exhibit10_1.htm


    
 

    
 

    FORM
      OF

    KEY
      EXECUTIVE EMPLOYMENT AND SEVERANCE AGREEMENT

     

    THIS
      AGREEMENT, made and entered into as of the _____day of ________, 2007,
      by and between Regal-Beloit Corporation, a Wisconsin corporation (hereinafter
      referred to as the “Company”), and [_______________] (hereinafter referred to as
      the “Executive”).

     

    WITNESSETH

     

    WHEREAS,
      the Executive is employed by the Company and/or a subsidiary of the Company
      (hereinafter referred to collectively as the “Employer”) in a key executive
      capacity and the Executive’s services are valuable to the conduct of the
      business of the Company;

     

    WHEREAS,
      the Company desires to continue to attract and retain dedicated and
      skilled management employees in a period of industry consolidation, consistent
      with achieving the best possible value for its shareholders in any change in
      control of the Company;

     

    WHEREAS,
      the Company recognizes that circumstances may arise in which a change in control
      of the Company occurs, through acquisition or otherwise, thereby causing a
      potential conflict of interest between the Company’s needs for the Executive to
      remain focused on the Company’s business and for the necessary continuity in
      management prior to and following a change in control, and the Executive’s
      reasonable personal concerns regarding future employment with the Employer
      and
      economic protection in the event of loss of employment as a consequence of
      a
      change in control;

     

    WHEREAS,
      the Company and the Executive are desirous that any proposal for a change in
      control or acquisition of the Company will be considered by the Executive
      objectively and with reference only to the best interests of the Company and
      its
      shareholders; 

     

    WHEREAS,
      the Executive will be in a better position to consider the Company’s best
      interests if the Executive is afforded reasonable economic security, as provided
      in this Agreement, against altered conditions of employment which could result
      from any such change in control or acquisition; 

     

    WHEREAS,
      the Executive possesses intimate knowledge of the business and affairs of the
      Company and has acquired certain confidential information and data with respect
      to the Company; and

     

    WHEREAS,
      the Company desires to insure, insofar as possible, that it will continue to
      have the benefit of the Executive’s services and to protect its confidential
      information and goodwill.

     

    NOW,
      THEREFORE, in consideration of the foregoing and of the mutual
      covenants and agreements hereinafter set forth, the parties hereto mutually
      covenant and agree as follows:

     

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    1.  Definitions.

     

    (a)  409A
      Affiliate.  The term “409A Affiliate” means each entity that is
      required to be included in the Company’s controlled group of corporations within
      the meaning of Section 414(b) of the Code, or that is under common control
      with
      the Company within the meaning of Section 414(c) of the Code; provided,
      however, that the phrase “at least 50 percent” shall be used in place of
      the phrase “at least 80 percent” each place it appears therein or in the
      regulations thereunder. 

     

    (b)  Accrued
      Benefits.  The term “Accrued Benefits” shall include the following
      amounts, payable as described herein: (i) all base salary for the time
      period ending with the Termination Date; (ii) reimbursement for any and all
      monies advanced in connection with the Executive’s employment for reasonable and
      necessary expenses incurred by the Executive on behalf of the Employer for
      the
      time period ending with the Termination Date; (iii) any and all other cash
      earned through the Termination Date and deferred at the election of the
      Executive or pursuant to any deferred compensation plan then in effect;
      (iv) notwithstanding any provision of any bonus or incentive compensation
      plan applicable to the Executive, but subject to any deferral election then
      in
      effect, a lump sum amount, in cash, equal to the sum of (A) any bonus or
      incentive compensation that has been allocated or awarded to the Executive
      for a
      fiscal year or other measuring period under the plan that ends prior to the
      Termination Date but has not yet been paid (pursuant to Section 5(f)
      or otherwise) and (B) a pro rata portion to the Termination Date of the
      aggregate value of all contingent bonus or incentive compensation awards to
      the
      Executive for all uncompleted periods under the plan calculated as to each
      such
      award as if the Goals with respect to such bonus or incentive compensation
      award
      had been attained at the target level (reduced, but not below zero, by amounts
      paid under all such contingent bonus or incentive compensation awards upon
      the
      Change in Control of the Company to the extent such amounts relate to the same
      period of time); and (v) all other payments and benefits to which the
      Executive (or in the event of the Executive’s death, the Executive’s surviving
      spouse or other beneficiary) may be entitled on the Termination Date as
      compensatory fringe benefits or under the terms of any benefit plan of the
      Employer, excluding severance payments under any Employer severance policy,
      practice or agreement in effect on the Termination Date.  Payment of
      Accrued Benefits shall be made promptly in accordance with the Company’s
      prevailing practice with respect to clauses (i) and (ii) or,
      with respect to clauses (iii), (iv) and (v), pursuant
      to the terms of the benefit plan or practice establishing such benefits;
provided that payments pursuant to clause (iv)(B) shall be paid on the
      first day of the seventh month following the month in which the Executive’s
      Separation from Service occurs, unless the Executive’s Separation from Service
      is due to death, in which event such payment shall be made within 90 days of
      the
      date of Executive’s death.

     

    (c)  Act.  The
      term “Act” means the Securities Exchange Act of 1934, as amended.

     

    (d)  Affiliate
      and Associate.  The terms “Affiliate” and “Associate” shall have
      the respective meanings ascribed to such terms in Rule l2b-2 of the General
      Rules and Regulations under the Act.

     

    
      
         

      

      
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    (e)  Annual
      Cash Compensation.  The term “Annual Cash Compensation” shall mean
      the sum of (i) the Executive’s Annual Base Salary (determined as of the
      time of the Change in Control of the Company or, if higher, immediately prior
      to
      the date the Notice of Termination is given) plus (ii) an amount equal to
      the greater of the Executive’s annual incentive target bonus for the fiscal year
      in which the Termination Date occurs or the annual incentive bonus the Executive
      received for the fiscal year prior to the Change in Control of the Company
      plus
      (iii) an amount equal to the greater of the Executive’s Fringe Benefits for the
      fiscal year in which the Termination Date occurs or the annual amount of Fringe
      Benefits the Executive received for the fiscal year prior to the Change in
      Control of the Company (the aggregate amount set forth in
clause (i), clause (ii) and clause iii shall
      hereafter be referred to as the “Annual Cash Compensation”).

     

    (f)  Beneficial
      Owner.  A Person shall be deemed to be the “Beneficial Owner” of
      any securities:

     

    (i)  which
      such Person or any of such Person’s Affiliates or Associates has the right to
      acquire (whether such right is exercisable immediately or only after the passage
      of time) pursuant to any agreement, arrangement or understanding, or upon the
      exercise of conversion rights, exchange rights, rights, warrants or options,
      or
      otherwise; provided, however, that a Person shall not be deemed the
      Beneficial Owner of, or to beneficially own, (A) securities tendered
      pursuant to a tender or exchange offer made by or on behalf of such Person
      or
      any of such Person’s Affiliates or Associates until such tendered securities are
      accepted for purchase, or (B) securities issuable upon exercise of Rights
      issued pursuant to the terms of the Company’s Rights Agreement, dated as of
      January 28, 2000, between the Company and Firstar Bank, N.A., as amended from
      time to time (or any successor to such Rights Agreement), at any time before
      the
      issuance of such securities;

     

    (ii)  which
      such Person or any of such Person’s Affiliates or Associates, directly or
      indirectly, has the right to vote or dispose of or has “beneficial ownership” of
      (as determined pursuant to Rule l3d-3 of the General Rules and Regulations
      under the Act), including pursuant to any agreement, arrangement or
      understanding; provided, however, that a Person shall not be deemed the
      Beneficial Owner of, or to beneficially own, any security under this clause
      (ii) as a result of an agreement, arrangement or understanding to vote
      such security if the agreement, arrangement or understanding: (A) arises
      solely from a revocable proxy or consent given to such Person in response to
      a
      public proxy or consent solicitation made pursuant to, and in accordance with,
      the applicable rules and regulations under the Act and (B) is not also then
      reportable on a Schedule l3D under the Act (or any comparable or successor
      report); or

     

    (iii)  which
      are
      beneficially owned, directly or indirectly, by any other Person with which
      such
      Person or any of such Person’s Affiliates or Associates has any agreement,
      arrangement or understanding for the purpose of acquiring, holding, voting
      (except pursuant to a revocable proxy as described in clause (ii) above)
      or disposing of any voting securities of the Company.

