assets or liabilities in active markets and quoted prices for identical or similar assets or liabilities in markets that are not active.


•	Level 3: Unobservable inputs that reflect the reporting entity’s own assumptions.

Our population of assets and liabilities subject to fair value measurements at June 30, 2020 is as follows:



	Fair Value		Level 1		Level 2		Level 3
Assets:
Foreign currency forward exchange contracts	$	6.2	$	—	$	6.2	$	—
Foreign currency options contracts	0.1		—		0.1		—
Total Assets	$	6.3	$	—	$	6.3	$	—
Liabilities:
Foreign currency forward exchange contracts	$	11.1	$	—	$	11.1	$	—
Contingent consideration	1.8		—		—		1.8
Total Liabilities	$	12.9	$	—	$	11.1	$	1.8

Our population of assets and liabilities subject to fair value measurements at December 31, 2019 is as follows:



	Fair Value		Level 1		Level 2		Level 3
Assets:
Foreign currency forward exchange contracts	$	6.4	$	—	$	6.4	$	—
Total Assets	$	6.4	$	—	$	6.4	$	—
Liabilities:
Foreign currency forward exchange contracts	$	16.2	$	—	$	16.2	$	—
Contingent consideration	$	2.1	—		—		2.1
Total Liabilities	$	18.3	$	—	$	16.2	$	2.1

Our foreign currency forward exchange and option contracts are valued using observable Level 2 market expectations at the measurement date and standard valuation techniques to convert future amounts to a single present value amount. Further details regarding our foreign currency forward exchange and option contracts are discussed in Note 10.

Contingent consideration is valued using a probability-weighted analysis of projected gross profit and integration milestones. Actual results may differ significantly from those used in the estimate above, which may affect future payments. Changes in future payments will be reflected in future operating results as they occur.

The carrying amounts reported in the Consolidated Balance Sheets for Cash and Cash Equivalents, Restricted Cash, Accounts Receivable, Other Current Assets, Accounts Payable and Other Current Liabilities approximate fair value due to their short-term nature.

The fair value and carrying value of total debt, including current portion, were $345.0 million and $340.0 million, respectively, as of June 30, 2020. The fair value and carrying value of total debt, including current portion, were $357.2 million and $338.8 million, respectively, as of December 31, 2019. The fair value was calculated based on the borrowing rates currently available to us for bank loans with similar terms and remaining maturities, which is a Level 2 in the fair value hierarchy.

From time to time, we measure certain assets at fair value on a non-recurring basis, including evaluation of long-lived assets, goodwill and other intangible assets, as part of a business acquisition. These assets are measured and recognized at amounts equal to the fair value determined as of the date of acquisition. Fair value valuations are based on the information available as of the acquisition date and the expectations and assumptions that have been deemed reasonable by us. There are inherent uncertainties and management judgment required in these determinations. The fair value measurements of assets and liabilities assumed as part of a business acquisition are based on valuations involving significant unobservable inputs, or Level 3, in the fair value hierarchy.

These assets are also subject to periodic impairment testing by comparing the respective carrying value of each asset to the estimated fair value of the reporting unit or asset group in which they reside. In the event we determine these assets to be impaired, we would recognize an impairment loss equal to

the amount by which the carrying value of the reporting unit, impairment asset or asset group exceeds its estimated fair value. These periodic impairment tests utilize company-specific assumptions involving unobservable inputs, or Level 3, in the fair value hierarchy.


12.	Retirement Benefit Plans

Our defined benefit pension plans and postretirement medical plan are described in Note 13 of our annual report on Form 10-K for the year ended December 31, 2019. We have contributed $0.1 million and $0.1 million during the second quarter of 2020 and $0.2 million and $0.3 million during the first six months of 2020 to our pension plans and postretirement medical plan, respectively. We contributed $0.1 million and $0.2 million during the second quarter of 2019 and $0.2 million and $0.4 million during the first six months of 2019 to our pension plans and postretirement medical plan, respectively.

Net benefit costs for the three and six months ended June 30, 2020 and 2019 were not material.


13.	Commitments and Contingencies

In the ordinary course of business, we may become liable with respect to pending and threatened litigation, tax, environmental and other matters. While the ultimate results of current claims, investigations and lawsuits involving us are unknown at this time, we do not expect that these matters will have a material adverse effect on our consolidated financial position or results of operations. Legal costs associated with such matters are expensed as incurred.


14.	Accumulated Other Comprehensive Loss

Components of Accumulated Other Comprehensive Loss, net of tax, within the Consolidated Balance Sheets, are as follows:



	June 30, 2020			December 31, 2019
Foreign currency translation adjustments	$	(43.1	)	$	(36.3	)
Pension and retiree medical benefits	(0.7		)	(0.7		)
Cash flow hedge	1.8			(1.5		)
Total Accumulated Other Comprehensive Loss	$	(42.0	)	$	(38.5	)

The changes in components of Accumulated Other Comprehensive Loss, net of tax, are as follows:



	Foreign Currency Translation Adjustments			Pension and Post-Retirement Benefits			Cash Flow Hedge			Total
December 31, 2019	$	(36.3	)	$	(0.7	)	$	(1.5	)	$	(38.5	)
Other comprehensive (loss) income before reclassifications	(6.8		)	—			4.2			(2.6		)
Amounts reclassified from Accumulated Other Comprehensive Loss	—			—			(0.9		)	(0.9		)
Net current period other comprehensive (loss) income	(6.8		)	—			3.3			(3.5		)
June 30, 2020	$	(43.1	)	$	(0.7	)	$	1.8		$	(42.0	)


15.	Income Taxes

We and our subsidiaries are subject to U.S. federal income tax as well as income tax of numerous state and foreign jurisdictions. We are generally no longer subject to U.S. federal tax examinations for taxable years before 2016 and, with limited exceptions, state and foreign income tax examinations for taxable years before 2015.

We recognize potential accrued interest and penalties related to unrecognized tax benefits in Income Tax Expense. In addition to the liability of $7.2 million for unrecognized tax benefits as of June 30, 2020, there was approximately $0.7 million for accrued interest and penalties. The total amount of unrecognized tax benefits that, if recognized, would affect the effective tax rate as of June 30, 2020 was $7.4 million. To the extent interest and penalties are not assessed with respect to uncertain tax positions, amounts accrued will be revised and reflected as an adjustment of the Income Tax Expense.

We are currently under examination by the Internal Revenue Service for the 2016 and 2017 tax years. Although the outcome of this matter cannot currently be determined, we believe adequate provision has been made for any potential unfavorable financial statement impact. Although the final outcome of these examinations cannot be currently determined, we believe that we have adequate reserves with respect to these examinations.


16.	Share-Based Compensation

Our share-based compensation plans are described in Note 18 of our annual report on Form 10-K for the year ended December 31, 2019. During the three months ended June 30, 2020 and 2019, we recognized total Share-Based Compensation Expense of less than $0.1 million and $1.7 million, respectively. During the six months ended June 30, 2020 and 2019, we recognized total Share-Based Compensation Expense of $2.8 million and $5.0 million, respectively. The total excess tax benefit recognized for share-based compensation arrangements during the six months ended June 30, 2020 and 2019 was $0.3 million and $0.2 million, respectively.

During the first six months of 2020, we issued 17,348 restricted shares. The weighted average grant date fair value of each share awarded was $81.07. Restricted share awards generally have a three year vesting period from the effective date of the grant. The total fair value of shares vested during the six months ended June 30, 2020 and 2019 was $0.7 million and $1.0 million, respectively.


17.	Earnings Attributable to Tennant Company Per Share

The computations of Basic and Diluted Earnings per Share were as follows:



	Three Months Ended				Six Months Ended
	June 30				June 30
	2020		2019		2020		2019
Numerator:
Net Earnings Attributable to Tennant Company	$	14.3	$	14.8	$	19.5	$	20.2
Denominator:
Basic - Weighted Average Shares Outstanding	18,347,189		18,082,492		18,317,003		18,062,591
Effect of dilutive securities:
Share-based compensation plans	237,504		312,373		297,524		304,793
Diluted - Weighted Average Shares Outstanding	18,584,693		18,394,865		18,614,527		18,367,384
Basic Earnings per Share	$	0.78	$	0.82	$	1.06	$	1.12
Diluted Earnings per Share	$	0.77	$	0.81	$	1.05	$	1.10

Excluded from the dilutive securities shown above were options to purchase and shares to be paid out under share-based compensation plans of 818,912 and 688,545 shares of common stock during the three months ended June 30, 2020 and 2019, respectively. Excluded from the dilutive securities shown above were options to purchase and shares to be paid out under share-based compensation plans of 532,564 and 664,311 shares of common stock during the six months ended June 30, 2020 and 2019, respectively. These exclusions were made if the exercise prices of the options are greater than the average market price of our common stock for the period, if the number of shares we can repurchase under the treasury stock method exceeds the weighted average shares outstanding in the options or if we have a net loss, as these effects are anti-dilutive.


Item 2.	Management's Discussion and Analysis of Financial Condition and Results of Operations

Overview

Tennant Company is a world leader in designing, manufacturing and marketing solutions that empower customers to achieve quality cleaning performance, reduce environmental impact and help create a cleaner, safer, healthier world. The Company is committed to creating and commercializing breakthrough, sustainable cleaning innovations to enhance its broad suite of products, including floor maintenance and cleaning equipment, detergent-free and other sustainable cleaning technologies, aftermarket parts and consumables, equipment maintenance and repair service, specialty surface coatings and asset management solutions. Our products are used in many types of environments, including retail establishments, distribution centers, factories and warehouses, public venues such as arenas and stadiums, office buildings, schools and universities, hospitals and clinics, and more. Customers include contract cleaners to whom organizations outsource facilities maintenance, as well as businesses that perform facilities maintenance themselves. The Company reaches these customers through the industry's largest direct sales and service organization and through a strong and well-supported network of authorized distributors worldwide.

Impact of COVID-19

Because we are a global company, our results of operations are affected by macroeconomic conditions. We continue to see economic and geopolitical uncertainty in many regions around the world. The coronavirus (COVID-19) pandemic has increased the uncertainty globally and has resulted in general economic disruption. Governments across the world have taken numerous actions to limit the spread of COVID-19, including stay-at-home orders, which have reduced operating activities across global businesses.

To date, the primary impact of the pandemic on the Company’s business has been related to a slowdown in sales to some end markets amid widespread closures of customer facilities and operations. We have experienced, and expect to continue experiencing, lower demand and volume for our products, including delivery and shipping delays that adversely impact our businesses. Within the first quarter of 2020, we recorded quarter-to-date organic sales growth of 6.7% in February and a 16.8% decline in the month of March, compared to the respective prior year periods. In addition, during the second quarter, we experienced an organic sales decline of 27.2%. We believe most of the organic sales decline in the second quarter was due to the pandemic. The decline in sales during the second quarter of 2020 was greater in the first two months of the quarter than in the last month of the quarter, with organic sales declines of 31.6%, 38.5%, and 12.4% in April, May, and June 2020, respectively, as compared to the prior year periods. We experienced sales orders rates in July 2020 that are consistent with June 2020 as a result of continued slowdowns in sales to some end markets amid widespread disruptions to our customers. We are unsure whether or not this level of decline, or if the trend in the sales decline on a month-to-month basis, will continue in the future.

We are actively managing our business to respond to the COVID-19 impact. We have prioritized the health and safety of our employees and customers. The Company has established a dedicated enterprise-wide response team and implemented work-from-home processes for much of its workforce. We have established cross-functional and daily communications with suppliers to review, track and prioritize high-risk components. We have also identified and activated alternative suppliers, materials and components as needed. To date, we have been able to avoid major supply disruptions. Regarding transportation, we have set up tracking, reporting and communication channels with carriers to understand their risks and to evaluate available options where necessary. For the majority of the second quarter of 2020, there were a limited number of restrictions on our manufacturing operations. Although end market demand was significantly lower than the same period last year, all of our factories had the ability to operate at full capacity.

We have also taken a number of actions globally to minimize the financial impact such as suspending a significant amount of business-related travel, reducing non-essential discretionary and project spending, and implementing merit freezes, hiring freezes, and other headcount-related actions, including a combination of salary cuts, reduced work schedules and/or furlough programs for all employees globally, while operating within the local laws and regulations, and developing multiple financial scenarios to ensure liquidity and to identify additional actions, if needed.

We continue to monitor the continuously evolving situation and guidance from authorities. As a result of the disruptions and volatility caused by COVID-19, we cannot reasonably estimate the impact of the pandemic on our financial results in the future. We expect that the longer the period of disruption continues, the more material the adverse impact will be on our business operations, financial performance and results of operations. Refer to Part II, Item 1A “Risk Factors” for an updated risk factor related to the COVID-19 pandemic.

Historical Results

The following table compares the historical results of operations for the three and six months ended June 30, 2020 and 2019, respectively, and as a percentage of Net Sales (in millions, except per share data and percentages):



	Three Months Ended										Six Months Ended
	June 30										June 30
	2020			%		2019			%		2020			%		2019			%
Net Sales	$	214.0		100.0		$	299.7		100.0		$	466.1		100.0		$	562.1		100.0
Cost of Sales	123.4			57.7		178.9			59.7		271.4			58.2		333.1			59.3
Gross Profit	90.6			42.3		120.8			40.3		194.7			41.8		229.0			40.7
Operating Expense:
Research and Development Expense	6.6			3.1		8.4			2.8		14.0			3.0		15.6			2.8
Selling and Administrative Expense	61.1			28.6		92.5			30.9		143.4			30.8		182.7			32.5
Total Operating Expense	67.7			31.6		100.9			33.7		157.4			33.8		198.3			35.3
Profit from Operations	22.9			10.7		19.9			6.6		37.3			8.0		30.7			5.5
Other Income (Expense):
Interest Income	0.8			0.4		0.9			0.3		1.7			0.4		1.7			0.3
Interest Expense	(5.6		)	(2.6	)	(5.4		)	(1.8	)	(10.7		)	(2.3	)	(10.5		)	(1.9	)
Net Foreign Currency Transaction Loss	—			—		(0.2		)	(0.1	)	(4.1		)	(0.9	)	—			—
Other (Expense) Income, Net	(0.2		)	(0.1	)	1.4			0.5		—			—		1.3			0.2
Total Other Expense, Net	(5.0		)	(2.3	)	(3.3		)	(1.1	)	(13.1		)	(2.8	)	(7.5		)	(1.3	)
Profit Before Income Taxes	17.9			8.4		16.6			5.5		24.2			5.2		23.2			4.1
Income Tax Expense	3.6			1.7		1.8			0.6		4.7			1.0		3.0			0.5
Net Earnings Including Noncontrolling Interest	14.3			6.7		14.8			4.9		19.5			4.2		20.2			3.6
Net Earnings Attributable to Tennant Company	$	14.3		6.7		$	14.8		4.9		$	19.5		4.2		$	20.2		3.6
Net Earnings Attributable to Tennant Company per Share - Diluted	$	0.77				$	0.81				$	1.05				$	1.10

Net Sales

Consolidated Net Sales for the second quarter of 2020 totaled $214.0 million, a 28.6% decrease as compared to consolidated Net Sales of $299.7 million in the second quarter of 2019.

