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EXHIBIT (10)(l)
TECUMSEH PRODUCTS COMPANY
SUPPLEMENTAL RETIREMENT PLAN
(Effective January 1, 1995)
ARTICLE I
PURPOSE
1.1 Tecumseh Products Company, a Michigan corporation (the "Company"),
establishes 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 those benefits provided under
the Tecumseh Products Company Salaried Retirement Plan (the "Retirement Plan").
1.2 The Plan supplements benefits under the Retirement Plan to the extent
such benefits are 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 to the
extent that benefits are reduced as a result of a change in the Retirement Plan
benefit formula that became effective as of January 1, 1993. The 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").
ARTICLE II
DEFINITIONS
Unless a different meaning is expressly assigned, all capitalized terms
used in this Plan have the same meaning as in the 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" means the benefits in the form and
amount that the Participant or his surviving spouse would have received under
the Retirement Plan 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 Retirement
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; and provided that Formula 1 shall not apply in respect of a
person who first became a Participant in the Retirement Plan
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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).
2.2 "Board" means the Board of Directors of the Company.
2.3 "Retirement Benefits" means benefits in the form and amount actually
payable to the Participant or his surviving spouse (if any) under the
Retirement Plan.
2.4 The following terms are defined elsewhere in this Plan:
"Administration Committee"......... Sec. 9.1;
"Code" ............................ Sec. 1.2;
"Company" ......................... Sec. 1.1;
"ERISA" ........................... Sec. 1.2;
"Participating Employer(s)"........ Sec. 3.2;
"Plan" ............................ Sec. 1.1;
"Reason" .......................... Sec. 6.2;
"Retirement Plan" ................. Sec. 1.1;
"Subsidiary" ...................... Sec. 3.1;
"Vested" .......................... Sec. 6.1.
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.
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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.
ARTICLE IV
PARTICIPATION
4.1 The persons entitled to benefits under this Plan shall be those
Participants in the Retirement Plan whose Base Compensation for the purpose of
determining his benefits under the Retirement Plan is limited by Section
401(a)(17), or whose benefit under the Retirement Plan is limited by Section
415 of the Code and who are selected for participation in this Plan by the
Administration Committee.
4.2 A Participant shall cease to participate in 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 withdraw the right to receive benefits earned 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.
4.3 The Administration Committee shall promptly notify each 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 Participants.
ARTICLE V
BENEFITS
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, as described in Section 5.5, on account of any
obligations to the Company as described in Section 12.6. For an example
showing the computation of benefits under the Plan, see Exhibit A.
5.2 Any benefits payable pursuant to this Plan shall be paid at the same
times and in the same manner and form (using the same actuarial assumptions) as
Retirement Benefits are paid to the
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Participant under the Retirement Plan.
5.3 If a Participant dies before benefits commence under the Retirement
Plan, the Participant's surviving spouse (if any) shall be entitled to a
survivor benefit under this Plan equal to (i) the survivor benefit provided for
in the Retirement Plan calculated as though the Participant's benefit under the
Retirement Plan was his Adjusted Retirement Benefit, reduced by (ii) the
survivor benefit paid to the surviving spouse under the Retirement Plan, with
the initial benefit payment(s) to be reduced or eliminated, as described in
Section 5.5, on account of any obligations to the Company as described in
Section 12.6. Survivor benefits under this Plan shall be paid at the same
times and in the same manner and form as survivor benefits are paid under the
Retirement Plan.
5.4 If a Participant dies after benefits under this Plan commence,
survivor benefits, if any, shall be paid in accordance with the form of benefit
being paid to the Participant at the time of death.
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 until they
are fully repaid. Only after such benefits are fully repaid shall payments
commence to the Participant or his spouse under the Plan.
ARTICLE VI
VESTING
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 Retirement Plan, or such earlier date as he dies
or becomes Totally and Permanently Disabled. 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
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forfeited, shall be deemed to exist where -
(i) The Participant, after receiving written notice of prior
breach from his Participating Employer, again breaches any
material written rules, regulations or 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
(ii) 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
(iii) 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
(iv) The Participant is convicted of a felony under state or
federal law, or commits a crime involving moral turpitude;
or
(v) 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.
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,
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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 shall confer upon any Participant the right to continue in
the employ of the Company or any of its Subsidiaries.
