Exhibit 10.3


 


MANAGEMENT
CONSULTING AGREEMENT


THIS
MANAGEMENT CONSULTING AGREEMENT (this “Agreement”) is entered into as of this 21st
day of July 2006, by and among Rexnord Corporation, a Delaware corporation (the
“Company”), George M.  Sherman (“GMS”),
Cypress Group, LLC, a Maryland limited liability company (“Cypress”), and
Cypress Industrial Holdings, LLC, a Maryland limited liability company (“Cypress
Industrial”), effective as of and subject to the Closing (within the meaning of
the Merger Agreement, as defined below) (the date of such Closing, the “Effective
Date”)


RECITALS


A.            The
Company desires to engage Cypress to assist the Company on the terms and
conditions set forth herein.


B.            The
Company believes that it is in its best interest to engage Cypress on the terms
and conditions set forth herein and for Cypress to arrange for GMS to provide
the services contemplated by this Agreement.


C.            The
Company desires that GMS be the individual responsible for performing the
duties on behalf of Cypress set forth in this Agreement.


D.            The
Company, Cypress, Cypress Industrial and GMS wish to enter into this new
consulting agreement and supersede the existing management consulting agreement
by and among the Company, GMS, Cypress, and Cypress Industrial, effective as of
November 25, 2002 (the “Prior Agreement”). 
The parties agree that the Prior Agreement and any other prior
consulting agreements between the Company and any of its subsidiaries or parent
entities, on the one hand, and GMS, Cypress, or Cypress Industrial, on the
other hand, shall be terminated and of no further force or effect as of the
Effective Date, except for the consulting agreements being entered into and
effective as of the Closing.


E.             RBS Global, Inc., a Delaware corporation and parent
company of the Company, Chase Acquisition I, Inc., Chase Merger Sub, Inc. (“Merger
Sub”), and TC Group, L.L.C. entered into an Agreement and Plan of Merger dated
as of May 24, 2006 (the “Merger Agreement”) pursuant to which Merger Sub shall
merge with and into the Company (the “Merger”) and continue its existence as a
wholly-owned subsidiary of Rexnord Holdings, Inc (“Parent,” and, together with
its subsidiaries, “Rexnord”).


F.             Cypress’,
GMS’ and Cypress Industrial’s agreement to enter into this Agreement and to be
bound by the terms hereof was a material factor in the decision of Chase
Acquisition I, Inc. to enter into the Merger Agreement and constitutes partial
consideration for the payments and commitments made or to be made by Chase
Acquisition I, Inc. and its affiliates in connection therewith.


G.            Cypress
desires to be engaged, and GMS desires Cypress to be engaged, by the Company in
the capacities and on the terms and conditions described herein.


 

















 


AGREEMENT


For
good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, the parties hereto, intending to be legally bound, agree
as follows:


1.             Scope
of Engagement.  The Company agrees to
engage Cypress, and Cypress hereby accepts such engagement, on the terms and
conditions set forth herein effective as of the Effective Date, until this
Agreement is terminated in accordance with Section 4.  GMS and Cypress agree that, unless otherwise
agreed in writing by the Company, GMS shall provide all consulting services to
be performed under this Agreement by Cypress (including the duties set forth in
Section 2).  GMS understands that
the Company will classify Cypress and GMS as independent contractors for all
purposes.  Payments due to Cypress
hereunder shall not be subject to withholding except as required by law.


2.             Duties.


a.             During the term of this Agreement, GMS agrees to serve
as a director in the capacity of Non-Executive Chairman of the Board of
Directors of the Company and the Board of Directors of Rexnord Holdings, Inc.
(the “Boards”), a Delaware corporation (“Parent”).


b.             GMS and Cypress acknowledge and agree that GMS and
Cypress have a duty to act in the best interests of Rexnord.  GMS and Cypress acknowledge and agree not to
knowingly commit any act that would injure the business, interests or
reputation of Rexnord or, to the best of GMS’ and Cypress’ knowledge, any of
Rexnord’s subsidiaries or affiliates.


