Exhibit 10.1
REXNORD CORPORATION
CHANGE OF CONTROL RETENTION AGREEMENT
This Change of Control Retention Agreement (the "Agreement") is entered into as
of March 22, 2006 (the "Effective Date") by and between Rexnord Corporation (the
"Company") and Robert A. Hitt (the "Executive").
RECITALS
A.
It is expected that the Company from time to time will consider
the possibility of a Change of Control (as defined below).
The Board of
Directors of the Company (the "Board") recognizes that such consideration can be
a distraction to the Executive and can cause the Executive to consider
alternative employment opportunities.
B.
The Board believes that it is in the best interests of the Company
and its shareholders to provide the Executive with an incentive to continue his
or her employment and to maximize the value of the Company upon a Change of
Control for the benefit of its shareholders.
C.
In order to provide the Executive with enhanced financial security
and sufficient encouragement to remain with the Company notwithstanding the
possibility of a Change of Control, the Board believes that it is imperative to
provide the Executive with certain severance benefits upon the Executive's
termination of employment.
AGREEMENT
In consideration of the mutual covenants herein contained and the continued
employment of Executive by the Company, the parties agree as follows:
1.
SEVERANCE BENEFITS.
(A) TERMINATION OF EMPLOYMENT.
IN THE EVENT EXECUTIVE'S EMPLOYMENT WITH THE
COMPANY TERMINATES FOR ANY REASON, EXECUTIVE WILL BE ENTITLED TO ANY (I) UNPAID
BASE SALARY ACCRUED UP TO THE EFFECTIVE DATE OF TERMINATION, (II) UNPAID, BUT
EARNED AND ACCRUED ANNUAL INCENTIVE FOR ANY COMPLETED FISCAL YEAR AS OF
EXECUTIVE'S TERMINATION OF EMPLOYMENT, (III) BENEFITS OR COMPENSATION AS
PROVIDED UNDER THE TERMS OF ANY EMPLOYEE BENEFIT AND COMPENSATION AGREEMENTS OR
PLANS APPLICABLE TO EXECUTIVE, AND (IV) UNREIMBURSED BUSINESS EXPENSES REQUIRED
TO BE REIMBURSED TO EXECUTIVE.
(B) TERMINATION WITHOUT CAUSE OR FOR GOOD REASON FOLLOWING A CHANGE OF CONTROL.
IF EXECUTIVE'S EMPLOYMENT IS (I) TERMINATED BY THE COMPANY WITHOUT CAUSE OR (II)
TERMINATED BY THE EXECUTIVE FOR GOOD REASON, WITHIN EIGHTEEN (18) MONTHS
FOLLOWING A CHANGE OF CONTROL, AND NOT DUE TO EXECUTIVE'S DEATH, DISABILITY OR
RESIGNATION (OTHER THAN FOR GOOD REASON), THEN, SUBJECT TO EXECUTIVE'S
COMPLIANCE WITH SECTION 2, EXECUTIVE WILL BE ENTITLED TO RECEIVE:
(I)
SEVERANCE PAY IN THE AMOUNT EQUAL TO EIGHTEEN (18) MONTHS OF EXECUTIVE'S
BASE SALARY, AS IN EFFECT IMMEDIATELY PRIOR TO THE DATE OF TERMINATION OF
EMPLOYMENT OR
CHANGE OF CONTROL, WHICHEVER IS GREATER, WHICH SHALL BE PAID OVER EIGHTEEN (18)
MONTHS (THE "SEVERANCE PAY PERIOD") AT REGULAR PAY DAY INTERVALS IN ACCORDANCE
WITH THE COMPANY'S CUSTOMARY PAYROLL PROCEDURES;
(II)
THE BONUS THE EXECUTIVE WOULD HAVE RECEIVED IF EXECUTIVE REMAINED
EMPLOYED WITH THE COMPANY THROUGH THE END OF THE BONUS PERFORMANCE PERIOD IN
WHICH EXECUTIVE'S EMPLOYMENT TERMINATES, WHICH BONUS, TO THE EXTENT BONUSES ARE
PAID BY THE COMPANY FOR SUCH PERFORMANCE PERIOD, SHALL BE BASED ON THE COMPANY'S
PERFORMANCE IN RELATION TO THE PERFORMANCE TARGETS SET FORTH IN THE BONUS PLAN
APPLICABLE TO THE EXECUTIVE (SUCH