     

    
      
         

      

      
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    (g)  Cause.  “Cause”
      for termination by the Employer of the Executive’s employment shall be limited
      to any of the following: (i) the engaging by the Executive in intentional
      conduct not taken in good faith that the Company establishes, by clear and
      convincing evidence, has caused demonstrable and serious financial injury to
      the
      Employer, as evidenced by a determination in a binding and final judgment,
      order
      or decree of a court or administrative agency of competent jurisdiction, in
      effect after exhaustion or lapse of all rights of appeal, in an action, suit
      or
      proceeding, whether civil, criminal, administrative or investigative;
      (ii) conviction of a felony (as evidenced by binding and final judgment,
      order or decree of a court of competent jurisdiction, in effect after exhaustion
      of all rights of appeal), which substantially impairs the Executive’s ability to
      perform his duties or responsibilities; or (iii) continuing willful and
      unreasonable refusal by the Executive to perform the Executive’s duties or
      responsibilities (unless significantly changed without the Executive’s
      consent).

     

    (h)  Change
      in Control of the Company. A “Change in Control of the Company” shall be
      deemed to have occurred if an event set forth in any one of the following
      paragraphs shall have occurred:

     

    (i)  any
      Person (other than (A) the Company or any of its subsidiaries, (B) a trustee
      or
      other fiduciary holding securities under any employee benefit plan of the
      Company or any of its subsidiaries, (C) an underwriter temporarily holding
      securities pursuant to an offering of such securities or (D) a corporation
      owned, directly or indirectly, by the shareholders of the Company in
      substantially the same proportions as their ownership of stock in the Company
      (“Excluded Persons”) is or becomes the Beneficial Owner, directly or indirectly,
      of securities of the Company (not including in the securities beneficially
      owned
      by such Person any securities acquired directly from the Company or its
      Affiliates after ____________, 2007, pursuant to express authorization by the
      Board that refers to this exception) representing 20% or more of either the
      then
      outstanding shares of common stock of the Company or the combined voting power
      of the Company’s then outstanding voting securities; or

     

    (ii)  the
      following individuals cease for any reason to constitute a majority of the
      number of directors of the Company then serving:  (A) individuals who,
      on __________, 2007 constituted the Board and (B) any new director (other than
      a
      director whose initial assumption of office is in connection with an actual
      or
      threatened election contest, including but not limited to a consent
      solicitation, relating to the election of directors of the Company) whose
      appointment or election by the Board or nomination for election by the Company’s
      shareholders was approved by a vote of at least two-thirds (2/3) of the
      directors then still in office who either were directors on _________, 2007,
      or
      whose appointment, election or nomination for election was previously so
      approved (collectively the “Continuing Directors”); provided, however,
      that individuals who are appointed to the Board pursuant to or in accordance
      with the terms of an agreement relating to a merger, consolidation, or share
      exchange involving the Company (or any direct or indirect subsidiary of the
      Company) shall not be Continuing Directors for purposes of this Agreement until
      after such individuals are first nominated for election by a vote of at least
      two-thirds (2/3) of the then Continuing Directors and are thereafter elected
      as
      directors by the shareholders of the Company at a meeting of shareholders held
      following consummation of such merger, consolidation, or share exchange;
and, provided further, that in the event the failure of any such
      persons appointed to the Board to be Continuing Directors results in a Change
      in
      Control of the Company, the subsequent qualification of such persons as
      Continuing Directors shall not alter the fact that a Change in Control of the
      Company occurred; or

     

     

    
      
         

      

      
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    (iii)  the
      shareholders of the Company approve a merger, consolidation or share exchange
      of
      the Company with any other corporation or approve the issuance of voting
      securities of the Company in connection with a merger, consolidation or share
      exchange of the Company (or any direct or indirect subsidiary of the Company)
      pursuant to applicable stock exchange requirements, other than (A) a merger,
      consolidation or share exchange which would result in the voting securities
      of
      the Company outstanding immediately prior to such merger, consolidation or
      share
      exchange continuing to represent (either by remaining outstanding or by being
      converted into voting securities of the surviving entity or any parent thereof)
      at least 50% of the combined voting power of the voting securities of the
      Company or such surviving entity or any parent thereof outstanding immediately
      after such merger, consolidation or share exchange, or (B) a merger,
      consolidation or share exchange effected to implement a recapitalization of
      the
      Company (or similar transaction) in which no Person (other than an Excluded
      Person) is or becomes the Beneficial Owner, directly or indirectly, of
      securities of the Company (not including in the securities beneficially owned
      by
      such Person any securities acquired directly from the Company or its Affiliates
      after __________, 2007, pursuant to express authorization by the Board that
      refers to this exception) representing 20% or more of either the then
      outstanding shares of common stock of the Company or the combined voting power
      of the Company’s then outstanding voting securities; or

     

    (iv)  the
      shareholders of the Company approve of a plan of complete liquidation or
      dissolution of the Company or an agreement for the sale or disposition by the
      Company of all or substantially all of the Company’s assets (in one transaction
      or a series of related transactions within any period of 24 consecutive months),
      other than a sale or disposition by the Company of all or substantially all
      of
      the Company’s assets to an entity at least 75% of the combined voting power of
      the voting securities of which are owned by Persons in substantially the same
      proportions as their ownership of the Company immediately prior to such
      sale.

     

    Notwithstanding
      the foregoing, no “Change in Control of the Company” shall be deemed to have
      occurred if there is consummated any transaction or series of integrated
      transactions immediately following which the record holders of the common stock
      of the Company immediately prior to such transaction or series of transactions
      continue to own, directly or indirectly, in the same proportions as their
      ownership in the Company, an entity that owns all or substantially all of the
      assets or voting securities of the Company immediately following such
      transaction or series of transactions.

     

    
      
         

      

      
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(i)  Code.  The
        term “Code” means the Internal Revenue Code of 1986, including any amendments
        thereto or successor tax codes thereof.

    

     

    (j)  Covered
      Termination.  Subject to Section 2(b), the term
“Covered Termination” means any Termination of Employment during the Employment
      Period where the Termination Date, or the date Notice of Termination is
      delivered, is any date prior to the end of the Employment Period.

     

    (k)  Employment
      Period.  Subject to Section 2(b), the term “Employment
      Period” means a period commencing on the date of a Change in Control of the
      Company, and ending at 11:59 p.m. Central Time on the earlier of the third
      anniversary of such date or the Executive’s Normal Retirement Date.

     

    (l)  Fringe
      Benefits.  The term “Fringe Benefits” means the fair market value
      of the fringe benefits payable to Executive by the Company (determined as of
      the
      time of the Change in Control of the Company or, if higher, immediately prior
      to
      the date the Notice of Termination is given).  For these purposes,
      Fringe Benefits include, but are not limited to club dues or automobile
      reimbursement and do not include welfare benefits, such as medical coverage
      (including prescription drug coverage), dental coverage, life insurance,
      disability insurance and accidental death and dismemberment
      benefits.

