EXHIBIT 10.4
FIRST AMENDMENT
TO
EMPLOYMENT AGREEMENT
This First Amendment to Employment Agreement, dated as of the 4th day of
March, 2008 (the "Amendment") by and between TECUMSEH PRODUCTS COMPANY, a
Michigan corporation (the "Company"), and XXXXX X. XXXXX ("Executive").
WITNESSETH:
WHEREAS, Executive and the Company are parties to that certain Employment
Agreement dated August 1, 2007 (the "Employment Agreement"); and
WHEREAS, pursuant to the terms of the Employment Agreement, under the
Company's Long-Term Incentive Equity Award Plan (the "Equity Plan"), Executive
was granted the Initial Incentive Awards consisting of (i) 180,941 Options and
(ii) 89,552 Units; and
WHEREAS, the Company has determined it would be in the Company's best
interest to terminate the Equity Plan and replace it with a plan entitled the
Long-Term Incentive Cash Award Plan (the "Cash Plan"); and
WHEREAS, as a result of the termination of the Equity Plan, Executive and
the Company desire to: (i) terminate the Initial Incentive Awards granted
pursuant to the Equity Plan and issue replacement awards to Executive under the
Cash Plan; and (ii) amend the Employment Agreement to provide that Annual Awards
will be granted to Executive under the Cash Plan.
NOW, THEREFORE, in consideration of the mutual covenants contained
herein, the parties hereto agree as follows:
1. Definitions. Capitalized terms not otherwise defined herein shall have the
meaning ascribed to such term in the Employment Agreement.
2. Amendment of Employment Agreement.
A. (i) The second sentence of Section 3(b) of the Employment Agreement is
deleted in its entirety and replaced with the following:
The bonus actually earned and payable to Executive will be
determined based on achievement of Company and individual performance
objectives as may be established with respect to each
calendar year by the Board or a committee thereof, and subject to such
other terms and conditions established by the Board pursuant to the
Company's Annual Incentive Plan, as it may be amended from time to
time, or any new annual incentive or bonus plan the Company may adopt
in the future to replace it.
(ii) The last sentence of Section 3(b) of the Employment Agreement is
deleted in its entirety and replaced with the following:
Unless otherwise provided in the Company's Annual Incentive Plan,
the minimum annual performance bonuses as described in the preceding
sentence will be paid no later than March 15 of the year following the
year in which each annual bonus is earned (i.e., March 15, 2008 and
March 15, 2009).
B. Section 4 of the Employment Agreement is deleted in its entirety and
replaced with the following:
4. Long Term Incentive Plan Grants.
(a) Annual Grants. Commencing with 2008, and continuing for
each calendar year during the Employment Period, Executive shall
receive an annual grant of awards under the Company's Long-Term
Incentive Cash Award Plan adopted by the Board on March 4, 2008,
as the same may be amended (the "Cash Plan") equal to (as of the
date of the grant) the aggregate of Executive's (i) then current
Base Salary and (ii) the Target Bonus then in effect (the "Annual
Award"). The Annual Awards shall be fixed and determined in
accordance with, and shall be subject to any conditions set forth
in the Cash Plan and the granting document(s).
(b) Initial Grants. Effective as of the date on which the
Board adopts the Cash Plan (the "Plan Date"), Executive is hereby
granted pursuant to the Cash Plan (i) a number of stock
appreciation rights equal to the sum of 180,941 plus a number
stock appreciation rights having a Black-Scholes value equal to
the difference between the Strike Price (as hereinafter
determined) and $16.75 multiplied by 180,941 (the "Initial
SARs"), and (ii) 89,552 phantom shares (the "Initial Phantom
Shares" and collectively, with the Initial SARs, the "Initial
Incentive Awards") to replace and in full substitution for the
Initial Incentive Awards granted pursuant to the Employment
Agreement. The Initial SARs will (x) have a Strike Price (within
the meaning of the Cash Plan) equal to the higher of the closing
market price of the Company's Class A shares of common stock on
the Plan Date or on the third (3rd) business day after the
Company files its
Annual Report on Form 10-K for its fiscal year ended December 31,
2007, (y) expire on August 13, 1014, and (z) vest in three (3)
tranches, with one-third of the Initial SARs exercisable on
August 13, 2008, one-third on August 13, 2009, and one-third on
August 13, 2010. The Initial Phantom Shares will vest, and will
be settled as of, August 13, 2010, if Executive remains employed
by the Company for the full term of Employment Period. The number
of Initial SARS will be determined by the compensation consulting
firm of Xxxxx, Xxxxxxxx & Company, Inc., promptly communicated to
Executive, and included in the Award Agreement relating to the
Initial Incentive Awards. The Initial Incentive Awards shall be
subject to any conditions set forth in the Cash Plan and the
granting document(s).
