Exhibit 10.3

 

Short-Term Incentive Plan
Deferred Stock Unit Plan Summary

 

In an effort to help our STIP participants increase their ownership in Tennant
stock, we have developed a plan which allows them the option to exchange their
cash award for deferred stock units.  The plan works as follows:

 

DEFERRED STOCK UNIT ELECTION

 

Prior to the beginning of a plan year, an eligible participant can elect to
convert all or a portion (in 10% increments) of the upcoming years STIP cash
incentive award to deferred stock units.

 

For each $1.00 of STIP cash payment, participants will receive $1.20 in deferred
stock units.

 

DEFERRED STOCK UNIT CALCULATION

 

The deferred stock unit account will be calculated as follows:

 

Annual STIP Award X Deferred Stock Unit Election X 120% Conversion / Fair Market
Value Closing Stock Price on the Effective Date of the Grant

 

Example:

STIP Award: $15,000

 

Deferred Stock Unit Election: 100% in Deferred Stock Units

 

Fair Market Value Stock Price: $33.00

 

$15,000 X 100% X 120% / $33.00 = 545 Stock Units*

 

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*Rounded down to nearest unit.

 

DEFERRED STOCK UNIT DIVIDEND ADJUSTMENTS

 

In the event the Company pays dividends on its common stock, additional deferred
stock units will be credited to a participant’s account effective as of the
dividend payment date based on the following calculation:

 

The number of Deferred stock units in a participant’s account is multiplied by
the dollar amount of the cash dividend per share of common stock and then
divided by the fair market value of the stock as of the dividend payment date

 

VESTING

 

The 20% premium, of the deferred stock units, will vest three years from the
date of the award.

 

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Payment of Deferred Stock Unit Account

 

At the time of payment, a participant’s deferred stock unit account will be paid
in 50% stock and 50% cash to cover applicable taxes.  To calculate the cash
value of the account, the number of deferred stock units will be multiplied by
the fair market value closing stock price at payment date.

 

TERMINATION PROVISIONS

 

If a participant terminates employment with the Company prior to the vesting
period, except by reason of death, disability, or retirement, he/she will
receive the equivalent cash incentive award less the 20% deferred stock unit
adjustment and any dividend adjustments.

 

If a participant terminates employment with the Company prior to the vesting
period by reason of death, disability, or retirement, he/she will receive
payment of the account in 50% stock and 50% cash which will include a prorated
amount of the 20% premium based on the length of time employed with the Company
during the three-year vesting period.

 

PLAN ADMINISTRATION

 

Stock being distributed through STIP deferred stock units will be issued and
governed by the terms of the 1999 Stock Incentive Plan.

 

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