     

    (m)  Good
      Reason.  The Executive shall have “Good Reason” for termination of
      employment in the event of:

     

    (i)  any
      breach of this Agreement by the Employer, including specifically any breach
      by
      the Employer of the agreements contained in Section 3(b),
Section 4, Section 5, or Section 6, other
      than an isolated, insubstantial and inadvertent failure not occurring in bad
      faith that the Employer remedies promptly after receipt of notice thereof given
      by the Executive;

     

    (ii)  any
      reduction in the Executive’s base salary, percentage of base salary available as
      incentive compensation or bonus opportunity or benefits, in each case relative
      to those most favorable to the Executive in effect at any time during the
      180-day period prior to the Change in Control of the Company or, to the extent
      more favorable to the Executive, those in effect at any time during the
      Employment Period;

     

    (iii)  the
      removal of the Executive from, or any failure to reelect or reappoint the
      Executive to, any of the positions held with the Employer on the date of the
      Change in Control of the Company or any other positions with the Employer to
      which the Executive shall thereafter be elected, appointed or assigned, except
      in the event that such removal or failure to reelect or reappoint relates to
      the
      termination by the Employer of the Executive’s employment for Cause or by reason
      of disability pursuant to Section 12;

     

    (iv)  a
      good
      faith determination by the Executive that there has been a material adverse
      change, without the Executive’s written consent, in the Executive’s working
      conditions or status with the Employer relative to the most favorable working
      conditions or status in effect during the 180-day period prior to the Change
      in
      Control of the Company, or, to the extent more favorable to the Executive,
      those
      in effect at any time during the Employment Period, including but not limited
      to
      (A) a significant change in the nature or scope of the Executive’s
      authority, powers, functions, duties or responsibilities, or (B) a
      significant reduction in the level of support services, staff, secretarial
      and
      other assistance, office space and accoutrements, but in each case excluding
      for
      this purpose an isolated, insubstantial and inadvertent event not occurring
      in
      bad faith that the Employer remedies within ten (10) days after receipt of
      notice thereof given by the Executive;

     

    
      
         

      

      
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    (v)  the
      relocation of the Executive’s principal place of employment to a location more
      than 50 miles from the Executive’s principal place of employment on the date 180
      days prior to the Change in Control of the Company;

     

    (vi)  the
      Employer requires the Executive to travel on Employer business 20% in excess
      of
      the average number of days per month the Executive was required to travel during
      the 180-day period prior to the Change in Control of the Company;
      or

     

    (vii)  failure
      by the Company to obtain the Agreement referred to in Section 17(a)
      as provided therein.

     

    (n)  Normal
      Retirement Date.  The term “Normal Retirement Date” means “Normal
      Retirement Date” as defined in the primary qualified defined benefit pension
      plan applicable to the Executive, or any successor plan, as in effect on the
      date of the Change in Control of the Company.  

     

    (o)  Person.  The
      term “Person” shall mean any individual, firm, partnership, corporation or other
      entity, including any successor (by merger or otherwise) of such entity, or
      a
      group of any of the foregoing acting in concert.

     

    (p)  Separation
      from Service.  For purposes of this Agreement, the term
“Separation from Service” means an Executive’s Termination of Employment, or if
      the Executive continues to provide services following his or her Termination
      of
      Employment, such later date as is considered a separation from service from
      the
      Company and its 409A Affiliates within the meaning of Code Section
      409A.   Specifically, if Executive continues to provide services
      to the Company or a 409A Affiliate in a capacity other than as an employee,
      such
      shift in status is not automatically a Separation from Service.

     

    (q)  Termination
      of Employment.  For purposes of this Agreement, the Executive’s
      termination of employment shall be presumed to occur when the Company and
      Executive reasonably anticipate that no further services will be performed
      by
      the Executive for the Company and its 409A Affiliates or that the level of
      bona
      fide services the Executive will perform as an employee of the Company and
      its
      409A Affiliates will permanently decrease to no more than 20% of the average
      level of bona fide services performed by the Executive (whether as an employee
      or independent contractor) for the Company and its 409A Affiliates over the
      immediately preceding 36-month period (or such lesser period of
      services).  The Executive’s termination of employment shall be
      presumed not to occur where the level of bona fide services performed by the
      Executive for the Company and its 409A Affiliates continues at a level that
      is
      50% or more of the average level of bona fide services performed by the
      Executive (whether as an employee or independent contractor) for the Company
      and
      its 409A Affiliates over the immediately preceding 36-month period (or such
      lesser period of service).  No presumption applies to a decrease in
      services that is more than 20% but less than 50%, and in such event, whether
      the
      Executive has had a Termination of Employment will be determined in good faith
      by the Company based on the facts and circumstances in accordance with Code
      Section 409A.  Notwithstanding the foregoing, if Executive takes a
      leave of absence for purposes of military leave, sick leave or other bona fide
      leave of absence, the Executive will not be deemed to have incurred a Separation
      from Service for the first 6 months of the leave of absence, or if longer,
      for
      so long as the Executive’s right to reemployment is provided either by statute
      or by contract, including this Agreement; provided that if the leave of
      absence is due to a medically determinable physical or mental impairment that
      can be expected to result in death or last for a continuous period of not less
      than six months, where such impairment causes the Executive to be unable to
      perform the duties of his or her position of employment or any substantially
      similar position of employment, the leave may be extended for up to 29 months
      without causing a Termination of Employment.

     

    
      
         

      

      
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    (r)  Termination
      Date.  Except as otherwise provided in Section 2(b),
Section 10(b), and Section 17(a), the term “Termination
      Date” means (i) if the Executive’s Termination of Employment is by the
      Executive’s death, the date of death; (ii) if the Executive’s Termination
      of Employment is by reason of voluntary early retirement, as agreed in writing
      by the Employer and the Executive, the date of such early retirement which
      is
      set forth in such written agreement; (iii) if the Executive’s Termination
      of Employment for purposes of this Agreement is by reason of disability pursuant
      to Section 12, the earlier of thirty days after the Notice of
      Termination is given or one day prior to the end of the Employment Period;
      (iv) if the Executive’s Termination of Employment is by the Executive
      voluntarily (other than for Good Reason), the date the Notice of Termination
      is
      given; and (v) if the Executive’s Termination of Employment is by the
      Employer (other than by reason of disability pursuant to Section 12)
      or by the Executive for Good Reason, the earlier of thirty days after the Notice
      of Termination is given or one day prior to the end of the Employment
      Period.  Notwithstanding the foregoing,

     

    (A)  If
      termination is for Cause pursuant to Section 1(f)(iii) and if the
      Executive has cured the conduct constituting such Cause as described by the
      Employer in its Notice of Termination within such thirty-day or shorter period,
      then the Executive’s employment hereunder shall continue as if the Employer had
      not delivered its Notice of Termination.

     

    (B)  If
      the
      Executive shall in good faith give a Notice of Termination for Good Reason
      and
      the Employer notifies the Executive that a dispute exists concerning the
      termination within the fifteen-day period following receipt thereof, then the
      Executive may elect to continue his or her employment during such dispute and
      the Termination Date shall be determined under this paragraph.  If the
      Executive so elects and it is thereafter determined that Good Reason did exist,
      the Termination Date shall be the earliest of (1) the date on which the
      dispute is finally determined, either (x) by mutual written agreement of
      the parties or (y) in accordance with Section 22, (2) the
      date of the Executive’s death or (3) one day prior to the end of the
      Employment Period.  If the Executive so elects and it is thereafter
      determined that Good Reason did not exist, then the employment of the Executive
      hereunder shall continue after such determination as if the Executive had not
      delivered the Notice of Termination asserting Good Reason and there shall be
      no
      Termination Date arising out of such Notice.  In either case, this
      Agreement continues, until the Termination Date, if any, as if the Executive
      had
      not delivered the Notice of Termination except that, if it is finally determined
      that Good Reason did exist, the Executive shall in no case be denied the
      benefits described in Section 9 (including a Termination Payment)
      based on events occurring after the Executive delivered his Notice of
      Termination.

     

     

    
      
         

      

      
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    (C)  Except
      as
      provided in Section 1(n)(B), if the party receiving the Notice of
      Termination notifies the other party that a dispute exists concerning the
      termination within the appropriate period following receipt thereof and it
      is
      finally determined that the reason asserted in such Notice of Termination did
      not exist, then (1) if such Notice was delivered by the Executive, the
      Executive will be deemed to have voluntarily terminated his employment and
      the
      Termination Date shall be the earlier of the date fifteen days after the Notice
      of Termination is given or one day prior to the end of the Employment Period
      and
      (2) if delivered by the Company, the Company will be deemed to have
      terminated the Executive other than by reason of death, disability or
      Cause.

     

    2.  Termination
      or Cancellation Prior to Change in Control.

     

    (a)  Subject
      to Section 2(b), the Employer and the Executive shall each retain
      the right to terminate the employment of the Executive at any time prior to
      a
      Change in Control of the Company.  Subject to
Section 2(b), in the event the Executive’s employment is terminated
      prior to a Change in Control of the Company, this Agreement shall be terminated
      and cancelled and of no further force and effect, and any and all rights and
      obligations of the parties hereunder shall cease.

