-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, F8SSPfZwRYwuqtwj8EoGW5QygSUfh++Az6iLEg20o9LRDlrXVILvxtEN2RjZNYLS N11c1dv3IOZyuALdRHk/Gw== 0000950124-07-003992.txt : 20070806 0000950124-07-003992.hdr.sgml : 20070806 20070806165224 ACCESSION NUMBER: 0000950124-07-003992 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 4 CONFORMED PERIOD OF REPORT: 20070731 ITEM INFORMATION: Departure of Directors or Principal Officers; Election of Directors; Appointment of Principal Officers ITEM INFORMATION: Regulation FD Disclosure ITEM INFORMATION: Financial Statements and Exhibits FILED AS OF DATE: 20070806 DATE AS OF CHANGE: 20070806 FILER: COMPANY DATA: COMPANY CONFORMED NAME: TECUMSEH PRODUCTS CO CENTRAL INDEX KEY: 0000096831 STANDARD INDUSTRIAL CLASSIFICATION: AIR COND & WARM AIR HEATING EQUIP & COMM & INDL REFRIG EQUIP [3585] IRS NUMBER: 381093240 STATE OF INCORPORATION: MI FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 8-K SEC ACT: 1934 Act SEC FILE NUMBER: 000-00452 FILM NUMBER: 071028443 BUSINESS ADDRESS: STREET 1: 100 E PATTERSON ST CITY: TECUMSEH STATE: MI ZIP: 49286 BUSINESS PHONE: 5174238411 MAIL ADDRESS: STREET 1: 100 EAST PATTERSON STREET CITY: TECUMSEH STATE: MI ZIP: 49286 8-K 1 k17435e8vk.txt CURRENT REPORT, DATED JULY 31, 2007 UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 8-K CURRENT REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 Date of Report (Date of earliest event reported): JULY 31, 2007 TECUMSEH PRODUCTS COMPANY (Exact name of registrant as specified in its charter) MICHIGAN 0-452 38-1093240 (State or other jurisdiction (Commission (IRS Employer of incorporation) File Number) Identification No.)
100 EAST PATTERSON STREET TECUMSEH, MICHIGAN 49286 (Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (517) 423-8411 (NOT APPLICABLE) (Former name or former address, if changed since last report.) Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below): [ ] Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) [ ] Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) [ ] Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) [ ] Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) ITEM 5.02 DEPARTURE OF DIRECTORS OR CERTAIN OFFICERS; ELECTION OF DIRECTORS; APPOINTMENT OF CERTAIN OFFICERS; COMPENSATORY AGREEMENTS OF CERTAIN OFFICERS. APPOINTMENT OF NEW CHIEF EXECUTIVE OFFICER AND DIRECTOR On July 31, 2007, our Board of Directors appointed Edwin "Ed" L. Buker as President, Chief Executive Officer, and a director effective August 13, 2007. We expect that he will also succeed David M. Risley as Chairman before our next annual meeting of shareholders. Since March 2002, Mr. Buker, 54, has served as President and Chief Executive Officer of Citation Corporation, a leading supplier of metal components based in Birmingham, Alabama. Prior to joining Citation, Mr. Buker served as Vice President and General Manager of the Chassis Systems Division at Visteon Automotive; as President, Electrical Systems--The Americas, for United Technologies Automotive; and as Vice President of New Model Development for BMW Manufacturing Corporation in Munich, Germany. He also held leadership positions at BMW's Spartanburg, South Carolina, facility and at Honda's East Liberty, Ohio, manufacturing plant. Among other accomplishments, Mr. Buker was co-leader of the design, building and operations management of Honda's East Liberty facility and of BMW's Spartanburg plant. Mr. Buker holds a bachelor's degree in mechanical engineering from Tri-State University in Angola, Indiana, and an MBA from Ohio University in Athens, Ohio. INTERIM PRESIDENT AND CHIEF OPERATING OFFICER In connection with Mr. Buker's appointment, James J. Bonsall will cease to be our interim President and Chief Operating Officer effective August 13, 2007. Mr. Bonsall will provide transition services to Mr. Buker before returning to his ongoing role as a Managing Director of AlixPartners LLP. EMPLOYMENT AGREEMENT WITH MR. BUKER On August 31, 2007, we entered into an employment agreement with Mr. Buker providing for his employment in the capacities described above for a three-year period. The following is a summary of the agreement's principal terms. Please see the copy filed as an exhibit to this report for more detailed information, including important definitions. Compensation. Mr. Buker's compensation under the agreement will be as follows: - $750,000 annual salary, which may be increased but not decreased during the agreement's term; - annual cash bonus targeted at 100% of salary, but that may vary between zero and 200% of salary (and must be at least $375,000 in each of 2007 and 2008), based on achievement of performance objectives to be established by the Board or a committee, payable under an executive performance bonus plan to be developed by the Board and submitted for shareholder approval at the next annual meeting; - participation in benefit plans and programs on the same terms as similarly situated executives; - $5,000,000 of term life insurance; - reimbursement for relocation expenses if approved in advance; - reimbursement for up to $20,000 in attorney fees incurred in connection with the employment agreement; - reimbursement for up to $500,000 of payments he will be ineligible to receive from his former employer as a result of accepting employment with us, subject to presentation of appropriate documentation; and - the following grants under our new Long-Term Incentive Equity Award Plan discussed below: - annual grants, valued at the time of grant, equal to the sum of his then current salary and target cash bonus; - an initial grant of options to purchase Class A shares having a Black-Scholes present value as of August 13, 2007 of $1,500,000; and - an initial grant of restricted Class A shares with a market value of $1,500,000 based on the closing price of Class A shares on August 13, 2007. The options included in Mr. Buker's initial grant will have an exercise price equal to the closing price of our Class A shares on the Nasdaq Stock Market on August 13, 2007, will have a term of seven years, and will vest over a three-year period, with one-third vesting at the end of each year of employment. The restricted Class A shares will vest if Mr. Buker's employment continues for three years. We will make both the initial grants and annual grants under the plan described below, subject to shareholder approval of the plan at the next annual meeting of shareholders. If our shareholders do not approve the plan, we will be required to replace these grants with grants of stock appreciation rights or contingent cash-based performance awards of equivalent value and with terms substantially identical to the terms of the grants being replaced to the extent possible. Termination Payments. Mr. Buker may terminate his employment with good reason, good reason on change of control, or voluntarily. We may terminate his employment due to his disability, for cause, or without cause. The payments and other benefits to which Mr. Buker would be entitled if his employment terminates under various scenarios is described below. If Mr. Buker voluntarily terminates his employment without good reason or without good reason on change of control, then he will be entitled to receive: - a cash payment equal to the total of his unpaid salary and unused vacation days; - settlement of any then vested restricted share awards; and - the ability to exercise any then vested options. In this event, all unvested options and restricted share awards will be canceled. If Mr. Buker terminates his employment for good reason, then: - He will be entitled to receive a cash payment equal to the total of -- - his unpaid salary, - his unused vacation days, - his target bonus on a pro rata basis through the termination date, - one and one-half times his salary then in effect, and - one times his annual target bonus. - If his good reason termination occurs within the first twelve months of employment, 50% of his initial and any annual stock option and restricted share grants will become immediately vested, and he will have 180 days from his termination date to exercise the vested options. If his good reason termination occurs after the first twelve months of employment, 100% of his initial and annual stock option and restricted share grants will become immediately vested, and he will have 180 days from his termination date to exercise the vested options. - He will be entitled to continuation of company-paid health insurance for one year to the extent the company is then providing health insurance. If we terminate Mr. Buker's employment for cause, then he will be entitled to receive a cash payment equal to the total of his unpaid salary and unused vacation days. All options and restricted shares, whether or not vested, will be forfeited and immediately canceled. If we terminate Mr. Buker's employment without cause, then he will be entitled to receive: - a cash payment equal to the total of-- - his unpaid salary, - his unused vacation days, - his target bonus on a pro rata basis through the termination date, - one and one-half times his salary then in effect; and - one times his annual target bonus; - the ability to exercise any then vested options for up to 180 days after his termination date; and - continuation of company-paid health insurance for one year to the extent the company is then providing health insurance. If a change of control occurs, 50% (if the change of control occurs during the first twelve months of employment) or 100% (if it occurs later) of Mr. Buker's options and restricted shares will become immediately vested. In addition, Mr. Buker is terminated without cause on a change of control or he terminates his employment for good reason on a change of control, then he will be entitled to receive the same compensation as if he had terminated his employment for good reason, except that his cash payment will include two (rather than one and one-half) times his salary then in effect and two (rather than one) times his annual target bonus. If we terminate Mr. Buker due to his disability, then he will be entitled to receive: - a cash payment equal to the total of -- - his unpaid salary, - his unused vacation days, and - his target bonus on a pro rata basis through the termination date; - settlement of any then vested restricted share awards; - the immediate vesting of the next tranche of options that would have vested after the termination date; and - the ability to exercise any then vested options. In this event, all of his unvested options and restricted shares will be canceled. Noncompetition Agreement. Mr. Buker agrees that he will not engage in competitive activities while employed and, in the event his employment is terminated voluntarily by him or without cause by us, for a period after his employment terminates equal to the longer of twelve months or the period during which he receives salary and benefits under the agreement. ADOPTION OF LONG-TERM INCENTIVE EQUITY AWARD PLAN On August 1, 2007, our Board of Directors adopted the Tecumseh Products Company Long-Term Incentive Equity Award Plan, subject to shareholder approval at our next annual meeting. The following is a summary of the plan's principal terms. Please see the copy filed as an exhibit to this report for more detailed information, including important definitions. General Information. The plan permits us to grant performance awards payable in our Class A shares, Class A stock options, and restricted Class A shares. The principal purposes of the plan are to provide a vehicle for granting the options and restricted shares to be granted to Mr. Buker under his employment agreement and, in the future, to provide incentives for other key employees. Under the plan, the aggregate number of Class A shares we can issue through awards of any form is 1,850,000. The plan limits the number of shares that may be subject to awards granted to any one individual during any fiscal year to 300,000 shares. The Class A shares available for issuance under the plan will be authorized and unissued shares. The following categories of shares would become available for future issuance under the plan: - shares subject to performance awards that terminate without payment being made or that are forfeited by participants; - shares subject to expired or canceled options; - shares issued as restricted shares or other awards that are forfeited by the participant or repurchased by the Company; and - shares delivered by the participant or withheld by the Company upon exercise or purchase in payment of the exercise or purchase price or any related tax withholding obligation. If our Class A shares are changed into or exchanged for a different number or kind of shares of capital stock or other securities of Tecumseh Products Company by reason of merger, reorganization, recapitalization, share split, share dividend, or otherwise, the number and kind of shares covered by the plan, the maximum number of shares that could be granted during any fiscal year, the number and kind of shares covered by, and the exercise or purchase price of, each outstanding option and other award, and other limitations on shares applicable under the plan, would be adjusted proportionately. Administration The plan will be administered by our Governance, Compensation, and Nominating Committee. Among other things, the committee is authorized to determine: - the individuals who will receive awards; - when they will receive awards; - the type of each award (i.e., performance awards, stock options, or restricted shares); - the number of shares to be subject to each award; - the exercise price of options; - payment terms and payment methods; - vesting requirements; - performance criteria for performance awards; and - the expiration date applicable to each award. The Committee also is authorized to adopt, amend, and rescind rules relating to the administration of the plan. Eligibility The plan allows granting awards to those employees of Tecumseh Products Company or any of its subsidiaries designated as eligible for awards by the committee. Awards Under the Plan The plan provides for three types of awards: performance awards, stock options, and restricted shares. Each grant will be set forth in an agreement with the employee, which will state the type, terms, and conditions of the award. Performance Awards The plan authorizes the committee to grant performance awards, the potential pay-outs on which are linked to achievement over a performance period established by the committee (which might consist of one or more fiscal years) of performance criteria established by the committee. All performance awards under the plan would be structured as outright grants of Class A shares, subject to achievement of specified performance criteria. The performance criteria upon which performance awards can be based consist of any one or more of the following performance criteria with respect to Tecumseh Products Company or any of its subsidiaries, divisions, or operating unit, as the committee may determine: - net income; - pre-tax income; - operating income or margin; - cash flow; - earnings per share; - return on equity; - return on invested capital or assets; - cost reductions or savings; - sales or revenue growth; - appreciation in the fair market value of our common shares (or total shareholder return); or - earnings before any one or more of interest, taxes, depreciation, or amortization. Options. Under the plan, the committee can grant options of the type that do not qualify as incentive stock options within the meaning of Section 422 of the Internal Revenue Code, which are sometimes referred to as "NSOs" or "non-qualified options." Options granted under the plan will provide for the right to purchase Class A shares at a specified price, which cannot be less than 100% of the fair market value of the Class A shares on the date of grant. For purposes of the plan, "fair market value" means the closing price of the Class A shares on Nasdaq as of a given date. The times when options become exercisable and their expiration dates (which cannot be more than ten years after the grant date) will be determined by the committee and set forth in individual option agreements. The exercise price for all stock options will be paid in full in cash at the time of exercise or, if permitted by the committee in its discretion: - by delivery of Class A shares owned by the employee for at least six months, or the surrender of Class A shares then issuable upon exercise of the option, in each case having a fair market value on the date of exercise equal to the aggregate exercise price of the exercised option; - by an irrevocable instruction to a broker to exercise the option and deliver sale proceeds to us to pay for all of the Class A shares acquired by exercising the stock options and any tax withholding obligations resulting from the exercise; or - by any combination of the foregoing. Restricted Shares Under the plan, we can grant restricted Class A shares, subject to conditions and restrictions determined by the committee. The restricted shares will be subject to forfeiture if the specified conditions or restrictions are not met. Holders of restricted Class A shares will have voting rights (to the very limited extent any Class A shares have voting rights) and will receive any dividends before the restrictions lapse. The vesting schedules for restricted shares will be determined by the committee and set forth in individual award agreements. Terms of Awards The dates on which stock options under the plan first become exercisable and on which they expire will be specified in individual option agreements setting forth the terms of the stock options. Option agreements will provide that stock options expire upon termination of the participant's employment except as otherwise provided in a written employment contract. Similarly, restricted shares granted under the plan that have not vested will be forfeited in the event of the grantee's termination of employment unless otherwise provided in an employment contract. Performance awards under the plan generally will terminate if the employee's employment terminates unless otherwise provided in an employment contract. In its discretion, however, the committee can permit payment of a performance award after termination without good cause, or following a change in control of the company, or because of the employee's retirement, death, or permanent disability. In consideration of the granting of an award, the participant will be required to agree to remain in the employ of Tecumseh Products Company or a subsidiary for at least one year. Awards under the plan cannot be assigned or transferred, except by will or the laws of intestate succession, or, with the consent of the committee, pursuant to a domestic relations order. Amendment, Suspension, or Termination The committee can amend, suspend, or terminate the plan at any time, but we would have to obtain shareholder approval to increase the number of shares subject to the plan or the maximum number of shares that may be awarded to any individual during any fiscal year, except for any increase or other change due to share dividends, split-ups, consolidations, recapitalizations, reorganizations, or like events. Amendments of the plan will not affect a participant's rights under an award previously granted unless the participant consents or the award itself otherwise expressly so provides. We cannot grant awards under the tenth anniversary of the effective date of the plan. Internal Revenue Code Section 162(m) Under Internal Revenue Code Section 162(m), in general, income tax deductions of publicly-traded companies may be limited to the extent total compensation (including base salary, annual bonus, option exercises, and nonqualified benefits) for certain executive officers exceeds $1 million in any one taxable year. However, under Internal Revenue Code Section 162(m), the deduction limit does not apply to certain "performance-based" compensation established by an independent compensation committee that conforms to certain restrictive conditions stated in the Internal Revenue Code and related regulations. The plan has been structured with the intent that options and performance awards granted under the plan may meet the requirements for performance-based compensation under Section 162(m). RESIGNATION OF DIRECTOR On July 31, 2007, Albert A. Koch resigned from our Board of Directors. ITEM 7.01 REGULATION FD DISCLOSURE. On August 1, 2007, we issued a press release announcing Mr. Buker's appointment as Chief Executive Officer. We are furnishing a copy as an exhibit to this report. ITEM 9.01 FINANCIAL STATEMENTS AND EXHIBITS. The following exhibits are filed or furnished with this report:
Exhibit No. Description - ----------- ----------- 10.1* Employment Agreement dated as of August 1, 2007 with Edwin L. Buker 10.2* Tecumseh Products Company Long-Term Incentive Equity Award Plan 99.1 Press release issued August 1, 2007
* Management contract or compensatory plan, contract, or arrangement 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 hereunto duly authorized. TECUMSEH PRODUCTS COMPANY Date: August 6, 2007 By /s/ James S. Nicholson ------------------------------------- James S. Nicholson Vice President, Treasurer and Chief Financial Officer NOTE: The information in Item 7.01 of this report and the related exhibit (Exhibit 99.1) is not to be deemed "filed" for purposes of Section 18 of the Exchange Act or otherwise subject to the liabilities of that section unless the registrant specifically incorporates it by reference into a filing under the Securities Act or the Exchange Act. EXHIBIT INDEX
Exhibit No. Description - ----------- ----------- 10.1* Employment Agreement dated as of August 1, 2007 with Edwin L. Buker 10.2* Tecumseh Products Company Long-Term Incentive Equity Award Plan 99.1 Press release issued August 1, 2007
* Management contract or compensatory plan, contract, or arrangement EX-10.1 2 k17435exv10w1.txt EMPLOYMENT AGREEMENT W/EDWIN L. BUKER Exhibit 10.1 EMPLOYMENT AGREEMENT This Employment Agreement, dated as of the 1st day of August 2007 (the "Agreement") by and between TECUMSEH PRODUCTS COMPANY, a Michigan corporation (the "Company"), and EDWIN L. BUKER ("Executive"). WITNESSETH: WHEREAS, the Company desires to enlist the services and employment of the Executive on behalf of the Company and the Executive is willing to render such services on the terms and conditions set forth herein; and WHEREAS, the Executive represents that he possesses skills, experience and knowledge that are of value to the Company. NOW, THEREFORE, in consideration of the mutual covenants contained herein, the parties hereto agree as follows: 1. Employment and Duties. Executive shall be named President and Chief Executive Officer of the Company and a member of the Company's Board of Directors. Prior to the next annual meeting of the shareholders (expected to be held in April 2008), it is expected that the Board will take action to elect Executive as the Chairman of the Board. Executive shall have the duties and responsibilities commensurate with such titles and offices, including, without limitation, all such duties and responsibilities as now are or hereafter may be set forth with respect to such offices in the bylaws of the Company or in the directives of the Board of Directors of the Company (the "Board"). During the Employment Period (as hereinafter defined), Executive also shall serve as an officer of such other affiliates of the Company and in such other capacities as may be requested by the Board and shall assume such duties and responsibilities as from time to time may be assigned to him by the Board, all without additional compensation therefore. Throughout the Employment Period, Executive shall devote his business time, attention and energy on a full-time basis exclusively to the affairs of the Company and its affiliates and shall use his best efforts to promote the interests of the Company, and the Executive shall not engage in any other business activity without the approval of the Board. 2. Term of Employment. The terms and provisions of the Agreement and the employment of Executive hereunder shall commence on the Effective Date (as hereinafter defined) and shall continue, unless earlier terminated as provided in this Agreement, through the close of business on that day that is immediately prior to the third anniversary of the Effective Date (the "Employment Period"). The "Effective Date" shall be that date on which Executive commences full time employment with the Company, but not later than August 15, 2007 (the "Effective Date"). 3. Compensation; Benefits; Relocation Expenses; Attorneys' Fees; Make-Whole Payment. (a) Base Salary. During the Employment Period, in full consideration of the performance by the Executive of the Executive's obligations hereunder (including, any services as an officer, director, employee or member of any committee of any affiliate of the Company, or otherwise on behalf of the Company), the Executive shall receive from the Company a base salary (the "Base Salary") at an annual rate of Seven Hundred Fifty Thousand Dollars ($750,000) per year, payable in accordance with the normal payroll practices of the Company then in effect. During the Employment Period, the Executive will be eligible to receive increases (but not decreases) in the Base Salary from time to time as determined in the sole discretion of the Board or a committee thereof. (b) Annual Performance Bonus. During the Employment Period, in addition to the payment of the Base Salary described above, the Executive shall be eligible to receive, in respect of each calendar year during the Employment Period, a performance-based cash bonus equal to 100% of the Base Salary (the "Target Bonus"). The bonus actually earned and payable to Executive will be determined based on achievement of Company and individual performance objectives as may be established with respect to each calendar year by the Board or a committee thereof, and subject to such other terms and conditions established by the Board pursuant to that certain Executive Performance Bonus Plan to be developed by the Board or a committee thereof, and approved (i) by the Board, and (ii) by the Company's shareholders, at the Company's next annual meeting of the shareholders (expected to be held in April 2008). The maximum bonus opportunity for Executive will be 200% of the Base Salary; consequently, the aggregate annual bonus that may be earned by Executive will range from zero (0) to 200% of Base Salary. Notwithstanding anything herein to the contrary, with respect to the years of the Employment Period, ending on December 31, 2007 and December 31, 2008, Executive shall receive a minimum annual performance bonus of Three Hundred Seventy-Five Thousand Dollars ($375,000) each such year. Unless otherwise provided in the Executive Performance Bonus Plan, the minimum annual performance bonuses as described in the preceding sentence will be paid no later than March 15 of the year following the year in which each annual bonus is earned (i.e., March 15, 2008 and March 15, 2009). (c) Benefits. During the Employment Period, the Executive shall be entitled to participate in employee benefit plans, policies, programs and arrangements (including, without limitation, paid vacation and holidays, and sick leave) as may be amended from time to time, on the same terms as similarly situated executives of the Company to the extent the Executive meets the eligibility requirements for any such plan, policy, program or arrangement. In addition, the Company shall, to the extent insurable at standard rates, provide a term life insurance policy (for the benefit of Executive's heirs and named beneficiaries) in the amount of Five Million Dollars ($5,000,000). (d) Relocation Expenses. If approved by the Company in advance, the Company will reimburse Executive for those reasonable and documented expenses incurred in connection with Executive's relocation from Birmingham, Alabama to southeast Michigan for: (i) movement of household goods and automobiles, (ii) up to three (3) house hunting trips for Executive and his spouse, and (iii) temporary housing in southeast Michigan for a period not to exceed ninety (90) days. (e) Attorneys' Fees. The Company will reimburse Executive for those reasonable and documented expenses (subject to attorney-client privilege) incurred in connection with the preparation, review, and execution of the term sheet on which this Agreement is based, and this Agreement. Such reimbursement of attorneys' fees shall be in an amount not to exceed Twenty Thousand Dollars ($20,000). (f) Make-Whole Payment. Executive has represented to the Company that as a result of his resignation from his then current employer, in order to accept the Company's offer of employment and become employed by the Company, Executive has become ineligible to receive certain payments he was entitled to receive from his former employer anticipated to be Five Hundred Thousand Dollars ($500,000) (the "Make-Whole Amount"). Following the Effective Date and subject to Executive's presentation of appropriate documentation to the Company, the Company agrees to pay the Make-Whole Amount to Executive as follows: (i) fifty percent (50%) of the Make-Whole Amount within 90 days of presentation of the appropriate documentation; and (ii) fifty percent (50%) of the Make-Whole Amount not later than February 1, 2008. 4. Long Term Incentive Plan Grants. (a) Annual Grants. During the Employment Period, Executive shall receive an annual grant of awards under the Company's Long-Term Incentive Equity Award Plan (the "Plan") equal to (as of the date of the grant) the aggregate of Executive's (i) then current Base Salary and (ii) the Target Bonus then in effect (the "Annual Award"). The Plan as approved and adopted by the Board on the Effective Date is subject to shareholder approval at the Company's next annual meeting of the shareholders (expected to be held in April 2008). The Annual Awards shall be subject to any conditions set forth in the Plan and the granting document(s), including, without limitation, shareholder approval as described in Section 4(c) of this Agreement. (b) Initial Grants. On the Effective Date, Executive will be granted (i) stock options for shares of Class A common stock of the Company having a Black-Scholes present value at the Effective Date of One Million Five Hundred Thousand Dollars ($1,500,000) (the "Options"), and (ii) restricted stock units with a value of One Million Five Hundred Thousand Dollars ($1,500,000) based on the closing market price of the Company's Class A shares of common stock on the Effective Date (the "Units" and collectively, with the Options, the "Initial Incentive Awards"). The Options will (x) be granted with an exercise price equal to the closing market price of the Company's Class A shares of common stock on the Effective Date, (y) have a term of seven (7) years, and (z) vest over a three (3) year period, with one-third of the Options vesting at the end of each year of employment. The Executive will be entitled to settle the Units with the Company on the third anniversary of the Effective Date, if he remains employed for the full term of Employment Period. It is anticipated that the Units will be settled in shares of the Company's Class A common stock. The Initial Incentive Awards shall be subject to any conditions set forth in the Plan and the granting document(s), including, without limitation, shareholder approval as described in Sections 4(a) and 4(c) of this Agreement. (c) Shareholder Approval. In the event that the Company's shareholders do not approve the Plan, the Company shall (i) replace the Initial Incentive Awards and any previously granted Annual Award with a grant to the Executive of stock appreciation rights or contingent cash-based performance awards of equivalent value of the Initial Incentive Awards and applicable Annual Awards (the "Replacement Awards"), and (ii) grant any Annual Awards thereafter in the form of Replacement Awards. The form and terms of any Replacement Awards will be determined by the Board or a committee thereof. Terms of any Replacement Awards will to the extent possible be substantially identical to the Initial Incentive Award or Annual Awards being replaced. 