The components of the consolidated Net Sales change for the three and six months ended June 30, 2020 as compared to the same period in 2019 were as follows:



	2020 v. 2019
	Three Months Ended	Six Months Ended
	June 30	June 30
Organic Net Sales	(27.2%)	(15.6%)
Foreign Currency	(1.4%)	(1.5%)
Total Net Sales	(28.6%)	(17.1%)

The 28.6% decrease in consolidated Net Sales in the second quarter of 2020 as compared to the same period in 2019 was driven by:


•	An organic sales decrease of approximately 27.2%, which excludes the effects of foreign currency exchange. The organic sales decrease was due to volume declines across all regions, largely driven by the impact of the COVID-19 pandemic. The decrease was partially offset by continued strong demand for our autonomous cleaning machines in North America; and


•	An unfavorable impact from foreign currency exchange of approximately 1.4%.

The 17.1% decrease in consolidated Net Sales in the first six months of 2020 as compared to the same period in 2019 was driven by:

•

An organic sales decrease of approximately 15.6%, which excludes the effects of foreign currency exchange. The organic sales decrease was primarily due to volume declines across all regions, largely driven by the impact of the COVID-19 pandemic as well as general softness in the APAC region. The decrease was partially offset by continued strong demand for our autonomous cleaning machines in North America; and


•	An unfavorable impact from foreign currency exchange of approximately 1.5%.

The following table sets forth the Net Sales by geographic area for the three and six months ended June 30, 2020 and 2019 and the percentage change from the prior year (in millions, except percentages):



	Three Months Ended					Six Months Ended
	June 30					June 30
	2020		2019		%	2020		2019		%
Americas	$	136.3	$	189.5	(28.1)	$	298.9	$	350.3	(14.7	)
Europe, Middle East and Africa	54.8		80.9		(32.3)	126.8		158.9		(20.2	)
Asia Pacific	22.9		29.3		(21.8)	40.4		52.9		(23.6	)
Total	$	214.0	$	299.7	(28.6)	$	466.1	$	562.1	(17.1	)

Americas

Net Sales in the Americas were $136.3 million and $298.9 million for the second quarter and first six months of 2020, respectively, a decrease of 28.1% and 14.7% compared to the prior year periods. Foreign currency exchange within the Americas unfavorably impacted Net Sales by approximately 1.1% in the second quarter of 2020 and 1.0% for the first six months of 2020. Organic sales declines in the Americas unfavorably impacted Net Sales by approximately 27.0% and 13.7% for the second quarter and first six months of 2020, respectively, due to the impact of COVID-19 throughout the entire region, partially offset by continued demand for our autonomous cleaning machines in North America.

Europe, Middle East and Africa

EMEA Net Sales were $54.8 million and $126.8 million for the second quarter and first six months of 2020, respectively, a decrease of 32.3% and 20.2% compared to the prior year periods. Foreign currency exchange within EMEA unfavorably impacted Net Sales by approximately 2.1% in the second quarter of 2020 and 2.5% in the first six months of 2020. Organic sales declines in EMEA unfavorably impacted Net Sales by approximately 30.2% and 17.7% for the second quarter and first six months of 2020, respectively, primarily due to the impact of COVID-19 throughout the region.

Asia Pacific

APAC Net Sales were $22.9 million and $40.4 million for the second quarter of 2020 and first six months of 2020, respectively, a decrease of 21.8% and 23.6% compared to the prior year periods. Foreign currency exchange within APAC unfavorably impacted Net Sales by approximately 1.7% in the second quarter of 2020 and 2.3% in the first six months of 2020. Organic sales declines in APAC unfavorably impacted Net Sales by approximately 20.1% and 21.3% for the second quarter and first six months of 2020, respectively, primarily due to the impact of COVID-19 throughout the region, particularly in China and Japan.

Gross Profit

Gross Profit margin of 42.3% was 200 basis points higher in the second quarter of 2020 compared to the second quarter of 2019. The increase primarily reflects actions directly resulting from the Company’s enterprise strategy efforts like pricing and cost-out initiatives, benefits from government programs, and cost actions including employee furloughs and reduced work hours, partially offset by volume deleverage and higher tariff costs.

Gross Profit margin of 41.8% was 110 basis points higher in the first six months of 2020 compared to the first six months of 2019. The increase was primarily driven by actions directly resulting from the Company’s enterprise strategy efforts like pricing and cost-out initiatives as well as cost actions including employee furloughs and reduced work hours, partially offset by volume deleverage, higher material costs, and $1.7 million from the discontinuance of the Green Machines, Orbio and outdoor product lines.

Operating Expense

Research and Development Expense

Research and Development ("R&D") Expense was $6.6 million, or 3.1% as a percentage of Net Sales, for the second quarter of 2020, essentially flat compared to the second quarter of 2019. R&D Expense was $14.0 million , or 3.0% as a percentage of Net Sales, for the first six months of 2020, essentially flat compared to the first six months of 2019.

We continue to invest in developing innovative products and technologies at levels necessary to propel our technology and innovation leadership position.

Selling and Administrative Expense

Selling and Administrative Expense ("S&A Expense") was $61.1 million for the second quarter of 2020, a decrease of $31.4 million compared to the second quarter of 2019. As a percentage of Net Sales, S&A Expense for the second quarter of 2020 decreased 230 basis points to 28.6% from 30.9% in the second quarter of 2019. S&A Expense decrease in the second quarter of 2020 was primarily driven by cost containment initiatives throughout the Company, including employee furloughs, reduction in travel spending, and temporary pay reductions, as well as benefits from government programs received related to COVID-19 and adjustments to management incentives. The remaining decreases included a note receivable write-down as well as acquisition- and integration-related expenses incurred in 2019 that did not repeat in 2020.

S&A Expense was $143.4 million for the first six months of 2020, a decrease of $39.3 million compared to the first six months of 2019. As a percentage of Net Sales, S&A Expense for the first six months of 2020 decreased 170 basis points to 30.8% from 32.5% in the first six months of 2019. S&A Expense in the first six months of 2020 was primarily driven by cost containment initiatives throughout the Company, including employee furloughs, reduction in travel spending, and temporary pay reductions. The remaining decreases included higher restructuring charges and a note receivable write-down as well as acquisition- and integration-related expenses incurred in 2019 that did not repeat in 2020.

Total Other Expense, Net

Interest Income

Interest Income was $0.8 million in the second quarter of 2020, relatively flat compared to $0.9 million in the second quarter of 2019. For the first six months of 2020, Interest Income was $1.7 million, flat compared to Interest Income of $1.7 million in the first six months of 2019.

Interest Expense

Interest Expense was $5.6 million in the second quarter of 2020, relatively flat compared to Interest Expense of $5.4 million in the second quarter of 2019. For the first six months of 2020, Interest Expense was $10.7 million compared to Interest Expense of $10.5 million in the first six months of 2019.

Net Foreign Currency Transaction Loss

Net Foreign Currency Transaction Loss in the second quarter of 2020 was a loss of less than $0.1 million compared to a loss of $0.2 million in the second quarter of 2019. The favorable improvement in the impact from foreign currency transactions in the second quarter of 2020 was primarily due to the strengthening in the Australian dollar and Canadian dollar compared to the same period of last year. For the first six months of 2020, Net Foreign Currency Transaction Losses were $4.1 million compared to losses of less than $0.1 million in the first six months of 2019. The change in the impact from foreign currency transactions in the first six months of 2020 was primarily due to the strengthening of the U.S. dollar relative to the Brazilian real and Mexican peso compared to the same period of last year.

Other (Expense) Income, Net

Other (Expense) Income, Net was $0.2 million and less than $0.1 million in the second quarter and first six months of 2020, respectively, a decrease of $1.6 million and $1.3 million compared to the same periods in 2019, respectively. The decrease was primarily due to a $1.8 million acquisition-related indemnification settlement in 2019.

Income Taxes

The effective tax rate for the second quarter of 2020 was 19.7%, as compared to the second quarter of 2019 of 10.8%. The year-to-date effective tax rate was 19.3% for the first six months of 2020 compared to 12.7% for the first six months of 2019.

The effective tax rate for both the second quarter and the first six months of 2020 increased primarily due to a high level of discrete tax benefit items recognized in 2019 compared to 2020 and the mix in expected full year taxable earnings by country.

In general, it is our practice and intention to permanently reinvest the earnings of our foreign subsidiaries and repatriate earnings only when the tax impact is zero or immaterial. No deferred taxes have been provided for withholding taxes or other taxes that would result upon repatriation of our foreign investments to the United States.

Liquidity and Capital Resources

Liquidity

Cash, Cash Equivalents and Restricted Cash totaled $99.3 million at June 30, 2020, as compared to $74.6 million as of December 31, 2019. Wherever possible, cash management is centralized and intercompany financing is used to provide working capital to subsidiaries as needed. At the end of March 2020, we borrowed $125 million from our revolving credit line as a precaution to ensure we would be able to cover our cash requirements if the COVID-19 pandemic were to continue for an extended period of time. In the second quarter of 2020, we repaid the entire $125 million borrowed in March 2020 as we determined our existing cash and cash flows were sufficient for our business needs. Our current ratio was 1.8 and 1.7 as of June 30, 2020 and December 31, 2019, respectively, and our working capital was $209.4 million and $206.1 million, respectively. Our debt-to-capital ratio was 47.8% as of June 30, 2020, compared to 48.5% as of December 31, 2019.

Cash Flow From Operating Activities

Operating Activities provided $48.5 million of cash for the six months ended June 30, 2020. Cash provided by operating activities was driven primarily by inflows from Net Earnings adding back non-cash items of $28.2 million and a decrease in Accounts Receivables of $38.3 million. These cash inflows were partially offset by cash outflows resulting from a decrease in Accounts Payables of $17.8 million and a decrease in our Employee Compensation and Benefits liabilities of $16.4 million, primarily related to 2019 incentive payments to employees.

Cash Flow From Investing Activities

Investing activities during the six months ended June 30, 2020 used $18.4 million, substantially all of which related to net capital expenditures.

Cash Flow From Financing Activities

Net cash used in financing activities was $4.7 million during the first six months of 2020. Proceeds from borrowings of $126.4 million and proceeds from the issuance of Common Stock of $2.6 million were offset by payment of credit facility borrowings of $125.5 million and dividend payments of $8.1 million.

Newly Issued Accounting Guidance

See Note 2 to the Consolidated Financial Statements for information on new accounting pronouncements.

No other new accounting pronouncements issued but not yet effective have had, or are expected to have, a material impact on our results of operations or financial position.

Cautionary Statement Relevant to Forward-Looking Information

This Form 10-Q, including “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in Item 2, contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements generally can be identified by the use of forward-looking terminology such as “may,” “will,” “expect,” “intend,” “estimate,” “anticipate,” “believe,” “project,” or “continue” or similar words or the negative thereof. These statements do not relate to strictly historical or current facts and provide current expectations of forecasts of future events. Any such expectations or forecasts of future events are subject to a variety of factors. Particular risks and uncertainties presently facing us include: uncertainty surrounding the impacts and duration of the COVID-19 pandemic; our ability to effectively develop or manage strategic planning and growth processes; our ability to successfully upgrade and evolve our information technology systems; fluctuations in the cost, quality, or availability of raw materials and purchased components; geopolitical and economic uncertainty throughout the world; our ability to integrate acquisitions; our ability to attract, retain and develop key personnel and create effective succession planning strategies; our ability to successfully protect our information technology systems from cybersecurity risks; our ability to develop and commercialize new innovative products and services; the occurrence of a significant business interruption; our ability to comply with laws and regulations; the potential disruption of our business from actions of activist investors or others; the competition in our business; unforeseen product liability claims or product quality issues; our ability to generate sufficient cash to satisfy our debt obligations; and the relative strength of the U.S. dollar, which affects the cost of our materials and products purchased and sold internationally. We caution that forward-looking statements must be considered carefully and that actual results may differ in material ways due to risks and uncertainties both known and unknown. Shareholders, potential investors and other readers are urged to consider these factors in evaluating forward-looking statements and are cautioned not to place undue reliance on such forward-looking statements. Additional information about factors that could materially affect our results can be found in Part I, Item 1A, Risk Factors in our annual report on Form 10-K for the year ended December 31, 2019 and Part II, Item 1A of this Form 10-Q.

We undertake no obligation to update or revise any forward-looking statement, whether as a result of new information, future events or otherwise, except as required by law. Investors are advised to consult any further disclosures by us in our filings with the SEC and in other written statements on related subjects. It is not possible to anticipate or foresee all risk factors, and investors should not consider any list of such factors to be an exhaustive or complete list of all risks or uncertainties.


Item 3.	Quantitative and Qualitative Disclosures About Market Risk

There have been no material changes in our market risk since December 31, 2019. For additional information, refer to Item 7A of our annual report on Form 10-K for the year ended December 31, 2019.


Item 4.	Controls and Procedures

Disclosure Controls and Procedures

Our management, with the participation of our Chief Executive Officer and our Principal Financial and Accounting Officer, has evaluated the effectiveness of our disclosure controls and procedures as of June 30, 2020 (as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934 (the “Exchange Act”)). Based on that evaluation, our Chief Executive Officer and our Principal Financial and Accounting Officer have concluded that our disclosure controls and procedures are effective to ensure that information required to be disclosed by us in reports that we file or submit under the

Exchange Act is recorded, processed, summarized and reported within the time periods specified in SEC rules and forms, and that such information is accumulated and communicated to our management, including our principal executive and our principal financial officers, as appropriate, to allow timely decisions regarding required disclosure.

Changes in Internal Controls

There were no changes in our internal controls over financial reporting during the most recently completed fiscal quarter that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

PART II – OTHER INFORMATION


Item 1.	Legal Proceedings

There are no material pending legal proceedings other than ordinary routine litigation incidental to our business.


Item 1A.	Risk Factors

Other than the risk set out below, there have been no material changes to our risk factors in Item 1A of Part I of our annual report on Form 10-K for the fiscal year ended December 31, 2019.

Uncertainty surrounding the impacts and duration of the COVID-19 pandemic

The coronavirus ("COVID-19") outbreak that originated in China at the beginning of 2020 is causing volatility and economic disruption across the globe. The impact of COVID-19 on our business and financial performance depends on evolving factors that we cannot accurately predict, including the duration of the pandemic, restrictions on travel and transportation, the effect on our customers and on the global supply chain, the demand for our products, government actions that have or could result in further closures of our manufacturing plants, and the pace of economic recovery when the COVID-19 pandemic subsides.

Certain of our manufacturing plants temporarily suspended operations either due to government restrictions or employee health concerns. There may be a risk of future health concerns and we cannot predict future disruptions of our plants or how long they would last.

Our customers have been negatively impacted which may continue to have a material adverse impact on our sales. In addition, our suppliers may not have the ability to provide us with parts needed to manufacture our products. This may result in delays in shipments to us and also to our customers, which would affect our results of operations.

If the pandemic continues for a long duration, we will need to assess our liquidity needs. A sustained disruption in the global economy could materially affect our ability to generate sufficient cash from operations and could require us to seek additional sources of liquidity or take further actions. It could also impact our ability to meet our strategic objectives.

As a result of the COVID-19 pandemic, our risk factors previously disclosed in our annual report on Form 10-K for the fiscal year ended December 31, 2019 have also been heightened.


Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds

On October 31, 2016, the Board of Directors authorized the repurchase of an additional 1,000,000 shares of our common stock. This is in addition to the 392,263 shares remaining under our prior repurchase program. Share repurchases are made from time to time in the open market or through privately negotiated transactions, primarily to offset the dilutive effect of shares issued through our share-based compensation programs. As of June 30, 2020, our 2017 Credit Agreement restricts the payment of dividends or repurchasing of stock requiring that, after giving effect to such payments, no default exists or would result from such payment. Additionally, cash dividends are restricted to $5.0 million per quarter and approved levels of other restricted payments range from $50.0 million to unlimited based on our net leverage ratio (not taking into account any acquisition holiday) after giving effect to such payment. Our Senior Notes due 2025 also contain certain restrictions, which are generally less restrictive than those contained in the 2017 Credit Agreement.



