Document:

EXHIBIT 10.8

 

SENSUS METERING SYSTEMS (BERMUDA 1) LTD.

 

MANAGEMENT SUBSCRIPTION AND SHAREHOLDERS AGREEMENT

 

THIS MANAGEMENT SUBSCRIPTION AND SHAREHOLDERS
AGREEMENT, dated as of March 5, 2004 (the “Agreement”),
is made by and among Sensus Metering Systems (Bermuda 1) Ltd., a company
organized under the laws of Bermuda (the “Company”),
whose address is c/o The Jordan Company, L.P., 767 Fifth Avenue, 48th
Floor, New York, New York 10153, and the persons and entities whose names are
set forth at the end of this Agreement (collectively the “Shareholders”).

 

1.                                       Share
Subscriptions.

 

(a)                                  Subject to the prior
approval of the Bermuda Monetary Authority, each Shareholder
(i) subscribes for (A) the number of Class A Common Shares, par value U.S.
$0.01 each of the Company (the “Class A Common Shares”) set forth
opposite such Shareholder’s name in Exhibit 1 hereto, and
(B) the number of Series A Redeemable Preferred Shares, par value
U.S. $0.01 each of the Company (the “Series A Preference Shares”,
and together with the Class A Common Shares, the “Securities” or “Shares”),
at a purchase price for the Class A Common Shares of U.S. $1.00 per share
and for the Series A Preference Shares of U.S. $1,000 per share
(together, “Cost”), and (ii) tenders cash in consideration of the
issuance of such Class A Common Shares and Series A Preference
Shares.  Each of the Shareholders, in
order to facilitate the transactions contemplated by this Agreement, authorizes
and appoints the Company or any of its representatives to direct the transfer
of the subscription consideration from any account into which such amounts may
be paid into for the benefit of such Shareholder to any account established for
the benefit of the Company or any of its subsidiaries.  The Shareholder’s investment described
hereby shall be the only investment in the Company required of the Shareholders
under this Agreement and no Shareholder shall, by virtue of such investment, be
subject to (i) any further obligation to contribute additional capital to
the Company or (ii) any liabilities of the Company that arise in the
ordinary course of business.

 

(b)                                 Each Shareholder
agrees to tender by wire or check for consideration of the purchase price of
the Securities on the date hereof, provided that immediately upon tender of the
consideration for the Securities described in Section 1(a), the
Company will issue the Securities.

 

(c)                                  Each Shareholder
acknowledges to the Company and the other Shareholders that such Shareholder
understands and agrees, as follows:

 

THE SECURITIES HAVE NOT BEEN REGISTERED UNDER FEDERAL
OR STATE SECURITIES LAWS.  THE
SECURITIES ARE VERY SPECULATIVE AND RISKY. 
THERE IS NO PUBLIC OR OTHER MARKET FOR THE SECURITIES NOR IS ANY LIKELY
TO DEVELOP.  THE COMPANY AND ITS
SUBSIDIARIES HAVE BORROWED A SUBSTANTIAL PORTION OF THE FUNDS USED TO OPERATE
ITS BUSINESS.  EACH SHAREHOLDER
ACKNOWLEDGES THAT SUCH SHAREHOLDER MAY AND CAN AFFORD TO LOSE SUCH
SHAREHOLDER’S ENTIRE INVESTMENT AND THAT

 

 

SUCH SHAREHOLDER UNDERSTANDS SUCH SHAREHOLDER MAY HAVE
TO HOLD THIS INVESTMENT INDEFINITELY.

 

2.                                       Proposed
Transactions.

 

(a)                                  This Agreement
references certain pertinent documents as well as applicable laws and
regulations.  Each Shareholder
acknowledges to the Company and the other Shareholders that such references are
not summaries or complete and are qualified in their entirety by the complete
texts of the documents, laws and regulations so summarized.

 

(b)                                 Each Shareholder
acknowledges to the Company and the other Shareholders that such Shareholder
has had ample opportunity to ask questions regarding each of the following
documents:

 

(i)                                     Memorandum
of Association of the Company, dated November 21, 2003;

 

(ii)                                  Bye-laws
of the Company, as amended, dated as of December 17, 2003 (the “Bye-laws”);

 

(iii)                               Stock
Purchase Agreement, as amended, dated as of October 21, 2003, by and among
IMS Meters Holdings, Inc., a Delaware corporation, and the other parties
signatory thereto, including all exhibits and schedules thereto (the “Stock Purchase Agreement”);

 

(iv)                              Shareholders
Agreement, dated as of December 17, 2003 (the “Shareholders Agreement”),
by and among the Company and the Shareholders party thereto, including all
exhibits and schedules thereto;

 

(v)                                 Resolute
Fund Subscription Agreement, dated as of December 17, 2003, by and among
the Company and the shareholders named therein, including all exhibits and
schedules thereto (the “Resolute Fund Subscription Agreement”);

 

(vi)                              Goldman
Sachs Subscription Agreement, dated as of December 17, 2003, by and among
the Company and the shareholders named therein, including all exhibits and
schedules thereto (the “Goldman Subscription Agreement”);

 

(vii)                           Form
of Consultant Subscription Agreement, by and among the Company and the
consultants named therein, including all exhibits and schedules thereto (the “Consultant
Subscription Agreement”);

 

(viii)                        Management
Consulting Agreement, dated as of December 17, 2003, by and among the
Company, its Related Companies and The Jordan Company, L.P. (“TJC”),
including all exhibits and schedules thereto (the “Management Consulting
Agreement”) and the Letter
Agreement, dated the date hereof, among The Jordan Company, L.P., Goldman Sachs
& Co., and Sensus Metering Systems Inc. relating to the Management
Consulting Agreement;

 

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(ix)                                Credit
Agreement, dated as of December 17, 2003, among Sensus Metering Systems
Inc., a Delaware corporation, Sensus Metering Systems (LuxCo 2) S.AR.L., a
société en commandite par actions, organized and existing under the laws of the
Grand-Duchy of Luxembourg , Sensus Metering Systems (Bermuda 2) Ltd., a company
organized under the laws of Bermuda, the Lenders (as defined therein), and
Credit Suisse First Boston, as administrative and collateral agent for the
Lenders (as therein defined) as such agreement may be amended, waived or
otherwise modified from time to time and all other agreements and documents
related thereto (the “Credit Agreement”);

 

(x)                                   The
Indenture, dated as of December 17, 2003, relating to the Senior
Subordinated Notes of Sensus Metering Systems, Inc. (the “Indenture”);

 

(xi)                                the
Confidential Offering Circular relating to the Senior Subordinated Notes (the “Offering
Circular”);

 

(xii)                             The
Company’s Restricted Share Plan; and

 

(xiii)                          This
Agreement and all exhibits and schedules hereto.

 

3.                                       Shareholder
Representations, Warranties and Covenants. 
Each Shareholder represents, warrants and covenants to the Company and
each other Shareholder that:

 

(a)                                  Such Shareholder has
the legal capacity, power and authority to enter into and perform all of its
obligations under this Agreement.  The
execution, delivery and performance of this Agreement by such Shareholder will
not violate any other agreement to which such Shareholder is a party including,
without limitation, any voting agreement, shareholders agreement or voting
trust.  This Agreement has been duly and
validly authorized, executed and delivered by such Shareholder and constitutes
a valid and binding agreement of such Shareholder, enforceable against such
Shareholder in accordance with its terms, except that such enforceability
(i) may be limited by bankruptcy, insolvency, moratorium or other similar
laws affecting or relating to enforcement of creditors’ rights generally and
(ii) is subject to general principles of equity.

 

(b)                                 Such Shareholder is
employed in a managerial or executive position with one or more of the
Company’s subsidiaries and is familiar with the Company’s and its subsidiaries’
operations, financial condition and business prospects.

 

(c)                                  Such Shareholder
(i) will not transfer any Securities if such transfer would result in a
default by the Company or its subsidiaries under any of the provisions of the
operative documents in connection with the financing, (ii) except as
required or contemplated by the operative documents in connection with the
financing, grant any proxies, deposit any Securities into a voting trust or
enter into a voting agreement with respect to any Securities, or
(iii) take any action that would make any representation or warranty of
such Shareholder contained herein untrue or incorrect or have the effect of
preventing or disabling such Shareholder from performing his obligations under
this Agreement or any of the operative documents in connection with the

 

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financing, or would result in a default by the Company or its
subsidiaries under the provisions of this Agreement or any of the operative
documents in connection with the financing. 
Each Shareholder further agrees that such Shareholder’s ability to
transfer Securities is subject to the limitations, restrictions and conditions
of the Shareholder Agreement and the operative documents in connection with the
financing.

 

(d)                                 Such Shareholder will
complete, execute and file a form of election under Section 83(b) of the
Internal Revenue Code of 1986, as amended, with the Internal Revenue Service
within thirty (30) days of the execution of this Agreement and the purchase of
the Securities.

 

(e)                                  Such Shareholder has
no pending or threatened claim, complaint, action, suit, proceeding, hearing or
investigation against the Company or its subsidiaries for any period prior to
the date hereof, nor does said Shareholder presently intend to bring or file
any claim, complaint, action, suit, proceeding, hearing or investigation
against the Company or its subsidiaries for any period prior to the date
hereof.

 

(f)                                    The Company has
afforded such Shareholder and such Shareholder’s advisors, if any, the
opportunity to discuss an investment in the Securities and to ask questions of
representatives of the Company concerning the terms and conditions of the
offering of the Securities and the operative documents in connection with the
financing, and such representatives have provided answers to all such questions
concerning the offering of the Securities and the operative documents in
connection with the financing.  Such
Shareholder has consulted its own financial, tax, accounting and legal
advisors, if any, as to such Shareholder’s investment in the Securities and
with the operative documents in connection with the financing and the
consequences thereof and risks associated therewith.  Such Shareholder and such Shareholder’s advisors, if any, have
examined or have had the opportunity to examine before the date hereof the
operative documents in connection with the financing and all information that
such Shareholder deems to be material to an understanding of the Company and
its subsidiaries, the proposed business of the Company and its subsidiaries,
and the offering of the Securities. 
Such Shareholder also acknowledges that to such Shareholder’s knowledge
there have been no general or public solicitations or advertisements or other
broadly disseminated disclosures (including, without limitation, any
advertisement, article, notice or other communication published in any
newspaper, magazine or similar media or broadcast over television, radio or
internet, or any seminar or meeting whose attendees have been invited by any
general solicitation or advertising) by or on behalf of the Company regarding
an investment in the Securities.

 

(g)                                 Such Shareholder
represents to the Company and the other shareholders of the Company that it
knows and understands and has given full consideration to and has had the
opportunity to ask questions of any person authorized to act on behalf of the
Company concerning any aspect of the transactions with affiliates being
consummated by the Company in connection with the Shareholders Agreement, the
Resolute Fund Subscription Agreement, the Goldman Subscription Agreement, the
Indenture, the Offering Circular, the Credit Agreement, the Management
Consulting Agreement, the Consultant Subscription Agreement and the Restricted
Share Plan, including all agreements, obligations, covenants and arrangements
contained therein or contemplated thereby, including all exhibits and schedules
thereto (collectively, the “Affiliate Transaction Agreements”).

 

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4.                                       Risk Factors
and Other Considerations.  Each
Shareholder acknowledges to the Company and the other Shareholders that:

 

(a)                                  (i) The Company’s
subsidiaries are the Company’s only material assets, and that the Company and
certain of its subsidiaries have borrowed a substantial portion of the funds
used to effect the purchase by the Company’s subsidiaries of the shares listed
in the Stock Purchase Agreement; (ii) certain of the operative documents
in connection with the financing severely restrict the ability of the Company
to make any dividend or redemption payments on the Securities and such payment
may be further restricted by future agreements or instruments binding on the
Company or its subsidiaries; (iii) if a Shareholder ceases to be an
employee of the Company’s subsidiaries such Shareholder’s Securities may be subject
to certain rights of the Company to repurchase such Securities under this
Agreement or the Shareholder’s employment agreement with the Company’s
subsidiaries; and (iv) under the repurchase payment terms, such
Shareholders may not receive full cash payment in return for the Shareholder’s
Securities for several years.

 

(b)                                 Any financial
projections or forecasts with respect to the Company and its subsidiaries are
only forecasts prepared by management, which are subject to many assumptions
and factors beyond the Company’s and its subsidiaries’ control, and that there
can be no assurances that these forecasts will be realized.

 

(c)                                  An investment in the
Securities of the Company is a speculative investment which involves a high
risk of loss and that on and after the date hereof, there will be no public
market for the Securities and the Company does not contemplate that a public
market will develop.

 

(d)                                 The operative
documents in connection with the financing and any other agreement or
instrument that may restrict the ability of the Company to make any dividend or
redemption payments may be created, amended, modified or supplemented, from
time to time, and may be refinanced, extended or substituted, from time to
time, without notice to, or the consent or approval of, the Shareholders.

 

(e)                                  Nothing in this
Agreement shall constitute an agreement by, or shall impose any obligation
upon, the Company or its subsidiaries to employ, or to continue to employ, any
Shareholder, or shall constitute an agreement by, or shall impose any
obligation upon, the Company or its subsidiaries with respect to the terms and
conditions of employment of any Shareholder, and will not limit or restrict, in
any manner, the Company’s or its subsidiaries’ right or ability to terminate
any Shareholder.

 

5.                                       Securities
Law and Other Matters.  Each
Shareholder represents and warrants to the Company and the other Shareholders
that:

 

(a)                                  (i) Such Shareholder
used no “purchaser’s representative” (as that term is used in Regulation D as
promulgated by the Securities and Exchange Commission) in connection with the
transactions contemplated by the operative documents in connection with the
financing; (ii) neither TJC, The Resolute Fund, L.P., nor any of their
respective partners, members, principals, directors, officers, representatives,
attorneys, agents, employees or affiliates has acted

 

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or is expected to act as a representative or agent of said Shareholder
in the subject transaction; (iii) such Shareholder has substantial
knowledge and experience in financial, investment and business matters, and
specifically in the business of the Company and its subsidiaries, and has the
requisite knowledge and experience to evaluate the risks and merits of this
investment; (iv) the decision of such Shareholder to purchase the
Securities hereunder has been made by such Shareholder independent of any other
Shareholder and independent of any statements, disclosures or judgments as to
the properties, business, prospects or condition (financial or otherwise) of
the Company and its subsidiaries which may have been made or given by any
Shareholder or other person.

