Employment Agreement
First Amendment to Employment Agreement
Letter

Exhibit 10.1
 
                              EMPLOYMENT AGREEMENT
 
     This Employment Agreement, dated as of the 1st day of August 2007 (the
"Agreement") by and between TECUMSEH PRODUCTS COMPANY, a Michigan corporation
(the "Company"), and EDWIN L. BUKER ("Executive").
 
                                   WITNESSETH:
 
          WHEREAS, the Company desires to enlist the services and employment of
the Executive on behalf of the Company and the Executive is willing to render
such services on the terms and conditions set forth herein; and
 
          WHEREAS, the Executive represents that he possesses skills, experience
and knowledge that are of value to the Company.
 
     NOW, THEREFORE, in consideration of the mutual covenants contained herein,
the parties hereto agree as follows:
 
     1. Employment and Duties. Executive shall be named President and Chief
Executive Officer of the Company and a member of the Company's Board of
Directors. Prior to the next annual meeting of the shareholders (expected to be
held in April 2008), it is expected that the Board will take action to elect
Executive as the Chairman of the Board. Executive shall have the duties and
responsibilities commensurate with such titles and offices, including, without
limitation, all such duties and responsibilities as now are or hereafter may be
set forth with respect to such offices in the bylaws of the Company or in the
directives of the Board of Directors of the Company (the "Board"). During the
Employment Period (as hereinafter defined), Executive also shall serve as an
officer of such other affiliates of the Company and in such other capacities as
may be requested by the Board and shall assume such duties and responsibilities
as from time to time may be assigned to him by the Board, all without additional
compensation therefore. Throughout the Employment Period, Executive shall devote
his business time, attention and energy on a full-time basis exclusively to the
affairs of the Company and its affiliates and shall use his best efforts to
promote the interests of the Company, and the Executive shall not engage in any
other business activity without the approval of the Board.
 
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     2. Term of Employment. The terms and provisions of the Agreement and the
employment of Executive hereunder shall commence on the Effective Date (as
hereinafter defined) and shall continue, unless earlier terminated as provided
in this Agreement, through the close of business on that day that is immediately
prior to the third anniversary of the Effective Date (the "Employment Period").
The "Effective Date" shall be that date on which Executive commences full time
employment with the Company, but not later than August 15, 2007 (the "Effective
Date").
 
     3. Compensation; Benefits; Relocation Expenses; Attorneys' Fees; Make-Whole
Payment.
 
          (a) Base Salary. During the Employment Period, in full consideration
     of the performance by the Executive of the Executive's obligations
     hereunder (including, any services as an officer, director, employee or
     member of any committee of any affiliate of the Company, or otherwise on
     behalf of the Company), the Executive shall receive from the Company a base
     salary (the "Base Salary") at an annual rate of Seven Hundred Fifty
     Thousand Dollars ($750,000) per year, payable in accordance with the normal
     payroll practices of the Company then in effect. During the Employment
     Period, the Executive will be eligible to receive increases (but not
     decreases) in the Base Salary from time to time as determined in the sole
     discretion of the Board or a committee thereof.
 
          (b) Annual Performance Bonus. During the Employment Period, in
     addition to the payment of the Base Salary described above, the Executive
     shall be eligible to receive, in respect of each calendar year during the
     Employment Period, a performance-based cash bonus equal to 100% of the Base
     Salary (the "Target Bonus"). 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 that certain Executive
     Performance Bonus Plan to be developed by the Board or a committee thereof,
     and approved (i) by the Board, and (ii) by the Company's shareholders, at
     the Company's next annual meeting of the shareholders (expected to be held
     in April 2008). The maximum bonus opportunity for Executive will be 200% of
     the Base Salary; consequently, the aggregate annual bonus that may be
     earned by Executive will range from zero (0) to 200% of Base Salary.
     Notwithstanding anything herein to the contrary, with respect to the years
     of the Employment Period, ending on December 31, 2007 and December 31,
     2008, Executive shall receive a minimum annual
 
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     performance bonus of Three Hundred Seventy-Five Thousand Dollars ($375,000)
     each such year. Unless otherwise provided in the Executive Performance
     Bonus 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).
 
          (c) Benefits. During the Employment Period, the Executive shall be
     entitled to participate in employee benefit plans, policies, programs and
     arrangements (including, without limitation, paid vacation and holidays,
     and sick leave) as may be amended from time to time, on the same terms as
     similarly situated executives of the Company to the extent the Executive
     meets the eligibility requirements for any such plan, policy, program or
     arrangement. In addition, the Company shall, to the extent insurable at
     standard rates, provide a term life insurance policy (for the benefit of
     Executive's heirs and named beneficiaries) in the amount of Five Million
     Dollars ($5,000,000).
 
          (d) Relocation Expenses. If approved by the Company in advance, the
     Company will reimburse Executive for those reasonable and documented
     expenses incurred in connection with Executive's relocation from
     Birmingham, Alabama to southeast Michigan for: (i) movement of household
     goods and automobiles, (ii) up to three (3) house hunting trips for
     Executive and his spouse, and (iii) temporary housing in southeast Michigan
     for a period not to exceed ninety (90) days.
 
