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                                                                   EXHIBIT 10.26

                                BRADY CORPORATION
                        2001 OMNIBUS INCENTIVE STOCK PLAN

I.   INTRODUCTION

     1.01 Purpose. This plan shall be known as the Brady Corporation 2001
Omnibus Incentive Stock Plan. The purpose of the Plan is to provide an incentive
for employees of Brady Corporation and its Affiliates to improve corporate
performance on a long-term basis, and to attract and retain employees by
enabling employees to participate in the future successes of the Corporation,
and by associating the long term interests of employees with those of the
Corporation and its shareholders. It is intended that the Plan and its operation
comply with the provisions of Rule 16b-3 under the Securities Exchange Act of
1934 (or any successor rule). The Plan is intended to permit the grant of
Nonqualified Stock Options, Incentive Stock Options, shares of Restricted Stock
and Restricted Stock Units. The proceeds received by the Corporation from the
sale of Corporation Stock pursuant to the Plan shall be used for general
corporate purposes.

     1.02 Effective Date. The effective date of the Plan shall be October 16,
2001, subject to approval of the Plan by holders of a majority of the
outstanding voting common stock of the Corporation provided that such approval
is given within 12 months of the effective date. Any Award granted prior to such
shareholder approval shall be expressly conditioned upon shareholder approval of
the Plan.

II.  PLAN DEFINITIONS

     For Plan purposes, except where the context clearly indicates otherwise,
the following terms shall have the meanings set forth below:

     (a)  "Affiliates" means any "subsidiary corporation" or "parent
          corporation" as such terms are defined in Section 424 of the Code.

     (b)  "Agreement" means a written agreement (including any amendment or
          supplement thereto) between the Corporation and a Participant
          specifying the terms and conditions of an Award.

     (c)  "Award" shall mean the grant of any form of Stock Option, Restricted
          Stock or Restricted Stock Units.

     (d)  "Board" shall mean the Board of Directors of the Corporation.

     (e)  "Code" shall mean the Internal Revenue Code of 1986, as amended from
          time to time.

     (f)  "Committee" shall mean the Committee described in Section 4.01.

     (g)  "Corporation" shall mean Brady Corporation, a Wisconsin corporation.

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     (h)  "Corporation Stock" shall mean the Corporation's Class A Non-Voting
          Common Stock, $.01 par value, and such other stock and securities as
          may be substituted therefor pursuant to Section 3.02.

     (i)  "Eligible Employee" shall mean any regular salaried employee of the
          Corporation or an Affiliate, including an employee who is a member of
          the Board, who satisfies the requirements of Section 5.01.

     (j)  "Exercise Period" shall mean the period of time provided pursuant to
          Section 6.05 within which a Stock Option may be exercised.

     (k)  "Fair Market Value" on any date shall mean, with respect to
          Corporation Stock, if the stock is then listed and traded on a
          registered national securities exchange, or is quoted in the NASDAQ
          National Market System, the average of the high and low sale prices
          recorded in composite transactions for such date or, if such date is
          not a business day or if no sales of Corporation Stock shall have been
          reported with respect to such date, the next preceding business date
          with respect to which sales were reported. In the absence of reported
          sales or if the stock is not so listed or quoted, but is traded in the
          over-the-counter market, Fair Market Value shall be the average of the
          closing bid and asked prices for such shares on the relevant date.

     (l)  "Participant" means an Eligible Employee who has been granted an Award
          under this Plan.

     (m)  "Performance Goals" means the performance goals established by the
          Committee prior to the grant of any Award of Restricted Stock or
          Restricted Stock Units intended to qualify as "performance-based
          compensation" under Section 162(m) of the Code and which are based on
          the attainment of goals relating to one or more of the following
          business criteria measured on an absolute basis or in terms of growth
          or reduction: net income (pre-tax or after-tax and with adjustments as
          stipulated), earnings per share, return on equity, return on assets,
          return on tangible book value, operating income, earnings before
          depreciation, interest, taxes and amortization (EBDITA), loss ratio,
          expense ratio, increase in stock price, total shareholder return,
          economic value added and operating cash flow. The Committee may
          establish other subjective or objective performance goals, including
          individual goals, which it deems appropriate.

     (n)  "Person" means any individual or entity, and the heirs, personal
          representatives, executors, administrators, legal representatives,
          successors and assigns of such Person as the context may require.

     (o)  "Plan" shall mean the Brady Corporation 2001 Omnibus Incentive Stock
          Plan, as set forth herein, as it may be amended from time to time.

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     (p)  "Restricted Stock" means shares of Corporation Stock granted to a
          Participant under Article VII.

     (q)  "Restricted Stock Unit" means an Award granted to a Participant under
          Article VIII.

     (r)  "Stock Option" means an option to purchase a stated number of shares
          of Corporation Stock at the price set forth in an Agreement. A Stock
          Option may be either a Nonqualified Stock Option or an Incentive Stock
          Option.

III. SHARES SUBJECT TO AWARD

     3.01 Available Shares. Subject to adjustments under Section 3.02, the total
number of shares of Corporation Stock authorized for issuance shall not exceed
five hundred thousand (500,000) shares, provided that no individual Eligible
Employee may be granted an Award or Awards covering more than one hundred
thousand (100,000) shares of Corporation Stock in any calendar year. The shares
authorized for issuance under the Plan may consist, in whole or in part, of
authorized but unissued Corporation Stock, or of treasury stock of the
Corporation. Shares subject to and not issued under an Award that expires,
terminates, is canceled or forfeited for any reason under the Plan shall again
become available for the granting of Awards.

     3.02 Changes in Corporation Stock. In the event of any change in the
Corporation Stock resulting from a reorganization, recapitalization, stock
split, stock dividend, merger, consolidation, rights offering or like
transaction, the Committee shall, in its discretion, proportionately and
appropriately adjust: (a) the aggregate number and kind of shares authorized for
issuance under the Plan and (b) in the case of previously granted Stock Options,
the option price and the number and kind of shares subject to the Stock Options,
without any change in the aggregate purchase prices to be paid for the Stock
Options.

IV.  ADMINISTRATION

     4.01 Administration by the Committee. The Plan shall be administered by the
Committee. The Committee shall be a committee designated by the Board to
administer the Plan and shall initially be the Compensation Committee of the
Board. The Committee shall be constituted to permit the Plan to comply with the
provisions of Rule 16b-3 under the Securities Exchange Act of 1934 (or any
successor rule) and Section 162(m) of the Code. A majority of the members of the
Committee shall constitute a quorum. The approval of such a quorum, expressed by
a majority vote at a meeting held either in person or by conference telephone
call, or the unanimous consent of all members in writing without a meeting,
shall constitute the action of the Committee and shall be valid and effective
for all purposes of the Plan.

     4.02 Committee Powers. Subject to Section 10.06, the Committee is empowered
to adopt, amend and rescind such rules, regulations and procedures and take such
other action as it shall deem necessary or proper for the administration of the
Plan and, in its discretion, may modify, extend or renew any Award theretofore
granted. The Committee shall also have authority to interpret the Plan, and the
decision of the Committee on any questions concerning the interpretation of the
Plan shall be final and conclusive. The express grant in the Plan of any

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specific power to the Committee shall not be construed as limiting any power or
authority of the Committee. The Committee shall not incur any liability for any
action taken in good faith with respect to the Plan or any Award.