 

(b)                                 (i) The Securities
being purchased by such Shareholder hereunder have not been registered under
the United States Securities Act of 1933, as amended, (the “Securities Act”) on the ground that the sales
of Securities pursuant to this Agreement are exempt under Section 4(2) of the
Securities Act as not constituting a distribution, and that the Company’s
reliance on such exemption is predicated in part on each Shareholder’s
representation which such Shareholder herewith makes that the Securities have
been acquired solely by and for the account of such Shareholder for investment
purposes only, and are not being purchased for subdivision, fractionalization,
resale or distribution and other than as expressly set forth in the Operative
documents in connection with the financing, such Shareholder has no contract,
undertaking, agreement or arrangement with any other Shareholder to sell,
transfer or pledge to such other Shareholder or anyone else the Securities (or
any part thereof) which such Shareholder has purchased hereunder, and such
Shareholder has no present plans or intentions to enter into any such contract,
undertaking, agreement or arrangement; (ii) the Securities being sold to
said Shareholder must be held indefinitely unless they are subsequently
registered under the Securities Act or a transfer is made pursuant to an
exemption from such registration, including, for example, pursuant to Rule 144
thereunder and that the Company has no agreements in respect of registering the
Securities under Federal or state law; and (iii) such Shareholder’s
financial condition is such that Shareholder is not under any present necessity
or constraint, and does not foresee in the future any necessity or constraint,
to dispose of these Shares to satisfy any existing or contemplated debt or
undertaking.

 

(c)                                  In the event that in
the future the Company engages in any negotiation or transaction (including a
merger, amalgamation or consolidation or other reorganization by or of the
Company) in which Regulation D promulgated by the Securities and Exchange
Commission may or will be available to the Company, each of the Shareholders
who is not then a professional investor agrees irrevocably (and with the
knowledge and intention that the other holders of the Company’s share of all
classes will rely thereon in making their respective present investment
decisions) that such Shareholder will, within 5 business days of notice from
the Company, which notice may be given in the sole discretion of the Company,
appoint a purchaser’s representative or representatives who shall be qualified
and acceptable to the Company and any other person(s) who is (are) involved in
the proposed transaction so that the maximum benefits of Regulation D
shall be available to the Company and all of its Shareholders.

 

6.                                       Registration
Rights.  The Securities have not
been registered under the Securities Act nor any state securities laws and, in
consequence thereof, all of the Securities must be held indefinitely unless
(a) subsequently registered under the Securities Act or other applicable
federal and state securities laws or (b) exemptions from such registration
are available at the time 

 

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of a proposed sale or transfer thereof.  Except as set forth in the Shareholders Agreement, the Company
has no agreements in respect of a registration statement under either federal
or state law.

 

7.                                       Legend.  (a) All certificates, if any, representing
Securities shall be endorsed as follows:

 

“THIS CERTIFICATE IS SUBJECT TO, AND IS TRANSFERABLE
ONLY UPON COMPLIANCE WITH, THE PROVISIONS OF A MANAGEMENT SUBSCRIPTION AND
SHAREHOLDERS AGREEMENT, DATED MARCH 5, 2004, AMONG THE COMPANY AND THE
SHAREHOLDERS NAMED THEREIN.  REFERENCE
ALSO IS MADE TO THE RESTRICTIVE PROVISIONS OF THE BYE-LAWS OF THE COMPANY.  A COPY OF THE ABOVE REFERENCED AGREEMENT AND
THE BYE-LAWS MAY BE OBTAINED FROM THE SECRETARY OF THE COMPANY.

 

THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE
NOT BEEN REGISTERED UNDER THE UNITED STATES SECURITIES ACT OF 1933 AND MAY NOT
BE TRANSFERRED EXCEPT IN ACCORDANCE WITH BERMUDA LAW PURSUANT TO AN EFFECTIVE
REGISTRATION STATEMENT, OR AN EXEMPTION FROM REGISTRATION, UNDER SAID ACT.”

 

(b)                                 Each Shareholder
acknowledges to the Company and the other Shareholders that (i) the effect
of such legend, among other things, is or may be to limit or destroy the value
of the certificate for purposes of sale or for use as loan collateral and that
“stop transfer” instructions may be noted against the Securities sold to such
Shareholder hereunder; (ii) any transferee of such Shareholder is required
to become a party to this Agreement as a condition to acquiring the Securities
hereunder; and (iii) the consent of the Bermuda Monetary Authority is
required before any Share may be transferred.

 

(c)                                  Except as otherwise
expressly provided in this Agreement, all certificates, if any, representing
Shares hereafter issued to or acquired by any of the Shareholders or their
successors hereto shall bear the legends set forth above, and the Shares
represented by such certificates shall be subject to the applicable provisions
of this Agreement.  The rights and
obligations of each party hereto shall inure to and be binding upon each
transferee to whom Shares are Transferred by any party hereto, except for
Transfers described in Section 10(b)(ii).  Prior to consummation of any Transfer, such party shall cause the
transferee to execute a counterpart to this Agreement, at which time the
Company shall revise the Shareholder Schedule as may be necessary or
appropriate.  Any Shareholder wishing to
Transfer Shares shall give written notice to the Company prior to any transfer
(whether or not to a Permitted Transferee) of any Shares.

 

8.                                       Repurchase
Provisions.

 

(a)                                  Call at Cost Upon
Termination for Cause, Material Breach or Unsatisfactory Performance or
Voluntary Termination Prior to the Third Anniversary of this Agreement.  If Shareholder’s employment with the Company
or a Related Company is terminated (x) at any time by the Company or a Related
Company for Cause, Material Breach or

 

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Unsatisfactory Performance or (y) by the Shareholder pursuant to a
Voluntary Termination (prior to the third anniversary of this Agreement),
subject to applicable law including the Companies Act of 1981 of Bermuda, the
Company may repurchase all or any portion of the Securities purchased by such
Shareholder (or held by any Permitted Transferee of the Shareholder) pursuant
to this Agreement at a price per share equal to Cost, irrespective of when such
termination occurs or the circumstances thereof.

 

The purchase
price for the shares to be purchased pursuant to this Section 8(a)
is payable, at the option of the Company, in cash, Three Year Junior Notes or a
combination thereof.

 

(b)                                 Call at Cost Upon
Termination For Other Than Cause, Material Breach or Unsatisfactory Performance
or Voluntary Termination or Material Reduction.  If Shareholder’s employment with the Company or a Related Company
is terminated (x) at any time by the Company or a Related Company for no or any
reason other than Cause, Material Breach or Unsatisfactory Performance or (y)
by the Shareholder pursuant to a Voluntary Termination (after the third
anniversary of the Agreement) or a Material Reduction, then the Securities
purchased by Shareholder or held by any Permitted Transferee of the Shareholder
pursuant to this Agreement (collectively, “Call Securities”) may be
repurchased by the Company, subject to applicable law, including the Companies
Act of 1981 of Bermuda in accordance with the terms described below (“Cost
Call Right Other Than For Cause”):

 

(i)                                     If
termination occurs within and including the first anniversary of the
Commencement Date (as defined in Section 14), the Company may
purchase all of the Call Securities at a price per share equal to Cost.

 

(ii)                                  If
termination occurs during the period commencing on the day following the first
anniversary of the Commencement Date and ending on the day immediately prior to
the second anniversary of the Commencement Date, the Company may purchase up to
70% of the Call Securities at a price per share equal to Cost and 30% of the
Call Securities at a price per share equal to Fair Market Value (as defined in Section 14).

 

(iii)                               If
termination occurs during the period commencing on the second anniversary of
the Commencement Date and ending on the day immediately prior to the third
anniversary of the Commencement Date, the Company may purchase up to 40% of the
Call Securities at a price per share equal to Cost and 60% of the Call
Securities at a price per share equal to Fair Market Value.

 

(iv)                              If
the Shareholder ceases to be employed by the Company or a Related Company at
any time after the third anniversary of the Commencement Date; the Call
Securities may be repurchased by the Company at a price per share equal to the
Fair Market Value (“FMV Call Right”). 
The purchase price for the shares to be purchased pursuant to the FMV
Call Right is payable, at the option of the Company, in cash, Three Year Junior
Notes or a combination thereof.

 

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The purchase
price for the Call Securities to be purchased pursuant to this Section 8(b)
is payable, at the option of the Company, in cash, Three Year Junior Notes or a
combination thereof.

 

(c)                                  Allocation of Call
Securities.  The Company may
exercise its rights to purchase the Call Securities as to any amount or mixture
of Class A Common Shares or Series A Preference Shares, in its
discretion, subject to the percentages described in Sections 8(a)
and (b) above, which percentages will be deemed to relate separately to
each class or series of Securities held by Shareholder.

 

(d)                                 Expiration of Repurchase Option.  If the Company does not deliver to the
Shareholder a written notice (a “Call Notice”) of its intention to
exercise the call rights set forth in Sections 8(a) and 8(b)
within six months of termination of employment of a Shareholder, such call
rights will expire.  This Section 8
shall terminate upon the consummation of a sale of all of the capital stock or
all or substantially all of the assets of the Company, whether by sale, merger,
amalgamation, combination, consolidation or similar business transaction.

 

(e)                                  Restrictions on Payments by the Company.  Notwithstanding anything to the contrary
contained in this Agreement, all repurchases pursuant to this Section 8, including issuances of and
payments by the Company on the Three Year Junior Notes, shall be subject to
(i) applicable restrictions contained in any applicable law,
(ii) restrictions contained in the Company’s and its Related Companies’
debt and equity financing agreements, including the Credit Agreement and the
Indenture, each as amended and in effect from time to time, and any Senior
Indebtedness (as defined in the Three Year Junior Notes) and (iii) the
availability of cash to make any lump sum cash payments.  If any such restrictions or unavailability
prohibit the repurchase of Securities or other shares of the Company hereunder
which the Company is otherwise entitled or required to make, the Company may
make such repurchases as soon as it is permitted to do so under such
restrictions.

 

(f)                                    Timing
Considerations.  In the event the
Company makes payments in cash pursuant to the provisions of Section 8, such payments will be made
within 90 days of the date of the call. 
In the event that the Company makes payments in Three Year Junior Notes,
such notes will be executed and delivered within 90 days of the date of
the call.

 

(g)                                 Life Insurance.  The Company may purchase, at its sole
expense, a life insurance policy, the proceeds of which will be used to
purchase Shareholder’s Securities in the event of Shareholder’s death and each
Shareholder hereby agrees to cooperate with the Company in obtaining such
insurance, including, subject to reasonable confidentiality protections,
disclosing medical and personal information to insurers.

 

9.                                       Non-Competition/Non-Disclosure
Provisions.

 

(a)                                  Non-Solicitation.  If a Shareholder’s employment is terminated,
then, subject to this Section 9, such Shareholder shall not for 24
months after termination of employment (the “Restricted Period”)
(A) directly or indirectly, in one or a series of transactions, recruit,
solicit or otherwise induce or influence any proprietor, partner, shareholder,
member, lender, director, officer, employee, sales agent, joint venturer,
investor, lessor, customer,

 

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supplier, agent, representative or any other person which has a
business relationship with the Company or a Related Company or had a business
relationship with the Company or a Related Company within the twenty-four (24)
month period preceding the date of the incident in question, to discontinue,
reduce or modify such employment, agency or business relationship with the
Company or a Related Company, or (B) employ or seek to employ or cause any
Competitive Business to employ or seek to employ any person or agent who is
then (or was at any time within twelve (12) months prior to the date such
Shareholder or the Competitive Business employs or seeks to employ such person)
employed or retained by the Company or a Related Company.  Notwithstanding the foregoing, nothing
herein shall prevent such Shareholder from providing a letter of recommendation
to an employee with respect to a future employment opportunity.

 

(b)                                 Non-Disclosure.  Each Shareholder further agrees, during and after his employment
with the Company or a Related Company, the Restricted Period and thereafter,
that such Shareholder will not, directly or indirectly in one or a series of
transactions disclose to any person or use or otherwise exploit for such
Shareholder’s own benefit or for the benefit of anyone other than the Company
or its subsidiaries any Confidential Information (as defined below) whether
prepared by such Shareholder or not provided, however, that any Confidential
Information may be disclosed to officers, representatives, employees and agents
of the Company or its Related Companies who need to know such Confidential
Information in order to perform the services or conduct the operations required
or expected of them in the Business. 
Each Shareholder shall use his best efforts to prevent the removal of
any Confidential Information from the premises of the Company or its Related
Companies, except as required in his normal course of employment by the Company
or its direct and indirect subsidiaries. 
During the Term of employment, each Shareholder shall use such
Shareholder’s commercially reasonable efforts to cause all persons or entities
to whom Confidential Information shall be disclosed by such Shareholder
hereunder to observe the terms and conditions set forth herein as though each
such person or entity was bound hereby. 
After the term of employment, the Shareholder shall not disclose
Confidential Information other than to his advisors, representatives and agents
who execute a confidentiality agreement 
whereby they will agree to observe the confidentiality terms and
conditions set forth herein.  Each
Shareholder shall have no obligation hereunder to keep confidential any
Confidential Information if and to the extent disclosure of any thereof is
specifically required by law; provided, however, that in the
event disclosure is required by applicable law, such Shareholder shall provide
the Company with prompt notice of such requirement to the extent allowed by
law, prior to making any disclosure, so that the Company may seek an appropriate
protective order.  At the request of the
Company, each Shareholder agrees to deliver to the Company all Confidential
Information which such Shareholder may possess or control.  Each Shareholder agrees that all
Confidential Information of the Company and Related Companies (whether now or
hereafter existing) conceived, discovered or made by him during his employment
with the Company or its Related Companies exclusively belongs to the Company
and its direct and indirect subsidiaries (and not to such Shareholder).  Each Shareholder will promptly disclose such
Confidential Information to the Company and its Related Companies and perform
all actions reasonably requested by the Company and its Related Companies to
establish and confirm such exclusive ownership.  As used herein, the term “Confidential Information” means
any confidential information including, without limitation, any study, data,
calculations, software storage media or other compilation of information,
patent, patent application, copyright, trademark, trade name, service mark,
service name, “know-how”, 

 

10

 

trade secrets, customer lists, details of client or consultant
contracts, pricing policies, operational methods, marketing plans or strategies,
product development techniques or plans, business acquisition plans or any
portion or phase of any scientific or technical information, ideas,
discoveries, designs, computer programs (including source of object codes),
processes, procedures, formulas, improvements or other proprietary or
intellectual property of the Company or its subsidiaries, whether or not in
written or tangible form, and whether or not registered, and including all
files, records, manuals, books, catalogues, memoranda, notes, summaries, plans,
reports, records, documents and other evidence thereof.  The term “Confidential
Information” does not include, and there shall be no obligation
hereunder with respect to, information that becomes generally available to the
public other than as a result of a disclosure by such Shareholder not
permissible hereunder.

