TECUMSEH PRODUCTS COMPANY SUPPLEMENTAL RETIREMENT PLAN
Addendum or Modifications
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TECUMSEH PRODUCTS COMPANY SUPPLEMENTAL RETIREMENT PLAN
Addendum or Modifications
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TECUMSEH PRODUCTS COMPANY
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
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.
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:
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.
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:
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
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:
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
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 -
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