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                                                                    EXHIBIT 10.1

                          THE TECUMSEH PRODUCTS COMPANY
                             KEY EMPLOYEE BONUS PLAN

I.   PLAN OBJECTIVES

This Key Employee Bonus Plan (the "Plan") applies to certain management
employees of Tecumseh Products Company (the "Company") and its subsidiaries and
related entities to the extent any of those entities constitute Participating
Employers as provided herein. The overall purpose of the Plan is to motivate and
reward certain management employees for achievement of identified corporate and
individual goals.

II.  GENERAL PROVISIONS

1.   The Plan covers key management employees that are selected and approved for
     participation by the Company's Board of Directors, in its discretion and
     for a particular year, and identified on the attached Schedule A, as may be
     amended from time to time in accordance with this Plan ("Key Employees");
     provided, that the president of the Company (the "President"), in his
     discretion and for a particular year, may, with the approval of the Board
     of Directors of the Company, select and add Key Employees to Schedule A
     from time to time. Except as specifically provided herein, at no time,
     subsequent to the execution of an Individual Performance Incentive Plan as
     provided in Section III, Paragraph 4 of this Plan, can a Key Employee's
     prior selection and approval for participation in this Plan for a
     particular year be changed in any way without the consent of the Key
     Employee.

2.   This Plan is not an amendment or restatement of any other plan or
     arrangement; however, a Key Employee's participation in this Plan will
     preclude any awards in the Tecumseh Products Company Management Incentive
     Plan, Key Incentive Plan or Key Employee Performance Incentive Plan that
     might otherwise be awarded to him in those plans for the same time period
     in which a Key Employee has been granted a Potential Bonus (as defined in
     Section III) from this Plan, regardless of whether the Potential Bonus is
     actually earned and distributed to the Key Employee.

3.   The employer providing any distribution resulting from a Potential Bonus
     shall withhold all Federal, state, local, or other taxes, required pursuant
     to any law or regulation or ruling, from any amount which is ultimately
     payable to a Key Employee under this Plan. Neither the Company nor any
     Participating Employers will be responsible for any Key Employee's personal
     income or other taxes resulting from any awards made under the Plan.

4.   The death or disability of a Key Employee shall not cause an automatic
     forfeiture of any Potential Bonus under this Plan.

5.   The Key Employee will forfeit the entire unpaid portion of a Potential
     Bonus under the Plan if he resigns or announces his intent to resign prior
     to the Potential Bonus becoming earned and distributed. Any Potential Bonus
     that is forfeited shall not be allocated to other Key Employees
     participating in the Plan. The forfeiture provisions of this Section II,
     Paragraph 5 shall also apply in the event that the employment of a Key
     Employee terminates for any of the following reasons:

     a.   The willful and continued failure of the Key Employee to perform
          substantially his duties owed to his employer or the Company after a
          written demand for substantial performance is delivered to the

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          Key Employee, specifically identifying the nature of the unacceptable
          performance, provided that the situation remains uncorrected for 30
          days; or

     b.   The Key Employee's conviction of a felony.

     If the employment of a Key Employee terminates due to circumstances not
     specifically provided above in this Section II, Paragraph 5 (e.g., death or
     disability), the President shall have sole discretion (subject to final
     approval as provided in Section III) to deem a Potential Bonus previously
     granted to a Key Employee to be earned and payable as if he achieved some
     or all of the Individual Performance Incentive Plan, as provided herein.
     The President's discretion in making such determination shall be based
     primarily on whether the Key Employee's performance was consistent with the
     achievement of the applicable goal based on the progress at the time of
     termination. If the Key Employee whose employment terminates due to
     circumstances consistent with the initial sentence to this flush Paragraph
     5 of this Section II (e.g., death or disability) is an Executive Officer,
     any discretionary decisions to be made by the President under this flush
     Paragraph shall be made by the Committee (which shall consider the
     recommendations of the President).

6.   The validity, interpretation, construction, and performance of this Plan
     shall be governed by the laws of the State of Michigan without reference to
     conflicts of laws principles.

7.   A change in control of the Company or any of its subsidiaries or related
     entities shall have no affect on the Plan.

8.   The invalidity or unenforceability of any provision of this Plan shall not
     affect the validity or enforceability of any other provision.

9.   The headings of this Plan are not part of its provisions and shall have no
     force or effect.

10.  Any references in this Plan to the masculine or feminine pronouns shall be
     deemed to refer to the other when applicable unless a different meaning is
     plainly required by the context.

III. DETAILED PLAN PROVISIONS

1.   Awards. All potential awards that can be earned by a Key Employee under
     this Plan for a particular year ("Potential Bonus") will be set forth in
     his Individual Performance Incentive Plan ("Individual Plan") and on
     Schedule A.

