Exhibit 10.1
EMPLOYMENT SEPARATION AND
GENERAL RELEASE AGREEMENT
This Employment Separation and
General Release Agreement (this “ Separation Agreement
”) is entered into as of the 11 th day of September 2009 (the “ Separation
Date ”), by and between Robert A. Hitt, an individual
(“ Executive ”), Rexnord LLC, a Delaware limited
liability company (“ Rexnord ”), RBS Global,
Inc., a Delaware corporation and the parent company of Rexnord
(“ RBS Global ”), and Rexnord Holdings, Inc., a
Delaware corporation and the parent company of RBS Global (“
Holdings ”, and together with Rexnord and RBS Global,
the “ Companies ” and each, a “
Company ”).
WHEREAS , Executive has been employed as the Chief
Executive Officer and President of Rexnord pursuant to that certain
Employment Agreement by and between Executive and Rexnord, dated as
of July 21, 2006 (the “ Employment Agreement
”), and has served as a member of the Board of Directors of
Rexnord;
WHEREAS , Executive has also been employed as the Chief
Executive Officer and President and has served as a member of the
Board of Directors of each of RBS Global and Holdings;
and
WHEREAS , Executive desires to resign from employment
with, as an officer and member of the board of directors of, and in
any and all other capacities with the Companies and each of their
respective subsidiaries and affiliates, effective as of the
Separation Date upon the terms set forth herein.
NOW, THEREFORE
, in consideration of the covenants
undertaken and the releases contained in this Separation Agreement,
Executive and the Companies agree as follows:
I. Resignation .
Executive hereby irrevocably resigns as an officer, director,
employee, member, manager and in any and all other capacities with
the Companies and each of their respective subsidiaries and
affiliates, effective as of the Separation Date. In connection and
concurrently with the execution of this Separation Agreement,
Executive shall execute and deliver to the Companies the letter
attached as Exhibit A hereto. The Companies and each of
their respective subsidiaries and affiliates hereby accept such
resignation, effective as of the Separation Date. Executive
acknowledges and agrees that any and all amounts and benefits due
to Executive from the Companies and each of their respective
subsidiaries and affiliates after the Separation Date shall be
determined under this Separation Agreement.
II. Consulting Services
. For ninety (90) days following the Separation Date,
Executive will be available to Rexnord to perform consulting,
transition and advisory services as reasonably requested by
Rexnord. Executive shall provide the services contemplated by this
Section II after the Separation Date in a consulting capacity,
shall not be an employee of Rexnord or any of its affiliates during
any such period, and shall perform such services for no additional
consideration beyond that expressly provided in this Separation
Agreement. Executive shall perform any such services requested of
him in a prompt, diligent and faithful manner and shall devote such
time to such services as may reasonably be required in order to
timely complete such services.
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III. Severance; Stock
Options .
A. Rexnord shall pay Executive any base salary that
had accrued but had not been paid (including accrued but unpaid
vacation time) on and before the Separation Date on the same date
Rexnord makes its payroll payments generally for the pay period in
which the Separation Date occurred and shall pay any reimbursement
due to Executive pursuant to Section 3(f) of the Employment
Agreement. Executive agrees to promptly provide any and all
documentation reasonably required by Rexnord to support any such
reimbursement due to Executive. The parties agree that
Executive’s accrued but unpaid vacation time as of the
Separation Date is not in excess of 1 day. Executive acknowledges
and agrees that upon payment of the amounts contemplated by this
Section III(A), Executive shall have received all amounts owed for
his regular and usual salary (including, but not limited to, any
severance (other than the Severance Benefits expressly provided for
in, and subject to the terms of, this Separation Agreement),
overtime, bonus, accrued vacation, commissions or other wages),
reimbursement of expenses, and usual benefits from the Companies
and each of their respective subsidiaries and
affiliates.
B. Subject to Section III(C) and Section VIII
below, Executive is also entitled to the following benefits
(collectively, the “ Severance Benefits
”):
(i) Rexnord shall pay Executive the
amount of Forty Nine Thousand Eight Hundred Thirty Three Dollars
and Thirty Three Cents ($49,833.33) per month, subject to tax
withholding, for a period of eighteen (18) consecutive months,
with the first payment being made in October 2009 and a payment
being made in each of the seventeen (17) months
thereafter.