     Subject to the provisions of the Plan, the Committee shall have full and
final authority to:

     (a)  designate the Eligible Employees to whom Awards shall be granted;

     (b)  grant Awards in such form and amount as the Committee shall determine;

     (c)  impose such limitations, restrictions and conditions upon any such
          Award as the Committee shall deem appropriate, including conditions
          (in addition to those contained in this Plan) on the exercisability of
          all or any portion of a Stock Option or on the transferability or
          forfeitability of Restricted Stock;

     (d)  prescribe the form of Agreement with respect to each Award;

     (e)  waive in whole or in part any limitations, restrictions or conditions
          imposed upon any such Award as the Committee shall deem appropriate
          (including accelerating the time at which any Stock Option may be
          exercised or the time at which Restricted Stock may become
          transferable or nonforfeitable); and

     (f)  determine the extent to which leaves of absence for governmental or
          military service, illness, temporary disability and the like shall not
          be deemed interruptions of continuous employment.

V.   PARTICIPATION

     5.01 Eligibility. Any employee of the Corporation and its Affiliates
(including officers and employees who may be members of the Board) who, in the
sole opinion of the Committee, has contributed or can be expected to contribute
to the profits, growth and success of the Corporation shall be eligible for
Awards under the Plan. A member of the Committee or any person who is expected
to become a member within one year of any Award shall not be an Eligible
Employee if his or her status as an Eligible Employee would prevent the
Committee from being "disinterested" under Rule 16b-3 under the Securities
Exchange Act of 1934. From among all such Eligible Employees, the Committee
shall determine from time to time those Eligible Employees to whom Awards shall
be granted. No Eligible Employee shall have any right whatsoever to receive an
Award unless so determined by the Committee.

     5.02 No Employment Rights. The Plan shall not be construed as conferring
any rights upon any person for a continuation of employment, nor shall it
interfere with the rights of the Corporation or any Affiliates to terminate the
employment of any person or to take any other action affecting such person.

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VI.  STOCK OPTIONS

     6.01 Stock Options; General. Stock Options granted under the Plan shall be
in the form of Nonqualified Stock Options ("NSOs"), Incentive Stock Options
("ISOs") or a combination thereof. Each Stock Option granted under the Plan
shall be evidenced by an Agreement which shall contain the terms and conditions
required by this Article VI, and such other terms and conditions, not
inconsistent herewith, as the Committee may deem appropriate in each case. A
Stock Option granted under the Plan shall not be treated as an Incentive Stock
Option unless the Stock Option Agreement specifically designates the option as
an Incentive Stock Option.

     6.02 Stock Option Holder's Rights as a Shareholder. The holder of a Stock
Option shall not have any rights as a shareholder with respect to the shares
covered by a Stock Option until such shares have been delivered to him or her.

     6.03 Option Price. The price at which each share of Corporation Stock
covered by a Stock Option may be purchased shall be not less than 100% of the
Fair Market Value of such stock on the date on which the option is granted. The
option price shall be subject to adjustment as provided in Section 3.02 hereof.

     6.04 Date Stock Option Granted. For purposes of the Plan, a Stock Option
shall be considered as having been granted on the date on which the Committee
authorized the grant of the Stock Option except where the Committee has
designated a later date, in which event the later date shall constitute the date
of grant of the Stock Option; provided, however, that notice of the grant of the
Stock Option shall be given to the Participant within a reasonable time.

     6.05 Exercise Period. The Committee shall have the power to set the time or
times within which each Option shall be exercisable, and to accelerate the time
or times of exercise; provided, however, that

     (a)  no Stock Option granted under this Plan to any Person subject to the
          reporting requirements of Section 16(b) of the Securities and Exchange
          Act of 1934 may be exercised until at least six months from the later
          of (i) the date of grant or (ii) shareholder approval of the Plan, and

     (b)  no Stock Option shall be exercisable after the expiration of ten (10)
          years from the date the Stock Option is granted. Each Agreement with
          respect to a Stock Option shall state the period or periods of time
          within which the Stock Option may be exercised by the Participant, in
          whole or in part.

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Subject to the foregoing, unless the Agreement with respect to a Stock Option
expressly provides otherwise, a Stock Option shall be exercisable in accordance
with the following schedule:

          Years After
          Date of Grant                      Percentage of Shares
          -------------                      --------------------

          Less than 1                                 0%

          1 but less than 2                         33-1/3%

          2 but less than 3                         66-2/3%

          3 or more                                  100%

     6.06 Method of Exercise. Subject to Section 6.05, each Stock Option may be
exercised in whole or in part from time to time as specified in the Agreements
provided, however, that each Participant may exercise a Stock Option in whole or
in part by giving written notice of the exercise to the Corporation, specifying
the number of shares to be purchased by payment in full of the purchase price
therefor. The purchase price may be paid (a) in cash, (b) by check, (c) with the
approval of the Committee, or if the applicable Agreement so provides, by
delivering shares of Corporation Stock ("Delivered Stock), or (d) with a
combination of cash, check and Delivered Stock. For purposes of the foregoing,
Delivered Stock shall be valued at its Fair Market Value determined as of the
business day immediately preceding the date of exercise of the Stock Option. No
Participant shall be under any obligation to exercise any Stock Option
hereunder.

     6.07 Dissolution or Liquidation. Anything contained herein to the contrary
notwithstanding, on the effective date of any dissolution or liquidation of the
Corporation, any unexercised Stock Options shall be deemed cancelled, and the
holder of any such unexercised Stock Options shall be entitled to receive
payment under Section 10.04.

     6.08 Special Rules for Incentive Stock Options. For so long as Section 422
(or any successor provision) of the Code so provides:

     (a)  The aggregate Fair Market Value of Corporation Stock (determined as of
          the date the stock option is granted) with respect to which ISOs are
          exercisable for the first time during a calendar year may not exceed
          $100,000. To the extent that the value of the stock subject to options
          exceeds that amount, the excess shall be considered to be NSOs, with
          the determination to be made in the order the options are granted.

     (b)  Employees who own, directly or indirectly, within the meaning of Code
          Section 425(d), more than 10% of the voting power of all classes of
          stock of the Corporation or any parent or subsidiary corporation shall
          not be eligible to receive an ISO hereunder unless the purchase price
          per share under such option is at least 110% of the Fair Market Value
          of the stock subject to the option and such option by its terms is not
          exercisable after the expiration of five (5) years from the date such
          option is granted.

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     (c)  To obtain favorable ISO tax treatment, the option must be exercised
          while the Participant is an employee, or within three months after the
          Participant's termination as an employee; provided that, in the case
          of termination on account of disability (as defined in Section
          22(e)(3) of the Code), the exercise period may be extended to one
          year; and further provided that the employment requirement is waived
          in the case of the participant's death.