c.             During the term of this Agreement, GMS shall
(i) devote at least two days on average per month advising Rexnord with
respect to management strategy; and (ii) attend at least four meetings of each
Board per year.


d.             On the Effective Date, GMS shall, or shall cause Cypress
Industrial Holdings, LLC to, invest in Parent the investment amount described
in Cypress’, GMS’ and Cypress Industrial’s binding term sheet with Chase
Acquisition I, Inc. dated as of May 24, 2006 (the “Binding Term Sheet”), and
set forth on the Confidential Annex hereto, which amount shall be invested in
part by contribution of shares of common stock of RBS Global, Inc. and in part
by the rollover of vested options to purchase shares of common stock of RBS
Global, Inc. into vested options to purchase shares of common stock of Parent, as
contemplated by the Binding Term Sheet. 
Such contributions shall be evidenced by a subscription agreement and a
stock option assumption agreement that shall be executed prior to or on the
Effective Date.


3.             Compensation. 
As compensation for GMS’ services, GMS or Cypress (as applicable) shall
receive the following amounts:


a.             Subject to Section 5, the Company shall pay
Cypress a base consulting fee at a rate of $250,000 per year (“Base Consulting
Fee”) on a monthly basis for causing GMS to perform the duties set forth in Section
2.


b.             The Company shall reimburse Cypress for all reasonable out-of-pocket
expenses incurred by GMS during the term of this Agreement for travel, lodging,
entertainment, 


 


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and other reasonable
out-of-pocket business expenses incurred in connection with performing the
services hereunder.  For purposes of
clarity, such expenses shall not include amounts paid for maintenance of an
office (including a home office) or secretarial support.


c.             On the Effective Date, GMS shall be granted
non-qualified stock options to purchase 576,765 shares of common stock (the “Common
Stock”) of Parent, at a price of $47.50 per share.  Such options shall be governed by the terms
of the Non-Qualified Stock Option Agreement, a copy of which is attached hereto
as Exhibit A.


4.             Termination. 
This Agreement shall be terminable as follows:


a.             automatically upon the death of GMS;


b.             by either the Company, GMS or Cypress for any reason
with 15 days’ prior written notice to the other party;


c.             by the Company for “Cause.”  The Company shall have “Cause” to terminate
this Agreement upon:


(i)                                     failure by GMS to carry out, or comply
with, in any material respect, any lawful and reasonable directive of a Board
consistent with the terms of this Agreement that, if capable of being cured, is
not remedied within 30 days after receipt of written notice from the Company
specifying such failure;


(ii)                                  GMS’ conviction, plea of no contest, plea
of nolo contendere, or imposition of unadjudicated probation for any felony;


(iii)                               GMS’ unlawful use (including being under
the influence) or possession of illegal drugs;


(iv)                              GMS’ commission of an act of fraud,
embezzlement, misappropriation, willful misconduct, or breach of fiduciary duty
against Rexnord;


(v)                                 GMS’, Cypress’ or Cypress Industrial’s
material breach of this Agreement or that certain Stockholders Agreement
entered into among Parent, Rexnord Acquisition Holdings I, LLC, Rexnord
Acquisition Holdings II, LLC, GMS and Cypress Industrial (the “Cypress
Stockholders Agreement”), pursuant to the terms thereof and such breach
continues unremedied for 30 days after receipt by GMS of written notice; or


d.             by GMS, Cypress or Cypress Industrial for “Good Reason.”  GMS, Cypress or Cypress Industrial shall have
Good Reason to terminate this Agreement upon:


(i)                                     failure by the Company to continue GMS as
non-executive Chairman of the Board of Directors of the Company or the Board 


 


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                                                of Directors of Parent (or if Parent does
not own, directly or indirectly a majority of the capital stock of the Company,
the Board of Directors of any entity that does);


(ii)                                  material diminution in GMS’
responsibilities, duties or authority with the Company and such diminution
continues unremedied for 30 days after receipt of written notice thereof;


(iii)                               the Company’s breach of this Agreement
and such breach continues unremedied for a period of 30 days after the Company
receives written notice of such breach; or


(iv)                              the Company’s material breach of the
Cypress Stockholders Agreement and such breach continues unremedied for 30 days
after receipt of written notice of such breach.


