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Exhibit
10.3
AMENDED AND RESTATED
MANAGEMENT CONSULTING AGREEMENT
AMENDED AND RESTATED MANAGEMENT
CONSULTING AGREEMENT, dated as of February 7, 2007, by and
among REXNORD HOLDINGS, INC., a Delaware corporation (“
Rexnord ”), APOLLO MANAGEMENT VI, L.P., a Delaware
limited partnership (“ Apollo Management ”), and
APOLLO ALTERNATIVE ASSETS, L.P., a Delaware limited partnership
(“ AAA ;” collectively with Apollo Management,
“ Apollo ”).
RECITALS
WHEREAS , Rexnord and Apollo
Management previously entered into that certain Management
Consulting Agreement, dated as of July 21, 2006 (the “
Original Agreement ”), pursuant to which Apollo
Management agreed to make its expertise available to Rexnord and
its subsidiaries (collectively, including subsidiaries acquired
pursuant to the transactions contemplated by the Purchase Agreement
(as defined below), the “ Rexnord Group ”) from
time to time in rendering certain management consulting and
advisory services related to the business and affairs of the
Rexnord Group; and
WHEREAS , Rexnord and Apollo now
desire to amend and restate the Original Agreement in its entirety
as set forth herein (the Original Agreement as amended and restated
hereby, this “ Agreement ”).
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 are hereby acknowledged, the parties 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, subject to
the terms of the subsequent paragraph, 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(f) (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),
and 5 through 14 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 each of the (x) Agreement and
Plan of Merger, dated as of October 11, 2006 (the “
Merger Agreement ”), by and among Jacuzzi Brands, Inc.
(“ Jacuzzi ”), Jupiter Acquisition, LLC (“
Seller ”), and Jupiter Merger Sub, Inc. and
(y) Purchase Agreement, dated as of October 11, 2006 (the
“ Purchase Agreement ”), between RBS Global,
Inc. (an indirect subsidiary of the Company) (“ RBS
Global ”) and Seller (pursuant to which the Rexnord Group
has or will have acquired the water management business of Jacuzzi
from Seller (the “ Zurn Acquisition ”),
(ii) has arranged for financing for the Rexnord Group in
connection with the Zurn Acquisition, and (iii) has provided
other services to the Rexnord Group in connection with the Zurn
Acquisition. Apollo agrees to continue to provide services to the
Rexnord Group in connection with the consummation of the Zurn
Acquisition.
(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) 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 $3,000,000.
Such amounts shall be payable to Apollo in two equal semi-annual
payments (i.e., 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 Apollo a fee of $8,500,000,
by wire transfer in same-day funds to a bank account designated by
Apollo, upon the consummation of the Zurn Acquisition.
(c) Each payment made
pursuant to this Agreement (whether pursuant to
Section 4(a) , 4(b) , 4(d) or otherwise)
by Rexnord or any of its subsidiaries or affiliates to Apollo shall
be divided between Apollo Management and AAA, such that Apollo
Management will receive 87.5% of any such payment, and AAA will
receive 12.5%.
(d) 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. (“ Chase
”), RBS Global or Rexnord LLC (f/k/a 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
or other equity interests of Rexnord, Chase, RBS Global or Rexnord
LLC (each such event, an “ IPO ”). The services
provided to the Rexnord Group by Apollo p
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