For the Quarter Ended June 30, 2020	Total Number of Shares Purchased⁽¹⁾	Average Price Paid Per Share		Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs	Maximum Number of Shares that May Yet Be Purchased Under the Plans or Programs
April 1 - 30, 2020	3,259	$	58.57	—	1,392,263
May 1 - 31, 2020	140	57.78		—	1,392,263
June 1 - 30, 2020	—	—		—	1,392,263
Total	3,399	$	58.53	—	1,392,263


⁽¹⁾	Includes 3,399 shares delivered or attested to in satisfaction of the exercise price and/or tax withholding obligations by employees who exercised stock options or restricted stock under employee share-based compensation plans.


Item 6.	Exhibits



Item #	Description	Method of Filing
3i	Restated Articles of Incorporation	Incorporated by reference to Exhibit 3i to the Company’s report on Form 10-Q for the quarterly period ended June 30, 2006.
3ii	Amended and Restated By-Laws	Incorporated by reference to Exhibit 3iii to the Company’s Form 8-K dated December 14, 2010.
3iii	Articles of Amendment of Restated Articles of Incorporation of Tennant Company	Incorporated by reference to Exhibit 3iii to the Company's report on Form 10-Q for the quarterly period ended March 31, 2018.
4.1	Indenture dated as of April 18, 2017	Incorporated by reference to Exhibit 4.1 to the Company's Current Report on Form 8-K filed April 24, 2017.
10.1	Separation Letter with Keith Woodward dated May 4, 2020	Filed herewith electronically.
10.2	Cash Retention Award for Richard H. Zay	Filed herewith electronically.
10.3	Tennant Company 2020 Stock Incentive Plan	Incorporated by reference to Appendix A to the Company's Proxy statement for the 2020 Annual Meeting of Shareholders filed on March 19, 2020.
10.4	Form of Tennant Company 2020 Stock Incentive Plan Non-Statutory Stock Option Agreement	Filed herewith electronically.
10.5	Form of Tennant Company 2020 Stock Incentive Plan Restricted Stock Agreement	Filed herewith electronically.
10.6	Form of Tennant Company 2020 Stock Incentive Plan Restricted Stock Unit Agreement	Filed herewith electronically.
10.7	Form of Tennant Company 2020 Stock Incentive Plan Non-Employee Restricted Stock Unit Agreement	Filed herewith electronically.
10.8	Form of Tennant Company 2020 Stock Incentive Plan Performance Restricted Stock Unit Agreement	Filed herewith electronically.
10.9	Form of Tennant Company 2020 Stock Incentive Plan Special Performance Restricted Stock Unit Agreement	Filed herewith electronically.
31.1	Rule 13a-14(a)/15d-14(a) Certification of CEO	Filed herewith electronically.
31.2	Rule 13a-14(a)/15d-14(a) Certification of CFO	Filed herewith electronically.
32.1	Section 1350 Certification of CEO	Filed herewith electronically.
32.2	Section 1350 Certification of CFO	Filed herewith electronically.
101	The following financial information from Tennant Company's Quarterly Report on Form 10-Q for the period ended June 30, 2020, formatted in Inline eXtensible Business Reporting Language (iXBRL): (i) Consolidated Statements of Earnings for the three and six months ended June 30, 2020 and 2019; (ii) Consolidated Statements of Comprehensive Income for the three and six months ended June 30, 2020 and 2019; (iii) Consolidated Balance Sheets as of June 30, 2020 and December 31, 2019; (iv) Consolidated Statements of Cash Flows for the six months ended June 30, 2020 and 2019; (v) Consolidated Statements of Equity; and (vi) Notes to the Consolidated Financial Statements.	Filed herewith electronically.
104	Cover Page Interactive Data File (formatted as iXBRL and contained in Exhibit 101)	Filed herewith electronically.

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.



		TENNANT COMPANY

Date:	July 30, 2020	/s/ H. Chris Killingstad
		H. Chris Killingstad President and Chief Executive Officer

Date:	July 30, 2020	/s/ Andrew Cebulla
		Andrew Cebulla Vice President, Finance and Corporate Controller; Interim Chief Financial Officer and Interim Principal Accounting Officer

TENNANT COMPANY

2020 STOCK INCENTIVE PLAN

Non-Statutory Stock Option Agreement



Name of Optionee: «A1» «A2»
No. of Shares Covered: «B»	Date of Grant: «C»
Exercise Price Per Share: $«D»	Vesting: No. of Shares Date «E» «F» «G» «H» «I» «D1»

This is a Non-Statutory Stock Option Agreement (“Agreement”) between Tennant Company, a Minnesota corporation (the “Company”), and the Optionee identified above (the “Optionee”) effective as of the date of grant specified above.

Recitals

WHEREAS, the Company maintains the Tennant Company 2020 Stock Incentive Plan (the “Plan”); and

WHEREAS, pursuant to the Plan, the Compensation Committee of the Board of Directors (the “Committee”) has the authority to determine the awards to be granted under the Plan; and

WHEREAS, the Committee or its delegatee has determined that the Optionee is eligible to receive an award under the Plan in the form of a Non‑Statutory Stock Option (the “Option”);

NOW, THEREFORE, the Company hereby grants this Option to the Optionee under the terms and conditions as follows:

Terms and Conditions^*


1.	Grant. The Optionee is granted this Option to purchase the number of Shares specified at the beginning of this Agreement.


2.	Exercise Price. The purchase price to the Optionee of each Share subject to this Option shall be the exercise price specified at the beginning of this Agreement.


3.	Non-Statutory Stock Option. This Option is not intended to be an “incentive stock option” within the meaning of Section 422 of the Internal Revenue Code of 1986, as amended (the “Code”).


4.	Exercise Schedule. This Option shall vest in accordance with the schedule specified at the beginning of this Agreement. If this Option has not expired prior thereto, it may be exercised at any time with respect to any or all of the Shares as to which this Option has vested.

The vesting of this Option will be accelerated and it may be exercised in full under the circumstances described in Section 8 of this Agreement if it has not expired prior thereto.


5.	Expiration. This Option shall expire at 5:00 p.m. Central Time on the earliest of:

(a) The date occurring ten years after the date of grant of this Option;


(b)	The last day of the period following the termination of employment of the Optionee during which this Option can be exercised (as specified in Section 7 of this Agreement); or

In no event may anyone exercise this Option, in whole or in part, after it has expired, notwithstanding any other provision of this Agreement.


6.	Procedure to Exercise Option.


(a)	Notice of Exercise. Inquiries regarding forms and procedures for exercising options should be directed to a Merrill Participant Service Representative at (877) 767-2404 or www.benefits.ml.com. If the person exercising this Option is not the Optionee, he/she also must submit appropriate proof of his/her right to exercise this Option.


(b)	Tender of Payment. Upon giving notice of any exercise hereunder, the Optionee shall provide for payment of the purchase price of the Shares being purchased and the amount of any tax withholding required in connection with such exercise as provided in Section 14 of the Plan through one or a combination of the following methods:

(i) Cash (including check, bank draft or money order);


^*	Unless the context clearly indicates otherwise, any capitalized term that is not defined in this Agreement shall have the meaning set forth in the Plan as it currently exists or as it is amended in the future.

(ii) To the extent permitted by law, a broker‑assisted cashless exercise in which the Optionee irrevocably instructs a broker to deliver proceeds of a sale of all or a portion of the Shares to be issued pursuant to the exercise (or a loan secured by such Shares) to the Company in payment of the purchase price of such Shares and the amount of any applicable withholding tax;

(iii) By delivery to the Company of unencumbered Shares having an aggregate Fair Market Value on the date of exercise equal to the purchase price of such Shares and the amount of any applicable withholding tax (or in lieu of such delivery, by tender through attestation of such Shares in accordance with such procedures as the Committee may permit); or

(iv) By a reduction in the number of Shares delivered to the Optionee upon exercise, such number of Shares withheld having an aggregate Fair Market Value on the date of exercise equal to the purchase price of such Shares and the amount of any applicable withholding tax.

Notwithstanding the foregoing, the Optionee shall not be permitted to pay any portion of the purchase price with Shares, if the Committee, in its sole discretion, determines that payment in such manner is undesirable.

(c)

Delivery of Shares. As soon as practicable after the Company receives the notice of exercise and payment provided for above, it shall deliver to the person exercising the Option, in the name of such person, a certificate or certificates representing the Shares being purchased (net of the number of Shares sold or withheld, if any, to pay the exercise price and withholding tax). The Company may alternatively satisfy this obligation to deliver Shares by a book entry made in the records of the Company’s transfer agent or by electronically transferring such shares to an account designated by the person exercising the Option. Notwithstanding anything to the contrary in this Agreement, the Company shall not be required to issue or deliver any Shares prior to the completion of such registration or other qualification of such Shares under any state or federal law, rule or regulation as the Company shall determine to be necessary or desirable.


7.	Employment Requirement. This Option may be exercised only while the Optionee remains employed with the Company or an Affiliate thereof, and only if the Optionee has been continuously so employed since the date of this Agreement; provided that:


(a)	This Option may be exercised within one year after the Optionee’s employment by the Company ceases if such cessation of employment is because of death or Disability;

(b)

This Option may be exercised within three months after the Optionee’s employment by the Company ceases if such cessation of employment is because of Retirement; provided that if the Optionee has provided the Company with six months’ prior written notice of the Optionee’s intention to Retire, and if there are no special payments made by the Company as a retirement incentive or inducement, then this Option may be exercised at any time within five years after the Optionee’s employment by the Company ceases due to Retirement;


(c)	If the Optionee’s employment terminates after a declaration made pursuant to Section 17 of the Plan, this Option may be exercised at any time during the period permitted by such declaration;


(d)	If the Optionee’s employment is terminated by the Company for Cause, the Option shall expire and all rights to purchase Shares hereunder shall terminate immediately upon such termination; or


(e)	If the Optionee’s employment terminates in any manner other than as provided above, this Option may be exercised at any time within three months after the time of such termination of employment, but only to the extent that it was exercisable immediately prior to such termination of employment.

Notwithstanding any provision of this Agreement, this Option may not be exercised after it has expired as provided in Section 5 of this Agreement.

8. Acceleration of Option.

(a)

Death, Disability or Retirement. This Option shall vest and may be exercised in full, regardless of whether such exercise occurs prior to a date on which this Option would otherwise vest in accordance with the vesting schedule, upon the death, Disability or Retirement of the Optionee; provided that the Optionee shall have been continuously employed by the Company or an Affiliate thereof between the date of this Agreement and the date of such death, Disability or Retirement.

(b)

Change of Control. In the event of a Change of Control, then, without any action by the Committee, this Option, to the extent not already exercised in full or otherwise expired, shall immediately vest and become exercisable in full; provided that the Committee, in its sole discretion, may cancel this Option in exchange for a cash payment equal to the amount, if any, by which the Fair Market Value per Share immediately prior to the Change of Control exceeds the exercise price per Share.


9.	Forfeiture/Recoupment of Option/Shares. This Option shall be subject to the terms of the Company’s Compensation Recoupment Policy as in effect from time to time.

10.

Limitation on Transfer. While the Optionee is alive, only the Optionee or his/her Successor may exercise this Option. This Option may not be assigned or transferred other than to a Successor in the event of Optionee’s death or pursuant to a Qualified Domestic Relations Order as defined by the Code or Title I of the Employee Retirement Income Security Act, or the rules thereunder. Notwithstanding the foregoing and to the extent permitted by law, the Optionee may transfer this Option to a Transferee if the Optionee does not receive any consideration for the transfer. Any such transfer shall be subject to Section 6.3 of the Plan.


11.	No Shareholder Rights Before Exercise. No person shall have any of the rights of a shareholder of the Company with respect to any Share subject to this Option until the Share actually is issued to him/her upon exercise of this Option.


12.	Adjustments for Changes in Capitalization. This Option shall be subject to adjustments for changes in the Company’s capitalization as provided in Section 16 of the Plan.


13.	No Right to Employment. This Agreement shall not give the Optionee a right to continued employment with the Company or any Affiliate of the Company, and the Company or any such Affiliate employing the Optionee may terminate his/her employment and otherwise deal with the Optionee without regard to the effect it may have upon him/her under this Agreement.

14.

Tax Withholding. The Company (or any Subsidiary of Affiliate employing the Optionee) shall have a right to require the Optionee to pay the Company (or such Subsidiary or Affiliate) a cash amount sufficient to cover any taxes including without limitation income, employment, social insurance, payroll tax, fringe benefit tax, payment on account or other tax-related items related to Optionee’s participation in the Plan and legally applicable to Optionee including, without limitation, in connection with the grant, vesting or exercise of the Option, the subsequent sale of Shares acquired under the Plan and/or the receipt of any dividends on such Shares which the Company determines must be withheld (“Tax-Related Items”) before delivery of Shares upon exercise of this Option. In lieu of all or any part of a cash payment from the Optionee, the Optionee may elect to cover the Tax-Related Items by tendering Shares or reducing the number of Shares delivered to the Optionee upon exercise of this Option equal in value to the amount of such Tax-Related Items, in accordance with the provisions of Section 14 of the Plan and Section 6 of this Agreement. Optionee further acknowledges that the Company and its Affiliates (1) make no representations or undertakings regarding the treatment of any Tax-Related Items in connection with any aspect of the Option; and (2) do not commit to and are under no obligation to structure the terms of the grant or any aspect of the Option to reduce or eliminate Optionee’s liability for Tax-Related Items or achieve any particular tax result.


15.	Option Subject to Plan, Articles of Incorporation, and By-Laws. Optionee acknowledges that this Option and the exercise thereof is subject to the Plan, the Articles of Incorporation, as amended from time to time, and the By-Laws, as amended from time to time, of the Company, and any applicable federal or state laws, rules or regulations.


16.	Obligation to Reserve Sufficient Shares. The Company shall at all times during the term of this Option reserve and keep available a sufficient number of Shares to satisfy this Agreement.


17.	Binding Effect. This Agreement shall be binding in all respects on the heirs, representatives, successors and assigns of the Optionee.


18.	Choice of Law. This Agreement is entered into under the laws of the State of Minnesota and shall be construed and interpreted thereunder (without regard to its conflict of law principles).

19.

Interpretation of This Agreement. All decisions and interpretations made by the Committee with regard to any question arising hereunder or under the Plan shall be binding and conclusive upon the Company and the Optionee. This Agreement is subject to and shall be construed in accordance with the terms of the Plan. If there is any inconsistency between the provisions of this Agreement and the Plan, the provisions of the Plan shall govern.


20.	Nature of the Option. The Optionee understands that the value that may be realized, if any, from the Option is contingent, and depends on the future market price of the Stock, among other factors. The Optionee further confirms his or her understanding that the Option is intended to promote employee retention and stock ownership and to align employees’ interests with those of the

Company’s shareholders. The Optionee also understands that (i) the Plan is discretionary in nature and may be suspended or terminated by the Company at any time; (ii) the grant of an Option is voluntary and occasional and does not create any contractual or other right to receive future Options, or benefits in lieu of Options even if Options have been granted repeatedly in the past; (iii) all decisions with respect to any future option will be at the sole discretion of the Company; (iv) his or her participation in the Plan is voluntary; (v) the value of this Option is an extraordinary item of compensation which is outside the scope of his or her employment contract with his or her actual employer, if any; (vi) this Option and past or future Options are not part of normal or expected compensation or salary for any purposes, including, but not limited to, calculating any severance, resignation, redundancy, end of service payments, bonuses, long-service awards, pension or retirement benefits or similar payments; and (vii) no claim or entitlement to compensation or damages arises from termination of this Option or diminution in value of this Option, and he or she irrevocably releases the Company, and its subsidiaries from any such claim that may arise.