          (e) Attorneys' Fees. The Company will reimburse Executive for those
     reasonable and documented expenses (subject to attorney-client privilege)
     incurred in connection with the preparation, review, and execution of the
     term sheet on which this Agreement is based, and this Agreement. Such
     reimbursement of attorneys' fees shall be in an amount not to exceed Twenty
     Thousand Dollars ($20,000).
 
          (f) Make-Whole Payment. Executive has represented to the Company that
     as a result of his resignation from his then current employer, in order to
     accept the Company's offer of employment and become employed by the
     Company, Executive has become ineligible to receive certain payments he was
     entitled to receive from his former employer anticipated to be Five Hundred
     Thousand Dollars ($500,000) (the "Make-Whole Amount"). Following the
     Effective Date and subject to Executive's presentation of appropriate
 
<PAGE>
 
     documentation to the Company, the Company agrees to pay the Make-Whole
     Amount to Executive as follows: (i) fifty percent (50%) of the Make-Whole
     Amount within 90 days of presentation of the appropriate documentation; and
     (ii) fifty percent (50%) of the Make-Whole Amount not later than February
     1, 2008.
 
     4. Long Term Incentive Plan Grants.
 
          (a) Annual Grants. During the Employment Period, Executive shall
     receive an annual grant of awards under the Company's Long-Term Incentive
     Equity Award Plan (the "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 Plan as approved and adopted
     by the Board on the Effective Date is subject to shareholder approval at
     the Company's next annual meeting of the shareholders (expected to be held
     in April 2008). The Annual Awards shall be subject to any conditions set
     forth in the Plan and the granting document(s), including, without
     limitation, shareholder approval as described in Section 4(c) of this
     Agreement.
 
          (b) Initial Grants. On the Effective Date, Executive will be granted
     (i) stock options for shares of Class A common stock of the Company having
     a Black-Scholes present value at the Effective Date of One Million Five
     Hundred Thousand Dollars ($1,500,000) (the "Options"), and (ii) restricted
     stock units with a value of One Million Five Hundred Thousand Dollars
     ($1,500,000) based on the closing market price of the Company's Class A
     shares of common stock on the Effective Date (the "Units" and collectively,
     with the Options, the "Initial Incentive Awards"). The Options will (x) be
     granted with an exercise price equal to the closing market price of the
     Company's Class A shares of common stock on the Effective Date, (y) have a
     term of seven (7) years, and (z) vest over a three (3) year period, with
     one-third of the Options vesting at the end of each year of employment. The
     Executive will be entitled to settle the Units with the Company on the
     third anniversary of the Effective Date, if he remains employed for the
     full term of Employment Period. It is anticipated that the Units will be
     settled in shares of the Company's Class A common stock. The Initial
     Incentive Awards shall be subject to any conditions set forth in the Plan
     and the granting document(s), including, without limitation, shareholder
     approval as described in Sections 4(a) and 4(c) of this Agreement.
 
          (c) Shareholder Approval. In the event that the Company's shareholders
     do not approve the Plan, the Company shall (i) replace
 
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     the Initial Incentive Awards and any previously granted Annual Award with a
     grant to the Executive of stock appreciation rights or contingent
     cash-based performance awards of equivalent value of the Initial Incentive
     Awards and applicable Annual Awards (the "Replacement Awards"), and (ii)
     grant any Annual Awards thereafter in the form of Replacement Awards. The
     form and terms of any Replacement Awards will be determined by the Board or
     a committee thereof. Terms of any Replacement Awards will to the extent
     possible be substantially identical to the Initial Incentive Award or
     Annual Awards being replaced.
 
     5. Taxes. The Executive shall be solely responsible for taxes imposed on
the Executive by reason of any compensation, benefits, or termination payments
provided under this Agreement and all such compensation, benefits, and
termination payments shall be subject to applicable withholding taxes or excise
tax. In the event that the aggregate payments or benefits to be made or afforded
to Executive under this Agreement would be deemed to include an "excess
parachute payment" under Section 280G of the Code or any successor thereof, and
subject to any excise tax imposed under Section 4999 (or any successor thereto)
of the Code, under no circumstances will the Company pay whether in form of
additional compensation or otherwise any portion of such excise tax.
 
     6. Certain Expenses. Subject to review of the Board, in accordance with the
Company's practices and policies as then in effect during the Employment Period
as same are applied to executive officers, the Company shall pay or reimburse
Executive for reasonable and documented travel, entertainment, and other
incidental expenses (including, the cost of business publications and
professional associations), incurred on or in furtherance of the business of the
Company.
 