5.             Effect of Termination.  The sole liability of the Company and its
affiliates under this Agreement upon termination of this Agreement shall be (a)
to reimburse Cypress pursuant to Section 3b for reasonable expenses
incurred by Cypress or GMS during the term of this Agreement; (b) to pay any
earned Base Consulting Fee not theretofore paid pursuant to Section 3a
(appropriately pro-rated to the date of termination); and (c) to comply with
any other obligations under this Agreement which expressly survive termination
of Cypress’ engagement, including, without limitation, the indemnification
obligations set forth in Section 9 hereof.


6.             Nondisclosure of Proprietary Information.


a.             Except as required in the faithful performance of
Cypress’ or GMS’ duties hereunder or pursuant to Section 6c below or as
expressly authorized by the Company in writing, GMS, Cypress and Cypress
Industrial shall, in perpetuity, maintain in confidence and shall not directly,
indirectly or otherwise, use, disseminate, disclose or publish, or use for its
or his benefit or the benefit of any person, firm, corporation or other entity
any confidential and proprietary information or trade secrets of Rexnord, including,
without limitation, information that is confidential and proprietary with
respect to Rexnord’s business operations, processes, products, inventions,
business practices, finances, principals, vendors, suppliers, customers,
potential customers, marketing methods, costs, prices, contractual
relationships, regulatory status, or deliver to any person, firm, corporation
or other entity any document, record, notebook, computer program or similar
repository of or containing any such confidential and proprietary information
or trade secrets.  The parties hereby
stipulate and agree that between them the foregoing information is important
and material and affects the successful conduct of the businesses of Rexnord
(and any successors or assignees of Rexnord). 
Information that (i) is generally known by the public, other than as a
result of GMS’, Cypress’ or Cypress Industrial’s acts or failure to act; (ii)
is obtained by GMS, Cypress or Cypress Industrial from third persons not known
to GMS, Cypress or Cypress Industrial to be under an agreement to maintain the
confidentiality of the information received; or (iii) GMS, Cypress or Cypress
Industrial is legally required to disclose, is not subject to the restrictions
of this Section 6a.


 


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b.             Upon termination of this Agreement for any reason, GMS,
Cypress and Cypress Industrial will promptly deliver to the Company all
correspondence, drawings, manuals, letters, notes, notebooks, reports,
programs, plans, proposals, financial documents or any other documents
concerning the customers, business plans, marketing strategies, products and/or
processes of Rexnord.


c.             GMS, Cypress, or Cypress Industrial may respond to a
lawful and valid subpoena or other legal process but shall give the Company the
earliest possible notice thereof, shall, as much in advance of the return date
as possible, make available to the Company and its counsel the documents and
other information sought and shall assist the Company and such counsel at the
Company’s expense in lawfully resisting or otherwise responding to such
process.


7.             No Competition; No Disparagement.


a.             Except as otherwise permitted herein, during the term of
Cypress’ and GMS’ engagement hereunder and until the conclusion of the 24-month
period following the cessation of Cypress’ and GMS’ services to Rexnord
hereunder, none of GMS, Cypress or Cypress Industrial shall:


(i)                                     without the prior written consent of the
Company, which consent may be granted or withheld by the Company in its sole
discretion, directly or indirectly engage in, consult, have any equity interest
in, or manage or operate any person, firm, corporation, partnership or business
(whether as director, officer, employee, agent, representative, partner,
security holder, consultant or otherwise) that engages in any business which
competes with any material business of Rexnord anywhere in the world (as
conducted during the term of this engagement); provided,
however, that (A) GMS, Cypress, and Cypress Industrial shall be permitted
to acquire stock or membership interests in such an entity provided the entity
is publicly traded and the acquired interest is not more than five percent (5%)
of the outstanding shares or membership interests of the entity; and (B) GMS,
Cypress, and Cypress Industrial shall be permitted to hold stock or membership
interests in companies and businesses in which GMS, Cypress, Cypress Industrial
or other entities affiliated with GMS hold stock or membership interests
immediately prior to the Effective Date (including, without limitation, stock
in Colfax, Inc. and related entities), or invested prior to the Effective Date;
or


