Exhibit 10.4


MANAGEMENT
CONSULTING AGREEMENT


This MANAGEMENT CONSULTING AGREEMENT (this “Agreement”)
is entered into as of July 21, 2006 by and between Rexnord Holdings, Inc., a
Delaware corporation (“Rexnord”), and Apollo Management VI, L.P., a
Delaware limited partnership (“Apollo”).


RECITALS


WHEREAS, Rexnord and its subsidiaries (collectively,
the “Rexnord Group”), desire to avail themselves of Apollo’s expertise
and consequently have requested Apollo to make such expertise available from
time to time in rendering certain management consulting and advisory services
related to the business and affairs of the Rexnord Group and the review and
analysis of certain financial and other transactions; and


WHEREAS, Apollo and Rexnord agree that it
is in their respective best interests to enter into this Agreement whereby, for
the consideration specified herein, Apollo has provided and shall provide such
services as an independent consultant to the Rexnord Group.


AGREEMENT


NOW, THEREFORE, in consideration of the foregoing, and
the mutual agreements set forth herein and other good and valuable
consideration, the receipt and adequacy of which is hereby acknowledged, the
parties hereto, intending to be legally bound, hereby agree as follows:


Section 1.               Retention of Apollo. Rexnord
hereby retains Apollo, and Apollo accepts such retention, upon the terms and
conditions set forth in this Agreement.


Section 2.               Term.   This Agreement shall commence on the date
hereof and, unless otherwise extended pursuant to the following sentence, shall
terminate on the twelfth anniversary of the date hereof (the “Term”) or
such earlier time as Apollo and Rexnord may mutually agree in a written agreement signed by each of
them. Upon the twelfth anniversary of the date hereof, and at the end of each
year thereafter (each of such twelfth anniversary and the end of each year
thereafter being a “Year End”), the Term shall automatically be extended
for an additional year unless written notice to the contrary is given by Apollo
at least 30, but no more than 60, days prior to such Year End.  The provisions of Sections 3(d), 4(e) (with
respect to any unpaid or unreimbursed expenses incurred prior to any termination
of this Agreement, whether or not such expenses have then become payable), 5
and 7 through 13 shall survive the termination of this Agreement.


                Apollo’s
obligation to provide services hereunder shall continue through and until the
earlier of (i) the expiration of the Term, as it may be extended pursuant to
the terms of this Section 2, (ii) a Change of Control (as defined below) or (iii)
an IPO (as defined below).


 

















 


Section 3.               Management
Consulting Services.


(a)           Apollo shall advise the Rexnord Group
concerning such management matters that relate to the business, financial
oversight, administration and policies of the Rexnord Group, in each case as Rexnord
shall reasonably and specifically request by way of written notice to Apollo,
which written notice shall specify the services required of Apollo and shall
include all background material necessary for Apollo to complete such services.
 In addition, the Rexnord Group shall
promptly provide any additional materials that Apollo may reasonably request in
connection with the provision of services by Apollo pursuant to the terms of
this Agreement.  Apollo shall devote such
time to any such written request as Apollo shall deem, in its discretion,
necessary.  Such consulting services, in
Apollo’s discretion, shall be rendered in person or by telephone or other
communication.  Except as otherwise
expressly agreed to, Apollo shall have no obligation to the Rexnord Group as to
the manner and time of rendering its services hereunder, and the Rexnord Group
shall not have any right to dictate or direct the details of the services
rendered hereunder.


(b)           In addition, Rexnord acknowledges and
agrees that Apollo (i) has structured the transactions contemplated by that
certain Agreement and Plan of Merger (the “Merger Agreement”), dated as
of May 24, 2006, by and among Chase Acquisition I, Inc., Chase Merger Sub, Inc.,
RBS Global, Inc. and TC Group, L.L.C., (ii) has arranged for financing for the Rexnord
Group in connection with the transactions contemplated by the Merger Agreement,
and (iii) has provided other services to the Rexnord Group in connection with
the transactions contemplated by the Merger Agreement. Apollo agrees to continue
to provide services to the Rexnord Group in connection with the consummation of
the transactions contemplated by the Merger Agreement.