     7. Certain Continuing Obligations of Executive. Throughout the Employment
Period and thereafter, Executive agrees to keep confidential all trade secrets,
technical information, intellectual property, business and marketing plans,
strategies, customer information, other information concerning the products,
promotions, development, financing, expansion plans, business policies and
practices of the Company, and other data concerning the private affairs of the
Company and its affiliates, made known to or developed by Executive during the
course of his employment hereunder ("Confidential Information"), not to use any
Confidential Information or supply Confidential Information to others other than
in furtherance of the Company's business, and to return to the Company upon
termination of his employment all copies, in whatever form or media, of all
Confidential Information and all other documents relating to the business of the
Company
 
<PAGE>
 
or any of its affiliates which may then be in the possession or under the
control of Executive.
 
     At the request of the Board, whether or not made during the Employment
Period, Executive agrees to execute such confidentiality agreements, assignments
of intellectual property rights, and other documents as hereafter may be
reasonably determined by the Board to be appropriate to carry out the purposes
of this Section.
 
     8. Termination; Termination Payments.
 
          (a) Termination. The Executive may terminate his employment under this
Agreement, in accordance with this Section 8, with Good Reason (as hereinafter
defined), Good Reason on Change of Control (as hereinafter defined), or
voluntarily. The Company may terminate the Executive's employment under this
Agreement, in accordance with this Section 8, for Executive's Disability, for
Cause, or without Cause. Any termination of the Executive under this Agreement
that would trigger an obligation to make any payments to the Executive shall be
considered a "separation from service" within the meaning of Section 409A of the
Internal Revenue Code of 1986, as amended (the "Code").
 
          (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 Units;
and (C) the ability to exercise any then vested Initial Incentive Award and
Annual Awards in accordance with their terms. All of Executive's unvested
Initial Incentive Award and Annual Awards or other grants will be cancelled as
of the effective date of Executive's termination (the "Termination Date"). After
the Termination Date, Executive will not be entitled to receive any other
post-termination payments or severance. Any cash payments due under this Section
8(b) shall be payable in a lump sum within ninety (90) days of the Termination
Date, provided that payment occurs no later than March 15 of the year following
the year in which the Termination Date falls.
 
          (c) Termination Payments - Good Reason. If Executive terminates his
employment for Good Reason, then Executive shall be entitled to receive: a cash
payment in an amount equal to the aggregate of (i) accrued but unpaid Base
Salary; (ii) unused vacation days; (iii) the Target Bonus on a pro rata basis
through the Termination Date; (iv) one and one-half (1.5) times the Base Salary
then in effect; and (v) one (1) times the annual Target Bonus. In the event
Executive's Good Reason termination
 
<PAGE>
 
occurs within the first twelve (12) months of the Employment Period, then fifty
percent (50%) of the Executive's Initial Incentive Award and any Annual Award
will become immediately vested as of the Termination Date, and irrespective of
the terms of any such Initial Incentive Award and Annual Award, the Executive
will have 180 days from the Termination Date to exercise the so vested Initial
Incentive Award and Annual Award. In the event Executive's Good Reason
termination occurs after the first twelve (12) months of the Employment Period,
one hundred percent (100%) of the Executive's Initial Incentive Award and Annual
Awards will become immediately vested as of the Termination Date, and
irrespective of the terms of any such Initial Incentive Award and Annual Awards,
the Executive will have 180 days from the Termination Date to exercise the so
vested Initial Incentive Award and Annual Awards. In addition, other than a
continuation of Company-paid health insurance for one (1) year (to the extent
such health insurance is in effect as of the Termination Date), Executive will
not be entitled to receive any other post-termination payments or severance
following such resignation. Any cash payments due under this Section 8(c) shall
be payable in a lump sum within ninety (90) days of the Termination Date,
provided that payment occurs no later than March 15 of the year following the
year in which the Termination Date falls.
 
          (d) Termination Payments - Cause. If the Company terminates
Executive's employment for Cause, then Executive shall be entitled to receive: a
cash payment in an amount equal to the aggregate of (i) accrued but unpaid Base
Salary; and (ii) unused vacation days. All Annual Awards and Initial Incentive
Awards, whether or not vested, will be forfeited and immediately cancelled
effective on the date notice of the for Cause termination is delivered to
Executive. Executive will not be entitled to receive any other post-termination
payments or severance following such termination. Any cash payments due under
this Section 8(d) shall be payable in a lump sum within ninety (90) days of the
Termination Date, provided that payment occurs no later than March 15 of the
year following the year in which the Termination Date falls.
 
          (e) Termination Payments - Without Cause. If the Company terminates
Executive's employment without Cause, then Executive shall be entitled to
receive: (i) a cash payment in an amount equal to the aggregate of (A) accrued
but unpaid Base Salary; (B) unused vacation days; (C) the Target Bonus on a pro
rata basis through the Termination Date; (D) one and one-half (1.5) times the
Base Salary then in effect; and (E) one (1) times the annual Target Bonus; and
(ii) the ability to exercise any then vested Initial Incentive Award and Annual
Awards in accordance with their terms for up to 180 days after the Termination
Date. In addition, other than a continuation of Company-paid health insurance
for up to one (1) year, Executive will not be entitled to receive any other
post-termination payments or severance following such resignation. Any cash
payments pursuant to
 
<PAGE>
 
Sections 8(e)(i)(A), (B) and (D) due under this Section 8(e) shall be payable in
regular installments in accordance with the normal payroll practices of the
Company then in effect, and any cash payments pursuant to Sections 8(e)(i)(C)
and (E) due under this Section 8(e) shall be payable in accordance with the
normal bonus payment practices of the Company then in effect, provided that all
cash payments made pursuant to this section 8(e) are subject to any required
delay in payment as described in Section 8(m).
 