IN WITNESS WHEREOF, the Optionee and the Company have executed this Agreement effective as of the ___ day of __________, 20__.

OPTIONEE

«A1» «A2»

TENNANT COMPANY

Carol E. McKnight

Its SVP, Chief Administrative Officer

Date

TENNANT COMPANY

2020 STOCK INCENTIVE PLAN

Restricted Stock Agreement



Name of Participant:
No. of Shares:		Date of Grant:
	Vesting Schedule: No. of Shares Date

This is a Restricted Stock Agreement (“Agreement”) between Tennant Company, a Minnesota corporation (the “Company”), and the participant identified above (the “Participant”) effective as of the date of grant specified above.

Recitals

WHEREAS, the Company maintains the Tennant Company 2020 Stock Incentive Plan (the “Plan”); and

WHEREAS, pursuant to the Plan, the Compensation Committee of the Board of Directors (the “Committee”) has the authority to determine the awards to be granted under the Plan; and

WHEREAS, the Committee or its delegatee has determined that the Participant is eligible to receive an award of Restricted Stock under the Plan (the “Restricted Stock Award”);

NOW, THEREFORE, the Company hereby grants this Restricted Stock Award to the Participant under the terms and conditions as follows:

Terms and Conditions^*


1.	Grant.

(a) The Participant is granted the number of Shares of Restricted Stock specified at the beginning of this Agreement. Unless and until these Shares vest as provided in Section 2 below, they are subject to the restrictions provided for in this Agreement and are referred to as “Restricted Shares.”

(b) The Restricted Shares will be evidenced by a book entry made in the records of the Company’s transfer agent in the name of the Participant, unless the Participant requests a certificate evidencing the Restricted Shares. Each book entry, or stock certificate if requested by a Participant, evidencing any Restricted Shares may contain such notifications or legends and stock transfer instructions or limitations as provided herein or as may be determined or authorized by the Company in its sole discretion. If a certificate evidencing any Restricted Shares is issued, the Company may, in its discretion, retain custody of such certificate until such Shares vest and require, as a condition to issuing any such certificate, that the Participant deliver to the Company a stock power duly executed in blank relating to such custody.


2.	Vesting of Award.


(a)	If the Participant remains continuously employed by the Company or an Affiliate from the date of grant of this Restricted Stock Award, then the Restricted Shares will vest in the numbers and on the dates specified in the vesting schedule specified at the beginning of this Agreement.

(b)

If the Participant’s employment with the Company and its Affiliates terminates due to death, Disability or Retirement (provided that, in the case of Retirement, the Participant has provided at least six months advance notice to the Company of the Participant’s intention to Retire), and the Participant has been continuously employed by the Company or an Affiliate between the date of grant specified above and the date of such death, Disability or Retirement, then a pro rata portion of the number of Restricted Shares outstanding immediately preceding such termination of employment shall vest in connection with such termination. The pro rata portion shall be determined by utilizing a fraction the numerator of which is [CLIFF VESTING: the number of days between the Date of Grant specified at the beginning of this Agreement and the date Participant’s employment ended, and the denominator of which is the number of days between such Date of Grant and the vesting date specified at the beginning of this Agreement][RATABLE VESTING: the number of days between the last scheduled vesting date prior the date Participant’s employment ended (or the Date of Grant if there was no scheduled vesting date prior to the termination of employment) and the


^*	Unless the context clearly indicates otherwise, any capitalized term that is not defined in this Agreement shall have the meaning set forth in the Plan as it currently exists or as it is amended in the future.

date Participant’s employment ended, and whose denominator is the number of days between the last scheduled vesting date prior to the date the Participant’s employment ended (or the Date of Grant if there was no scheduled vesting date prior the termination of employment) and the next scheduled vesting date, which fraction shall be applied to the number of Shares scheduled to vest on the next scheduled vesting date].


(c)	In the event of a Change of Control, then this Restricted Stock Award shall immediately vest in full.


(d)	Notwithstanding any other provision of this Agreement, the Committee may, in its discretion, declare that the Restricted Shares, or any portion of them, will vest at such other times and in such other situations as it deems appropriate and in the best interest of the Company.

Effect of Vesting. Upon the vesting of any Restricted Shares, all restrictions on such vested Shares as specified in this Agreement will lapse and such vested Shares will no longer be subject to forfeiture as provided in Section 5 below. Upon vesting, the Company will issue to the Participant a certificate or electronically transfer by book-entry the number of Shares that are free of any transfer or other restrictions arising under this Agreement. Any such issuance or transfer may be conditioned upon the Participant returning to the Company any certificate(s) evidencing such Restricted Shares that may previously have been delivered to the Participant.

Applicable Restrictions. The Restricted Shares may not be transferred, sold, assigned, pledged, alienated, attached or otherwise encumbered (collectively, a “Transfer”) prior to the time they vest in accordance with this Agreement, except for a transfer to the Successor of the Participant in the event of the Participant’s death. Any prohibited Transfer will be void and unenforceable against the Company. No attempted Transfer of any Restricted Shares that is prohibited hereunder, whether voluntary or involuntary, shall vest the purported transferee with any interest or right in or with respect to such Shares.


5.	Forfeiture of Shares. If any of the Restricted Shares become the subject of an attempted Transfer, or if Participant’s employment with the Company and its Affiliates terminates for any reason other than as provided in Section 2(b) above, this Restricted Stock Award will immediately terminate and all Restricted Shares will be forfeited to the Company.


6.	Forfeiture/Recoupment of Restricted Shares. This Award is subject to the terms of the Company’s Compensation Recoupment Policy as in effect from time to time.

Actions in Connection With a Forfeiture of Shares. If the Company does not have custody of any and all certificates representing any Restricted Shares forfeited hereunder, the Participant shall immediately return to the Company any and all such certificates. If the Participant has not already done so, the Participant will also deliver to the Company a stock power duly executed in blank relating to any and all certificates representing Restricted Shares forfeited to the Company, and the Company will be authorized to cancel any and all certificates representing Restricted Shares so forfeited and to cause a book entry to be made in the records of the Company’s transfer agent in the name of the Participant (or a new stock certificate to be issued, if requested by the Participant) evidencing any Shares that vested prior to forfeiture. If the Restricted Shares are evidenced by a book-entry made in the records

of the Company’s transfer agent, then the Company will be authorized to cause such book-entry to be adjusted to reflect the number of Restricted Shares so forfeited.


8.	Restrictive Legend. Any book entry or certificate representing Restricted Shares shall contain a notation or bear the following legend:

“THE SHARES REPRESENTED BY THIS [BOOK-ENTRY] [CERTIFICATE] MAY BE TRANSFERRED ONLY IN ACCORDANCE WITH THE TERMS OF A RESTRICTED STOCK AGREEMENT BETWEEN THE COMPANY AND THE SHAREHOLDER, A COPY OF WHICH IS ON FILE WITH THE SECRETARY OF THE COMPANY.”

The Participant agrees that in order to ensure compliance with the restrictions referred to in this Agreement, the Company may issue appropriate “stop transfer” instructions to its transfer agent.

Rights as a Shareholder; Rights to Dividends. As of the date of grant specified at the beginning of this Agreement, the Participant shall have all of the rights of a shareholder of the Company with respect to the Restricted Shares (including voting rights), except as otherwise specifically provided in this Agreement. Notwithstanding the foregoing, any dividends, whether in cash, stock or other property, declared and paid by the Company with respect to Restricted Shares that have not yet vested in accordance with Section 2 of this Agreement (“Accrued Dividends”) shall vest and be paid to the Participant, without interest, only if and when such Restricted Shares vest. If Accrued Dividends consist of shares of capital stock, certificates for such shares will be issued and the unvested Accrued Dividends shall be held in the same manner as certificates for Restricted Shares are issued and held under Sections 1(b) and 3 above. In the event that the Participant forfeits Restricted Shares as provided under Sections 5 or 6 hereof, all unvested Accrued Dividends shall also be cancelled by the Company. The Participant shall have no further rights with respect to any Accrued Dividends that are so forfeited. If the Accrued Dividends consist of shares of capital stock, such Accrued Dividends will be forfeited and cancelled in the same manner and under the same terms as forfeited Restricted Shares under Section 7.


10.	Adjustments for Changes in Capitalization. This Restricted Stock Award shall be subject to adjustments for changes in the Company’s capitalization as provided in Section 16 of the Plan.


11.	No Right to Employment. This Agreement shall not give the Participant a right to continued employment with the Company or any Affiliate of the Company, and the Company or any such Affiliate employing the Participant may terminate his/her employment and otherwise deal with the Participant without regard to the effect it may have upon him/her under this Agreement.

12.

Tax Consequences and Withholding. The Participant understands that unless a proper and timely Section 83(b) election has been made as further described below, generally under Section 83 of the Code, at the time the Restricted Shares vest, the Participant will be obligated to recognize ordinary income and be taxed in an amount equal to the Fair Market Value as of the date of vesting for the Restricted Shares then vesting. The Participant has been informed that, with respect to the grant of the Restricted Stock Award, an election may be filed by the Participant with the Internal Revenue Service, within 30 days of the date of grant, electing pursuant to Section 83(b) of the Code to be taxed currently on the Fair Market Value of the

Restricted Shares on the date of grant. The Participant acknowledges that it is the Participant’s sole responsibility to timely file the election under Section 83(b) of the Code. If the Participant makes such election, the Participant shall promptly provide the Company a copy and the Company may require at the time of such election an additional payment for withholding tax purposes based on the Fair Market Value of the Restricted Shares as of the date of grant.

The Company (or any Subsidiary or Affiliate employing the Participant) shall have a right to require the Participant to pay the Company (or such Subsidiary or Affiliate) a cash amount sufficient to cover any required domestic or foreign tax withholding obligation, including income, employment, social insurance, payroll tax, fringe benefit tax, payment on account or other tax-related items related to the Participant’s participation in the Plan and legally applicable to the Participant including, without limitation, in connection with the vesting of the Restricted Shares, the subsequent sale of Shares acquired upon vesting and/or the receipt of any dividends on such Shares which the Company determines must be withheld (“Tax-Related Items”), before delivery of any Shares under this Restricted Stock Award. In lieu of all or any part of a cash payment from the Participant, the Participant may elect to cover the Tax-Related Items by forfeiting a number of Shares delivered to the Participant equal in value to the amount of such tax withholding obligation. The Participant acknowledges that the Company and its Affiliates (1) make no representations or undertakings regarding the treatment of any Tax-Related Items in connection with any aspect of the Restricted Shares; and (2) do not commit to and are under no obligation to structure the terms of the grant or any aspect of the Restricted Shares to reduce or eliminate the Participant’s liability for Tax-Related Items or achieve any particular tax result.


13.	Restricted Shares Subject to Plan, Articles of Incorporation and By-Laws. Participant acknowledges that this Restricted Stock Award is subject to the Plan, the Articles of Incorporation, as amended from time to time, and the By-Laws, as amended from time to time, of the Company, and any applicable federal or state laws, rules or regulations.


14.	Obligation to Reserve Sufficient Shares. The Company shall at all times during the term of this Restricted Stock Award reserve and keep available a sufficient number of Shares to satisfy this Agreement.


15.	Binding Effect. This Agreement shall be binding in all respects on the heirs, representatives, successors, and assigns of the Participant.


16.	Choice of Law. This Agreement is entered into under the laws of the State of Minnesota and shall be construed and interpreted thereunder (without regard to its conflict of law principles).

17.

Interpretation of This Agreement. All decisions and interpretations made by the Committee with regard to any question arising hereunder or under the Plan shall be binding and conclusive upon the Company and the Participant. This Agreement is subject to and shall be construed in accordance with the terms of the Plan. If there is any inconsistency between the provisions of this Agreement and the Plan, the provisions of the Plan shall govern.


18.	Nature of the Award. The Participant understands that the value that may be realized, if any, from the Restricted Stock Award is contingent, and depends on the future market price of the Common Stock, among other factors. The Participant further confirms his or her understanding that the Restricted Stock Award is intended to promote employee retention and stock ownership

and to align employees’ interests with those of the Company’s shareholders. The Participant also understands that (i) the Plan is discretionary in nature and may be suspended or terminated by the Company at any time; (ii) the grant of a Restricted Stock Award is voluntary and occasional and does not create any contractual or other right to receive future Restricted Stock Awards, or benefits in lieu of Restricted Stock Awards even if Restricted Stock Awards have been granted repeatedly in the past; (iii) all decisions with respect to any future award will be at the sole discretion of the Company; (iv) his or her participation in the Plan is voluntary; (v) the value of this Restricted Stock Award is an extraordinary item of compensation which is outside the scope of his or her employment contract with his or her actual employer, if any; (vi) this Restricted Stock Award and past or future Restricted Stock Awards are not part of normal or expected compensation or salary for any purposes, including, but not limited to, calculating any severance, resignation, redundancy, end of service payments, bonuses, long-service awards, pension or retirement benefits or similar payments; and (vii) no claim or entitlement to compensation or damages arises from termination of this Restricted Stock Award or diminution in value of this Restricted Stock Award, and he or she irrevocably releases the Company, and its subsidiaries from any such claim that may arise.

IN WITNESS WHEREOF, the Participant and the Company have executed this Agreement effective as of the ___ day of __________, 20__.

PARTICIPANT

TENNANT COMPANY

By _____________________________

Carol E. McKnight

Its SVP, Chief Administrative Officer

Date

TENNANT COMPANY

2020 STOCK INCENTIVE PLAN

Restricted Stock Unit Agreement



Name of Holder:
No. of Units:	Date of Grant:
Vesting Schedule: No. of Units Date

This is a Restricted Stock Unit Agreement (“Agreement”) between Tennant Company (the “Company”) and the individual identified above (the “Holder”), effective as of the Date of Grant specified above.

Recitals

WHEREAS, the Company maintains the Tennant Company 2020 Stock Incentive Plan (the “Plan”); and

WHEREAS, pursuant to the Plan, the Compensation Committee (“Committee”) of the Board of Directors has the authority to grant awards under the Plan, including awards that may be denominated in restricted stock units (“Units”); and

WHEREAS, the Committee or its delegatee has determined that the Holder is eligible to receive an award of Units under the Plan (the “Award”);

NOW, THEREFORE, the Company hereby grants Units to the Holder under the terms and conditions as follows:

Terms and Conditions*


1.	Grant. The Holder is granted the number of Units specified at the beginning of this Agreement.


2.	Fair Market Value of Units. The fair market value of a Unit subject to this Agreement shall at all times be equal to the Fair Market Value of a Share of the Company’s Stock (the “Common Stock”).

* Unless the context clearly indicates otherwise, any capitalized term that is not defined in this Agreement shall have the meaning set forth in the Plan as it currently exists or as it is amended in the future.

3. Vesting and Payment of Benefits.

(a) Generally. Payment of vested Units subject to this Agreement shall be made by the Company delivering one Share of Common Stock for each vested Unit to the Holder, subject to the tax withholding provisions of Section 12.