VII. RESTRICTED STOCK

     7.01 Administration. Shares of Restricted Stock may be issued either alone
or in addition to other Awards granted under the Plan. The Committee shall
determine the Eligible Employees to whom and the time or times at which grants
of Restricted Stock will be made, the number of shares to be granted, the time
or times within which such Awards may be subject to forfeiture or otherwise
restricted and any other terms and conditions of the Awards. The restrictions
may be based upon specified Performance Goals, the Participant's continued
employment with the Corporation or its Affiliates or such other factors or
criteria as the Committee shall determine. Subject to Sections 7.02 and 7.03
hereof the provisions of Restricted Stock Awards need not be the same with
respect to each recipient.

     7.02 Certificates. Each individual receiving a Restricted Stock Award shall
be issued a certificate in respect of such shares of Restricted Stock which
certificate shall be held in custody by the Corporation until the restrictions
thereon shall have lapsed. In addition, each individual receiving a Restricted
Stock Award shall, as a condition of any such Restricted Stock Award, have
delivered to the Corporation a stock power, endorsed in blank, with respect to
the Corporation Stock covered by such Award. Each certificate in respect of
shares of Restricted Stock shall be registered in the name of the Participant to
whom such Restricted Stock has been granted and shall bear an appropriate legend
referring to the terms, conditions, and restrictions applicable to such Award,
substantially in the following form:

     "The transferability of this certificate and the shares of stock
     represented hereby are subject to the terms and conditions (including
     forfeiture) of the Brady Corporation 2001 Omnibus Incentive Stock Plan and
     a Restricted Stock Agreement. Copies of such Plan and Agreement are on file
     at the offices of the Brady Corporation."

In addition each certificate in respect of shares of Restricted Stock may bear
such legends and statements as the Committee may deem advisable to assure
compliance with the federal and state laws and regulations.

     7.03 Terms and Conditions. Shares of Restricted Stock shall be subject to
the following terms and conditions:

     (a)  Until the applicable restrictions lapse, the Participant shall not be
          permitted to sell, assign, transfer, exchange, pledge, hypothecate or
          otherwise dispose of or encumber shares of Restricted Stock.

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     (b)  Unless and until a forfeiture of the Restricted Stock, the Participant
          shall have, with respect to the shares of Restricted Stock, all of the
          rights of a shareholder of the Corporation, including the right to
          vote the shares (if applicable) and the right to receive any cash
          dividends. Unless otherwise determined by the Committee, cash
          dividends shall be automatically paid in cash and dividends payable in
          Corporation Stock shall be paid in the form of additional Restricted
          Stock.

     (c)  Except to the extent otherwise provided in the applicable Restricted
          Stock Agreement and (d) below, all shares still subject to restriction
          shall be forfeited by the Participant upon termination of a
          Participant's employment for any reason.

     (d)  In the event of hardship or other special circumstances of a
          Participant whose employment is involuntarily terminated (other than
          for cause), the Committee may waive in whole or in part any or all
          remaining restrictions with respect to such Participant's shares of
          Restricted Stock.

     (e)  If and when the applicable restrictions lapse, unlegended certificates
          for such shares shall be delivered to the Participant.

     (f)  Each Award shall be confirmed by, and be subject to the terms of, a
          Restricted Stock Agreement.

VIII. RESTRICTED STOCK UNITS

     8.01 Administration. Restricted Stock Units may be issued either alone or
in addition to other Awards granted under the Plan. The Committee shall
determine the Eligible Employees to whom and the time or times at which grants
of Restricted Stock Units will be made, the number of units to be granted, the
time or times within which such Awards may be subject to forfeiture or otherwise
restricted and any other terms and conditions of the Awards. The restrictions
may be based upon specified Performance Goals, the Participant's continued
employment with the Corporation or its Affiliates or such other factors or
criteria as the Committee shall determine. The provisions of Restricted Stock
Awards need not be the same with respect to each recipient.

     8.02 Form and Timing of Payment of Restricted Stock Units. Timing of
payment of earned Restricted Stock Units shall be determined by the Committee at
its sole discretion. The Committee, in its sole discretion, may pay earned
Restricted Stock Units in the form of cash or in shares of Corporation Stock (or
in a combination thereof), which have an aggregate Fair Market Value equal to
the value of the earned Restricted Stock Units.

IX.  WITHHOLDING TAXES

     9.01 General Rule. Pursuant to applicable federal and state laws, the
Corporation is or may be required to collect withholding taxes upon the exercise
of a Stock Option or the lapse of stock restrictions. The Corporation may
require, as a condition to the exercise of a Stock Option or the issuance of a
stock certificate, that the Participant concurrently pay to the Corporation

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(either in cash or, at the request of Participant, but subject to such rules and
regulations as the Committee may adopt from time to time, in shares of Delivered
Stock) the entire amount or a portion of any taxes which the Corporation is
required to withhold by reason of such exercise or lapse of restrictions, in
such amount as the Committee or the Corporation in its discretion may determine.
If and to the extent that withholding of any federal, state or local tax is
required in connection with the exercise of an Option or the lapse of stock
restrictions, the Participant may, subject to such rules and regulations as the
Corporation may adopt from time to time, elect to have the Corporation hold back
from the shares to be issued upon the exercise of the Stock Option or the lapse
of stock restrictions, the number of shares of Corporation Stock having a Fair
Market Value equal to such withholding obligation.

     9.02 Special Rule for Insiders. Any such request or election (to satisfy a
withholding obligation using shares) by an individual who is subject to the
provisions of Section 16 of the Securities Exchange Act of 1934 (an "Insider")
shall be made in accordance with the rules and regulations of the Securities and
Exchange Commission promulgated thereunder.

X.   GENERAL

     10.01 Nontransferability. No Award granted under the Plan shall be
transferable or assignable (or made subject to any pledge, lien, obligation or
liability of a Participant) except by last will and testament or the laws of
descent and distribution. Upon a transfer or assignment pursuant to a
Participant's last will and testament or the laws of descent and distribution,
any Stock Option must be transferred in accordance therewith. During the
Participant's lifetime, Stock Options shall be exercisable only by the
Participant or by the Participant's guardian or legal representative.
Notwithstanding the foregoing, NSOs may be transferred by a Participant to the
Participant's spouse, children or grandchildren or to a trust for the benefit of
such spouse, children or grandchildren; provided that the terms of any such
transfer prohibit the resale of shares acquired upon exercise of the option at a
time during which the transferor would not be permitted to sell such shares
under the Corporation's policy on trading by insiders.

     10.02 General Restriction. Each Award shall be subject to the requirement
that if at any time the Board or the Committee shall determine, in its
discretion, that the listing, registration, or qualification of securities upon
any securities exchange or under any state or federal law, or the consent or
approval of any government regulatory body, is necessary or desirable as a
condition of, or in connection with, the granting of such Stock Option or the
issue or purchase of securities thereunder, such Stock Option may not be
exercised in whole or in part unless such listing, registration, qualification,
consent or approval shall have been effected or obtained free of any conditions
not acceptable to the Board or the Committee. The Committee shall have the right
to rely on an opinion of its counsel as to whether any such listing,
registration, qualification, consent or approval shall have been effected or
obtained.