 

(c)                                  Non-Disparagement.  Each Shareholder agrees, during and after
his employment with the Company and its Related Companies, the Restricted
Period and thereafter, that he shall not make any false, defamatory or
disparaging statements about the Company or its Related Companies or the
officers or directors of the Company or its Related Companies.  During and after each Shareholder’s
employment with the Company or its Related Companies, the Company agrees on
behalf of itself and its Related Companies that neither the officers nor the
directors of the Company or its Related Companies shall make any false,
defamatory or disparaging statements about such Shareholder.

 

(d)                                 Specific Performance.  All the parties hereto agree that their
rights under this Section 9 are
special and unique and that violation thereof would not be adequately
compensated by money damages and each grants the others the right to
specifically enforce (including injunctive relief where appropriate) the terms
of this Agreement.

 

10.                                 Transfers of Shares.  (a) Each Shareholder agrees that such
Shareholder will not, directly or indirectly, whether by operation of law or
otherwise, offer, sell, transfer, assign or otherwise dispose of (or make any
exchange, gift, assignment, charge or pledge of) any Shares or any rights or
interests therein (collectively, a “Transfer”), except as provided in Section 10(b).  In addition to the other restrictions noted
in this Section 10, each Shareholder agrees that it will not,
directly or indirectly, Transfer any of its Shares except as permitted under
the Securities Act and other applicable securities laws, including the laws of
Bermuda.

 

(b)                                 The provisions of Section 10(a)
shall not apply to any of the following Transfers:

 

(i)                                     From
any Shareholder to any of their Permitted Transferees.

 

(ii)                                  Pursuant
to a Public Offering or pursuant to Rule 144 under the Securities Act.

 

(iii)                               From
any Shareholder to any Person pursuant to Section 12.

 

(iv)                              From
any Shareholder to the Company.

 

(c)                                  Transfer to
Permitted Transferees.  Subject to
the provisions of Section 10(d), each Permitted Transferee of any
Shareholder to which Shares are Transferred 

 

11

 

shall, and such Shareholder shall cause such Permitted Transferee to,
Transfer back to such Shareholder (or to another Permitted Transferee of such
Shareholder) any Shares it owns if such Permitted Transferee ceases to be a
Permitted Transferee of such Shareholder.

 

(d)                                 Notwithstanding 10(b)
and (c), no Shareholder will Transfer any Shares to any person that competes,
directly or indirectly, with the Business;

 

(e)                                  no Shareholder shall
be entitled to Transfer its Shares at any time if such Transfer would:

 

(i)                                     violate
the Securities Act, or any state (or other applicable) securities or “Blue Sky”
laws applicable to the Company or the Shares;

 

(ii)                                  cause
the Company to become subject to the registration requirements of the U.S.
Investment Company Act of 1940, as amended from time to time; or

 

(iii)                               be
a “prohibited transaction” under ERISA or the Code or cause all or any portion
of the assets of the Company to constitute “plan assets” under ERISA or Section
4975 of the Code; and

 

(f)                                    any attempt to
Transfer or encumber any Shares not in accordance with this Agreement shall be
null and void and neither the Company nor any transfer agent of such securities
shall give any effect to such attempted transfer or encumbrance in its Shares
records.

 

(g)                                 If the Company at any
time shall register securities for sale to the public, the Shareholders shall
not sell publicly, make any short sale of, grant any option for the purchase
of, or otherwise dispose publicly of, any Common Shares (other than any Common
Shares included in such registration) without the prior written consent of the
Company, for a period designated by the Company in writing to the Shareholders,
which period shall not begin more than 10 days prior to the effectiveness
of the registration statement pursuant to which such public offering shall be
made and shall not last more than (i) 180 days after the effective
date of the Company’s initial public offering, and (ii) 90 days after
the effective date of any other registration statement.

 

11.                                 Rights of First
Refusal for New Securities.

 

(a)                                  The Company hereby
grants to each of the Shareholders a right of first refusal to purchase New
Securities (as defined below) which the Company may, from time to time, propose
to issue and sell.  Such right of first refusal
shall allow each Shareholder to purchase its pro rata share based on its
percentage ownership of the New Securities proposed to be issued, determined
with reference to the percentage ownership of Class A Common Shares of each
Shareholder relative to all other holders of Class A Common Shares before the
proposed issuance of New Securities.  In
the event a Shareholder does not purchase any or all of its pro rata share
based on its percentage ownership of New Securities, the remaining Shareholders
shall each have the right to purchase its pro rata share based on its
percentage ownership of such unpurchased New Securities until all of the New
Securities are purchased or until no other Shareholder desires to purchase any
more New Securities.  The right of first
refusal granted 

 

12

 

hereunder shall terminate if unexercised within 30 calendar days after
receipt of the New Securities Notice described in Section 11(c)
below.

 

(b)                                 “New Securities”
shall mean any authorized but unissued capital shares, or debt securities, of
the Company, and all rights, options or warrants to purchase shares, and
securities of any type whatsoever that are, or may become, convertible into, or
exchangeable for, shares of capital stock of the Company; provided, however,
that the term “New Securities” does not include (i) securities
issued pursuant to the acquisition of another corporation by the Company by
merger, amalgamation, purchase of all or substantially all of the assets or
other reorganization whereby the Company shall become the owner of 50% or more
of the voting power of such corporation; (ii) Common Shares issued in
connection with any pro rata share split or share dividend or bonus issue of
the Company; (iii) Common Shares issued pursuant to any Public Offering;
(iv) Common Shares issued to a member of the Management of the Company
employed by the Company subsequent to the date hereof under any incentive plan
approved by the Board of Directors or upon exercise of restricted stock awards
granted under any incentive plan approved by the Board of Directors, including
the Restricted Share Plan; (v) Common Shares issued pursuant to the
Management and Consultant Subscription Agreements, Resolute Subscription
Agreement and Goldman Subscription Agreement; or (vi) any rights,
warrants, or options to purchase capital stock issued in connection with any
debt financing, in exchange for debt or other claims or in connection with an
offering made to institutional investors pursuant to Rule 144A or Regulation D
under the Securities Act.

 

(c)                                  In the event the
Company proposes to undertake an issuance of New Securities, it shall promptly
give each Shareholder written notice (“New Securities Notice”) of its
intention, describing the class and number of securities intended to be issued
as New Securities, the purchase price therefor (which shall be payable solely
in cash) and the terms and conditions upon which the Company proposes to issue
the same.  Each Shareholder shall have
30 calendar days from the Date of Delivery of the New Securities Notice to
determine whether to purchase all or any portion of the Shareholder’s pro rata
share based on its percentage ownership of such New Securities for the purchase
price and upon the terms specified in the notice by giving written notice to
the Company and stating therein the quantity of New Securities to be purchased.

 

(d)                                 The Company shall have
120 days from the expiration of the period set forth in Section 11
to issue, sell or exchange all or any part of such New Securities which
Shareholders have not elected to purchase, but only upon the terms and
conditions set forth in the New Securities Notice.

 

12.                                 Drag Along.

 

(a)                                  If Resolute Investors
(as defined in the Shareholder Agreement) holding, in the aggregate, at least
50 percent (50%) of the Common Shares (the “Selling Shareholders”) agree
to enter into a transaction which would result in the Transfer of all the
Common Shares owned by the Selling Shareholders to a non-Affiliate third party
(the “Drag-Along Buyer”), the Selling Shareholders may deliver written
notice (a “Drag-Along Notice”) to each other Shareholder (the “Drag-Along
Shareholders”), stating that such Selling Shareholders wish to exercise
their rights under this Section 12 with respect to such Transfer,
and setting forth the 

 

13

 

name and address of the Drag-Along Buyer, the number of Common Shares
proposed to be Transferred, the proposed amount and form of the consideration,
and all other material terms and conditions offered by the Drag-Along Buyer.

 

(b)                                 Upon delivery of a
Drag-Along Notice, each Drag-Along Shareholder shall be required to Transfer
all, but not less than all, of its Common Shares, upon the same terms and
conditions (including, without limitation, as to price, time of payment and
form of consideration) as agreed by the Selling Shareholders and the Drag-Along
Buyer, and shall make to the Drag-Along Buyer representations,
warranties, covenants, indemnities and agreements comparable to those made by
the Selling Shareholders in connection with the Transfer (other than any
non-competition or similar agreements or covenants that would bind the
Drag-Along Shareholder or its Affiliates), and shall agree to the same
conditions to the Transfer as the Selling Shareholders agree, it being
understood that all such representations, warranties, covenants, indemnities
and agreements shall be made by each Selling Shareholder and each Drag-Along
Shareholder severally and not jointly and that, except with respect to individual
representations, warranties, covenants, indemnities and other agreements of the
Drag-Along Shareholder as to the unencumbered title to its Common Shares and
the power, authority and legal right to Transfer such Common Shares, the
aggregate amount of the liability of the Drag-Along Shareholder shall not
exceed either (i) such Drag-Along Shareholder’s pro rata portion of any
such liability, to be determined in accordance with such Drag-Along
Shareholder’s portion of the total number of Common Shares included in such
Transfer or (ii) the proceeds to such Drag-Along Shareholder in connection
with such Transfer.

 

(c)                                  In the event that any
such Transfer is structured as a merger, amalgamation, consolidation, or
similar business combination, each Drag-Along Shareholder agrees to
(i) vote in favor of the transaction, (ii) take such other action as
may be required to effect such transaction (subject to Section 12(b))
and (iii) take all action to waive any dissenters, appraisal or other
similar rights with respect thereto.

 

(d)                                 If any Shareholder
fails to vote its Voting Shares or to provide a written consent in accordance
with the terms of Section 11 (each such Shareholder, a “Breaching
Drag-Along Shareholder”), the Shareholders and the Company shall take such
action as is necessary in accordance with the Bye-laws of the Company and
Bermuda law to convene a general meeting or to circulate written resolutions,
the purpose of which will be to propose for approval of the Shareholders such
actions as are necessary in order to ensure compliance with the provisions of Section 11.

 

(e)                                  Solely for purposes
of Section 11 and in order to secure the performance of each
Shareholder’s obligations under Section 11, each Shareholder
hereby:  (i) appoints each
Drag-Along Proxy Holder (as defined in Section 11(f)) acting
severally: the attorney-in-fact of such Shareholder (with full power of
substitution) for the purpose of signing written resolutions circulated
pursuant to Section 11(d) on behalf of such Shareholder; and
(ii) agrees on the date hereof to grant a proxy to each Proxy Holder in
the form attached hereto as Exhibit for the purpose of voting the Voting Shares
held by such Shareholder at a general meeting convened pursuant to Section 11(d).  Each Shareholder acknowledges and agrees
that the power of attorney granted by such Shareholder pursuant to this Section 11(d)
is coupled with an interest and is

 

14

 

irrevocable, and that the proxy to be granted pursuant to this Section 11(d)
shall be coupled with an interest and shall be irrevocable.

 

(f)                                    For purposes of Section 11,
each “Drag-Along Proxy Holder” shall be an individual nominated for this
purpose by any Selling Shareholder.

 

(g)                                 Each Shareholder
agrees to take such further action and to execute such other instruments as may
be necessary to effect the appointment of attorneys-in-fact and proxies
pursuant to this Section 11, and each Drag-Along Breaching Shareholder
hereby revokes any power of attorney or proxy previously granted by it with
respect to the matters set forth in Section 11 for purposes of,
respectively, any written resolutions circulated or any general meeting
convened pursuant to Section 11(d).

 

13.                                 Covenant to Vote;
Restrictions On Other Agreements; After Acquired Shares.  (a) Each Shareholder hereby agrees to take
all Necessary Action to call, or cause the Company and the appropriate officers
and directors of the Company to call, an annual meeting (and when circumstances
so require, a special meeting) of Shareholders of the Company and to vote all
Voting Shares owned or held of record by such Shareholder at any such meeting
and at any other annual or special meeting of Shareholders in favor of, or take
all actions by written consent in lieu of any such meeting as may be necessary
to cause, the election as members of the Board of Directors of those
individuals so designated in accordance with, and to otherwise effect the
intent of, Article II of the Shareholders Agreement.

 

(b)                                 No Shareholder shall
grant any proxy or enter into or agree to be bound by any voting trust with
respect to the Shares nor shall any Shareholder enter into any other agreements
or arrangements of any kind with any Person with respect to the Shares on terms
which conflict with the provisions of this Agreement (whether or not such
proxy, voting trust, agreements or arrangements are with other Shareholders,
holders of Shares that are not parties to this Agreement or otherwise),
including but not limited to, agreements or arrangements with respect to the
acquisition, disposition or voting of shares of Shares inconsistent herewith.