          (f) Termination Payments - Change of Control. In the event that a
Change of Control (as hereinafter defined) occurs, (i) within the first twelve
(12) months of the Employment Period, then fifty percent (50%) of the
Executive's Initial Incentive Award and Annual Award will become immediately
vested as of the date of the Change of Control irrespective of the terms of any
such Initial Incentive Award and Annual Award; and (ii) after the first twelve
(12) months of the Employment Period, one hundred percent (100%) of the
Executive's Initial Incentive Award and Annual Awards will become immediately
vested as of the Termination Date irrespective of the terms of any such Initial
Incentive Award and Annual Awards. In addition, in the event that (x) Executive
is terminated without Cause on a Change of Control or (y) Executive terminates
his employment for Good Reason on Change of Control, then Executive shall be
entitled to receive the compensation specified under Section 8(c) of this
Agreement, except that the compensation specified under Sections 8(c)(iv) and
(v) shall be two (2) times the Base Salary then in effect, and two (2) times the
annual Target Bonus. Any cash payments due under this Section 8(f) shall be
payable in a lump sum within ninety (90) days of the Termination Date, provided
that payment occurs no later than March 15 of the year following the year in
which the Termination Date falls.
 
          (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 Units; and (ii) the immediate vesting of the next tranche of options
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. All of
Executive's unvested Initial Incentive Award and Annual Awards or other grants
will be cancelled as of the Termination Date. After the Termination Date,
Executive will not be entitled to receive any other post-termination payments or
severance. Any cash payments due under this Section 8(g) shall be payable in a
lump sum within ninety (90) days of the Termination Date, provided that payment
occurs no later than March 15 of the year following the year in which the
Termination Date falls.
 
<PAGE>
 
          (h) Definitions. For purposes of this Agreement:
 
               (i) "Cause" shall mean any of the following: (A) the Executive's
     continuing substantial failure to perform his duties for the Company for
     thirty (30) days (other than as a result of incapacity due to mental or
     physical illness) after a written demand is delivered to the Executive by
     the Company's Board of Directors; (B) the Executive's willful engagement in
     illegal conduct or gross misconduct that is materially and demonstrably
     injurious to the Company; (C) the Executive's conviction of a felony or his
     plea of guilty or nolo contendere to a felony, or (D) the Executive's
     willful and material breach of his confidentiality obligations under local
     law or Tecumseh's code of conduct.
 
               (ii) A "Change of Control" shall occur if at any time:
 
                    (A) Any person or group (as such terms are used in
               connection with Section 13(d) and 14(d) of the Exchange Act)
               hereafter becomes the "beneficial owner" (as defined in Rule
               13(d)(3) and 13(d)(5) under the Exchange Act), directly or
               indirectly, of securities of the Company representing thirty-five
               percent (35%) or more of the combined voting power of the
               Company's then outstanding securities;
 
                    (B) A merger, consolidation, sale of assets, reorganization,
               or proxy contest is consummated and, as a consequence of which,
               members of the Board in office immediately prior to such
               transaction or event constitute less than a majority of the Board
               thereafter;
 
                    (C) A merger, consolidation, or reorganization is
               consummated with any other corporation pursuant to which the
               shareholders of the Company immediately prior to the merger,
               consolidation, or reorganization do not immediately thereafter
               directly or indirectly own more than fifty percent (50%) of the
               combined voting power of the voting securities entitled to vote
               in the election of directors of the merged, consolidated, or
               reorganized entity; or
 
<PAGE>
 
                    (D) members of the Incumbent Board (as hereinafter defined)
               cease for any reason to constitute a majority of the Board of
               Directors of the Company.
 
               (iii) "Disability" means any medically determinable physical or
     mental impairment which can be expected to result in death or can be
     expected to last for a continuous period of not less than 12 months: (A)
     which renders Executive unable to engage in any substantial gainful
     activity; or (B), which enables Executive to receive income replacement
     benefits for a period of not less than three (3) months under an accident
     and health plan covering employees of the Company, provided that this
     definition shall be interpreted in accordance with Code Section
     409A(a)(2)(A)(v) and regulations and other guidance thereunder.
     Notwithstanding (A) and (B) of this Section 8(h)(iii), Executive shall be
     deemed to have a total and permanent disability when determined to be
     totally disabled by the Social Security Administration.
 