(ii)                                  hire, solicit or accept, if offered, with
or without solicitation, on GMS’, Cypress’, or Cypress Industrial’s behalf or
on behalf of any other person, the services of any person who is (or was at any
time in the preceding six months) an employee of Rexnord, nor solicit any of
Rexnord’s employees to terminate employment with Rexnord (it being understood
that the foregoing shall not apply to employees solicited or hired without GMS’
knowledge and shall 


 


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                                                not preclude Cypress, Cypress Industrial
or other companies or businesses associated with GMS from soliciting employees
generally though newspaper or other mass media advertising); or


(iii)                               induce or attempt to induce any customer,
supplier, licensee or other business relation of Rexnord to cease doing
business with Rexnord, or in any way interfere with the relationship between
any such customer, supplier, licensee or business relation, on the one hand,
and Rexnord, on the other hand.


b.             During the term of GMS’ engagement and thereafter, none
of GMS, Cypress or Cypress Industrial shall, directly or indirectly, issue or
communicate any public statement, or statement likely to become public, that is
disparaging of or damaging to Rexnord, any of its products or practices, or any
of its officers, directors, employees, representatives or stockholders.  During the term of GMS’ engagement hereunder
and thereafter, neither Rexnord nor any officers of Rexnord shall, directly or
indirectly, issue or communicate any public statement, or statement likely to
become public, that is disparaging of or damaging to GMS, Cypress or Cypress
Industrial.  The foregoing shall not be
violated by truthful responses required by law or legal process.


c.             In the event the terms of this Section 7 shall be
determined by any court of competent jurisdiction to be unenforceable because
the provision extends for too great a period of time, over too great a
geographical area, or for any other reason, the provision shall be interpreted
to extend only over the maximum period of time for which it may be enforceable,
and/or over the maximum geographical area as to which it may be enforceable
and/or to the maximum extent in all other respects as to which it may be
enforceable, all as determined by such court in such action.


8.             Injunctive Relief, Survival


a.             GMS, Cypress and Cypress Industrial recognize and
acknowledge that a breach of the covenants contained in Section 6 and Section
7 will cause irreparable damage to Rexnord and its goodwill, the exact
amount of which will be difficult or impossible to ascertain, and that the
remedies at law for any breach will be inadequate.  Accordingly, GMS, Cypress and Cypress
Industrial agree that in the event of a breach of any of the covenants
contained in Section 6 and Section 7, in addition to any other
remedy which may be available at law or in equity, the Company will be entitled
to specific performance and injunctive relief. 
Parent and the Company recognize and acknowledge that a breach of the
covenants in Section 7b will cause irreparable damage to GMS, Cypress
and Cypress Industrial and the goodwill of Cypress and Cypress Industrial, the
exact amount of which will be difficult or impossible to ascertain, and that
the remedies at law for any breach will be inadequate.  Accordingly, Parent and the Company agree
that in the event of a breach of the covenants contained in Section 7b,
in addition to any other remedy which may be available at law or in equity,
GMS, Cypress and Cypress Industrial will be entitled to specific performance
and injunctive relief.


 


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b.             The rights and obligations of the parties arising under Section
6 and Section 7 of this Agreement shall survive, and will not be
impaired by, the expiration of GMS’ engagement by the Company.