 

(c)                                  The provisions of
Sections 8, 10, 12 and related definitions of this Agreement shall apply, to
the full extent set forth herein with respect to the Class A Common Shares and
the Series A Preference Shares and to any and all equity or debt securities of
the Company or any successor or assign of the Company (whether by merger,
amalgamation, consolidation, sale of assets, or otherwise) which may be issued
in respect of, in exchange for, or in substitution of, such equity or debt
securities and shall be appropriately adjusted for any share dividends, bonus
issues, splits, reverse splits, combinations, subdivisions, reclassifications,
recapitalizations, reorganizations and the like occurring after the date
hereof.

 

14.                                 Definitions.  Capitalized terms used in this Agreement and
not otherwise defined shall have the meanings set forth below, unless the
context requires otherwise:

 

(a)                                  “Business” means the business of providing the
following products and services for metering and communication by or for
utilities or residential/commercial submetering entities of water, gas,
electricity and heat consumption by their customers:

 

15

 

(A)                              Residential
Water Meters (Velocity, Positive Displacement, Piston or otherwise);

(B)                                Commercial
/ Industrial Water Meters (Turbine, Combination, Propeller, Irrigation, Fire
Hydrant, Fire Service, or otherwise);

(C)                                Sub
Meters - Water, Gas, Electric and Heat;

(D)                               Residential
Gas Meters (Diaphragm and Ultrasonic);

(E)                                 Intermediate
and Large Capacity Gas Meters (Diaphragm and Ultrasonic);

(F)                                 Turbine
Gas Meters;

(G)                                Pressure
Regulation Products;

(H)                               Correlative
Natural Gas, Energy and Density Measurement Products;

(I)                                    Residential
and Polyphase Solid-State Electricity Meters;

(J)                                   Heat
Meters (Velocity and Ultrasonic);

(K)                               Heat
Integrators;

(L)                                 Bulk
Hot Water Meters;

(M)                            Automatic
Meter Reading Devices or Systems for any of the foregoing;

(N)                               Meter
Test Equipment for any of the foregoing;

(O)                               Instrumentation
for any of the foregoing;

(P)                                 Meter
accuracy testing and recalibration services;

(Q)                               Project
management services related to Metering and AMR activities; and

 

the business of providing other products and services
as follows:

 

(R)                                Pipe
Repair, Pipe Tapping and Pipe Joining Products;

(S)                                 High
Pressure, Low Porosity Aluminum Die Castings;

(T)                                Services
to utilities related to the procurement, testing, repair and management of
meter populations; and

(U)                               Software
applications sold, licensed or offered as a service to utilities and used to
manage billing and meter data management for utilities and submetering
entities.

 

“Cause” means
any of the following:

 

(i)                                     Shareholder’s
conviction of, or plea of guilty or nolo contendere to, a felony or a crime
involving embezzlement, conversion of property or moral turpitude;

 

(ii)                                  Shareholder’s
fraud, embezzlement or conversion of property;

 

(iii)                               Shareholder’s
conviction of, or plea of guilty or nolo contendere to, a crime involving the
acquisition, use or expenditure of federal, state or local government funds;

 

(iv)                              an
administrative or judicial determination that Shareholder committed fraud or
any other violation of law involving federal, state or local government funds;

 

(v)                                 Shareholder’s
material violation, with the actual knowledge of Shareholder, of any
obligations imposed upon Shareholder, personally, as opposed to

 

16

 

upon the
Company, whether as a shareholder or otherwise, under this Agreement, the
Memorandum of Association or Bye-Laws of the Company, the organizational and
formation documents of any Related Company, the Employment Agreement, if
applicable, and the Restricted Share Plan and related agreements, if applicable;
or

 

(vi)                              Shareholder’s
material and knowing failure, to observe or comply with Regulations whether as
an officer, shareholder or otherwise, in any material respect or in any manner
which would reasonably be expected to have a material adverse effect in respect
of the Company’s and its Related Companies’ ongoing business, assets,
properties, operations, condition (financial and other), prospects and other
business relationships.

 

(b)                                 “Commencement Date”
shall mean December 17, 2003 for the original management signatories
hereto and shall mean the date of execution of a counterpart page to this
Agreement for all other persons.

 

(c)                                  “Cost” means as to Class A Common Shares and
Series A Preference Shares, the cost thereof set forth in Section 1(a).

 

(d)                                 “Determination
Period” shall mean last four consecutive completed fiscal quarters as set
forth on the audited financial statements of the Company immediately preceding
the “call” exercised pursuant to Section 8 for which Fair Market
Value shall be used to determine the “call” price.

 

(e)                                  “EBITDA” shall
have the meaning set forth in the Indenture.

 

(f)                                    “Fair Market Value” means,

 

(i)                                     with
respect to Class A Common Shares, the sum of (X) the quotient obtained by
dividing (a) an amount equal to (A) 5.0 multiplied by EBITDA for the
Determination Period less (B) the aggregate amount of Indebtedness,
as defined in the Credit Agreement of the Company and its Related Companies,
including, but not limited to, indebtedness for borrowed money and capitalized
leases of the Company and its Related Companies as of the end of the
Determination Period (including, without limitation, interest accrued but
unpaid or paid-in-kind as of the end of the Determination Period) less
(C) the aggregate liquidation value of the Series A Preference Shares
of the Company outstanding at the end of the Determination Period (including,
without limitation, dividends accrued but unpaid or paid-in-kind in respect of
such preference share as of the end of the Determination Period) less
(D) the aggregate liquidation value of the Class A Common Shares  of the Company outstanding at the end of the
Determination Period less (E) the aggregate liquidation value of
any class or series of equity securities of the Company ranking senior in right
of payment upon a liquidation of the Company to the Class B Common Shares
outstanding at the end of the Determination Period less (F) the
aggregate amount that would have been payable by the Company in respect of any
equity appreciation or similar rights outstanding as of the end of the
Determination Period assuming the exercise in full of any and all such rights
(whether vested or not) as of such date, by (b) the aggregate number of
Class A Common Shares 

 

17

 

and Class B
Common Shares issued and outstanding on a fully diluted basis as of the last
day of the Determination Period and (Y) the liquidation value of a
Class A Common Share of the Company as of the end of the Determination
Period.  For this purpose, “fully
diluted basis” shall assume the full exercise of all outstanding options,
warrants, stock appreciation and other rights in relation to Common Shares and
the full conversion (if dilutive) of all convertible securities, and other
obligations, irrespective of whether then exercisable or convertible, and
further irrespective of any vesting, repurchase, call or other restrictions or
limitations; and

 

(ii)                                  with
respect to Series A Preference Shares, the Liquidation Preference (as defined
in the Bye-laws) for such shares plus any accrued and unpaid dividends.

 

(g)                                 “Indenture”
shall mean The Indenture, dated as of December 17, 2003, relating to the Senior
Subordinated Notes of Sensus Metering Systems Inc., as such indenture may be
amended, waived or otherwise modified from time to time.

 

(h)                                 “Market” means any county in the United States
of America and each similar jurisdiction in any other country in which the
Business was conducted by or engaged in by the Company or its subsidiaries on
or prior to the date hereof or is conducted or engaged in, or in which the
Company or its subsidiaries is seeking authorization to conduct Business, at
any time during the Shareholders employment by the Company or its subsidiaries.

 

(i)                                     “Material Breach” means:

 

(i)                                     Shareholder’s
breach of any of such Shareholder’s fiduciary duties to the Company or a
Related Company or their shareholders or making of a willful misrepresentation
or omission which breach, misrepresentation or omission would reasonably be
expected to materially adversely affect the business, properties, assets,
condition (financial or other), prospects of the Company or its Related
Companies;

 

(ii)                                  Shareholder’s
willful, continual and material neglect or failure to discharge such
Shareholder’s duties, responsibilities or obligations prescribed by this
Agreement or of any other agreement between the Shareholder and the Company or
its Related Companies (other than arising solely due to physical or mental
disability);

 

(iii)                               Shareholder’s
habitual drunkenness or substance abuse which materially interferes with such
Shareholder’s ability to discharge such Shareholder’s duties, responsibilities
or obligations prescribed by the Company or its Related Companies;

 

(iv)                              Shareholder’s
violation of any non-competition, non-disparagement or confidentiality
agreement with the Company or its Related Companies, including without
limitation, those set forth in Section 9
of this Agreement, or any other agreements with the Company or its Related
Companies; and

 

(v)                                 Shareholder’s
gross neglect of such Shareholder’s duties and responsibilities, as determined
by the Company’s Board of Directors;

 

18

 

provided, for purposes of clauses
(i)-(v), to the extent such conduct is able to be remedied or cured by
Shareholder and such conduct is not cured or remedied after the Company or the
Board of Directors has provided such Shareholder with 30 days’ written notice
of such circumstances and the possibility of a Material Breach in reasonable
detail, and such Shareholder fails to cure such circumstances and Material
Breach within those 30 days.  No act or
omission shall be deemed gross neglect if done, or omitted to be done, in good
faith by such Shareholder based upon a resolution duly adopted by the Company’s
Board of Directors.  Whether a breach
can be cured or remedied shall be determined by the Board of Directors in its
sole discretion.

 

(j)                                     “Material
Reduction” means circumstances involving a material reduction in
Shareholder’s position, authority, base compensation or benefits or a hostile
or adverse work environment with respect to Shareholder’s employment by the
Company or a Related Company, taken as a whole.

 

(k)                                  “Related Company”
means all direct and indirect subsidiaries of the Company.

 

(l)                                     “Sale”, “sell”,
“transfer” and the like shall include
any disposition by way of transfer, with or without consideration, to any
person for any purpose and shall include, but shall not be limited in any way
to, redemption by the Company, private or public sale or exchanges of
securities or any other similar transaction involving share.

 

(m)                               “Three Year Junior Notes” means a promissory
note of the Company in the form attached hereto as Exhibit 2.

 

(n)                                 “Unsatisfactory Performance” means a
Shareholder’s failure to perform Shareholder’s duties to the standards set by
the Board of Directors (such determination to be made in the good faith by the
Board of Directors); provided, that
such Shareholder has been given notice and 30 days from such notice fails to
cure such unsatisfactory performance. 
Whether such unsatisfactory performance can be cured shall be determined
by the Board of Directors in its sole discretion.

 

(o)                                 “Voluntary
Termination” means means a voluntary termination of employment with the
Company or a Related Company by a Shareholder for any reason or no reason other
than a Material Reduction, Death or Disability.

 

(p)                                 “Permitted
Transferee” means (i) in the case of any Shareholder that is an
individual, any successor by death or divorce, (ii) in the case of any
individual, any trust, partnership, limited liability company or similar entity
solely for the benefit of such individual or such individual’s spouse or lineal
descendants provided, that such individual acts as trustee, general
partner or managing member and retains the sole power to direct the voting and
disposition of such shares, or (iii) in the case of any Shareholder that
is a trust whose sole beneficiaries are individuals, such individuals or their
spouses or lineal descendants.

 

(q)                                 “Public Offering”
shall mean a public offering and sale of equity securities of the Company
pursuant to an effective Registration Statement under the Securities Act.

 

19

 

(r)                                    “Registration
Statement” means any registration statement of the Company filed with, or
to be filed with, the SEC under the rules and regulations promulgated under the
Securities Act, including the related Prospectus, amendments and supplements to
such registration statement, including post-effective amendments, and all
exhibits and all material incorporated by reference in such registration
statement other than a registration statement (and related Prospectus) filed on
Form S-8 or any successor form thereto.

 

15.                                 Reporting.  Until the consummation of a Public Offering,
the Company shall furnish to each Shareholder the following financial
statements and such other information and such as may be reasonably requested
by a Shareholder or by law:

 

(i)                                     as
soon as available and in any event within 45 days after the end of each
quarterly fiscal period of each fiscal year of the Company (except for the
quarterly fiscal periods ending on or prior to June 30, 2004 in which case
financial statements shall be furnished within 60 days after the end of each
such quarterly fiscal period), consolidated primary financial statements,
consisting of statements of operations, retained earnings and cash flows of the
Company and its subsidiaries for such period and for the period from the
beginning of the respective fiscal year to the end of such period, and the
related consolidated balance sheet of the Company and its subsidiaries as at
the end of such period (together with, in each case, supplemental financial
information including, among other things, sales, cost of goods sold and gross
profit segmented by product category, setting forth in each case in comparative
form the corresponding consolidated (and segmented) figures for the respective
period during the prior fiscal year beginning with June 30, 2005 (except that,
in the case of consolidated balance sheets, such comparison shall be to the
last day of the prior fiscal year), accompanied by a certificate of a senior
financial officer of the Company, which certificate shall state (A) that said
consolidated primary financial statements fairly present the financial
condition and results of operations of the Company and its subsidiaries, in
each case in accordance with GAAP (except for the omission of footnotes), as at
the end of, and for, such period (subject to normal year-end audit adjustments)
and (B) said supplemental information fairly presents the information set forth
therein as at the end of, and for, such period (subject to normal year-end
audit adjustments);

 

(ii)                                  as
soon as available and in any event within 90 days after the end of each fiscal
year of the Company and its subsidiaries (except for the fiscal year ended
March 31, 2004 in which case financial statements shall be furnished within 105
days after the end of such fiscal year) , consolidated primary financial statements,
consisting of statements of operations, retained earnings and cash flows for
such fiscal year and the related consolidated balance sheet of the Company and
its subsidiaries as at the end of such fiscal year (together with, in each
case, supplemental financial information including, among other things, sales,
costs of goods sold and gross profit segmented by product category), setting
forth in each case in comparative form the corresponding consolidated (and
segmented) figures for the respective period during the prior fiscal year
beginning March 31, 2006 (except that, in the case of consolidated balance
sheets, such comparison shall be to the last day of the prior fiscal year), and
accompanied (A) in the case of said consolidated primary financial statements
of the Company and its subsidiaries, by an opinion thereon of independent
certified public accountants of 

 

20

 

recognized
national standing, which opinion shall state that said financial statements
fairly present the financial condition and results of operations of the Company
and its subsidiaries as at the end of, and for, such fiscal year in accordance
with GAAP, and (B) in the case of said supplemental information, by a
certificate of a senior financial officer of the Company, which certificate
shall state that said supplemental information fairly presents the information
set forth therein as at the end of, and for, such fiscal year; and

 

(iii)                               copies
of any proxy statements, financial statements and other reports as the Company
shall send or make available generally to its shareholders, and copies of all
regular and periodic reports and of all registration statements (other than on
Form S-8 or Form 701 or a similar form) that the Company may file with the SEC
or with any securities exchange.