(b) Vesting and Payment. Subject to Sections 5 and 6 of this Agreement, Units subject to this Agreement shall vest in the numbers and on the dates specified in the vesting schedule specified at the beginning of this Agreement, unless the Holder’s employment with the Company shall terminate prior to such vesting dates. Delivery of Shares of Common Stock in payment of the Units will occur as soon as administratively practicable after each applicable vesting date (but no later than the 15^th day of the third calendar month following the vesting date). Such issuance shall be evidenced by a stock certificate or appropriate entry on the books of the Company or a duly authorized transfer agent of the Company, and shall be in complete satisfaction of such vested Units. If the Units that vest and become payable include a fractional Unit, the Company shall round the number of vested Units to the nearest whole Unit prior to delivery of Shares as provided herein. If the ownership of or issuance of Shares to the Holder as provided herein is not feasible or practical due to applicable exchange controls, securities or tax laws or other provisions of applicable law, as determined by the Committee in its sole discretion, the Holder or his legal representative shall receive cash proceeds in an amount equal to the Fair Market Value (as of the date vesting occurs) of the Shares otherwise issuable to Holder, net of any amount required to satisfy Tax-Related Items as provided in Section 12.

(c) Effect. Whenever the Company shall become obligated to make payment in respect of a Unit subject to this Agreement, all rights of the Holder with respect to such Unit, other than the right to such payment, shall terminate and be of no further force or effect and such Unit shall be cancelled.

(d) Payments on Death. Any payment due under this Agreement following the death of the Holder shall be paid to the Successor of the Holder.


4.	No Entitlement to Cash Dividends. The Holder shall not be entitled to receive any cash dividends or cash dividend equivalents with respect to the Units credited to the Holder’s account.

Effect of Termination of Employment. If the Holder ceases to be an Employee prior to any vesting date specified at the beginning of this Agreement other than as a result of the Holder’s death, Retirement or Disability, the Holder shall forfeit the Units. If the Holder ceases to be an Employee as a result of Holder’s death, Retirement or Disability, then the Holder shall be entitled to receive a pro rata portion of the Units that vest as provided in Section 3, and the balance of the Units shall be forfeited. The pro rata portion shall be determined by utilizing a fraction the numerator of which is [CLIFF VESTING: the number of days between the Date of Grant specified at the beginning of this Agreement and the date Holder’s employment ended, and the denominator of which is the number of days between such Date of Grant and the vesting date specified at the beginning of this Agreement][RATABLE VESTING: the number of days between the last scheduled vesting date prior to the date Holder’s employment ended (or the Date of Grant if there was no scheduled vesting date prior to the termination of employment) and the date Holder’s employment ended, and whose denominator is the number of days between the last scheduled vesting date prior to the date Holder’s employment ended (or the Date of Grant if there was no scheduled vesting date prior to the termination of employment) and the next scheduled vesting date, which fraction shall be applied to the number of Units scheduled to vest on the next scheduled vesting date.] Notwithstanding anything to the contrary in this Agreement, to the extent the benefit provided hereunder is considered to be deferred compensation under Section 409A of the Code, and if the Holder is a “specified employee” within the meaning of Section 409A of the Code, then

any payment due as a result of separation from service will not be made until six months after the Holder’s separation from service or, if earlier, the payment date in accordance with this Agreement.

Change of Control. Notwithstanding anything to the contrary stated herein, upon the occurrence of a Change of Control, all of the Units subject to this Agreement shall immediately vest and be paid in full as provided in Section 3. Notwithstanding anything in this Agreement to the contrary, no Change of Control shall be deemed to occur unless it would also be deemed to constitute a change in ownership or effective control, or a change in the ownership of a substantial portion of the assets, of a business under Section 409A of the Code.


7.	Forfeiture/Recoupment of Restricted Stock Unit. The Units subject to this Agreement shall be subject to the terms of the Company’s Compensation Recovery Policy in effect from time to time.


8.	Adjustments for Changes in Capitalization. The Units subject to this Agreement shall be subject to adjustments for changes in the Company’s capitalization as provided in Section 16 of the Plan.


9.	No Transfer. The Units may not be pledged, assigned or transferred except as expressly provided in Section 6.3 of the Plan.


10.	No Shareholder Rights Until Payment. The Holder shall not have any of the rights of a shareholder of the Company in connection with the award of Units subject to this Agreement unless and until the Holder becomes the holder of record of the Common Stock issued in payment of the Units.


11.	No Right to Employment. This Agreement shall not give the Holder a right to continued employment with the Company or any Affiliate of the Company, and the Company or any such Affiliate employing the Holder may terminate his/her employment and otherwise deal with the Holder without regard to the effect it may have upon him/her under this Agreement.

12.

Tax Withholding. The Company (or the Subsidiary or Affiliate employing the Holder) shall have a right to require the Holder to pay the Company (or such Subsidiary or Affiliate) a cash amount sufficient to cover any required domestic or foreign tax withholding obligation, including income, employment, social insurance, payroll tax, fringe benefit tax, payment on account or other tax-related items related to Holder’s participation in the Plan and legally applicable to Holder including, without limitation, in connection with the grant or vesting of the Units, the subsequent sale of Shares acquired under the Plan and/or the receipt of any dividends on such Shares which the Company determines must be withheld (“Tax-Related Items”) before receipt of any Shares under this Award. In lieu of all or any part of a cash payment from the Holder, the Holder may elect to cover the Tax-Related Items through a reduction in the number of Shares delivered to the Holder equal in value to the amount of such tax withholding obligation. Holder acknowledges that the Company and its Affiliates (1) make no representations or undertakings regarding the treatment of any Tax-Related Items in connection with any aspect of the Units; and (2) do not commit to and are under no obligation to structure the terms of the grant or any aspect of the Units to reduce or eliminate Holder’s liability for Tax-Related Items or achieve any particular tax result.


13.	Restricted Stock Units Subject to Plan, Articles of Incorporation and By-Laws. Holder acknowledges that this Award is subject to the Plan, the Articles of Incorporation, as amended from time to time, and the By-Laws, as amended from time to time, of the Company, and any applicable federal or state laws, rules or regulations.


14.	Obligation to Reserve Sufficient Shares. The Company shall at all times during the term of this Award reserve and keep available a sufficient number of Shares to satisfy this Agreement.


15.	Binding Effect. This Agreement shall be binding in all respects on the heirs, representatives, successors and assigns of the Holder.


16.	Choice of Law. This Agreement is entered into under the laws of the State of Minnesota and shall be construed and interpreted thereunder (without regard to its conflict of law principles).

17.

Interpretation of This Agreement. All decisions and interpretations made by the Committee with regard to any question arising hereunder or under the Plan shall be binding and conclusive upon the Company and the Holder. This Agreement is subject to and shall be construed in accordance with the terms of the Plan. If there is any inconsistency between the provisions of this Agreement and the Plan, the provisions of the Plan shall govern.


18.	Nature of the Award.

In accepting the Unit, the Holder acknowledges and agrees that:

(a) Any notice period mandated under applicable law shall not be treated as service for the purpose of determining the vesting of the Unit; and the Holder’s right to vesting of Shares in settlement of the Unit after termination of service, if any, will be measured by the date of termination of the Holder’s active service and will not be extended by any notice period mandated under applicable law. Subject to the foregoing and the provisions of the Plan, the Company, in its sole discretion, shall determine whether the Holder’s service has terminated and the effective date of such termination.

(b) The Plan is established voluntarily by the Company. It is discretionary in nature and it may be modified, amended, suspended or terminated by the Company at any time, unless otherwise provided in the Plan and this Agreement.

(c) The grant of the Unit is voluntary and occasional and does not create any contractual or other right to receive future grants of Units, or benefits in lieu of Units, even if Units have been granted repeatedly in the past.

(d) All decisions with respect to future Unit grants, if any, will be at the sole discretion of the Company.

(e) The Holder’s participation in the Plan shall not create a right to further service with the Company or another Subsidiary and shall not interfere with the ability of with the Company or another Subsidiary to terminate the Holder’s service at any time, with or without cause, subject to applicable law.

(f) The Holder is voluntarily participating in the Plan.

(g) The Unit is an extraordinary item that does not constitute compensation of any kind for service of any kind rendered to the Company or any Subsidiary, and which is outside the scope of the Holder’s employment contract, if any.

(h) The Unit is not part of normal or expected compensation or salary for any purpose, including, but not limited to, calculating any severance, resignation, termination, redundancy, end-of-service payments, bonuses, long-service options, pension or retirement benefits or similar payments.

(i) In the event that the Holder is not an employee of a Subsidiary, the Unit grant will not be interpreted to form an employment contract or relationship with a Subsidiary.

(j) The future value of the underlying Shares is unknown and cannot be predicted with certainty. The value of the Shares may increase or decrease.

(k) No claim or entitlement to compensation or damages arises from termination of the Unit or diminution in value of the Unit or Shares and the Holder irrevocably releases the Company and any Subsidiary from any such claim that may arise. If, notwithstanding the foregoing, any such claim is found by a court of competent jurisdiction to have arisen then, by signing this Agreement, the Holder shall be deemed irrevocably to have waived the Holder’s entitlement to pursue such a claim.


19.	Data Privacy.

The following provisions shall only apply to the Holder if he or she resides outside the US, the EU, and EEA:

(a)The Holder voluntarily consents to the collection, use, disclosure and transfer to the United States and other jurisdictions, in electronic or other form, of his or her personal data as described in this Agreement and any other award materials (“Data”) by and among, as applicable, the Company and any Subsidiary for the exclusive purpose of implementing, administering, and managing his or her participation in the Plan. If the Holder does not choose to participate in the Plan, his or her employment status or service with the Company and any Subsidiary will not be adversely affected.

(b)The Holder understands that the Company and any Subsidiary may collect, maintain, process and disclose, certain personal information about him or her, including, but not limited to, his or her name, home address and telephone number, date of birth, social insurance number or other identification number, salary, nationality, job title, any Shares or directorships held in the Company, details of all equity awards or any other entitlement to Shares awarded, canceled, exercised, vested, unvested or outstanding in his or her favor, for the exclusive purpose of implementing, administering and, managing the Plan.

(c)The Holder understands that Data will be transferred to one or more service provider(s) selected by the Company, which may assist the Company with the implementation, administration and management of the Plan. The Holder understands that the recipients of the Data may be located in the United States or elsewhere, and that the recipient’s country (e.g., the United States) may have different, including less stringent, data privacy laws and protections than his or her country. The Holder understands that if he or she resides outside the United States, he or she may request a list with the names and addresses of any potential recipients of the Data by contacting his or her local human resources representative. The Holder authorizes the Company and any other possible recipients that may assist the Company (presently or in the future) with implementing, administering and managing the Plan to receive, possess, use, retain and transfer

the Data, in electronic or other form, for the sole purposes of implementing, administering and managing his or her participation in the Plan.

(d)The Holder understands that Data will be held only as long as is necessary to implement, administer and manage his or her participation in the Plan, including to maintain records regarding participation. The Holder understands that if he or she resides in certain jurisdictions, to the extent required by applicable law, he or she may, at any time, request access to Data, request additional information about the storage and processing of Data, require any necessary amendments to Data or refuse or withdraw the consents given by accepting these Units, in any case without cost, by contacting in writing his or her local human resources representative. Further, the Holder understands that he or she is providing these consents on a purely voluntary basis. If the Holder does not consent or if he or she later seeks to revoke his or her consent, his or her engagement as a service provider with the Company and any Subsidiary will not be adversely affected; the only consequence of refusing or withdrawing his or her consent is that the Company will not be able to grant him or her Units under the Plan or administer or maintain Units. Therefore, the Holder understands that refusing or withdrawing his or her consent may affect his or her ability to participate in the Plan (including the right to retain the Units). The Holder understands that he or she may contact his or her local human resources representative for more information on the consequences of his or her refusal to consent or withdrawal of consent.

The following provisions shall only apply to the Holder if he or she resides in the EU or EEA, or EU privacy laws are otherwise applicable:

(a)Data Collected and Purposes of Collection. The Holder understands that the Company, acting as controller, as well as the employing Subsidiary, will process, to the extent permissible under applicable law, certain personal information about the Holder, including name, home address and telephone number, information necessary to process the Units (e.g., mailing address for a check payment or bank account wire transfer information), date of birth, social insurance number or other identification number, salary, nationality, job title, employment location, details of all Units granted, canceled, vested, unvested or outstanding in the Holder’s favor, and where applicable service termination date and reason for termination, any capital shares or directorships held in the Company (where needed for legal or tax compliance), and any other information necessary to process mandatory tax withholding and reporting (all such personal information is referred to as “Data”). The Data is collected from the Holder, and from the Company and any Subsidiary, for the purpose of implementing, administering and managing the Plan pursuant to its terms. The legal bases (that is, the legal justification) for processing the Data is that it is necessary to perform, administer and manage the Plan and in Company’s legitimate interests, which means the Company is using the relevant Data to conduct and develop its business activities, subject to the Holder’s interest and fundamental rights. The Data must be provided in order for the Holder to participate in the Plan and for the parties to this Agreement to perform their respective obligations thereunder. If the Holder does not provide Data, he or she will not be able to participate in the Plan and become a party to this Agreement.

(b)Transfers and Retention of Data. The Holder understands that the Data will be transferred to and among the Company and any Subsidiary, as well as service providers (such as stock administration providers, brokers, transfer agents, accounting firms, payroll processing firms or tax firms), for the purposes explained above. The Holder understands that the recipients of the Data may be located in the United States and in other jurisdictions outside of the European Economic Area where we or our service providers have operations. The United States and some of these other jurisdictions have not been found by the European Commission to have adequate data protection safeguards. If the Company and any Subsidiary transfer Data outside of the

European Economic Area, we will take steps as required and recognized by the European Commission to provide adequate safeguards for the transferred Data, such as the European Commission approved standard contractual clauses or certification schemes, such as the EU-US Privacy Shield. The Holder has a right to obtain details of the mechanism(s) under which the Holder’s Data is transferred outside of the European Economic Area, or the United Kingdom, which the Holder may exercise by contacting privacy@tennantco.com.

(c)The Holder’s Rights in Respect of Data. The Holder has the right to access the Holder’s Data being processed by the Company as well as understand why Company is processing such Data. Additionally, subject to applicable law, the Holder is entitled to have any inadequate, incomplete or incorrect Data corrected (that is, rectified). Further, subject to applicable law, the Holder may be entitled to the following rights in regard to his or her Data: (i) to object to the processing of Data; (ii) .o have his or her Data erased, under certain circumstances, such as where it is no longer necessary in relation to the purposes for which it was processed; (iii) to restrict the processing of the Holder’s Data so that it is stored but not actively processed (e.g., while the Company assesses whether the Holder is entitled to have Data erased) under certain circumstances; (iv) to port a copy of the Data provided pursuant to this Agreement or generated by the Holder, in a common machine-readable format; and (v) to obtain a copy of the appropriate safeguards under which Data is transferred to a third country or international organization. To exercise his or her rights, the Holder may contact the applicable human resources representative. The Holder may also contact the relevant data protection supervisory authority, as he or she has the right to lodge a complaint.

20.

Country-Specific Terms and Conditions and Notices. Notwithstanding any provisions in this Agreement, the grant of Units shall be subject to any special terms and conditions set forth in any appendix to this Agreement for Holder’s country (the “Appendix”). Moreover, if Holder relocates to one of the countries included in the Appendix, the special terms and conditions for such country will apply to Holder, to the extent the Company determines that the application of such terms and conditions is necessary or advisable for legal or administrative reasons. The Appendix constitutes part of this Agreement.

