Exhibit 10.6(a)

This plan was last amended effective January 27, 2010 but was not restated on
that date. The following is an accurate compilation of the plan as last amended
through January 27, 2010.

2006 STOCK OPTION PLAN

OF

REXNORD HOLDINGS, INC.

(as amended effective April 19, 2007 and January 27, 2010)

Rexnord Holdings, Inc. (the “Company”), a Delaware corporation, hereby adopts
this 2006 Stock Option Plan of Rexnord Holdings, Inc. The purposes of the Plan
are as follows:

(1) To further the growth, development and financial success of the Company and
its Subsidiaries (as defined herein), by providing additional incentives to
employees, consultants and directors of the Company and its Subsidiaries who
have been or will be given responsibility for the management or administration
of the Company’s or one of its Subsidiaries’ business affairs, by providing a
means through which they can purchase Common Stock, thereby benefiting directly
from the growth, development and financial success of the Company and its
Subsidiaries.

(2) To enable the Company and its Subsidiaries to obtain and retain the services
of the type of professional, technical and managerial employees, consultants and
directors considered essential to the long-range success of the Company and its
Subsidiaries by providing and offering them an opportunity to purchase Common
Stock upon exercise of Options, including, in the case of employees, Options
that are intended to qualify as “incentive stock options” under Section 422 of
the Code (as defined herein).

ARTICLE I.

DEFINITIONS

Whenever the following terms are used in the Plan, they shall have the meaning
specified below unless the context clearly indicates otherwise. The singular
pronoun shall include the plural where the context so indicates.

“Affiliate” shall mean, with respect to any Person, any other Person that,
directly or indirectly, controls, is controlled by, or is under common control
with, such Person, through one or more intermediaries or otherwise. For purposes
of this definition, “control” shall mean, when used with respect to any Person,
the power to direct the management and policies of such Person, directly or
indirectly, through the ownership of voting securities, by contract or
otherwise.

“Board” shall mean the Board of Directors of the Company.

“CEO” shall mean the Chief Executive Officer of the Company.

“Closing Date” shall mean July 21, 2006.

“Code” shall mean the Internal Revenue Code of 1986, as amended.

 

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“Committee” shall mean the Committee appointed as provided in Section 6.1.

“Common Stock” shall mean the Common Stock, par value $0.01 per share, of the
Company.

“Company” shall mean Rexnord Holdings, Inc., a Delaware corporation. In
addition, “Company” shall mean any corporation assuming, or issuing new employee
stock options in substitution for, Incentive Stock Options outstanding under the
Plan in a transaction to which Section 424(a) of the Code applies.

“Consultant” shall mean any Person who has entered into a consulting agreement
with the Company or any of its Subsidiaries.

“Corporate Event” shall mean, as determined by the Committee (or by the Board,
in the case of Options granted to Non-Employee Directors) in its sole
discretion, any transaction or event described in Section 7.1(a) or any unusual
or nonrecurring transaction or event affecting the Company, any Subsidiary of
the Company, or the financial statements of the Company or any Subsidiary of the
Company, or changes in applicable laws, regulations, or accounting principles.

“Director” shall mean a member of the Board.

“Eligible Representative” for an Optionee shall mean such Optionee’s personal
representative or such other Person as is empowered under the deceased
Optionee’s will or the then applicable laws of descent and distribution to
represent the Optionee hereunder.

“Employee” shall mean any employee (as defined in accordance with the
regulations and revenue rulings then applicable under Section 3401(c) of the
Code) of the Company or one of its Subsidiaries, whether such employee is so
employed at the time the Plan is adopted or becomes so employed subsequent to
the adoption of the Plan.

“Exchange Act” shall mean the Securities Exchange Act of 1934, as amended.

“Incentive Stock Option” shall mean an Option which qualifies under Section 422
of the Code and is designated as an Incentive Stock Option by the Committee.

“Liquidity Event” shall mean:

 

  (a) Approval by stockholders of the Company (or, if no stockholder approval is
required, by the Board alone) of the complete dissolution or liquidation of the
Company, other than in the context of a Business Combination (as defined below)
that does not constitute a Liquidity Event under paragraph (c) below;

 

  (b)

The acquisition by any Person of beneficial ownership (within the meaning of
Rule 13d-3 promulgated under the Exchange Act) of 50% or more of the combined
voting power of the then-outstanding voting securities of the Company entitled
to vote generally in the election of directors (the “Outstanding Company Voting
Securities”); provided, however, that, for purposes of this paragraph (b),

 

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  the following acquisitions shall not constitute a Liquidity Event; (A) any
acquisition directly from the Company or any of its Subsidiaries, (B) any
acquisition by the Company or any of its Subsidiaries, (C) any acquisition by
any employee benefit plan (or related trust) sponsored or maintained by the
Company or any of its Affiliates or a successor, (D) any acquisition by any
entity pursuant to a Business Combination, (E) any acquisition by a Person who
is the beneficial owner (within the meaning of Rule 13d-3 promulgated under the
Exchange Act) of 50% or more of the Outstanding Company Common Stock and/or the
Outstanding Company Voting Securities on the Closing Date (or an Affiliate, heir
or descendant of such Person) or (F) any acquisition by the Principal
Stockholder(s) or one of its (their) Affiliated investment funds; or