     

    (b)  Anything
      in this Agreement to the contrary notwithstanding, if a Change in Control of
      the
      Company occurs and if the Executive’s employment with the Employer is terminated
      (other than a termination due to the Executive’s death or as a result of the
      Executive’s disability) during the period of 180 days prior to the date on
      which the Change in Control of the Company occurs, and if it is reasonably
      demonstrated by the Executive that such termination of employment (i) was
      at the request of a third party who has taken steps reasonably calculated to
      effect a Change in Control of the Company or (ii) was by the Executive for
      Good Reason or was by the Employer for other than Cause and otherwise arose
      in
      connection with or in anticipation of a Change in Control of the Company, then
      for all purposes of this Agreement such termination of employment shall be
      deemed a “Covered Termination,” “Notice of Termination” shall be deemed to have
      been given, and the “Employment Period” shall be deemed to have begun on the
      date of such termination which shall be deemed to be the “Termination Date” and
      the date of the Change of Control of the Company for purposes of this
      Agreement.

     

    
      
         

      

      
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    3.  Employment
      Period; Vesting of Certain Benefits.

     

    (a)  If
      a
      Change in Control of the Company occurs when the Executive is employed by the
      Employer, the Employer will continue thereafter to employ the Executive during
      the Employment Period, and the Executive will remain in the employ of the
      Employer in accordance with and subject to the terms and provisions of this
      Agreement.  Any Termination of Employment during the Employment
      Period, whether by the Company or the Employer, shall be deemed a termination
      by
      the Company for purposes of this Agreement.

     

    (b)  If
      a
      Change in Control of the Company occurs when the Executive is employed by the
      Employer, (i) the Company shall cause all restrictions on restricted stock
      awards made to the Executive prior to the Change in Control of the Company
      to
      lapse such that the Executive is fully and immediately vested in the Executive’s
      restricted stock upon such a Change in Control of the Company; and (ii) the
      Company shall cause all stock options granted to the Executive prior to the
      Change in Control of the Company pursuant to the Company’s stock option plan(s)
      to be fully and immediately vested upon such a Change in Control of the
      Company.

     

    4.  Duties.  During
      the Employment Period, the Executive shall, in the same capacities and positions
      held by the Executive at the time of the Change in Control of the Company or
      in
      such other capacities and positions as may be agreed to by the Employer and
      the
      Executive in writing, devote the Executive’s best efforts and all of the
      Executive’s business time, attention and skill to the business and affairs of
      the Employer, as such business and affairs now exist and as they may hereafter
      be conducted.

     

    5.  Compensation.  During
      the Employment Period, the Executive shall be compensated as
      follows:

     

    (a)  The
      Executive shall receive, at reasonable intervals (but not less often than
      monthly) and in accordance with such standard policies as may be in effect
      immediately prior to the Change in Control of the Company, an annual base salary
      in cash equivalent of not less than twelve times the Executive’s highest monthly
      base salary for the twelve-month period immediately preceding the month in
      which
      the Change in Control of the Company occurs or, if higher, an annual base salary
      at the rate in effect immediately prior to the Change in Control of the Company
      (determined prior to any reduction for amounts deferred under
      Section 401(k) of the Code or otherwise, or deducted pursuant to a
      cafeteria plan under Section 125 of the Code), subject to adjustment as
      hereinafter provided in Section 6 (such salary amount as adjusted
      upward from time to time is hereafter referred to as the “Annual Base
      Salary”).

     

    (b)  The
      Executive shall receive Fringe Benefits at least equal in value to the highest
      value of such benefits provided for the Executive at any time during the 180-day
      period immediately prior to the Change in Control of the Company or, if more
      favorable to the Executive, those provided generally at any time during the
      Employment Period to any executives of the Employer of comparable status and
      position to the Executive; and shall be reimbursed, at such intervals and in
      accordance with such standard policies that are most favorable to the Executive
      that were in effect at any time during the 180-day period immediately prior
      to
      the Change in Control of the Company, for any and all monies advanced in
      connection with the Executive’s employment for reasonable and necessary expenses
      incurred by the Executive on behalf of the Employer, including travel
      expenses.

     

    
      
         

      

      
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    (c)  The
      Executive and/or the Executive’s family, as the case may be, shall be included,
      to the extent eligible thereunder (which eligibility shall not be conditioned
      on
      the Executive’s salary grade or on any other requirement which excludes persons
      of comparable status to the Executive unless such exclusion was in effect for
      such plan or an equivalent plan at any time during the 180-day period
      immediately prior to the Change in Control of the Company), in any and all
      plans
      providing benefits for the Employer’s salaried employees in general, including
      but not limited to group life insurance, hospitalization, medical (including
      prescription drug coverage), dental, profit sharing and stock bonus plans;
      provided, that, (i) in no event shall the aggregate level of benefits
      under such plans in which the Executive is included be less than the aggregate
      level of benefits under plans of the Employer of the type referred to in this
      Section 5(c) in which the Executive was participating at any time
      during the 180-day period immediately prior to the Change in Control of the
      Company and (ii) in no event shall the aggregate level of benefits under such
      plans be less than the aggregate level of benefits under plans of the type
      referred to in this Section 5(c) provided at any time after the
      Change in Control of the Company to any executive of the Employer of comparable
      status and position to the Executive.

     

    (d)  The
      Executive shall annually be entitled to not less than the amount of paid
      vacation and not fewer than the highest number of paid holidays to which the
      Executive was entitled annually at any time during the 180-day period
      immediately prior to the Change in Control of the Company or such greater amount
      of paid vacation and number of paid holidays as may be made available annually
      to other executives of the Employer of comparable status and position to the
      Executive at any time during the Employment Period.

     

    (e)  The
      Executive shall be included in all plans providing additional benefits to
      executives of the Employer of comparable status and position to the Executive,
      including but not limited to deferred compensation, split-dollar life insurance,
      supplemental retirement, stock option, stock appreciation, stock bonus and
      similar or comparable plans; provided, that, (i) in no event shall the
      aggregate level of benefits under such plans be less than the highest aggregate
      level of benefits under plans of the Employer of the type referred to in this
      Section 5(e) in which the Executive was participating at any time
      during the 180-day period immediately prior to the Change in Control of the
      Company; (ii) in no event shall the aggregate level of benefits under such
      plans
      be less than the aggregate levels of benefits under plans of the type referred
      to in this Section 5(e) provided at any time after the Change in
      Control of the Company to any executive of the Employer comparable in status
      and
      position to the Executive; and (iii) the Employer’s obligation to include the
      Executive in bonus or incentive compensation plans shall be determined by
Section 5(f).

     

    (f)  To
      assure
      that the Executive will have an opportunity to earn incentive compensation
      after
      a Change in Control of the Company, the Executive shall be included in a bonus
      plan of the Employer which shall satisfy the standards described below (such
      plan, the “Bonus Plan”).  Bonuses under the Bonus Plan shall be
      payable with respect to achieving such financial or other goals reasonably
      related to the business of the Employer as the Employer shall establish (the
      “Goals”), all of which Goals shall be attainable, prior to the end of the
      Employment Period, with approximately the same degree of probability as the
      most
      attainable goals under the Employer’s bonus plan or plans as in effect at any
      time during the 180-day period immediately prior to the Change in Control of
      the
      Company (whether one or more, the “Company Bonus Plan”) and in view of the
      Employer’s existing and projected financial and business circumstances
      applicable at the time.  The amount of the bonus (the “Bonus Amount”)
      that the Executive is eligible to earn under the Bonus Plan shall be no less
      than the amount of the Executive’s maximum award provided in such Company Bonus
      Plan (such bonus amount herein referred to as the “Targeted Bonus”), and in the
      event the Goals are not achieved such that the entire Targeted Bonus is not
      payable, the Bonus Plan shall provide for a payment of a Bonus Amount equal
      to a
      portion of the Targeted Bonus reasonably related to that portion of the Goals
      which were achieved.  Payment of the Bonus Amount shall not be
      affected by any circumstance occurring subsequent to the end of the Employment
      Period, including termination of the Executive’s employment.

     

    
      
         

      

      
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    6.  Annual
      Compensation Adjustments.  During the Employment Period, the Board
      of Directors of the Company (or an appropriate committee thereof) will consider
      and appraise, at least annually, the contributions of the Executive to the
      Company, and in accordance with the Company’s practice prior to the Change in
      Control of the Company, due consideration shall be given to the upward
      adjustment of the Executive’s Annual Base Salary, at least annually,
      (a) commensurate with increases generally given to other executives of the
      Company of comparable status and position to the Executive, and (b) as the
      scope of the Company’s operations or the Executive’s duties expand.