ARTICLE VII
SOURCE OF PAYMENT
7.1 Each Participating Employer shall pay the benefits earned by and
payable to a Participant under this Plan to the extent that the Participant's
benefit is based on compensation paid from the Participating Employer's
payroll. Notwithstanding the withdrawal of a Participating Employer from this
Plan, it shall continue to be liable for benefits earned by each Participant on
its payroll prior to its withdrawal.
7.2 The benefits payable under this Plan shall be paid only from the
general funds of each Participating Employer, and each Participant and his
surviving spouse shall be no more than unsecured general creditors of the
Participating Employer, with no special or prior right to any assets of the
Participating Employer for payment of any obligations hereunder. Nothing
contained in this Plan or elsewhere shall be deemed to create a trust or escrow
of any kind for the benefit of any Participant or any surviving spouse with
respect to any assets of any Participating Employer. Any assets (including
without limitation insurance policies or annuities) which a Participating
Employer chooses to use to pay benefits under this Plan shall constitute
general assets of the Participating Employer, shall be subject to the claims of
the Participating Employer's general creditors and shall not cause this to be a
funded plan within the meaning of any section of ERISA or the Code. No
Participant or surviving spouse shall have any prior or special claim to any
such asset.
7.3 The Board, upon the recommendation of the Administration Committee,
may authorize the creation of trusts or other arrangements to facilitate or
ensure payment of some or all benefit obligations under the Plan, provided that
such trusts and arrangements are consistent with the "unfunded" status of the
Plan. A Participant shall have no right, title, or interest whatsoever in or
to any investments which a Participating Employer may make to aid it in meeting
its obligations hereunder. Nothing contained in the Plan, and no action taken
pursuant to its provisions, shall create or be construed to create a trust of
any kind, or a fiduciary relationship between the Participating Employer and
the Participant or any other person. To the extent that any person acquires a
right to receive benefits under this Plan, such right shall be no greater than
the right of an unsecured general creditor of the Participating Employer. All
payments to be made hereunder shall be paid in cash from the general funds of
the Participating Employer and no special or separate fund shall be established
and no segregation of assets shall be made to assure payments of such amounts.
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ARTICLE VIII
WITHHOLDING
8.1 The Participant and (if applicable) his surviving spouse shall make
appropriate arrangements with the Participating Employer by which he was or is
employed for the satisfaction of any federal, state or local income tax
withholding requirements and federal social security, medicare, or other
employment tax requirements applicable to the payment or vesting of benefits.
If no other arrangements are made, the Participating Employer may provide, at
its discretion, for such withholding and tax payments as may be required.
ARTICLE IX
ADMINISTRATION OF THE PLAN
9.1 The Plan shall be administered by the Administration Committee which
shall have full power, discretion and authority to interpret, construe and
administer the Plan and any part thereof, and the Administration Committee's
interpretation and construction thereof, and actions thereunder, shall be
binding and conclusive on all persons for all purposes. The Administration
Committee shall be the Executive Compensation Committee of the Board, or such
other committee as the Board may subsequently appoint to administer the Plan.
All actuarial determinations shall be made by the actuary for the Retirement
Plan, and the Administration Committee shall be entitled to rely on the good
faith determinations of such actuary. Any Participant who is a member of the
Administration Committee shall take no part in any discretionary action by the
Administration Committee which affects only him. Decisions of the
Administration Committee shall be final and binding on all parties who have an
interest in the Plan.
ARTICLE X
AMENDMENT OR TERMINATION OF THE PLAN
10.1 The Board may at any time amend, alter, modify or terminate the
Plan; provided, however, that any such action shall not reduce any benefits
earned under the Plan prior to such action. In the event of termination of the
Plan, the Administration Committee (in its sole discretion) may accelerate the
time of vesting and/or date of payment applicable to such benefits.
ARTICLE XI
CLAIMS AND DISPUTES
11.1 Claims for benefits under the Plan shall be made in writing to the
Administration Committee. The Participant may furnish the Administration
Committee with any written material he believes necessary to perfect his claim.
11.2 A person whose claim for benefits under the Plan has been
denied, or his duly authorized representative, may request a review upon
written application to the Administration Committee,
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may review pertinent documents, and may submit issues and comments in writing.
The claimant's written request for review must be submitted to the
Administration Committee within sixty (60) days after receipt by the claimant
of written notification of the denial of a claim. A decision by the
Administration Committee shall be made promptly, and not later than sixty (60)
days after the Administration Committee's receipt of a request for review,
unless special circumstances require an extension of time for proceeding, in
which cases a decision shall be rendered as soon as possible, but not later
than one hundred twenty (120) days after receipt of the request for review.
