EMPLOYMENT AGREEMENT

BETWEEN

NATIONAL WATERWORKS, INC.

AND

PHILIP KEIPP

MARCH 1, 2005

 

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          THIS EMPLOYMENT AGREEMENT dated as of March 1, 2005 between National
Waterworks, Inc., a Delaware corporation, (the “Company”), and Philip Keipp (the
“Executive”).

          The Company will engage in the business (the “Subject Business”) of
the sale and distribution of waterworks products for building and rehabilitating
water and wastewater infrastructure and any other related business in which the
Company may be engaged.

          Prior to the date hereof, Executive has been and will continue as an
officer of the Company and, as such, has substantial experience that is valuable
to the Subject Business and the Company.

          The Company desires to employ the Executive, and the Executive desires
to accept such employment, on the terms and subject to the conditions
hereinafter set forth.

          NOW, THEREFORE, in consideration of the covenants contained herein and
other good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, the parties hereto agree as follows:

     Section 1. Employment.

          The Company shall employ the Executive, and the Executive accepts
employment with the Company, upon the terms and conditions set forth in this
Agreement for the period beginning on the Effective Date and ending on the
Termination Date determined pursuant to Section 4(a) (the “Employment Period”).

     Section 2. Position and Duties.

          (a) During the Employment Period, the Executive shall serve as the
Chief Financial Officer of the Company and shall have the usual and customary
duties, responsibilities and authority of a Chief Financial Officer subject to
the power of the Chief Executive Officer and the Board (i) with the Executive’s
consent, to expand or limit such duties, responsibilities and authority and
(ii) to override the actions of the Executive. The Executive acknowledges and
agrees that he owes a fiduciary duty of loyalty to the Company to discharge his
duties and otherwise act in a manner consistent with the best interests of the
Company and its Subsidiaries.

          (b) During the Employment Period, the Executive shall devote his best
efforts and all of his working time, attention and energies to the performance
of his duties and responsibilities under this Agreement (except for vacations to
which he is entitled pursuant to Section 3(a) and except for illness or
incapacity). During the Employment Period, the Executive shall not engage in any
business activity which, in the reasonable judgment of the Board (excluding the
Executive if he should be a member of the Board at the time of such
determination), conflicts with the duties of the Executive hereunder, whether or
not such activity is pursued for gain, profit or other pecuniary advantage.

 

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     Section 3. Base Salary and Benefits.

          (a) Base Salary. During the Employment Period, the Executive’s base
salary shall be $188,513.62 per annum, or such higher rate as the Compensation
Committee of the Board (excluding the Executive if he should be a member of the
Board or the Compensation Committee at the time of such determination) may
designate from time to time (the “Base Salary”), which salary shall be payable
in such installments as is customary for other senior executives of the Company.
In addition, during the Employment Period, the Executive shall be entitled to
participate in all employee benefit programs for which other senior executives
of the Company are generally eligible and the Executive shall be eligible to
participate in all insurance plans available generally to other senior
executives of the Company. The Executive shall be entitled to take four
(4) weeks of paid vacation annually. The Board shall conduct a review of the
Executive’s Base Salary on an annual basis.

          (b) Bonus. Executive shall be entitled to receive, in addition to the
Base Salary, an annual bonus (the “Bonus”) for services rendered during such
year determined as follows:

               (i) For each calendar year commencing on or after January 1,
2005, there shall be no Bonus unless the Company exceeds 90% of the Target
EBITDA (as defined below) in any calendar year. If the Company exceeds 90% of
Target EBITDA for any calendar year, the Bonus shall be the percentage of Base
Salary between 10% and 50%, calculated on a straight line basis, as corresponds
to the relative achievement of Target EBITDA, with 10% corresponding to 90% of
Target EBITDA and 50% corresponding to 100% of Target EBITDA. The Bonus shall be
50% of the Base Salary if the Target EBITDA (as defined below) is achieved for
any calendar year and shall be 100% of the Base Salary if 110% of the Target
EBITDA is achieved or exceeded in any calendar year. If EBITDA (as defined
below) for any calendar year exceeds 100% of the Target EBITDA but does not
exceed 110% of the Target EBITDA, the Bonus shall be a percentage of the Base
Salary between 50% and 100%, calculated on a straight-line basis, as corresponds
to the relative achievement of Target EBITDA, with 50% corresponding to 100%
Target EBITDA and 100% corresponding to 110% of Target EBITDA.