     

    7.  Termination
      For Cause or Without Good Reason.  If there is a Covered
      Termination for Cause or due to the Executive’s voluntarily terminating his or
      her employment other than for Good Reason (any such terminations to be subject
      to the procedures set forth in Section 13), then the Executive shall
      be entitled to receive only Accrued Benefits. 

     

    8.  Termination
      Giving Rise to a Termination Payment.  If there is a Covered
      Termination by the Executive for Good Reason, or by the Company other than
      by
      reason of (i) death, (ii) disability pursuant to
Section 12, or (iii) Cause (any such terminations to be subject
      to the procedures set forth in Section 13), then the Executive shall
      be entitled to receive, and the Company shall promptly pay, Accrued Benefits
      and, in lieu of further base salary for periods following the Termination Date,
      as liquidated damages and additional severance pay and in consideration of
      the
      covenant of the Executive set forth in Section 14(a), the
      Termination Payment pursuant to Section 9(a).

     

    9.  Payments
      Upon Termination.

     

    (a)  Termination
      Payment. The “Termination Payment” shall be an amount equal to the Annual
      Cash Compensation times three (3).  The Termination Payment shall be
      paid to the Executive in cash equivalent on the first day of the seventh month
      following the month in which the Executive’s Separation from Service occurs, and
      the Termination Payment shall be accompanied by a payment of interest calculated
      at the rate of interest announced by M&I Marshall & Ilsley Bank
      from time to time as its prime or base lending rate, such rate to be determined
      on the Termination Date, compounded quarterly.  Notwithstanding the
      foregoing, in the event the Executive’s Termination Date is pursuant to Section
      2(b), the Termination Payment shall be paid within ten (10) business days after
      the date of the Change in Control of the Company (as defined without reference
      to Section 2(b)), without interest.  Such lump sum payment shall not
      be reduced by any present value or similar factor, and the Executive shall
      not
      be required to mitigate the amount of the Termination Payment by securing other
      employment or otherwise, nor will such Termination Payment be reduced by reason
      of the Executive securing other employment or for any other
      reason.  The Termination Payment shall be in lieu of, and acceptance
      by the Executive of the Termination Payment shall constitute the Executive’s
      release of any rights of the Executive to, any other cash severance payments
      under any Company severance policy, practice or agreement.

     

    
      
         

      

      
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    (b)  Certain
      Additional Payments by the Company.

     

    (i)  Notwithstanding
      any other provision of this Agreement, if any portion of the Termination Payment
      or any other payment under this Agreement, or under any other agreement with
      or
      plan of the Employer (in the aggregate, “Total Payments”), would constitute an
“excess parachute payment,” then the Company shall pay the Executive an
      additional amount (the “Gross-Up Payment”) such that the net amount retained by
      the Executive after deduction of any excise tax imposed under Section 4999
      of the Code (or any successor provision) and any interest charges or penalties
      in respect of the imposition of such excise tax (but not any federal, state
      or
      local income tax, or employment tax) on the Total Payments, and any federal,
      state and local income tax, employment tax, and excise tax upon the payment
      provided for by this Section 9(b)(i), shall be equal to the Total
      Payments.  For purposes of determining the amount of the Gross-Up
      Payment, the Executive shall be deemed to pay federal income tax and employment
      taxes at the highest marginal rate of federal income and employment taxation
      in
      the calendar year in which the Gross-Up Payment is to be made and state and
      local income taxes at the highest marginal rate of taxation in the state and
      locality of the Executive’s domicile for income tax purposes on the date the
      Gross-Up Payment is made, net of the maximum reduction in federal income taxes
      that may be obtained from the deduction of such state and local
      taxes.

     

    (ii)
      For
      purposes of this Agreement, the terms “excess parachute payment” and “parachute
      payments” shall have the meanings assigned to them in Section 280G of the
      Code (or any successor provision) and such “parachute payments” shall be valued
      as provided therein.  Present value for purposes of this Agreement
      shall be calculated in accordance with Section 1274(b)(2) of the Code (or
      any successor provision).  Promptly following a Covered Termination or
      notice by the Company to the Executive of its belief that there is a payment
      or
      benefit due the Executive which will result in an “excess parachute payment” as
      defined in Section 280G of the Code (or any successor provision), the
      Executive and the Company, at the Company’s expense, shall obtain the opinion
      (which need not be unqualified) of nationally recognized tax counsel (“National
      Tax Counsel”) selected by the Company’s independent auditors and reasonably
      acceptable to the Executive (which may be regular outside counsel to the
      Company), which opinion sets forth (A) the amount of the Base Period Income,
      (B)
      the amount and present value of Total Payments, (C) the amount and present
      value
      of any excess parachute payments, and (D) the amount of any Gross-Up
      Payment.  As used in this Agreement, the term “Base Period Income”
means an amount equal to the Executive’s “annualized includable compensation for
      the base period” as defined in Section 280G(d)(1) of the
      Code.  For purposes of such opinion, the value of any noncash benefits
      or any deferred payment or benefit shall be determined by the Company’s
      independent auditors in accordance with the principles of
      Section 280G(d)(3) and (4) of the Code (or any successor provisions), which
      determination shall be evidenced in a certificate of such auditors addressed
      to
      the Company and the Executive.  The opinion of National Tax Counsel
      shall be addressed to the Company and the Executive and shall be binding upon
      the Company and the Executive.  If such National Tax Counsel so
      requests in connection with the opinion required by this
Section 9(b), the Executive and the Company shall obtain, at the
      Company’s expense, and the National Tax Counsel may rely on, the advice of a
      firm of recognized executive compensation consultants as to the reasonableness
      of any item of compensation to be received by the Executive solely with respect
      to its status under Section 280G of the Code and the regulations
      thereunder.  The Company shall pay Executive the Gross-Up Payment, if
      any, at the same time as the Termination Payment is paid; provided that if
      prior
      to such date the Executive is required to remit the excise tax under Section
      4999 of the Code to the Internal Revenue Service, then upon written notice
      by
      the Executive to the Company, the Company shall promptly pay the Gross-Up
      Payment (but based on Executive’s actual rate of taxation) to the
      Executive.

     

    
      
         

      

      
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    (iii)
      In
      the event that upon any audit by the Internal Revenue Service, or by a state
      or
      local taxing authority, of the Total Payments or Gross-Up Payment, a change
      is
      finally determined to be required in the amount of taxes paid by the Executive,
      appropriate adjustments shall be made under this Agreement such that the net
      amount which is payable to the Executive after taking into account the
      provisions of Section 4999 of the Code (or any successor provision) shall
      reflect the intent of the parties as expressed in this Section 9, in
      the manner determined by the National Tax Counsel.  If the Company is
      required to make a payment to the Executive, such payment shall be paid
      following the date of the final determination by a court or the Internal Revenue
      Service and within thirty (30) days after the date Executive provides the
      Company a written request for reimbursement thereof (accompanied by proof of
      taxes paid), but in no event shall the reimbursement be made later than the
      end
      of the calendar year following the year in which the Executive remits the excise
      tax to the Internal Revenue Service.

     

    (iv)The
      Company agrees to bear all costs associated with, and to indemnify and hold
      harmless, the National Tax Counsel of and from any and all claims, damages,
      and
      expenses resulting from or relating to its determinations pursuant to this
      Section 9(b), except for claims, damages or expenses resulting from
      the gross negligence or willful misconduct of such firm.

     

    (c)  Additional
      Benefits.  If there is a Covered Termination and the Executive is
      entitled to Accrued Benefits and the Termination Payment, then the Company
      shall
      provide to the Executive the following additional benefits:

     

    (i)  The
      Executive shall receive until the end of the second calendar year following
      the
      calendar year in which the Executive’s Separation from Service occurs, at the
      expense of the Company, outplacement services, on an individualized basis at
      a
      level of service commensurate with the Executive’s status with the Company
      immediately prior to the date of the Change in Control of the Company (or,
      if
      higher, immediately prior to the Executive’s Termination of Employment),
      provided by a nationally recognized executive placement firm selected by the
      Company; provided that the cost to the Company of such services shall
      not exceed 10% of the Executive’s Annual Base Salary.

