REXNORD MANAGEMENT INCENTIVE COMPENSATION PLAN (MICP)

Budgeted EBITDA (Earnings before interest, taxes, depreciation and amortization)

Debt Reduction / Divisional Cash Flow

Non-financial Goals & Objectives (Personal Performance Factor)

Bonus

Payout

EBITDA*

Debt Reduction/Divisional Cash Flow*

EBITDA & Debt Reduction/Cash Flow targets will be recommended by Management, reviewed/approved by the Chairman, and then approved by the Compensation Committee of the Board of Directors of RBS Global, Inc, (the “Compensation Committee”).

% weighting of EBITDA and Debt Reduction/Cash Flow will normally be 50%/50% (variances from this weighting will be recommended by Management and reviewed/approved by the Chairman)

Corporate will be at 90%

Business Units will normally be at 80% (Chairman to approve any business units at the 90% cliff)

See examples in Addendum A

EBITDA as a % of the Financial Factor calculation

Debt Reduction as a % of the Financial Factor

Cliff

% of EBITDA Target Achieved

% of Divisional Cash Flow Achieved

Calculation:

Company Financial Factor

Based primarily on Individual Non-Financial Goals & Objectives

Re-enforce Cross-Functional / Business Teamwork

DIFFERENTIATE for Performance

Range

Focus - No More Than Five Personal Objectives Which:

Generally Tie to Strategy Deployment Objectives

Are Aggressive

Are Measurable

Are Critical to Business Success

Setting Objectives

Common Format

Non-Financial Objectives

Results

EVALUATION OF GOALS & OBJECTIVES
AT THE END OF THE YEAR

Associate Signature & Date

Manager Signature & Date

One-over-One Manager Signature & Date

Following Signature the “One-Over-One Manager” should send copies of this form to the Associate’s Manager and HR

(it will be HR’s responsibility to ensure that this closed-loop process is followed)

Following Signature the “One-Over-One Manager” should send copies of this form to the Associate’s Manager and HR

(it will be HR’s responsibility to ensure that this closed-loop process is followed)

PLEASE NOTE: ALTHOUGH THE FORM CALLS FOR SIGNATURE FOLLOWING YEAR-END; THIS SHOULD NOT BE CONFUSED WITH THE NEED FOR VERY REGULAR/MONTHLY REVIEW BETWEEN ASSOCIATE & MANAGER THROUGHOUT THE YEAR ON PROGRESS/ COUNTERMEASURES – THE OBJECTIVE IS TO ENABLE ACHIEVEMENT OF THE HIGHEST LEVEL OF STRETCH PERFORMANCE POSSIBLE

The Plan will be administered in accordance with the following guidelines:

Plan Design & Continuation – to be determined by the Compensation Committee.

Plan Participation – to be determined by the CEO, in consultation with the Chairman.

Payout Calculations and Timing – the Compensation Committee shall approve the total annual payout, as well as specific payouts to the CEO and the other Named Executive Officers. The rest of the payouts shall be approved by the CEO, in consultation with the Chairman.

The CEO shall apply discretionary management judgment, as appropriate, in administering all other aspects of the Plan, based on specific business situations or individual considerations. The CEO may delegate the daily administration of the Plan to other managers and associates, including payments of the amounts to be issued to participants under the Plan.

Plan participants must be employed by the Company on the date of payment in order to qualify for payout (normally June)

Exceptions due to retirement, disability, or death will be at the sole discretion of the CEO, in consultation with the Chairman.

Promotions / Transfers

Where a transfer from one organizational unit to another organizational unit occurs during the Plan year, the individual will receive a pro-rated award based on time and base salary / target MICP % in the multiple assignments

When a promotion occurs and the associate remains in the same organizational unit, the base salary and target MICP % in effect @ year-end (3/31) will be used for the entire year

Partial Year participants will normally be eligible for a payment on a pro rata amount calculated at a rate of 1/12 of the annual amount for each complete calendar month

Each Plan Participant will receive individual written notification of the following plan details at the beginning of each fiscal year:

Financial Factor “Mix”

Applicable EBITDA and Debt Reduction/Divisional Cash Flow Targets

% Weighting of EBITDA & Debt Reduction/Divisional Cash Flow in calculating Financial Factor

Guidelines for Establishing Participant’s Annual Personal Objectives

For 90% Cliff

90% of

Target

100% of

Target

105% of

Target

110% of

Target

115% of

Target

120% of

Target

125% of

Target

130%

or > of

Target

225%

and >*

For 80% Cliff

80% of

Target

90% of

Target

100% of

Target

105% of

Target

110% of

Target

115% of

Target

120% of

Target

125% of

Target

130%

or > of

Target

175.5%

and >*