TECUMSEH PRODUCTS COMPANY
SUPPLEMENTAL RETIREMENT PLAN
Amended and Restated effective as of January 1,
2005)
1.1 Tecumseh
Products Company, a Michigan corporation (the
“Company”), continues the Tecumseh Products Company
Supplemental Retirement Plan (the “Plan”) for the
purpose of providing certain management or highly compensated
Employees with retirement benefits in excess of (or in addition to)
those benefits provided under the Salaried Retirement Plan
(“Salaried Plan”) or under the Consolidated Pension and
Retirement Plan (“Consolidated Plan”) of Tecumseh
Products Company. The Salaried Plan and/or the Consolidated Plan
are sometimes referred to as the “Retirement
Plan(s)”).
1.2 This Plan
supplements benefits for Selected Participants under the Salaried
Plan to the extent such benefits are
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(i)
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reduced due to the limits of
Section 401(a)(17) and Section 415 of the Internal
Revenue Code of 1986, as amended (the “Code”),
and/or
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(ii)
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reduced as a result of a change in
the Salaried Plan benefit formula that became effective as of
January 1, 1993.
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1.3 This Plan
supplements benefits for Deferral Participants under the Salaried
or Consolidated Plan as payable to Deferral Participants in
accordance with Section 6.8 of the Executive Deferred
Compensation Plan and/or Section 6.8 of the Voluntary Deferred
Compensation Plan of Tecumseh Products Company.
1.4 This Plan is
intended to be an unfunded plan maintained primarily for the
purpose of providing deferred compensation for a select group of
management or highly compensated Employees as described in
Sections 201(a)(2), 301(a)(3) and 401(a)(1) of the Employee
Retirement Income Security Act of 1974, as amended
(“ERISA”).
Unless a different
meaning is expressly assigned, all capitalized terms used in this
Plan have the same meaning as in the applicable Retirement Plan. In
addition, the following terms shall have the following meanings
unless the context in which the term is used clearly indicates that
another or different meaning is intended:
2.1
“Adjusted Retirement Benefits”
A. For
Selected Participants : “Adjusted Retirement
Benefits” means the benefits that a Selected Participant or
his surviving spouse would have received under the Salaried Plan
based
on the terms of
the Salaried Plan at April 30, 2007 had those Salaried Plan
benefits commenced at the time and in the form specified in
Section 5.2, but as if —
(i) the
limitation on benefits imposed by Section 415 of the Code were
disregarded;
(ii) Base
Compensation were computed without reduction due to the limits of
Section 401(a)(17) of the Code; and
(iii) such
benefits were computed by applying whichever of the following two
benefit formulas results in the largest monthly amount when applied
to all of the Participant’s Benefit Service under the
Salaried Plan as of the time benefits become payable under this
Plan (subject, however, to the 30 and 35 year limits on
service, as described in the formulas; provided that Formula
1 shall not apply to any person who first became a covered under
the Salaried Plan after January 1, 1993):
Formula
1 The difference,
“A” minus “B”, where -
“A”
represents 1-1/2% of the Participant’s Average Monthly
Compensation multiplied by his years and fractional years of
Benefit Service (provided that no Benefit Service in excess of
35 years shall be included), and
“B”
represents 1-2/3% of the Participant’s Primary Social
Security Benefit multiplied by his years and fractional years of
Benefit Service (provided that no Benefit Service in excess of
30 years shall be included). However, if “B” as
computed pursuant to the preceding sentence exceeds 50% of
“A”, then “B” shall be reduced to 50% of
“A”.
Formula
2 The amount
“G”, where “G” represents 1-1/4% of the
Participant’s Average Monthly Compensation multiplied by his
years and fractional years of Benefit Service (provided that no
Benefit Service in excess of 35 years shall be
included).
