Exhibit
10.7


 


REXNORD CORPORATION


SPECIAL SIGNING BONUS PLAN


DATED:  JULY
21, 2006


This document sets
forth the terms of the Special Signing Bonus Plan (the “Plan”) of Rexnord
Corporation (and any successor to such corporation, the “Company”).


1.             Operation
of the Plan


1.1          Participation. 
Only the Persons (as defined in Exhibit A hereto) who are employees,
consultants or directors of, or who are otherwise providing services to, the
Company or one of its Subsidiaries (as such term is defined in Exhibit A hereto)
and are listed in Exhibit B hereto (each, a “Participant”) are eligible
to receive a bonus (a “Bonus”) under the Plan.


 


1.2          Bonus Amount. 
The amount of each Participant’s Bonus under the Plan shall be
communicated to the Participant in a “Plan Participation Letter,” which
may contain terms and conditions on the payment of a Bonus under the Plan in
addition to those set forth herein.


 


1.3          Award Payment and Timing. 
A Participant’s Bonus will be paid by the Company to the Participant in
cash upon or as soon as administratively practicable following the earliest to
occur of (i) the payment date specified in the Participant’s Plan Participation
Letter, (ii) a Change in Control (as defined in Exhibit A hereto) or (iii) the
Participant’s Separation From Service (as defined in Exhibit A hereto),
whenever it may occur (the earliest of such dates to occur is referred to
herein as the “Payment Date”); provided, however,
that in no event shall the Bonus be paid later than the 30th day
following the Payment Date.


2.             Other
Rules


2.1          Administration.  The Board of Directors of the
Company (the “Board”) shall administer the Plan.  The Board shall have the authority to
construe and interpret the Plan and any agreement, Plan Participation Letter or
other document relating to the Plan.  All
actions taken and all interpretations and determinations made by the Board in
respect of the Plan shall be made in the Board’s sole discretion, shall be conclusive
and binding on all persons and shall be given the maximum deference permitted
by law.


2.2          No Assignment. 
The rights, if any, of a Participant or any other person to any Bonus
payment or other benefits under the Plan may not be assigned, transferred,
pledged, or encumbered except by will or the laws of descent or distribution.  The Company may, without the consent of
Participants, assign its obligations under the Plan to any of its Subsidiaries
or other Affiliates (as defined in Exhibit A hereto) or to any successor to all
or substantially all of the its assets or otherwise in connection with a Change
in Control.


2.3          Withholding.  All payments made
under the Plan will be subject to required income, employment and other tax
withholdings and any other authorized deductions.


2.4          Amendment; Section 409A.  The Company reserves the right
to amend and/or terminate the Plan at any time and in any manner, with or
without notice; provided, however, that the written
consent of a Participant will be required to the extent such amendment or
termination adversely affects the Participant’s rights under the Plan.  No 


 


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amendment shall be binding upon the Company unless
approved by the Company and set forth in writing.  Without limiting the foregoing, the Plan is
intended to comply with Section 409A of the Internal Revenue Code of 1986, as
amended (the “Code”), and the Company reserves the right to make any
amendments to the Plan consistent with Participants’ rights hereunder to the
extent it deems necessary or advisable to so comply.


2.5          No Fiduciary Relationship. 
Nothing contained in the Plan and no action taken pursuant to the
provisions of the Plan shall create or be construed as creating a trust or any
kind of fiduciary relationship between the Company or any of its Subsidiaries
or other Affiliates, on one hand, and any Participant or any other person, on
the other hand.


2.6          No Right to Continued Employment. 
Nothing contained in the Plan or any related document constitutes an
employment or service commitment by the Company or any of its Subsidiaries or
other Affiliates, affects an employee’s status as an employee at will, confers
upon any Participant any right to remain employed by or in service to the
Company or any of its Subsidiaries or other Affiliates, interferes in any way
with the right of the Company or any of its Subsidiaries or other Affiliates to
terminate a Participant’s employment or service or to change the Participant’s
compensation or other terms of employment or service at any time (except as
otherwise provided in an employment or consulting agreement between the Company
and a Participant).  The Plan provides
for a one-time payment for each Participant, and it is not anticipated that any
Participant will be eligible for any future bonus under the Plan.


2.7          Governing Law.  The Plan, and
any and all documents evidencing the Bonuses (including, without limitation,
any Plan Participation Letter) and all other related documents, shall be
governed by and construed in accordance with the domestic laws of the state of
New York without regard to conflicts of laws principles thereof that would
cause the application of the laws of any jurisdiction other than the state of
New York.


2.8          Arbitration; Waiver
of Trial.  Any dispute or controversy arising under, out
of, or in connection with or in relation to the Plan or a Plan Participation
Letter shall be finally determined and settled by arbitration in New York, New
York in accordance with the Commercial Rules of the American Arbitration
Association, and judgment upon the award may be entered in any court having
jurisdiction.  Within 20 days of the
conclusion of the arbitration hearing, the arbitrator shall prepare written
findings of fact and conclusions of law. 
It is mutually agreed that the written decision of the arbitrator shall
be valid, binding, final and non-appealable; provided,
however, that the arbitrator shall not
be empowered to award punitive damages against any party to such
arbitration.  To the extent permitted by
law, the arbitrator’s fees and expenses will be borne equally by each
party.  In the event that an action is
brought to enforce the provisions of the Plan or a Plan Participation Letter
pursuant to this Section 2.8, each party to such action shall pay its own
attorney’s fees and expenses regardless of whether in the opinion of the court
or arbitrator deciding such action there is a prevailing party.  THE COMPANY AND THE
PARTICIPANTS EXPRESSLY WAIVE ALL RIGHT TO A TRIAL, INCLUDING, WITHOUT
LIMITATION, TRIAL BY JURY, IN ANY ACTION, PROCEEDING OR COUNTERCLAIM ARISING OUT OF OR RELATING TO
THE PLAN OR A PLAN PARTICIPATION LETTER.


