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EXHIBIT 10.1
THE TECUMSEH PRODUCTS COMPANY
KEY EMPLOYEE BONUS PLAN
I. PLAN
OBJECTIVES
This Key Employee Bonus Plan (the "Plan") applies to certain
management
employees of Tecumseh Products Company (the "Company") and its
subsidiaries and
related entities to the extent any of those entities constitute
Participating
Employers as provided herein. The overall purpose of the Plan is to
motivate and
reward certain management employees for achievement of identified
corporate and
individual goals.
II. GENERAL
PROVISIONS
1. The Plan
covers key management employees that are selected and approved
for
participation by the Company's Board of Directors, in its
discretion and
for
a particular year, and identified on the attached Schedule A, as
may be
amended from time to time in accordance with this Plan ("Key
Employees");
provided, that the president of the Company (the "President"), in
his
discretion and for a particular year, may, with the approval of the
Board
of
Directors of the Company, select and add Key Employees to Schedule
A
from
time to time. Except as specifically provided herein, at no
time,
subsequent to the execution of an Individual Performance Incentive
Plan as
provided in Section III, Paragraph 4 of this Plan, can a Key
Employee's
prior selection and approval for participation in this Plan for
a
particular year be changed in any way without the consent of the
Key
Employee.
2. This Plan is
not an amendment or restatement of any other plan or
arrangement; however, a Key Employee's participation in this Plan
will
preclude any awards in the Tecumseh Products Company Management
Incentive
Plan, Key Incentive Plan or Key Employee Performance Incentive Plan
that
might otherwise be awarded to him in those plans for the same time
period
in
which a Key Employee has been granted a Potential Bonus (as defined
in
Section III) from this Plan, regardless of whether the Potential
Bonus is
actually earned and distributed to the Key Employee.
3. The employer
providing any distribution resulting from a Potential Bonus
shall withhold all Federal, state, local, or other taxes, required
pursuant
to
any law or regulation or ruling, from any amount which is
ultimately
payable to a Key Employee under this Plan. Neither the Company nor
any
Participating Employers will be responsible for any Key Employee's
personal
income or other taxes resulting from any awards made under the
Plan.
4. The death or
disability of a Key Employee shall not cause an automatic
forfeiture of any Potential Bonus under this Plan.
5. The Key
Employee will forfeit the entire unpaid portion of a Potential
Bonus under the Plan if he resigns or announces his intent to
resign prior
to
the Potential Bonus becoming earned and distributed. Any Potential
Bonus
that
is forfeited shall not be allocated to other Key Employees
participating in the Plan. The forfeiture provisions of this
Section II,
Paragraph 5 shall also apply in the event that the employment of a
Key
Employee terminates for any of the following reasons:
a.
The willful and
continued failure of the Key Employee to perform
substantially his duties owed to his employer or the Company after
a
written demand for substantial performance is delivered to the
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Key Employee, specifically identifying the nature of the
unacceptable
performance, provided that the situation remains uncorrected for
30
days; or
b.
The Key
Employee's conviction of a felony.
If
the employment of a Key Employee terminates due to circumstances
not
specifically provided above in this Section II, Paragraph 5 (e.g.,
death or
disability), the President shall have sole discretion (subject to
final
approval as provided in Section III) to deem a Potential Bonus
previously
granted to a Key Employee to be earned and payable as if he
achieved some
or
all of the Individual Performance Incentive Plan, as provided
herein.
The
President's discretion in making such determination shall be
based
primarily on whether the Key Employee's performance was consistent
with the
achievement of the applicable goal based on the progress at the
time of
termination. If the Key Employee whose employment terminates due
to
circumstances consistent with the initial sentence to this flush
Paragraph
5 of
this Section II (e.g., death or disability) is an Executive
Officer,
any
discretionary decisions to be made by the President under this
flush
Paragraph shall be made by the Committee (which shall consider
the
recommendations of the President).
6. The validity,
interpretation, construction, and performance of this Plan
shall be governed by the laws of the State of Michigan without
reference to
conflicts of laws principles.
7. A change in
control of the Company or any of its subsidiaries or related
entities shall have no affect on the Plan.
8. The
invalidity or unenforceability of any provision of this Plan shall
not
affect the validity or enforceability of any other provision.
9. The headings
of this Plan are not part of its provisions and shall have no
force or effect.
10. Any references in
this Plan to the masculine or feminine pronouns shall be
deemed to refer to the other when applicable unless a different
meaning is
plainly required by the context.
III. DETAILED PLAN PROVISIONS
1. Awards. All
potential awards that can be earned by a Key Employee under
this
Plan for a particular year ("Potential Bonus") will be set forth
in
his
Individual Performance Incentive Plan ("Individual Plan") and
on
Schedule A.
2. Entity Goals.
Subject to Paragraph 14 of this Section 3, for any years in
which this Plan is operative, the President shall establish the
goals at
the
Company or employer level (including for Participating Employers)
and
the
amount of the Potential Bonus attributable to those goals that can
be
earned by the respective Key Employee.
3. Individual
Goals. Subject to Paragraph 14 of this Section 3, in his sole
discretion, the President may, if he deems appropriate, establish
up to
four
(4) individual goals for any Key Employee ("Individual Goals");
in
that
case, the President shall also establish the appropriate
measurement
for
each Individual Goal and the applicable percentages (i.e.,
weight)
allocated to each Individual Goal. The President may consider
suggestions
from
the Key Employee when establishing individual goals and
measurements.
4. Individual
Plan. The President and the Key Employee shall execute an
Individual Plan. If an Individual Plan is not executed by the
President and
the
Key Employee, no Potential Bonus will be deemed granted nor may
a
Potential Bonus become earned or payable with respect to that
Key
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Employee, notwithstanding the Key Employee's inclusion on Schedule
A. Each
Individual Plan and Potential Bonus