     10.03 Effect of Termination of Employment, Disability or Death. Except as
otherwise provided by the Committee upon any Award, all rights under any Stock
Option granted to a Participant shall terminate and any Restricted Stock or
Restricted Stock Unit granted to a Participant shall be forfeited on the date
such Participant ceases to be employed by the Corporation or its subsidiaries,
except that

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     (a)  if the Participant's employment is terminated by the death of the
          Participant, any unexercised, unexpired Stock Options granted
          hereunder to the Participant shall be 100% vested and fully
          exercisable, in whole or in part, at any time within one year after
          the date of death, by the Participant's personal representative or by
          the person to whom the Stock Options are transferred under the
          Participant's last will and testament or the applicable laws of
          descent and distribution;

     (b)  if the Participant dies within 90 days after termination of employment
          by the Corporation or its Affiliates, other than for cause, any
          unexercised, unexpired Stock Options granted hereunder to the
          Participant and exercisable as of the date of such termination of
          employment shall be exercisable, in whole or in part, at any time
          within one year after the date of death, by the Participant's personal
          representative or by the person to whom the Stock Options are
          transferred under the Participant's last will and testament or the
          applicable laws of descent and distribution;

     (c)  if the Participant's employment is terminated as a result of the
          disability of the Participant (a disability means that the Participant
          is disabled as a result of sickness or injury, such that he or she is
          unable to satisfactorily perform the material duties of his or her
          job, as determined by the Board of Directors, on the basis of medical
          evidence satisfactory to it), any unexercised, unexpired Stock Options
          granted hereunder to the Participant shall become 100% vested and
          fully exercisable, in whole or in part, at any time within one year
          after the date of disability;

     (d)  if the Participant's employment is terminated as a result of the
          Participant's retirement (after age 55 with ten years of employment
          with the Corporation or an Affiliate or after age 65), any
          unexercised, unexpired Stock Options granted hereunder to the
          Participant and exercisable as of the date of such retirement may be
          exercised by the Participant at any time within one year after the
          date of retirement; and

     (e)  if the Participant's employment is terminated by the Company or an
          Affiliate for any reason other than the Participant's death,
          disability or retirement of the Participant, any unexercised,
          unexpired Stock Options granted hereunder and exercisable as of the
          date of such termination of employment shall be exercisable in whole
          or in part at any time within 90 days after such date of termination.

If a Participant's employment is terminated because of the Participant's
voluntary separation from the Corporation, or for cause (as determined by the
Committee in its sole discretion), all of the Participant's unexercised Stock
Options shall expire and all of the Participant's Restricted Stock and
Restricted Stock Units shall be forfeited. Notwithstanding the foregoing, no
Stock Option shall be exercisable after the date of expiration of its term.

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     10.04 Merger, Consolidation or Reorganization. In the event of (a) the
merger or consolidation of the Corporation with or into another corporation or
corporations in which the Corporation is not the surviving corporation, (b) the
adoption of any plan for the dissolution of the Corporation, or (c) the sale or
exchange of all or substantially all the assets of the Corporation for cash or
for shares of stock or other securities of another corporation, all
then-unexercised Stock Options shall become fully exercisable, and all
restrictions imposed on any then-Restricted Stock shall terminate (such that any
Restricted Stock shall become fully transferable) immediately prior to any such
merger or consolidation in which the Corporation is not the surviving
corporation. Notwithstanding the foregoing, in the case of then-unexercised
Stock Options held by persons subject to the reporting requirements of Section
16(a) of the 1934 Act, the Committee may elect to cancel any then-unexercised
Stock Option. If any Stock Option is canceled, the Corporation, or the
corporation assuming the obligations of the Corporation hereunder, shall pay the
Participant an amount of cash or stock, as determined by the Committee, equal to
the Fair Market Value per share of the Corporation Stock immediately preceding
such cancellation over the option price, multiplied by the number of shares
subject to such cancelled Stock Option.

     10.05 Expiration and Termination of the Plan. This Plan shall remain in
effect until all of the Awards made under the Plan have been exercised, the
restrictions thereon have lapsed or the Awards have expired, terminated, or been
canceled or forfeited. Notwithstanding the foregoing, no Awards shall be granted
under the Plan, after that date which is ten years after the Plan is approved by
the Board; or such earlier date as the Board determines in its sole discretion.

     10.06 Amendments. The Board may from time to time amend, modify, suspend or
terminate the Plan; provided, however, that no such action shall (a) impair
without the Participant's consent any Award theretofore granted under the Plan
or deprive any Participant of any shares of Corporation Stock which he may have
acquired through or as a result of the Plan or (b) be made without shareholder
approval where such approval would be required as a condition of compliance with
Rule 16b-3.

     10.07 Wisconsin Law. Except as otherwise required by applicable federal
laws, the Plan shall be governed by, and construed in accordance with, the laws
of the State of Wisconsin.

     10.08 Unfunded Plan. The Plan, insofar as it provides for Awards, shall be
unfunded and the Corporation shall not be required to segregate any assets that
may at any time be represented by Awards under this Plan. Any liability of the
Corporation to any Person with respect to any Award under this Plan shall be
based solely upon any contractual obligations that may be created pursuant to
this Plan. No such obligation of the Corporation shall be deemed to be secured
by any pledge of, or other encumbrance on, any property of the Corporation.

     10.09 Rules of Construction. Headings are given to the articles and
sections of this Plan solely as a convenience to facilitate reference. The
reference to any statute, regulation, or other provision of law shall be
construed to refer to any amendment to or successor of such provision of law.

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     10.10 Gender and Number. Except when otherwise required by the context,
words in the masculine gender shall include the feminine, the singular shall
include the plural, and the plural the singular.

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                                                                   EXHIBIT 10.16

                            TECUMSEH PRODUCTS COMPANY
                          SUPPLEMENTAL RETIREMENT PLAN
                 (Amended and Restated effective June 27, 2001)

                                    ARTICLE I
                                     PURPOSE

         1.1 Tecumseh Products Company, a Michigan corporation (the "Company"),
establishes the Tecumseh Products Company Supplemental Retirement Plan (the
"Plan") for the purpose of providing certain management or highly compensated
employees with retirement benefits in excess of (or in addition to) those
benefits provided under the Tecumseh Products Company Salaried Retirement Plan
(the "Retirement Plan").

         1.2 The Plan supplements benefits under the Retirement Plan to the
extent such benefits are

         (i)      reduced due to the limits of Section 401(a)(17) and Section
                  415 of the Internal Revenue Code of 1986, as amended (the
                  "Code"), and/or

         (ii)     reduced as a result of a change in the Retirement Plan benefit
                  formula that became effective as of January 1, 1993, or

         (iii)    payable to Participants under the Company's 2001 Voluntary
                  Early Retirement Program.

