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                                                                   EXHIBIT 10.25

                            TECUMSEH PRODUCTS COMPANY

                   OUTSIDE DIRECTORS' DEFERRED STOCK UNIT PLAN

     Tecumseh Products Company (the "Company") hereby adopts this Outside
Directors' Deferred Stock Unit Plan to provide an incentive for outside
Directors to join and remain in service on the Company's Board of Directors so
that the Company may benefit from their counsel and dedication, while rewarding
their commitment to the Company with deferred income based on the stock market
performance of the Company's Class A Common Stock. Under this Plan, each outside
director will receive one-half of his or her annual retainer for serving on the
Board of Directors (and, if applicable, for serving as Lead Director) in cash
and one-half in deferred stock units.

1.   DEFINITIONS

     As used in this Plan, the following terms have the following respective
meanings:

     "1934 Act" means the Securities Exchange Act of 1934, as amended.

     "Account" is defined in Section 4.1.

     "Award" means an allocation of Stock Units to the Account of an Eligible
Director. References in this Plan to the amount of an award may be either to a
dollar amount or to the number of Stock Units.

     "Board" means the Board of Directors of the Company.

     "Cash Retainer" means:

          (a) for each Plan Year and each person who is an Eligible Director on
     the first day of that Plan Year, the annual amount payable in cash to that
     Eligible Director for that Plan Year for serving as a Director of the
     Company and, if applicable, for serving as the Corporation's Lead Director,
     all determined as of the first day of the Plan Year under the Company's
     policies as in effect on that day; and

          (b) for the Plan Year in which a person first becomes an Eligible
     Director (unless he or she becomes an Eligible Director on the first day of
     the Plan Year), the amount payable in cash to that Eligible Director for
     that Plan Year for serving as a Director of the Company and, if applicable,
     for serving as the Corporation's Lead Director, all determined as of the
     day the person becomes an Eligible Director under the Company's policies as
     in effect on that day.

     EXAMPLE: If a person first becomes an Eligible Director on April 1 of a
     Plan Year, and if the Company's policies as in effect on that day provide

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     for a $40,000 annual cash retainer for outside directors, that Eligible
     Director's Cash Retainer would be $30,000 for that Plan Year.

The Cash Retainer does not include amounts payable for serving on or as chairman
of committees of the Board or for attendance at meetings of the Board or
committees or any amounts payable for reimbursement of expenses.

     "Code" means the Internal Revenue Code of 1986, as amended.

     "Committee" means the Compensation Committee of the Board or such other
committee as the Board may subsequently appoint to administer this Plan.

     "Company Change in Control," solely for the purposes of this Plan, means
(and is limited to) any change that qualifies as a change of control event
pursuant to Section 409A of the Code, Treasury Regulation Section
1.409A-3(i)(5), and all subsequent relevant authority, including one or more of
the following events:

          (a) a change in the ownership of the Company in compliance with
     Treasury Regulation Section 1.409A-3(i)(5)(v) pursuant to which any person
     or group acquires ownership of stock of the corporation that, together with
     stock held by such person or group, constitutes more than 50% of the total
     fair market value or total voting power of the stock of such corporation;

          (b) a change in the effective control of the Company pursuant to
     Proposed Treasury Regulation Section 1.409A-3(g)(5)(vi), pursuant to which
     either:

               (1) any one person, or more than one person acting as a group,
          acquires (or has acquired during the twelve-month period ending on the
          date of the most recent acquisition by such person or persons)
          ownership (including acquisition of beneficial ownership within the
          meaning of Rule 13d-3 promulgated under the 1934 Act) of stock of the
          Company possessing 30% or more of the total voting power of the stock
          of such corporation; or

               (2) a majority of members of the Board is replaced during any
          twelve-month period by directors whose appointment or election is not
          endorsed by a majority of the members of the Board before the date of
          the appointment or election; or

          (c) a change in the ownership of a substantial portion of the
     Company's assets pursuant to Treasury Regulation Section
     1.409A-3(i)(5)(vii) pursuant to which any one person or group acquires (or
     has acquired during the twelve-month period ending on the date of the most
     recent acquisition by such person or persons) assets from the Company that
     have a total gross fair market value (as defined in 1.409A-3(i)(5)(vii))
     equal to or more than 40% of the total gross fair market value of all of
     the


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     assets of the Company immediately prior to such acquisition or
     acquisitions.