B. For
Deferral Participants : For an Employee who has experienced a
reduction in his or her benefits under a Retirement Plan as a
consequence of having made elective deferrals of compensation under
the Executive Deferred Compensation Plan or the Voluntary Deferred
Compensation Plan of Tecumseh Products Company (as provided under
Section 6.8 of each of those deferred compensation plans),
“Adjusted Retirement Benefits” means the benefits in
the form and amount that a Deferral Participant or his surviving
spouse would have received under the applicable Retirement Plan if
those elective deferrals had been included in his Compensation or
Base Compensation for the year in which such compensation (but for
the deferral election) would have been paid. In the determination
of Adjusted Retirement Benefits under subsection A above for a
Deferral Participant who is also a Selected Participant, elective
deferrals of Base Compensation shall be included in Base
Compensation for the year in which such compensation (but for the
deferral election) would have been paid.
2.2
“Board” means the Board of Directors of the
Company.
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2.3
“Retirement Benefits” means benefits in the form and
amount that would have been payable to the Participant or his
surviving spouse (if any) under the applicable Retirement Plan had
those Retirement Plan benefits commenced at the applicable time and
in the applicable form specified in Section 5.2.
2.4
“Employee” means any individual employed by the Company
or any of its subsidiaries.
2.5 The following
terms are defined elsewhere in this Plan:
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“Administration
Committee”
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Sec.
9.1;
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Sec.
1.2;
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Sec.
1.1;
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Sec.
4.1;
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Sec.
1.2;
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“Participating
Employer(s)”
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Sec.
3.2;
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Sec.
1.1;
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Sec.
6.2;
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Sec.
1.1;
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Sec.
4.1;
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Sec.
3.1;
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Sec.
6.1.
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ARTICLE III
EMPLOYER PARTICIPATION
3.1 If a
Subsidiary of the Company wishes to participate in the Plan and its
participation is approved by the Administration Committee, the
board of directors of the Subsidiary shall adopt a resolution in
form and substance satisfactory to the Administration Committee
authorizing participation by the Subsidiary in the Plan with
respect to its Employees. As used herein, the term
“Subsidiary” means any corporation at least one-half of
whose outstanding voting stock is owned, directly or indirectly, by
the Company.
3.2 A Subsidiary
participating in the Plan may cease to be a Participating Employer
at any time by action of the Administration Committee, or by action
of the board of directors of such Subsidiary, which latter action
shall be effective not earlier than the date of delivery to the
Secretary of the Company of a certified copy of a resolution of the
Subsidiary’s board of directors taking such action. If the
participation in the Plan of a Subsidiary shall terminate, such
termination shall not relieve it of any obligations heretofore
incurred by it under the Plan except with the approval of the Board
of Directors of the Company. The Company and each of its
Subsidiaries participating in this Plan are sometimes called
“Participating Employer(s)” in this Plan.
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4.1
“Selected Participants” shall be those Participants in
the Salaried Plan whose Base Compensation for the purpose of
determining benefits under the Salaried Plan is limited by Section
401(a)(17), or whose benefit under the Salaried Plan is limited by
Section 415 of the Code and who are selected for
participation in this Plan by the Administration Committee.
Selected Participants are listed on attached Exhibit A, as
modified from time to time. The Administration Committee shall
promptly notify each Selected Participant in writing of his
selection for participation in or removal from or other cessation
of participation in this Plan. The Administration Committee shall
maintain a record of all Selected Participants.
4.2 The Plan also
covers two additional categories of Participants as described
below:
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(i)
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Benefits remaining payable to
certain Employees and surviving spouses under supplemental
executive retirement agreements dated October 19, 1992 (and
effective January 1, 1993) have been incorporated in
Section 2.1 (Formula 1) of this Plan. Such Employees are
listed on attached Exhibit A as “1993
Participants.”
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(ii)
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Additionally, this Plan shall cover,
as “Deferral Participants,” any Employee who has
experienced a reduction in his or her benefits under the Salaried
Plan or the Consolidated Plan as a consequence of making elective
deferrals of compensation under the Executive Deferred Compensation
Plan or the Voluntary Deferred Compensation Plan of Tecumseh
Products Company (as provided under Section 6.8 of each of
those deferred compensation plans).
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4.3 A Participant
shall cease to accrue benefits under this Plan on the earliest of
(i) termination of employment, (ii) retirement,
(iii) Total and Permanent Disability, (iv) death, (v)
withdrawal from participation in the Plan by the
Participant’s Participating Employer, or (vi) removal of the
Participant from participation by the Administration Committee;
provided, however, that no such event shall impair the right to
receive benefits earned and/or vested under this Plan prior to such
event, recognizing that the amount of such benefits may
increase or decrease over time, depending on the various factors
taken into account in computing the benefit.