5. Taxes. The Executive shall be solely responsible for taxes imposed on the Executive by reason of any compensation, benefits, or termination payments provided under this Agreement and all such compensation, benefits, and termination payments shall be subject to applicable withholding taxes or excise tax. In the event that the aggregate payments or benefits to be made or afforded to Executive under this Agreement would be deemed to include an "excess parachute payment" under Section 280G of the Code or any successor thereof, and subject to any excise tax imposed under Section 4999 (or any successor thereto) of the Code, under no circumstances will the Company pay whether in form of additional compensation or otherwise any portion of such excise tax. 6. Certain Expenses. Subject to review of the Board, in accordance with the Company's practices and policies as then in effect during the Employment Period as same are applied to executive officers, the Company shall pay or reimburse Executive for reasonable and documented travel, entertainment, and other incidental expenses (including, the cost of business publications and professional associations), incurred on or in furtherance of the business of the Company. 7. Certain Continuing Obligations of Executive. Throughout the Employment Period and thereafter, Executive agrees to keep confidential all trade secrets, technical information, intellectual property, business and marketing plans, strategies, customer information, other information concerning the products, promotions, development, financing, expansion plans, business policies and practices of the Company, and other data concerning the private affairs of the Company and its affiliates, made known to or developed by Executive during the course of his employment hereunder ("Confidential Information"), not to use any Confidential Information or supply Confidential Information to others other than in furtherance of the Company's business, and to return to the Company upon termination of his employment all copies, in whatever form or media, of all Confidential Information and all other documents relating to the business of the Company or any of its affiliates which may then be in the possession or under the control of Executive. At the request of the Board, whether or not made during the Employment Period, Executive agrees to execute such confidentiality agreements, assignments of intellectual property rights, and other documents as hereafter may be reasonably determined by the Board to be appropriate to carry out the purposes of this Section. 8. Termination; Termination Payments. (a) Termination. The Executive may terminate his employment under this Agreement, in accordance with this Section 8, with Good Reason (as hereinafter defined), Good Reason on Change of Control (as hereinafter defined), or voluntarily. The Company may terminate the Executive's employment under this Agreement, in accordance with this Section 8, for Executive's Disability, for Cause, or without Cause. Any termination of the Executive under this Agreement that would trigger an obligation to make any payments to the Executive shall be considered a "separation from service" within the meaning of Section 409A of the Internal Revenue Code of 1986, as amended (the "Code"). (b) Termination Payments - Termination by Executive. If Executive voluntarily terminates his employment (i) without Good Reason, or (ii) without Good Reason on Change of Control, then Executive shall be entitled to receive: (A) a cash payment equal to the aggregate amount of (x) accrued but unpaid Base Salary and (y) unused vacation days; (B) settlement of any then vested Units; and (C) the ability to exercise any then vested Initial Incentive Award and Annual Awards in accordance with their terms. All of Executive's unvested Initial Incentive Award and Annual Awards or other grants will be cancelled as of the effective date of Executive's termination (the "Termination Date"). After the Termination Date, Executive will not be entitled to receive any other post-termination payments or severance. Any cash payments due under this Section 8(b) shall be payable in a lump sum within ninety (90) days of the Termination Date, provided that payment occurs no later than March 15 of the year following the year in which the Termination Date falls. (c) Termination Payments - Good Reason. If Executive terminates his employment for Good Reason, then Executive shall be entitled to receive: a cash payment in an amount equal to the aggregate of (i) accrued but unpaid Base Salary; (ii) unused vacation days; (iii) the Target Bonus on a pro rata basis through the Termination Date; (iv) one and one-half (1.5) times the Base Salary then in effect; and (v) one (1) times the annual Target Bonus. In the event Executive's Good Reason termination occurs within the first twelve (12) months of the Employment Period, then fifty percent (50%) of the Executive's Initial Incentive Award and any Annual Award will become immediately vested as of the Termination Date, and irrespective of the terms of any such Initial Incentive Award and Annual Award, the Executive will have 180 days from the Termination Date to exercise the so vested Initial Incentive Award and Annual Award. In the event Executive's Good Reason termination occurs after the first twelve (12) months of the Employment Period, one hundred percent (100%) of the Executive's Initial Incentive Award and Annual Awards will become immediately vested as of the Termination Date, and irrespective of the terms of any such Initial Incentive Award and Annual Awards, the Executive will have 180 days from the Termination Date to exercise the so vested Initial Incentive Award and Annual Awards. In addition, other than a continuation of Company-paid health insurance for one (1) year (to the extent such health insurance is in effect as of the Termination Date), Executive will not be entitled to receive any other post-termination payments or severance following such resignation. Any cash payments due under this Section 8(c) shall be payable in a lump sum within ninety (90) days of the Termination Date, provided that payment occurs no later than March 15 of the year following the year in which the Termination Date falls. (d) Termination Payments - Cause. If the Company terminates Executive's employment for Cause, then Executive shall be entitled to receive: a cash payment in an amount equal to the aggregate of (i) accrued but unpaid Base Salary; and (ii) unused vacation days. All Annual Awards and Initial Incentive Awards, whether or not vested, will be forfeited and immediately cancelled effective on the date notice of the for Cause termination is delivered to Executive. Executive will not be entitled to receive any other post-termination payments or severance following such termination. Any cash payments due under this Section 8(d) shall be payable in a lump sum within ninety (90) days of the Termination Date, provided that payment occurs no later than March 15 of the year following the year in which the Termination Date falls. (e) Termination Payments - Without Cause. If the Company terminates Executive's employment without Cause, then Executive shall be entitled to receive: (i) a cash payment in an amount equal to the aggregate of (A) accrued but unpaid Base Salary; (B) unused vacation days; (C) the Target Bonus on a pro rata basis through the Termination Date; (D) one and one-half (1.5) times the Base Salary then in effect; and (E) one (1) times the annual Target Bonus; and (ii) the ability to exercise any then vested Initial Incentive Award and Annual Awards in accordance with their terms for up to 180 days after the Termination Date. In addition, other than a continuation of Company-paid health insurance for up to one (1) year, Executive will not be entitled to receive any other post-termination payments or severance following such resignation. Any cash payments pursuant to Sections 8(e)(i)(A), (B) and (D) due under this Section 8(e) shall be payable in regular installments in accordance with the normal payroll practices of the Company then in effect, and any cash payments pursuant to Sections 8(e)(i)(C) and (E) due under this Section 8(e) shall be payable in accordance with the normal bonus payment practices of the Company then in effect, provided that all cash payments made pursuant to this section 8(e) are subject to any required delay in payment as described in Section 8(m). (f) Termination Payments - Change of Control. In the event that a Change of Control (as hereinafter defined) occurs, (i) within the first twelve (12) months of the Employment Period, then fifty percent (50%) of the Executive's Initial Incentive Award and Annual Award will become immediately vested as of the date of the Change of Control irrespective of the terms of any such Initial Incentive Award and Annual Award; and (ii) after the first twelve (12) months of the Employment Period, one hundred percent (100%) of the Executive's Initial Incentive Award and Annual Awards will become immediately vested as of the Termination Date irrespective of the terms of any such Initial Incentive Award and Annual Awards. In addition, in the event that (x) Executive is terminated without Cause on a Change of Control or (y) Executive terminates his employment for Good Reason on Change of Control, then Executive shall be entitled to receive the compensation specified under Section 8(c) of this Agreement, except that the compensation specified under Sections 8(c)(iv) and (v) shall be two (2) times the Base Salary then in effect, and two (2) times the annual Target Bonus. Any cash payments due under this Section 8(f) shall be payable in a lump sum within ninety (90) days of the Termination Date, provided that payment occurs no later than March 15 of the year following the year in which the Termination Date falls. (g) Termination Payments - Disability. If Executive is terminated by the Company for a Disability (as hereinafter defined), then Executive shall be entitled to receive: (i) a cash payment equal to the aggregate amount of (A) accrued but unpaid Base Salary, (B) unused vacation days, and (C) the Target Bonus on a pro rata basis through the Termination Date; (D) settlement of any then vested Units; and (ii) the immediate vesting of the next tranche of options that would have vested after the Termination Date under any Initial Incentive Award and Annual Awards; and (iii) the ability to exercise any then vested Initial Incentive Award and Annual Awards in accordance with their terms. All of Executive's unvested Initial Incentive Award and Annual Awards or other grants will be cancelled as of the Termination Date. After the Termination Date, Executive will not be entitled to receive any other post-termination payments or severance. Any cash payments due under this Section 8(g) shall be payable in a lump sum within ninety (90) days of the Termination Date, provided that payment occurs no later than March 15 of the year following the year in which the Termination Date falls. (h) Definitions. For purposes of this Agreement: (i) "Cause" shall mean any of the following: (A) the Executive's continuing substantial failure to perform his duties for the Company for thirty (30) days (other than as a result of incapacity due to mental or physical illness) after a written demand is delivered to the Executive by the Company's Board of Directors; (B) the Executive's willful engagement in illegal conduct or gross misconduct that is materially and demonstrably injurious to the Company; (C) the Executive's conviction of a felony or his plea of guilty or nolo contendere to a felony, or (D) the Executive's willful and material breach of his confidentiality obligations under local law or Tecumseh's code of conduct. (ii) A "Change of Control" shall occur if at any time: (A) Any person or group (as such terms are used in connection with Section 13(d) and 14(d) of the Exchange Act) hereafter becomes the "beneficial owner" (as defined in Rule 13(d)(3) and 13(d)(5) under the Exchange Act), directly or indirectly, of securities of the Company representing thirty-five percent (35%) or more of the combined voting power of the Company's then outstanding securities; (B) A merger, consolidation, sale of assets, reorganization, or proxy contest is consummated and, as a consequence of which, members of the Board in office immediately prior to such transaction or event constitute less than a majority of the Board thereafter; (C) A merger, consolidation, or reorganization is consummated with any other corporation pursuant to which the shareholders of the Company immediately prior to the merger, consolidation, or reorganization do not immediately thereafter directly or indirectly own more than fifty percent (50%) of the combined voting power of the voting securities entitled to vote in the election of directors of the merged, consolidated, or reorganized entity; or (D) members of the Incumbent Board (as hereinafter defined) cease for any reason to constitute a majority of the Board of Directors of the Company. (iii) "Disability" means any medically determinable physical or mental impairment which can be expected to result in death or can be expected to last for a continuous period of not less than 12 months: (A) which renders Executive unable to engage in any substantial gainful activity; or (B), which enables Executive to receive income replacement benefits for a period of not less than three (3) months under an accident and health plan covering employees of the Company, provided that this definition shall be interpreted in accordance with Code Section 409A(a)(2)(A)(v) and regulations and other guidance thereunder. Notwithstanding (A) and (B) of this Section 8(h)(iii), Executive shall be deemed to have a total and permanent disability when determined to be totally disabled by the Social Security Administration. (iv) "Good Reason" shall mean any of the following occurrences without the written consent of Executive: (a) the assignment to Executive of any duties inconsistent with his duties described in Section 1 of this Agreement or any removal of Executive from or any failure to reelect Executive to his positions described in Section 1 hereof; provided, that the suspension of Executive from the duties of his employment and any positions held by him during the pendency of any criminal proceedings against Executive as to which a conviction would constitute "Cause" shall not be deemed "Good Reason" so long as during the period of such suspension the Company continues to pay the Base Salary and provide the additional benefits to