               (ii) “EBITDA” shall mean the Company’s earnings before reduction
for interest, income tax, depreciation and amortization for any period
calculated in the same manner as the monthly reporting package presented to the
Board. “Target EBITDA” shall be the targeted EBITDA for the Company for any
calendar year established annually, and subject to adjustments for acquisitions
by the Company, by the Board in consultation with the Company’s Chief Executive
Officer.

               (iii) Each Bonus, if any, shall be paid within thirty (30) days
following the completion of the Company’s audited financial statements for the
relevant calendar year subject to Executive’s continued employment with the
Company as of the last date of such calendar year, except as specifically
provided in Section 5(a)(ii) hereof.

          (c) Option Agreement. Concurrent with the date hereof, National
Waterworks Holdings, Inc. (“Parent”), shall issue 95,628 Options (as defined in
the Option Agreement) to the Executive pursuant to the Option Agreement.

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          (d) The Company shall reimburse the Executive for all reasonable
expenses incurred by him in the course of performing his duties under this
Agreement which are consistent with the Company’s policies in effect from time
to time with respect to travel, entertainment and other business expenses,
subject to the Company’s requirements with respect to reporting and
documentation of such expenses.

          (e) The Company shall deduct from any payments to be made by it to the
Executive under this Agreement any amounts required to be withheld in respect of
any Federal, state or local income or other taxes.

     Section 4. Termination.

          (a) Termination Date. The Executive’s employment under this Agreement
shall terminate upon the earliest to occur (the date of such occurrence being
the “Termination Date”) of (i) the fourth anniversary of the Effective Date (the
“Initial Term”), as may be extended under Section 4(c) below, (ii) the effective
date of the Executive’s resignation (a “Resignation”), (iii) the Executive’s
death or Disability (an “Involuntary Termination”), (iv) the effective date of a
termination of the Executive’s employment for Cause by the Board (a “Termination
for Cause”), (v) the effective date of Executive’s resignation for Good Reason
(a “Termination for Good Reason”) and (vi) the effective date of a termination
of the Executive’s employment by the Board for reasons that do not constitute
Cause (a “Termination Without Cause”). The effective date of a Resignation shall
be as determined under Section 4(b); the effective date of an Involuntary
Termination shall be the date of death or, in the event of a Disability, the
date specified in a notice delivered to the Executive by the Company; the
effective date of a Termination for Good Reason shall be the date specified in a
notice delivered to the Company by the Executive of such termination and the
effective date of a Termination for Cause or a Termination Without Cause shall
be the date specified in a notice delivered to the Executive by the Company of
such termination.

          (b) Resignation. The Executive shall give the Company and the Board at
least 30 days’ prior written notice of a Resignation, with the effective date of
such Resignation specified therein. The Board may, in its discretion, accelerate
the effective date of the Resignation.

          (c) Renewal. This Agreement may be renewed for additional one (1) year
terms by mutual agreement of the Company and the Executive within one year and
90 days (450 days) prior to the expiration of the Initial Term. Nothing stated
in this Agreement or represented orally or in writing to either party shall
create an obligation to renew this Agreement.

     Section 5. Effect of Termination; Severance.