(c)           Apollo shall perform all services to
be provided to the Rexnord Group hereunder as an independent contractor to the Rexnord
Group and not as an employee, agent or representative of any member of the Rexnord
Group. Apollo shall have no authority to act for or to bind any member of the Rexnord
Group while acting in its capacity as an advisor to the Rexnord Group under
this Agreement without Rexnord’s prior written consent.


(d)           This Agreement shall in no way
prohibit Apollo, its affiliates, or any of its or its affiliates’ limited partners,
general partners, directors, members, officers, managers, employees, agents,
advisors or representatives from engaging in other activities, whether or not
competitive with any business of any member of the Rexnord Group.


Section 4.               Compensation.


(a)           As consideration for Apollo’s
agreement to render the services set forth in Section 3(a) of this Agreement
and as compensation for any such services rendered by Apollo, Rexnord agrees to
pay, or cause its subsidiaries to pay, to Apollo an annual fee equal to
$2,000,000.  Such amounts shall be
payable to Apollo in two equal semi-annual payments (ie, every six months) by
wire transfer in same-day funds to a bank account designated by Apollo.


(b)           As consideration for services
rendered and Apollo’s agreement to render services as set forth in Section
3(b), Rexnord agrees to pay, or to cause its subsidiaries to pay, to 


 


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Apollo a fee of $20,000,000 upon the consummation of
the transactions contemplated by the Merger Agreement.


(c)           The parties acknowledge and agree
that an objective of the Rexnord Group is to maximize value for its
shareholders which may include consummating (or participating in the
consummation of) (i) a transaction (including, without limitation, any merger,
consolidation, recapitalization or sale of assets or equity interests) the
result of which is that any Person (as defined in the Merger Agreement) other
than Apollo or an affiliate of Apollo becomes the beneficial owner, directly or
indirectly, of more than 50% of the voting stock of Rexnord, Chase Acquisition
I, Inc., RBS Global, Inc. or Rexnord Corporation, or all or substantially all
of the assets of the Rexnord Group (each such event, a “Change of Control”),
or (ii) one or more initial public offerings of the common stock of Rexnord,
Chase Acquisition I, Inc., RBS Global, Inc. or Rexnord Corporation (each such
event, an “IPO”).  The services
provided to the Rexnord Group by Apollo pursuant to this Agreement will help to
facilitate the consummation of a Change of Control or IPO, should Rexnord
decide to pursue such a transaction.  In
consideration of the services provided pursuant hereto, following the provision
of notice to Apollo by Rexnord of Rexnord’s or another member of the Rexnord
Group’s intent to enter into an event that constitutes a Change of Control or an
IPO, Apollo may elect at any time in connection with or in anticipation of such
Change of Control or IPO (or at any time thereafter) (which election shall be
made by the delivery of notice to Rexnord (such notice, the “Notice”,
and the date on which such Notice is delivered to Rexnord, the “Notice Date”))
to receive the Lump Sum Payment (as defined below), in lieu of annual payments
of the fee set forth in Section 4(a) above, such amount to be paid, unless
prohibited by and subject to the terms of any agreement or indenture governing material
indebtedness of Rexnord or any of its subsidiaries, on the date on which such Change
of Control or IPO is consummated, or, if the Notice occurs, subsequent to such
date, as soon as practicable, but in no event, unless prohibited by and subject
to the terms of any agreement or indenture governing material indebtedness of
the Rexnord Group, later than 30 days subsequent to the Notice Date.  The “Lump Sum Payment” shall be a
single lump sum cash payment equal to the then present value of all then
current and future fees payable pursuant to Section 4(a) above, assuming the
Term ends on the date that is the twelfth anniversary hereof (using a discount
rate equal to the yield to maturity on the Notice Date of the class of
outstanding U.S. government bonds having a final maturity closest to the
twelfth anniversary of the date hereof (the “Discount Rate”)); provided,
however, that no portion of the Lump Sum Payment shall be payable to
Apollo if on the Notice Date Apollo and its affiliates (taken as a whole) do
not own any beneficial economic interest in the Rexnord Group. The Lump Sum
Payment will be payable to Apollo by wire transfer in same-day funds to a bank
account designated by Apollo.