     

    
      
         

      

      
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          14 -

        
          

        

      

      
         

      

       

      (ii)  Until
        the
        earlier of the end of the Employment Period or such time as the Executive
        has
        obtained new employment and is covered by benefits which in the aggregate
        are at
        least equal in value to the following benefits, the Executive shall continue
        to
        be covered, at the expense of the Company, by the same or equivalent life
        insurance, hospitalization, medical and dental coverage as was required
        hereunder with respect to the Executive immediately prior to the date the
        Notice
        of Termination is given, subject to the following:

    

     

    (A)  If
      applicable, following the end of the COBRA continuation period, if such
      hospitalization, medical or dental coverage is provided under a health plan
      that
      is subject to Section 105(h) of the Code, benefits payable under such health
      plan shall comply with the requirements of Treasury regulation section
      1.409A-3(i)(1)(iv)(A) and (B) and, if necessary, the Company shall amend such
      health plan to comply therewith.

     

    (B)  During
      the first six months following the Executive’s Separation from Service, the
      Executive shall pay the Company for any life insurance coverage that provides
      a
      benefit in excess of $50,000 under a group term life insurance
      policy.  After the end of such six month period, the Company shall
      make a cash payment to the Executive equal to the aggregate premiums paid by
      the
      Executive for such coverage, and thereafter such coverage shall be provided
      at
      the expense of the Company for the remainder of the period.

     

    If
      the
      Executive is entitled to the Termination Payment pursuant to Section 2(b),
      within ten (10) days following the Change of Control, the Company shall
      reimburse the Executive for any COBRA premiums the Executive paid for his or
      her
      hospitalization, medical and dental coverage under COBRA from the Executive’s
      Termination Date through the date of the Change of Control.

     

    (iii)  The
      Company shall bear up to $15,000 in the aggregate of fees and expenses of
      consultants and/or legal or accounting advisors engaged by the Executive to
      advise the Executive as to matters relating to the computation of benefits
      due
      and payable under this Section 9.

     

    (iv)  The
      Company shall cause the Executive to be fully and immediately vested in his
      accrued benefit under any supplemental executive retirement plan of the Employer
      providing benefits for the Executive (the “SERP”) and in any nonqualified
      defined contribution retirement plan of the Employer.  In addition,
      the Company shall cause the Executive to be deemed to have satisfied any minimum
      years of service requirement under the SERP for subsidized early retirement
      benefits regardless of the Executive’s age and service at the Termination Date;
provided, however, that SERP benefits will be based on service
      to date with no additional credit for service or age beyond such Termination
      Date.

     

    
      
         

      

      
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      (v)  On
        the
        Termination Date, for purposes of determining Executive’s eligibility for
        post-retirement benefits under any welfare benefit plan (as defined in Section
        3(1) of the Employee Retirement Security Act of 1974, as amended) maintained
        by
        the Company immediately prior to the Change in Control of the Company and
        in
        which Executive participated, immediately prior to the Change in Control
        of the
        Company, Executive shall be credited with the excess of three (3) years of
        participation in the applicable medical plan and three (3) years of age over
        the
        actual years and fractional years of participation and age credited to Executive
        as of the Change in Control of the Company.  If the Executive is less
        than 60 years of age, he shall be credited with a minimum age of 60
        years.  If after taking into account such participation and age,
        Executive would have been eligible to receive such post-retirement benefits
        had
        Executive retired immediately prior to the Change in Control of the Company,
        Executive shall receive, commencing on the Termination Date, post-retirement
        benefits based on the terms and conditions of the applicable plans in effect
        immediately prior to the Change in Control of the Company.  If
        applicable, following the end of the COBRA continuation period, if such
        post-retirement welfare benefits are provided under a health plan that is
        subject to Section 105(h) of the Code, benefits payable under such health
        plan
        shall comply with the requirements of Treasury regulation section
        1.409A-3(i)(1)(iv)(A) and (B) and, if necessary, the Company shall amend
        such
        health plan to comply therewith.

    

     

    (vi)  At
      the same time as the
      Termination Payment is made, the Company shall pay the Executive an amount
      equal
      to the value of the retirement benefits under the various retirement benefits
      plans of the Company (both qualified and non-qualified) that the Executive
      is
      participating in as of the Termination Date, and that would have accrued had
      Executive been an active employee receiving his Annual Base Salary under such
      plans for an additional period of three (3) years following the Termination
      Date.  For purposes of calculating this payment for any defined
      benefit pension plan (whether qualified or nonqualified), if any, the value
      shall be determined as a single sum present value, calculated assuming
      that the benefits commence on the earliest date following termination on which
      the Executive would be eligible to commence benefits under the such plan(s),
      and
      the actuarial factors used shall be the factors utilized in the qualified
      defined benefit pension plan to determine lump sum payments as of the
      Termination Date.  For purposes of calculating this payment for any
      defined contribution plan (whether qualified or nonqualified), if any, the
      value
      shall be determined as a single sum amount equal to the employer non-matching
      and non-elective deferral contributions that would have been made for the
      Executive, assuming that the contribution formulas are the same as in effect
      on
      the Termination Date, but determined without regard to any interest such amounts
      would have earned.

     

    
      
         

      

      
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    (vii)  The
      Company shall cause all performance plan awards granted to the Executive
      pursuant to any long-term incentive plan maintained by the Company to be paid
      out at target, as if all performance requirements had been satisfied, on a
      pro
      rata basis based on the completed portion of each award cycle, reduced, but
      not
      below zero, by the amount payable as an Accrued Benefit  pursuant to
      Section 1(b)(iv)(B) to the extent such Accrued Benefit amount relates to the
      same performance plan award(s) and the same period of time as are described
      in
      this clause (vii).

     

    (viii)  The
      Executive shall, after the Termination Date, retain all rights to
      indemnification under applicable law or under the Company’s Certificate of
      Incorporation or By-Laws, as they may be amended or restated from time to time,
      to the extent any such amendment or restatement expands the Executive’s rights
      to indemnification.  In addition, the Company shall maintain
      Director’s and Officer’s liability insurance on behalf of the Executive,
      provided the Executive is eligible to be covered and has in fact been covered
      by
      such insurance, at the highest level in effect immediately prior to the date
      of
      the Change in Control of the Company (or, if higher, immediately prior to the
      termination of the Executive’s employment) including any such insurance that was
      reduced prior to a Change in Control of the Company at the request of the person
      or entity acquiring control of the Company or reasonably shown to be related
      to
      the Change in Control of the Company, for the seven (7) year period following
      the Termination Date.

     

    10.  Death.

     

    (a)  Except
      as
      provided in Section 10(b), in the event of a Covered Termination due
      to the Executive’s death, the Executive’s estate, heirs and beneficiaries shall
      receive all the Executive’s Accrued Benefits through the Termination
      Date.

     

    (b)  In
      the
      event the Executive dies after a Notice of Termination is given (i) by the
      Company or (ii) by the Executive for Good Reason, the Executive’s estate,
      heirs and beneficiaries shall be entitled to the benefits described in
Section 10(a) and, subject to the provisions of this Agreement, to
      such Termination Payment (and the additional benefits described in Section
      9(c)) as the Executive would have been entitled to had the Executive lived,
      except that the Termination Payment shall be paid within ninety (90) days
      following the date of the Executive’s death, without interest
      thereon. For purposes of this Section 10(b),
      the Termination Date shall be the earlier of thirty days following the giving
      of
      the Notice of Termination, subject to extension pursuant to
Section 1(n), or one day prior to the end of the Employment
      Period.

     

    11.  Retirement.  If,
      during the Employment Period, the Executive and the Employer shall execute
      an
      agreement providing for the early retirement of the Executive from the Employer,
      or the Executive shall otherwise give notice that he is voluntarily choosing
      to
      retire early from the Employer, the Executive shall receive Accrued Benefits
      through the Termination Date; provided, that if the Executive’s
      employment is terminated by the Executive for Good Reason or by the Company
      other than by reason of death, disability or Cause and the Executive also,
      in
      connection with such termination, elects voluntary early retirement, the
      Executive shall also be entitled to receive a Termination Payment pursuant
      to
Section 8.