 

  (c) Consummation of a reorganization, merger, statutory share exchange or
consolidation or similar corporate transaction involving the Company or any of
its Subsidiaries, a sale or other disposition of all or substantially all of the
assets of the Company and its Subsidiaries, taken as a whole, or the acquisition
of assets or stock of another entity by the Company or any of its Subsidiaries
(each, a “Business Combination”), in each case unless, following such Business
Combination, (1) all or substantially all of the individuals and entities that
were the beneficial owners of the Outstanding Company Voting Securities
immediately prior to such Business Combination beneficially own, directly or
indirectly, more than 50% of the combined voting power of the then-outstanding
voting securities entitled to vote generally in the election of directors, as
the case may be, of the entity resulting from such Business Combination
(including, without limitation, an entity that, as a result of such transaction,
owns the Company or all or substantially all of the Company’s assets directly or
through one or more subsidiaries (a “Parent”)), and (2) no Person (excluding any
individual or entity described in clauses (C), (E) or (F) of paragraph
(b) above) beneficially owns (within the meaning of Rule 13d-3 promulgated under
the Exchange Act), directly or indirectly, more than 50% of the combined voting
power of the then-outstanding voting securities of such entity, except to the
extent that the ownership in excess of 50% existed prior to the Business
Combination;

provided, however, that an underwritten public offering of the securities of the
Company or any of its Subsidiaries shall in no event constitute a Liquidity
Event for purposes of the Plan.

“Merger Agreement” shall mean that certain Agreement and Plan of Merger, dated
as of May 24, 2006, by and among Chase Acquisition I, Inc., a Delaware
corporation, Chase Merger Sub, Inc., a Delaware corporation, RBS Global, Inc., a
Delaware corporation, and TC Group, L.L.C., a Delaware limited liability
company.

“Non-Employee Director” shall mean a member of the Board who is not an Employee
of the Company or any of its Subsidiaries.

“Non-Qualified Stock Option” shall mean an Option which is not an “incentive
stock option” under Section 422 of the Code and shall include an Option which is
designated as a Non-Qualified Stock Option by the Committee.

 

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“Officer” shall mean an officer of the Company, as defined in Rule 16a-l(f)
under the Exchange Act, as such Rule may be amended in the future.

“Option” shall mean an option granted under the Plan to purchase Common Stock.
“Options” include both Incentive Stock Options and Non-Qualified Stock Options.

“Optionee” shall mean an Employee, Consultant or Non-Employee Director to whom
an Option is granted under the Plan.

“Person” shall mean an individual, partnership, corporation, limited liability
company, business trust, joint stock company, trust, unincorporated association,
joint venture, governmental authority or other entity of whatever nature.

“Plan” shall mean this 2006 Stock Option Plan of Rexnord Holdings, Inc., as it
may be amended from time to time.

“Principal Stockholder(s)” shall mean Apollo Management VI, L.P. or any of its
Affiliated investment funds to which (a) Apollo Management VI, L.P. or any other
Person transfers Common Stock, or (b) the Company issues Common Stock.

“Secretary” shall mean the Secretary of the Company.

“Securities Act” shall mean the Securities Act of 1933, as amended.

“Stockholders’ Agreement” shall mean, with respect to an Optionee, that certain
agreement by and among the Optionee, the Company and the other stockholders of
the Company party thereto, which contains certain restrictions and limitations
applicable to the shares of Common Stock acquired upon Option exercise (and to
other shares of Common Stock, if any, held by the Optionee during the term of
such agreement). If an Optionee is not a party to a Stockholders’ Agreement at
the time of exercise of the Option (or any portion thereof), the exercise of the
Option shall be subject to the condition that the Optionee enter into a
Stockholders’ Agreement with the Company.

“Subsidiary” means, with respect to any Person, any other Person of which 50% or
more of the voting power of the equity securities or equity interests sufficient
to elect at least a majority of its Board of Directors or other governing body
(or, if there is no such voting power, 50% or more of the equity securities or
equity interests) is owned, directly or indirectly, by such Person.

“Termination of Consultancy” shall mean the time when the Optionee’s consulting
relationship with the Company and all of its Subsidiaries terminates for any
reason. The Board, in its sole discretion, shall determine the effect of all
matters and questions relating to a Termination of Consultancy.

“Termination of Directorship” shall mean the time when an Optionee who is a
Non-Employee Director ceases to be a Director for any reason, including but not
by way of limitation, a termination by resignation, failure to be elected or
appointed, death or retirement. The Board, in its sole discretion, shall
determine the effect of all matters and questions relating to a Termination of
Directorship.