(ii) Rexnord shall provide continued
participation in Rexnord’s group health benefit plans
(including the health, dental and vision plans) and in
Rexnord’s Exec-U-Care plan for Executive and his dependents
at Rexnord’s expense until the earlier of (i) the
expiration of eighteen (18) months from the Separation Date or
(ii) Executive’s eligibility for participation in the
substantially comparable group health plan of a subsequent employer
or entity (the “ Benefits Continuation Period
”). For the avoidance of doubt, in the event that Executive
shall become eligible to participate in a subsequent
employer’s or entity’s substantially comparable
benefits plan(s) offering one or more, but not all, of the benefits
herein described (for example, group medical, but not vision and
dental), Executive shall be entitled to continue to receive from
Rexnord the benefits that are not offered, and/or for which he is
not eligible, under the subsequent employer’s or
entity’s benefits plan(s) until the earliest of the
expiration of eighteen (18) months from the Separation Date or
he becomes so eligible (if at all). In the event that the Benefits
Continuation Period terminates at the end of the 18-month period
pursuant to clause (i) of this Section III(B)(ii) (and not
upon Executive’s eligibility to participate in a subsequent
employer’s group health plans pursuant to clause (ii)),
Rexnord shall reimburse Executive for the cost of the premiums
incurred by Executive for medical insurance coverage for himself
and his dependents during the eighteen (18) month period
following the last day of the Benefits Continuation Period, payable
monthly in arrears upon Rexnord’s receipt of satisfactory
invoices; provided, however , that in no event shall the
maximum aggregate amount of such reimbursement exceed
$50,000.
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(iii) Executive currently owns
60,208 shares of common stock, par value $0.01 per share (the
“ Common Stock ”) of Holdings (the “
Shares ”), which Executive acquired upon the exercise
of vested stock options granted under the Rexnord Holdings, Inc.
2006 Stock Option Plan (the “ 2006 Plan ”).
Notwithstanding Section 4 of the Stockholders’ Agreement
dated as of July 21, 2006 among Holdings, Rexnord Acquisition
Holdings I, LLC, Rexnord Acquisition Holdings II, LLC and certain
other stockholders of Holdings parties thereto (the “
Stockholders’ Agreement ”) or Section 5 of
the stock option agreements evidencing the stock option awards
under the 2006 Plan (the “ Option Agreements ”),
Holdings agrees that it shall not exercise its right to repurchase
the Shares following the Separation Date pursuant to Section 4
of the Stockholders’ Agreement or Section 5 of the
Option Agreements.
(iv) Rexnord shall reimburse
Executive’s costs for outplacement services approved in
advance by Rexnord during the twelve (12) month period
following the Separation Date, payable quarterly in arrears upon
Rexnord’s receipt of satisfactory invoices.
C. This Section III(C) shall apply notwithstanding
anything else contained in this Separation Agreement to the
contrary. As a condition precedent to Rexnord’s obligation to
pay or provide the Severance Benefits (or continue to pay or
provide such benefits, as the case may be), (i) Executive
shall have complied with the restrictive covenants set forth in
Section VIII below and (ii) Executive shall have fulfilled his
obligations described in Section II above. Further, Rexnord shall
have no obligation to pay or provide the Severance Benefits to
Executive unless and until Executive’s release set forth in
Section IV becomes irrevocable by Executive under the
ADEA.
D. Executive agrees that the payments and benefits
contemplated by Section III(B) shall constitute the exclusive and
sole remedy for the termination of his employment, and Executive
covenants not to assert or pursue any other remedies against
anyone, at law or in equity, with respect to any termination of
employment.
E. To the extent that the benefits under Section
III(B)(ii) or (iv) are taxable to Executive, any reimbursement
payment due to Executive pursuant to such provision shall be paid
to Executive on or before the last day of Executive’s taxable
year following the taxable year in which the related expense was
incurred. To facilitate timely payment, Executive agrees to
promptly provide any and all documentation reasonably required by
the Company to support any such payment due to Executive. The
benefits in Section III(B)(ii) and (iv) are not subject to
liquidation or exchange for another benefit and the amount of such
benefits and reimbursements that Executive receives in one taxable
year shall not affect the amount of such benefits or reimbursements
that Executive receives in any other taxable year.
F. Executive currently holds the following
outstanding options to acquire shares of Common Stock, of Holdings:
(i) a stock option grant covering 115,791 shares of Common
Stock granted under the RBS Global Inc. Option Plan (the “
Rollover Options ”), which is currently outstanding
and has not been exercised as to any portion thereof, (ii) a
stock option grant covering 230,706 shares of Common Stock granted
under the 2006 Plan, a portion of which is currently outstanding
and has not been exercised as to 184,565 shares of Common Stock
(the “ July 2006 Options ”), and (iii) a
stock option grant covering 140,677 shares of Common Stock granted
under the 2006 Plan, a portion of which is currently outstanding
and has
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not been exercised as to 126,610 shares of
Common Stock (the “ April 2007 Options ”). As of
the Separation Date, the Rollover Options are fully vested, the
July 2006 Options are vested as to 92,283 shares of Common Stock
and the April 2007 Options are vested as to 42,204 shares of Common
Stock. Notwithstanding any provision of any stock option agreement
or other document to the contrary, on the Separation Date, the
Rollover Options shall be, and they hereby are, cancelled and
Rexnord shall pay to Executive, in consideration thereof, an amount
equal to One Million Four Hundred Ninety Thousand Two Hundred
Thirty Dollars and Seventeen Cents ($1,490,230.17), subject to tax
withholding. Rexnord shall pay such amount to Executive in a single
cash lump sum not later than three (3) business days after
Executive’s release pursuant to Section IV becomes
irrevocable by Executive under the Age Discrimination in Employment
Act of 1967 (the “ ADEA ”).