          (a) In the event of a Termination Without Cause, a Termination for
Good Reason or an Involuntary Termination, the Executive or his beneficiaries or
estate shall have the right to receive the following:

               (i) the Base Salary provided by Section 3(a) hereof for a period
of twelve (12) months from the Termination Date, such amount to be deemed
liquidated damages and payable at the applicable payroll periods; provided,
however, that in the

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event of a breach by the Executive of Section 6, 7, 8, or 9 on or after the
Termination Date, the provisions of Section 11 shall apply;

               (ii) a pro rata amount of any Bonus which is earned by the
Executive for the calendar year in which such termination occurs determined
after the end of the calendar year in which such termination occurs and equal to
the amount which would have been payable to the Executive if Executive’s
employment had not been terminated during such calendar year multiplied by a
fraction, the numerator of which is the number of whole months the Executive was
employed by the Company and the denominator of which is 12. The Bonus shall be
paid out as set forth in Section 3(b)(iii); and

               (iii) reimbursement for any expenses for which the Executive
shall not have been previously reimbursed, as provided in Section 3(d).

          (b) In the event of a Termination for Cause or Resignation, the
Executive or his beneficiaries or estate shall have the right to receive the
following:

               (i) the unpaid portion of the Base Salary, computed on a pro rata
basis to the Termination Date; and

               (ii) reimbursement for any expenses for which the Executive shall
not have been previously reimbursed, as provided in Section 3(d).

          (c) Upon any termination, neither the Executive nor his beneficiaries
or estate shall have any further rights under this Agreement or any rights
arising out of this Agreement other than as provided in Sections 5(a) and (b)
above. The rights of the Executive set forth in this Section 5 are intended to
be the Executive’s exclusive remedy for termination and, to the greatest extent
permitted by applicable law, the Executive waives all other remedies.

     Section 6. Nondisclosure and Nonuse of Confidential Information.

          The Executive will not disclose or use at any time, either during the
Employment Period or thereafter, any Confidential Information of which the
Executive is or becomes aware, whether or not such information is developed by
him, except to the extent that (i) such disclosure or use is directly related to
and required by the Executive’s performance of duties assigned to the Executive
by the Company, (ii) to the extent that such disclosure is required in
connection with any action by the Executive to enforce rights under this
Agreement, or (iii) such disclosure is required by a court of law, governmental
agency, or by any administrative or legislative entity with jurisdiction to
order the Executive to divulge or disclose such Confidential Information;
provided, that, the Executive shall provide ten (10) days prior written notice,
if practicable, to the Company of such disclosure so that the Company may seek a
protective order or similar remedy; and, provided, further, that, in each case
set forth above, the Executive informs the recipients that such information or
communication is confidential in nature.

     Section 7. Inventions and Patents.

          The Executive agrees that all Work Product belongs to the Company. The
Executive will promptly disclose such Work Product to the Board and perform all
actions

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reasonably requested by the Board (whether during or after the Employment
Period) to establish and confirm such ownership (including, without limitation,
the execution and delivery of assignments, consents, powers of attorney and
other instruments) and to provide reasonable assistance to the Company in
connection with the prosecution of any applications for patents, trademarks,
trade names, service marks or reissues thereof or in the prosecution or defense
of interferences relating to any Work Product.

     Section 8. Non-Compete, Non-Solicitation, Non-Disparagement.

          The Executive acknowledges and agrees with the Company that during the
course of the Executive’s employment with the Company, the Executive has had and
will continue to have the opportunity to develop relationships with existing
employees, customers and other business associates of the Company and its
Subsidiaries which relationships constitute goodwill of the Company, and the
Company would be irreparably damaged if the Executive were to take actions that
would damage or misappropriate such goodwill. Accordingly, the Executive agrees
as follows:

          (a) The Executive acknowledges that the Company currently conducts the
Subject Business throughout North America (the “Territory”). Accordingly, during
the term hereof and until one year from the Termination Date (the “Non-Compete
Period”), the Executive shall not, directly or indirectly, enter into, engage
in, assist, give or lend funds to or otherwise finance, be employed by or
consult with, or have a financial or other interest in, any business which
engages in the Subject Business within the Territory, whether for or by himself
or as an independent contractor, agent, stockholder, partner or joint ventures
for any other person. To the extent that the covenant provided for in this
Section 8(a) may later be deemed by a court to be too broad to be enforced with
respect to its duration or with respect to any particular activity or geographic
area, the court making such determination shall have the power to reduce the
duration or scope of the provision, and to add or delete specific words or
phrases to or from the provision. The provision as modified shall then be
enforced.