               (iv) "Good Reason" shall mean any of the following occurrences
     without the written consent of Executive: (a) the assignment to Executive
     of any duties inconsistent with his duties described in Section 1 of this
     Agreement or any removal of Executive from or any failure to reelect
     Executive to his positions described in Section 1 hereof; provided, that
     the suspension of Executive from the duties of his employment and any
     positions held by him during the pendency of any criminal proceedings
     against Executive as to which a conviction would constitute "Cause" shall
     not be deemed "Good Reason" so long as during the period of such suspension
     the Company continues to pay the Base Salary and provide the additional
     benefits to which Executive is entitled; (b) the Company requiring that the
     Executive relocate his principal office to a location fifty or more miles
     from Tecumseh, Michigan; (c) the failure of the Company to pay Executive
     the Base Salary and provide the additional benefits, including the Target
     Bonus opportunity, Annual Awards, and Initial Incentive Award as and when
     required hereunder; or (d) any other failure of the Company to perform its
     obligations to Executive hereunder if such failure continues uncured for
     thirty (30) days after written notice thereof, specifying the nature of
     such failure and requesting that it be cured, is given by Executive to the
     Company.
 
               (v) "Good Reason on Change of Control" shall mean any of the
     following occurrences following a Change of Control: (a) the failure to
     offer the Executive an equivalent position in the surviving entity; or (b)
     the Incumbent Board ceases to
 
<PAGE>
 
 
     constitute a majority of the Board as described in Section (8)(h)(ii)(D) of
     this Agreement.
 
               (vi) "Incumbent Board" shall mean the individuals who, as of the
     date of this Agreement, constitute the entire Board of Directors of the
     Company and any new director whose election by the Board or nomination for
     election by the shareholders of the Company was approved by a vote of at
     least a majority of the directors then still in office who either were
     directors on the date of this Agreement or whose election or nomination for
     election was previously so approved.
 
          (i) Termination Notice. The Company shall provide the Executive with
thirty (30) days advance written notice of its intention to terminate the
Executive's employment for any reason other than Cause. The Executive must
provide the Company with thirty (30) days advance written notice of his
intention to terminate his employment for any reason other than Good Reason or
Good Reason on Change of Control for which the Executive may give the Company
ten (10) days advance written notice.
 
          (j) Post Termination Cooperation. In the event of termination of the
Executive's employment, for whatever reason (other than death or Disability),
the Executive agrees to cooperate with the Company and to be reasonably
available to the Company for a reasonable period of time thereafter with respect
to matters arising out of the Executive's employment hereunder or any other
relationship with the Company, whether such matters are business-related, legal
or otherwise. The Company shall reimburse the Executive for all expenses
reasonably incurred by the Executive during such period in connection with such
cooperation with the Company.
 
          (k) Board Resignation. Upon termination of the Executive's employment
for any reason, the Executive shall be deemed to have resigned from the Board
and from all other boards of, and other positions with, the Company and its
affiliates.
 
          (l) Release; Full Satisfaction. Notwithstanding any other provision of
this Agreement, no post-termination payments to which Executive becomes entitled
under this Agreement or any agreement or plan referenced herein shall become
payable under this Agreement unless and until the Executive executes a general
release of claims in form and manner reasonably satisfactory to the Company
including, where relevant, a release of any statutory claims, and such release
has become irrevocable; provided, that the Executive shall not be required to
release any indemnification rights. The payments to be provided to the Executive
pursuant to this Section 8 upon termination of the Executive's employment shall
constitute the exclusive
 
<PAGE>
 
payments in the nature of severance or termination pay or salary continuation
which shall be due to the Executive upon a termination of employment and shall
be in lieu of any other such payments under any plan, program, policy or other
arrangement which has heretofore been or shall hereafter be established by any
member of the Company.
 
          (m) Termination Payments - Delay. To the extent (i) any
post-termination payments to which Executive becomes entitled under this
Agreement or any agreement or plan referenced herein constitute "deferred
compensation" subject to Section 409A of the Code and (ii) Executive is deemed
at the time of such termination of employment to be a "specified employee" under
Section 409A of the Code, then such payment will not be made or commence until
the earliest of (x): the expiration of the six (6) month period measured from
the date of Executive's "separation from service" (as such term is defined in
Treasury Regulations under Section 409A of the Code and any other guidance
issued under Section 409A of the Code) with the Company; (y) the date Executive
has a Disability; and (z) the date of Executive's death following such
separation from service. Upon the expiration of the applicable deferral period
as described in this Section 8(m), any payments which would have otherwise been
made during that period (whether in a single sum or in installments) in the
absence of this provision (together with reasonable accrued interest) will be
paid to Executive or Executive's beneficiary in one lump sum.
 
     9. Executive's Representation. The Executive represents to the Company that
the Executive's execution and performance of this Agreement does not violate any
agreement or obligation (whether or not written) that the Executive has with or
to any person or entity including, but not limited to, any prior employer.
 
     10. Integration; Amendment. This Agreement contains the entire agreement of
the parties relating to the subject matter hereof and thereof, and supersedes
and replaces in their entirety any prior agreements or understandings concerning
such subject matter, including without limitation the First Agreement. This
Agreement may not be waived, changed, modified, extended, or discharged orally,
but only by agreement in writing.
 