which Executive is entitled; (b) the Company requiring that the Executive relocate his principal office to a location fifty or more miles from Tecumseh, Michigan; (c) the failure of the Company to pay Executive the Base Salary and provide the additional benefits, including the Target Bonus opportunity, Annual Awards, and Initial Incentive Award as and when required hereunder; or (d) any other failure of the Company to perform its obligations to Executive hereunder if such failure continues uncured for thirty (30) days after written notice thereof, specifying the nature of such failure and requesting that it be cured, is given by Executive to the Company. (v) "Good Reason on Change of Control" shall mean any of the following occurrences following a Change of Control: (a) the failure to offer the Executive an equivalent position in the surviving entity; or (b) the Incumbent Board ceases to constitute a majority of the Board as described in Section (8)(h)(ii)(D) of this Agreement. (vi) "Incumbent Board" shall mean the individuals who, as of the date of this Agreement, constitute the entire Board of Directors of the Company and any new director whose election by the Board or nomination for election by the shareholders of the Company was approved by a vote of at least a majority of the directors then still in office who either were directors on the date of this Agreement or whose election or nomination for election was previously so approved. (i) Termination Notice. The Company shall provide the Executive with thirty (30) days advance written notice of its intention to terminate the Executive's employment for any reason other than Cause. The Executive must provide the Company with thirty (30) days advance written notice of his intention to terminate his employment for any reason other than Good Reason or Good Reason on Change of Control for which the Executive may give the Company ten (10) days advance written notice. (j) Post Termination Cooperation. In the event of termination of the Executive's employment, for whatever reason (other than death or Disability), the Executive agrees to cooperate with the Company and to be reasonably available to the Company for a reasonable period of time thereafter with respect to matters arising out of the Executive's employment hereunder or any other relationship with the Company, whether such matters are business-related, legal or otherwise. The Company shall reimburse the Executive for all expenses reasonably incurred by the Executive during such period in connection with such cooperation with the Company. (k) Board Resignation. Upon termination of the Executive's employment for any reason, the Executive shall be deemed to have resigned from the Board and from all other boards of, and other positions with, the Company and its affiliates. (l) Release; Full Satisfaction. Notwithstanding any other provision of this Agreement, no post-termination payments to which Executive becomes entitled under this Agreement or any agreement or plan referenced herein shall become payable under this Agreement unless and until the Executive executes a general release of claims in form and manner reasonably satisfactory to the Company including, where relevant, a release of any statutory claims, and such release has become irrevocable; provided, that the Executive shall not be required to release any indemnification rights. The payments to be provided to the Executive pursuant to this Section 8 upon termination of the Executive's employment shall constitute the exclusive payments in the nature of severance or termination pay or salary continuation which shall be due to the Executive upon a termination of employment and shall be in lieu of any other such payments under any plan, program, policy or other arrangement which has heretofore been or shall hereafter be established by any member of the Company. (m) Termination Payments - Delay. To the extent (i) any post-termination payments to which Executive becomes entitled under this Agreement or any agreement or plan referenced herein constitute "deferred compensation" subject to Section 409A of the Code and (ii) Executive is deemed at the time of such termination of employment to be a "specified employee" under Section 409A of the Code, then such payment will not be made or commence until the earliest of (x): the expiration of the six (6) month period measured from the date of Executive's "separation from service" (as such term is defined in Treasury Regulations under Section 409A of the Code and any other guidance issued under Section 409A of the Code) with the Company; (y) the date Executive has a Disability; and (z) the date of Executive's death following such separation from service. Upon the expiration of the applicable deferral period as described in this Section 8(m), any payments which would have otherwise been made during that period (whether in a single sum or in installments) in the absence of this provision (together with reasonable accrued interest) will be paid to Executive or Executive's beneficiary in one lump sum. 9. Executive's Representation. The Executive represents to the Company that the Executive's execution and performance of this Agreement does not violate any agreement or obligation (whether or not written) that the Executive has with or to any person or entity including, but not limited to, any prior employer. 10. Integration; Amendment. This Agreement contains the entire agreement of the parties relating to the subject matter hereof and thereof, and supersedes and replaces in their entirety any prior agreements or understandings concerning such subject matter, including without limitation the First Agreement. This Agreement may not be waived, changed, modified, extended, or discharged orally, but only by agreement in writing. 11. Noncompetition and Nonsolicitation. Notwithstanding anything to the contrary contained elsewhere in this Agreement, in view of Executive's importance to the success of the Company, Executive and the Company agree that the Company would likely suffer significant harm from Executive's competing with the Company during Employment Period and for some period of time thereafter. Accordingly, Executive agrees that Executive shall not engage in competitive activities while employed by the Company and, in the event Executive's employment is terminated voluntarily by Executive or without Cause by the Company, during the Restricted Period (as hereinafter defined). Executive shall be deemed to engage in competitive activities if he shall, without the prior written consent of the Company, (i) render services directly or indirectly, as an employee, officer, director, consultant, advisor, partner, or otherwise, for any organization or enterprise which competes directly or indirectly with the business of Company or any of its affiliates in providing those products and services to original equipment manufacturers or aftermarket distributors, or (ii) directly or indirectly acquires any financial or beneficial interest in (except as provided in the next sentence) any organization which conducts or is otherwise engaged in a business or enterprise which competes directly or indirectly with the business of the Company or any of its affiliates in providing those products and services to original equipment manufacturers or aftermarket distributors. Notwithstanding the preceding sentence, Executive shall not be prohibited from owning less than one (1%) percent of any publicly traded corporation whether or not such corporation is in competition with the Company. For purposes of this Agreement, the term "Restricted Period" shall equal the longer of (y) twelve (12) months, or (z) the period during which Executive receives salary and benefits under Sections 8(a)-(f), in each case commencing as of the Termination Date. Further, during the Restricted Period, the Executive shall not, and shall not cause any other person to, (i) interfere with or harm, or attempt to interfere with or harm, the relationship of the Company or its affiliates with any Restricted Person (as hereinafter defined), or (ii) endeavor to entice or solicit any Restricted Person away from the Company or its affiliates. For the purposes of this Agreement, "Restricted Person" shall mean any person who at any time during the Employment Period was an employee or customer of the Company or its affiliates, or otherwise had a material business relationship with the Company or its affiliates. 12. Non-disparagement. During the Restricted Period, (a) the Executive shall not make or publish any disparaging statements (whether written or oral) regarding the Company or its affiliates, directors, officers or employees, and (b) the Company shall not make or publish any disparaging statements (whether written or oral) regarding the Executive. Notwithstanding anything herein to the contrary, during the Restricted Period, the Company may respond to inquiries from Executive's prospective employers who contact the Company, and may make any public announcements or filings that may be necessary for a public company. 13. Notices. For the purposes of this Agreement, notices and all other communications provided for shall be in writing and shall be deemed to have been given when delivered or mailed by United States registered or certified mail, return receipt requested, postage prepaid, or national overnight courier with proof of delivery addressed as follows: If to the Executive: Mr. Edwin L. Buker 1195 Greystone Crest Birmingham, Alabama 35242 With copy to: Cattel, Tuyn & Rudzewicz PLLC 33 Bloomfield Hills Parkway, Suite 120 Bloomfield Hills, Michigan 48304 Attn: Thomas A. Cattel, Esq. If to the Company: Tecumseh Products Company 100 East Patterson Street Tecumseh, Michigan 49286 Attn: General Counsel With copy to: Miller, Canfield, Paddock & Stone, P.L.C. 840 West Long Lake Road, Suite 200 Troy, Michigan 48098 Attn: David D. Joswick, Esq. or to such other address as either party may have furnished to the other in writing. Notices of change of address shall be effective only upon receipt. 14. Applicable Law. This Agreement shall be governed by and construed in accordance with the laws of the State of Michigan applicable to contracts made and to be performed within such State without regards to the principles of conflicts of law. 15. Venue and Jurisdiction. The parties hereby consent to the jurisdiction of the state and federal courts located in the Eastern District of Michigan, which shall be the exclusive venue for any legal action or proceeding filed by either party with respect to this Agreement. The parties hereby further agree and irrevocably waive any objection, including any objection to the laying of venue or based on the grounds of forum non conveniens, that either of them may now or hereafter have to the bringing of any such action or proceedings in such jurisdictions. 16. Conflict. In the event of a conflict between the terms of this Agreement and the Plan or the Executive Performance Bonus Plan, this Agreement shall control. 17. Headings. The headings contained herein are solely for the purposes of reference, are not part of this Agreement and shall not in any way affect the meaning or interpretation of this Agreement. 18. Counterparts. This Agreement may be executed in two or more counterparts, each of which shall be deemed to be an original but all of which together shall constitute one and the same instrument. [THIS SPACE INTENTIONALLY LEFT BLANK] IN WITNESS WHEREOF, the parties have executed this Agreement as of the date first above written. TECUMSEH PRODUCTS COMPANY ---------------------------------------- By: David M. Risley Its: Chairman EXECUTIVE ---------------------------------------- Edwin L. Buker EX-10.2 3 k17435exv10w2.txt TECUMSEH PRODUCTS COMPANY LONG-TERM INCENTIVE EQUITY AWARD PLAN Exhibit 10.2 TECUMSEH PRODUCTS COMPANY LONG-TERM INCENTIVE EQUITY AWARD PLAN (AS ORIGINALLY ADOPTED ON JULY 31, 2007) Tecumseh Products Company, a Michigan corporation (the "Company"), has adopted this Long-Term Incentive Equity Award Plan (this "Plan") for the benefit of its eligible employees. This Plan is effective as of July 31, 2007. The purposes of this Plan are as follows: A. To join the interests of management and other employees with the interests of shareholders by providing an additional incentive for selected management and other Employees to further the growth, development, and financial success of the Company by personally benefiting through the ownership of Company stock and/or stock rights that recognize such growth, development, and financial success. B. To enable the Company to obtain and retain the services of Employees considered essential to the long-term success of the Company by offering them an opportunity to own stock in the Company and/or stock rights that will reflect the growth, development, and financial success of the Company. C. This Plan is intended to constitute an unfunded, nonqualified plan of deferred compensation for a select group of management or highly compensated employees, within the meaning of Section 201(2) of the Employee Retirement Income Security Act of 1974, as amended ("ERISA"), that is exempt from the requirements of Title 1 of ERISA. 1. DEFINITIONS Wherever the following terms are used in this Plan they have the meanings specified below unless the context clearly indicates otherwise. The singular pronoun includes the plural where the context so indicates. "Administrator" means the Committee, unless the Committee has delegated its authority to administer this Plan as provided in Section 9.5, in which events "Administrator" means the delegated sub-committee. "Award" means an Option, a Restricted Stock award, or a Performance Award awarded or granted under this Plan. "Award Agreement" means a written agreement executed by an authorized officer of the Company and the Holder containing such terms and conditions with respect to an Award as the Administrator determines, consistent with this Plan. "Award Limit" means 300,000 shares of Class A Stock, as adjusted pursuant to Section 10.3. "Board" means the Board of Directors of the Company. "Change in Control" means any change that occurs after the date this Plan is first approved by the Company's shareholders and that qualifies as a change of control event pursuant to Section 409A of the Code, Proposed Treasury Regulation Section 1.409A-3(g)(5), and all subsequent relevant authority, including any one or more of the following events:: (a) a change in the ownership of the Company in compliance with Proposed Treasury Regulation Section 1.409A-3(g)(5)(v) pursuant to which any person or group acquires ownership of stock of the Company that, together with stock held by that person or group, constitutes more than 50% of the total fair market value or total voting power of the stock of the Company; (b) a change in the effective control of the Company pursuant to Proposed Treasury Regulation Section 1.409A-3(g)(5)(vi), pursuant to which either: (1) any one person, or more than one person acting as a group, acquires (or has acquired during the twelve-month period ending on the date of the most recent acquisition by that person or group) ownership (including acquisition of beneficial ownership) of stock of the Company possessing 35% or more of the total voting power of the stock of the Company; or (2) a majority of members of the Company's board of directors is replaced during any twelve-month period by directors whose appointment or election is not endorsed by a majority of the members of the Company's board of directors before the date of the appointment or election; or (c) a change in the ownership of a substantial