 

16.                                 Confidentiality.  Each Shareholder shall keep confidential
this Agreement and the transactions contemplated hereby and shall not disclose,
issue any press release or otherwise make any public statement in connection
therewith without the prior written consent of each other Shareholder (not to
be unreasonably withheld) unless so required by applicable law or any
governmental authority; provided that no such written consent shall be required
(and each Shareholder shall be free to release such information) for
disclosures to each Shareholder’s partners, members, advisors, employees,
agents, accountants or attorneys, so long as such persons agree to keep such
information confidential.

 

17.                                 Shareholder Acknowledgement.  Each Shareholder acknowledges and agrees
that the provisions of this Agreement have been reviewed and are understood by
such Shareholder, and expresses the will and intention of such Shareholder and
agrees not to take any action to frustrate the purposes and provisions of this
Agreement.

 

18.                                 Defense of Claims.  Each Shareholder agrees that, for the period
beginning on the date hereof, and continuing for a reasonable period after
termination of employment with the Company or its Related Companies,
Shareholder will cooperate with the Company in defense of any claims that may
be made against the Company and its Related Companies and affiliates, and will
cooperate with the Company in the prosecution of any claims that may be made by
Company and its Related Companies, to the extent that such claims may relate to
services performed by the Shareholder for the Company and its Related Companies
and affiliates.  Each Shareholder agrees
to promptly inform the Company if he becomes aware of any lawsuits involving
such claims that may be filed against the Company and its Related Companies and
affiliates.  The Company agrees to
reimburse Shareholder for all of Shareholder’s reasonable out-of-pocket
expenses associated with such cooperation, including travel expenses.  For periods during and following
Shareholder’s employment with the Company, the Company agrees to provide
reasonable compensation to Shareholder for such cooperation in addition to
reimbursement of expenses and his reasonable attorneys’ fees, if any.

 

19.                                 Miscellaneous.

 

(a)                                  The rights and
obligations contained in this Agreement are in addition to the relevant
provisions of the organizational documents of the Company in force from time to
time and shall be construed to comply with such provisions.  To the extent that this Agreement is

 

21

 

determined to be in contravention of the organizational documents of
the Company, this Agreement shall constitute a waiver by each Shareholder, to
the fullest extent permissible under applicable laws, of any right such
Shareholder may have pursuant to the organizational documents of the Company
that is inconsistent with this Agreement.

 

(b)                                 This Agreement may be
amended only by a written instrument duly executed by Shareholders holding
greater than 50.1% of the Class A Common Shares held by the Shareholders.

 

(c)                                  Except as otherwise
provided in this Agreement, any failure of any of the parties to comply with
any obligation, covenant, agreement or condition herein may be waived by the
party entitled to the benefits thereof only by a written instrument signed by
the party granting such waiver, but such waiver or failure to insist upon
strict compliance with such obligation, covenant, agreement or condition shall
not operate as a waiver of, or estoppel with respect to, any subsequent or
other failure.

 

(d)                                 The provisions of this
Agreement shall apply, to the full extent set forth herein with respect to the
Common Shares and the Series A Preference Shares and to any and all equity or
debt securities of the Company or any successor or assign of the Company
(whether by merger, amalgamation, consolidation, sale of assets, or otherwise)
which may be issued in respect of, in exchange for, or in substitution of, such
equity or debt securities and shall be appropriately adjusted for any share
dividends, bonus issues, splits, reverse splits, combinations, subdivisions,
reclassifications, recapitalizations, reorganizations and the like occurring
after the date hereof.

 

(e)                                  THIS AGREEMENT SHALL
BE GOVERNED BY, CONSTRUED, APPLIED AND ENFORCED IN ACCORDANCE WITH THE
INTERNAL LAWS OF THE STATE OF NEW YORK. 
EACH OF THE PARTIES HERETO ACKNOWLEDGES AND AGREES THAT IN THE EVENT OF
ANY BREACH OF THIS AGREEMENT, THE NON-BREACHING PARTY WOULD BE IRREPARABLY
HARMED AND COULD NOT BE MADE WHOLE BY MONETARY DAMAGES, AND THAT, IN ADDITION
TO ANY OTHER REMEDY TO WHICH THEY MAY BE ENTITLED AT LAW OR IN EQUITY, THE
PARTIES SHALL BE ENTITLED TO SUCH EQUITABLE OR INJUNCTIVE RELIEF AS MAY BE
APPROPRIATE.  THE CHOICE OF FORUM SET
FORTH IN THIS SECTION 15 SHALL NOT BE DEEMED TO PRECLUDE THE
ENFORCEMENT OF ANY JUDGMENT OF A NEW YORK FEDERAL OR STATE COURT, OR THE TAKING
OF ANY ACTION UNDER THIS AGREEMENT TO ENFORCE SUCH A JUDGMENT, IN ANY OTHER
APPROPRIATE JURISDICTION.

 

(f)                                    IN THE EVENT ANY
PARTY TO THIS AGREEMENT COMMENCES ANY LITIGATION, PROCEEDING OR OTHER LEGAL
ACTION IN CONNECTION WITH OR RELATING TO THIS AGREEMENT, ANY RELATED AGREEMENT
OR ANY MATTERS DESCRIBED OR CONTEMPLATED HEREIN OR THEREIN, THE PARTIES TO THIS
AGREEMENT HEREBY (1) AGREE UNDER ALL CIRCUMSTANCES ABSOLUTELY AND IRREVOCABLY
TO INSTITUTE ANY LITIGATION, PROCEEDING OR OTHER LEGAL ACTION IN A COURT OF
COMPETENT JURISDICTION LOCATED WITHIN THE SOUTHERN DISTRICT OF NEW YORK,
WHETHER A STATE OR

 

22

 

FEDERAL COURT; (2) AGREE THAT IN THE EVENT OF ANY SUCH LITIGATION,
PROCEEDING OR ACTION, SUCH PARTIES WILL CONSENT AND SUBMIT TO THE PERSONAL
JURISDICTION OF ANY SUCH COURT DESCRIBED IN CLAUSE (1) OF THIS SECTION AND TO
SERVICE OF PROCESS UPON THEM IN ACCORDANCE WITH THE RULES AND STATUTES
GOVERNING SERVICE OF PROCESS (IT BEING UNDERSTOOD THAT NOTHING IN THIS SECTION
SHALL BE DEEMED TO PREVENT ANY PARTY FROM SEEKING TO REMOVE ANY ACTION TO A
FEDERAL COURT IN THE SOUTHERN DISTRICT OF NEW YORK; (3) AGREE TO WAIVE TO THE
FULL EXTENT PERMITTED BY LAW ANY OBJECTION THAT THEY MAY NOW OR HEREAFTER HAVE
TO THE VENUE OF ANY SUCH LITIGATION, PROCEEDING OR ACTION IN ANY SUCH COURT OR
THAT ANY SUCH LITIGATION, PROCEEDING OR ACTION WAS BROUGHT IN ANY INCONVENIENT
FORUM; (4) AGREE, AFTER CONSULTATION WITH COUNSEL, TO WAIVE ANY RIGHTS TO A
JURY TRIAL TO RESOLVE ANY DISPUTES OR CLAIMS RELATING TO THIS AGREEMENT; (5)
AGREE TO DESIGNATE, APPOINT AND DIRECT AN AUTHORIZED AGENT TO RECEIVE ON ITS
BEHALF SERVICE OF ANY AND ALL PROCESS AND DOCUMENTS IN ANY LEGAL PROCEEDING IN
THE SOUTHERN DISTRICT OF NEW YORK; (6) AGREE TO PROVIDE THE OTHER PARTIES TO
THIS AGREEMENT WITH THE NAME, ADDRESS AND FACSIMILE NUMBER OF SUCH AGENT; (7) AGREE
AS AN ALTERNATIVE METHOD OF SERVICE TO SERVICE OF PROCESS IN ANY LEGAL
PROCEEDING BY MAILING OF COPIES THEREOF TO SUCH PARTY AT ITS ADDRESS SET FORTH
HEREIN FOR COMMUNICATIONS TO SUCH PARTY; (8) AGREE THAT ANY SERVICE MADE AS
PROVIDED HEREIN SHALL BE EFFECTIVE AND BINDING SERVICE IN EVERY RESPECT; AND
(9) AGREE THAT NOTHING HEREIN SHALL AFFECT THE RIGHTS OF ANY PARTY TO EFFECT
SERVICE OF PROCESS IN ANY OTHER MANNER PERMITTED BY LAW.  TO THE EXTENT PERMITTED BY LAW IN CONNECTION
WITH OR RELATING TO THIS AGREEMENT, ANY RELATED AGREEMENT OR ANY MATTERS
DESCRIBED OR CONTEMPLATED HEREIN OR THEREIN, AND AGREE TO TAKE ANY AND ALL
ACTION NECESSARY OR APPROPRIATE TO EFFECT SUCH WAIVER.

 

(g)                                 All personal pronouns
used in this Agreement, whether used in masculine, feminine or neuter gender,
shall include all other genders if the context so requires; the singular shall
include the plural, and vice versa.

 

(h)                                 This Agreement may be
executed in two or more counterparts, each of which shall be deemed an original
but all of which together shall constitute one and the same instrument.  If the requirements of this Agreement have
otherwise been met, new Shareholders may become parties to this Agreement by
executing a counterpart to this Agreement at which time the Company shall
revise the Exhibits as may be necessary or appropriate.

 

(i)                                     In case any one or
more of the provisions or parts of a provision contained in this Agreement
shall, for any reason, be held to be invalid, illegal or unenforceable in any
respect in any jurisdiction, such invalidity, illegality or unenforceability
shall not affect any other provision or part of a provision of this Agreement
or any other jurisdiction, but this Agreement shall be reformed and construed
in any such jurisdiction as if such invalid or illegal or unenforceable
provision or part of a provision had never been contained herein and such

 

23

 

provision or part shall be reformed so that it would be valid, legal
and enforceable to the maximum extent permitted in such jurisdiction.

 

(j)                                     This Agreement
constitutes the entire agreement by and among the parties with respect to the
subject matter hereof and may not be modified orally, but only by a writing
subscribed by the party charged therewith.

 

(k)                                  Each of the parties
hereto agrees to execute all such further instruments and documents and to take
all such further action as are necessary to effectuate the terms and purposes
of this Agreement.

 

(l)                                     Whenever notice is
required to be given by any party hereunder, such notice shall be deemed
sufficient when delivered to the Company at its address above and to each of
the other Shareholders at such Shareholder’s address below or to such other
address as the Shareholder shall have furnished to the Company.

 

(m)                               Each party shall be
entitled to rely conclusively upon any notice received, or the failure to
receive any notice, from any other party with respect to rights and obligations
under this Agreement.

 

24

 

IN WITNESS WHEREOF, each of the undersigned has signed
this Agreement as of the date first above written.

 

	
   

  	
  SENSUS METERING SYSTEMS

  
	
   

  	
  (BERMUDA 1) LTD.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
  Name: 

  	
  Jonathan F. Boucher

  
	
   

  	
  Title:

  	
  Vice President

  
						

 

 

	
   

  	
  MANAGEMENT SHAREHOLDER:

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  Dan
  Haness

  

 

 

	
   

  	
  MANAGEMENT SHAREHOLDER:

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  Peter
  Mainz

  

 

 

	
   

  	
  MANAGEMENT SHAREHOLDER:

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  Barry
  Seneri

  

 

 

	
   

  	
  MANAGEMENT SHAREHOLDER:

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  Mike
  DeCocco

  

 

 

	
   

  	
  MANAGEMENT SHAREHOLDER:

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  Dane
  Ehrich

  

 

 

	
   

  	
  MANAGEMENT SHAREHOLDER:

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  Dave
  Herchko

  

 

 

	
   

  	
  MANAGEMENT SHAREHOLDER:

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  Jim
  Hilty

  

 

 

	
   

  	
  MANAGEMENT SHAREHOLDER:

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  Regina
  Hughes

  

 

 

	
   

  	
  MANAGEMENT SHAREHOLDER:

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  Bill
  Inglis

  

 

 

	
   

  	
  MANAGEMENT SHAREHOLDER:

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  Jean-Marc
  Loeser

  

 

 

	
   

  	
  MANAGEMENT SHAREHOLDER:

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  Doug
  Neely

  

 

 

	
   

  	
  MANAGEMENT SHAREHOLDER:

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  Harald
  Tiemann

  

 

 

	
   

  	
  MANAGEMENT SHAREHOLDER:

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  George
  Uram

  

 

 

	
   

  	
  MANAGEMENT SHAREHOLDER:

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  Thomas Weber

  

 

 

	
   

  	
  MANAGEMENT SHAREHOLDER:

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  Chuck
  Barnewolt

  

 

 

	
   

  	
  MANAGEMENT SHAREHOLDER:

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  Michel
  Sengel

  

 

 

	
   

  	
  MANAGEMENT SHAREHOLDER:

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  Steve
  Larkin

  

 

 

	
   

  	
  MANAGEMENT SHAREHOLDER:

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  Blake
  Snider

  

 

 

	
   

  	
  MANAGEMENT SHAREHOLDER:

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  Mike
  Show

  

 

 

	
   

  	
  MANAGEMENT SHAREHOLDER:

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  Arlin
  Rummel

  

 

 

	
   

  	
  MANAGEMENT SHAREHOLDER:

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  Dan
  Pinney

  

 

 

	
   

  	
  MANAGEMENT SHAREHOLDER:

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  Joe
  Fafalios

  

 

 

	
   

  	
  MANAGEMENT SHAREHOLDER:

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  Jim
  Thomson

  

 

 

	
   

  	
  MANAGEMENT SHAREHOLDER:

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  Bill
  Mazza

  

 

 

	
   

  	
  MANAGEMENT SHAREHOLDER:

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  Pierre
  Egly

  

 

 

	
   

  	
  MANAGEMENT SHAREHOLDER:

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  Tim
  Harriger

  

 

 

	
   

  	
  MANAGEMENT SHAREHOLDER:

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  Archer
  Pippen

  

 

 

EXHIBIT 1

 

Purchase Schedule

 

 

	
  Shareholder

  	
   

  	
  Class A

  Common

  Shares

  	
   

  	
  Consideration

  Paid for Class A

  Common Shares

  	
   

  	
  Series A

  Preference

  Shares

  	
   

  	
  Consideration

  Paid for

  Preference Shares

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  

 

 

EXHIBIT 2

 

Form of Three
Year Junior NoteExhibit 10.9

 

EMPLOYMENT AND NON-INTERFERENCE AGREEMENT

 

This
Employment and Non-Interference Agreement, dated as of December 17, 2003
(the “Agreement”), is by and between Dan Harness (the “Executive”)
and Sensus Metering Systems Inc., a Delaware corporation (the “Company”),
which is a wholly-owned subsidiary of Sensus Metering Systems (Bermuda 2)
Ltd., a company organized under the laws of Bermuda (“Bermuda 2”),
which is a wholly-owned subsidiary of Sensus Metering Systems (Bermuda 1)
Ltd., a company organized under the laws of Bermuda (“Holdings”).