The decision on review shall be in writing, shall include reasons for the
decision, may include specific reference to the pertinent provision of the Plan
on which the decision is based, and shall be written in a manner calculated to
be understood by the claimant.
11.3 Unless otherwise required by law, any controversy or claim
arising out of or relating to this Plan or the breach thereof, including in
particular any controversy relating to Articles VI or IX, shall be settled by
binding arbitration in the City of Tecumseh in accordance with the laws of the
State of Michigan by three arbitrators, one of whom shall be appointed by the
Company, one by the Participant (or in the event of his prior death, his
beneficiary(-ies)), and the third of whom shall be appointed by the first two
arbitrators. If the selected (third) arbitrator declines or is unable to serve
for any reason, the appointed arbitrators shall select another arbitrator.
Upon their failure to agree on another arbitrator, the jurisdiction of the
Circuit Court of Lenawee County, Michigan shall be invoked to make such
selection. The arbitration shall be conducted in accordance with the
commercial arbitration rules of the American Arbitration Association except as
provided in Section 11.4 below. Judgment upon the award rendered by the
arbitrators may be entered in any court having jurisdiction thereof. Review by
the arbitrators of any decision, action or interpretation of the Board or
Administration Committee shall be limited to a determination of whether it was
arbitrary and capricious or constituted an abuse of discretion, within the
guidelines of Firestone Tire & Rubber Co. v. Bruch, 489 U.S. 101 (1989). In
the event the Participant or his beneficiary shall retain legal counsel and/or
incur other costs and expenses in connection with enforcement of any of the
Participant's rights under this Plan, the Participant or beneficiary shall not
be entitled to recover from the Company any attorneys fees, costs or expenses
in connection with the enforcement of such rights (including enforcement of any
arbitration award in court) regardless of the final outcome.
11.4 Any arbitration shall be conducted as follows:
(a) The arbitrators shall follow the Commercial arbitration Rules of
the American Arbitration Association, except as otherwise provided herein.
The arbitrators shall substantially comply with the rules of evidence;
shall grant essential but limited discovery; shall provide for the
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exchange of witness lists and exhibit copies; and shall conduct a pretrial
and consider dispositive motions. Each party shall have the right to
request the arbitrators to make findings of specific factual issues.
(b) The arbitrators shall complete their proceedings and render
their decision within 40 days after submission of the dispute to them,
unless both parties agree to an extension. Each party shall cooperate
with the arbitrators to comply with procedural time requirements and the
failure of either to do so shall entitle the arbitrators to extend the
arbitration proceedings accordingly and to impose sanctions on the party
responsible for the delay, payable to the other party. In the event the
arbitrators do not fulfill their responsibilities on a timely basis,
either party shall have the right to require a replacement and the
appointment of new arbitrators.
(c) The decision of the arbitrator shall be final and binding upon
the parties and accordingly a judgment by any Circuit Court of the State
of Michigan or any other court of competent jurisdiction may be entered in
accordance therewith.
(d) The costs of the arbitration shall be borne equally by the
parties to such arbitration, except that each party shall bear its own
legal and accounting expenses relating to its participation in the
arbitration.
(e) Every asserted claim to benefits or right of action by or on
behalf of any Participant, past, present, or future, or any spouse, child,
beneficiary or legal representative thereof, against the Company or any
Subsidiary arising out of or in connection with this Plan shall,
irrespective of the place where such right of action may arise or be
asserted, cease and be barred by the expiration of the earliest of: (i)
one year from the date of the alleged act or omission in respect of which
such right of action first arises in whole or in part, (ii) one year after
the Participant's termination of employment, or (iii) six months after
notice is given to or on behalf of the Participant of the amount of
benefits payable under this Plan.
ARTICLE XII
MISCELLANEOUS
12.1 Governing Law; Indemnification. This Plan shall be governed by and
construed, enforced, and administered in accordance with the laws of the State
of Michigan excluding any such laws which direct an application of the laws of
any other jurisdiction. Subject to Article XI, the Company, the Participating
Employers and the Administration Committee shall be subject to suit regarding
the Plan only in the courts of the State of Michigan, and the Company shall
fully indemnify and defend the Board and the Administration Committee with
respect to any actions relating to this Plan made in good faith by such bodies
or their members.