portion of the Company's assets pursuant to Proposed Treasury Regulation Section 1.409A-3(g)(5)(vii) pursuant to which any one person or group acquires (or has acquired during the twelve-month period ending on the date of the most recent acquisition by that person or group) assets from the Company that have a total gross fair market value (as defined in Proposed Treasury Regulation Section 1.409A-3(g)(5)(vii)) equal to or more than 40% of the total gross fair market value of all of the assets of the Company immediately before the acquisition or acquisitions by that person or group. For purposes of this definition: (A) "person" means a person as defined in Section 3(a)(9) of the Exchange Act; (B) "beneficial ownership" is to be determined in accordance with Rule 13d-3 promulgated under the Exchange Act or any successor regulation; (C) "group" means a group as described in Rule 13d-5 promulgated under the Exchange Act or any successor regulation provided the group falls within the purview of Proposed Treasury Regulation Sections 1.409A-3(g)(v)(B), 1.409A-3(g)(5)(vi)(D), or 1.409A-3(g)(5)(vii)(C), as applicable; and (D) the formation of a group under this definition will have the effect described in paragraph (b) of Rule 13d-5 promulgated under the Exchange Act or any successor regulation. In addition, if an Employment Contract provides that a Holder is to receive severance pay or other rights or benefits if his or her employment terminates following a "change in control, "change of control," or other similar defined event, then the occurrence of that event will be a Change in Control for purposes of this Agreement with respect to that Holder. "Class A Stock" means the Company's Class A Common Stock. "Code" means the Internal Revenue Code of 1986, as amended. "Committee" means the Governance, Compensation, and Nominating Committee of the Board, or another committee or subcommittee of the Board, appointed as provided in Section 9.1. "Company" means Tecumseh Products Company, a Michigan corporation. "Corporate Transaction" means: (a) the shareholders of the Company approve a merger, consolidation, or share exchange of the Company with any other corporation (or other entity), other than a merger, consolidation, or share exchange that would result in the voting securities of the Company outstanding immediately before the transaction continuing to represent (either by remaining outstanding or by being converted into voting securities of the surviving entity) more than 50% of the combined voting power of the voting securities of the Company or the surviving entity outstanding immediately after the merger, consolidation, or share exchange; or (b) the shareholders of the Company approve a plan of complete liquidation of the Company or an agreement for the sale or disposition by the Company of all or substantially all of the Company's assets. "DRO" means a domestic relations order as defined by the Code or Title I of the Employee Retirement Income Security Act of 1974, as amended, or the rules either. "Effective Date" means July 31, 2007. "Employment Contract" means a written employment contract between a Holder and the Company or a Subsidiary. "Employee" means any officer or other employee (as defined in accordance with Section 3401(c) of the Code) of the Company or any Subsidiary. "Exchange Act" means the Securities Exchange Act of 1934, as amended. "Fair Market Value" of a share of Class A Stock as of a given date means: (a) the closing price of a share of Class A Stock on the principal exchange on which shares of Class A Stock are then trading, if any (or as reported on any composite index which includes that principal exchange), on that date, or if shares were not traded on that date, then on the next preceding date on which a trade occurred; or (b) if Class A Stock is not traded on an exchange but is quoted on Nasdaq or a successor quotation system, the average of the closing representative bid and asked prices for the Class A Stock on such date as reported by Nasdaq or the successor quotation system; or (c) if Class A Stock is not publicly traded on an exchange and not quoted on Nasdaq or a successor quotation system, the fair market value of a share of Class A Stock as established by the Administrator acting in good faith. "Holder" means a person who has been granted or awarded an Award. "Option" means a stock option granted under Section 4 of this Plan. Any Option granted under this Plan will be a non-qualified stock option and not an incentive stock option within the meaning of Section 422 of the Code. "Performance Award" means an award of the opportunity to receive shares of Class A Stock made under Section 8 of this Plan. "Performance Criteria" means the following business criteria with respect to the Company, any Subsidiary, or any division or operating unit: (a) net income; (b) pre-tax income; (c) operating income or margin; (d) cash flow; (e) earnings per share; (f) return on equity; (g) return on invested capital or assets; (h) cost reductions or savings; (i) sales or revenue growth; (j) appreciation in the fair market value of Class A Stock; and (k) earnings before any one or more of the following items: interest, taxes, depreciation, or amortization; each as determined in accordance with generally accepted accounting principles and subject to any adjustments that may be specified by the Committee with respect to a Performance Award. "Permanent Disability" means the inability of the Holder to perform his usual duties as an Employee by reason of any medically determinable physical or mental impairment expected to result in death or to be of continuous duration of twelve months or more. "Plan" means this Long-Term Incentive Equity Award Plan, as amended and/or restated from time to time. "Restricted Stock" means Class A Stock subject to restrictions and awarded under Section 7 of this Plan. "Retirement" means a separation from service with the Company or a Subsidiary at a time when the Holder is eligible for immediate commencement of a defined benefit pension (other than a disability pension). "Rule 16b-3" means Rule 16b-3 promulgated under the Exchange Act, as amended from time to time, or any successor rule. "Section 162(m) Participant" means any Senior Management Employee whose compensation for the fiscal year in which the Employee is so designated or a future fiscal year may be subject to the limit on deductible compensation imposed by Section 162(m) of the Code. Unless the Administrator determines otherwise in regard to particular Senior Management Employees whose compensation is unlikely to be subject to such limit, all Senior Management Employees will be treated as Section 162(m) Participants. "Securities Act" means the Securities Act of 1933, as amended. "Senior Management Employee" means any Employee designated by the Administrator as a Senior Management Employee for purposes of this Plan. "Subsidiary" means any corporation or limited liability company in an unbroken chain of corporations or limited liability companies beginning with the Company if each of the corporations and limited liabilities other than the last one in the unbroken chain then owns stock or other equity interests possessing 50% or more of the total combined voting power of all classes of stock or equity interests in one of the other corporations or limited liability companies in the chain. "Termination of Employment" means the time when the employee-employer relationship between a Holder and the Company or any Subsidiary is terminated for any reason, with or without cause, including but not limited to a termination by resignation, discharge, death, Permanent Disability, or Retirement; but excluding: (a) terminations where there is a simultaneous reemployment or continuing employment of a Holder by the Company or any Subsidiary; and (b) at the discretion of the Administrator, terminations which result in a temporary severance of the employee-employer relationship. 2. SHARES SUBJECT TO PLAN 2.1 Shares Subject to Plan. (a) The shares of stock subject to Awards will be Class A Stock. Subject to adjustment as provided in Section 10.3, the aggregate number of shares that may be issued upon exercise of Options and under all other Awards under this Plan may not exceed 1,850,000 shares. The shares of Class A Stock issuable upon exercise of Options under other Awards will be previously authorized but unissued shares. (b) The maximum number of shares that may be subject to Awards granted under this Plan to any individual in any fiscal year of the Company may not exceed the Award Limit. For purposes of this limitation, where a Performance Award is based on performance criteria measured over more than one fiscal year, the entire potential Performance Award will be treated as part of the Award Limit for the first year of the entire performance cycle and not as part of the Award Limit for any other year. 2.2 Add-back of Options and Other Awards. If any Option or Performance Award expires or is canceled without having been fully exercised or paid, the number of shares subject to that Option or Performance Award but as to which the Option or Performance Award was not exercised or paid before its expiration or cancellation may again be optioned, granted, or awarded under this Plan, subject to the limitations of Section 2.1. Any shares subject to Awards that are adjusted under Section 10.3 and become exercisable with respect to shares of stock of another corporation are to be considered canceled and may again be optioned, granted, or awarded under this Plan, subject to the limitations of Section 2.1. Shares of Class A Stock delivered by the Holder or withheld by the Company upon the exercise or payment of any Award under this Plan, in payment of the exercise price or tax withholding, may again be optioned, granted, or awarded under this Plan, subject to the limitations of Section 2.1. If any shares of Restricted Stock are surrendered by the Holder under Section 7.4, those shares may again be optioned, granted, or awarded under this Plan, subject to the limitations of Section 2.1. 3. GRANTING OF AWARDS 3.1 Award Agreement. Each Award will be evidenced by an Award Agreement. Award Agreements evidencing Awards intended to qualify as performance-based compensation as described in Section 162(m)(4)(C) of the Code will contain those terms and conditions necessary to meet the applicable provisions of Section 162(m) of the Code. 3.2 Provisions Applicable to Section 162(m) Participants. (a) The Administrator, in its discretion, may determine whether an Award is to qualify as performance-based compensation as described in Section 162(m)(4)(C) of the Code. (b) Notwithstanding anything in this Plan to the contrary, the Administrator may grant any Award to a Section 162(m) Participant, including: (1) Restricted Stock, the restrictions with respect to which lapse upon the attainment of performance goals related to one or more of the Performance Criteria; and (2) any Performance Award that becomes payable upon the attainment of performance goals which are related to one or more of the Performance Criteria. (c) To the extent necessary to comply with the performance-based compensation requirements of Section 162(m)(4)(C) of the Code, with respect to any Award of Restricted Stock or any Performance Award granted to Section 162(m) Participants that is intended to qualify as performance-based compensation, no later than 90 days following the commencement of the fiscal year in question or any other designated fiscal period or period of service (or such other time as may be required or permitted by Section 162(m) of the Code), the Administrator will, in writing: (1) select the Performance Criteria applicable to the fiscal year or other designated fiscal period or period of service; (2) establish the various performance targets, in terms of an objective formula or standard, and amounts of the Awards, as applicable, that may be earned for the fiscal year or other designated fiscal period or period of service; and (3) specify the relationship among the Performance Criteria, the performance targets, and the amounts of the Awards, as applicable, to be earned by each Section 162(m) Participant for that fiscal year or other designated fiscal period or period of service. Following the completion of each fiscal year or other designated fiscal period or period of service, the Administrator will certify in writing whether the applicable performance targets have been achieved for the fiscal year or other designated fiscal period or period of service. In determining the amount earned by a Section 162(m) Participant, the Administrator will have the right to reduce (but not to increase) the amount payable at a given level of performance to take into account additional factors that the Administrator may deem relevant to the assessment of individual or corporate performance for the fiscal year or other designated fiscal period or period of service. (d) Furthermore, notwithstanding any other provision of this Plan or any Award Agreement, any Award granted to a Section 162(m) Participant that is intended to qualify as performance-based compensation as described in Section 162(m)(4)(C) of the Code will be subject to any additional limitations set forth in Section 162(m) of the Code (including any amendment to Section 162(m) of the Code) or any regulations or rulings issued under Section 162(m) of the Code that are requirements for qualification as performance-based compensation as described in Section 162(m)(4)(C) of the Code, and this Plan will be deemed amended to the extent necessary to conform to those requirements. 3.3 Limitations Applicable to Section 16 Persons. Notwithstanding any other provision of this Plan, this Plan, and any Award granted or awarded to any individual who is then subject to Section 16 of the Exchange Act, will be subject to any additional limitations set forth in Rule 16b-3 that are requirements for the application of the exemption provided by Rule 16b-3. To the extent permitted by applicable law, this Plan and Awards granted or awarded under this Plan will be deemed amended to the extent necessary to conform to Rule 16b-3. 3.4 Consideration. In consideration of the granting of an Award under this Plan, the Holder must agree, in the Award Agreement, to remain in the employ of the Company or any Subsidiary for a period of at least one year (or such shorter period as may be fixed in the Award Agreement or by action of the Administrator following grant of the Award) after the Award is granted. 3.5 At-Will Employment. Nothing in this Plan or in any Award Agreement will confer on any Holder any right to continue in the employ of the Company or any Subsidiary or interfere with or restrict in any way the right of the Company or any Subsidiary, all of which the Company expressly reserves, to discharge any Holder at any time for any reason whatsoever, with or without cause, except to the extent expressly provided otherwise in an Employment Contract. 3.6 Prohibition on Repricing. The Administrator may not, without prior approval by the Company's shareholders, reprice, replace, or re-grant through cancellation or lowering of the exercise price any Options issued under this Plan. Notwithstanding shareholder approval, to the extent that the Company reasonably determines that any repriced, replaced, or re-granted Option may constitute a deferral of compensation under Section 409A of the Code, the Option must be accompanied by a written agreement setting forth the terms and conditions required to comply with the provisions of Section 409A of the Code. 4. OPTION GRANTS 4.1 Eligibility. Any Senior Management Employee selected by the Administrator is eligible for the grant of an Option to purchase a number of shares of Class A Stock determined by the Administrator, subject to the Award Limit. 