9.             Indemnification. 
The Company agrees that during the term of this Agreement and following the
time GMS’ and Cypress’ relationship with the Company is terminated, GMS,
Cypress and Cypress Industrial shall be entitled to receive indemnification
from time to time from the Company in accordance with the Company’s charter,
bylaws and applicable law to the extent GMS, Cypress or Cypress Industrial
(each such person, for purposes of this Section 9, an “Indemnitee” and
collectively the “Indemnitees”) becomes subject to suits, claims, actions,
causes of action, proceedings or investigations or would otherwise be entitled
to or could seek indemnification thereunder in respect of matters which involve
actions GMS or Cypress have taken or omitted to take prior to the termination
date of their relationship with the Company as an employee, officer, director,
consultant or agent of or to the Company. 
The Company shall provide such indemnification to the fullest extent
permitted by its charter, bylaws and applicable law.  Without limiting the generality of and in
addition to the foregoing, to the fullest extent permitted by its charter,
bylaws and applicable laws, the Company shall defend, indemnify and hold the
Indemnitees harmless for, from and against all demands, suits, claims, actions
or causes of action, assessments, losses, damages, liabilities, costs, judgments,
proceedings, investigations and expenses (including, without limitation,
interest, penalties, reasonable attorneys’ fees and disbursements) (“Losses”),
imposed on or incurred by the Indemnitees relating to GMS’ or Cypress’
relationship with the Company, including by reason of actions or omissions
taken or made by GMS or Cypress during the term of this Agreement.  The Company will also advance reasonable fees
and expenses to the Indemnitees to the maximum extent permitted by law to the
extent the Indemnitees become subject to or involved in any suit, claim,
action, cause of action, proceeding or investigation involving the Company, provided that each such person agrees and undertakes to
reimburse the Company for all expenses paid by the Company to such Indemnitee
pursuant hereto in the event and only to the extent that it shall be finally
determined by a court of competent jurisdiction that Indemnitee is not
entitled, under the provisions of the Company’s charter, bylaws, this
Agreement, applicable law, or otherwise, to be indemnified by the Company for
such expenses, or if Indemnitee receives reimbursement of such expenses from
any other source.


Promptly
after receipt by any Indemnitee of notice of the commencement of any action,
suit, or proceeding, such Indemnitee will, if a claim in respect thereof is to
be made against the Company under this Agreement, notify the Company of the
commencement thereof.  The failure of
such Indemnitee to notify the Company shall have no effect on the obligations
of the Company hereunder except if, and only to the extent that, the Company
suffers actual prejudice or material loss resulting from such failure.  The Company will be entitled to participate
in any such action, suit or proceeding at its own expense.  Except as otherwise provided below, to the
extent that it may wish, the Company shall be entitled to assume the defense
thereof with counsel satisfactory to such Indemnitee.  After notice from the Company to such
Indemnitee of its election to assume the defense thereof, the Company will not
be liable to such Indemnitee under the Agreement for any legal or other
expenses subsequently incurred by such Indemnitee in connection with the
defense thereof except as otherwise provided below.  The Indemnitees shall have the right to
employ counsel in such action, suit, or proceeding, but the fees and expenses
of such counsel incurred after notice from the Company of its assumption of the
defense thereof 


 


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shall be at the expense of
the Indemnitees (and not subject to indemnification or reimbursement hereunder)
unless (a) the employment of counsel by the Indemnitees has been authorized by
the Company, (b) the Indemnitees shall have reasonably concluded that there may
be a conflict of interest between the Company and the Indemnitees in the
conduct of the defense of such action, or (c) the Company shall not in fact
have employed counsel to assume the defense of such action, in each of which
cases the fees and expenses of one counsel acting on behalf of the Indemnitees
shall be at the expense of the Company. 
The Company shall not be entitled to assume the defense of any action,
suit, or proceeding brought by or on behalf of the Company.  The Company shall not be liable to indemnify any
Indemnitee under this Agreement for any amounts paid in settlement of any
action or claim effected without the Company’s written consent.  The Company shall not settle any such action
or claim in any manner without such Indemnitee’s written consent.  Neither the Company nor any Indemnitee will
unreasonably withhold its or his consent to any proposed settlement.  Notwithstanding anything to the contrary
contained herein, the Company shall not indemnify any Indemnitee for any costs
of defense incurred by, or any judgment rendered against, any Indemnitee as a
result of any acts or omissions that constitute fraud, intentional misconduct,
or gross negligence.