 

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“Termination of Employment” shall mean the time when the employee-employer
relationship between an Optionee and the Company or one of its Subsidiaries is
terminated for any reason, with or without cause, including, but not by way of
limitation, a termination by resignation, discharge, death or retirement, but
excluding a termination where there is a simultaneous reemployment by the
Company or one of its Subsidiaries. The Committee shall determine the effect of
all matters and questions relating to a Termination of Employment, including,
but not by way of limitation, the question of whether a Termination of
Employment resulted from a discharge for good cause, and all questions of
whether a particular leave of absence constitutes a Termination of Employment;
provided, however, that, with respect to Incentive Stock Options, a leave of
absence shall constitute a Termination of Employment if, and to the extent that,
such leave of absence interrupts employment for the purposes of
Section 422(a)(2) of the Code and the then applicable regulations and revenue
rulings under Section 442(a)(2) of the Code.

ARTICLE II.

SHARES SUBJECT TO PLAN

Section 2.1 Shares Subject To Plan

The shares of stock subject to Options shall be shares of Common Stock. Subject
to Section 7.1, the aggregate number of such shares of Common Stock which may be
issued upon exercise of Options is 2,700,000.

Section 2.2 Unexercised Options

If any Option (or portion thereof) expires or is canceled without having been
fully exercised, the number of shares of Common Stock subject to such Option (or
portion thereof) but as to which such Option was not exercised prior to its
expiration or cancellation may again be optioned hereunder, subject to the
limitations of Section 2.1.

ARTICLE III.

GRANTING OF OPTIONS

Section 3.1 Eligibility

Any Employee, Non-Employee Director and Consultant shall be eligible to be
granted Options, except as provided in Section 3.2.

Section 3.2 Qualification Of Incentive Stock Options

No Incentive Stock Option shall be granted to any Person who is not an Employee.

Section 3.3 Granting Of Options To Employees Or Consultants

(a) The Committee shall from time to time:

(i) Select from among the Employees or Consultants (including those to whom
Options have been previously granted under the Plan) such of them as in its
opinion should be granted Options;

 

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(ii) Determine the number of shares of Common Stock to be subject to such
Options granted to such Employees or Consultants, and determine whether such
Options are to be Incentive Stock Options or Non-Qualified Stock Options; and

(iii) Determine the terms and conditions of such Options (provided such terms
and conditions are consistent with the Plan).

(b) Upon the selection of an Employee or Consultant to be granted an Option
pursuant to Section 3.3(a), the Committee shall instruct the Secretary or
another authorized officer of the Company to issue such Option and may impose
such conditions on the grant of such Option as it deems appropriate. Without
limiting the generality of the preceding sentence, the Committee may require as
a condition to the grant of an Option to an Employee or Consultant that the
Employee or Consultant surrender for cancellation some or all of the unexercised
Options which have been previously granted to such Employee or Consultant. An
Option the grant of which is conditioned upon such surrender may have an Option
price lower or higher than the Option price of the surrendered Option, may cover
the same or a lesser or greater number of shares of Common Stock as the
surrendered Option, may contain such other terms as the Committee deems
appropriate and shall be exercisable in accordance with its terms, without
regard to the number of shares of Common Stock, price, period of exercisability
or any other term or condition of the surrendered Option.

Section 3.4 Granting Of Option To Non-Employee Directors

(a) The Board shall from time to time:

(i) Select from among the Non-Employee Directors (including those to whom
Options have previously been granted under the Plan) such of them as in its
opinion should be granted Options;

(ii) Determine the number of shares of Common Stock to be subject to such
Options granted to such selected Non-Employee Directors; and

(iii) Determine the terms and conditions of such Options (provided such terms
and conditions are consistent with the Plan); provided, however, that all
Options granted to Non-Employee Directors shall be Non-Qualified Stock Options.

(b) Upon the selection of a Non-Employee Director to be granted an Option
pursuant to Section 3.4(a), the Board shall instruct the Secretary or another
authorized officer of the Company to issue such Option and may impose such
conditions on the grant of such Option as it deems appropriate. Without limiting

 

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the generality of the preceding sentence, the Board may require as a condition
to the grant of an Option to a Non-Employee Director that the Non-Employee
Director surrender for cancellation some or all of the unexercised Options which
have been previously granted to such Non-Employee Director. An Option the grant
of which is conditioned upon such surrender may have an Option price lower or
higher than the Option price of the surrendered Option, may cover the same or a
lesser or greater number of shares of Common Stock as the surrendered Option,
may contain such other terms as the Board deems appropriate (provided such terms
and conditions are consistent with the Plan) and shall be exercisable in
accordance with its terms, without regard to the number of shares of Common
Stock, price, period of exercisability or any other term or condition of the
surrendered Option.

ARTICLE IV.

TERMS OF OPTIONS

Section 4.1 Stock Option Agreement

Each Option shall be evidenced by a written Stock Option Agreement, which shall
be executed by the Optionee and an authorized Officer of the Company and which
shall contain such terms and conditions as the Committee (or the Board, in the
case of Options granted to Non-Employee Directors) shall determine (provided
such terms and conditions are consistent with the Plan). In the event of a
conflict between the terms of the Stock Option Agreement and the terms of the
Plan, the terms of the Plan shall govern. Stock Option Agreements evidencing
Incentive Stock Options shall contain such terms and conditions as may be
necessary to qualify such Options as “incentive stock options” under Section 422
of the Code.