For purposes of this definition, the following terms have the following
meanings:

          (i) "person" means a person as defined in Section 3(a)(9) of the 1934
     Act.

          (ii) "beneficial ownership" is to be determined in accordance with
     Rule 13d-3 promulgated under the 1934 Act or any successor regulation; and

          (iii) "group" means a group as described in Rule 13d-5 promulgated
     under the 1934 Act or any successor regulation provided such definition
     satisfies the meaning of group in Treas. Reg. Sections 1.409A-3(i)(v)(B),
     1.409A-3(i)(5)(vi)(D), or 1.409A-3(i)(5)(vii)(C), as applicable. The
     formation of a group under these provisions will have the effect described
     in paragraph (b) of Rule 13d-5 or any successor regulation.

     "Determination Date" means, for each Eligible Director, the date on which
he or she ceases to be a Director of the Company due to resignation, retirement,
death, Disability, or other reason, but only if the event is also a "separation
from service" with the Company, as determined in accordance with Code Section
409A. If the event is not a "separation from service," then the Determination
Date will be the earliest date following the event when a "separation from
service" occurs.

     "Disability" (or to be "Disabled") means a medically determinable physical
or mental impairment that can be expected to result in death or to last for a
continuous period of not less than twelve months and that causes an Eligible
Director to be unable to engage in any substantial gainful activity by reason of
the impairment. An Eligible Director will also be deemed to have a Disability
when determined to be totally disabled by the Social Security Administration.

     "Eligible Director" means, for any relevant time, each individual who at
that time is a member of the Board but is not also an officer or employee of the
Company or of any subsidiary of the Company.

     "Market Price" means, for any given date:

          (a) if the Shares are then listed for trading on one or more national
     securities exchanges (including the Nasdaq Stock Market), the average of
     the high and low sale prices for a Share on the principal exchange on the
     date in question (or, if no Shares traded on the principal exchange on that
     date, the next preceding date on which trading occurred);


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          (b) if (a) is inapplicable but bid and asked prices for Shares are
     quoted through NASDAQ, the average of the highest bid and lowest asked
     prices so quoted for a Share on the date in question (or, if no prices for
     Shares were quoted on that date, the next preceding date on which they were
     quoted);

          (c) if (a) and (b) are inapplicable but bid and asked prices for
     Shares are otherwise quoted by one or more broker-dealers known to the
     Company to be making a market in the Shares, the average of the highest bid
     and lowest asked prices so quoted on the date in question (or, if no prices
     were quoted on that date, the next preceding date on which they were
     quoted); and

          (d) if all of the foregoing are inapplicable, the fair market value of
     a Share on the date in question as determined in good faith by the
     Committee;

provided that Market Price is determined in accordance with Treasury Regulation
Section 1.409A-1(b)(5)(iv).

     "NASDAQ" means the National Association of Securities Dealers, Inc.
Automated Quotation System.

     "Plan" means this Outside Directors' Deferred Stock Unit Plan.

     "Plan Year" means the calendar year.

     "Reason" is defined in Section 6.2.

     "Share(s)" means Class A Common Stock of the Company.

     "Stock Unit" means an allocation credited to the Account of an Eligible
Director and maintained in such Account together with any prior or subsequent
allocations made on behalf of that Director. An allocation of Stock Units
confers only those rights specified in this Plan. Directors who receive
allocations of Stock Units will not (as a consequence of those allocations) be
treated as shareholders under the Articles of Incorporation or Bylaws of the
Company or under applicable law.

2.   ADMINISTRATION

     This Plan is to be administered by the Committee. To the extent consistent
with the terms of this Plan, the Committee has the power to interpret any Plan
provision, to prescribe, amend, and rescind rules and regulations relating to
this Plan, and to make all other determinations that it deems necessary or
advisable to administer this Plan. The Committee may appoint such agents to
assist in administration of this Plan, other than Eligible Directors, as the
Committee deems appropriate. The Committee's interpretation of this Plan and any
action it takes


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with respect to allocations of Stock Units pursuant thereto is final and binding
on all affected parties.

3.   AWARDS

     3.1 In addition to his or her Cash Retainer, each person who is an Eligible
Director on the first day of each Plan Year will receive an Award for that Plan
Year. The dollar amount of the Award will equal 100% of that Eligible Director's
Cash Retainer for that Plan Year.