The Plan is intended to be an unfunded plan maintained primarily for the purpose
of providing deferred compensation for a select group of management or highly
compensated employees as described in Sections 201(a)(2), 301(a)(3) and
401(a)(1) of the Employee Retirement Income Security Act of 1974, as amended
("ERISA").

                                   ARTICLE II
                                   DEFINITIONS

         Unless a different meaning is expressly assigned, all capitalized terms
used in this Plan have the same meaning as in the Retirement Plan. In addition,
the following terms shall have the following meanings unless the context in
which the term is used clearly indicates that another or different meaning is
intended:

         2.1 "Adjusted Retirement Benefits" means the benefits in the form and
amount that the Participant or his surviving spouse would have received under
the Retirement Plan if --

<PAGE>

         (i) the limitation on benefits imposed by Section 415 of the Code were
         disregarded;

         (ii) Base Compensation were computed without reduction due to the
         limits of Section 401(a)(17) of the Code; and

         (iii) such benefits were computed by applying whichever of the
         following two benefit formulas results in the largest monthly amount
         when applied to all of the Participant's Benefit Service under the
         Retirement Plan as of the time benefits become payable under this Plan
         (subject, however, to the 30 and 35 year limits on service, as
         described in the formulas; and provided that Formula 1 shall not apply
         to any Special Participant or to any person who first became a
         Participant in the Retirement Plan after January 1, 1993):

         Formula 1  The  difference, "A" minus "B", where -

                  "A" represents 1-1/2% of the Participant's Average Monthly
                  Compensation multiplied by his years and fractional years of
                  Benefit Service (provided that no Benefit Service in excess of
                  35 years shall be included), and

                  "B" represents 1-2/3% of the Participant's Primary Social
                  Security Benefit multiplied by his years and fractional years
                  of Benefit Service (provided that no Benefit Service in excess
                  of 30 years shall be included). However, if "B" as computed
                  pursuant to the preceding sentence exceeds 50% of "A", then
                  "B" shall be reduced to 50% of "A".

         Formula 2 The amount "G", where "G" represents 1-1/4% of the
         Participant's Average Monthly Compensation multiplied by his years and
         fractional years of Benefit Service (provided that no Benefit Service
         in excess of 35 years shall be included).

         2001 Voluntary Early Retirement Program For Participants (including
         Special Participants) who retire after September 17 but prior to
         October 1, 2001 under the Company's Voluntary Early Retirement Program
         ("VERP"):

             (i)  "Average Monthly Compensation" as used under either Formula 1
                  or 2 (whichever applies) shall mean the Participant's Base
                  Compensation during the most recent full calendar month of
                  active work.

             (ii) "Benefit Service" as used in "A" under Formula 1 or in Formula
                  2 shall mean the sum of such Participant's Benefit Service at
                  October 1, 2001 plus five

                                      -2-

<PAGE>

                  additional years of Benefit Service (but in no event shall
                  more than 35 years of Benefit Service be counted). Maximum
                  "Benefit Service" as used in "B" under Formula 2 shall remain
                  at 30 years.

         Adjusted Retirement Benefits paid to VERP Participants (including
         Special Participants) shall not be subject to actuarial adjustment for
         commencement prior to Normal Retirement Age. Adjusted Retirement
         Benefits paid to a Special Participant (or his/her surviving spouse)
         shall terminate with the monthly payment that precedes the Special
         Participant's 55th birthday.

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

         2.3 "Retirement Benefits" means benefits in the form and amount
actually payable to the Participant or his surviving spouse (if any) under the
Retirement Plan.

         2.4 The following terms are defined elsewhere in this Plan:

<TABLE>
<S>                                                   <C>
                  "Administration Committee"......... Sec. 9.1;
                  "Code" ............................ Sec. 1.2;
                  "Company" ......................... Sec. 1.1;
                  "ERISA" ........................... Sec. 1.2;
                  "Participating Employer(s)"........ Sec. 3.2;
                  "Plan" ............................ Sec. 1.1;
                  "Reason" .......................... Sec. 6.2;
                  "Retirement Plan" ................. Sec. 1.1;
                  "Special Participant" ............. Sec. 4.1;
                  "Subsidiary" ...................... Sec. 3.1;
                  "VERP" ............................ Sec. 2.1;
                  "Vested" .......................... Sec. 6.1.
</TABLE>

                                   ARTICLE III
                             EMPLOYER PARTICIPATION

         3.1 If a Subsidiary of the Company wishes to participate in the Plan
and its participation is approved by the Administration Committee, the board of
directors of the Subsidiary shall adopt a resolution in form and substance
satisfactory to the Administration Committee authorizing participation by the
Subsidiary in the Plan with respect to its employees. As used herein, the term
"Subsidiary" means any corporation at least one-half of whose outstanding voting
stock is owned, directly or indirectly, by the Company.

         3.2 A Subsidiary participating in the Plan may cease to be a
Participating Employer at any time by action of the Administration Committee, or
by action of the board of directors of such

                                      -3-

<PAGE>

Subsidiary, which latter action shall be effective not earlier than the date of
delivery to the Secretary of the Company of a certified copy of a resolution of
the Subsidiary's board of directors taking such action. If the participation in
the Plan of a Subsidiary shall terminate, such termination shall not relieve it
of any obligations heretofore incurred by it under the Plan except with the
approval of the Board of Directors of the Company. The Company and each of its
Subsidiaries participating in this Plan are sometimes called "Participating
Employer(s)" in this Plan.

                                   ARTICLE IV
                                  PARTICIPATION

         4.1 The persons entitled to benefits under this Plan shall be those
Participants in the Retirement Plan whose Base Compensation for the purpose of
determining his benefits under the Retirement Plan is limited by Section
401(a)(17), or whose benefit under the Retirement Plan is limited by Section 415
of the Code and who are selected for participation in this Plan by the
Administration Committee. Plan Participants are listed on attached Exhibit A.
The Plan also covers two additional categories of Participants as described
below:

   (i)   Benefits remaining payable to certain Employees and surviving spouses
         under supplemental executive retirement agreements dated October 19,
         1992 (and effective January 1, 1993) have been incorporated in Section
         2.1 (Formula 1) of this Plan. Such Employees are listed on attached
         Exhibit A as "1993 Participants."

   (ii)  Additionally, this Plan shall cover, as "Special Participants," those
         Employees who are "highly compensated employees" as defined under
         Section 414(q) of the Code, who have not attained age 55 prior to
         October 1, 2001 and who retire after September 17 but prior to October
         1, 2001 under the VERP.

         4.2 A Participant shall cease to participate in this Plan on the
earliest of (i) termination of employment, (ii) retirement, (iii) Total and
Permanent Disability, (iv) death, (v) withdrawal from participation in the Plan
by the Participant's Participating Employer, or (vi) removal of the Participant
from participation by the Administration Committee; provided, however, that no
such event shall withdraw the right to receive benefits earned and/or vested
under this Plan prior to such event, recognizing that the amount of such
benefits may increase or decrease over time, depending on the various factors
taken into account in computing the benefit.

         4.3 The Administration Committee shall promptly notify each Participant
in writing of his selection for participation in or

                                      -4-

<PAGE>

removal from or other cessation of participation in this Plan. The
Administration Committee shall maintain a record of Participants.