     

    
      
         

      

      
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    12.  Termination
      for Disability.  If, during the Employment Period, as a result of
      the Executive’s disability due to physical or mental illness or injury
      (regardless of whether such illness or injury is job-related), the Executive
      shall have been absent from the Executive’s duties hereunder on a full-time
      basis for a period of six consecutive months and, within thirty days after
      the
      Company notifies the Executive in writing that it intends to terminate the
      Executive’s employment (which notice shall not constitute the Notice of
      Termination contemplated below), the Executive shall not have returned to the
      performance of the Executive’s duties hereunder on a full-time basis, the
      Company may terminate the Executive’s employment for purposes of this Agreement
      pursuant to a Notice of Termination given in accordance with
Section 13.  If the Executive’s employment is terminated
      on account of the Executive’s disability in accordance with this Section, the
      Executive shall receive Accrued Benefits through the Termination Date and shall
      remain eligible for all benefits provided by any long term disability programs
      of the Company in effect at the time of such termination.

     

    13.  Termination
      Notice and Procedure.  Any Covered Termination by the Company or
      the Executive (other than a termination of the Executive’s employment that is a
      Covered Termination by virtue of Section 2(b)) shall be communicated
      by a written notice of termination (“Notice of Termination”) to the Executive,
      if such Notice is given by the Company, and to the Company, if such Notice
      is
      given by the Executive, all in accordance with the following procedures and
      those set forth in Section 23:

     

    (a)  If
      such
      termination is for disability, Cause or Good Reason, the Notice of Termination
      shall indicate in reasonable detail the facts and circumstances alleged to
      provide a basis for such termination.

     

    (b)  Any
      Notice of Termination by the Company shall have been approved, prior to the
      giving thereof to the Executive, by a resolution duly adopted by a majority
      of
      the directors of the Company (or any successor corporation) then in
      office.

     

    (c)  If
      the
      Notice is given by the Executive for Good Reason, the Executive may cease
      performing his duties hereunder on or after the date fifteen days after the
      delivery of Notice of Termination and shall in any event cease employment on
      the
      Termination Date.  If the Notice is given by the Company, then the
      Executive may cease performing his duties hereunder on the date of receipt
      of
      the Notice of Termination, subject to the Executive’s rights
      hereunder.

     

    (d)  The
      Executive shall have thirty days, or such longer period as the Company may
      determine to be appropriate, to cure any conduct or act, if curable, alleged
      to
      provide grounds for termination of the Executive’s employment for Cause under
      this Agreement pursuant to Section 1(f)(iii).

     

    (e)  The
      recipient of any Notice of Termination shall personally deliver or mail in
      accordance with Section 23 written notice of any dispute relating to
      such Notice of Termination to the party giving such Notice within fifteen days
      after receipt thereof; provided, however, that if the Executive’s
      conduct or act alleged to provide grounds for termination by the Company for
      Cause is curable, then such period shall be thirty days.  After the
      expiration of such period, the contents of the Notice of Termination shall
      become final and not subject to dispute.

     

    
      
         

      

      
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    14.  Further
      Obligations of the Executive.

     

    (a)  Competition.  The
      Executive agrees that, in the event of any Covered Termination where the
      Executive is entitled to Accrued Benefits and the Termination Payment, the
      Executive shall not, for a period expiring one year after the Termination Date,
      without the prior written approval of the Company’s Board of Directors,
      participate in the management of, be employed by or own any business enterprise
      at a location within the United States that engages in substantial competition
      with the Company or its subsidiaries, where such enterprise’s revenues from any
      competitive activities amount to 10% or more of such enterprise’s net revenues
      and sales for its most recently completed fiscal year; provided,
      however, that nothing in this Section 14(a) shall prohibit the
      Executive from owning stock or other securities of a competitor amounting to
      less than five percent of the outstanding capital stock of such
      competitor.

     

    (b)  Confidentiality.  During
      and following the Executive’s employment by the Company, the Executive shall
      hold in confidence and not directly or indirectly disclose or use or copy or
      make lists of any confidential information or proprietary data of the Company
      (including that of the Employer), except to the extent authorized in writing
      by
      the Board of Directors of the Company or required by any court or administrative
      agency, other than to an employee of the Company or a person to whom disclosure
      is reasonably necessary or appropriate in connection with the performance by
      the
      Executive of duties as an executive of the Company.  Confidential
      information shall not include any information known generally to the public
      or
      any information of a type not otherwise considered confidential by persons
      engaged in the same business or a business similar to that of the
      Company.  All records, files, documents and materials, or copies
      thereof, relating to the business of the Company which the Executive shall
      prepare, or use, or come into contact with, shall be and remain the sole
      property of the Company and shall be promptly returned to the Company upon
      termination of employment with the Company.

     

    15.  Expenses
      and Interest.  If, after a Change in Control of the Company,
      (a) a dispute arises with respect to the enforcement of the Executive’s
      rights under this Agreement or (b) any legal or arbitration proceeding
      shall be brought to enforce or interpret any provision contained herein or
      to
      recover damages for breach hereof, in either case so long as the Executive
      is
      not acting in bad faith, then the Company shall reimburse the Executive for
      any
      reasonable attorneys’ fees and necessary costs and disbursements incurred as a
      result of the dispute, legal or arbitration proceeding (“Expenses”), and
      prejudgment interest on any money judgment or arbitration award obtained by
      the
      Executive calculated at the rate of interest announced by M&I Marshall
& Ilsley Bank from time to time at its prime or base lending rate from the
      date that payments to him or her should have been made under this
      Agreement.  Within ten days after the Executive’s written request
      therefor (but in no event later than the end of the calendar year following
      the
      calendar year in which such Expense is incurred), the Company shall reimburse
      the Executive, or such other person or entity as the Executive may designate
      in
      writing to the Company, the Executive’s reasonable Expenses.

     

    16.  Payment
      Obligations Absolute.  The Company’s obligation during and after
      the Employment Period to pay the Executive the amounts and to make the benefit
      and other arrangements provided herein shall be absolute and unconditional
      and
      shall not be affected by any circumstances, including, without limitation,
      any
      setoff, counterclaim, recoupment, defense or other right which the Company
      may
      have against him or anyone else, except as provided in Section
      20.  Executive shall not be required to mitigate damages or the
      amount of any payment provided for under this Agreement by seeking other
      employment or otherwise, and compensation earned from such employment or
      otherwise shall not reduce the amounts otherwise payable under this
      Agreement.  Except as provided in Section 9(b) and
Section 15, all amounts payable by the Company hereunder shall be
      paid without notice or demand. Each and every payment made hereunder by the
      Company shall be final, and the Company will not seek to recover all or any
      part
      of such payment from the Executive, or from whomsoever may be entitled thereto,
      for any reason whatsoever.

     

    
      
         

      

      
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    17.  Successors.

     

    (a)  If
      the
      Company sells, assigns or transfers all or substantially all of its business
      and
      assets to any Person or if the Company merges into or consolidates or otherwise
      combines (where the Company does not survive such combination) with any Person
      (any such event, a “Sale of Business”), then the Company shall assign all of its
      right, title and interest in this Agreement as of the date of such event to
      such
      Person, and the Company shall cause such Person, by written agreement in form
      and substance reasonably satisfactory to the Executive, to expressly assume
      and
      agree to perform from and after the date of such assignment all of the terms,
      conditions and provisions imposed by this Agreement upon the
      Company.  Failure of the Company to obtain such agreement prior to the
      effective date of such Sale of Business shall be a breach of this Agreement
      constituting “Good Reason” hereunder, except that for purposes of implementing
      the foregoing the date upon which such Sale of Business becomes effective shall
      be deemed the Termination Date.  In case of such assignment by the
      Company and of assumption and agreement by such Person, as used in this
      Agreement, “Company” shall thereafter mean such Person which executes and
      delivers the agreement provided for in this Section 17 or which
      otherwise becomes bound by all the terms and provisions of this Agreement by
      operation of law, and this Agreement shall inure to the benefit of, and be
      enforceable by, such Person.  The Executive shall, in his or her
      discretion, be entitled to proceed against any or all of such Persons, any
      Person which theretofore was such a successor to the Company and the Company
      (as
      so defined) in any action to enforce any rights of the Executive
      hereunder.  Except as provided in this Section 17(a), this
      Agreement shall not be assignable by the Company.  This Agreement
      shall not be terminated by the voluntary or involuntary dissolution of the
      Company.