Section 4.2 Exercisability Of Options

(a) Each Option shall become exercisable according to the terms of the
applicable Stock Option Agreement; provided, however, that by a resolution
adopted after an Option is granted the Committee (or the Board, in the case of
Options granted to Non-Employee Directors) may, on such terms and conditions as
it may determine to be appropriate, accelerate the time at which such Option or
any portion thereof may be exercised.

(b) Except as otherwise provided in the applicable Stock Option Agreement, no
portion of an Option which is unexercisable at Termination of Employment,
Termination of Directorship or Termination of Consultancy, as applicable, shall
thereafter become exercisable.

(c) To the extent that the aggregate fair market value of stock with respect to
which “incentive stock options” (within the meaning of Section 422 of the Code,
but without regard to Section 422(d) of the Code) are exercisable for the first
time by an Optionee during any calendar year (under the Plan and all other
incentive stock option plans of the Company or any Subsidiary thereof) exceeds
$100,000, such options shall be treated and taxable as Non-Qualified Stock
Options. The

 

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rule set forth in the preceding sentence shall be applied by taking options into
account in the order in which they were granted, and the stock issued upon
exercise of options shall designate whether such stock was acquired upon
exercise of an Incentive Stock Option. For purposes of these rules, the fair
market value of stock shall be determined as of the date of grant of the Option
granted with respect to such stock and in the manner set forth in
Section 4.3(b).

Section 4.3 Option Price

(a) The price of the Common Stock subject to each Option shall be set by the
Committee (or the Board, in the case of Options granted to Non-Employee
Directors); provided, however, that the price per share of Common Stock shall be
not less than 100% of the fair market value of such shares on the date such
Option is granted (determined as set forth in Section 4.3(b)); and, that, with
respect to an Incentive Stock Option, in the case of an individual then owning
(within the meaning of Section 424(d) of the Code) more than 10% of the total
combined voting power of all classes of stock of the Company, the price per
share of Common Stock shall not be less than 110% of the fair market value of
such shares on the date such Incentive Stock Option is granted (determined as
set forth in Section 4.3(b)).

(b) For purposes of the Plan, the fair market value of a share of Common Stock
as of a given date shall be:

(i) if the Common Stock is listed on one or more National Securities Exchanges
(within the meaning of the Exchange Act), each share of Common Stock shall be
valued at the closing price of a share of Common Stock on the principal exchange
on which such shares are then trading, or, if no sales of Common Stock were made
on such exchange on that date, the closing price of a share of Common Stock for
the next preceding day on which sales of Common Stock were made on the exchange;

(ii) if the Common Stock is not traded on a National Securities Exchange but is
quoted on NASDAQ or a successor quotation system and the Common Stock is listed
as a National Market Issue under the NASD National Market System, each share of
Common Stock shall be valued at the last sales price per share of Common Stock
on such date as reported by NASDAQ or such successor quotation system, or, if no
sales of Common Stock were reported by NASDAQ or such successor quotation system
on that date, the last price of a share of Common Stock as reported by NASDAQ or
such successor quotation system for the next preceding day on which sales of
Common Stock were reported by NASDAQ or such successor quotation system; or

(iii) if the Common Stock is not publicly traded on a National Securities
Exchange and is not quoted on NASDAQ or a successor quotation system, the fair
market value of the Common Stock shall be determined in good faith by the
Committee.

 

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Section 4.4 Expiration Of Options

No Option may be exercised to any extent by anyone after the first to occur of
the following events:

(a) The expiration of ten years from the date the Option was granted; or

(b) With respect to an Incentive Stock Option in the case of an Optionee owning
(within the meaning of Section 424(d) of the Code), at the time the Incentive
Stock Option was granted, more than 10% of the total combined voting power of
all classes of stock of the Company or any Subsidiary of the Company, the
expiration of five years from the date the Incentive Stock Option was granted.

ARTICLE V.

EXERCISE OF OPTIONS

Section 5.1 Person Eligible To Exercise

During the lifetime of the Optionee, only the Optionee may exercise an Option
(or any portion thereof) granted to the Optionee; provided, however, that the
Optionee’s Eligible Representative may exercise the Optionee’s Option during the
period of the Optionee’s disability (as defined in Section 22(e)(3) of the Code)
notwithstanding that an Option so exercised may not qualify as an Incentive
Stock Option. After the death of the Optionee, any exercisable portion of an
Option may, prior to the time when such portion becomes unexercisable under the
Plan or the applicable Stock Option Agreement, be exercised by the Optionee’s
Eligible Representative.