IN WITNESS WHEREOF, the Holder and the Company have executed this Agreement effective as of the date of grant specified above.

HOLDER

TENNANT COMPANY

Carol E. McKnight

Its SVP, Chief Administrative Officer

APPENDIX

TENNANT COMPANY

2020 STOCK INCENTIVE PLAN

RESTRICTED STOCK UNIT AGREEMENT

FOR NON-U.S. HOLDERS

Terms and Conditions

This Appendix includes additional terms and conditions that govern the Units granted to Holder under the Plan if he or she resides in one of the countries listed below. Certain capitalized terms used but not defined in this Appendix have the meanings set forth in the Plan and/or the main body of the Agreement.

Notifications

This Appendix also includes information regarding exchange controls and certain other issues of which Holder should be aware with respect to his or her participation in the Plan. The information is based on the securities, exchange control and other laws in effect in the respective countries as of April 2020. Such laws are often complex and change frequently. As a result, the Company strongly recommends that Holder not rely on the information in this Appendix as the only source of information relating to the consequences of Holder’s participation in the Plan because the information may be out of date at the time the Units are settled or the Holder sells the Shares acquired under the Plan.

In addition, the information contained herein is general in nature and may not apply to Holder’s particular situation and the Company is not in a position to assure Holder of any particular result. Accordingly, Holder is advised to seek appropriate professional advice as to how the relevant laws of Holder’s country may apply to his or her situation.

Finally, if Holder is a citizen or resident of a country other than the one in which Holder is currently working or transfers to another country after the grant of the Units, or is considered a resident of another country for applicable law purposes, the information contained herein may not be applicable to Holder in the same manner. In addition, the Company shall, in its discretion, determine to what extent the terms and conditions contained herein shall apply to Holder under these circumstances.

AUSTRALIA

Notifications

Securities Law Information.

The offering and resale of Shares acquired under the Plan to a person or entity resident in Australia may be subject to disclosure requirements under Australian law. Holder is advised to obtain legal advice regarding any applicable disclosure requirements prior to making any such offer.

No Advice or Recommendation.

This Agreement is not intended to provide the sole or principal basis of any investment or credit decision or any other risk evaluation. The information contained in this Agreement is not a recommendation by the Company or any other person that any investor subscribe for Shares in the Company. Each Holder

must conduct his or her own investigations and analysis of the operations and prospects of the Company that it considers necessary or desirable and should determine for itself its interest in acquiring Shares in the Company on the basis of such independent assessment and investigation.

Terms and Conditions

Foreign Exchange.

Holder acknowledges and agrees that it is the Holder’s sole responsibility to investigate and comply with any applicable exchange control laws in connection with the inflow of funds from the vesting of the Units or subsequent sale of the Shares and any dividends (if any) and that the Holder shall be responsible for any reporting of inbound international fund transfers required under applicable law. Holder is advised to seek appropriate professional advice as to how the exchange control regulations apply to Holder’s specific situation.

Offer of Unit.

The Board, in its absolute discretion, may make a written offer to an eligible person who is an Australian resident it chooses to accept Unit.

The offer shall specify the maximum number of Shares the Holder may accept under the Unit, the Date of Grant, the vesting conditions (if any), any applicable holding period and any disposal restrictions attaching to the Unit or the resulting Shares (all of which may be set by the Board in its absolute discretion).

The offer is intended to receive tax deferred treatment under Subdivision 83A-C of the Income Tax Assessment Act 1997(Cth). The conditions to receive such treatment are contained in this Agreement.

The offer shall be accompanied by an acceptance form and a copy of the Plan and this Agreement or, alternatively, details on how the Holder may obtain a copy of the Plan and this Agreement.

Grant of Unit.

If the Holder validly accepts the Board’s offer of Unit, the Board must grant the Holder the Unit for the number of Shares for which the Unit were accepted. However, the Board must not do so if the Holder has ceased to be an eligible person at the date when the Unit are to be granted or the Company is otherwise prohibited from doing so under the Corporations Act 2001(Cth) without a disclosure document, product disclosure statement or similar document.

The Company must provide a copy of this Agreement in respect of the Unit granted to the Holder to be executed by the Holder as soon as practicable after the Date of Grant.

BELGIUM

Notifications

Securities Law Information.

The grant of the Units under the Plan is exempt from the requirement to publish a prospectus under the EU Prospectus Regulation as implemented in Belgium.

Foreign Asset/Account Reporting Information.

Belgian residents are required to report any securities (i.e., Shares acquired under the Plan) or bank accounts opened and maintained outside Belgium on their annual tax returns. Belgian residents are also required to complete a separate report providing the National Bank of Belgium with details regarding any such account. This report, as well as additional information on how to complete it, can be found on the website of the National Bank of Belgium, www.nbb.be, under the Kredietcentrales / Centrales des crédits caption.

BRAZIL

Terms and Conditions

Nature of Grant.

The following provisions supplement Section 18 of this Agreement.

By accepting the Unit, the Holder acknowledge, understand and agree that (i) the Holder are making an investment decision, (ii) the Holder will be entitled to vest in the Units, and receive Shares pursuant to the Unit, only if the vesting conditions are met and any necessary services are rendered by the Holder between the Date of Grant and the first date of vesting, and (iii) the value of the underlying Shares of Common Stock is not fixed and may increase or decrease without compensation to the Holder.

Compliance with Law.

By accepting the Units, Holder acknowledges and agrees to comply with applicable Brazilian laws and to report and pay any and all applicable required tax withholdings. Holder agrees that, for all legal purposes: (i) the benefits provided under the Plan are the result of commercial transactions unrelated to the Holder’s employment; (ii) the Plan is not a part of the terms and conditions of the Holder’s employment; and (iii) the income from the Units, if any, is not part of the Holder’s remuneration from employment.

Notifications

Report of Overseas Assets.

If Holder is resident or domiciled in Brazil, Holder will be required to submit an annual declaration of assets and rights held outside of Brazil to the Central Bank of Brazil if the aggregate value of such assets and rights equals or exceeds US$100,000. Assets and rights that must be reported include, but are not limited to, the Shares acquired under the Plan.

Tax on Financial Transaction.

If the Holder repatriates the proceeds from the sale of Shares of Common Stock or receipt of any cash dividends and converts the funds into local currency, the Holder may be subject to the Tax on Financial Transactions. It is the Holder’s responsibility to pay any applicable Tax on Financial Transactions arising from participation in the Plan. The Holder should consult with the Holder’s personal tax advisor for additional details.

FRANCE

Terms and Conditions

Units Not Tax-Qualified.

The Unit is not intended to be a tax-qualified or tax-preferred award, including without limitation, under Sections L. 225-197-1 to L. 225-197-6 of the French Commercial Code. The Holder is encouraged to consult with a personal tax advisor to understand the tax and social insurance implications of the Unit.

Language Consent.

By accepting the Unit, the Holder confirms having read and understood the documents relating to this grant (the Plan and this Agreement) which were provided in English language. The Holder accepts the terms of those documents accordingly. The Holder confirms that the Holder has a good knowledge of the English language.

En acceptant l’Attribution, le Bénéficiaire confirme avoir lu et compris les documents relatifs à cette attribution (le Plan et ce Contrat) qui ont été fournis en langue anglaise. Le Bénéficiaire accepte les dispositions de ces documents en connaissance de cause. Etant précisé que le Titulaire a une bonne maîtrise de la langue anglaise.

Notifications

Securities Law Information.

The grant of Unit under the Plan is exempt or excluded from the requirement to publish a prospectus under the EU Prospectus Regulation as implemented in France.

Foreign Asset/Account Reporting Information.

The Holder may hold Shares acquired upon vesting/settlement of the Unit, any proceeds resulting from the sale of Shares or any dividends paid on such Shares outside of France, provided the Holder declares all foreign bank and brokerage accounts (including any accounts that were opened or closed during the tax year) with his or her annual income tax return. Failure to complete this reporting may trigger penalties for the Holder.

GERMANY

Notifications

Securities Law Information.

The grant of Unit under the Plan is exempt or excluded from the requirement to publish a prospectus under the EU Prospectus Regulation as implemented in Germany.

Exchange Control Information.

If the Holder remits proceeds in excess of €12,500 out of or into Germany, such cross-border payment must be reported monthly to the State Central Bank. In the event that the Holder makes or receives a payment in excess of this amount, the Holder is responsible for obtaining the appropriate form from a German bank and complying with applicable reporting requirements. In addition, the Holder must also report on an annual basis in the unlikely event that the Holder holds Shares exceeding 10% of the total voting capital of the Company.

Terms and Conditions

Prohibition on Insider Dealing.

The Holder should be aware of the insider dealing rules of the Regulation (EU) No 596/2014 of the European Parliament and Council (Market Abuse Regulation) apply in Germany, which may affect transactions under the Plan such as e.g. the subscription or participation, the suspension, the cancellation or an amending order, the acquisition or sale of Shares acquired under the Plan, if the Holder has inside information regarding the Company. The Holder is advised to determine carefully whether he or she has inside information in respect of the Company and whether and to what extend insider dealing rules can

apply to him or her. In case of uncertainty, the Company recommends that the Holder consults with a legal advisor.

Limitation of Liability.

The Holder is responsible for compliance with any laws to be observed by the Holder in person in conjunction with the participation in the Plan. The Company cannot be held liable if the Holder violates German law or any other applicable rules to be complied with by the Holder in conjunction with the participation in the Plan including but not limited to insider dealing restrictions under the Market Abuse Regulation.

ITALY

Terms and Conditions

Plan Document Acknowledgment.

In accepting the Unit, the Holder acknowledges that he or she has received a copy of the Plan and this Agreement and has reviewed the Plan and this Agreement in their entirety and fully understands and accepts all provisions of the Plan and this Agreement. The Holder further acknowledges that he or she has read and specifically and expressly approves the following Sections of this Agreement: Section 4: No Entitlement to Cash Dividends; Section 5: Effect of Termination of Employment; Section 6: Forfeiture/Recoupment of Restricted Stock Unit; Section 9: No Transfer; Section 10: No Shareholder Rights Until Payment; Section 11: No Right to Employment; Section 12: Tax Withholding; Section 18: Nature of Grant; Section 19: Data Privacy; Section 20: Country-Specific Terms and Conditions and Notices.

Notifications

Securities Law Information.

The grant of Unit under the Plan is exempt or excluded from the requirement to publish a prospectus under the EU Prospectus Regulation as implemented in Italy.

Foreign Asset/Account Reporting Information.

If the Holder holds investments abroad or foreign financial assets (e.g., cash, Shares, Units) that may generate income taxable in Italy, the Holder is required to report them on his or her annual tax returns (UNICO Form, RW Schedule) or on a special form if no tax return is due, irrespective of their value. The same reporting duties apply to the Holder if he or she is a beneficial owner of the investments, even if the Holder does not directly hold investments abroad or foreign assets.

Foreign Asset Tax Information.

The value of financial assets held outside of Italy by Italian residents is subject to a foreign asset tax, subject to an exemption. The taxable amount will be the fair market value of the financial assets (e.g., Shares) assessed at the end of the calendar year.

MEXICO

Terms and Conditions

Labor Law Acknowledgment.

These provisions supplement Section 18 of this Agreement:

Modification. By accepting the Unit, the Holder understands and agrees that any modification of the Plan or this Agreement or its termination shall not constitute a change or impairment of the terms and conditions of the Holder’s employment.

Policy Statement. The grant of the Unit made under the Plan is unilateral and discretionary and, therefore, the Company reserves the absolute right to amend it and discontinue it at any time without any liability.

The Company with registered offices at 701 N. Lilac Drive, Minneapolis, MN 55422, United States of America, is solely responsible for the administration of the Plan and participation in the Plan and the acquisition of Shares does not, in any way, establish an employment relationship between the Holder and the Company since the Holder is participating in the Plan on a wholly commercial basis and the Holder’s sole employer is the Company’s Mexican Subsidiary, nor does it establish any rights between the Holder and the employer.

Plan Document Acknowledgment.

By accepting the grant of Unit, the Holder acknowledges that the Holder has received copies of the Plan, have reviewed the Plan and this Agreement in their entirety and fully understand and accept all provisions of the Plan and this Agreement.

In addition, by signing this Agreement, the Holder further acknowledges that the Holder has read and specifically and expressly approve the terms and conditions in Section 18 of this Agreement, in which the following is clearly described and established: (i) participation in the Plan does not constitute an acquired right; (ii) the Plan and participation in the Plan is offered by the Company on a wholly discretionary basis; (iii) participation in the Plan is voluntary; and (iv) none of the Participating Companies or the Company is responsible for any decrease in the value of the Shares underlying the Unit.

Finally, the Holder hereby declares that the Holder does not reserve any action or right to bring any claim against the Company for any compensation or damages as a result of the participation in the Plan and therefore grant a full and broad release to the employer, the Company and any Participating Companies with respect to any claim that may arise under the Plan.

NETHERLANDS

Notifications

Securities Law Information.

The grant of Unit under the Plan is exempt or excluded from the requirement to publish a prospectus under the EU Prospectus Regulation as implemented in the Netherlands.

Prohibition Against Insider Trading.

The Holder should be aware of the Dutch insider trading rules, which may affect the sale of Shares acquired under the Plan. In particular, the Holder may be prohibited from effecting certain share transactions if the Holder has insider information regarding the Company. Below is a discussion of the applicable restrictions. The Holder is advised to read the discussion carefully to determine whether the insider rules could apply to him or her. If it is uncertain whether the insider rules apply, the Company recommends that the Holder consult with a legal advisor. The Company cannot be held liable if the Holder violates the Dutch insider trading rules. The Holder is responsible for ensuring compliance with these rules.

Dutch securities laws prohibit insider trading. As of 3 July 2016, the European Market Abuse Regulation (MAR), is applicable in the Netherlands. For further information, the Holder is referred to the website of the Authority for the Financial Markets (AFM): https://www.afm.nl/en/professionals/onderwerpen/marktmisbruik.

Given the broad scope of the definition of inside information, certain employees of the Company working at its Dutch Affiliate may have inside information and thus are prohibited from making a transaction in securities in the Netherlands at a time when they have such inside information. By entering into this Agreement and participating in the Plan, the Holder acknowledges having read and understood the notification above and acknowledges that it is the Holder’s responsibility to comply with the Dutch insider trading rules, as discussed herein.

SINGAPORE

Notifications

Securities Law Information.

The grant of the Unit is being made pursuant to the “Qualifying Person” exemption under section 273(1)(f) of the Singapore Securities and Futures Act (Chapter 289, 2006 Ed.) (“SFA”). The Plan has not been lodged or registered as a prospectus with the Monetary Authority of Singapore. The Holder should note that the Unit are subject to section 257 of the SFA and the Holder will not be able to make any subsequent sale in Singapore of the Shares acquired through the vesting of the Unit or any offer of such sale in Singapore unless such sale or offer is made pursuant to the exemptions under Part XIII Division (1) Subdivision (4) (other than section 280) of the SFA.

Director Notification Obligation.