 

W  I  T  N  E  S
S  E  T  H:

 

WHEREAS, the
Company wishes to obtain the future services of the Executive for the Company
and its divisions and direct and indirect subsidiaries; and

 

WHEREAS, the
Executive is willing, upon the terms and conditions herein set forth, to
provide services hereunder; and

 

WHEREAS, the
Company wishes to secure the Executive’s non-interference, upon the terms and
conditions herein set forth;

 

NOW,
THEREFORE, in consideration of the mutual promises and covenants contained
herein, and intending to be legally bound hereby, the parties hereto agree as
follows:

 

1.                                       Nature
of Employment; Term of Employment.

 

The “Term
of Employment” shall commence as of the date hereof, and extend to
December 31, 2006, unless sooner terminated as hereinafter provided; provided,
that such term shall continue for the twelve month period following
December 31, 2006, and for each twelve month period thereafter, unless at
least 90 days prior to the scheduled expiration date, either the Executive or
the Company notifies the other of its decision not to continue such term.  Should the Executive’s employment be earlier
terminated by the Company pursuant to Section 4(a), by the
Executive pursuant to Section 4(b) or mutually by both parties
pursuant to Section 4(c), the Term of Employment shall end on the
date of such earlier termination. 
Nothing contained herein shall be deemed to be an obligation on the part
of the Company to extend the Term of Employment.  During the Term of Employment, the Company agrees to retain
Executive in its employ, and Executive agrees to remain in the employ of the
Company, as President and Chief Executive Officer.  Executive will carry out his duties as President and Chief
Executive Officer with respect to all the divisions and direct and indirect
subsidiaries of Holdings (which companies, together with the Company, shall be
referred to collectively as the “Company Group”), subject to the
direction of the Holdings’ Board of Directors (the “Board of Directors”).

 

2.                                       Extent
of Employment.

 

(a)                                  During
the Term of Employment, the Executive shall perform his obligations hereunder
faithfully and to the best of his ability under the direction of the Board of
Directors of Holdings to which the Executive shall directly report, and shall
abide by the rules, customs and usages from time to time established by the
Company or Holdings.

 

 

(b)                                 During
the Term of Employment, the Executive shall devote all of his business time,
energy and skill to the performance of his duties, responsibilities and
obligations hereunder (except for vacation periods and reasonable periods of
illness or other incapacity), consistent with past practices and norms in
similar positions.  The Executive will
have such authority and power as are inherent to the undertakings applicable to
his position as President and Chief Executive Officer and which are necessary
to carry out his responsibilities and the duties required of him hereunder.

 

(c)                                  Nothing
contained herein shall require Executive to follow any directive or to perform
any act which would violate any laws, ordinances, regulations or rules of any
governmental, regulatory or administrative body, agent or authority, any court
or judicial authority, or any public, private or industry regulatory authority
(collectively, “Regulations”). 
Executive will not (i) breach or violate any provision of any
Regulations in any material respect or (ii) otherwise act in any manner which
might reasonably be expected to have a material adverse effect on the ongoing
business, operations, conditions, prospects or other business relationships or
properties of any company in the Company Group or Holdings.

 

3.                                       Compensation.

 

(a)                                  Base
Salary.  During the Term of
Employment, the Company shall pay compensation to Executive as base
compensation for his services hereunder, in substantially equal bi-weekly
installments, an annual base salary of $400,000 (the “Base Salary”).  The Board of Directors shall annually, and
in its sole discretion, determine whether the Base Salary should be increased
and, if so, the amount of such increase.

 

(b)                                 Annual
Bonus.  During the Term of
Employment, in addition to the Base Salary, commencing the fiscal year
beginning on April 1, 2004, the Company shall pay to the Executive an annual bonus
or performance incentive compensation, up to 50% of Executive’s Base Salary,
subject to such performance and other conditions as the Board of Directors, in
its sole discretion, shall determine on an annual basis (the “Annual Bonus”)
pursuant to the Company’s Bonus Program for its senior executives.

 

4.                                       Termination.

 

(a)                                  Company
Termination.  Subject to the
Company’s obligations to make the payments contemplated by Section 4(d),
the Term of Employment may be terminated at any time by the Company:

 

(i)                                     upon the death of
Executive;

 

(ii)                                  in the event that
because of physical or mental disability the Executive is unable to perform,
and does not perform, as certified by a mutually agreeable competent medical
physician, his material duties hereunder for 180 days in any continuous 210 day
period;

 

(iii)                               for Cause or Material
Breach; or

 

2

 

(iv)                              for any other reason not
referred to in clauses (i) through (iii) including nonrenewal of the Term by
the Company under Section 1 or no reason, and the Company shall not be
required to specify a reason for the termination, provided that termination of
the Executive’s employment by the Company shall be deemed to have occurred
under this clause (iv) only if it is not for reasons described in
clauses (i) through (iii) such that this Agreement, subject to the
provisions of Section 4(d), shall be construed as terminable at
will by the Company.

 

Executive
acknowledges that no representations or promises have been made concerning the
grounds for termination or the future operation of the Company’s business, and
that, except as set forth in the following sentence, nothing contained herein
or otherwise stated by or on behalf of the Company modifies or amends the right
of the Company to terminate Executive at any time, with or without Cause or for
Material Breach.  Termination shall
become effective 30 days after written notice, or, if for Cause or
Material Breach, upon the delivery by the Company to the Executive of written
notice specifying the basis of such termination and, if for Cause or Material
Breach, the specific reasons therefor.

 

(b)                                 Executive
Termination.  Subject to the
Company’s obligations to make the payments contemplated by Section 4(d),
the Term of Employment may be terminated at any time by the Executive:

 

(i)                                     upon the death of
Executive;

 

(ii)                                  in the event that
because of physical or mental disability the Executive is unable to perform,
and does not perform, as certified by a mutually agreeable competent medical
physician, his material duties hereunder for 180 days in any continuous 210 day
period;

 

(iii)                               under circumstances
involving a material reduction in Executive’s position, authority, base
compensation or benefits or a hostile or adverse work environment, taken as a
whole; or

 

(iv)                              voluntarily or for any
reason or no reason not referred to in clauses (i) through (iii) or no
reason or non renewal of this Agreement by either Executive or the Company (a “Voluntary
Termination”), after 30 days’ prior written notice to the Company and
its Board of Directors, provided, that the expiration of the Term of Employment
pursuant to Section 1, or any renewal term thereof, will not be
considered a Voluntary Termination.

 

(c)                                  Mutual
Termination.  Subject to the
Company’s obligations to make the payments contemplated by Section 4(d),
the Term of Employment may be terminated at any time by the mutual agreement of
the Company and the Executive.  Any
termination of the Executive’s employment by mutual agreement of the parties
will be memorialized by an agreement which is reduced to writing and signed by
the Executive and a duly appointed officer of the Company.

 

(d)                                 Severance.  If Executive’s employment is terminated for
any reason whatsoever, then Executive shall be entitled to (x) accrued and
unpaid base salary and benefits (including sick pay, vacation pay and benefits
under Section 6) with respect to the period prior to

 

3

 

termination,
(y) reimbursement for expenses under Section 5 with respect to
such period, and (z) any other benefits (including COBRA) required by law
to be provided after termination of employment under the circumstances.  Except as may otherwise be expressly
provided to the contrary in this Agreement, nothing in this Agreement shall be
construed as requiring the Executive to be treated as employed by the Company
for purposes of any employee benefit plan following the date of the termination
of the Executive’s Term of Employment. 
In the event Executive’s employment is terminated pursuant to:

 

(i)                                     Sections
4(a)(i) [Death], or 4(a)(ii) [Disability] by the Company, 4(b)(i)
[Death], 4(b)(ii) [Disability], 4(b)(iii) [Material Reduction] by
the Executive, or 4(c) [Mutual Termination] by the Executive, the
Company will also pay to Executive (or his estate or representative) the
Executive’s Base Salary for a 12 month period following the actual date the
Term of Employment is terminated; provided, however, if the
termination of employment occurs after a Change of Control such payment will be
the Executive’s Base Salary for a 24 month period; and

 

(ii)                                  Section 4(a)(iii)
[Cause or Material Breach] by the Company or 4(b)(iv) [Any or No Reason]
by the Executive, there will be no additional amounts owing by the Company to
Executive under this Agreement from and after such termination; and

 

(iii)                               Section 4(a)(iv)
[Any or No Reason] by the Company, the Company will pay to Executive the
Executive’s base salary through December 31, 2006, the balance of the term of
the original Agreement, or for a 12 month period, whichever is longer; provided,
however, if the termination of employment occurs after a Change of
Control such payment will be through December 31, 2006, the balance of the term
of the original Agreement, or for a 24 month period, whichever is longer.

 

(e)                                  Continuing
Provisions.  Termination of the Term
of Employment will not terminate Sections 7, 8, 9, 10,
12 through 24, and related definitions, or any other provisions
not associated specifically with the Term of Employment.

 

(f)                                    Mitigation.  In the event of termination, the Executive
shall not have a duty to mitigate the Company’s payment obligations under Section 4(d)
by seeking alternative employment; provided, however, that if the
Executive does accept alternative employment, payment obligations under Section 4(d)
shall be subject to offset by any amounts of base and bonus compensation earned
by Executive through such alternate employment.

 

(g)                                 Company
Election.  Subject to the terms and
conditions of this Agreement, during the period beginning on the date of
delivery of a written notice by the Company or the Executive, as the case may
be, indicating that the Term of Employment is to be terminated, and ending on
the actual date the Term of Employment is terminated, which, in any event,
shall be no later than 180 days following the delivery of such notice, the
Executive shall continue to perform his duties as set forth in this Agreement,
and shall also perform such services for the Company as are necessary and
appropriate for a smooth transition to the Executive’s successor, if any.  Notwithstanding the foregoing provisions of
this Section 4(g), the Company may suspend the Executive from
performing his duties under this Agreement following the delivery of a written
notice by the Executive providing for the Executive’s resignation, or delivery
by the Company of

 

4

 

a notice
providing for the Executive’s termination of employment for any reason; provided,
however, that during the period of suspension (which shall end upon the
actual date the Term of Employment is terminated, which in any event shall be
no later than 180 days following the delivery of such notice), the Executive
shall continue to be treated as employed by the Company for other purposes, and
his rights to compensation or benefits shall not be reduced by reason of the
suspension.

 

5.                                       Reimbursement
of Expenses.

 

During the
Term of Employment, subject to the approval of the Board of Directors, the
Company shall reimburse Executive for reasonable and documented travel,
entertainment and other expenses reasonably incurred by Executive in connection
with the performance of his duties hereunder and, in each case, in accordance
with the rules, customs and usages promulgated by Holdings and the Company from
time to time in effect.

 

6.                                       Benefits.

 

(a)                                  Vacation.  The Executive shall be entitled to five (5)
weeks paid vacation.

 

(b)                                 Company
Car.  The Company will provide
Executive with one (1) leased vehicle for both his business and personal
use.  If at any time a Company leased
vehicle is no longer available for Executive’s use, the Company will provide
Executive with an automobile allowance of $700 per month, to be paid each
month.  The automobile allowance will
commence at the time Executive no longer has access to a Company-leased car.

 

(c)                                  Insurance
and Other Plans.  The Executive
shall be entitled to participate in and be covered by any insurance plan
(including but not limited to medical, dental, health, life, accident,
hospitalization and disability), profit sharing or other employee benefit plan
of the Company, to the same extent and on the same terms as such benefits are
or may be provided by the Company, at the sole discretion of the Board of
Directors, from time to time to other members of senior management.

 

(d)                                 Supplemental
Retirement Benefits.  Executive
agrees to provide the Company with the amount of Supplemental Retirement
Benefit Plan contributions made by the Company’s predecessor to Executive in
2001, 2002 and 2003.  The Company agrees
to review such contribution amounts and to make additional Company
contributions to Executive’s 401(k) account on an annual basis consistent with
such past Supplemental Retirement Benefit contributions during the Term of
Employment.