                                    ARTICLE V
                                    BENEFITS

         5.1 Subject to becoming and remaining vested under Article VI, a
Participant's benefits under the Plan shall be his Adjusted Retirement Benefits
reduced by his Retirement Benefits, with the initial benefit payment(s) to be
reduced or eliminated, as described in Section 5.5, on account of any
obligations to the Company as described in Section 12.6. For an example showing
the computation of benefits under the Plan, see Exhibit B. The Adjusted
Retirement Benefits of Participants (including Special Participants) who retire
after September 17 but prior to October 1, 2001 under the VERP (but who have not
yet attained age 55) shall not be subject to reduction for Retirement Benefits
until their Retirement Benefits actually become payable from the Retirement
Plan.

         5.2 Except as otherwise provided in the Plan in regard to Participants
(including Special Participants) who retire under the VERP, any benefits payable
pursuant to this Plan shall be paid at the same times and in the same manner and
form (using the same actuarial assumptions) as Retirement Benefits are paid to
the Participant under the Retirement Plan. A Participant who disputes the amount
or timing of such benefits shall file a claim for benefits pursuant to Article
XI.

         5.3 If a Participant dies before benefits commence under the Retirement
Plan, the Participant's surviving spouse (if any) shall be entitled to a
survivor benefit under this Plan equal to (a) the survivor benefit provided for
in the Retirement Plan calculated as though the Participant's benefit under the
Retirement Plan was his Adjusted Retirement Benefit, reduced (when applicable)
by (b) the survivor benefit paid to the surviving spouse under the Retirement
Plan, with the initial benefit payment(s) to be reduced or eliminated, as
described in Section 5.5, on account of any obligations to the Company as
described in Section 12.6. Survivor benefits under this Plan shall be paid at
the same times and in the same manner and form as survivor benefits are paid
under the Retirement Plan, except that in the case of Special Participants,
survivor benefits shall also be paid under this Plan following such
Participant's date of death until the month preceding the deceased Participant's
55th birthday. Thereafter, no survivor benefits shall be payable under this Plan
to the surviving spouse of a deceased Special Participant. The survivor benefit
payable until the 55th birthday of a deceased Special Participant shall be
determined under the formula of Art. II ss.8(G)(1) of the Retirement Plan
unless, prior to his death, the Participant had made an election

                                      -5-

<PAGE>

that such survivor benefit be determined under the formula of Art. II ss.8(G)(2)
of the Retirement Plan.

         Survivor benefits payable to other Participants shall be subject to
reduction by the amount of survivor benefit paid to his/her surviving spouse
under the Retirement Plan.

         5.4 If a Participant dies after benefits under this Plan commence,
survivor benefits, if any, shall be paid in accordance with the form of benefit
being paid to the Participant at the time of death.

         5.5 If a Participant is obligated to the Company as described in
Section 12.6 at the time benefits first become payable to the Participant or his
spouse under the Plan, then the initial monthly benefit payment(s), net of
required withholding taxes, shall be applied in reduction of such obligations
until they are fully repaid. Only after such benefits are fully repaid shall
payments commence to the Participant or his spouse under the Plan.

                                   ARTICLE VI
                                     VESTING

         6.1 Except as otherwise provided in the Plan, a Participant's
entitlement to benefits under the Plan shall become vested on the first day of
the calendar month after such Participant has become entitled to a Deferred
Benefit under Article VII, Section 2 of the Retirement Plan, or such earlier
date as he dies or becomes Totally and Permanently Disabled. As used in the
Plan, "vested" refers to the right to receive a benefit calculated pursuant to
Section 5.1, recognizing that the amount of such benefit may increase or
decrease over time, depending on the various factors taken into account in
computing the benefit. The provisions of Sections 6.2 and 6.3 shall govern the
forfeiture of benefits which are not vested and, in certain circumstances, even
those which had become fully vested. Subject to Section 12.7, a Participant's
benefits, to the extent not previously vested, shall become fully vested and
payable as of the Participant's Normal Retirement Date. Notwithstanding other
Plan provisions, a Participant (including a Special Participant) who elects to
retire under the terms of the VERP shall be fully vested, provided he thereafter
actually retires after September 17 but prior to October 1, 2001.

         6.2 Any unpaid vested benefits shall be forfeited as a result of
termination of employment for one or more Reasons specified below, as determined
by the Administration Committee. Also, any previously unpaid vested benefits in
pay status shall be forfeited for any one or more of the Reasons specified in
subsections (iv) and (v) below. Such "Reason," for the sole purpose of
determining

                                      -6-

<PAGE>

whether a Participant's otherwise vested benefits are to be forfeited, shall be
deemed to exist where -

         (i)      The Participant, after receiving written notice of prior
                  breach from his Participating Employer, again breaches any
                  material written rules, regulations or policies of the
                  Participating Employer now existing or hereafter arising which
                  are uniformly applied to all employees of the Participating
                  Employer or which rules, regulations and policies are
                  promulgated for general application to executives, officers or
                  directors of the Participating Employer; or

         (ii)     The Participant willfully and repeatedly fails to
                  substantially perform the duties of his employment (other than
                  any such failure resulting from his incapacity due to physical
                  or mental illness) after a written demand for substantial
                  performance is delivered to him by his immediate supervisor,
                  which demand specifically identifies the manner in which the
                  supervisor believes that the Participant has not substantially
                  performed his duties; or

         (iii)    The Participant is repeatedly or habitually intoxicated or
                  under the influence of drugs while on the premises of the
                  Participating Employer or while performing his employment
                  duties, after receiving written notice thereof from the
                  Participating Employer, such that the Administration Committee
                  determines in good faith that the Participant is impaired in
                  performing the duties of his employment; or

         (iv)     The Participant is convicted of a felony under state or
                  federal law, or commits a crime involving moral turpitude; or

         (v)      The Participant embezzles any property belonging to the
                  Company or any of its Subsidiaries such that he may be subject
                  to criminal prosecution therefor or the Participant
                  intentionally and materially injures the Company or any of its
                  Subsidiaries or their personnel or property.

Nothing in this Plan shall alter the at-will nature of the Participant's
employment relationship with his Participating Employer. Nothing in this Plan
shall confer upon any Participant the right to continue in the employ of the
Company or any of its Subsidiaries.

                                      -7-

<PAGE>

         6.3 Except as provided in Section 6.1, if a Participant voluntarily
terminates his employment with the Participating Employer or is terminated by
the Participating Employer for no reason or for any reason whatsoever, his
benefits shall be forfeited, except for that portion (if any) which the
Administration Committee, in its sole and absolute discretion, permits him to
retain. Nothing in this Plan shall alter the at-will nature of the Participant's
employment relationship with his Participating Employer. Nothing in this Plan
shall confer upon any Participant the right to continue in the employ of the
Company or any of its Subsidiaries.