If the Holder is the chief executive officer (“CEO”) or a director, associate director or shadow director of one of the Participating Companies in Singapore, the Holder is subject to certain notification requirements under the Singapore Companies Act. Among these requirements is an obligation to notify the Singapore Subsidiary in writing within two business days of any of the following events: (i) acquiring or disposing of an interest in the Company (e.g., Units or Shares) or in any Subsidiary, (ii) any change in a previously-disclosed interest (e.g., upon exercise of the Unit), or (iii) becoming the CEO or a director, associate director or shadow director of a Subsidiary in Singapore, if the Holder holds such an interest at that time.

UNITD KINGDOM

Notifications

Securities Law Information.

The grant of the Unit is exempt from the requirement to publish a prospectus under the EU Prospectus Regulation as implemented in the United Kingdom.

Neither this Agreement nor Appendix is an approved prospectus for the purposes of section 85(1) of the Financial Services and Markets Act 2000 (“FSMA”) and no offer of transferable securities to the public (for the purposes of section 102B of FSMA) is being made in connection with this Agreement. This Agreement and the Unit are exclusively available in the UK to bona fide employees and former employees of the Company or its Affiliate.

Non-Qualified Grants.

The Unit is not intended to be tax-qualified or tax preferred under current tax rules and regulations in the United Kingdom.

Tax Consultation.

The Holder understands that he or she may suffer adverse tax consequences as a result of the Holder’s acquisition or disposition of the Shares. The Holder represents that he or she will consult with any tax advisors that the Holder deems appropriate in connection with the acquisition or disposition of the Shares and that the Holder is not relying on the Company or any Parents or Subsidiaries for any tax advice.

Tax Election

The Holder shall, if so required by the Company, on acquisition of any Shares (or on such earlier date as may be specified by the Company), enter into an irrevocable joint election with his/her employer pursuant to section 431 of Income Tax (Earnings & Pensions) Act 2003 ("ITEPA") in a form specified by the Company that for the relevant tax purposes the market value of Shares acquired (or to be acquired) under the Plan by the Holder is to be calculated as if the Shares did not constitute restricted securities (as defined in section 423 of ITEPA) and section 425 to 430 of ITEPA are not to apply to such Shares.

Prohibition Against Insider Dealing.

The Holder should be aware of:


1.	the insider dealing rules of the Regulation (EU) No 596/2014 of the European Parliament and Council (Market Abuse Regulation) which apply in the UK; and


2.	the UK's insider dealing rules under the Criminal Justice Act 1993,

each of which may affect transactions under the Plan such as the acquisition or sale of Shares acquired under the Plan, if the Holder has inside information regarding the Company. If the Holder is uncertain whether the insider dealing rules apply, the Company recommends that the Holder consults with a legal advisor. The Company cannot be held liable if the Holder violates the UK's insider dealing rules. The Holder is responsible for ensuring his or her compliance with these rules.

* * *

TENNANT COMPANY

2020 STOCK INCENTIVE PLAN

Non-Employee Director

Restricted Stock Unit Agreement





Name of Participant:
No. of Units:	Grant Date:
Vesting Date: ______, 20_

This is a Restricted Stock Unit Agreement (“Agreement”) between Tennant Company (the “Company”) and the individual identified above (the “Participant”), effective as of the date of grant specified above. Unless the context clearly indicates otherwise, any capitalized term that is not defined in this Agreement shall have the meaning set forth in the Tennant Company 2020 Stock Incentive Plan (as may be amended, modified or otherwise restated, the “Plan”).

Recitals

WHEREAS, the Company maintains the Plan;

WHEREAS, pursuant to the Plan, the Compensation Committee of the Board of Directors (“Committee”) has the authority to grant awards under the Plan, including awards that may be denominated in restricted stock units (“Units”); and

WHEREAS, the Participant is a Non-Employee Director of the Company and is eligible to receive an award of Units under the Plan (the “Award”);

NOW, THEREFORE, the Company hereby grants this Restricted Stock Unit Award to the Participant under the terms and conditions, as follows:

Terms and Conditions

Grant. The Participant is granted the number of Units specified above. Unless and until these Units vest as provided in Section 3 below, they are subject to the restrictions provided for in this Agreement and are referred to as “Restricted Stock Units.” Each Unit represents the right to receive one Share. Prior to their settlement or forfeiture in accordance with the terms of this Agreement, the Units granted to the Participant will be credited to an account in the Participant’s name maintained by the Company. This account shall be unfunded and maintained for book-keeping purposes only, with the Units simply representing an unfunded and unsecured contingent obligation of the Company.


2.	Fair Market Value of Units. The fair market value of a Unit subject to this Agreement shall at all times be equal to the Fair Market Value of a Share of the Company’s Stock.


3.	Vesting and Payment.


a.	Generally. Except as otherwise provided herein, if Participant remains a Non-Employee Director continuously from the Grant Date specified above (the “Grant Date”) to the Vesting Date also specified above (the “Vesting Date”), the Units will vest on the Vesting Date.


b.	Accelerated Vesting.


i.	If a Participant’s service as a Non-Employee Director of the Company (“Service”) terminates prior to the Vesting Date due to his or her death or Disability, then all of the Units subject this Agreement shall immediately vest in full.

ii.If a Participant’s Service terminates prior to the Vesting Date due to his or her Retirement (as defined below), then the Participant shall be entitled to have a pro rata portion of the Units vest on the Vesting Date, and the balance of the Units shall be forfeited. The pro rata portion shall be determined by utilizing a fraction the numerator of which is the number of days between the Grant Date and the date Participant’s Service ended, and the denominator of which is the number of days between such Grant Date and the Vesting Date. As used herein, “Retirement” means a Participant’s voluntary separation from Service.

iii.Upon the occurrence of a Change of Control (as defined in Section 2.1(f) of the Plan after giving effect to the last sentence thereof) prior to the Vesting Date and while the Participant’s Service to the Company continues, all of the Units subject to this Agreement shall immediately vest and be paid in full.


c.	Forfeiture. If a Participant’s Service terminates prior to the Vesting Date specified at the beginning of the Agreement other than as a result of an action described in Section 3(b), the Participant shall forfeit all Units and dividend equivalents subject to this Agreement.

Settlement and Payment of Units. Subject to Section 5 below, payment of vested Units subject to this Agreement shall be made by the Company delivering one Share of Common Stock for each vested Unit to the Participant (i) as soon as administratively practicable after the Units vest (but no later than the 15^th day of the third calendar month after the date the Units vest, and the Participant will have no power to affect such timing) or (ii) if the Participant has previously submitted to the Company no later than the December 31 immediately prior to the calendar year in which the Grant Date occurs a Deferral Election Form in the form attached hereto as Exhibit A, as soon as administratively practicable (but no later than ten days

after) such other settlement date as set forth in the Deferral Election Form, and the Participant shall have no power to affect the timing of such issuance. Such issuance shall be evidenced by a stock certificate to the Participant, appropriate entry on the books of the Company or a duly authorized transfer agent of the Company with a notice of issuance provided to the Participant or by the electronic delivery of the Shares to a brokerage account the Participant designates, and shall be in complete satisfaction of such vested Units. If the Units that vest and become payable include a fractional Unit, the Company shall round the number of vested Units to the nearest whole Unit prior to delivery of Shares as provided herein. If the ownership of or issuance of Shares to the Participant as provided herein is not feasible or practical due to applicable exchange controls, securities or tax laws or other provisions of applicable law, as determined by the Committee in its sole discretion, the Participant or his/her legal representative shall receive cash proceeds in an amount equal to the Fair Market Value (as of the date vesting occurs or, if the Participant has elected a deferred settlement date, as of such settlement date) of the Shares otherwise issuable to the Participant.


e.	Effect. Whenever the Company shall become obligated to make payment in respect of a Unit subject to this Agreement, all rights of the Participant with respect to such Unit, other than the right to such payment, shall terminate and be of no further force or effect and such Unit shall be cancelled.


f.	Payments on Death. Any payment due under this Agreement following the death of the Participant shall be paid to the Successor of the Participant.

Dividend Equivalents. In the event the Company shall pay cash dividends on its Shares on or after the date of this Agreement, the Company shall credit, as of the dividend record date, an amount of cash dividend equivalents to the Participant’s account. The amount of the dividend equivalents credited shall be determined by multiplying the number of Units credited to the Participant’s account as of the dividend record date times the dollar amount of the cash dividend per Share. The Participant’s right to receive such accrued dividend equivalents shall vest, and the amount of the accrued dividend equivalents shall be paid in cash, to the same extent and at the same time as the underlying Units to which the dividend equivalents relate, as provided in Section 3 of this Agreement. No interest shall accrue on any unpaid dividend equivalents. Any dividend equivalents accrued on Units that are forfeited in accordance with this Agreement shall also be forfeited.


5.	Adjustments for Changes in Capitalization. The Units subject to this Agreement shall be subject to adjustments for changes in the Company’s capitalization as provided in Section 16 of the Plan.


6.	No Transfer. The Units may not be pledged, assigned or transferred except as expressly provided in Section 6.3 of the Plan.


7.	No Shareholder Rights Until Payment. The Participant shall not have any of the rights of a shareholder of the Company in connection with the award of Units or dividend equivalents subject to this Agreement unless and until the Participant becomes the holder of record of the Common Stock issued in payment of the Units.


8.	Service as a Director. This Agreement shall not give the Participant a right to continued service on the Board, nor will it interfere in any way with any right of the Board, the Company or its shareholders to terminate such service.


9.	Restricted Stock Units Subject to Plan, Articles of Incorporation and By-Laws. The Participant acknowledges that this Award is subject to the Plan, the Articles of Incorporation, as amended from time to time, and the By-Laws, as amended from time to time, of the Company, and any applicable federal or state laws, rules or regulations.


10.	Obligation to Reserve Sufficient Shares. The Company shall at all times during the term of this Award reserve and keep available a sufficient number of Shares to satisfy this Agreement.


11.	Binding Effect. This Agreement shall be binding in all respects on the heirs, representatives, successors and assigns of the Participant, and on the successors and assigns of the Company.


12.	Choice of Law. This Agreement is entered into under the laws of the State of Minnesota and shall be construed and interpreted thereunder (without regard to its conflict of law principles).


13.	Section 409A of the Code. The provisions of this Agreement shall be interpreted and construed in a manner intended to comply with Section 409A of the Code, and shall specifically be subject to Section 27 of the Plan.

14.

Interpretation of This Agreement. All decisions and interpretations made by the Committee with regard to any question arising hereunder or under the Plan shall be binding and conclusive upon the Company and the Participant. This Agreement is subject to and shall be construed in accordance with the terms of the Plan. If there is any inconsistency between the provisions of this Agreement and the Plan, the provisions of the Plan shall govern.

15.

Nature of the Award. The Participant understands that the value that may be realized, if any, from the Award is contingent, and depends on the future market price of the Common Stock, among other factors. The Participant further confirms his or her understanding that the Award is intended to promote stock ownership and to align Non-Employee Directors’ interests with those of the Company’s shareholders. The Participant acknowledges that the Award is subject to vesting conditions and will be cancelled if vesting conditions are not satisfied. The Participant also understands that (i) the Plan is discretionary in nature and

may be suspended or terminated by the Company at any time; (ii) all decisions with respect to any future award will be at the sole discretion of the Company; (iii) his or her participation in the Plan is voluntary; and (iv) no claim or entitlement to compensation or damages arises from termination of this Award or diminution in value of this Award, and he or she irrevocably releases the Company, and its subsidiaries from any such claim that may arise.

16.

Electronic Delivery and Acceptance. The Company may deliver any documents related to this Award by electronic means and request the Participant’s acceptance of this Agreement by electronic means. The Participant hereby consents to receive all applicable documentation by electronic delivery and to participate in the Plan through an on-line (and/or voice activated) system established and maintained by the Company or the Company’s third-party stock plan administrator.

WITNESS WHEREOF, the Participant and the Company have executed this Agreement effective as of the date of grant specified above.

PARTICIPANT

____________________________

TENNANT COMPANY

Carol E. McKnight

Its SVP, Chief Administrative Officer

Date

TENNANT COMPANY, INC.
Form of Restricted Stock Unit Deferral Election Form

Participant Name:

This Election applies to the anticipated Restricted Stock Unit (RSU) Award to be granted to the Participant by Tennant Company (the “Company”) during calendar year 20[ ] for the Recipient’s service as a non-employee director of the Company for the Board service year commencing with the 20[ ] annual meeting of shareholders.

This Election will be effective as to the above referenced RSU Award only if this Election Form is received by the Company on or before December 31, 20[ ].

Election:

I, the undersigned non-employee director of the Company, hereby elect the following settlement date for RSUs that vest in accordance with the terms of the above referenced RSU Award from the Company: (check one)

o The date my service as a director of the Company ends.

o May 15, 20___.


o	The earlier of the two options above. [Please make sure you fill in the date above if you select this option.]

I understand and acknowledge that:


•	Any election to defer the settlement of RSUs granted to me pursuant to this Deferral Election Form means that my RSUs will not be settled upon the applicable vesting date set forth in the award agreement, which is the default settlement date if I do not make an election to defer hereunder;


•	Regardless of my election above, I understand that my RSUs will be settled as contemplated by the RSU Award agreement in the event of my death, termination of my Service due to Disability or a Change of Control;


•	Any such election will be irrevocable as of December 31, 20[__]; and


•	My vested RSUs (and any accrued and vested dividend equivalents) will be settled in a single lump sum payment on the settlement date I have chosen.

Signature:

By signing and submitting this election form, I revoke any election form I may have previously submitted to the Company with respect to the RSUs subject to the award described above.

Date: Signature:

Name:

TENNANT COMPANY

2020 STOCK INCENTIVE PLAN

Restricted Stock Unit Agreement



Name of Holder:
No. of Units: (at Target level)	Date of Grant:
Vesting Date: December 31, 20[__], subject to vesting conditions set forth on Exhibit I

This is a Restricted Stock Unit Agreement (“Agreement”) between Tennant Company (the “Company”) and the individual identified above (the “Holder”), effective as of the date of grant specified above.

Recitals

WHEREAS, the Company maintains the Tennant Company 2020 Stock Incentive Plan (the “Plan”); and

WHEREAS, the Committee or its delegatee has determined that the Holder is eligible to receive an award of Units under the Plan (the “Award”), subject to the vesting conditions set forth on Exhibit I;

NOW, THEREFORE, the Company hereby grants Units to the Holder under the terms and conditions as follows:

Terms and Conditions*


1.	Grant. The Holder is granted the number of Units specified at the beginning of this Agreement, subject to the vesting conditions set forth on Exhibit I.


2.	Fair Market Value of Units. The fair market value of a Unit subject to this Agreement shall at all times be equal to the Fair Market Value of a Share of the Company’s Stock (the “Common Stock”).

* Unless the context clearly indicates otherwise,any capitalized term that is not defined in this Agreement shall have the meaning set forth in the Plan as it currently exists or as it is amended in the future.

3. Vesting and Payment of Benefits.

(b) Vesting and Payment. Subject to Sections 5 and 6 of this Agreement, Units subject to this Agreement shall vest on the vesting date specified at the beginning of this Agreement, subject to the vesting conditions set forth on Exhibit I, unless the Holder’s employment with the Company shall terminate prior to such vesting date. The number of Units that vest, if any, may be more or less than the number of Units specified at the beginning of this Agreement and will be based solely on the vesting conditions set forth on Exhibit I. Delivery of Shares of Common Stock in payment of the Units will occur as soon as administratively practicable after the Committee certifies achievement of the vesting conditions (but no later than March 15, 20__), and the Holder shall have no power to affect the timing of such payment. Such issuance shall be evidenced by a stock certificate or appropriate entry on the books of the Company or a duly authorized transfer agent of the Company, and shall be in complete satisfaction of such vested Units. If the Units that vest and become payable include a fractional Unit, the Company shall round the number of vested Units to the nearest whole Unit prior to delivery of Shares as provided herein. If the ownership of or issuance of Shares to the Holder as provided herein is not feasible or practical due to applicable exchange controls, securities or tax laws or other provisions of applicable law, as determined by the Committee in its sole discretion, the Holder or his/her legal representative shall receive cash proceeds in an amount equal to the Fair Market Value (as of the date vesting occurs) of the Shares otherwise issuable to Holder, net of any amount required to satisfy withholding tax obligations as provided in Section 12.

