Document:

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                                                                   EXHIBIT 10.7

                                            STOCKHOLDERS' AGREEMENT dated as of
                                            November 22, 2002, among NATIONAL
                                            WATERWORKS HOLDINGS, INC., a
                                            Delaware corporation (the
                                            "Corporation"), the Investors
                                            (defined herein) and the Other
                                            Stockholders (defined herein).

                                    PREAMBLE

         Each Stockholder owns, as of the date hereof, that number, class and
type of Equity Securities set forth opposite such Stockholder's name on Annex I
hereto. The Stockholders believe it to be in the best interest of the
Corporation and the Stockholders to provide for the continued stability of the
business and policies of the Corporation and its subsidiaries, as the same may
exist from time to time, and, to that end, the parties hereto set forth this
Agreement.

         ACCORDINGLY, in consideration of the mutual covenants and agreements
contained in this Agreement, the sufficiency of which is hereby acknowledged,
the parties agree as follows:

                                    ARTICLE I

                       DEFINITIONS; RULES OF CONSTRUCTION

         The following terms have the following meanings:

                  "ACCEPTANCE PERIOD" shall have the meaning set forth in
Section 3.3.

                  "AFFILIATE" means, with respect to any Person, any (a)
director, officer, limited or general partner, or any member or stockholder
holding 5% or more of the outstanding capital stock or other equity interests of
such Person, (b) spouse, parent, sibling or descendant of such Person (or a
spouse, parent, sibling or descendant of a Person specified in clause (a) above
relating to such Person) and (c) other Person that, directly or indirectly,
through one or more intermediaries, Controls, or is controlled by, or is under
common control with, such Person.

                  "APPROVED SALE" shall have the meaning set forth in Section
3.6.

                  "BOARD" means the Board of Directors of the Corporation.

                  "CHARTER" means the Restated Certificate of Incorporation of
the Corporation in effect as of the date hereof, as the same may be amended,
modified or supplemented after the date hereof.

                  "CLASS A COMMON STOCK" shall mean the Class A Common Stock,
$0.01 par value per share, of the Corporation.

                  "CLASS B COMMON STOCK" shall mean the Class B Common Stock,
$0.01 par value per share, of the Corporation.

                  "CLASS A HOLDER" means a Stockholder holding Class A Common
Stock.
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                  "CLASS B HOLDER" means a Stockholder holding Class B Common
Stock.

                  "COMMISSION" shall mean the Securities and Exchange Commission
or any other Federal agency at the time administering the Securities Act.

                  "COMMON STOCK" shall mean collectively, all of the common
stock, $0.01 par value, of the Corporation of any class.

                  "COMMON STOCK EQUIVALENTS" shall mean all shares of Common
Stock outstanding and all shares of Common Stock issuable upon the conversion,
exchange or exercise of all outstanding Equity Securities of the Corporation.

                  "CONTROL" means, (including, with correlative meaning, the
terms "controlling," "controlled by" and "under common control with") with
respect to any Person, the possession, directly or indirectly, of the power to
direct or cause the direction of the management, policies or investment
decisions of such Person, whether through the ownership of voting securities, by
contract or otherwise.

                  "CORPORATE ACCEPTANCE" shall have the meaning set forth in
Section 3.3(a)(i).

                  "CO-SALE NOTICE" shall have the meaning set forth in Section
3.4(a)(i).

                  "CO-SALE OFFEREE" shall have the meaning set forth in Section
3.4(a).

                  "CO-SALE OFFEROR" shall have the meaning set forth in Section
3.4(a).

                  "CO-SALE RIGHTHOLDER" shall have the meaning set forth in
Section 3.4(b).

                  "EQUITY SECURITIES" means all shares of capital stock of the
Corporation, all securities convertible into or exchangeable for shares of
capital stock of the Corporation, and all options, warrants, and other rights to
purchase or otherwise acquire from the Corporation shares of such capital stock,
including any stock appreciation or similar rights, contractual or otherwise.

                  "EQUIVALENT PRICE" shall mean in the case (a) where a share of
Class A Common Stock is being transferred, then the Equivalent Price for a share
of Class B Common Stock shall be the price of such share of Class A Common Stock
plus the amount of the then-outstanding Unpaid Yield and Unreturned Original
Cost (as such terms are defined in the Charter) of such share of Class B Common
Stock and (b) where a share of Class B Common Stock is being transferred, then
the Equivalent Price for a share of Class A Common Stock shall be the price of
such share of Class B Common Stock less the amount of the then-outstanding
Unpaid Yield and Unreturned Original Cost of such share of Class B Common Stock.

                  "EXCLUDED STOCK" means (i) Class A Common Stock issued or to
be issued to employees, officers or directors of, or consultants or advisors to
the Corporation, pursuant to stock purchase or stock option plans or other
arrangements that are approved by the Board, provided that the number of such
Shares issued pursuant to this clause (i) does not exceed 47,589.80 (subject to
adjustment for stock splits, stock dividends, subdivisions or other similar
events), (ii) Equity Securities issued in respect of or in exchange for Shares
by way of a stock

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dividend, stock split or similar transaction, (iii) Class A Common Stock,
warrants or other equity rights issued to a financial institution in connection
with a debt financing of the Corporation and/or a Subsidiary of the Corporation
approved by the Board and the Requisite Class B Holders, (iv) Equity Securities
issued to the seller(s) of a business (provided such sellers are not Affiliates
of the Corporation) in connection with the Corporation's (or its Affiliates)
acquisition of such seller's business approved by the Board and the Requisite
Class B Holders whether such acquisition is in the form of a merger,
consolidation, asset purchase or other similar business combination, (v) Equity
Securities issued in the Initial Public Offering approved by the Board and the
Requisite Class B Holders, and (vi) Equity Securities issued in connection with
any recapitalization, merger, consolidation or reorganization by the Corporation
approved by the Board and the Requisite Class B Holders.