2.   Entity Goals. Subject to Paragraph 14 of this Section 3, for any years in
     which this Plan is operative, the President shall establish the goals at
     the Company or employer level (including for Participating Employers) and
     the amount of the Potential Bonus attributable to those goals that can be
     earned by the respective Key Employee.

3.   Individual Goals. Subject to Paragraph 14 of this Section 3, in his sole
     discretion, the President may, if he deems appropriate, establish up to
     four (4) individual goals for any Key Employee ("Individual Goals"); in
     that case, the President shall also establish the appropriate measurement
     for each Individual Goal and the applicable percentages (i.e., weight)
     allocated to each Individual Goal. The President may consider suggestions
     from the Key Employee when establishing individual goals and measurements.

4.   Individual Plan. The President and the Key Employee shall execute an
     Individual Plan. If an Individual Plan is not executed by the President and
     the Key Employee, no Potential Bonus will be deemed granted nor may a
     Potential Bonus become earned or payable with respect to that Key

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     Employee, notwithstanding the Key Employee's inclusion on Schedule A. Each
     Individual Plan and Potential Bonus shall apply only to the specific
     calendar year designated. An additional Potential Bonus may be granted for
     future calendar years according to the terms herein.

5.   Earning a Potential Bonus. Determinations as to whether the particular
     goals of a Key Employee have been met and as to whether a Potential Bonus
     has been earned and will be distributed shall be determined by the
     President based on the goals, Individual Plan and other relevant criteria
     and approved by the Committee prior to distribution; provided, that, if an
     "executive officer" (as defined under the rules of the Securities and
     Exchange Commission, and hereinafter referred to as an "Executive Officer")
     is participating as a Key Employee in the Plan, determinations as to
     whether the particular goals set for that Executive Officer have been met
     and as to whether a Potential Bonus has been earned and will be distributed
     shall be determined by the Committee (which shall consider the
     recommendations of the President) based on the goals, Individual Plan and
     other relevant criteria.

6.   Distribution. Amounts due under the Plan shall be paid in a lump sum not
     later than the March 15 immediately following the close of the calendar
     year to which a Potential Bonus relates.

7.   Corporate assets. This Plan constitutes a mere unsecured benefit and any
     assets used for distribution are simply part of the general assets of the
     entities participating herein that are subject to the claims of its
     respective general creditors. In the event that this Plan is deemed to be
     governed by ERISA, it is expressly intended that this arrangement shall be
     unfunded for tax purposes and for purposes of Title I of ERISA.

8.   Administration.

     a.   This Plan shall be administered by the Governance, Compensation and
          Nominating Committee of the Company's Board of Directors (the
          "Committee"), and the Committee may nominate, or otherwise delegate,
          to the President or another party, the function of Plan Administrator.

     b.   The Administrator is expressly empowered to interpret the Plan,
          determine all questions arising in the administration, interpretation,
          and application of the Plan (and any such determination shall be
          entitled to the maximum deference provided for under law), employ
          professionals and other persons it deems necessary, request
          information deemed necessary, and to take all other necessary and
          proper actions to fulfill its duties as Administrator. All decisions
          with respect to the Plan shall be made by the Administrator in its
          sole and final discretion, whose decision shall be final, binding, and
          conclusive upon all persons.

     c.   The office of the Administrator shall not be liable for any actions by
          it hereunder, unless due to its own gross negligence, willful
          misconduct, or lack of good faith.

9.   Claims.

     a.   Neither Key Employees or their successors, heirs, personal
          representatives or other similar parties shall have any right to audit
          the Plan or amounts payable or alleged to be payable. Notwithstanding
          the preceding sentence, in the event that a final legal authority
          authorizes any challenge to the Plan or to any Potential Bonus or
          distribution, any such challenge shall be permitted to be made with
          respect to this Plan only as provided in this Section III, Paragraph 9
          and only if made in writing and personally delivered or mailed,
          certified mail, return receipt requested, to the Company's
          headquarters, attn: Administrator of The Tecumseh Products Company Key
          Employee Bonus Plan.