4.2 Granting of Options. (a) The Administrator will from time to time, in its absolute discretion, and subject to applicable limitations of this Plan: (1) determine which Senior Management Employees (including but not limited to Employees who have previously received Awards under this Plan) are to be granted Options; and (2) subject to the Award Limit, determine the number of shares to be subject to the Options. (b) Upon the selection of an Employee to be granted an Option, the Administrator will instruct the Secretary of the Company to issue the Option. The Administrator may impose such conditions on the grant of the Option as it deems appropriate. 4.3 Options in Lieu of Cash Compensation. Options may be granted under this Plan to Employees in lieu of cash bonuses that would otherwise be payable to them, pursuant to policies adopted by the Administrator from time to time. 5. OPTION TERMS 5.1 Exercise Price. The exercise price per share for each Option will be set by the Administrator. The exercise price may not be less than 100% of the Fair Market Value of a share of Class A Stock on the date the Option is granted. 5.2 Option Term. The term of each Option will be set by the Administrator but may not exceed ten years from the date the Option is granted. 5.3 Option Vesting. Each Option will vest and become exercisable as determined by the Administrator and set forth in the Award Agreement evidencing the Option. No portion of an Option that is unexercisable at Termination of Employment will become exercisable, except as may be otherwise provided by the express terms of an Employment Contract. 6. EXERCISE OF OPTIONS 6.1 Partial Exercise. An exercisable Option may be exercised in whole or in part. However, an Option may not be exercised with respect to fractional shares, and the Administrator may, by the terms of the Option, require that a partial exercise be with respect to a minimum number of shares. 6.2 Manner of Exercise. All or a portion of an exercisable Option will be deemed exercised upon delivery of all of the following to the Secretary of the Company or his or her office: (a) a written notice complying with the applicable rules established by the Administrator stating that the Option or portion of the Option is exercised, signed by the Holder or other person then entitled to exercise the Option or portion of the Option; (b) such representations and documents as the Administrator, in its absolute discretion, deems necessary or advisable to effect compliance with all applicable provisions of the Securities Act and any other applicable federal or state securities laws or regulations; (c) if the Option is being exercised under Section 10.1 by any person or persons other than the Holder, appropriate proof of the right of such person or persons to exercise the Option; and (d) full cash payment for the shares with respect to which the Option or portion of the Option is exercised, except that the Administrator may, in its discretion: (1) allow payment, in whole or in part, through delivery of shares of Class A Stock which have been owned by the Holder for at least six months, duly endorsed for transfer to the Company, with a Fair Market Value on the date of delivery equal to the aggregate exercise price; (2) allow payment, in whole or in part, through surrender of shares of Class A Stock then issuable upon exercise of the Option having a Fair Market Value on the date of Option exercise equal to the aggregate exercise price; (3) allow payment, in whole or in part, through delivery of a notice that the Holder has placed a market sell order with a broker with respect to shares of Class A Stock issuable upon exercise of the Option and has irrevocably instructed the broker to pay a sufficient portion of the net proceeds of the sale to the Company to satisfy the exercise price; (4) allow payment through any combination of the methods allowed by subsections (1), (2), and (3) of this Section 6.2(d). The Administrator may, in its absolute discretion, take whatever actions it deems appropriate to effect compliance with the Securities Act and any other applicable federal or state securities laws or regulations including, without limitation, placing legends on share certificates and issuing stop-transfer notices to transfer agents and registrars. 6.3 Conditions to Issuance of Shares. The Company will not be required to issue any shares of stock purchased upon the exercise of any Option or deliver any related stock certificates before fulfillment of all of the following conditions: (a) admission of the shares to listing on all stock exchanges on which that class of stock is then listed; (b) completion of any registration or other qualification of the shares under any state or federal law, or under the rulings or regulations of the Securities and Exchange Commission or any other governmental regulatory body that the Administrator, in its absolute discretion, deems necessary or advisable; (c) obtaining any approval or other clearance from any state or federal governmental agency that the Administrator, in its absolute discretion, determines to be necessary or advisable; (d) lapse of such reasonable period of time following exercise of the Option as the Administrator may establish from time to time for reasons of administrative convenience; and (e) receipt by the Company of full payment for the shares in good and collected funds, including payment of any applicable withholding tax, which in the discretion of the Administrator may be in the form of consideration used by the Holder to pay for the shares under Section 6.2(d). The Company may enter into a contract with an independent administrative services provider to perform recordkeeping, custodial, and other administrative services with respect to this Plan and shares issued under this Plan. Additional or different conditions than those enumerated in subsections (a) through (e) above may be imposed as a result of that contract, and any such conditions are incorporated by reference in this Plan. 6.4 Rights as Shareholders. Holders will not be, nor have any of the rights or privileges of, shareholders of the Company in respect of any shares purchasable upon the exercise of any part of an Option unless and until those shares have been issued by the Company. 6.5 Ownership and Transfer Restrictions. The Administrator, in its absolute discretion, may impose such restrictions on the ownership and transferability of the shares purchasable upon the exercise of an Option as it deems appropriate. Any such restriction will be set forth in the respective Award Agreement and may be referred to on the certificates evidencing the shares. 6.6 Additional Limitations on Exercise of Options. Holders may be required to comply with any timing or other restrictions with respect to the exercise of Options, including a window-period limitation, as may be imposed in the discretion of the Administrator. 7. RESTRICTED STOCK 7.1 Eligibility. Any Senior Management Employee selected by the Administrator is eligible for grant of a number of shares of Restricted Stock determined by the Administrator, subject to the Award Limit. 7.2 Award of Restricted Stock. (a) The Administrator may from time to time, in its absolute discretion: (1) determine which Senior Management Employees (including but not limited to Employees who have previously received Awards under this Plan) will be granted Restricted Stock; and (2) determine the terms and conditions applicable to the Restricted Stock, consistent with this Plan and consistent with the grant being covered by Section 83 of the Code and thus exempt from Section 409A of the Code. (b) Rights to Restricted Stock will vest on the third anniversary of the Restricted Stock Award date. Rights that do not vest will be forfeited. (c) Upon the selection of a Senior Management Employee to be awarded Restricted Stock, the Administrator will instruct the Secretary of the Company to issue the Restricted Stock and may impose such conditions on the issuance of such Restricted Stock as it deems appropriate. 7.3 Rights as Shareholders. Subject to Section 7.4, upon delivery of the shares of Restricted Stock to the escrow holder under Section 7.5, the Holder will have, unless otherwise provided by the Administrator, all the rights of a shareholder with respect to those shares, subject to the restrictions in his or her Award Agreement, including the right to vote and receive all dividends and other distributions paid or made with respect to the shares, except that, in the discretion of the Administrator, any extraordinary distributions with respect to the Class A Stock may be subjected to the restrictions set forth in Section 7.4. 7.4 Restrictions. All shares of Restricted Stock issued under this Plan (including any shares received as a result of stock dividends, stock splits, or any other form of recapitalization) will, under the terms of each individual Award Agreement, be subject to such restrictions as the Administrator provides, which restrictions may include, without limitation, restrictions concerning voting rights and transferability and restrictions based on duration of employment with the Company, Company performance and individual performance. Except with respect to shares of Restricted Stock granted to Section 162(m) Participants and intended to be performance-based compensation under Section 162(m) of the Code, by action taken after the Restricted Stock is issued, the Administrator may, on such terms and conditions as it may determine to be appropriate, remove any or all of the restrictions imposed by the terms of the Award Agreement. Restricted Stock may not be sold or encumbered until all restrictions are terminated or expire. A Holder's rights in unvested Restricted Stock will lapse, and the Restricted Stock will be surrendered to the Company without consideration, upon the Holder's Termination of Employment with the Company unless otherwise expressly provided in an Employment Contract, in which event the terms of the Employment Contract will be given effect. 7.5 Escrow. The Secretary of the Company or such other escrow holder as the Administrator appoints will retain physical custody of each certificate representing Restricted Stock and will credit the stock to a separate restricted account until all of the restrictions imposed under the Award Agreement with respect to the shares expire or are removed. The Company may enter into a contract with an independent administrative services provider to perform recordkeeping, custodial, and other administrative services with respect to this Plan and Restricted Stock issued under this Plan. Terms and conditions in addition to those enumerated in the Award Agreement may be imposed as a result of that contract, and any such conditions are incorporated by reference in this Plan and in any such Award Agreement. 7.6 Legend. In order to enforce the restrictions imposed upon shares of Restricted Stock under this Plan, the Administrator will cause a legend or legends to be placed on certificates representing shares of Restricted Stock, or will appropriately mark any account to which shares of Restricted Stock are credited, making appropriate reference to the conditions imposed by this Plan. 7.7 Section 83(b) Election. If a Holder makes an election under Section 83(b) of the Code, or any successor section, to be taxed with respect to the Restricted Stock as of the date of award of the Restricted Stock rather than as of the date or dates upon which the Holder would otherwise be taxable under Section 83(a) of the Code, the Holder must deliver a copy of the election to the Company immediately after filing it with the Internal Revenue Service, together with any tax withholding required by the Company under Section 10.5. 8. PERFORMANCE AWARDS 8.1 Eligibility. Any Senior Management Employee selected by the Administrator is eligible for grant of a Performance Award determined by the Administrator, subject to the Award Limit. 8.2 Performance Awards. (a) Any Senior Management Employee selected by the Administrator may be granted one or more Performance Awards. The number of shares of Class A Stock issuable under a Performance Award may be linked to any one or more of the Performance Criteria or other specific performance criteria determined appropriate by the Administrator, in each case on a specified date or dates or over any period or periods determined by the Administrator. In making such determinations, the Administrator will consider (among such other factors as it deems relevant in light of the specific type of award) the contributions, responsibilities, and other compensation of the particular Employee. (b) Not later than 90 days after commencement of each fiscal year or performance period with respect to which Performance Awards may be made, the Administrator will establish targeted group allocations and targeted financial results, and may establish targeted individual allocations, for that year or period. Actual Performance Awards for that fiscal year or period will be based on the attainment of specified types and combinations of performance measurement criteria, which may differ as to various Employees or classes of Employees, and from time to time. The criteria may include, without limitation: (1) any of the Performance Criteria; (2) attainment of certain performance levels by, and measured against objectives of, the Company, the individual Employee, and/or a group of Employees; (3) increases in operating efficiency; (4) completion of specified strategic actions; (5) the recommendation of the Chief Executive Officer; and (6) such other factors as the Administrator deems important in connection with accomplishing the purposes of this Plan. No Employee or group of Employees may receive an actual Performance Award greater than the applicable targeted individual allocation (if any) or group allocation for a given year, unless due to extraordinary circumstances the Administrator deems it appropriate, in its sole discretion, to make allocations to one or more Employees or groups of Employees in excess of his or their targeted awards. (c) The maximum amount of any Performance Award granted to an Employee during any fiscal year of the Company may not exceed the Award Limit. (d) Unless otherwise specified by the Administrator at the time of grant, the Performance Criteria applicable to a Section 162(m) Participant will be determined on the basis of generally accepted accounting principles. 8.3 Disposition Upon Termination of Employment. A Performance Award is payable only while the Holder is an Employee unless: (a) otherwise expressly provided in an Employment Contract, in which event the terms of the Employment Contract will be given effect; or (b) the Administrator in its sole and absolute discretion provides for payment of a Performance Award, in whole or in part, following a Termination of Employment without good cause, or following a Change in Control of the Company, or because of the Holder's Retirement, death, or Permanent Disability, or otherwise. 