 

7.                                       Non-Competition/Non-Disclosure
Provisions.

 

(a)                                  Non-Competition.  In consideration of this Agreement, the
Executive covenants and agrees that during the Term of Employment and, for a
period of two (2) years from the date of termination of the Term of Employment
(the “Restricted Period”), the Executive shall not, subject to this Section 7,
without the express written approval of the Board of Directors of the Company,
directly or indirectly, in one or a series of transactions, own, manage,
operate, control, invest or acquire an interest in, whether as a proprietor,
partner, stockholder, member, lender, director, officer, employee, joint
venturer, investor, lessor, supplier, customer, agent,

 

5

 

representative
or other participant, or otherwise engage or participate in, whether as a
proprietor, partner, stockholder, member, lender, director, officer, employee,
joint venturer, investor, lessor, supplier, customer, agent, representative or
other participant, any business which competes, directly or indirectly, with
the Business in the Market (“Competitive Business”) without regard to
(A) whether the Competitive Business has its office, manufacturing or other
business facilities within or without the Market, (B) whether any of the
activities of the Executive occur or are performed within or without the Market
or (C) whether the Executive resides, or reports to an office, within or
without the Market; provided, however, that (x) the Executive
may, anywhere in the Market, directly or indirectly, in one or a series of
transactions, own, invest or acquire an interest in up to two percent (2%) of
the capital stock of a corporation whose capital stock is traded publicly, or
that (y) the Executive may accept employment with a successor company to
the Company.

 

(b)                                 Non-Solicitation.  If the Executive’s employment is terminated,
then, subject to this Section 7, the Executive shall not during the
Restricted Period, without the Company’s prior written consent, (A) directly or
indirectly, in one or a series of transactions, recruit, solicit or otherwise
induce or influence any proprietor, partner, stockholder, member, lender,
director, officer, employee, sales agent, joint venturer, investor, lessor,
customer, supplier, agent, representative or any other person which has a
business relationship with the Company Group or had a business relationship
with the Company Group within the twenty-four (24) month period preceding the
date of the incident in question, to discontinue, reduce or modify such
employment, agency or business relationship with the Company Group, or
(B) employ or seek to employ or cause any Competitive Business to employ
or seek to employ any person or agent who is then (or was at any time within
twelve (12) months prior to the date the Executive or the Competitive Business
employs or seeks to employ such person) employed or retained by the Company
Group.  Notwithstanding the foregoing,
nothing herein shall prevent the Executive from providing a letter of
recommendation to an employee with respect to a future employment opportunity.

 

(c)                                  Non-Disclosure.  The Executive further agrees, during and
after the Term of Employment, the Restricted Period and thereafter, that the
Executive will not, directly or indirectly in one or a series of transactions
disclose to any person or use or otherwise exploit for his own benefit or for
the benefit of anyone other than the Company Group any Confidential Information
(as defined below) whether prepared by the Executive or not provided, however,
that any Confidential Information may be disclosed to officers,
representatives, employees and agents of the Company Group who need to know
such Confidential Information in order to perform the services or conduct the
operations required or expected of them in the Business.  The Executive shall use his best efforts to
prevent the removal of any Confidential Information from the premises of the
Company Group, except as required in his normal course of employment by the
Company Group.  During the Term, the
Executive shall use his commercially reasonable efforts to cause all persons or
entities to whom Confidential Information shall be disclosed by the Executive
hereunder to observe the terms and conditions set forth herein as though each
such person or entity was bound hereby. 
After the Term, the Executive shall not disclose Confidential
Information other than to his advisors, representatives and agents who execute
a confidentiality agreement  whereby
they will agree to observe the confidentiality terms and conditions set forth
herein.  The Executive shall have no
obligation hereunder to keep confidential any Confidential Information if and
to the extent disclosure of any thereof is specifically required by law;

 

6

 

provided, however, that in the event
disclosure is required by applicable law, the Executive shall provide the
Company with prompt notice of such requirement to the extent allowed by law,
prior to making any disclosure, so that the Company may seek an appropriate
protective order.  At the request of the
Company, the Executive agrees to deliver to the Company all Confidential
Information which the Executive may possess or control.  The Executive agrees that all Confidential
Information of the Company Group (whether now or hereafter existing) conceived,
discovered or made by him during his employment with the Company Group
exclusively belongs to the Company Group (and not to the Executive).  The Executive will promptly disclose such
Confidential Information to the Company Group and perform all actions
reasonably requested by the Company Group to establish and confirm such
exclusive ownership.  As used herein,
the term “Confidential Information” means any confidential information
including, without limitation, any study, data, calculations, software storage
media or other compilation of information, patent, patent application,
copyright, trademark, trade name, service mark, service name, “know-how”, trade
secrets, customer lists, details of client or consultant contracts, pricing
policies, operational methods, marketing plans or strategies, product
development techniques or plans, business acquisition plans or any portion or
phase of any scientific or technical information, ideas, discoveries, designs,
computer programs (including source of object codes), processes, procedures,
formulas, improvements or other proprietary or intellectual property of the
Company Group, whether or not in written or tangible form, and whether or not
registered, and including all files, records, manuals, books, catalogues,
memoranda, notes, summaries, plans, reports, records, documents and other
evidence thereof.  The term “Confidential
Information” does not include, and there shall be no obligation hereunder
with respect to, information that becomes generally available to the public
other than as a result of a disclosure by such shareholder not permissible
hereunder.

 

(d)                                 Non-Disparagement.  The Executive agrees, during and after the
Term of Employment, the Restricted Period and thereafter, that he shall not
make any false, defamatory or disparaging statements about Holdings or the
Company Group or the officers or directors of Holdings or the Company
Group.  During and after the Executive’s
employment with the Company Group, the Company agrees on behalf of itself and
its subsidiaries that neither the officers nor the directors of the Company
Group shall make any false, defamatory or disparaging statements about the
Executive.

 

(e)                                  Specific
Performance.  All the parties hereto
agree that their rights under this Section 7 are special and unique
and that violation thereof would not be adequately compensated by money damages
and each grants the other the right to specifically enforce (including
injunctive relief where appropriate) the terms of this Agreement.

 

8.                                       Defense
of Claims.

 

The Executive
agrees that, for the period beginning on the date hereof, and continuing for a
reasonable period after termination or expiration of the Term of Employment,
the Executive will cooperate with the Company in defense of any claims that may
be made against the Company Group, and will cooperate with the Company in the
prosecution of any claims that may be made by Company Group, to the extent that
such claims may relate to services performed by the Executive for the Company
Group.  The Executive agrees to promptly
inform the Company if he becomes aware of any lawsuits involving such claims
that may be filed against Holdings or

 

7

 

the Company Group.  The Company agrees to reimburse the
Executive for all of the Executive’s reasonable out-of-pocket expenses
associated with such cooperation, including travel expenses.  For periods during and following the
Executive’s employment with the Company, the Company agrees to provide
reasonable compensation to the Executive for such cooperation in addition to
reimbursement of expenses and his reasonable attorneys’ fees, if any.

 

9.                                       Definitions.

 

“Annual
Bonus” has the meaning set forth in Section 3(b).

 

“Authority”
means any governmental, regulatory or administrative body, agency or authority,
any court or judicial authority, any public, private or industry regulatory
authority, whether national, Federal, state or local or otherwise, or any
Person lawfully empowered by any of the foregoing to enforce or seek compliance
with any applicable law, statute, regulation, order or decree.

 

“Base
Salary” has the meaning set forth in Section 3(a).

 

“Board of
Directors” has the meaning set forth in Section 1.

 

“Business”
means the business of providing the following products and services for
metering and communication by or for utilities or residential/commercial
submetering entities of water, gas, electricity and heat consumption by their
customers:

 

(A)                              Residential Water Meters
(Velocity, Positive Displacement, Piston or otherwise);

(B)                                Commercial / Industrial
Water Meters (Turbine, Combination, Propeller, Irrigation, Fire Hydrant, Fire
Service, or otherwise);

(C)                                Sub Meters - Water,
Gas, Electric and Heat;

(D)                               Residential Gas Meters
(Diaphragm and Ultrasonic);

(E)                                 Intermediate and Large
Capacity Gas Meters (Diaphragm and Ultrasonic);

(F)                                 Turbine Gas Meters;

(G)                                Pressure Regulation
Products;

(H)                               Correlative Natural Gas,
Energy and Density Measurement Products;

(I)                                    Residential and Polyphase
Solid-State Electricity Meters;

(J)                                   Heat Meters
(Velocity and Ultrasonic);

(K)                               Heat Integrators;

(L)                                 Bulk Hot Water Meters;

(M)                            Automatic Meter Reading
Devices or Systems for any of the foregoing;

(N)                               Meter Test Equipment for
any of the foregoing;

(O)                               Instrumentation for any
of the foregoing;

(P)                                 Meter accuracy testing
and recalibration services;

(Q)                               Project management
services related to Metering and AMR activities; and 

the business of providing other products and services as follows:

(R)                                Pipe Repair, Pipe
Tapping and Pipe Joining Products;

(S)                                 High Pressure, Low
Porosity Aluminum Die Castings;

 

8

 

(T)                                Services to utilities
related to the procurement, testing, repair and management of meter populations;
and

(U)                               Software applications
sold, licensed or offered as a service to utilities and used to manage billing
and meter data management for utilities and submetering entities.

 

“Cause”
means any of the following:

 

(i)                                     Executive’s
conviction of, or plea of guilty or nolo contendere to, a felony or a crime
involving embezzlement, conversion of property or moral turpitude;

 

(ii)                                  Executive’s fraud,
embezzlement or conversion of property;

 

(iii)                               Executive’s conviction
of, or plea of guilty or nolo contendere
to, a crime involving the acquisition, use or expenditure of federal, state or
local government funds;

 

(iv)                              an administrative or
judicial determination that Executive committed fraud or any other violation of
law involving federal, state or local government funds;

 

(v)                                 Executive’s material
violation, with the actual knowledge of Executive, of any obligations imposed
upon Executive, personally, as opposed to upon the Company Group, whether as a
shareholder or otherwise, under this Agreement, the Memorandum of Association
or Bye-Laws of Holdings, the organizational and formation documents of any of
Holdings’ direct or indirect subsidiaries, the Management Shareholders
Agreement and the Restricted Share Plan and related agreements, if applicable;
or

 

(vi)                              Executive’s material and
knowing failure, to observe or comply with Regulations whether as an officer,
shareholder or otherwise, in any material respect or in any manner which would
reasonably be expected to have a material adverse effect in respect of the Company
Group’s ongoing business, operations, condition (financial and other),
prospects and other business relationships;

 

“Change of
Control” shall mean the occurrence of any of the following:  (a) the closing of any merger,
amalgamation, combination, consolidation or similar business transaction
involving the Company in which the majority holders of Common Shares
immediately prior to such closing are not the holders, directly or indirectly,
of a majority of the Voting securities of the surviving or continuing Person in
such transaction or its ultimate controlling Person immediately after such
closing; (b) the closing of any sale or transfer by the Company or its
Subsidiaries of all or substantially all of the Company’s assets to an
acquiring Person in which the majority holders of Common Shares immediately
prior to such closing are not the holders of a majority of the Voting
securities of the acquiring Person or its ultimate controlling Person
immediately after such closing; (c) the closing of any sale by the holders
of Common Shares (other than any sale to a Permitted Transferee as defined in
the Management Shareholders Agreement and the Shareholders Agreement) of an
amount of Common Shares that equals or exceeds a majority of the Common Shares
issued and outstanding immediately prior to such closing to a Person in which
the holders of a majority of the Common Shares immediately prior to such
closing are not the holders of a majority of the Voting securities of such
Person or its ultimate controlling Person immediately after such closing.

 

9

 

“Company”
has the meaning set forth in the preamble.

 

“Company
Group” has the meaning set forth in Section 1.

 

“Competitive
Business” has the meaning set forth in Section 7(b).

 

“Confidential
Information” has the meaning set forth in Section 7(d).

 

“Executive”
means Dan Harness or his estate, if deceased.

 

“knowing”
and “knowledge” shall each refer to actual knowledge without any duty of
investigation.

 

“Management
Shareholders Agreement” means the Management Subscription and Shareholders
Agreement, dated March 5, 2004, among Holdings and the shareholders party
thereto.

 

“Market”
means any county in the United States of America, or any other country in which
the Business was conducted by or engaged in by the Company Group prior to the
date hereof or is conducted or engaged in by the Company Group at any time
during the Term of Employment.

 

“Material
Breach” means:

 

(i)                                     Executive’s breach
of any of his fiduciary duties to any company in the Company Group or the
Company’s stockholders or making of a willful misrepresentation or omission
which breach, misrepresentation or omission would reasonably be expected to
materially adversely affect the business, properties, assets, condition
(financial or other) or prospects of any company in the Company Group;

 

(ii)                                  Executive’s willful,
continual and material neglect or failure to discharge his material duties,
responsibilities or obligations prescribed by this Agreement or any other
agreement between the Executive and any company in the Company Group (other
than arising solely due to physical or mental disability);

 

(iii)                               Executive’s habitual
drunkenness or substance abuse, which materially interferes with Executive’s
ability to discharge his duties, responsibilities and obligations prescribed by
this Agreement;

 

(iv)                              Executive’s violation of
any non-competition, non-solicitation, non-disparagement or confidentiality
agreement with any company in the Company Group, including without limitation,
those set forth in Section 7 of this Agreement, or any other
agreements with any company in the Company Group; and

 

(v)                                 Executive’s gross
neglect of such his duties and responsibilities, as determined by Holdings’
Board of Directors;

 

10

 

provided,
for purposes of clauses (i) – (v), to the extent such conduct is able to be
remedied or cured by Executive, and such conduct is not cured or remedied after
the Company or the Board of Directors has provided Executive with 30 days’
written notice of such circumstances and the possibility of a Material Breach
in reasonable detail, and Executive fails to cure such circumstances and
Material Breach within those 30 days. 
No act or omission shall be deemed gross neglect if done, or omitted to
be done, in good faith by Executive based upon a resolution duly adopted by the
Board of Directors.  Whether a breach
can be cured or remedied shall be determined by the Board of Directors in its
sole discretion.