During
the term of this Agreement and for a period of six (6) years following its
termination, the Company shall maintain directors and officers liability
insurance with the limits and retentions substantially similar to the insurance
which is in effect as of immediately before the Effective Date and GMS shall be
covered thereunder.


For
purposes of this Section 9, the term “Company” shall include Parent, the
Company, and each of their subsidiaries.


10.           Legal Fees.  The Company agrees that it shall reimburse
GMS, Cypress or Cypress Industrial for reasonable legal fees and expenses GMS,
Cypress or Cypress Industrial collectively incurred in connection with the
negotiation and execution of this Agreement and the Cypress Stockholders
Agreement, and the transactions contemplated hereby.


11.           Public Communications.  The Company agrees that Cypress and GMS shall
have a right to approve in good faith the terms of any communications by the
Company, other than communications not intended for the public generally, with
respect to Cypress and GMS, including communications concerning the engagement
and the termination of GMS’ and Cypress’ engagement with the Company.  Notwithstanding the foregoing, the Company
may make any disclosure required by law, court order, or applicable exchange or
regulatory body without the approval of GMS or Cypress and may respond truthfully
to inquiries from journalists regarding the Company and the role of GMS or
Cypress therein.


12.           Directors and Officers Liability
Insurance.  The Company shall
purchase directors and officers liability insurance coverage in the amount of
$25 million from, and at all times maintain such coverage with, an insurer
selected by the Company.


13.           Assignment.  None of GMS, Cypress or Cypress Industrial
shall be entitled to assign this Agreement by operation of law or otherwise
without the prior written consent of the Company, and the Company shall not be
entitled to assign this Agreement to any party by operation of law or otherwise
without the prior written consent of GMS and Cypress.  This Agreement shall be binding upon the Company,
GMS, Cypress, Cypress Industrial and their respective successors, assigns,
personnel and legal representatives, executors, administrators, 


 


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heirs, distributes,
devisees, and legatees, as applicable. 
Cypress shall be entitled to assign its right to receive all or a
portion of the Base Consulting Fee and to direct that all or a part of such
payments be made payable to any other person, including GMS, in the manner
contemplated by this Agreement.


14.           Complete Agreement.  This Agreement constitutes the complete
agreement and understanding concerning the arrangement between the parties and
supersedes all other agreements, understandings or commitments between the
parties as to the arrangement, including, without limitation, (a) the portions
of the Binding Term Sheet that address the terms of GMS’ and Cypress’
consulting arrangement with the Company, (b) the Prior Agreement, and (c) any
other consulting agreement between the Company and Rexnord, on the one hand,
and GMS, Cypress, or Cypress Industrial, on the other hand.


15.           Counterparts.  This Agreement may be executed in several
counterparts, including via facsimile, each of which shall be deemed to be an
original, but all of which together shall constitute one and the same
Agreement.


16.           Notice.  All notices, requests, consents and other
communications hereunder to any party hereto 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 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 Holdings, Inc.

c/o Apollo Management, L.P.

10250 Constellation Blvd, Suite 2900

Los Angeles, CA 90067

Fax:  (310) 843-1933


Attention:  Larry Berg


 


and


 


Rexnord Corporation


c/o Apollo Management, L.P.


9 West 57th Street, 43rd Floor


New York, NY 10019


Fax:  (212)
515-3288


Attention: 
Steven Martinez


 


and


 


 


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O’Melveny & Myers LLP


Times Square Tower


7 Times Square


New York, New York 10036


Fax:  (212) 326-2061

Attention:  John M. Scott, Esq.


(ii)           if to GMS, Cypress or Cypress
Industrial, to:

c/o Cypress Group, LLC

___________________

___________________

Attention: George M.  Sherman


with a copy to:

King & Spalding LLP

1700 Pennsylvania Avenue, NW

Washington, DC  20006

Fax:  (202) 626-3737

Attention:  Glenn C. Campbell


17.           Waiver.  No party shall be deemed to have waived any
right, power or privilege under this Agreement or any provisions hereof unless
the waiver shall have been duly executed in writing and acknowledged by the
party to be charged with the waiver.  The
failure of any party at any time to insist upon performance of any of the
provisions of this Agreement shall in no way be construed to be a waiver of any
provision of this Agreement, nor in any way to affect the validity of this
Agreement or any part hereof.  No waiver
of any breach of this Agreement shall be held to be a waiver of any subsequent
breach.