          (b) Notwithstanding the foregoing, the aggregate ownership by the
Executive of no more than two percent (on a fully-diluted basis) of the
outstanding equity securities of any person, which securities are traded on a
national or foreign securities exchange, quoted on the NASDAQ stock market or
other automated quotation system, and which person competes with the Company (or
any part thereof) within the Territory, shall not be deemed to be a violation of
Section 8(a). In the event that any person in which the Executive has any
financial or other interest directly or indirectly enters into a line of
business during the Non-Compete Period that competes with the Company or engages
in the Subject Business within the Territory, the Executive shall divest all of
his interest (other than as permitted to be held pursuant to the first sentence
of this Section 8(b)) in such person within 15 days after such person enters
into such line of business that competes with the Company or that engages in the
Subject Business within the Territory.

          (c) The Executive covenants and agrees that during the period
commencing with the Effective Date and ending on the third anniversary of the
Termination Date, the Executive will not, directly or indirectly, either for
himself or for any other person (A) solicit any employee or consultant of the
Company or any of its Subsidiaries to terminate his or her

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employment or consulting relationship with the Company or any of its
Subsidiaries or employ any such individual during his or her employment or
consulting relationship with the Company or any of its Subsidiaries and for a
period of one year after such individual terminates his or her employment with
the Company or any of its Subsidiaries, (B) solicit any customer of the Company
or any of its Subsidiaries to purchase or distribute information, products or
services of or on behalf of the Executive or such other person that are
competitive with the information, products or services provided by the Company
or any of its Subsidiaries, or (c) take any action that may cause injury to the
relationships between the Company or any of its Subsidiaries or any of their
employees and any lessor, lessee, vendor, supplier, customer, distributor,
employee, consultant or other business associate of the Company or any of its
Subsidiaries as such relationship relates to the Company’s or any of its
Subsidiaries’ conduct of their business.

          (d) The Executive understands that the foregoing restrictions may
limit his ability to earn a livelihood in a business similar to the business of
the Company and any of its Subsidiaries, but he nevertheless believes that he
has received and will receive sufficient consideration and other benefits as an
employee of the Company and as otherwise provided hereunder or as described in
the recitals hereto to clearly justify such restrictions which, in any event
(given his education, skills and ability), the Executive does not believe would
prevent him from otherwise earning a living.

     Section 9. Delivery of Materials Upon Termination of Employment.

          The Executive shall deliver to the Company at the termination of the
Employment Period or at any time the Company may request all memoranda, notes,
plans, records, reports, computer tapes and software and other documents and
data (and copies thereof) relating to the Confidential Information, Work Product
or the Subject Business which he may then possess or have under his control
regardless of the location or form of such material and, if requested by the
Company, will provide the Company with written confirmation that all such
materials have been delivered to the Company.

     Section 10. Insurance.

          The Company may, for its own benefit, maintain “keyman” life and
disability insurance policies covering the Executive. The Executive will
cooperate with the Company and provide such information or other assistance as
the Company may reasonably request in connection with the Company obtaining and
maintaining such policies.

     Section 11. Enforcement.

          Because the Executive’s services are unique and because the Executive
has access to Confidential Information and Work Product, the parties hereto
agree that money damages would be an inadequate remedy for any breach of this
Agreement. Therefore, in the event of a breach or threatened breach of this
Agreement, the Company or its successors or assigns may, in addition to other
rights and remedies existing in their favor, apply to any court of competent
jurisdiction for specific performance and/or injunctive or other relief in order
to enforce, or prevent any violations of, the provisions hereof (without posting
a bond or other security). In addition to the foregoing, and not in any way in
limitation thereof, or in limitation of any right or

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remedy otherwise available to the Company, if the Executive violates any
provision of the foregoing Sections 6, 7, 8 or 9, any payments then or
thereafter due from the Company to the Executive pursuant to Section 5(a)(i) and
Section 5(a)(ii) shall be terminated forthwith and the Company’s obligation to
pay and the Executive’s right to receive such payments shall terminate and be of
no further force or effect, in each case without limiting or affecting the
Executive’s obligations under such Sections 6, 7, 8 and 9 or the Company’s other
rights and remedies available at law or equity.