                                   ARTICLE VII
                                SOURCE OF PAYMENT

         7.1 Each Participating Employer shall pay the benefits earned by and
payable to a Participant under this Plan to the extent that the Participant's
benefit is based on compensation paid from the Participating Employer's payroll.
Notwithstanding the withdrawal of a Participating Employer from this Plan, it
shall continue to be liable for benefits earned by each Participant on its
payroll prior to its withdrawal.

         7.2 The benefits payable under this Plan shall be paid only from the
general funds of each Participating Employer, and each Participant and his
surviving spouse shall be no more than unsecured general creditors of the
Participating Employer, with no special or prior right to any assets of the
Participating Employer for payment of any obligations hereunder. Nothing
contained in this Plan or elsewhere shall be deemed to create a trust or escrow
of any kind for the benefit of any Participant or any surviving spouse with
respect to any assets of any Participating Employer. Any assets (including
without limitation insurance policies or annuities) which a Participating
Employer chooses to use to pay benefits under this Plan shall constitute general
assets of the Participating Employer, shall be subject to the claims of the
Participating Employer's general creditors and shall not cause this to be a
funded plan within the meaning of any section of ERISA or the Code. No
Participant or surviving spouse shall have any prior or special claim to any
such asset.

         7.3 The Board, upon the recommendation of the Administration Committee,
may authorize the creation of trusts or other arrangements to facilitate or
ensure payment of some or all benefit obligations under the Plan, provided that
such trusts and arrangements are consistent with the "unfunded" status of the
Plan. A Participant shall have no right, title, or interest whatsoever in or to
any investments which a Participating Employer may make to aid it in meeting its
obligations hereunder. Nothing contained in the Plan, and no action taken
pursuant to its provisions, shall

                                      -8-

<PAGE>

create or be construed to create a trust of any kind, or a fiduciary
relationship between the Participating Employer and the Participant or any other
person. To the extent that any person acquires a right to receive benefits under
this Plan, such right shall be no greater than the right of an unsecured general
creditor of the Participating Employer. All payments to be made hereunder shall
be paid in cash from the general funds of the Participating Employer and no
special or separate fund shall be established and no segregation of assets shall
be made to assure payments of such amounts.

                                  ARTICLE VIII
                                   WITHHOLDING

         8.1 The Participant and (if applicable) his surviving spouse shall make
appropriate arrangements with the Participating Employer by which he was or is
employed for the satisfaction of any federal, state or local income tax
withholding requirements and federal social security, medicare, or other
employment tax requirements applicable to the payment or vesting of benefits. If
no other arrangements are made, the Participating Employer may provide, at its
discretion, for such withholding and tax payments as may be required.

                                   ARTICLE IX
                           ADMINISTRATION OF THE PLAN

         9.1 The Plan shall be administered by the Administration Committee
which shall have full power, discretion and authority to interpret, construe and
administer the Plan and any part thereof, and the Administration Committee's
interpretation and construction thereof, and actions thereunder, shall be
binding and conclusive on all persons for all purposes. The Administration
Committee shall be the Governance and Executive Compensation Committee of the
Board, or such other committee as the Board may subsequently appoint to
administer the Plan. All actuarial determinations shall be made by the actuary
for the Retirement Plan, and the Administration Committee shall be entitled to
rely on the good faith determinations of such actuary. Any Participant who is a
member of the Administration Committee shall take no part in any discretionary
action by the Administration Committee which affects only him. Decisions of the
Administration Committee shall be final and binding on all parties who have an
interest in the Plan.

                                    ARTICLE X
                      AMENDMENT OR TERMINATION OF THE PLAN

         10.1 The Board may at any time amend, alter, modify or terminate the
Plan; provided, however, that any such action shall not reduce any benefits
earned under the Plan prior to such action.

                                      -9-

<PAGE>

In the event of termination of the Plan, the Administration Committee (in its
sole discretion) may accelerate the time of vesting and/or date of payment
applicable to such benefits.

                                   ARTICLE XI
                               CLAIMS AND DISPUTES

         11.1 Claims for benefits under the Plan shall be made in writing to the
Administration Committee. The Participant may furnish the Administration
Committee with any written material he believes necessary to perfect his claim.

         11.2 A person whose claim for benefits under the Plan has been denied,
or his duly authorized representative, may request a review upon written
application to the Administration Committee, may review pertinent documents, and
may submit issues and comments in writing. The claimant's written request for
review must be submitted to the Administration Committee within sixty (60) days
after receipt by the claimant of written notification of the denial of a claim.
A decision by the Administration Committee shall be made promptly, and not later
than sixty (60) days after the Administration Committee's receipt of a request
for review, unless special circumstances require an extension of time for
proceeding, in which cases a decision shall be rendered as soon as possible, but
not later than one hundred twenty (120) days after receipt of the request for
review. The decision on review shall be in writing, shall include reasons for
the decision, may include specific reference to the pertinent provision of the
Plan on which the decision is based, and shall be written in a manner calculated
to be understood by the claimant.

         11.3 Unless otherwise required by law, any controversy or claim arising
out of or relating to this Plan or the breach thereof, including in particular
any controversy relating to Articles VI or IX, shall be settled by binding
arbitration in the City of Tecumseh in accordance with the laws of the State of
Michigan by three arbitrators, one of whom shall be appointed by the Company,
one by the Participant (or in the event of his prior death, his
beneficiary(-ies)), and the third of whom shall be appointed by the first two
arbitrators. If the selected (third) arbitrator declines or is unable to serve
for any reason, the appointed arbitrators shall select another arbitrator. Upon
their failure to agree on another arbitrator, the jurisdiction of the Circuit
Court of Lenawee County, Michigan shall be invoked to make such selection. The
arbitration shall be conducted in accordance with the commercial arbitration
rules of the American Arbitration Association except as provided in Section 11.4
below. Judgment upon the award rendered by the arbitrators may be entered in any
court having jurisdiction thereof. Review by the arbitrators of any decision,
action or interpretation of the Board or

                                      -10-

<PAGE>

Administration Committee shall be limited to a determination of whether it was
arbitrary and capricious or constituted an abuse of discretion, within the
guidelines of Firestone Tire & Rubber Co. v. Bruch, 489 U.S. 101 (1989). In the
event the Participant or his beneficiary shall retain legal counsel and/or incur
other costs and expenses in connection with enforcement of any of the
Participant's rights under this Plan, the Participant or beneficiary shall not
be entitled to recover from the Company any attorneys fees, costs or expenses in
connection with the enforcement of such rights (including enforcement of any
arbitration award in court) regardless of the final outcome.

         11.4     Any arbitration shall be conducted as follows:

                  (a) The arbitrators shall follow the Commercial arbitration
         Rules of the American Arbitration Association, except as otherwise
         provided herein. The arbitrators shall substantially comply with the
         rules of evidence; shall grant essential but limited discovery; shall
         provide for the exchange of witness lists and exhibit copies; and shall
         conduct a pretrial and consider dispositive motions. Each party shall
         have the right to request the arbitrators to make findings of specific
         factual issues.