C. The first sentence of Section 8(b) of the Employment Agreement is
deleted in its entirety and replaced with the following:
(b) Termination Payments - Termination by Executive. If
Executive voluntarily terminates his employment (i) without Good
Reason, or (ii) without Good Reason on Change of Control, then
Executive shall be entitled to receive: (A) a cash payment equal
to the aggregate amount of (x) accrued but unpaid Base Salary and
(y) unused vacation days; (B) settlement of any then vested
Initial Phantom Shares and Phantom Shares (as defined in the Cash
Plan); and (C) the ability to exercise any then vested Initial
Incentive Award and Annual Awards in accordance with their terms.
The balance of Section 8(b) of the Employment Agreement shall remain unchanged.
D. The first sentence of Section 8(g) of the Employment Agreement is
deleted in its entirety and replaced with the following:
(g) Termination Payments - Disability. If Executive is
terminated by the Company for a Disability (as hereinafter
defined), then Executive shall be entitled to receive: (i) a cash
payment equal to the aggregate amount of (A) accrued but unpaid
Base Salary, (B) unused vacation days, and (C) the Target Bonus
on a pro rata basis through the Termination Date; (D) settlement
of any then vested Initial Phantom Shares and Phantom Shares; and
(ii) the immediate vesting of the next tranche of Initial SARs
and SARs (as defined in the Cash Plan) that would have vested
after the Termination Date under any Initial Incentive Award and
Annual Awards; and (iii) the ability to exercise any then vested
Initial Incentive Award and Annual Awards in accordance with
their terms.
The balance of Section 8(g) of the Employment Agreement shall remain unchanged.
E. Section 16 of the Employment Agreement is deleted in its entirety and
replaced with the following:
16. Conflict. In the event of a conflict between the terms of this
Agreement and the Cash Plan or the Company's Annual Incentive Plan,
this Agreement shall control.
3. Termination of Options and Units. Executive and the Company agree that upon
grant of the Initial SARs and Initial Phantom Shares, the grants of the Units
and Options as provided in the Employment Agreement, and any related granting
documents will be immediately terminated and of no further force or effect.
4. Conflicts. In the event there is a conflict between the terms of the
Employment Agreement and the terms of this Amendment, the terms of this
Amendment shall control.
5. Employment Agreement. The Employment Agreement, as hereby amended, shall
continue in full force and effect, to the fullest extent not inconsistent with
this Amendment.
6. Applicable Law. This Amendment shall be governed by and construed in
accordance with the laws of the State of Michigan applicable to contracts made
and to be performed within such State without regards to the principles of
conflicts of law.
7. Counterparts. This Amendment may be executed in two or more counterparts,
each of which shall be deemed to be an original but all of which together shall
constitute one and the same instrument.
IN WITNESS WHEREOF, the parties have executed this Amendment as of the date
first above written.
TECUMSEH PRODUCTS COMPANY
/s/ Xxxxx X. Xxxxxxxxx
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By: Xxxxx X. Xxxxxxxxx
Its: Vice President, Treasurer and Chief
Financial Officer
EXECUTIVE
/s/ Xxxxx X. Xxxxx
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Xxxxx X. Xxxxx