     11. Noncompetition and Nonsolicitation. Notwithstanding anything to the
contrary contained elsewhere in this Agreement, in view of Executive's
importance to the success of the Company, Executive and the Company agree that
the Company would likely suffer significant harm from Executive's competing with
the Company during Employment Period and for some period of time thereafter.
Accordingly, Executive agrees that Executive shall not engage in competitive
activities while employed by the Company and, in the event Executive's
employment is terminated voluntarily by Executive or without Cause by the
Company, during the
 
<PAGE>
 
Restricted Period (as hereinafter defined). Executive shall be deemed to engage
in competitive activities if he shall, without the prior written consent of the
Company, (i) render services directly or indirectly, as an employee, officer,
director, consultant, advisor, partner, or otherwise, for any organization or
enterprise which competes directly or indirectly with the business of Company or
any of its affiliates in providing those products and services to original
equipment manufacturers or aftermarket distributors, or (ii) directly or
indirectly acquires any financial or beneficial interest in (except as provided
in the next sentence) any organization which conducts or is otherwise engaged in
a business or enterprise which competes directly or indirectly with the business
of the Company or any of its affiliates in providing those products and services
to original equipment manufacturers or aftermarket distributors. Notwithstanding
the preceding sentence, Executive shall not be prohibited from owning less than
one (1%) percent of any publicly traded corporation whether or not such
corporation is in competition with the Company. For purposes of this Agreement,
the term "Restricted Period" shall equal the longer of (y) twelve (12) months,
or (z) the period during which Executive receives salary and benefits under
Sections 8(a)-(f), in each case commencing as of the Termination Date. Further,
during the Restricted Period, the Executive shall not, and shall not cause any
other person to, (i) interfere with or harm, or attempt to interfere with or
harm, the relationship of the Company or its affiliates with any Restricted
Person (as hereinafter defined), or (ii) endeavor to entice or solicit any
Restricted Person away from the Company or its affiliates. For the purposes of
this Agreement, "Restricted Person" shall mean any person who at any time during
the Employment Period was an employee or customer of the Company or its
affiliates, or otherwise had a material business relationship with the Company
or its affiliates.
 
     12. Non-disparagement. During the Restricted Period, (a) the Executive
shall not make or publish any disparaging statements (whether written or oral)
regarding the Company or its affiliates, directors, officers or employees, and
(b) the Company shall not make or publish any disparaging statements (whether
written or oral) regarding the Executive. Notwithstanding anything herein to the
contrary, during the Restricted Period, the Company may respond to inquiries
from Executive's prospective employers who contact the Company, and may make any
public announcements or filings that may be necessary for a public company.
 
     13. Notices. For the purposes of this Agreement, notices and all other
communications provided for shall be in writing and shall be deemed to have been
given when delivered or mailed by United States registered or certified mail,
return receipt requested, postage prepaid, or national overnight courier with
proof of delivery addressed as follows:
 
<PAGE>
 
     If to the Executive: Mr. Edwin L. Buker
                          1195 Greystone Crest
                          Birmingham, Alabama  35242
 
     With copy to:        Cattel, Tuyn & Rudzewicz PLLC
                          33 Bloomfield Hills Parkway,
                          Suite 120 Bloomfield Hills,
                          Michigan 48304
                          Attn: Thomas A. Cattel, Esq.
 
<PAGE>
 
     If to the Company: Tecumseh Products Company
                        100 East Patterson Street
                        Tecumseh, Michigan 49286
                        Attn: General Counsel
 
     With copy to:      Miller, Canfield, Paddock & Stone,
                        P.L.C.
                        840 West Long Lake Road, Suite 200
                        Troy, Michigan 48098
                        Attn: David D. Joswick, Esq.
 
or to such other address as either party may have furnished to the other in
writing. Notices of change of address shall be effective only upon receipt.
 
     14. Applicable Law. This Agreement 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.
 
     15. Venue and Jurisdiction. The parties hereby consent to the jurisdiction
of the state and federal courts located in the Eastern District of Michigan,
which shall be the exclusive venue for any legal action or proceeding filed by
either party with respect to this Agreement. The parties hereby further agree
and irrevocably waive any objection, including any objection to the laying of
venue or based on the grounds of forum non conveniens, that either of them may
now or hereafter have to the bringing of any such action or proceedings in such
jurisdictions.
 
     16. Conflict. In the event of a conflict between the terms of this
Agreement and the Plan or the Executive Performance Bonus Plan, this Agreement
shall control.
 
     17. Headings. The headings contained herein are solely for the purposes of
reference, are not part of this Agreement and shall not in any way affect the
meaning or interpretation of this Agreement.
 
     18. Counterparts. This Agreement 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.
 
                      [THIS SPACE INTENTIONALLY LEFT BLANK]
 
<PAGE>
 
     IN WITNESS WHEREOF, the parties have executed this Agreement as of the date
first above written.
 