2.9          Notices.  All notices,
requests, consents and other communications hereunder to the Company or any
Participant shall be deemed to be sufficient if contained in a written
instrument and shall be deemed to have been duly given when delivered in
person, by telecopy, by nationally-recognized overnight courier, or by first
class registered or certified 


 


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mail, postage prepaid, addressed to such party at the
address set forth below or such other address as may hereafter be designated in
writing by the addressee to the addressor:


(i)            if
to the Company, to:


Rexnord Corporation

4701 Greenfield Avenue

Milwaukee, WI 53214

Attention:  Patty Whaley


with copies to:


Rexnord Corporation

c/o Apollo Management, L.P.

9 West 57th Street, 43rd Floor

New York, NY  10016

Fax:  (212) 515-3288

Attention:  Steven Martinez


and


Rexnord Corporation

c/o Apollo Management, L.P.

10250 Constellation Blvd., Suite 2900

Los Angeles, CA  90067

Fax:  (310) 843-1933

Attention:  Larry Berg


and


O’Melveny & Myers LLP

Times Square Tower

7 Times Square

New York, NY  10036

Fax:  (212) 326-2061

Attention:  John M. Scott, Esq.


(ii)           if
to a Participant, to the Participant’s home address on file with the Company.


2.10        Severability.  If it is
determined that any provision of the Plan or a Plan Participation Letter, or
any action pursuant thereto, is illegal or unenforceable for any reason, the illegality
or invalidity shall not affect the remaining parts of the Plan and/or Plan
Participation Letter, the Plan and Plan Participation Letter 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.


2.11        Other Company Compensation or Benefit Programs. 
A Bonus received by a Participant under the Plan shall not be deemed a
part of the Participant’s compensation for purposes of the determination of
benefits under any other employee welfare or benefit plans or arrangements, if
any, provided by the Company or any of its Subsidiaries or other Affiliates,
except where the Company expressly otherwise provides or authorizes in
writing.  


 


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Bonuses under the Plan may be made in addition to or in
combination with grants, awards or commitments under any other plans or
arrangements of the Company or any of its Subsidiaries or other Affiliates.


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


2.13        Effective Date.  The Plan is adopted
by the Company effective as of July 21, 2006.


 


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


Executed on this 21st day of July, 2006


	
   

  	
  REXNORD
  CORPORATION

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/
  Thomas J. Jansen

  
	
   

  	
   

  	
   

  
	
   

  	
  Name:

  	
  Thomas J. Jansen

  
	
   

  	
   

  	
   

  
	
   

  	
  Its:

  	
  Executive Vice
  President and 

  Chief Financial Officer

  



 


 


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EXHIBIT A


REXNORD CORPORATION SPECIAL SIGNING BONUS PLAN


DEFINITIONS


For purposes of the Plan, the following terms shall
have the following meanings:


A.1                             “Affiliate” means, with respect to
any Person (as defined below), 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” means,
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.


A.2          “Change in Control” means:


(a)                                  Approval by stockholders of the Company
(or, if no stockholder approval is required, by the Board of Directors of the
Company 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 Change in Control under paragraph (c) below;


(b)                                 The acquisition by any individual, entity
or group (within the meaning of Section 13(d)(3) or 14(d)(2) of the Securities
Exchange Act of 1934, as amended (the “Exchange Act”)) (a “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), the following acquisitions shall not constitute a Change in
Control; (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 Effective
Date (or an Affiliate, heir or descendant of such Person) or (F) any
acquisition by Apollo Management VI, L.P., a Delaware limited partnership, or
one of its Affiliated investment funds; or


(c)                                  Consummation of a reorganization, merger,
statutory share exchange or consolidation or similar corporate transaction
involving the Company or any corporation or other entity a majority of whose
outstanding voting stock or voting power is beneficially owned directly or
indirectly by the Company (a “Subsidiary”), 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 


 


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                                                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 Change in Control for purposes of the Plan, and provided, further, that no event or transaction shall
constitute a Change in Control for purposes of the Plan unless such event or
transaction is also a “change in control event” for purposes of Section 409A of
the Code and the published authorities promulgated thereunder.


A.3                             “Separation From Service” means
the death, retirement or other termination of a Participant’s employment or
service with the Company and its Subsidiaries (as such term is defined in the
definition of Change in Control); provided, however,
that in no event shall a termination of a Participant’s employment or service
with the Company or any of its Subsidiaries constitute a Separation From
Service unless such termination of employment or service is also a “separation
from service” within the meaning of Section 409A of the Code and the published
authorities promulgated thereunder.


 


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