     Section 12. Representations.

          Each party hereby represents and warrants to the other party that
(a) the execution, delivery and performance of this Agreement by such party does
not and will not conflict with, breach, violate or cause a default under any
agreement, contract or instrument to which such party is a party or any
judgment, order or decree to which such party is subject, and (b) upon the
execution and delivery of this Agreement by such party, this Agreement will be a
valid and binding obligation of such party, enforceable in accordance with its
terms, except as enforcement hereof may be limited by any applicable bankruptcy,
reorganization, insolvency or other laws affecting creditors’ rights generally
or by general principles of equity. In addition, the Executive represents and
warrants to the Company that the Executive is not a party to or bound by any
employment agreement, consulting agreement, non-compete agreement,
confidentiality agreement or similar agreement with any other person, all of
which shall be terminated effective as of the Closing. The Company and the
Executive hereby terminate all existing employment or consulting agreements
between them, if any, to the extent such agreements may be in effect after the
date hereof.

     Section 13. Termination of Existing Employment Arrangements.

          Effective upon the Effective Date, any and all prior agreements or
understandings related to employment matters between the Company or its
affiliates and the Executive shall be terminated and shall be of no further
force or effect and the Executive hereby agrees to take all action necessary to
affect such termination.

     Section 14. Definitions.

          “Board” shall mean the board of directors of the Company.

          “Business Day” shall mean any day that is not a Saturday, Sunday, or a
day on which banking institutions in New York are not required to be open.

          “Cause” shall mean (i) the failure by the Executive to perform such
duties as are reasonably requested by the Board which is not cured within thirty
(30) days of receipt by the Executive of written notice detailing the same from
the Board, (ii) the Executive’s willful disregard of his duties or failure to
act, where such action would be in the ordinary course of the Executive’s
duties, (iii) the failure by the Executive to observe all written material
Company policies and written material policies of all Affiliates of the Company
generally applicable to executives of the Company and/or its Affiliates of which
the Executive has notice, (iv) gross negligence or willful misconduct by the
Executive in the performance of his duties, (v) the commission by the Executive
of any act of fraud, theft or financial dishonesty with respect to the

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Company or any of its Affiliates, or any felony or criminal act involving moral
turpitude, (vi) the material breach by the Executive of (a) this Agreement,
including, without limitation, any breach by the Executive of the provisions of
Paragraph 6, Paragraph 7 or Paragraph 8, (b) the Option Agreement, or (c) any
Stockholders’ Agreement to which the Company or the Executive may become a
party, or (vii) chronic absenteeism. For purposes of this Agreement,
“Affiliates” means the Company (or its successors and assigns) and all
Subsidiaries thereof.

          “Confidential Information” means information that is not generally
known to the public and that is or was used, developed or obtained by U.S.
Filter Distribution, Inc. (“Distribution”) or the Company or any of its
Subsidiaries in connection with the Subject Business, including, but not limited
to, (i) information, observations, procedures and data obtained by the Executive
while employed by the Company (including those obtained by the Executive while
employed at Distribution prior to the date of this Agreement) concerning the
business or affairs of Distribution or the Company or any of its Subsidiaries,
(ii) products or services, (iii) costs and pricing structures, (iv) analyses,
(v) drawings, photographs and reports, (vi) computer software, including
operating systems, applications and program listings, (vii) flow charts, manuals
and documentation, (viii) data bases, (ix) accounting and business methods,
(x) inventions, devices, new developments, methods and processes, whether
patentable or unpatentable and whether or not reduced to practice,
(xi) customers, vendors, suppliers and customer, vendor and supplier lists,
(xii) other copyrightable works, (xiii) all production methods, processes,
technology and trade secrets, and (xiv) all similar and related information in
whatever form. Confidential Information will not include any information that
has been published in a form generally available to the public prior to the date
the Executive proposes to disclose or use such information. Confidential
Information will not be deemed to have been published merely because individual
portions of the information have been separately published, but only if all
material features comprising such information have been published in
combination.