                                        TECUMSEH PRODUCTS COMPANY
 
 
                                        ----------------------------------------
                                        By: David M. Risley
                                        Its: Chairman
 
 
                                        EXECUTIVE
 
 
                                        ----------------------------------------
                                        Edwin L. Buker
</TEXT>
</DOCUMENT>








<DOCUMENT>
<TYPE>EX-10.1
<SEQUENCE>2
<FILENAME>k47026exv10w1.txt
<DESCRIPTION>EX-10.1
<TEXT>
<PAGE>

                                                                    Exhibit 10.1

                     [Tecumseh Products Company Letterhead]

                               November 20, 2008

Edwin L. Buker
President & CEO
Tecumseh Products Company
1136 Oak Valley Drive
Ann Arbor, MI 48108

     Re: Amendments to Employment Agreement and 2008 Retention Arrangements

Dear Mr. Buker:

     You agreed to become the Company's CEO based on your understanding that in
the event Todd and Kent Herrick and their affiliates reasserted control of the
Company you would be entitled to resign your position and receive enhanced
severance benefits under the terms of your Employment Agreement dated August 1,
2007, as amended by an agreement dated March 4, 2008 (the "Employment
Agreement"). The Company understands that it is your view that the current
effort by the Herricks, acting through Herrick Foundation, to remove two of the
Company's directors and replace them with the Herricks' nominees at the
shareholders' meeting to be held November 21, 2008 (the "Contested Election")
would, if such effort is successful, constitute such a reassertion of control by
the Herricks, possibly leading to your terminating your employment for Good
Reason on Change of Control, with the meaning and effect provided in your
Employment Agreement.

     The Company has determined your resignation at this point in the Company's
turnaround and development efforts based on the Herricks' success in the
Contested Election could have an adverse effect on the Company and its
prospects. Moreover, any controversy over the interpretation of your Employment
Agreement would be distracting and not be in the bests interests of the Company.
In order to avoid those results, the Company is prepared to make certain
payments and provide other benefits to you contingent on your remaining with the
Company, notwithstanding the results of the Contested Election. In exchange, you
would agree that success by the Herricks in the Contested Election, absent a
subsequent termination by you for Good Reason or by the Company without Cause,
would not provide a basis for you to terminate your employment and collect the
enhanced severance benefits provided in Section 8(f) of your Employment
Agreement, but you would retain all of the rights and benefits provided in your
Employment Agreement arising from a resignation by you for Good Reason, or a
termination of your employment by the Company without Cause, whether before or
after a Change of Control (the definition of which would be changed to
specifically include success by the Herricks in the Contested Election).

<PAGE>

     Based on actions taken by the Company's Compensation Committee and Board,
and the Company's discussions and negotiations with you, this Letter Agreement
will memorialize the agreements reached between you and the Company concerning
certain amendments to your Employment Agreement, and to set forth certain
payments and benefits to you to encourage you to remain with, and focused on,
the Company's business.

     1.   AMENDMENTS TO EMPLOYMENT AGREEMENT

          (a) Section 8(h)(v)(b) of the Employment Agreement is hereby deleted
          in its entirety and replaced with the following:

               "(b) Executive terminates his employment for Good Reason."

          (b) Section 8(h)(vi) of the Employment Agreement is hereby deleted in
          its entirety and replaced with the following:

               "(b) "Incumbent Board" shall mean the individuals who, as of
          November 1, 2008, constituted the entire Board of Directors of the
          Company, and any new director whose appointment by the Board of
          Directors or nomination for election by the shareholders of the
          Company is approved by the vote of at least the majority of directors
          then still in office who were either directors on November 1, 2008 or
          whose appointment or nomination for election was previously so
          approved, but excluding from any such determination (a) any individual
          elected as a director of the Company as a result of an actual or
          threatened solicitation of proxies or consents or otherwise by or on
          behalf of any person other than the Board of Directors ("Election
          Contest"), including by reason of any agreement intended to avoid or
          settle any Election Contest, (b) any individual nominated, appointed
          or otherwise selected (whether in connection with the Election Contest
          or any time prior to the Election Contest) by the person or entity who
          solicited proxies or consents in connection with the Election Contest
          or such person's or entity's affiliates, and (c) those individuals
          appointed to the Board of Directors pursuant to Section 1(b)(ii) and
          1(c)(ii) of that certain Settlement and Release Agreement dated as of
          April 2, 2007."

     2.   RETENTION PAYMENTS: CASH AND PHANTOM SHARES

          (a) The Company shall pay you $1.5 million in cash, payable in
     installments as follows: $500,000 shall vest and be payable on the six
     month anniversary of the date of this Letter Agreement; $500,000 shall vest
     and be payable on the twelfth month anniversary of the date of this Letter
     Agreement; and $500,000 shall vest and be payable on the eighteenth month
     anniversary of the date of this Letter Agreement; provided, however, in
     each instance on the applicable payment date your employment by the Company
     has not terminated for any reason. All payments otherwise due according to
     the foregoing after your employment has been terminated for any reason
     shall lapse and be forfeited. In addition, it is understood and agreed that
     the amount of any cash payments due and paid to you in accordance with the
     foregoing shall be set off against

<PAGE>

     the cash payments, if any, due you under Section 8 of your Employment
     Agreement in respect of any termination of your employment by the Company
     during the Employment Period (as defined in your Employment Agreement).