(d)           To the extent Rexnord does not pay any portion of the
Lump Sum Payment by reason of any prohibition on such payment pursuant to the
terms of any agreement or indenture governing material indebtedness of the Rexnord
Group, any unpaid portion of the Lump Sum Payment shall be paid to Apollo on
the first date on which the payment of such unpaid amount is permitted under
such agreement or indenture, to the extent permitted by such agreement or
indenture. Any portion of the Lump Sum Payment not paid on the scheduled due date shall bear
interest at an annual rate equal to the Discount Rate, compounded quarterly,
from the date due until paid.


 


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(e)           Upon presentation by Apollo to Rexnord
of such documentation as may be reasonably requested by Rexnord, Rexnord shall
reimburse, or cause its subsidiaries to reimburse, Apollo for all out-of-pocket
expenses, including, without limitation, legal fees and expenses, and other
disbursements incurred by Apollo, its affiliates or any of its or its affiliates’
limited partners, general partners, directors, members, officers, managers,
employees, agents, advisors or representatives in the performance of Apollo’s
obligations hereunder, whether incurred on, after or prior to the date hereof,
including, without limitation, out-of-pocket expenses incurred in connection
with the transactions contemplated by the Merger Agreement and each of the
documents referred to therein.


(f)            Nothing in this Agreement shall have
the effect of prohibiting Apollo, its affiliates or any of its or its affiliates’
limited partners, general partners, directors, members, officers, managers, employees,
agents, advisors or representatives from receiving from Rexnord or any other
member of the Rexnord Group any other fees, including any fee payable pursuant
to Section 7.


Section 5.               Indemnification. Rexnord
agrees that it shall, and it shall cause its subsidiaries to, indemnify and
hold harmless Apollo, its affiliates and its and its affiliates’ limited partners,
general partners, directors, members, officers, managers, employees, agents, advisors
or representatives (collectively, the “Indemnified Persons”) on demand
from and against any and all claims, demands, actions, causes of action, judgments,
obligations, contracts, agreements, debts, liabilities, costs, expenses and
disbursements whether known or unknown, contingent or otherwise, both at law
and in equity (collectively, “Claims”) of any kind with respect to or
arising from this Agreement or the performance by any Indemnified Person of any
services in connection herewith.  Notwithstanding
the foregoing provision, Rexnord shall not be liable for any Claim under this
Section 5 arising from the willful misconduct of any Indemnified Person.


Section
6.               Limitation on Damages.  Rexnord’s sole remedy against Apollo for
breach of this Agreement shall be to offset any fees paid or otherwise payable
to Apollo by the amount of any Claims arising out of or relating to this
Agreement or the services to be rendered hereunder; it being understood that any
recovery will be limited to actual damages. 
No Indemnified Person shall be liable to the Rexnord Group (a) for any
breach hereunder by another Indemnified Person or (b) for any breach by it,
unless the same constitutes fraud or willful misconduct as determined in a
final judgment of a court of competent jurisdiction from which no appeal can be
made.


Section
7.               Other Services.  If
Rexnord shall determine that it is advisable for any member of the Rexnord
Group to hire a financial advisor, consultant, investment bank or any similar
agent in connection with any merger, acquisition, disposition,
recapitalization, divestiture, sale of assets, joint venture, issuance of
securities (whether equity, equity-linked, debt or otherwise), financing or any
similar transaction, Rexnord shall notify Apollo of such determination in
writing. Promptly thereafter, upon the request of Apollo, the parties shall
negotiate in good faith to agree upon appropriate services, additional
compensation and indemnification for the relevant member of the Rexnord Group
to hire Apollo or its affiliates for such services. No member of the Rexnord
Group may hire any Person, other than Apollo or its affiliates, for any
services, unless all of the following conditions have been satisfied: (a) the 


 