5.1 Subject to
becoming and remaining vested under Article VI, a
Participant’s benefits under the Plan shall be his Adjusted
Retirement Benefits reduced by his Retirement Benefits, with the
initial benefit payment(s) to be reduced or eliminated in amounts
up to $5,000 in the aggregate, as described in Section 5.5, on
account of obligations to the Company as described in
Section 12.6.
5.2 Any benefits
payable under this Plan to a Selected Participant and to his
surviving spouse (if any) pursuant to this Plan shall commence
either (A) on that first date on which the
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Participant is
entitled to commence a retirement or deferred benefit under the
applicable Retirement Plan (whether or not he actually commences
his Retirement Plan benefit at that time), or (B) on that date
on which the Participant has a “separation from
service” with the Employer (as determined in accordance with
Code Section 409A), whichever of those two dates is
later , and shall be paid in one of the following three forms,
whichever form applies to that Participant, commencing on the later
of those two dates:
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a.
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if
the Participant is unmarried at the benefit commencement date, the
benefits shall be paid in the form of a single-life
annuity;
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b.
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if
at the benefit commencement date the Participant has attained age
55, has accrued 10 or more Years of Service under the Retirement
Plan and is married, the benefits shall be paid in the form
of a joint-and-surviving spouse annuity using the
“95%-55%” formula found in Art. II Sec. 8(F)(1) of the
Salaried Plan; or
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c.
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if
at the benefit commencement date the Participant is married but
does not meet the other criteria in (b) above, the benefits
shall be paid in the form of a joint-and-surviving spouse annuity
using the “50% survivor option” formula found in Art.
VII Sec. 2(E)(1) of the Salaried Plan.
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Any benefits
payable under this Plan by reason of someone being a Deferral
Participant shall be calculated actuarially at such
Participant’s death or his 65 th birthday, whichever is earlier, and paid as soon
as practicable thereafter in a lump sum to the Participant or his
surviving spouse, if any, otherwise to the Participant’s
estate.
5.3 If a Selected
Participant dies before benefits commence under this Plan, the
Participant’s surviving spouse (if any) shall be entitled to
a survivor benefit under this Plan equal to (a) the survivor
benefit provided for in the applicable Retirement Plan calculated
as though the Participant’s benefit under that Retirement
Plan was his Adjusted Retirement Benefit, reduced by
(b) the survivor benefit then payable to the surviving spouse
under that Retirement Plan, with the initial benefit payment(s) to
be reduced or eliminated, up to $5,000, as described in
Section 5.5, on account of any obligations to the Company as
described in Section 12.6. Survivor benefits in respect of Selected
Participants under this Plan shall be paid in the applicable form
of surviving spouse benefit specified in Section 5.2,
commencing as soon as practicable following the earliest date on
which the Participant could have commenced a retirement or deferred
benefit under the applicable Retirement Plan had the Participant
lived until that date and then immediately separated from service.
Survivor benefits payable to Deferral Participants shall be
determined pursuant to the final sentence of
Section 5.2.
5.4 If a
Participant dies after benefits under this Plan commence, surviving
spouse benefits, if any, shall be paid in accordance with
Section 5.2.
5.5 If a
Participant is obligated to the Company as described in
Section 12.6 at the time benefits first become payable to the
Participant or his spouse under the Plan, then the initial monthly
benefit payment(s), net of required withholding taxes, shall be
applied in reduction of
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such
obligations (not to exceed $5,000) until they are fully repaid.
Only after such benefits are fully repaid shall payments commence
to the Participant or his spouse under the Plan.
5.6
Notwithstanding the foregoing provisions of this Article V, in
the case of a “specified employee,” commencement of
benefit installments based on such employee’s
“separation from service” with the Employer (as
determined in accordance with Code Section 409A) shall be
delayed until six months following the date of such separation from
service (or until death, if earlier) and the first installment paid
shall include the total of installments otherwise payable during
the period of delay. (“Specified employees” are
employees who (i) own more than 5 percent of the stock of
the Company; (ii) own more than 1 percent of the stock of
the Company and have compensation from the Employer in excess of
$150,000 a year (not indexed); or (iii) are officers of the
Employer with compensation in excess of $145,000 a year
(indexed)).