 

“Regulations”
has the meaning set forth in Section 2(c).

 

“Restricted
Period” has the meaning set forth in Section 7(a).

 

“Shareholders
Agreement” means Shareholders Agreement, dated as of December 17,
2003, by and among the Company and the Shareholders party thereto.

 

“Term of
Employment” has the meaning set forth in Section 1.

 

“Voluntary
Termination” has the meaning set forth in Section 4(b)(iv).

 

10.                                 Notice.

 

Any notice,
request, demand or other communication required or permitted to be given under
this Agreement shall be given in writing and if delivered personally, sent by
certified or registered mail, return receipt requested, sent by overnight
courier or sent by facsimile transmission (with confirmation and a copy sent by
mail within one day) as follows (or to such other addressee or address as shall
be set forth in a notice given in the same manner):

 

	
  If to
  Executive:

  	
   

  	
  Dan Harness

  President and Chief Executive Officer

  7525 Tynewind Drive

  Wake Forest, NC 27587

  
	
   

  	
   

  	
   

  
	
  If to the
  Company or the

  Board of Directors:

  	
   

  	
  
Sensus Metering Systems

  c/o The Jordan Company, L.P

  767 Fifth Avenue, 48th Floor

  New York, NY 10153

  Attention: Jonathan F. Boucher

  Facsimile No.: (212) 755-5263

  

 

Any such notices shall be
deemed to be given on the date personally delivered or sent by facsimile
transmission or such return receipt is issued or the day after if sent by
overnight courier.

 

11

 

11.                                 Executive’s
Representations.

 

The Executive
represents, warrants and covenants to Holdings and the Company Group that:

 

(a)                                  Noncompetes.  Executive is not a party to any written
employment contract or written agreement not to compete with or solicit from
any of his former employers.

 

(b)                                 Proceedings.  To the best of his knowledge and belief,
during his tenure with his former employers, the Executive did not engage
directly in any activity which would give rise to any disciplinary or other
similar proceeding before any federal or state governmental agency or
self-regulatory organization, and he has not been subject to or involved in any
such proceeding and no such proceeding is threatened.

 

(c)                                  Sophistication.  He is knowledgeable and sophisticated as to
business matters, including the subject matter of this Agreement, and that
prior to assenting to the terms of this Agreement, or giving the
representations and warranties herein, he has been given a reasonable time to
review it and has consulted with counsel of his choice.

 

(d)                                 Regulations.  He will not knowingly breach or violate any
provision of any Regulations in any material respect or in any manner which
might reasonably have a material adverse effect in respect of the ongoing
business, operations, conditions, or other business relationships or properties
of any of the companies in the Company Group.

 

12.                                 Company’s
Obligation; Taxes.

 

Executive
agrees and acknowledges that the obligations owed to Executive under this
Agreement are solely the obligations of the Company, and that none of the
Company’s, Holdings’ or their direct and indirect subsidiaries nor their
respective stockholders, directors, officers or lenders will have any
obligations or liabilities in respect of this Agreement and the subject matter
hereof.  Any amounts payable to the
Executive pursuant to this Agreement shall be subject to withholding and any
other applicable taxes.

 

13.                                 Validity.

 

If, for any
reason, any provision hereof shall be determined to be invalid or
unenforceable, the validity and effect of the other provisions hereof shall not
be affected thereby.

 

14.                                 Severability.

 

If any one or
more of the provisions of this Agreement should be ruled wholly or partially
invalid or unenforceable by a court of competent jurisdiction, then (i) the
validity and enforceability of all provisions of this Agreement not ruled to be
invalid or unenforceable shall be unaffected, and (ii) the provision(s) held
wholly or partially invalid or unenforceable shall be deemed amended, and such
court is authorized to reform the provision(s), to the minimum extent necessary
to render them valid and enforceable in conformity with the parties’ intent as
manifested herein.

 

12

 

15.                                 Right
to Withhold Payments.

 

Upon the
determination of a majority of the Board of Directors that the Executive has
breached his obligations in any material respect under Sections 7
or 8 the Company, in addition to pursuing all available remedies under
this Agreement, at law or otherwise, and without limiting its right to pursue
the same, shall cease all payments to the Executive under this Agreement.

 

16.                                 Waiver
of Breach; Specific Performance.

 

The waiver by
the Company or Executive of a breach of any provision of this Agreement by the
other party shall not operate or be construed as a waiver of any other breach
of such other party.  Each of the
parties (and third party beneficiaries) to this Agreement will be entitled to
enforce its rights under this breach of any provision of this Agreement and to
exercise all other rights existing in its favor.  The parties hereto agree and acknowledge that the Company would
be irreparably injured by a violation of Sections 7 or 8 of
this Agreement, that the provisions of such sections are reasonable and that
the Company could not adequately be compensated in monetary damages, in light
of the sensitivity of the non-public information of the Company to which the
Executive will be exposed and that any party (and third party beneficiaries)
may in its sole discretion apply to any court of law or equity of competent
jurisdiction for specific performance and/or injunctive relief, including
temporary restraining orders, preliminary injunctions and permanent injunctions
in order to enforce or prevent any violations of the provisions of such
sections of this Agreement.

 

17.                                 Assignment;
Third Parties.

 

Neither the
Executive nor the Company may assign, transfer, pledge, hypothecate, encumber
or otherwise dispose of this Agreement or any of his or its respective rights
or obligations hereunder, without the prior written consent of the other.  The parties agree and acknowledge that each
of Holdings, its direct and indirect subsidiaries and the shareholders of,
lenders to and investors therein are intended to be third party beneficiaries
of, and have rights and interests in respect of, Executive’s agreements set
forth in Sections 7 and 8.

 

18.                                 Amendment;
Entire Agreement.

 

This Agreement
may not be changed orally but only by an agreement in writing agreed to by the
party against whom enforcement of any waiver, change, modification, extension
or discharge is sought.  This Agreement,
the Shareholders Agreement and the Restricted Stock Agreement constitute the
entire agreement between the parties concerning the subject matter hereof and
supersedes all prior and contemporaneous agreements, if any, between the
parties relating to the subject matter hereof. 
The enforceability of this Agreement shall not cease or otherwise be
adversely affected by the termination of the Executive’s employment with the
Company.  The Executive and the Company
agree that the language used in this Agreement is the language chosen by the
parties to express their mutual intent, and that no rule of strict construction
is to be applied against any party hereto.

 

13

 

19.                                 Arbitration.

 

(a)                                  Except
with respect to disputes or controversies arising out of Sections 7
or 8 hereto, any dispute between any of the parties hereto or claim by a
party against another party arising out of or in relation to this Agreement or
in relation to any alleged breach thereof shall be finally determined by
arbitration in accordance with the rules then in force by the American
Arbitration Association.  The
arbitration proceedings shall take place in Wilmington, Delaware, or such other
location as the parties in dispute hereafter may agree upon; and such
proceedings shall be governed by the laws of the State of Delaware as such laws
are applied to agreements between residents of such State entered into and to
be performed entirely within that State.

 

(b)                                 The
parties shall agree upon one arbitrator, who shall be an individual skilled in
the legal and business aspects of the subject matter of this Agreement and of
the dispute.  If the parties cannot
agree upon one arbitrator, each party in dispute shall select one arbitrator
and the arbitrators so selected shall select a third arbitrator.  In the event the arbitrators cannot agree
upon the selection of the third arbitrator, the third arbitrator shall be
appointed by the American Arbitration Association at the request of any of the
parties in dispute.  The arbitrators
shall, if possible, be individuals skilled in the legal and business aspects of
the subject matter of this Agreement and of the dispute.

 

(c)                                  The
decision rendered by the arbitrator or arbitrators shall be accompanied by a
written opinion in support thereof.  The
decision shall be final and binding upon the parties in dispute without right
of appeal.  Judgment upon the decision
may be entered into any court having jurisdiction thereof, or application may
be made to that court for a judicial acceptance of the decision and any other
enforcement.

 

(d)                                 THIS
AGREEMENT SHALL BE GOVERNED BY, CONSTRUED, APPLIED AND ENFORCED IN ACCORDANCE
WITH THE INTERNAL LAWS OF THE STATE OF DELAWARE.  EACH OF THE PARTIES HERETO ACKNOWLEDGES AND AGREES THAT IN THE
EVENT OF ANY BREACH OF THIS AGREEMENT, THE NON-BREACHING PARTY WOULD BE
IRREPARABLY HARMED AND COULD NOT BE MADE WHOLE BY MONETARY DAMAGES, AND THAT,
IN ADDITION TO ANY OTHER REMEDY TO WHICH THEY MAY BE ENTITLED AT LAW OR IN
EQUITY, THE PARTIES SHALL BE ENTITLED TO SUCH EQUITABLE OR INJUNCTIVE RELIEF AS
MAY BE APPROPRIATE.  THE CHOICE OF FORUM
SET FORTH IN THIS SECTION 19 SHALL NOT BE DEEMED TO PRECLUDE THE
ENFORCEMENT OF ANY JUDGMENT OF A DELAWARE FEDERAL OR STATE COURT OR THE TAKING
OF ANY ACTION UNDER THIS AGREEMENT TO ENFORCE SUCH A JUDGMENT IN ANY OTHER
APPROPRIATE JURISDICTION.

 

20.                                 IN
THE EVENT ANY PARTY TO THIS AGREEMENT COMMENCES ANY LITIGATION, PROCEEDING OR
OTHER LEGAL ACTION IN CONNECTION WITH OR RELATING TO THE PROVISIONS OF SECTION
7, THIS AGREEMENT, ANY RELATED AGREEMENT OR ANY MATTERS DESCRIBED OR
CONTEMPLATED HEREIN OR THEREIN, THE PARTIES TO THIS AGREEMENT HEREBY (1) AGREE
UNDER ALL CIRCUMSTANCES ABSOLUTELY AND IRREVOCABLY TO INSTITUTE ANY LITIGATION,
PROCEEDING OR OTHER LEGAL ACTION IN A COURT OF

 

14

 

COMPETENT
JURISDICTION LOCATED WITHIN DELAWARE, 
WHETHER A STATE OR FEDERAL COURT; (2) AGREE THAT IN THE EVENT OF ANY
SUCH LITIGATION, PROCEEDING OR ACTION, SUCH PARTIES WILL CONSENT AND SUBMIT TO
THE PERSONAL JURISDICTION OF ANY SUCH COURT DESCRIBED IN CLAUSE (1) OF THIS
SECTION AND TO SERVICE OF PROCESS UPON THEM IN ACCORDANCE WITH THE RULES AND
STATUTES GOVERNING SERVICE OF PROCESS (IT BEING UNDERSTOOD THAT NOTHING IN THIS
SECTION SHALL BE DEEMED TO PREVENT ANY PARTY FROM SEEKING TO REMOVE ANY ACTION
TO A FEDERAL COURT IN DELAWARE; (3) AGREE TO WAIVE TO THE FULL EXTENT PERMITTED
BY LAW ANY OBJECTION THAT THEY MAY NOW OR HEREAFTER HAVE TO THE VENUE OF ANY
SUCH LITIGATION, PROCEEDING OR ACTION IN ANY SUCH COURT OR THAT ANY SUCH
LITIGATION, PROCEEDING OR ACTION WAS BROUGHT IN ANY INCONVENIENT FORUM;
(4) AGREE, AFTER CONSULTATION WITH COUNSEL, TO WAIVE ANY RIGHTS TO
A JURY TRIAL TO RESOLVE ANY DISPUTES OR CLAIMS RELATING TO THIS AGREEMENT;
(5) AGREE TO DESIGNATE, APPOINT AND DIRECT AN AUTHORIZED AGENT TO RECEIVE ON
ITS BEHALF SERVICE OF ANY AND ALL PROCESS AND DOCUMENTS IN ANY LEGAL PROCEEDING
IN DELAWARE; (6) AGREE TO PROVIDE THE OTHER PARTIES TO THIS AGREEMENT WITH THE
NAME, ADDRESS AND FACSIMILE NUMBER OF SUCH AGENT; (7) AGREE AS AN ALTERNATIVE
METHOD OF SERVICE TO SERVICE OF PROCESS IN ANY LEGAL PROCEEDING BY MAILING OF
COPIES THEREOF TO SUCH PARTY AT ITS ADDRESS SET FORTH HEREIN FOR COMMUNICATIONS
TO SUCH PARTY; (8) AGREE THAT ANY SERVICE MADE AS PROVIDED HEREIN SHALL BE
EFFECTIVE AND BINDING SERVICE IN EVERY RESPECT; AND (9) AGREE THAT NOTHING
HEREIN SHALL AFFECT THE RIGHTS OF ANY PARTY TO EFFECT SERVICE OF PROCESS IN ANY
OTHER MANNER PERMITTED BY LAW.  TO THE
EXTENT PERMITTED BY LAW IN CONNECTION WITH OR RELATING TO THIS AGREEMENT, ANY
RELATED AGREEMENT OR ANY MATTERS DESCRIBED OR CONTEMPLATED HEREIN OR THEREIN,
AND AGREE TO TAKE ANY AND ALL ACTION NECESSARY OR APPROPRIATE TO EFFECT SUCH
WAIVER.

 

21.                                 Further
Action.

 

Executive and
the Company agree to perform any further acts and to execute and deliver any
documents which may be reasonable to carry out the provisions hereof.

 

22.                                 Headings.

 

The headings
contained in this Agreement are for convenience only and shall not affect in
any way the meaning or interpretation of this Agreement.

 

23.                                 Counterparts.

 

This Agreement
may be executed in counterparts, each of which shall be deemed an original, but
all of which together shall constitute one and the same instrument.

 

[End of page]

 

15

 

IN WITNESS
WHEREOF, the parties hereto have set their hands as of the day and year first
written above.

 

	
   

  	
  EXECUTIVE:

  
	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  DAN HARNESS

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  SENSUS
  METERING SYSTEMS INC

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
  Name:

  
	
   

  	
  Title:

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00063-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00063-of-00352.parquet"}]]