     

    (b)  This
      Agreement and all rights of the Executive shall inure to the benefit of and
      be
      enforceable by the Executive’s personal or legal representatives, executors,
      administrators, heirs and beneficiaries.  All amounts payable to the
      Executive under Sections 7, 8, 9, 10, 11, 12 and 15 if the Executive
      had lived shall be paid, in the event of the Executive’s death, to the
      Executive’s estate, heirs and representatives; provided, however, that
      the foregoing shall not be construed to modify any terms of any benefit plan
      of
      the Employer, as such terms are in effect on the date of the Change in Control
      of the Company, that expressly govern benefits under such plan in the event
      of
      the Executive’s death.

     

    18.  Severability.  The
      provisions of this Agreement shall be regarded as divisible, and if any of
      said
      provisions or any part hereof are declared invalid or unenforceable by a court
      of competent jurisdiction, the validity and enforceability of the remainder
      of
      such provisions or parts hereof and the applicability thereof shall not be
      affected thereby.

     

    
      
         

      

      
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    19.  Contents
      of Agreement; Waiver of Rights; Amendment.  This Agreement sets
      forth the entire understanding between the parties hereto with respect to the
      subject matter hereof and supercedes, and the Executive hereby waives all rights
      under, any prior or other agreement or understanding between the parties with
      respect to such subject matter.  This Agreement may not be amended or
      modified at any time except by written instrument executed by the Company and
      the Executive.

     

    20.  Withholding.  The
      Company shall be entitled to withhold from amounts to be paid to the Executive
      hereunder any federal, state or local withholding or other taxes or charges
      which it is from time to time required to withhold; provided, that the
      amount so withheld shall not exceed the minimum amount required to be withheld
      by law.  The Company shall be entitled to rely on an opinion of the
      National Tax Counsel if any question as to the amount or requirement of any
      such
      withholding shall arise.

     

    21.  Certain
      Rules of Construction.  No party shall be considered as being
      responsible for the drafting of this Agreement for the purpose of applying
      any
      rule construing ambiguities against the drafter or otherwise.  No
      draft of this Agreement shall be taken into account in construing this
      Agreement.  Any provision of this Agreement which requires an
      agreement in writing shall be deemed to require that the writing in question
      be
      signed by the Executive and an authorized representative of the
      Company.

     

    22.  Governing
      Law; Resolution of Disputes.  This Agreement and the rights and
      obligations hereunder shall be governed by and construed in accordance with
      the
      laws of the State of Wisconsin.  Any dispute arising out of this
      Agreement shall, at the Executive’s election, be determined by arbitration under
      the rules of the American Arbitration Association then in effect (in which
      case
      both parties shall be bound by the arbitration award) or by
      litigation.  Whether the dispute is to be settled by arbitration or
      litigation, the venue for the arbitration or litigation shall be Milwaukee,
      Wisconsin or, at the Executive’s election, if the Executive is not then residing
      or working in the Milwaukee, Wisconsin metropolitan area, in the judicial
      district encompassing the city in which the Executive resides; provided,
      that, if the Executive is not then residing in the United States, the
      election of the Executive with respect to such venue shall be either Milwaukee,
      Wisconsin or in the judicial district encompassing that city in the United
      States among the thirty cities having the largest population (as determined
      by
      the most recent United States Census data available at the Termination Date)
      which is closest to the Executive’s residence.  The parties consent to
      personal jurisdiction in each trial court in the selected venue having subject
      matter jurisdiction notwithstanding their residence or situs, and each party
      irrevocably consents to service of process in the manner provided hereunder
      for
      the giving of notices.  

     

    23.  Notice.  Notices
      given pursuant to this Agreement shall be in writing and, except as otherwise
      provided by Section 13(d), shall be deemed given when actually
      received by the Executive or actually received by the Company’s Secretary or any
      officer of the Company other than the Executive.  If mailed, such
      notices shall be mailed by United States registered or certified mail, return
      receipt requested, addressee only, postage prepaid, if to the Company, to
      Regal-Beloit Corporation, Attention: Secretary (or President, if the Executive
      is then Secretary), 200 State Street, Beloit, Wisconsin 53511-6254, or if to
      the
      Executive, at the address set forth below the Executive’s signature to this
      Agreement, or to such other address as the party to be notified shall have
      theretofore given to the other party in writing.

     

    
      
         

      

      
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    24.  Withholding.  The
      Company shall be entitled to withhold from amounts to be paid to the Executive
      hereunder any federal, state or local withholding or other taxes or charges
      which it is from time to time required to withhold; provided that the
      amount so withheld shall not exceed the minimum amount required to be withheld
      by law.  In addition, if prior to the date of payment of the
      Termination Payment hereunder, the Federal Insurance Contributions Act (FICA)
      tax imposed under Sections 3101, 3121(a) and 3121(v)(2), where applicable,
      becomes due with respect to any payment or benefit to be provided hereunder,
      the
      Company may provide for an immediate payment of the amount needed to pay the
      Executive’s portion of such tax (plus an amount equal to the taxes that will be
      due on such amount) and the Executive’s Termination Payment shall be reduced
      accordingly.  The Company shall be entitled to rely on an opinion of
      the National Tax Counsel if any question as to the amount or requirement of
      any
      such withholding shall arise.  

     

    25.  Additional
      Section 409A Provisions.  (a)  If any payment amount or
      the value of any benefit under this Agreement is required to be included in
      an
      Executive’s income prior to the date such amount is actually paid or the benefit
      provided as a result of the failure of this Agreement (or any other arrangement
      that is required to be aggregated with this Agreement under Code Section 409A)
      to comply with Code Section 409A, then the Executive shall receive a
      distribution, in a lump sum, within 90 days after the date it is finally
      determined that the Agreement (or such other arrangement that is required to
      be
      aggregated with this Agreement) fails to meet the requirements of Section 409A
      of the Code; such distribution shall equal the amount required to be included
      in
      the Executives income as a result of such failure and shall reduce the amount
      of
      payments or benefits otherwise due hereunder.  

     

    (b)  The
      Company and the Executive intend the terms of this Agreement to be in compliance
      with Section 409A of the Code.  The Company does not guarantee the tax
      treatment or tax consequences associated with any payment or benefit, including
      but not limited to consequences related to Section 409A of the
      Code.  To the maximum extent permissible, any ambiguous terms of this
      Agreement shall be interpreted in a manner which avoids a violation of Section
      409A of the Code.

     

    (c)  The
      Executive acknowledges that to avoid an additional tax on payments that may
      be
      payable or benefits that may be provided under this Agreement and that
      constitute deferred compensation that is not exempt from Section 409A of the
      Code, the Executive must make a reasonable, good faith effort to collect any
      payment or benefit to which the Executive believes the Executive is entitled
      hereunder no later than 90 days after the latest date upon which the payment
      could have been made or benefit provided under this Agreement, and if not paid
      or provided, must take further enforcement measures within 180 days after such
      latest date.

     

    26.  No
      Waiver.  No waiver by either party at any time of any breach by
      the other party of, or compliance with, any condition or provision of this
      Agreement to be performed by the other party shall be deemed a waiver of similar
      or dissimilar provisions or conditions at the same time or any prior or
      subsequent time.

     

    27.  Headings.  The
      headings herein contained are for reference only and shall not affect the
      meaning or interpretation of any provision of this Agreement.

     

     

    IN
      WITNESS WHEREOF, the parties have executed this Agreement as of the day and
      year
      first above written.

     

      	 	REGAL-BELOIT
              CORPORATION	 
	 	 	 	 
	
               

            	
              By:
                

            	 	 
	 	 	Name 	 
	 	 	Title 	 
	 	 	 	 


    

     

    
      	 	
            	 
	 	 	 	 
	
               

            	
              Attest:
                

            	 	 
	 	 	Name 	 
	 	 	Title 	 
	 	 	 	 


    

     

    
      	 	EXECUTIVE:	 
	 	 	 	 
	
               

            	
               

            	 (SEAL)
	 	 	 	 
	 	 Address: 	 
	 	 	 	 


    

     

    


    


    
      
         

      

      
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