     3.2 In addition to his or her Cash Retainer, each person who first becomes
an Eligible Director on a day other than the first day of a Plan Year will
receive an Award for that Plan Year. The dollar amount of the Award will equal
100% of that Eligible Director's Cash Retainer for that Plan Year.

     3.3 Subject to Section 6.2, each Award will be fully vested when made.
Subject to Section 6.2, if an Eligible Director dies, becomes Disabled, retires,
or otherwise terminates service as a director during a Plan Year, he or she will
nevertheless be entitled to his or her entire Award for that Plan Year.

4.   ACCOUNTS

     4.1 For each Eligible Director, the Company will establish and maintain a
bookkeeping account ("Account") in which all Stock Units allocable to the
Eligible Director due to his or her participation in this Plan will be credited.

     4.2 Effective as of the first day of each Plan Year, there will be
allocated to each Eligible Director's Account a number (to four decimal places)
of Stock Units that is equal to:

          (a) the dollar amount of the Eligible Director's Award for that Plan
     Year; divided by

          (b) the Market Price on the last trading day before the allocation
     date.

EXAMPLE: If an Eligible Director is due to receive $40,000 as his or her annual
Award pursuant to this Plan, and if the Market Price per Share is $21 on the
valuation date, then he or she will receive an allocation of Stock Units
determined by the formula $40,000 / $21, or 1,904.7619 Stock Units.

     4.3 Effective as of the day (unless it is the first day of a Plan Year) on
which a person first becomes an Eligible Director, there will be allocated to
that Eligible Director's Account a number (to four decimal places) of Stock
Units that is equal to:

          (a) the dollar amount of the Eligible Director's Award for that Plan
     Year; divided by

          (b) the higher of--


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               (1) the Market Price on the last trading day before the
          allocation date, or

               (2) the Market Price on the last trading day of the preceding
          Plan Year.

EXAMPLE: If a person first becomes an Eligible Director on October 1 of a Plan
Year and is due to receive $10,000 as his or her annual Award pursuant to this
Plan for that Plan Year, and if the Market Price per Share was $21 on the last
trading day of the preceding Plan Year and $32 on the last trading day before
October 1, then he or she will receive an allocation of Stock Units determined
by the formula $10,000 / $32, or 312.5 Stock Units.

     4.4 On the payment date for any cash dividend or other cash distribution
declared on the Shares, there will be allocated to each Eligible Director's
Account that number (to four decimal places) of Stock Units that is equal to:

          (a) the total number of Stock Units that on the related record date
     were in the Eligible Director's Account; multiplied by

          (b) the dollar amount per Share of the cash dividend or other
     distribution; divided by

          (c) the Market Price on the dividend or distribution payment date.

5.   NO EFFECT ON DIRECTOR'S ELECTION OR TERM OF OFFICE

     Nothing contained in this Plan entitles an Eligible Director to serve
beyond the term for which he or she was elected to the Board. Nothing in this
Plan is to be construed to restrict the shareholders' right to elect any person
a Director of the Company in accordance with the Articles of Incorporation and
Bylaws.

6.   PAYMENT OF AWARDS

     6.1 Subject to the provisions of Sections 6.2 and 6.3, within 30 days after
the first to occur of (1) an Eligible Director's Determination Date, or (2) a
Company Change of Control, the Company will pay to the Director an amount in
cash equal to:

          (a) the number of Stock Units then credited to his or her Account;
     multiplied by

          (b) the Market Price per Share on the Determination Date or the date
     the Company Change of Control occurred, as the case may be.


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     6.2 An Eligible Director's Account will be forfeited if his or her service
on the Board is terminated, voluntarily or otherwise, for any Reason denominated
below (which shall be determined by the Committee). "Reason," for the sole
purpose of determining whether an Eligible Director's Awards are to be
forfeited, will be deemed to exist where:

          (a) the Eligible Director breaches any material written rules,
     regulations, or policies of the Board, now existing or enacted in the
     future, that are uniformly applied to all Eligible Directors or that are
     promulgated for general application to Directors of the Company;

          (b) the Eligible Director willfully and repeatedly fails to
     substantially perform the duties of his or her tenure (other than any such
     failure resulting from incapacity due to physical or mental illness) after
     a written demand for substantial performance is delivered to him or her by
     the Chairman of the Board, which demand specifically identifies the manner
     in which the Chairman of the Board believes that the Eligible Director has
     not substantially performed his or her duties;

          (c) the Eligible Director is convicted of a felony under state or
     federal law, or commits a crime involving moral turpitude; or

          (d) the Eligible Director embezzles or misappropriates any property
     belonging to the Company such that he may be subject to criminal
     prosecution, or the Eligible Director intentionally and materially injures
     the Company, its personnel, or its property.