Section 5.2 Partial Exercise

At any time and from time to time prior to the time when the Option becomes
unexercisable under the Plan or the applicable Stock Option Agreement, the
exercisable portion of an Option may be exercised in whole or in part; provided,
however, that the Company shall not be required to issue fractional shares and
the Committee (or the Board, in the case of Options granted to Non-Employee
Directors) may, by the terms of the Option, require any partial exercise to
exceed a specified minimum number of shares of Common Stock.

Section 5.3 Manner Of Exercise

An exercisable Option, or any exercisable portion thereof, may be exercised
solely by delivery to the Secretary of all of the following prior to the time
when such Option or such portion becomes unexercisable under the Plan or the
applicable Stock Option Agreement:

(a) Notice in writing signed by the Optionee or the Optionee’s Eligible
Representative, stating that such Option or portion is exercised, and
specifically stating the number of shares of Common Stock with respect to which
the Option is being exercised;

 

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(b) A copy of a Joinder to the Stockholders’ Agreement designated by the Company
(in the form attached to such Stockholders’ Agreement) signed by the Optionee or
Eligible Representative, as applicable;

(c) Full payment (in cash or by personal, certified or bank cashier check) for
the shares of Common Stock with respect to which such Option or portion is
thereby exercised; or

(i) Unless otherwise determined by the Committee (or the Board, in the case of
Options to Non-Employee Directors), (A) shares of Common Stock owned by the
Optionee duly endorsed for transfer to the Company; or (B) except with respect
to Incentive Stock Options, shares of the Common Stock issuable to the Optionee
upon exercise of the Option, with a fair market value (as determined under
Section 4.3(b)) on the date of Option exercise equal to the aggregate Option
price of the shares of Common Stock with respect to which such Option or portion
is thereby exercised; or

(ii) Unless otherwise determined by the Committee (or the Board, in the case of
Options granted to Non-Employee Directors), any combination of the consideration
listed in this Section 5.3(c);

(d) The payment to the Company (in cash or by personal, certified or bank
cashier check or by any other means of payment approved by the Committee and set
forth in Section 5.3(c)) of all amounts necessary to satisfy any and all
federal, state and local tax withholding requirements arising in connection with
the exercise of the Option or otherwise;

(e) Such representations and documents as the Committee (or the Board, in the
case of Options granted to Non-Employee Directors) deems necessary or advisable
to effect compliance with all applicable provisions of the Securities Act and
any other applicable federal or state securities laws or regulations. The
Committee (or the Board, in the case of Options granted to Non-Employee
Directors) may, in its sole discretion, also take whatever additional actions it
deems appropriate to effect such compliance including, without limitation,
placing legends on share certificates and issuing stop-transfer orders to
transfer agents and registrars; and

(f) In the event that the Option or portion thereof shall be exercised pursuant
to Section 5.1 by any Person or Persons other than the Optionee, appropriate
proof of the right of such Person or Persons to exercise the Option or portion
thereof.

Section 5.4 Conditions To Issuance Of Stock Certificates

The shares of Common Stock issuable and deliverable upon the exercise of an
Option, or any portion thereof, may be either previously authorized but unissued
shares of Common Stock or issued shares of Common Stock which have then been
reacquired by the Company. A

 

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certificate of shares of Common Stock will be delivered to the Optionee at the
Company’s principal place of business within thirty days of receipt by the
Company of the written notice and payment, unless an earlier date is agreed
upon. Notwithstanding the above, the Company shall not be required to issue or
deliver any certificate or certificates for shares of Common Stock purchased
upon the exercise of any Option or portion thereof prior to fulfillment of all
of the following conditions:

(a) The admission of such shares of Common Stock to listing on any and all stock
exchanges on which such class of stock is then listed;

(b) The completion of any registration or other qualification of such shares of
Common Stock under any state or federal law or under the rulings or regulations
of the Securities and Exchange Commission or any other governmental regulatory
body, which the Committee (or the Board, in the case of Options granted to
Non-Employee Directors) shall, in its sole discretion, deem necessary or
advisable;

(c) The obtaining of any approval or other clearance from any state or federal
governmental agency which the Committee (or the Board, in the case of Options
granted to Non-Employee Directors) shall, in its sole discretion, determine to
be necessary or advisable; and

(d) The payment to the Company of all amounts which it is required to withhold
under federal, state or local law in connection with the exercise of the Option
or otherwise.

Section 5.5 Rights As Stockholders

The holder of an Option shall not be, nor have any of the rights or privileges
of, a stockholder of the Company in respect of any shares of Common Stock
purchasable upon the exercise of any part of an Option unless and until such
holder has signed a Joinder to the Stockholders’ Agreement designated by the
Company (in the form attached to such Stockholders’ Agreement) and certificates
representing such shares of Common Stock have been issued by the Company to such
holder.