          “Disability” shall mean the physical or mental inability of the
Executive (i) to substantially perform all of his duties under this Agreement
for a period of 90 consecutive days or longer or for any 90 days in any period
of 365 consecutive days, or (ii) that, in the opinion of a physician selected by
the Board (excluding the Executive if the Executive is a member of the Board at
such time), but reasonably acceptable to the Executive, is likely to prevent the
Executive from substantially performing all of his duties under this Agreement
for more than 90 days in any period of 365 consecutive days.

          “Effective Date” shall mean January 5, 2005.

          “Good Reason” shall mean the occurrence of any of the following events
without the prior consent of the Executive: (i) a material reduction in the
Executive’s duties and responsibilities which has not been cured within ten
(10) days of the receipt of the written notice detailing the same from the
Executive to the Company, (ii) a reduction in the Base Salary and (iii) a
relocation of the offices where Executive is to perform his duties to a location
which is greater than fifty (50) miles from the offices where Executive
currently performs his duties.

          “Option Agreement” means the Parent’s Stock Option Agreement approved
by the Board as of the Effective Date.

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          “Subsidiary” of the Company means and includes (i) any corporation
more than 50% of whose stock of any class or classes having by the terms thereof
ordinary voting power to elect a majority of the directors of such corporation
(irrespective of whether or not at the time stock of any class or classes of
such corporation shall have or might have voting power by reason of the
happening of any contingency) is at the time owned by the Company or indirectly
through Subsidiaries and (ii) any partnership, association, joint venture or
other entity (other than a corporation) in which the Company directly or
indirectly through Subsidiaries, has more than a 50% equity interest at the
time.

          “Work Product” shall mean all inventions, innovations, improvements,
technical information, systems, software developments, methods, designs,
analyses, drawings, reports, service marks, trademarks, tradenames, logos and
all similar or related information (whether patentable or unpatentable) which
relates to the Company’s or any of its Subsidiaries’ actual or anticipated
business, research and development or existing or future products or services
and which are conceived, developed or made by the Executive (whether or not
during usual business hours and whether or not alone or in conjunction with any
other person) while employed by the Company (including those conceived,
developed or made prior to the date of this Agreement) together with all patent
applications, letters patent, trademark, tradename and service mark applications
or registrations, copyrights and reissues thereof that may be granted for or
upon any of the foregoing.

     Section 15. General Provisions.

          (a) Severability. It is the desire and intent of the Parties hereto
that the provisions of this Agreement be enforced to the fullest extent
permissible under the laws and public policies applied in each jurisdiction in
which enforcement is sought. Accordingly, if any particular provision of this
Agreement shall be adjudicated by a court of competent jurisdiction to be
invalid, prohibited or unenforceable for any reason, such provision, as to such
jurisdiction, shall be ineffective, without invalidating the remaining
provisions of this Agreement or affecting the validity or enforceability of this
Agreement or affecting the validity or enforceability of such provision in any
other jurisdiction. Notwithstanding the foregoing, if such provision could be
more narrowly drawn so as not to be invalid, prohibited or unenforceable in such
jurisdiction, it shall, as to such jurisdiction, be so narrowly drawn, without
invalidating the remaining provisions of this Agreement or affecting the
validity or enforceability of such provision in any other jurisdiction.

          (b) Notices. All notices, requests, demands, claims and other
communications hereunder shall be in writing and sufficient if (i) delivered
personally, (ii) delivered by certified United States Post Office mail, return
receipt requested, (iii) telecopied or (iv) sent to the recipient by a
nationally-recognized overnight courier service (charges prepaid) and addressed
to the intended recipient as set forth below:

         

  (i)   if to the Executive, to him at:
 
       

      c/o National Waterworks Holdings, Inc.
1805 Borman Circle Drive

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      St. Louis, Missouri 63146

      Telephone: (314) 432-4700

      Telecopier: (314) 432-8481
 
       

  (ii)   if to the Company, to:
 
       

      National Waterworks, Inc.