(d) Payments on Death. Any payment due under this Agreement following the death of the Holder shall be paid to the Successor of the Holder.


4.	No Entitlement to Cash Dividends. The Holder shall not be entitled to receive any cash dividends or cash dividend equivalents with respect to the Units credited to the Holder’s account.

Effect of Termination of Employment. If the Holder ceases to be an Employee prior to the vesting date specified at the beginning of this Agreement other than as a result of the Holder’s death, Retirement or Disability, the Holder shall forfeit the Units. If the Holder ceases to be an Employee as a result of Holder’s death, Retirement or Disability, then the Holder shall be entitled to receive a pro rata portion of the Units that vest, if any, on the vesting date specified at the beginning of this Agreement and based upon the extent of the vesting conditions set forth on Exhibit I, as provided in Section 3, and the balance of the Units shall be forfeited. The pro rata portion shall be determined by utilizing a fraction the numerator of which is the number of days between the first day of the performance period set forth on Exhibit I and the date the Holder’s employment ended, and the denominator of which is the total number of days in the performance period set forth on Exhibit I. Notwithstanding anything to the contrary in this Agreement, to the extent the benefit provided hereunder is considered to be deferred compensation under Section 409A of the Code, and if the Holder is a “specified employee” within the meaning of Section 409A of the Code, then any payment due as a result of separation from service will not be made until

six months after the Holder’s separation from service or, if earlier, the payment date in accordance with this Agreement.

Change of Control. Notwithstanding anything to the contrary stated herein, upon the occurrence of a Change of Control, all of the Units (based on achievement at the target level) subject to this Agreement shall immediately vest and be paid in full as provided in Section 3. Notwithstanding anything in this Agreement to the contrary, no Change of Control shall be deemed to occur unless it would also be deemed to constitute a change in ownership or effective control, or a change in the ownership of a substantial portion of the assets, of a business under Section 409A of the Code.


7.	Forfeiture/Recoupment of Restricted Stock Unit. This Award is subject to the terms of the Company’s Compensation Recoupment Policy as in effect from time to time.


8.	Adjustments for Changes in Capitalization. The Units subject to this Agreement shall be subject to adjustments for changes in the Company’s capitalization as provided in Section 16 of the Plan.


9.	No Transfer. The Units may not be pledged, assigned or transferred except as expressly provided in Section 6.3 of the Plan.


10.	No Shareholder Rights Until Payment. The Holder shall not have any of the rights of a shareholder of the Company in connection with the award of Units subject to this Agreement unless and until the Holder becomes the holder of record of the Common Stock issued in payment of the Units.


11.	No Right to Employment. This Agreement shall not give the Holder a right to continued employment with the Company or any Affiliate of the Company, and the Company or any such Affiliate employing the Holder may terminate his/her employment and otherwise deal with the Holder without regard to the effect it may have upon him/her under this Agreement.

12.


13.	Restricted Stock Units Subject to Plan, Articles of Incorporation and By-Laws. Holder acknowledges that this Award is subject to the Plan, the Articles of Incorporation, as amended from time to time, and the By-Laws, as amended from time to time, of the Company, and any applicable federal or state laws, rules or regulations.


14.	Obligation to Reserve Sufficient Shares. The Company shall at all times during the term of this Award reserve and keep available a sufficient number of Shares to satisfy this Agreement.


15.	Binding Effect. This Agreement shall be binding in all respects on the heirs, representatives, successors and assigns of the Holder.


16.	Choice of Law. This Agreement is entered into under the laws of the State of Minnesota and shall be construed and interpreted thereunder (without regard to its conflict of law principles).

17.

Interpretation of This Agreement. All decisions and interpretations made by the Committee with regard to any question arising hereunder or under the Plan shall be binding and conclusive upon the Company and the Holder. This Agreement is subject to and shall be construed in accordance with the terms of the Plan. If there is any inconsistency between the provisions of this Agreement and the Plan, the provisions of the Plan shall govern.

18.

Nature of the Award. The Holder understands that the value that may be realized, if any, from the Award is contingent, and depends on the future market price of the Common Stock, among other factors. The Holder further confirms his or her understanding that the Award is intended to promote employee retention and stock ownership and to align employees’ interests with those of the Company’s shareholders, is subject to vesting conditions and will be cancelled if vesting conditions are not satisfied. The Holder also understands that (i) the Plan is discretionary in nature and may be suspended or terminated by the Company at any time; (ii) the grant of an Award is voluntary and occasional and does not create any contractual or other right to receive future Awards, or benefits in lieu of Awards even if Awards have been granted repeatedly in the past; (iii) all decisions with respect to any future award will be at the sole discretion of the Company; (iv) his or her participation in the Plan is voluntary; (v) the value of this Award is an extraordinary item of compensation which is outside the scope of his or her employment contract with his or her actual employer, if any; (vi) this Award and past or future Awards are not part of normal or expected compensation or salary for any purposes, including, but not limited to, calculating any severance, resignation, redundancy, end of service payments, bonuses, long-service awards, pension or retirement benefits or similar payments; and (vii) no claim or entitlement to compensation or damages arises from termination of this Award or diminution in value of this Award, and he or she irrevocably releases the Company, and its subsidiaries from any such claim that may arise.

IN WITNESS WHEREOF, the Holder and the Company have executed this Agreement effective as of the date of grant specified above.

HOLDER

TENNANT COMPANY

Carol E. McKnight

Its SVP, Chief Administrative Officer

EXHIBIT I

Vesting Conditions

The Units will vest based on the Company’s [_________] achievement during the three-year period commencing January 1, 20[_] and ending December 31, 20[_] (the “performance period”).

[include applicable performance criteria]

TENNANT COMPANY

2020 STOCK INCENTIVE PLAN

Restricted Stock Unit Agreement



Name of Holder:
No. of Units:	Date of Grant:
Vesting Date: ______, 20__, subject to vesting conditions set forth on Exhibit I

Recitals

WHEREAS, the Company maintains the Tennant Company 2020 Stock Incentive Plan (the “Plan”); and

WHEREAS, the Committee has delegated its authority under the Plan to the President and Chief Executive Officer of the Company to grant awards to employees who are not executive officers of the Company; and

WHEREAS, the President and Chief Executive Officer of the Company has determined that the Holder is eligible to receive an award of Units under the Plan (the “Award”), subject to the vesting conditions set forth on Exhibit I;

NOW, THEREFORE, the Company hereby grants Units to the Holder under the terms and conditions as follows:

Terms and Conditions*


1.	Grant. The Holder is granted the number of Units specified at the beginning of this Agreement, subject to the vesting conditions set forth on Exhibit I.


2.	Fair Market Value of Units. The fair market value of a Unit subject to this Agreement shall at all times be equal to the Fair Market Value of a Share of the Company’s Stock (the “Common Stock”).

3. Vesting and Payment of Benefits.

(b) Vesting and Payment. Subject to Sections 5 and 6 of this Agreement, Units subject to this Agreement shall vest on the vesting date specified at the beginning of this Agreement, subject to the vesting conditions set forth on Exhibit I, unless the Holder’s employment with the Company shall terminate prior to such vesting date. The number of Units that vest, if any, may be more or less than the number of Units specified at the beginning of this Agreement and will be based solely on the vesting conditions set forth on Exhibit I. Delivery of Shares of Common Stock in payment of the Units will occur as soon as administratively practicable after the President and Chief Executive Officer certifies achievement of the vesting conditions (but no later than the 15^th day of the third calendar month following the vesting date) and the Holder shall have no power to affect the timing of such payment. Such issuance shall be evidenced by a stock certificate or appropriate entry on the books of the Company or a duly authorized transfer agent of the Company, and shall be in complete satisfaction of such vested Units. If the Units that vest and become payable include a fractional Unit, the Company shall round the number of vested Units to the nearest whole Unit prior to delivery of Shares as provided herein. If the ownership of or issuance of Shares to the Holder as provided herein is not feasible or practical due to applicable exchange controls, securities or tax laws or other provisions of applicable law, as determined by the President and Chief Executive Officer in his sole discretion, the Holder or his/her legal representative shall receive cash proceeds in an amount equal to the Fair Market Value (as of the date vesting occurs) of the Shares otherwise issuable to Holder, net of any amount required to satisfy withholding tax obligations as provided in Section 12.

(d) Payments on Death. Any payment due under this Agreement following the death of the Holder shall be paid to the Successor of the Holder.


4.	No Entitlement to Cash Dividends. The Holder shall not be entitled to receive any cash dividends or cash dividend equivalents with respect to the Units credited to the Holder’s account.

Effect of Termination of Employment. If the Holder ceases to be an Employee prior to the vesting date specified at the beginning of this Agreement other than as a result of the Holder’s death, Retirement or Disability, the Holder shall forfeit the Units. If the Holder ceases to be an Employee as a result of Holder’s death, Retirement or Disability, then the Holder shall be entitled to receive a pro rata portion of the Units that vest, if any, on the vesting date specified at the beginning of this Agreement and based upon the extent of the achievement of the vesting conditions set forth on Exhibit I, as provided in Section 3, and the balance of the Units shall be forfeited. The pro rata portion shall be determined by utilizing a fraction the numerator of which is the number of days between the Date of Grant specified at the beginning of this Agreement and the date Holder’s employment ended, and the denominator of which is the number of days between such Date of Grant and the vesting date specified at the beginning of this Agreement. Notwithstanding anything to the contrary in this Agreement, to the extent the benefit provided hereunder is considered to be deferred compensation under Section 409A of the Code, and if

the Holder is a “specified employee” within the meaning of Section 409A of the Code, then any payment due as a result of separation from service will not be made until six months after the Holder’s separation from service or, if earlier, the payment date in accordance with this Agreement.

7. Forfeiture/Recoupment of Restricted Stock Unit. This Award is subject to the terms of the Company’s Compensation Recoupment Policy as in effect from time to time.


8.	Adjustments for Changes in Capitalization. The Units subject to this Agreement shall be subject to adjustments for changes in the Company’s capitalization as provided in Section 16 of the Plan.


9.	No Transfer. The Units may not be pledged, assigned or transferred except as expressly provided in Section 6.3 of the Plan.


10.	No Shareholder Rights Until Payment. The Holder shall not have any of the rights of a shareholder of the Company in connection with the award of Units subject to this Agreement unless and until the Holder becomes the holder of record of the Common Stock issued in payment of the Units.


11.	No Right to Employment. This Agreement shall not give the Holder a right to continued employment with the Company or any Affiliate of the Company, and the Company or any such Affiliate employing the Holder may terminate his/her employment and otherwise deal with the Holder without regard to the effect it may have upon him/her under this Agreement.

12.

Tax Withholding. The Company (or the Subsidiary or Affiliate employing the Holder) shall, in accordance with the provisions of Section 14 of the Plan, withhold from any payment in settlement of vested Units under this Agreement an amount equal to the amount of any required domestic or foreign tax withholding obligation, including any social security obligation. The Company (or the Subsidiary or Affiliate employing the Holder) may withhold Shares equal in value to the amount of such tax withholding obligation, or may permit the Holder to arrange for the satisfaction of such tax withholding obligation by payment of the estimated tax obligation to the Company (or the Subsidiary or Affiliate employing the Holder).


13.	Restricted Stock Units Subject to Plan, Articles of Incorporation and By-Laws. Holder acknowledges that this Award is subject to the Plan, the Articles of Incorporation, as amended from time to time, and the By-Laws, as amended from time to time, of the Company, and any applicable federal or state laws, rules or regulations.


14.	Obligation to Reserve Sufficient Shares. The Company shall at all times during the term of this Award reserve and keep available a sufficient number of Shares to satisfy this Agreement.


15.	Binding Effect. This Agreement shall be binding in all respects on the heirs, representatives, successors and assigns of the Holder.


16.	Choice of Law. This Agreement is entered into under the laws of the State of Minnesota and shall be construed and interpreted thereunder (without regard to its conflict of law principles).

17.

Interpretation of This Agreement. All decisions and interpretations made by the Committee with regard to any question arising hereunder or under the Plan shall be binding and conclusive upon the Company and the Holder. This Agreement is subject to and shall be construed in accordance with the terms of the Plan. If there is any inconsistency between the provisions of this Agreement and the Plan, the provisions of the Plan shall govern.

18.

IN WITNESS WHEREOF, the Holder and the Company have executed this Agreement effective as of the date of grant specified above.

HOLDER

TENNANT COMPANY

Carol E. McKnight

Its SVP, Chief Administrative Officer

EXHIBIT I

Vesting Conditions

The Units will vest based on

Exhibit 31.1

CERTIFICATIONS

I, H. Chris Killingstad, certify that:


1.	I have reviewed this quarterly report on Form 10-Q of Tennant Company;


2.	Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;


3.	Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;


4.	The registrant’s other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:


a)	Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;


b)	Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;


c)	Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and


d)	Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and


5.	The registrant’s other certifying officers and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):


a)	All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and


b)	Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.



Date:	July 30, 2020	/s/ H. Chris Killingstad
		H. Chris Killingstad President and Chief Executive Officer

Exhibit 31.2

CERTIFICATIONS

I, Andrew Cebulla, certify that:


1.	I have reviewed this quarterly report on Form 10-Q of Tennant Company;


2.	Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;


3.	Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;


4.	The registrant’s other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:


a)	Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;


b)	Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;


c)	Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and


d)	Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and


5.	The registrant’s other certifying officers and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):


a)	All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and


b)	Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.



Date:	July 30, 2020	/s/ Andrew Cebulla
		Andrew Cebulla Vice President, Finance and Corporate Controller; Interim Chief Financial Officer and Interim Principal Accounting Officer

Exhibit 32.1

CERTIFICATION OF CHIEF EXECUTIVE OFFICER

PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the quarterly report of Tennant Company (the “Company”) on Form 10-Q for the period ended June 30, 2020 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, H. Chris Killingstad, President and Chief Executive Officer, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to section 906 of the Sarbanes-Oxley Act of 2002, that:


(1)	The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and


(2)	The information contained in this periodic report fairly presents, in all material respects, the financial condition and results of operations of the Company.



Date:	July 30, 2020	/s/ H. Chris Killingstad
		H. Chris Killingstad
		President and Chief Executive Officer

Exhibit 32.2

CERTIFICATION OF CHIEF FINANCIAL OFFICER

PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the quarterly report of Tennant Company (the “Company”) on Form 10-Q for the period ended June 30, 2020 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Andrew Cebulla, Vice President, Finance and Corporate Controller; Interim Chief Financial Officer and interim Principal Accounting Officer, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to section 906 of the Sarbanes-Oxley Act of 2002, that:


(1)	The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and


(2)	The information contained in this periodic report fairly presents, in all material respects, the financial condition and results of operations of the Company.



Date:	July 30, 2020	/s/ Andrew Cebulla
		Andrew Cebulla
		Vice President, Finance and Corporate Controller; Interim Chief Financial Officer and Interim Principal Accounting Officer