6.1 Except as
otherwise provided in the Plan, a Participant’s entitlement
to benefits under the Plan shall become vested on the first day of
the calendar month after such Participant has become entitled to a
Deferred Benefit under Article VII, Section 2 of the
Salaried Plan, or under Article VII-A, Section 2 of the
Consolidated Plan or at such earlier date as he dies or has a
Disability. “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: (i) which renders an employee
unable to engage in any substantial gainful activity; or (ii),
which enables an employee to receive income replacement benefits
for a period of not less than 3 months under an accident and
health plan covering employees of the employee’s Employer,
provided that this definition shall be interpreted in accordance
with Code Section 409A(a)(2)(A)(v) and regulations and other
guidance thereunder. Notwithstanding (i) and (ii), an employee
shall be deemed to have a total and permanent disability when
determined to be totally disabled by the Social Security
Administration. As used in the Plan, “vested” refers to
the right to receive a benefit calculated pursuant to
Section 5.1, recognizing that the amount of such
benefit may increase or decrease over time, depending on the
various factors taken into account in computing the benefit. The
provisions of Sections 6.2 and 6.3 shall govern the forfeiture
of benefits which are not vested and, in certain circumstances,
even those which had become fully vested. Subject to
Section 12.7, a Participant’s benefits, to the extent
not previously vested, shall become fully vested and payable as of
the Participant’s Normal Retirement Date.
6.2 Any unpaid
vested benefits shall be forfeited as a result of termination of
employment for one or more Reasons specified below, as determined
by the Administration Committee. Also, any previously unpaid vested
benefits in pay status shall be forfeited for any one or more of
the Reasons specified in subsections (iv) and (v) below.
Such “Reason,” for the sole purpose of determining
whether a Participant’s otherwise vested benefits are to be
forfeited, shall be deemed to exist where -
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(i)
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The
Participant, after receiving written notice of prior breach from
his Participating Employer, again breaches any material written
rules, regulations or
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policies of the
Participating Employer now existing or hereafter arising which are
uniformly applied to all Employees of the Participating Employer or
which rules, regulations and policies are promulgated for general
application to executives, officers or directors of the
Participating Employer; or
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(ii)
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The
Participant willfully and repeatedly fails to substantially perform
the duties of his employment (other than any such failure resulting
from his incapacity due to physical or mental illness) after a
written demand for substantial performance is delivered to him by
his immediate supervisor, which demand specifically identifies the
manner in which the supervisor believes that the Participant has
not substantially performed his duties; or
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(iii)
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The
Participant is repeatedly or habitually intoxicated or under the
influence of drugs while on the premises of the Participating
Employer or while performing his employment duties, after receiving
written notice thereof from the Participating Employer, such that
the Administration Committee determines in good faith that the
Participant is impaired in performing the duties of his employment;
or
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(iv)
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The
Participant is convicted of a felony under state or federal law, or
commits a crime involving moral turpitude; or
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(v)
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The
Participant embezzles any property belonging to the Company or any
of its Subsidiaries such that he may be subject to criminal
prosecution therefor or the Participant intentionally and
materially injures the Company or any of its Subsidiaries or their
personnel or property.
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Nothing in this
Plan shall alter the at-will nature of the Participant’s
employment relationship with his Participating Employer. Nothing in
this Plan shall confer upon any Participant the right to continue
in the employ of the Company or any of its Subsidiaries.
6.3 Except as
provided in Section 6.1, if a Participant voluntarily
terminates his employment with the Participating Employer or is
terminated by the Participating Employer for no reason or for any
reason whatsoever, his benefits shall be forfeited, except for that
portion (if any) which the Administration Committee, in its sole
and absolute discretion, permits him to retain. Nothing in this
Plan shall alter the at-will nature of the Participant’s
employment relationship with his Participating Employer. Nothing in
this Plan shal
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