18.           Governing Law.  This Agreement shall be governed by and
construed in accordance with the domestic laws of the state of New York without
regard to the conflicts of laws provisions or principles thereof that would
cause the application of the laws of any jurisdiction other than the state of
New York.


19.           Amendment.  This Agreement may not be amended or modified
at any time except by a written instrument executed by the Company, Cypress,
Cypress Industrial and GMS.


20.           Construction.  This Agreement shall be deemed drafted equally
by the parties.  The language contained
in this Agreement shall be construed as a whole and according to its fair
meaning.  Any presumption or principle
that the language is to be construed against any party shall not apply.  The headings in this Agreement are only for
convenience and are not intended to affect construction or interpretation.  Any references to paragraphs, subparagraphs,
sections or subsections are to those parts of this Agreement, unless the context
clearly indicates to the contrary.


21.           Representations/Warranties.  GMS, Cypress and Cypress Industrial represent
and warrant to Rexnord that (i) no legal impediment, and (ii) no arrangement or
understanding 


 


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between GMS, Cypress,
Cypress Industrial or any of their affiliated entities, on the one hand, and TC
Group, L.L.C. or any of its affiliated entitles or any other person or entity,
on the other hand, precludes GMS, Cypress and Cypress Industrial from entering
into this Agreement and rendering the services contemplated hereby.


22.           Arbitration; Waiver of Jury Trial.  Any dispute or controversy arising under, out
of, or in connection with or in relation to this Agreement 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 parties hereto agree 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 this Agreement pursuant to this Section 22,
each party 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.  EACH OF THE PARTIES
HERETO HEREBY IRREVOCABLY WAIVES ALL RIGHT TO TRIAL, INCLUDING TRIAL BY JURY,
IN ANY ACTION, PROCEEDING OR COUNTERCLAIM ARISING OUT OF OR RELATING TO THIS
AGREEMENT.


23.           Enforcement.  If any provision of this Agreement is held to
be illegal, invalid or unenforceable under present or future laws effective
during the term of this Agreement, the provision shall be fully severable; this
Agreement shall be construed and enforced as if the illegal, invalid or
unenforceable provision had never comprised a portion of this Agreement; and
the remaining provisions of this Agreement shall remain in full force and
effect and shall not be affected by the illegal, invalid or unenforceable
provision or by its severance from this Agreement.  Furthermore, in lieu of such illegal, invalid
or unenforceable provision there shall be added automatically as part of this
Agreement a provision as similar as possible in terms that are legal, valid and
enforceable.


[Signature page follows]


 


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


 


	
  COMPANY:

  	
   

  	
   

  
	
   

  	
  REXNORD
  CORPORATION

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/
  Thomas J. Jansen

  
	
   

  	
  Name:

  	
  Thomas
  J. Jansen

  
	
   

  	
  Title:
  

  	
  Executive
  Vice President and Chief Financial Officer 

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  GMS:

  	
   

  	
   

  
	
   

  	
  GEORGE
  M. SHERMAN

  
	
   

  	
   

  	
   

  
	
   

  	
  /s/
  George M. Sherman

  
	
   

  	
  Name:

  	
  George
  M. Sherman

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  CYPRESS:

  	
   

  	
   

  
	
   

  	
  CYPRESS
  GROUP, LLC

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/
  George M. Sherman

  
	
   

  	
  Name:

  	
  George
  M. Sherman

  
	
   

  	
  Title:

  	
  Managing
  Member

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  CYPRESS INDUSTRIAL:

  	
   

  	
   

  
	
   

  	
  CYPRESS
  INDUSTRIAL HOLDINGS, LLC

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/
  George M. Sherman

  
	
   

  	
  Name:

  	
  George
  M. Sherman

  
	
   

  	
  Title:

  	
  Managing
  Member