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12.2 Prohibition of Assignment. The benefits provided under Article V of
this Plan may not be alienated, assigned, transferred, pledged or hypothecated
by any Participant, surviving spouse or other person, at any time, to any
person whatsoever. These benefits shall be exempt from the claims of creditors
or other claimants and from all orders, decrees, levies, garnishment or
executions to the fullest extent allowed by law.
12.3 Severability. The provisions of this Plan shall be deemed
severable and in the event any provision of this Plan is held invalid, void, or
unenforceable, the same shall not affect, in any respect whatsoever, the
validity of any other provision of this Plan. Furthermore, the Administration
Committee shall have the power to modify such provision to the extent
reasonably necessary to make the provision, as so changed, both legal, valid
and enforceable as well as compatible with the other provisions of the Plan.
12.4 Interpretation. Titles and headings to the Articles of this Plan
are included for convenience only and shall not control the meaning or
interpretation of any provision of this Plan. Wherever reasonably necessary in
this Plan, pronouns of any gender shall be deemed synonymous, as shall singular
and plural pronouns.
12.5 Participant Cooperation. A Participant shall cooperate with the
Company by furnishing any and all information requested by the Company, taking
such physical examinations as the Company may deem necessary, and taking such
other relevant actions as may reasonably be required by the Company or
Administration Committee for purposes of the Plan. If a Participant neglects
or refuses so to cooperate, the Company shall have no further obligation to
such Participant or his beneficiaries under the Plan, and any Plan benefits
accrued prior to such neglect or refusal shall be forfeited.
12.6 Obligations to Company. If any Participant becomes entitled to
payment of benefits under this Plan, and if at such time the Participant has
outstanding any debt, obligation, or other liability representing an amount
owing to the Company or any of its Subsidiaries, then, as provided in Article
V, such amounts owed shall be an offset against the amount of benefits payable
under this Plan.
12.7 Release and Non-Disclosure/Non-Competition Agreements. As a
condition precedent to commencement of benefit payments under the Plan, and in
consideration of such payments, a Participant may be required to execute and
acknowledge a general release of all claims against the Company (and the
Participating Employer, if not the Company) in such form as the Company may
then require. Upon termination of the Participant's employment, at retirement
or otherwise, the Participant (if the Company requires him to do so) shall
execute and thereafter perform a Non-competition/Non-disclosure Agreement in
such form as the Company
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may then require. In that event, five per cent (5%) of each payment to the
Participant pursuant to the Plan shall be deemed a payment by the Company for
such agreement. If the Participant subsequently violates the
Non-competition/Non-disclosure Agreement, as determined by the Administration
Committee, the Company may suspend payment of Plan benefits to the Participant
and any surviving spouse or other beneficiary until such time as there is a
final determination that no such violation had occurred.
12.8 No Employment Contract. Nothing in this Plan shall be construed to
limit in any way the right of the Company or any other Participating Employer
to terminate a Participant's employment at any time for any reason whatsoever;
nor shall it be evidence of any agreement or understanding, express or implied,
that the Company or any Participating Employer (i) will employ an employee in
any particular position or for any particular period of time, (ii) will ensure
participation in any incentive program, or (iii) will grant any awards from any
such program.
12.9 Effective Date. This Plan shall be effective with respect to any
Participant who retires or whose employment otherwise terminates on or after
January 1, 1995.
TECUMSEH PRODUCTS COMPANY
By _______________________________
Its _________________________
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EXHIBIT A
EXAMPLE OF BENEFIT COMPUTATION:
Participant A decides to retire at age 60 and receive a joint and survivor
retirement benefit. His Accrued Benefit under the Retirement Plan is $5,469
per month at his Normal Retirement Date. However, there are actuarial
reductions for commencing benefits before age 62 and for his wife's survivor
benefit, so A's Retirement Benefits (as defined in Section 2.3) will be $4,707
per month. If A's Accrued Benefit were to be calculated under "Formula 1" and
"Formula 2" as described in Section 2.1(iii), Formula 1 would produce the
largest benefit. If that benefit were not reduced in accordance with Code
Sections 401(a)(17) and 415, his Accrued Benefit would be $8,100 per month.
Applying the same actuarial reductions, his Adjusted Retirement Benefits (as
defined in Section 2.1) would be $6,972 per month. A's benefits under this
Plan are initially determined by subtracting his Retirement Benefits from his
Adjusted Retirement Benefits; in other words $6,972 minus $4,707 = $2,265.
Assuming A has no obligations to the Company pursuant to Section 12.6, no
further reductions are required. A's benefits under this Plan are, therefore,
$2,265 per month.
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