Exhibit 10.5

STOCK OPTION CANCELLATION AND RELEASE AGREEMENT

This Stock Option Cancellation and Release Agreement (hereinafter “Agreement”),
dated as of October 29, 2009, is made by and among Rexnord Holdings, Inc., a
Delaware corporation (the “Company”), Cypress Industrial Holdings, LLC, a
Maryland limited liability company (“Industrial”), and Cypress Group, LLC, a
Maryland limited liability company (the “Optionee”).

WHEREAS, pursuant to that certain Non-Qualified Stock Option Agreement of
Rexnord Holdings, Inc., dated as of April 19, 2007, by and between the Company,
Industrial and Optionee (the “Stock Option Agreement”), the Company granted a
stock option to Optionee covering 130,743 shares of Company common stock and
with an exercise price of $19.94 per share (the “Option”); and

WHEREAS, Optionee desires and has requested the Company to cancel the Option and
all rights thereunder in order that the Company may grant additional options
under the 2006 Stock Option Plan of Rexnord Holdings, Inc. (the “Plan”), and the
Company has agreed to such cancellation.

NOW, THEREFORE, the Company and Optionee agree as follows:

1. Option Cancellation. The Option is hereby cancelled. Optionee shall have no
further rights to exercise the Option or to acquire Company stock pursuant to
the Option.

2. Cancellation Payment. As a payment in lieu of whatever benefits, if any, to
which Optionee may be entitled under the Option, and in exchange for the release
of claims and covenants contained herein, the Company shall pay Optionee the
amount of $1.

3. Optionee Release. Optionee agrees that, in exchange for the good and valuable
consideration described in this Agreement, including but not limited to
Section 2 hereof, the sufficiency of which is hereby acknowledged, and in order
to permit the Company to grant additional stock options under the Plan, Optionee
hereby releases and discharges fully and forever the Company from any and all
present or future claims, demands, and causes of action which may relate to the
Option.

4. Binding Effect. This Agreement shall be binding upon and shall inure to the
benefit of both the Company and Optionee and their respective successors, heirs,
and legal representatives. Optionee’s signature below on this Agreement affirms
that it has read and understands all provisions of this Agreement and Optionee
agrees to comply with all terms hereof.

5. Entire Agreement. This Agreement constitutes the entire agreement between the
Company and Optionee and contains all the agreements between them with respect
to the subject matter hereof; provided, however, that this Agreement shall not
affect any other agreements existing between the Company, Industrial and
Optionee, including but not limited to any such agreements related to shares of
Company stock owned by Industrial or Optionee or any stockholders, consulting or
similar agreements or arrangements.

6. Applicable Law. This Agreement shall be construed and enforced under and in
accordance with the laws of the State of New York.

[SIGNATURE PAGE TO FOLLOW.]

 

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IN WITNESS WHEREOF, this Agreement has been executed and delivered by the
parties hereto as of the day, month and year first set forth above.

 

THE COMPANY: Rexnord Holdings, Inc. By:  

/s/ Patricia M. Whaley

Name:   Patricia M. Whaley Title:   Vice President, General Counsel & Secretary
THE OPTIONEE: Cypress Group, LLC By:  

/s/ George M. Sherman

Print Name:   George M. Sherman Title:   Managing Member INDUSTRIAL: Cypress
Industrial Holdings, Inc. By:  

/s/ George M. Sherman

Print Name:   George M. Sherman Title:   Managing Member