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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
DISCLOSURES
We know of no fact or situation that would
represent a conflict of interest for
us with regard to the Company. However, we
wish to disclose the following:
- Questor Partners
Fund, L.P. ("QPF") and an affiliated side-by-side fund
and
Questor Partners Fund II, L.P. ("QPF II") and affiliated
side-by-side
funds,
$300 million and $865 million funds, respectively, are private
equity
funds that invest in special situations and under-performing
companies.
Neither QPF nor QPF II will make an investment in the Debtors
for at
least three years after the date that AlixPartners' engagement
terminates.
- Mr. Jay Alix, a
managing director in AlixPartners, is also the President
and CEO of
Questor Management Company, LLC ("Questor"), the entity that
manages
QPF and QPF II.
- Questor and
AlixPartners are separate companies. AlixPartners, pursuant to
contract,
performs certain accounting and other administrative services
for
Questor. From time to time, Questor hires AlixPartners as a
contractor
to advise
it regarding a potential acquisition, and occasionally investee
companies
of QPF and QPF II hire AlixPartners. From time to time,
employees
of AlixPartners are elected to the boards of directors of
investee
companies of QPF and QPF II, but no such board members are
involved
in this engagement.
- Mr. Alix and Mr.
Robert Shields own interests in Questor General Partner,
LP ("QGP")
and Questor General Partner II, LP ("QGP II"), the general
partners
of QPF and QPF II. Substantially all of the AlixPartners
managing
directors
are limited partners in QGP II and, as such, are passive
participants in the general partner with no voice in authorizing
QPF II's
investments. Mr. Alix, Mr. Albert A. Koch, and Mr. Michael
Grindfors are
also
managing directors of Questor and, along with Mr. Shields, members
of
its
Investment Committee. The Investment Committee makes investment
decisions
for Questor.
- Substantially
all of the managing directors of AlixPartners own limited
partnership interests in one or more of the following entities:
Questor
Side-by-Side Partners, L.P. ("SBS"), Questor Side-by-Side Partners
II,
L.P. ("SBS
II") and Questor Side-by-Side Partners II 3(c)(1), L.P. ("SBS
II 3c1").
Limited partners, except for Mr. Alix, Mr. Koch and Mr.
Grindfors
are passive investors and have no voice in approving the
entities'
investments.
- Some of the
limited partners of QPF and/or QPF II are affiliates of
financial
institutions that are also lenders to companies that may have
retained
AlixPartners.
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[APSERVICES LLC LOGO]
The
affiliates of such financial institutions are passive investors in
QPF
and QPF II
and have no voice in approving Questor's investments. Where
such
situations occur, the lending relationship and investment in
QPF
and/or QPF
II is detailed in AlixPartners' disclosures.
- QPF, QPF II,
SBS, SBS II, SBS II 3c1 and Questor are all related entities.
T