          (b) You will receive a grant of $1.5 million of phantom shares
     pursuant to the Company's Long Term Incentive Plan ("LTIP"), with the
     actual number of shares being determined on the basis of the closing price
     of the Company's Class A shares on the date of this Letter Agreement (the
     "Phantom Shares"). This grant is in addition to any annual grant under the
     LTIP to which you might be entitled. The Phantom Shares shall be issued in
     accordance with the LTIP, and shall vest and be payable in installments as
     follows: one-third shall vest and be payable on the nine month anniversary
     of the date of this Letter Agreement; one-third shall vest and be payable
     on the fifteenth month anniversary of the date of this Letter Agreement;
     and one-third shall vest and be payable on the twenty-first month
     anniversary of the date of this Letter Agreement.

          Vesting and payment for the Phantom Shares will, in each instance be
     contingent on your remaining in the employ of the Company on each
     applicable vesting and payment date, except that (i) if you are terminated
     by the Company without Cause (as defined in your Employment Agreement) or
     resign from the Company with Good Reason (as defined in your Employment
     Agreement), all Phantom Shares not then vested shall immediately vest and
     be payable as of the effective date of your termination. If your employment
     by the Company is terminated for any other reason, all Phantom Shares then
     not vested shall be canceled and forfeited.

     3.   EFFECT OF AGREEMENT

     Except as modified and supplemented herein, your Employment Agreement
constitutes the entire agreement between Company and you with respect to the
subject matter hereof. No change to this Letter Agreement shall be effective
unless it is in writing and signed by both you and a duly authorized officer of
the Company.

     4. SUCCESSORS AND ASSIGNS

     This Letter Agreement shall inure to the benefit of and be binding upon the
respective heirs, executors, administrators, representatives, successors and
assigns of the parties hereto; provided, however, that you may not assign your
rights or obligations hereunder without the prior written consent of the
Company. The Company or its successors may assign its rights and obligations
hereunder to any affiliate of the Company or its successor, as the case may be,
provided, that the Company or its successor, as the case may be, remains jointly
and severally liable for the performance by any such affiliate of its
obligations hereunder.

     5. SURVIVAL

     This Letter Agreement shall survive the termination of your employment with
the Company or any successor thereof.

<PAGE>

     6.   GOVERNING LAW; VENUE AND JURISDICTION; ENFORCEMENT

          (a) This Letter Agreement shall be governed by and construed in
     accordance with the internal laws of the State of Michigan.

          (b) The parties hereby consent to the jurisdiction of the state and
     federal courts located in or serving the County of Washtenaw, Michigan,
     which shall be the exclusive venue for any legal action or proceeding filed
     by either party with respect to this agreement. The parties hereby further
     agree and irrevocably waive any objection, including any objection to the
     laying of venue or based on the grounds of forum non conveniens that either
     of them may now or hereafter have to the bringing of any such action or
     proceedings in such jurisdictions.

          (c) In connection with any proceeding brought by you or your heirs or
     other successors or assigns, to enforce any provision of this Letter
     Agreement or your Employment Agreement, whether brought by you as plaintiff
     or as a counter- or cross-claim by you, the Company shall advance to you
     all cash amounts required to pay your costs, expenses and fees (including
     actual attorneys' fees) incurred by you in connection with such proceeding.

     This Letter Agreement may be executed in one or more counterparts, each of
which shall be deemed to be an original but all of which together will
constitute one and the same instrument.

     Please indicate your acceptance of these terms by countersigning a copy of
this Letter Agreement and returning it to the undersigned at your earliest
convenience.

                                        Very truly yours,

                                        TECUMSEH PRODUCTS COMPANY


                                        By: /S/ James S. Nicholson
                                            ------------------------------------
                                            Its: Vice President, Treasurer and
                                                 Chief Financial Officer
                                                 -------------------------------

Accepted and agreed:


/s/ Edwin L. Buker
-------------------------------------
Edwin L. Buker

Dated: November 20, 2008
</TEXT>
</DOCUMENT>

<DOCUMENT>
<TYPE>EX-10.4
<SEQUENCE>5
<FILENAME>k24711exv10w4.txt
<DESCRIPTION>FIRST AMENDMENT DATED AS OF MARCH 4, 2008 TO EMPLOYMENT AGREEMENT
<TEXT>
<PAGE>

                                                                    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 EDWIN L. BUKER ("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

<PAGE>

          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

<PAGE>

               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 Lyons, Benenson & 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.

<PAGE>

     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.

<PAGE>

     IN WITNESS WHEREOF, the parties have executed this Amendment as of the date
first above written.

                                        TECUMSEH PRODUCTS COMPANY

                                        /s/ James S. Nicholson
                                        ----------------------------------------
                                        By: James S. Nicholson
                                        Its: Vice President, Treasurer and Chief
                                             Financial Officer


                                        EXECUTIVE


                                        /s/ Edwin L. Buker
                                        ----------------------------------------
                                        Edwin L. Buker
</TEXT>
</DOCUMENT>