Re: Interim Management Services

 

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[APSERVICES LLC LOGO]                            Detroit New York Chicago Dallas

 

                                                                    Exhibit 10.2

 

July 20, 2005

 

Todd Herrick

Chairman, President & CEO

Tecumseh Products Company

100 E. Patterson Street

Tecumseh, MI 49286

 

Re: Interim Management Services

 

Dear Todd:

 

This letter, together with the attached Schedule(s), Exhibit and General Terms

and Conditions, sets forth the agreement ("Agreement") between AP Services, LLC,

a Michigan limited liability company ("APS"), and Tecumseh Products Company (the

"Company"), for the engagement of APS to provide certain temporary employees to

the Company to assist it in its restructuring as described below.

 

All defined terms shall have the meanings ascribed to them in this letter and in

the attached Schedule(s), Exhibit and General Terms and Conditions.

 

The engagement of APS, including any APS employees who serve in management

positions, shall be under the direction and control of the Board of Directors of

the Company and the direct supervision of its Chief Executive Officer.

 

                               OBJECTIVE AND TASKS

 

Jim Bonsall will be designated "President of the Engine & Power Train Group,"

reporting to the Company's Chief Executive Officer. In addition, Bob Busch will

be designated as "VP, Finance - Engine & Power Train Group," reporting to Mr.

Bonsall. APS may provide additional resources including a President of the

Brazil Engine & Power Train Group and a Plant Manager of New Holstein, if

mutually agreeable with the Company. No such APS personnel, regardless of

designation or title, will be or become or be deemed to be employees or officers

of the Company.

 

Working collaboratively with the senior management team, the Board of Directors

and other Company professionals, Mr. Bonsall will assist the Company in

evaluating and implementing strategic and tactical options for performance

improvement. In addition, the Temporary Staff (as defined below) roles will

include working with the Company and its team to do the following:

 

2000 Town Center | Suite 2400 | Southfield, MI | 48075 | 248.358.4420 |

248.358.1969 fax | www.alixpartners.com

 

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[APSERVICES LLC LOGO]

 

Todd Herrick

July 20, 2005

Page 2

 

-     Assist in overseeing and driving financial performance in such a manner as

      to maximize value for the Company's stakeholders.

 

-     Assist management with the development of the Company's business plans,

      and such other related forecasts as may be required.

 

-     Assist in communication and/or negotiation with outside constituents

      including the customers, suppliers, governmental units and others as

      appropriate.

 

-     Assist with such other matters as may be requested that fall within APS'

      expertise and that are mutually agreeable.

 

                                    STAFFING

 

APS will provide the Company with the individuals set forth on Exhibit A

("Temporary Staff"), subject to the terms and conditions of this Agreement, with

the titles, pay rates and other descriptions set forth therein.

 

With prior notice to, and approval of, the Company, the Temporary Staff may be

assisted by or replaced by other professionals at various levels, as required,

who shall also become Temporary Staff. APS will keep the Company informed as to

APS' staffing and will not add additional Temporary Staff to the assignment

without first consulting with the Company to obtain Company concurrence that

such additional resources are required and do not duplicate the activities of

other employees or professionals.

 

                            TIMING, FEES AND RETAINER

 

APS will commence this engagement immediately upon receipt of a copy of the

Agreement executed by the Company accompanied by the Retainer, as set forth in

Schedule 1.

 

APS shall be compensated for its services, and reimbursed for expenses, under

this Agreement as set forth on Schedule 1.

 

                                      * * *

 

The terms and conditions set out in the attached Schedule(s), Exhibit and the

General Terms and Conditions form part of this Agreement and are incorporated by

reference herein.

 

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[APSERVICES LLC LOGO]

 

Todd Herrick

July 20, 2005

Page 3

 

If these terms meet with your approval, please sign and return the enclosed copy

of this Agreement and wire transfer the amount to establish the Retainer.

 

We look forward to working with you.

 

Sincerely yours,

 

AP SERVICES, LLC

 

/s/ TED STENGER

 

Ted Stenger

Managing Director

 

Acknowledged and Agreed to:

 

TECUMSEH PRODUCTS COMPANY

 

By: /s/ TODD W. HERRICK

 

Its: President and Chief Executive Officer

 

Dated: July 20, 2005

 

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[APSERVICES LLC LOGO]

 

                                AP SERVICES, LLC

             INTERIM MANAGEMENT SERVICES - TECUMSEH PRODUCTS COMPANY

 

                                    EXHIBIT A

 

                               TEMPORARY EMPLOYEES

                      INDIVIDUALS WITH MANAGEMENT POSITIONS

 

<TABLE>

<CAPTION>

                                                         COMMITMENT

    NAME            DESCRIPTION         DAILY RATE  FULL(1) OR PART TIME

------------  ------------------------  ----------  --------------------

<S>           <C>                       <C>         <C>

Jim Bonsall   President - Engine &        $7,150          Full Time

              Power Train Group

 

Robert Busch  V.P., Finance - Engine &    $5,830          Full-Time

              Power Train Group

</TABLE>

 

                         ADDITIONAL TEMPORARY EMPLOYEES

 

<TABLE>

<CAPTION>

                                      COMMITMENT

NAME  DESCRIPTION  DAILY RATE  FULL(1) OR PART(2) TIME

----  -----------  ----------  -----------------------

<S>   <C>          <C>         <C>

TBD       TBD          TBD              TBD

</TABLE>

 

The parties agree that Exhibit A can be amended by APS from time to time, with

the prior consent of the Company, to add or delete staff.

 

(1)   Full time is defined as substantially full time.

 

(2)   Part time is defined as approximately 2-3 days per week, with some weeks

      more or less depending on the needs and issues facing the Company at that

      time.

 

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[APSERVICES LLC LOGO]                            Detroit New York Chicago Dallas

 

                                   SCHEDULE 1

 

                                FEES AND EXPENSES

 

1.    FEES: APS' fees will be based on APS' daily rates, which are:

 

<TABLE>

<S>                    <C>

Managing Directors     $6,270 - $7,590

Directors              $4,730 - $5,830

Vice Presidents        $3,520 - $4,510

Associates             $2,750 - $3,080

Analysts               $1,980 - $2,420

Paraprofessionals          $1,650

</TABLE>

 

      APS will review and revise its daily rates effective each January 1, but

      increases will be limited to a maximum of 4%.

 

2.    CONTINGENT SUCCESS FEE: APS does not seek a Contingent Success Fee in this

      engagement.

 

3.    EXPENSES: In addition to the fees set forth herein, the Company shall pay

      directly, or reimburse APS upon receipt of periodic billings, for all

      reasonable out-of-pocket expenses incurred in connection with this

      assignment, such as travel, lodging, postage, telephone and facsimile

      charges. Expenses will be capped at 15% of Fees.

 

4.    BREAK FEE: APS does not seek a Break Fee in this engagement.

 

5.    RETAINER: The Company shall pay APS a retainer of $250,000 to be applied

      against Fees and Expenses as set forth in this Schedule and in accordance

      with Section 2 of the attached General Terms and Conditions.

 

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[APSERVICES LLC LOGO]

 

                                   SCHEDULE 2