Section 5.6 Transfer Restrictions

Shares of Common Stock acquired upon exercise of an Option shall be subject to
the terms and conditions of a Stockholders’ Agreement. In addition, the
Committee (or the Board, in the case of Options granted to Non-Employee
Directors), in its sole discretion, may impose further restrictions on the
transferability of the shares of Common Stock purchasable upon the exercise of
an Option as it deems appropriate. Any such restriction shall be set forth in
the respective Stock Option Agreement and may be referred to on the certificates
evidencing such shares of Common Stock. The Committee may require the Employee
to give the Company prompt notice of any disposition of shares of Common Stock,
acquired by exercise of an Incentive Stock Option, within two years from the
date of granting such Option or one year after the transfer of such shares of
Common Stock to such Employee. The Committee may direct that the certificates
evidencing shares of Common Stock acquired by exercise of an Incentive Stock
Option refer to such requirement.

 

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ARTICLE VI.

ADMINISTRATION

Section 6.1 Committee

The Committee shall be the Compensation Committee of the Board. Any action
required or permitted to be taken by the Committee hereunder or under any Stock
Option Agreement may be taken by the Board. The Board or the Committee may, by a
resolution adopted by the Board or the Committee, appoint a subcommittee of the
Committee to take any action required or permitted to be taken by the Committee
hereunder or under any Stock Option Agreement, on the terms, conditions and
limitations set forth in such Board or Committee resolution.

Section 6.2 Delegation By Committee

To the extent permitted by applicable law, the Committee, in its sole
discretion, may delegate all rights, powers and duties of the Committee under
the Plan (except those granted pursuant to Sections 3.3, 4.3, 5.3(c), 5.3(e),
5.6 and Article VII) to the CEO pursuant to a written instrument signed by each
member of the Committee.

Section 6.3 Duties And Powers Of CEO And The Committee

It shall be the duty of the Committee (or, if administrative authority is
delegated by the Committee to the CEO pursuant to Section 6.2, the CEO, subject
to the approval of the Committee) to conduct the general administration of the
Plan in accordance with its provisions, and the Committee (or, if administrative
authority is delegated by the Committee to the CEO pursuant to Section 6.2, the
CEO, subject to the approval of the Committee) shall have the power to interpret
the Plan and the Options and to adopt such rules for the administration,
interpretation and application of the Plan as are consistent therewith and to
interpret, amend or revoke any such rules. Notwithstanding the foregoing, the
full Board, acting by a majority of its members in office, shall conduct the
general administration of the Plan with respect to Options granted to
Non-Employee Directors. Any such interpretations and rules in regard to
Incentive Stock Options shall be consistent with the terms and conditions
applicable to “incentive stock options” within the meaning of Section 422 of the
Code. All determinations and decisions made by the Committee (or, if
administrative authority is delegated to the CEO pursuant to Section 6.2, by the
CEO and approved by the Committee) under any provision of the Plan or of any
Option granted thereunder shall be final, conclusive and binding on all persons.

Section 6.4 Compensation, Professional Assistance, Good Faith Actions

The members of the Committee shall receive such compensation for their services
hereunder as may be determined by the Board. All expenses and liabilities
incurred by the members of the Committee or the Board in connection with the
administration of the Plan shall be borne by the Company. The Committee or the
Board may employ attorneys, consultants, accountants, appraisers, brokers or
other persons. The Committee, the Company and its Officers and Directors shall
be entitled to rely upon the advice, opinions or valuations of any such persons.
All actions taken and all interpretations and determinations made by the CEO,
the Committee and the Board, in good faith shall be final and binding upon all
Optionees, the Company and all other interested persons. No member of the Board
or the CEO shall be personally liable for any action, determination or
interpretation made in good faith with respect to the Plan or the Options, and
all members of the Board shall be indemnified by the Company in respect to any
such action, determination or interpretation.

 

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ARTICLE VII.

OTHER PROVISIONS

Section 7.1 Changes In Common Stock; Disposition Of Assets And Corporate Events.

(a) Subject to Section 7.1(d), (x) in the event that the Committee (or the
Board, in the case of Options granted to Non-Employee Directors) determines that
any dividend or other distribution (whether in the form of cash, Common Stock,
other securities, or other property), recapitalization, reclassification, stock
split, reverse stock split, reorganization, merger, consolidation, split-up,
spin-off, combination, repurchase, liquidation, dissolution, or sale, transfer,
exchange or other disposition of all or substantially all of the assets of the
Company and its Subsidiaries, taken as a whole (including, but not limited to, a
Liquidity Event), or exchange of Common Stock or other securities of the
Company, issuance of warrants or other rights to purchase Common Stock or other
securities of the Company, or other similar corporate transaction or event, in
the Committee’s sole discretion (or in the case of Options granted to
Non-Employee Directors, the Board’s sole discretion), affects the Common Stock
or the value thereof, or (y) in the event of the issuance of securities of the
Company or any of its Subsidiaries or interim holding companies, in addition to
the securities of any such entities outstanding as of the Closing Date, that
would dilute (on a fully diluted basis) the equity interests of Optionees under
the Plan in the Company and its Subsidiaries to a greater degree than any such
issuance would dilute (on a fully diluted basis) the equity interests of the
Principal Stockholder(s) and its (their) Affiliated investment funds, taken as a
whole, in the Company and its Subsidiaries (taking into account any
consideration received with respect to such securities), then the Committee (or
the Board, in the case of Options granted to Non-Employee Directors) shall, in
such manner and at such time, and, for an event described in clause (x) above,
to such extent as it deems appropriate and equitable in the circumstances,
adjust any or all of the following so as to prevent dilution or enlargement of
the benefits or potential benefits intended to be made available under the Plan
or with respect to an Option:

(i) The number and kind of shares (or other securities or property) with respect
to which Options may be granted under the Plan (including, but not limited to,
adjustments of the limitations in Section 2.1 on the maximum number and kind of
shares which may be issued);

(ii) The number and kind of shares (or other securities or property) subject to
outstanding Options;

(iii) The exercise price with respect to any Option; and

(iv) The financial or other “targets” specified in a Stock Option Agreement for
determining the exercisability of Options.

 

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(b) Subject to Section 7.1(d) and the terms of outstanding Options, upon the
occurrence of a Corporate Event, the Committee (or the Board, in the case of
Options granted to Non-Employee Directors), in its sole discretion, is hereby
authorized to take any one or more of the following actions whenever the
Committee (or the Board, in the case of Options granted to Non-Employee
Directors) determines that such action is appropriate in order to prevent
dilution or enlargement of the benefits or potential benefits intended to be
made available under the Plan or with respect to any Option under the Plan, to
facilitate such Corporate Event or to give effect to such changes in laws,
regulations or principles:

(i) In its sole discretion, and on such terms and conditions as it deems
appropriate, the Committee (or the Board, in the case of Options granted to
Non-Employee Directors) may provide, either by the terms of the applicable Stock
Option Agreement or by action taken prior to the occurrence of such Corporate
Event and either automatically or upon the Optionee’s request, for either the
purchase of any such Option for an amount of cash, securities, or other property
equal to the amount that could have been attained upon the exercise of the
vested portion of such Option (and such additional portion of the Option as the
Board or Committee may determine) immediately prior to the occurrence of such
transaction or event, or the replacement of such vested (and/or other) portion
of such Option with other rights or property selected by the Committee (or the
Board, in the case of Options granted to Non-Employee Directors) in its sole
discretion;

(ii) In its sole discretion, the Committee (or the Board, in the case of Options
granted to Non-Employee Directors) may provide, either by the terms of the
applicable Stock Option Agreement or by action taken prior to the occurrence of
such Corporate Event, that the Option (or any portion thereof) cannot be
exercised after such event;

(iii) In its sole discretion, and on such terms and conditions as it deems
appropriate, the Committee (or the Board, in the case of Options granted to
Non-Employee Directors) may provide, either by the terms of the applicable Stock
Option Agreement or by action taken prior to the occurrence of such Corporate
Event, that for a specified period of time prior to such Corporate Event, such
Option shall be exercisable as to all shares of Common Stock covered thereby or
a specified portion of such shares of Common Stock, notwithstanding anything to
the contrary in (A) Section 4.2; or (B) the provisions of the applicable Stock
Option Agreement;

(iv) In its sole discretion, and on such terms and conditions as it deems
appropriate, the Committee (or the Board, in the case of Options granted to
Non-Employee Directors) may provide, either by the terms of the applicable Stock
Option Agreement or by action taken prior to the

 

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occurrence of such Corporate Event, that upon such Corporate Event, such Option
(or any portion thereof) be assumed by the successor or survivor corporation, or
a parent or subsidiary thereof, or shall be substituted for by similar options,
rights or awards covering the stock of the successor or survivor corporation, or
a parent or subsidiary thereof, with appropriate adjustments as to the number
and kind of shares and the exercise price subject to such Option; and

(v) In its sole discretion, and on such terms and conditions as it deems
appropriate, the Committee (or the Board, in the case of Options granted to
Non-Employee Directors) may make adjustments in the number and type of shares of
Common Stock (or other securities or property) subject to outstanding Options
(or any portion thereof) and/or in the terms and conditions of (including the
exercise price), and the criteria included in, outstanding Options and Options
which may be granted in the future.

(c) Subject to Section 7.1(d), the Committee (or the Board, in the case of
Options granted to Non-Employee Directors) may, in its sole discretion, include
such further provisions and limitations in any Stock Option Agreement as it may
deem equitable and in the best interests of the Company and its Subsidiaries.

(d) With respect to Incentive Stock Options, no adjustment or action described
in this Section 7.1 or in any other provision of the Plan shall be authorized or
permitted to be taken or implemented to the extent that such adjustment or
action would cause the Plan to violate Section 422(b)(1) of the Code or any
successor provisions thereto, unless the Committee determines that the Plan
and/or the Options are not to comply with Section 422(b)(1) of the Code.