      American Plaza

      200 West Highway 6

      Suite 620

      Waco, Texas 76712

      Attention: President

      Telephone: (254) 772-5355

      Telecopier: (254) 772-5716
 
       

  with copies to:    
 
       

      J.P. Morgan Partners, LLC

      c/o J.P. Morgan Partners, L.P.

      1221 Avenue of the Americas

      New York, New York 10020

      Attention: Stephen Murray;
 
       

      Thomas H. Lee Partners, L.P.

      100 Federal Street

      Boston, Massachusetts 02110

      Attention: Todd Abbrecht;
 
       

      O’Melveny & Myers

      30 Rockefeller Plaza

      New York, New York 10112

      Attention: Gregory A. Gilbert, Esq.

      Telecopier: (212) 408-2420;
 
       

      and
 
       

      Weil, Gotshal & Manges LLP

      101 Federal Street

      Boston, Massachusetts 02110

      Attention: James Westra, Esq.

      Telecopier: (617) 772-8333

or such other address as the recipient party to whom notice is to be given may
have furnished to the other party in writing in accordance herewith. Any such
communication shall be deemed to have been delivered and received (a) in the
case of personal delivery, on the date of such delivery, (b) in the case of
delivery by mail, on the third Business Day following such mailing, (c) if
telecopied, on the date telecopied, and (d) in the case of delivery by
nationally-recognized, overnight courier, on the Business Day following
dispatch.

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          (c) Entire Agreement. This Agreement, the Option Agreement, and the
documents expressly referred to herein embody the complete agreement and
understanding among the parties and supersede and preempt any prior
understandings, agreements or representations by or among the parties, written
or oral, which may have related to the subject matter hereof in any way;
provided, however, that nothing set forth herein shall supersede or preempt the
Executive Subscription Agreement between the Executive and Parent dated as of
November 22, 2002 or the Restricted Stock Agreement between the Executive and
Parent dated as of November 22, 2002.

          (d) Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original and all of which
together shall constitute one and the same instrument.

          (e) Successors and Assigns. Except as otherwise provided herein, this
Agreement shall bind and inure to the benefit of and be enforceable by the
Executive and the Company and their respective successors, assigns, heirs,
representatives and estate, as the case may be; provided, however, that the
obligations of the Executive under this Agreement shall not be assigned without
the prior written consent of the Company.

          (f) Amendment and Waiver. The provisions of this Agreement may be
amended and waived only with the prior written consent of the Company and the
Executive, and no course of conduct or failure or delay in enforcing the
provisions of this Agreement shall affect the validity, binding effect or
enforceability of this Agreement or any provision hereof.

          (g) Governing Law. This Agreement shall be governed by and construed
in accordance with the domestic laws of the State of Delaware without giving
effect to any choice or conflict of law provision or rule that would cause the
application of the laws of any jurisdiction other than the State of Delaware.

          (h) Descriptive Headings; Nouns and Pronouns. Descriptive headings are
for convenience only and shall not control or affect the meaning or construction
of any provision of this Agreement. Whenever the context may require, any
pronouns used herein shall include the corresponding masculine, feminine or
neuter forms, and the singular form of nouns and pronouns shall include the
plural and vice-versa.

          (i) Waiver of Jury Trial. EACH OF THE PARTIES HERETO HEREBY
IRREVOCABLY WAIVES ALL RIGHT TO TRIAL BY JURY IN ANY ACTION, PROCEEDING OR
COUNTERCLAIM ARISING OUT OF OR RELATING TO THIS AGREEMENT.

* * * * *

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

                  NATIONAL WATERWORKS, INC.
 
           

  By:   /s/ Harry K. Hornish, Jr.    

       

      Name: Harry K. Hornish, Jr.    

      Title: President and Chief Executive Officer    
 
                /s/ Philip Keipp           Philip Keipp, individually