                  (b) The arbitrators shall complete their proceedings and
         render their decision within 40 days after submission of the dispute to
         them, unless both parties agree to an extension. Each party shall
         cooperate with the arbitrators to comply with procedural time
         requirements and the failure of either to do so shall entitle the
         arbitrators to extend the arbitration proceedings accordingly and to
         impose sanctions on the party responsible for the delay, payable to the
         other party. In the event the arbitrators do not fulfill their
         responsibilities on a timely basis, either party shall have the right
         to require a replacement and the appointment of new arbitrators.

                  (c) The decision of the arbitrator shall be final and binding
         upon the parties and accordingly a judgment by any Circuit Court of the
         State of Michigan or any other court of competent jurisdiction may be
         entered in accordance therewith.

                  (d) The costs of the arbitration shall be borne equally by the
         parties to such arbitration, except that each party shall bear its own
         legal and accounting expenses relating to its participation in the
         arbitration.

                  (e) Every asserted claim to benefits or right of action by or
         on behalf of any Participant, past, present, or future, or any spouse,
         child, beneficiary or legal representative thereof, against the Company
         or any Subsidiary arising out of

                                      -11-

<PAGE>

         or in connection with this Plan shall, irrespective of the place where
         such right of action may arise or be asserted, cease and be barred by
         the expiration of the earliest of: (i) one year from the date of the
         alleged act or omission in respect of which such right of action first
         arises in whole or in part, (ii) one year after the Participant's
         termination of employment, or (iii) six months after notice is given to
         or on behalf of the Participant of the amount of benefits payable under
         this Plan.

                                   ARTICLE XII
                                  MISCELLANEOUS

         12.1 Governing Law; Indemnification. This Plan shall be governed by and
construed, enforced, and administered in accordance with the laws of the State
of Michigan excluding any such laws which direct an application of the laws of
any other jurisdiction. Subject to Article XI, the Company, the Participating
Employers and the Administration Committee shall be subject to suit regarding
the Plan only in the courts of the State of Michigan, and the Company shall
fully indemnify and defend the Board and the Administration Committee with
respect to any actions relating to this Plan made in good faith by such bodies
or their members.

         12.2 Prohibition of Assignment. The benefits provided under Article V
of this Plan may not be alienated, assigned, transferred, pledged or
hypothecated by any Participant, surviving spouse or other person, at any time,
to any person whatsoever. These benefits shall be exempt from the claims of
creditors or other claimants and from all orders, decrees, levies, garnishment
or executions to the fullest extent allowed by law.

         12.3 Severability. The provisions of this Plan shall be deemed
severable and in the event any provision of this Plan is held invalid, void, or
unenforceable, the same shall not affect, in any respect whatsoever, the
validity of any other provision of this Plan. Furthermore, the Administration
Committee shall have the power to modify such provision to the extent reasonably
necessary to make the provision, as so changed, both legal, valid and
enforceable as well as compatible with the other provisions of the Plan.

         12.4 Interpretation. Titles and headings to the Articles of this Plan
are included for convenience only and shall not control the meaning or
interpretation of any provision of this Plan. Wherever reasonably necessary in
this Plan, pronouns of any gender shall be deemed synonymous, as shall singular
and plural pronouns.

         12.5 Participant Cooperation. A Participant shall cooperate with the
Company by furnishing any and all information requested by

                                      -12-

<PAGE>

the Company, taking such physical examinations as the Company may deem
necessary, and taking such other relevant actions as may reasonably be required
by the Company or Administration Committee for purposes of the Plan. If a
Participant neglects or refuses so to cooperate, the Company shall have no
further obligation to such Participant or his beneficiaries under the Plan, and
any Plan benefits accrued prior to such neglect or refusal shall be forfeited.

         12.6 Obligations to Company. If any Participant becomes entitled to
payment of benefits under this Plan, and if at such time the Participant has
outstanding any debt, obligation, or other liability representing an amount
owing to the Company or any of its Subsidiaries, then, as provided in Article V,
such amounts owed shall be an offset against the amount of benefits payable
under this Plan.

         12.7 Release and Non-Disclosure/Non-Competition Agreements. As a
condition precedent to commencement of benefit payments under the Plan, and in
consideration of such payments, a Participant may be required to execute and
acknowledge a general release of all claims against the Company (and the
Participating Employer, if not the Company) in such form as the Company may then
require. Upon termination of the Participant's employment, at retirement or
otherwise, the Participant (if the Company requires him to do so) shall execute
and thereafter perform a Non-competition/Non-disclosure Agreement in such form
as the Company may then require. In that event, five percent (5%) of each
payment to the Participant pursuant to the Plan shall be deemed a payment by the
Company for such agreement. If the Participant subsequently violates the
Non-competition/Non-disclosure Agreement, as determined by the Administration
Committee, the Company may suspend payment of Plan benefits to the Participant
and any surviving spouse or other beneficiary until such time as there is a
final determination that no such violation had occurred.

         12.8 No Employment Contract. Nothing in this Plan shall be construed to
limit in any way the right of the Company or any other Participating Employer to
terminate a Participant's employment at any time for any reason whatsoever; nor
shall it be evidence of any agreement or understanding, express or implied, that
the Company or any Participating Employer (i) will employ an employee in any
particular position or for any particular period of time, (ii) will ensure
participation in any incentive program, or (iii) will grant any awards from any
such program.

                                      -13-

<PAGE>

         12.9 Effective Date. The changes to the Plan (as amended and restated
in this document) shall take effect as of June 27, 2001 pursuant to the Board's
approval of such changes on that date.

                                    TECUMSEH PRODUCTS COMPANY

                                    By _______________________________

                                         Its _________________________

                                      -14-
<PAGE>

                                    EXHIBIT A

Executives selected as Participants in the Tecumseh Products Company
Supplemental Retirement Plan:

         Todd W. Herrick
         John H. Foss
         James E. Martinco
         Dennis McCloskey

1993 Participants:

         George W. Gatecliff
         James G. Hammond

                                      A-1
<PAGE>

                                    EXHIBIT B

EXAMPLE OF BENEFIT COMPUTATION:

         Participant A decides to retire at age 60 and receive a joint and
survivor retirement benefit. His Accrued Benefit under the Retirement Plan is
$5,469 per month at his Normal Retirement Date. However, there are actuarial
reductions for commencing benefits before age 62 and for his wife's survivor
benefit, so A's Retirement Benefits (as defined in Section 2.3) will be $4,707
per month. If A's Accrued Benefit were to be calculated under "Formula 1" and
"Formula 2" as described in Section 2.1(iii), Formula 1 would produce the
largest benefit. If that benefit were not reduced in accordance with Code
Sections 401(a)(17) and 415, his Accrued Benefit would be $8,100 per month.
Applying the same actuarial reductions, his Adjusted Retirement Benefits (as
defined in Section 2.1) would be $6,972 per month. A's benefits under this Plan
are initially determined by subtracting his Retirement Benefits from his
Adjusted Retirement Benefits; in other words $6,972 minus $4,707 = $2,265.
Assuming A has no obligations to the Company pursuant to Section 12.6, no
further reductions are required. A's benefits under this Plan are, therefore,
$2,265 per month.

                                      B-1

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