9. ADMINISTRATION 9.1 Committee. The Board may from time to time appoint a committee or subcommittee of the Board other than the Governance, Nominating, and Compensation Committee to constitute the Committee under this Plan. The Committee must consist solely of two or more directors, each of whom is both a "non-employee director" as defined by Rule 16b-3 and an "outside director" for purposes of Section 162(m) of the Code. 9.2 Duties and Powers of the Administrator. It is the Administrator's duty to conduct the general administration of this Plan in accordance with its provisions. The Administrator has the power to interpret this Plan and the Award Agreements and to adopt such rules for the administration, interpretation, and application of this Plan and Award Agreements as are consistent with this Plan, to interpret, amend, or revoke any such rules, and to amend any Award Agreement if the amendment will not adversely affect the rights or obligations of the Holder of the Award. Any or award under this Plan need not be the same with respect to each Holder. 9.3 Administrator's Authority with Respect to Termination of Employment. The Administrator is authorized, in its absolute discretion, to determine the effect of all matters and questions relating to Termination of Employment, including but not the limited to the question of whether a Termination of Employment results from a discharge for good cause and all questions of whether a particular leave of absence constitutes a Termination of Employment, except that: (a) where the effect of a matter or question relating to Termination of Employment is specified in an Employment Contract, the effect will be as specified in the Employment Contract; (b) where "good cause" is defined in an Employment Contract, the definition in the Employment Contract will control; and (c) where "good cause" is not defined in an Employment Contract: (1) the following reasons are conclusively presumed to constitute "good cause": (A) an Employee's conviction of a felony; or (B) an Employee's-- (1) willful and continued failure to perform the material duties of his position, (2) willful and serious fraud against the Company or any Subsidiary, or (3) material breach of any provision of any agreement with the Company which has had (or is expected to have) a material adverse effect on the business of the Company or any Subsidiary; and (2) "good cause" does not include any one or more of the following: (A) bad judgment, (B) ordinary negligence, or (C) any act or omission that an Employee believed in good faith to have been in (or not opposed to) the best interests of the Company and from which the Employee did not intend to gain, directly or indirectly, a profit to which he was not legally entitled. 9.4 Professional Assistance; Good Faith Actions. All expenses and liabilities which the Administrator incurs in connection with the administration of this Plan will be borne by the Company. The Administrator may employ attorneys, consultants, accountants, appraisers, brokers, or other persons. The Administrator, the Company, and the Company's officers and directors will be entitled to rely on the advice, opinions, or valuations of any such persons. All actions taken and all interpretations and determinations made by the Administrator or the Board in good faith will be final and binding on all Holders, the Company, and all other interested persons. No members of the Administrator or Board will be personally liable for any action, determination, or interpretation made in good faith with respect to this Plan or Awards, and all members of the Administrator and the Board will be fully protected by the Company in respect of any such action, determination, or interpretation. 9.5 Delegation of Authority to Grant Awards. The Committee may, but need not, delegate from time to time some or all of its authority to grant Awards under this Plan and administer this Plan to a subcommittee consisting of one or more members of the Committee or of one or more officers of the Company, except that the Committee may not delegate its authority to grant Awards to individuals: (a) who are subject on the date of the grant to the reporting rules under Section 16(a) of the Exchange Act; (b) who are Section 162(m) Participants; or (c) who are officers of the Company who are delegated authority by the Committee under this Section 9.5. Any delegation under this Section 9.5 will be subject to the restrictions and limits that the Committee specifies at the time of the delegation and may be rescinded at any time by the Committee. Any subcommittee appointed under this Section 9.5 will serve in that capacity at the pleasure of the Committee. 10. MISCELLANEOUS PROVISIONS 10.1 Transferability of Awards. (a) Except as provided in Section 10.1(b): (1) No Award under this Plan may be sold, pledged, assigned, or transferred in any manner other than by will or the laws of descent and distribution or, subject to the consent of the Administrator, pursuant to a DRO, unless and until the Award has been exercised, or the shares underlying the Award have been issued, and all restrictions applicable to the shares have lapsed. (2) No Award or interest or right in an Award will be liable for the debts, contracts, or engagements of the Holder or his or her successors in interest or will be subject to disposition by transfer, alienation, anticipation, pledge, encumbrance, assignment, or any other means, regardless of whether such purported disposition is voluntary or involuntary or by operation of law, judgment, levy, attachment, garnishment, or any other legal or equitable proceedings (including bankruptcy), and any attempted disposition of an Award will be null and void and of no effect. (3) During the lifetime of the Holder, only he or she may exercise an Option (or any portion of an Option) granted to him or her under this Plan unless it has been disposed of with the consent of the Administrator pursuant to a DRO. After the death of the Holder and before to the time when the Option becomes unexercisable under the terms of this Plan or the applicable Award Agreement, any exercisable portion of an Option may be exercised by the deceased Holder's personal representative or by any person empowered to do so under the deceased Holder's will or under the then applicable laws of descent and distribution. (b) Notwithstanding Section 10.1(b), the Administrator, in its sole discretion, may determine to permit a Holder to transfer an Option to any one or more Permitted Transferees (as defined below), subject to the following terms and conditions: (1) an Option transferred to a Permitted Transferee will not be assignable or transferable by the Permitted Transferee other than by will or the laws of descent and distribution; (2) an Option transferred to a Permitted Transferee will continue to be subject to all the terms and conditions that were applicable to the original Holder (other than the ability to further transfer the Option); and (3) the Holder and the Permitted Transferee must execute any and all documents requested by the Administrator including, without limitation, documents to-- (A) confirm the status of the transferee as a Permitted Transferee, (B) satisfy any requirements for an exemption for the transfer under applicable federal and state securities laws, and (C) evidence the transfer. For purposes of this Section 10.1(b), "Permitted Transferee" means, with respect to a Holder, any child, stepchild, grandchild, parent, stepparent, grandparent, spouse, former spouse, sibling, niece, nephew, mother-in-law, father-in-law, son-in-law, daughter-in-law, brother-in-law, or sister-in-law, including adoptive relationships, any person sharing the Holder's household (other than a tenant or employee), a trust in which these persons (or the Holder) control the management of assets, and any other entity in which these persons (or the Holder) own more than 50% of the voting interests, or any other transferee specifically approved by the Administrator after taking into account any state or federal tax or securities laws applicable to transferable Options. 10.2 Amendment, Suspension, or Termination of this Plan. (a) This Plan may be wholly or partially amended or otherwise modified, suspended, or terminated at any time or from time to time by the Administrator, except that: (1) no amendment is permitted to the extent that the individual Award or this Plan, in general, would constitute deferred compensation subject to Section 409A of the Code unless the Award Agreement sets forth the terms and conditions necessary to comply with the requirements of Section 409A of the Code; (2) without approval of the Company's shareholders given within twelve months before or after the action by the Administrator, no action of the Administrator may, except as provided in Section 10.3, increase the limits imposed in Section 2.1 on the maximum number of shares that may be issued under this Plan; and (3) no amendment, suspension, or termination of this Plan may, without the consent of the Holder, alter or impair any rights or obligations under any Award granted or awarded before the date of the amendment, suspension, or termination, unless the Award itself otherwise expressly so provides. (b) No Awards may be granted or awarded during any period of suspension or after termination of this Plan. (c) No awards may be granted or awarded after the tenth anniversary of the Effective Date. 10.3 Changes in Class A Stock or Assets of the Company, Acquisition or Liquidation of the Company and Other Corporate Events. (a) Subject to Section 10.3(e), in the event that the Administrator determines that any dividend or other distribution (whether in the form of cash, Class A Stock, other securities, or other property), recapitalization, reclassification, stock split, reverse stock split, reorganization, merger, consolidation, share exchange, split-up, spin-off, combination, repurchase, liquidation, dissolution, or sale, transfer, exchange, or other disposition of all or substantially all of the assets of the Company, or exchange of Class A Stock or other securities of the Company, issuance of warrants, or other rights to purchase Class A Stock or other securities of the Company, or other similar corporate transaction or event, in the Administrator's sole discretion, affects the Class A Stock such that an adjustment is determined by the Administrator to be appropriate in order to prevent dilution or enlargement of the benefits or potential benefits intended to be made available under this Plan or with respect to an Award, then the Administrator will, in such manner as it may deem equitable, adjust any or all of: (1) the number and kind of shares of stock (or other securities or property) with respect to which Awards may be granted or awarded (including, but not limited to, adjustments of the limitations in Section 2.1 on the maximum number and kind of shares that may be issued and adjustments of the Award Limit); (2) the number and kind of shares of stock (or other securities or property) subject to outstanding Awards; and (3) the grant or exercise price with respect to any Award. (b) Subject to Sections 10.3(c) and 10.3(e), in the event of any transaction or event described in Section 10.3(a), any Change in Control, any Corporate Transaction, or any unusual or nonrecurring transactions or events affecting the Company, any affiliate of the Company, or the financial statements of the Company or any affiliate, or of changes in applicable laws, regulations, or accounting principles, the Administrator, in its sole and absolute discretion, and on such terms and conditions as it deems appropriate, either by the terms of the Award or by action taken before the occurrence of the transaction or event, is authorized to take any one or more of the following actions whenever the Administrator determines that the action is appropriate in order to prevent dilution or enlargement of the benefits or potential benefits intended to be made available under this Plan or with respect to any Award under this Plan, to facilitate the transactions or events in question, or to give effect to changes in laws, regulations, or accounting principles (but only to the extent the action does not result in a deferral of compensation under Section 409A of the Code or, to the extent that the Company reasonably determines that any the action may constitute a deferral of compensation under Section 409A of the Code, pursuant to an agreement setting forth the terms and conditions required to comply with the provisions of Section 409A of the Code): (1) provide for either the purchase of the Award for an amount of cash equal to the amount that could have been attained upon the exercise of the Award or realization of the Holder's rights had the Award been currently exercisable or payable or fully vested or the replacement of the Award with other rights or property selected by the Administrator in its sole discretion; (2) provide that the Award cannot vest, be exercised, or become payable after the event in question; (3) provide that the Award will be exercisable as to all shares it covers, notwithstanding anything to the contrary in Section 5.3 or the provisions of the Award Agreement; (4) provide for the Award to be assumed by the successor or survivor corporation, or its parent or subsidiary, or for it to be substituted for by similar options, rights, or awards covering the stock of the successor or survivor corporation, or its parent or subsidiary, with appropriate adjustments as to the number and kind of shares and prices; (5) make adjustments in the number and type of shares of stock (or other securities or property) subject to outstanding Awards, and in the number and kind of shares of outstanding Restricted Stock, and/or in the terms and conditions (including the grant or exercise price), and the criteria included in, outstanding options, rights, and awards and options, rights, and awards that may be granted in the future; and (6) provide that, for a specified period of time before the event in question, the restrictions imposed under an Award Agreement upon some or all shares of Restricted Stock may be terminated, and some or all of those shares of Restricted Stock may cease to be subject to forfeiture under Section 7.4 after the event. (c) Notwithstanding any other provision of this Plan, in the event of a Corporate Transaction, each outstanding Option will be assumed or an equivalent option substituted by the successor corporation or a parent or subsidiary of the successor corporation. In the event that the successor corporation refuses to assume or substitute for the Option, the Holder will have the right to exercise the Option as to all of the optioned shares, including shares as to which it would not otherwise be exercisable. If an Option is exercisable in lieu of assumption or substitution in the event of a merger, consolidation, share exchange, or sale of assets, the Administrator will notify the Holder that the Option will be fully exercisable for a period of 15 days from the date of the notice, and the Option will then terminate upon the expiration of that period to the extent it has not been exercised. For the purposes of this Section 10.3(c), the Option will be considered assumed if, following the merger, consolidation, share exchange, or sale of assets, the option confers the right to purchase or receive, for each share of optioned stock subject to the Option immediately before the merger, consolidation, share exchange, or sale of assets, the consideration (whether stock, cash, or other securities or property) received in the merger, consolidation, share exchange, or sale of assets by holders of Class A Stock for each share held on the effective date of the transaction (and if holders were offered a choice of consideration, the type of consideration chosen by the holders of a majority of the outstanding shares); provided, however, that if the consideration received in the merger, consolidation, share exchange, or sale of assets was not solely common stock of the successor corporation