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     b.   Any claim shall state the claimants name and address, the specific
          basis for the claim, and any additional materials that the claimant
          desires to present. The claim will be promptly reviewed and if the
          claim is wholly or partially denied, the Administrator will furnish
          the claimant with a notice of its decision within 90 days after its
          receipt of the claim. The written notice will provide the specific
          reason or reasons for denial, specific reference to the reason(s) or
          provision(s) of the Plan upon which the denial is based, a description
          of any material or information necessary to perfect the claim and an
          explanation why such material or information is necessary, and copy of
          the Plan's claim review procedure. If notice is not received within
          the 90-day period, the claimant shall consider the claim to be denied.

     c.   The claimant may request review of the denial within 60 days after the
          denial of the claim. The written request must state with specificity
          the reasons for requesting review, may contain issues and comments,
          and may further state why the claimant believes that the
          Administrator's decision was incorrect.

     d.   The claimant may make a request for a hearing. The Administrator, in
          its sole discretion, may, but is not required to, convene a hearing to
          consider matters raised in the application. If a hearing is granted,
          the claimant is entitled to be represented by legal counsel or other
          duly authorized representative, to request, at his or her expense, the
          presence of a court reporter for the taking of a transcript of the
          hearing, and to cross-examine the witnesses. Not later than 60 days
          after receipt by the Administrator, a decision will be made, unless
          special circumstances apply (and the claimant is given written notice
          during such period), in which case a decision will be made as soon as
          possible, but not later than 120 days after receipt of the application
          for review. The decision on the application will be in writing and
          will include reasons for the decision with specific references to the
          pertinent reason(s) or provision(s) of the Plan on which the decision
          is based. The decision of the Administrator shall be final and binding
          60 days after denial of the claim, or upon the claimant's receipt of
          the Administrator's decision on the application for review.

10.  No Assignment. Other than by the laws of descent or distribution, awards
     under this Plan shall not be subject in any manner to anticipation,
     alienation, sale, transfer, assignment, pledge, encumbrance, attachment, or
     garnishment by creditors of the Key Employee or his or her beneficiary,
     whether voluntary or involuntary, and any attempt to so anticipate,
     alienate, sell, transfer, assign, pledge, encumber, attach, or garnish the
     same shall not be valid and shall cause a forfeiture of the Potential Bonus
     or resulting distribution to which it pertains. This Plan shall be binding
     on any entity succeeding to, surviving, or purchasing a majority of the
     assets or stock of the Company or a Participating Employer.

11.  No Employment Rights. Participation in this Plan shall not be construed to
     confer upon any person the legal right to be retained in the employ of his
     employer, or give any person, any right to any payment whatsoever, except
     to the extent of the benefits provided for hereunder. Each Key Employee
     shall remain subject to discharge to the same extent as if this Plan had
     never been adopted.

12.  Amendment and Termination. The Company shall have the sole authority to
     amend or terminate this Plan at any time. An amendment of this Plan shall
     be in writing and signed by the Company.

13.  Participating Employers. With proper authorization from the Company, any of
     the Company's subsidiaries or related entities may adopt this Plan;
     provided, that employees of the Participating Employer will only be
     eligible to participate in the Plan as a Key Employee pursuant to the
     procedures set forth herein. Any such entity shall be known as a
     "Participating Employer" and shall be bound by the terms of this Plan and
     its procedures, including the authorities and duties assigned to the
     Company and its officers. A Participating Employer shall be responsible for
     providing the distribution and

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     corresponding monies resulting from a Potential Bonus that is deemed earned
     and payable and that is related to any Key Employee that is participating
     in this Plan to the extent that the Key Employee is employed by the
     Participating Employer.

14.  Executive Officers. Notwithstanding anything to the contrary contained
     herein, in the event that an Executive Officer is participating in this
     Plan as a Key Employee, the Potential Bonus, goals, measurements and
     percentages applicable to that Executive Officer (as provided in Section
     III, Paragraph 2 and 3) shall be established by the Committee. With respect
     to establishing the Potential Bonus, goals, measurements and percentages
     for each Executive Officer participating in this Plan as a Key Employee,
     the Committee shall consider recommendations by the President and such
     other recommendations and/or factors as the Committee may deem appropriate.

          IN WITNESS WHEREOF, The Company has caused this instrument to be
executed by its duly authorized officer as of the ____________ day of April,
2007, to be effective as of an even date herewith.

                                        TECUMSEH PRODUCTS COMPANY


                                        By:
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                                        Title:
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                                        Participating Employer:


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                                        Date:
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                                        Participating Employer:

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                                        Title:
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                                        Date:
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                                        Participating Employer:

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                                        Participating Employer:


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                                        By:
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                                        Print name:
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                                        Title:
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                                        Date:
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                                   SCHEDULE A
                                     TO THE
                            TECUMSEH PRODUCTS COMPANY
                             KEY EMPLOYEE BONUS PLAN

<TABLE>
<CAPTION>
Key Employee                         Year                        Potential Bonus
------------                         ----                        ---------------
<S>                                  <C>                         <C>

</TABLE>