     6.3 If an Eligible Director's Determination Date occurs due to death, or if
he or she dies before payment pursuant to Section 6.1, then the amount payable
shall be paid to the beneficiary or beneficiaries designated in the Eligible
Director's written beneficiary designation filed with the Committee, or if no
valid beneficiary designation has been filed, the legally appointed personal
representative of the Eligible Director's estate. If no such representative is
appointed by the time payment is due, then the Company will hold the payment
without interest until appointment occurs or proper claim for the payment
otherwise is made of the Company by the person or persons entitled to it. If the
Company is notified that an Eligible Director has been adjudicated mentally
incompetent as of the time any amount is payable under this Plan to the Eligible
Director, or if it otherwise is demonstrated to the satisfaction of the
Committee that such mental incapacity then exists by a person authorized by a
durable power of attorney or similar document to attend to the Eligible
Director's financial affairs, then any cash so payable will be delivered to the
Eligible Director's legally appointed guardian or conservator or, if none has
been appointed, the holder of the power of attorney or similar document.


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7.   ADJUSTMENTS

     In the event of any non-cash dividend or other distribution, or any stock
split, reverse stock split, recapitalization, reorganization, split-up,
spin-off, merger, consolidation, share exchange, or other like change in the
capital or corporate structure of the Company affecting the Shares, there will
be made such adjustment or adjustments (if any) in the number of Stock Units
credited to the Accounts of Eligible Directors as the Committee determines to be
appropriate in light of such event in order to continue to make available the
benefits intended by this Plan, but no adjustment will be required by reason of
any sales of Shares or other Company securities by the Company at any price,
whether below, or at or above Market Price, and whether by or pursuant to
warrant, option, right, conversion right or privilege, or otherwise.

8.   MISCELLANEOUS MATTERS

     8.1 Accounts are not intended to be and will not be trust accounts for the
benefit of any Eligible Director or other person, nor will the establishment and
maintenance of an Account afford any Eligible Director or other person any right
or interest in any asset the Company may determine to earmark for future payment
of benefits under this Plan. Rather, benefits payable under this Plan are
intended to be unfunded for tax purposes, and the sole right of an Eligible
Director or beneficiary or other successor in interest of an Eligible Director
with respect to his or her Account shall be the right as an unsecured general
creditor of the Company to claim any cash benefit to which the Eligible Director
becomes entitled after his or her Determination Date or a Company Change of
Control pursuant to the terms and conditions of this Plan.

     8.2 An Eligible Director's right and interest in his or her Account are not
subject in any manner to anticipation, alienation, sale, assignment, pledge,
encumbrance, attachment, garnishment for the benefit of creditors of the
Eligible Director, or other transfer whatsoever, except that such right and
interest may be transferred by:

          (a) will or the laws of descent and distribution; or

          (b) a domestic relations order if the Committee, in its discretion,
     establishes procedures permitting the Company to honor such an order.

     8.3 Nothing in this Plan obligates any Eligible Director to continue as a
director of the Company or the Company or to accept any nomination for a future
term as director, or requires the Company to nominate or cause the nomination of
any Eligible Director for a future term as a director.

     8.4 Each Eligible Director will remain responsible for all applicable taxes
associated with Awards under this Plan.


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     8.5 This Plan is to be governed by and construed, enforced, and
administered in accordance with the laws of the State of Michigan excluding any
such laws that direct an application of the laws of any other jurisdiction. At
all times, this Plan will also be interpreted and administered to maintain
intended income tax deferral in accordance with Code Section 409A and
regulations and other guidance issued under Code Section 409A. The Company and
the Committee will be subject to suit regarding this Plan only in the courts of
the State of Michigan, and the Company will fully indemnify and defend the Board
and the Committee with respect to any actions relating to this Plan taken in
good faith by either of those bodies or their members.

     8.6 This Plan was adopted by the Board on December 17, 2007 and takes
effect as of January 1, 2008.

     8.7 The Board may at any time and from time to time amend, modify, suspend,
or terminate this Plan, except that none of those actions by the Board can
adversely affect the rights or benefits of an Eligible Director without the
Eligible Director's consent.


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