Section 7.2 Options Not Transferable

No Option or interest or right therein or part thereof shall be encumbered by
any debts, contracts or engagements of the Optionee or the Optionee’s successors
in interest or shall be subject to disposition by transfer, alienation,
anticipation, hypothecation, pledge, encumbrance, assignment or any other means
whether such disposition be voluntary or involuntary or by operation of law, by
judgment, levy, attachment, garnishment or any other legal or equitable
proceedings (including bankruptcy), and any attempted disposition thereof shall
be null and void and of no effect. Notwithstanding the foregoing, nothing in
this Section 7.2 shall prevent transfers of the Option to the Company or by will
or by the applicable laws of descent and distribution.

Section 7.3 Amendment, Suspension Or Termination Of The Plan

The Plan may be wholly or partially amended or otherwise modified, suspended or
terminated at any time or from time to time by the Board or the Committee in a
written instrument. However, without stockholder approval within 12 months
before or after such action no action of the Board or the Committee may, except
as provided in Section 7.1, increase any limit imposed in Section 2.1 on the
maximum number of shares of Common Stock which may be

 

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issued on exercise of Options, reduce the minimum Option price requirements of
Section 4.3(a), or extend the limit imposed in this Section 7.3 on the period
during which Options may be granted. Except as provided by Section 7.1, neither
the amendment, suspension nor termination of the Plan shall, without the consent
of the holder of the Option, alter or impair any rights or obligations under any
Option theretofore granted. No Option may be granted during any period of
suspension nor after termination of the Plan, and in no event may any Option be
granted under the Plan after the expiration of ten years from the date the Plan
is adopted by the Board.

Section 7.4 Effect Of Plan Upon Other Option And Compensation Plans

The adoption of the Plan shall not affect any other compensation or incentive
plans in effect for the Company or any Subsidiary of the Company. Nothing in the
Plan shall be construed to limit the right of the Company or any Subsidiary of
the Company (a) to establish any other forms of incentives or compensation for
directors, consultants or employees of the Company or any Subsidiary of the
Company; or (b) to grant or assume options other than under the Plan in
connection with any proper purpose, including, but not by way of limitation, the
grant or assumption of options in connection with the acquisition by purchase,
lease, merger, consolidation or otherwise, of the business, stock or assets of
any Person.

Section 7.5 Approval Of Plan By Board and Stockholders

This Plan is effective as of July 21, 2006 pursuant to the approval of this Plan
by the Board and the Company’s stockholders on such date.

Section 7.6 Titles

Titles are provided herein for convenience only and are not to serve as a basis
for interpretation or construction of the Plan.

Section 7.7 Conformity to Laws Generally

The Plan, the granting and vesting of Options under the Plan, and the offer,
issuance and delivery of shares of Common Stock are subject to compliance with
all applicable federal and state laws, rules and regulations (including but not
limited to state and federal securities laws, federal margin requirements and,
to the extent applicable as the Company’s state of incorporation, the laws of
the state of Delaware) and to such approvals by any listing, regulatory or
governmental authority as may, in the opinion of counsel for the Corporation, be
necessary or advisable in connection therewith. The person acquiring any
securities under this Plan will, if requested by the Corporation, provide such
assurances and representations to the Corporation as the Administrator may deem
necessary or desirable to assure compliance with all applicable legal and
accounting requirements.

Section 7.8 Conformity To Securities Laws

The Plan is intended to conform to the extent necessary with all provisions of
the Securities Act and the Exchange Act and any and all regulations and rules
promulgated by the Securities and Exchange Commission thereunder to the extent
the Company or any Optionee is subject to the provisions thereof.
Notwithstanding anything herein to the contrary, the Plan shall

 

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be administered, and Options shall be granted and may be exercised, only in such
a manner as to conform to such laws, rules and regulations. To the extent
permitted by applicable law, the Plan and Options granted hereunder shall be
deemed amended to the extent necessary to conform to such laws, rules and
regulations.

Section 7.9 Governing Law

To the extent not preempted by federal law, the Plan shall be construed in
accordance with and governed by the laws of the state of New York, without
regard to conflicts of law provisions that would give effect to the laws of
another jurisdiction.

Section 7.10 Severability

In the event any portion of the Plan or any action taken pursuant thereto shall
be held illegal or invalid for any reason, the illegality or invalidity shall
not affect the remaining parts of the Plan, and the Plan shall be construed and
enforced as if the illegal or invalid provisions had not been included, and the
illegal or invalid action shall be null and void.

Section 7.11 Amendment of Stock Option Agreements

The Committee (or the Board, in the case of Options granted to Non-Employee
Directors) at any time, and from time to time, may amend the terms of any one or
more existing Stock Option Agreements by agreement or resolution; provided,
however, that the rights of an Optionee under a Stock Option Agreement shall not
be adversely impaired without the Optionee’s written consent. The Company shall
provide an Optionee with notice and a copy of any amendment made to such
Optionee’s existing Stock Option Agreement.

 

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I hereby certify that the foregoing Plan was duly adopted by the Board of
Directors of Rexnord Holdings, Inc. on July 21, 2006.

Executed on this 21st day of July, 2006.

 

REXNORD HOLDINGS, INC.  

/s/ Thomas J. Jansen

Name:   Thomas J. Jansen Title:   Executive Vice President and Chief Financial
Officer

 

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