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parties are unable to agree after 30 days following
receipt by Apollo of such written notice, (b) such other Person has a
reputation that is at least equal to the reputation of Apollo in respect of
such services, (c) 10 business days shall have elapsed after Rexnord provides a
written notice to Apollo of its intention to hire such other Person, which
notice shall identify such other Person and shall describe in reasonable detail
the nature of the services to be provided, the compensation to be paid and the
indemnification to be provided, (d) the compensation to be paid is not more
than Apollo was willing to accept in the negotiations described above, and (e)
the indemnification to be provided is not more favorable to the relevant member
of the Rexnord Group than the indemnification that Apollo was willing to accept
in the negotiations described above. In the absence of an express agreement to
the contrary, at the closing of any merger, acquisition, disposition,
recapitalization, divestiture, sale of assets, joint venture, issuance of
securities (whether equity, equity-linked, debt or otherwise), financing or any
similar transaction, Apollo shall receive a fee equal to 1% of the aggregate
enterprise value paid or provided by the Rexnord Group (including the aggregate
value of (x) equity securities, warrants, rights and options
acquired or retained, (y) indebtedness acquired, assumed or refinanced, and (z)
any other consideration or compensation paid in connection with such
transaction).


Section 8.               Notices.  All notices, requests, consents and other
communications hereunder shall be in writing and shall be deemed sufficient if
personally delivered, sent by nationally-recognized overnight courier, by
telecopy, or by registered or certified mail, return receipt requested and
postage prepaid, addressed as follows:


if to Apollo, to:


Apollo Management VI, L.P.


9 West 57th Street


43rd Floor


New York, New York 10019


Telecopy: 212-515-3288


Attention: Larry Berg


if to Rexnord:


Rexnord Holdings, Inc.


c/o Rexnord Corporation


4701 Greenfield Avenue


Milwaukee, WI 53214


Telecopy: (414) 643-3078


Attention:  Robert Hitt


or to such other address as the party to whom notice
is to be given may have furnished to each other party in writing in accordance
herewith. Any such notice or communication shall be deemed to have been
received (a) in the case of personal delivery, on the date of such delivery,
(b) in the case of nationally-recognized overnight courier, on the next
business day after the date when sent, (c) in the case of telecopy
transmission, when received, and (d) in the case of mailing, on the third
business day following that on which the piece of mail containing such communication
is posted.


 


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Section 9.               Benefits of Agreement.  This Agreement shall bind and inure to the
benefit of Apollo, Rexnord, the other members of the Rexnord Group, the
Indemnified Persons and any successors to or assigns of Apollo, Rexnord and the
Indemnified Persons; provided, however, that other than any
assignment to an affiliate of Apollo, this Agreement may not be assigned by
either party hereto without the prior written consent of the other party, which
consent will not be unreasonably withheld in the case of any assignment by
Apollo. Upon Apollo’s request, Rexnord shall cause the other members of the Rexnord
Group to become parties hereto directly in order to avail themselves of the
services hereunder.


Section 10.             Governing Law.  This Agreement shall be governed by and
construed and enforced in accordance with the laws of the State of New York
(without giving effect to principles of conflicts of laws that would give
effect to the laws of another jurisdiction).


Section 11.             Headings.  Section headings are used for convenience only
and shall in no way affect the construction of this Agreement.


Section 12.             Entire Agreement; Amendments.
 This Agreement contains the entire
understanding of the parties with respect to its subject matter, and neither it
nor any part of it may in any way be altered, amended, extended, waived,
discharged or terminated except by a written agreement signed by each of the
parties hereto.


Section 13.             Counterparts.  This Agreement may be executed in
counterparts, including via facsimile transmission, and each such counterpart
shall be deemed to be an original instrument, but all such counterparts
together shall constitute but one agreement.


Section 14.             Waivers.
 Any party to this Agreement may, by
written notice to the other party, waive any provision of this Agreement. The
waiver by any party of a breach of any provision of this Agreement shall not
operate or be construed as a waiver of any subsequent breach.


 


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


	
   

  	
  REXNORD
  HOLDINGS, INC.

  
	
   

  	
  By:

  	
  /s/ Thomas
  Jansen

  
	
   

  	
   

  	
  Name: 

  	
  Thomas Jansen

  
	
   

  	
   

  	
  Title:

  	
  Executive Vice President
  and Chief Financial Officer

  
	
   

  	
  APOLLO MANAGEMENT VI, L.P.

  
	
   

  	
  By:

  	
  /s/ Michael
  Weiner

  
	
   

  	
   

  	
  Name: 

  	
  Michael Weiner

  
	
   

  	
   

  	
  Title:

  	
  President