or its parent, the Administrator may, with the consent of the successor corporation, provide for the consideration to be received upon the exercise of the Option, for each share of optioned stock subject to the Option, to be solely common stock of the successor corporation or its parent equal in fair market value to the per share consideration received by holders of Class A Stock in the merger, consolidation, share exchange, or sale of assets. (d) Subject to Sections 10.3(e), 3.2, and 3.3, the Administrator may, in its discretion, include such further provisions and limitations in any Award, agreement, or certificate, as it may deem equitable and in the best interests of the Company. (e) With respect to Awards which are granted to Section 162(m) Participants and are intended to qualify as performance-based compensation under Section 162(m)(4)(C), no adjustment or action described in this Section 10.3 or in any other provision of this Plan is authorized to the extent that the adjustment or action would cause the Award to fail to so qualify under Section 162(m)(4)(C), or any successor provisions. Furthermore, no such adjustment or action will be authorized to the extent the adjustment or action would result in short-swing profits liability under Section 16 of the Exchange Act or violate the exemptive conditions of Rule 16b-3 unless the Administrator determines that the Award is not to comply with such exemptive conditions. The number of shares of Class A Stock or other stock subject to any Award will always be rounded up to the next whole number. (f) The existence of this Plan and the Awards granted under this Plan will not affect or restrict in any way the right or power of the Company or the shareholders of the Company to make or authorize any adjustment, recapitalization, reorganization, or other change in the Company's capital structure or its business, any merger, consolidation, or share exchange of the Company, any issue of stock or of options, warrants, or rights to purchase stock or of bonds, debentures, preferred or prior preference stocks whose rights are superior to or affect the Class A Stock or the rights thereof or which are convertible into or exchangeable for Class A Stock, or the dissolution or liquidation of the Company, or any sale or transfer of all or any part of its assets or business, or any other corporate act or proceeding, whether of a similar character or otherwise. 10.4 Approval of Plan by Shareholders. This Plan will be submitted for the approval of the Company's shareholders within twelve months after the date of the Board's initial adoption of this Plan. Awards may be granted or awarded before shareholder approval, but those Awards will not be exercisable or payable, nor will they vest, before the time when this Plan is approved by the shareholders. If shareholder approval has not been obtained at the end of the twelve-month period, all Awards previously granted or awarded under this Plan will automatically be canceled and become null and void. In addition, if the Board determines that Awards that may be granted to Section 162(m) Participants should continue to be eligible to qualify as performance-based compensation under Section 162(m)(4)(C) of the Code, the Performance Criteria must be disclosed to and approved by the Company's shareholders no later than the first shareholder meeting that occurs in the fifth year following the year in which the Company's shareholders previously approved the Performance Criteria. 10.5 Tax Withholding. The Company will be entitled to require payment in cash or deduction from other compensation payable to each Holder of any sums required by federal, state, or local tax law to be withheld with respect to the issuance, vesting, exercise, or payment of any Award or in consequence of a Holder's making a Section 83(b) election as describe in Section 7.7. The Administrator may in its discretion and in satisfaction of the this requirement to allow the Holder to elect to have the Company withhold shares of Class A Stock otherwise issuable under the Award (or allow the return of shares of Class A Stock) having a Fair Market Value equal to the sums required to be withheld. Notwithstanding any other provision of this Plan, the number of shares of Class A Stock that may be withheld with respect to the issuance, vesting, exercise, or payment of any Award (or that may be repurchased from the Holder of the Award within six months after the shares were acquired by the Holder from the Company) in order to satisfy the Holder's income and payroll tax liabilities with respect to the issuance, vesting, exercise, or payment of the Award is limited to the number of shares that have a Fair Market Value on the date of withholding or repurchase equal to the aggregate amount of those liabilities based on the minimum statutory withholding rates for tax purposes that are applicable to that supplemental taxable income. 10.6 Forfeiture Provisions. Pursuant to its general authority to determine the terms and conditions applicable to Awards under this Plan, the Administrator will have the right to provide, in the terms of Awards made under this Plan, or to require a Holder to agree by separate written instrument, that: (a) any proceeds, gains, or other economic benefit actually or constructively received by the Holder upon any receipt or exercise of the Award, or upon the receipt or resale of any Class A Stock underlying the Award, must be paid to the Company; and (b) the Award will terminate and any unexercised portion of the Award (whether or not vested) will be forfeited; if (1) a Termination of Employment occurs before a specified date, or within a specified time period following receipt or exercise of the Award, (2) the Holder at any time, or during a specified time period, engages in any activity in competition with the Company, or that is inimical, contrary, or harmful to the interests of the Company, as further defined by the Administrator, or (3) the Holder incurs a Termination of Employment for cause. 10.7 Right of Recapture. If at any time within one year after the date on which an Employee exercises an Option, or on which Restricted Stock vests or on which Class A Stock is issued to an Employee pursuant to a Performance Award (each a "realization event"), the Administrator should determine in its discretion that the Company has been materially harmed by the Employee, whether the harm (a) results in the Employee's termination or deemed termination of employment for cause or (b) results from any activity of the Employee determined by the Committee to be in competition with any activity of the Company, or otherwise inimical, contrary, or harmful to the interests of the Company (including, but not limited to, accepting employment with or serving as a consultant, adviser, or in any other capacity to an entity that is in competition with or acting against the interests of the Company), then any gain realized by the Employee from the realization event must be paid by the Employee to the Company upon notice from the Company. The gain will be determined as of the date of the realization event, without regard to any later change in the Fair Market Value of a share of Class A Stock. The Company will have the right, to the maximum extent permitted by law, to set the gain off against any amounts otherwise owed to the Employee by the Company or any Subsidiary (whether as wages, vacation pay, or pursuant to any benefit plan or other compensatory arrangement). 10.8 Compliance with Laws. This Plan, the granting and vesting of Awards under this Plan, and the issuance and delivery of shares of Class A Stock and the payment of money under this Plan or under Awards are subject to compliance with all applicable federal and state laws, rules, and regulations (including but not limited to state and federal securities law and federal margin requirements) and to such approvals by any listing, regulatory, or governmental authority as may, in the opinion of counsel for the Company, be necessary or advisable. Any securities delivered under this Plan will be subject to such restrictions, and the person acquiring the securities must, if requested by the Company, provide such assurances and representations to the Company as the Company may deem necessary or desirable to assure compliance with all applicable legal requirements. To the extent permitted by applicable law, this Plan and Awards granted or awarded hereunder will be deemed amended to the extent necessary to conform to applicable laws, rules, and regulations. 10.9 Headings. Headings are included in this Plan for convenience only and are not to serve as a basis for interpretation or construction of this Plan. 10.10 Severability of Provisions. If any provision of this Plan is held to be invalid or unenforceable, the other provisions of this Plan are not to be affected but are to be applied as if the invalid or unenforceable provision had not been included in this Plan. 10.11 Governing Law. This Plan and any agreements this Plan will be administered, interpreted, and enforced under the internal laws of the State of Michigan without regard to its law of conflicts of laws. This Plan was duly adopted by the Board of Directors of Tecumseh Products Company on July 31, 2007. Executed on July 31, 2007. TECUMSEH PRODUCTS COMPANY By: /s/ James S. Nicholson ---------------------------------- James S. Nicholson Vice President, Treasurer and Chief Financial Officer EX-99.1 4 k17435exv99w1.txt PRES RELEASE ISSUED AUGUST 1, 2007 Exhibit 99.1 TECUMSEH PRODUCTS COMPANY ANNOUNCES APPOINTMENT OF EDWIN L. "ED" BUKER AS CHIEF EXECUTIVE OFFICER TECUMSEH, Mich., August 1, 2007--Tecumseh Products Company (Nasdaq: TECUA, TECUB) ("Tecumseh" or the "Company") today announced the appointment of Edwin "Ed" L. Buker as the Company's Chief Executive Officer. Mr. Buker, whose appointment is effective August 13, 2007, joins Tecumseh from Citation Corporation, a leading supplier of metal components based in Birmingham, Alabama, where he had served as President and Chief Executive Officer since March 2002. Prior to joining Citation, Mr. Buker, 54, served as Vice President and General Manager of the Chassis Systems Division at Visteon Automotive; as President, Electrical Systems--The Americas, for United Technologies Automotive; and as Vice President of New Model Development for BMW Manufacturing Corporation in Munich, Germany. He also held leadership positions at BMW's Spartanburg, South Carolina, facility and at Honda's East Liberty, Ohio, manufacturing plant. Among other accomplishments, Mr. Buker was co-leader of the design, building and operations management of Honda's East Liberty facility and of BMW's Spartanburg plant. Mr. Buker holds a bachelor's degree in mechanical engineering from Tri-State University in Angola, Indiana, and an MBA from Ohio University in Athens, Ohio. David M. Risley, Chairman of Tecumseh, said: "The appointment of Ed Buker as Chief Executive Officer adds a seasoned, proven, highly successful executive to Tecumseh. His manufacturing expertise, customer orientation and overall management and strategic acumen make him an ideal choice to lead Tecumseh's continuing efforts to improve its operational and financial performance." Mr. Buker will become a member of Tecumseh's Board of Directors when he joins the Company this month, and will eventually succeed Mr. Risley as Chairman. Since January 2007, the Company has been functioning under the leadership of interim President and Chief Operating Officer James J. Bonsall, who will provide transition services to Mr. Buker before returning to his ongoing role as a Managing Director of AlixPartners LLP. "Jim Bonsall provided capable leadership at a challenging time for the Company. I want to thank Jim for his outstanding work at Tecumseh in our continuing efforts to place the Company on a solid strategic, operational and financial footing," Mr. Risley said. "Tecumseh has a long and proud history of serving customers around the world. We look forward to Ed's role as a team builder and team leader as Tecumseh continues to serve its customers and drive for improved performance and market position." CAUTIONARY INFORMATION REGARDING FORWARD-LOOKING STATEMENTS This release may contain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 that are subject to the safe harbor provision created by that Act. In addition, forward-looking statements may be made orally in the future by or on behalf of the Company. Forward-looking statements can be identified by the use of terms such as "expects," "should," "may," "believes," "anticipates," "will," and other future tense and forward-looking terminology. Readers are cautioned that actual results may differ materially from those projected as a result of certain risks and uncertainties, including but not limited to i) the outcome of the judicial restructuring of our Brazilian engine manufacturing subsidiary; ii) the success of our ongoing effort to bring costs in line with projected production levels and product mix; iii) our ability to reduce a substantial amount of costs in the Engine & Power Train group associated with excess capacity; iv) the extent of any business disruption that may result from the restructuring and realignment of our manufacturing operations or system implementations, the ultimate cost of those initiatives and the amount of savings actually realized; v) the ability of the Company to maintain adequate liquidity in total and within each foreign operation; vi) financial market changes, including fluctuations in interest rates and foreign currency exchange rates; vii) availability and cost of materials, particularly commodities, including steel, copper and aluminum, whose cost can be subject to significant variation; viii) weather conditions affecting demand for air conditioners, lawn and garden product, portable power generators and snow throwers; ix) the ultimate cost of resolving environmental and legal matters; x) changes in business conditions and the economy in general in both foreign and domestic markets; xi) potential political and economic factors that could adversely affect anticipated sales and production in Brazil; xii) potential political and economic factors that could adversely affect anticipated sales and production in India, including potential military conflict with neighboring countries; xiii) the effect of terrorist activity and armed conflict; xiv) economic trend factors such as housing starts; xv) the effect of any business disruption caused by work stoppages initiated by organized labor unions; xvi) emerging governmental regulations; xvii) increased or unexpected warranty claims; xviii) actions of competitors; xix) our ability to profitably develop, manufacture and sell both new and existing products; and xx) the ongoing financial health of major customers. The forward-looking statements are made only as of the date of this report, and we undertake no obligation to update or revise the forward-looking statements, whether as a result of new information, future events or otherwise. Contacts: Roy Winnick or Michael Freitag Kekst and Company 212-521-4842 or 4896 roy-winnick@kekst.com michael-freitag@kekst.com Teresa Hess Director, Investor Relations Tecumseh Products Company 517-423-8455 teresa.hess@tecumseh.com Press releases and other investor information can be accessed via the Investor Relations section of Tecumseh Products Company's Internet web site at http://www.tecumseh.com. Tecumseh Products Company now offers media access to news releases via RSS. Please go to http://tecumseh.mediaroom.com to sign up for our RSS feeds. -----END PRIVACY-ENHANCED MESSAGE-----