G. On the Separation Date, the July 2006 Options
and the April 2007 Options (including both vested and unvested
portions) shall be, and they hereby are, terminated and Executive
shall have no further right with respect thereto or in respect
thereof.
IV. Release .
Executive, on behalf of himself, his descendants, dependents,
heirs, executors, administrators, assigns, and successors, and each
of them, hereby covenants not to sue and fully releases and
discharges the Companies and each of their respective parents,
subsidiaries and affiliates, past and present, as well as its and
their trustees, directors, officers, members, managers, partners,
agents, attorneys, insurers, employees, stockholders,
representatives, assigns, and successors, past and present, and
each of them (hereinafter together and collectively referred to as
the “ Releasees ”) with respect to and from any
and all claims, wages, demands, rights, liens, agreements or
contracts (written or oral), covenants, actions, suits, causes of
action, obligations, debts, costs, expenses, attorneys’ fees,
damages, judgments, orders and liabilities of whatever kind or
nature in law, equity or otherwise, whether now known or unknown,
suspected or unsuspected, and whether or not concealed or hidden
(each, a “ Claim ”), which he now owns or holds
or he has at any time heretofore owned or held or may in the future
own or hold as against any of said Releasees (including, without
limitation, any Claim arising out of or in any way connected with
Executive’s service as an officer, director, employee, member
or manager of any Releasee, Executive’s separation from his
position as an officer, director, employee, manager and/or member,
as applicable, of any Releasee, or any other transactions,
occurrences, acts or omissions or any loss, damage or injury
whatever), resulting from any act or omission by or on the part of
said Releasees, or any of them, committed or omitted prior to the
date of this Agreement including, without limiting the generality
of the foregoing, any Claim under Title VII of the Civil Rights Act
of 1964, the Americans with Disabilities Act, the Family and
Medical Leave Act of 1993, or any other federal, state or local
law, regulation, or ordinance, or any Claim for severance pay,
bonus, sick leave, holiday pay, vacation pay, life insurance,
health or medical insurance or any other fringe benefit,
workers’ compensation or disability (the “
Release ”); provided, however , that the
foregoing release does not apply to any obligation of the Companies
to Executive pursuant to any of the following: (1) any
obligation created by or arising out of this Separation Agreement;
(2) any right to indemnification that Executive may have
pursuant to the Bylaws of any of the Companies, any of their
respective Certificates of Incorporation or under any written
indemnification agreement with any of the Companies (or any
corresponding provision of any subsidiary or affiliate of any of
the Companies) or under applicable state law with respect to any
loss, damages or expenses (including but not limited to
attorneys’ fees to the extent otherwise provided) that
Executive may in the future incur with respect to his service
as
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an employee, officer or director of the
Companies or any of their respective subsidiaries or affiliates;
(3) any rights that Executive may have to insurance coverage
for such losses, damages or expenses under any directors and
officers liability insurance policy of any of the Companies or any
of their respective subsidiaries or affiliates; (4) any rights
to payment of benefits that Executive may have under the Rexnord
Special Signing Bonus Plan and the Rexnord Supplemental Executive
Retirement Plan (Executive’s benefit under the Rexnord
Special Signing Bonus Plan is $825,594 and his benefit under the
Rexnord Supplemental Executive Retirement Plan is approximately
$642,311, each to be finally determined and paid in accordance with
and subject to the terms and conditions of the applicable plan);
(5) the continued medical or dental coverage that Executive
may have under the Consolidated Omnibus Budget Reconciliation Act;
or (6) any rights to payment of benefits that Executive may
have under a retirement plan or plans intended to qualify under
Section 401(a) of the Code. In addition, this Release does not
cover any Claim that cannot be so released as a matter of
applicable law. Executive acknowledges and agrees that he has
received any and all leave and other benefits that he has been and
is entitled to pursuant to the Family and Medical Leave Act of
1993.
V. Unknown Claims . It
is the intention of Executive in executing this Separation
Agreement that the same shall be effective as a bar to each and
every Claim hereinabove specified. Executive acknowledges that he
may hereafter discover Claims or facts in addition to or different
from those which Executive now knows or believes to exist with
respect to the subject matter of this Separation Agreement and
which, if known or suspected at the t