                  "FIRST OFFER" shall have the meaning set forth in Section
3.3(a)(i).

                  "FIRST OFFER NUMBER" shall have the meaning set forth in
Section 3.5(b).

                  "FIRST OFFER PERIOD" shall have the meaning set forth in
Section 3.5(a).

                  "FIRST OFFERED SHARES" shall have the meaning set forth in
Section 3.3(a)(i).

                  "FULL ALLOTMENT" shall have the meaning set forth in Section
3.3(a)(ii).

                  "FULL INVESTOR ALLOTMENT" shall have the meaning set forth in
Section 3.3(b)(i).

                  "FUTURE STOCKHOLDER" shall have the meaning set forth in
Section 3.1.

                  "GROUP" means:

                           (i) in the case of any Stockholder who is an
         individual, (i) such Stockholder, (ii) all trusts for the benefit of
         such Stockholder's estate (including the executor or personal
         representative of such estate, as applicable), and (iii) all Affiliates
         of such Stockholder;

                           (ii) in the case of any Stockholder that is a
         partnership, (i) such Stockholder, (ii) its limited, special and
         general partners, (iii) any Person to which such Stockholder shall
         Transfer all or substantially all of its assets, and (iv) all
         Affiliates and employees of and consultants to, such Stockholder or any
         of its Affiliates;

                           (iii) in the case of any Stockholder which is a
         corporation or a limited liability company, (i) such Stockholder, (ii)
         its stockholders or members as the case may be, (iii) any Person to
         which such Stockholder shall Transfer all or substantially all of its
         assets, and (iv) all Affiliates of such Stockholder; and

                           (iv) in the case of any THL Holder, such THL Holder
         and all other THL Holders; and in the case of any JPMP Holder, such
         JPMP Holder and all other JPMP Holders.

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                  "INDEBTEDNESS" means indebtedness for borrowed money,
reimbursement obligations with respect to letters of credit and similar
instruments, obligations incurred, issued or assumed as the deferred purchase
price of property or services (other than accounts payable incurred in the
ordinary course of business consistent with past practice), obligations of
others secured by (or, for which the holder or such indebtedness has an existing
right, contingent or otherwise, to be secured) any encumbrance on property or
assets of any Person, capital lease obligations and obligations in respect of
guarantees of any of the foregoing or any "keep well" or other agreement to
maintain any financial statement condition of another person, in each case,
whether or not matured, liquidated, fixed, contingent, or disputed. The term
"Indebtedness" shall include all principal, interest, fees, expenses, prepayment
penalties and other obligations owed in respect of any outstanding Indebtedness.

                  "INDEPENDENT DIRECTOR" shall have the meaning set forth in
Section 2.1(b)(iv).

                  "INITIAL PUBLIC OFFERING" means the Corporation's first Public
Offering.

                  "INVESTOR ACCEPTANCE" shall have the meaning set forth in
Section 3.3(b)(i).

                  "INVESTOR ACCEPTANCE PERIOD" shall have the meaning set forth
in Section 3.3(b)(i).

                  "INVESTOR DIRECTORS" means the JPMP Holder Directors and the
THL Holder Directors, collectively.

                  "INVESTOR OFFEROR" shall have the meaning set forth in Section
3.3(b).

                  "INVESTOR OFFERED SHARES" shall have the meaning set forth in
Section 3.3(b).

                  "INVESTOR OFFEREE" shall have the meaning set forth in Section
3.3(b)(i).

                  "INVESTORS" means the Persons designated on the signature
pages hereto as "Investors" and any Transferee of such Persons.

                  "INVESTOR SHARES" means all Equity Securities of the
Corporation held at any time during the term of this Agreement by the Investors.

                  "JPMP HOLDER" shall mean, collectively, (i) J.P. Morgan
Partners (BHCA), L.P., (ii) J.P. Morgan Partners Global Investors, L.P., (iii)
J.P. Morgan Partners Global Investors (Cayman), L.P., (iv) J.P. Morgan Partners
Global Investors (Cayman II), L.P., and (v) J.P. Morgan Partners Global
Investors A, L.P. and each of their Affiliates.

                  "JPMP HOLDER DIRECTORS" shall have the meaning set forth in
Section 2.1(b)(i).

                  "LIQUIDATION" " means (i) any voluntary or involuntary
liquidation, dissolution or winding up of the Corporation, other than any
dissolution, liquidation or winding up in connection with any reincorporation of
the Corporation in another jurisdiction, or (ii) any Sale of the Corporation

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                  "MANAGEMENT DIRECTOR" shall have the meaning set forth in
Section 2.1(b)(iii).

                  "NEW SECURITIES" means all Equity Securities other than
Excluded Stock.

                  "OFFER" shall have the meaning set forth in Section 3.5(a).

                  "OFFEREE" shall have the meaning set forth in Section
3.3(a)(i).

                  "OFFEROR" shall have the meaning set forth in Section 3.3(a).

                  "OTHER CLASS B HOLDER" means a holder of Class B Common Stock
other than an Investor.

                  "OTHER INVESTORS" shall have the meaning set forth in Section
3.3(b)(i).

                  "OTHER STOCKHOLDER" means any party to this Agreement other
than an Investor or the Corporation.

                  "OTHER STOCKHOLDER SHARES" means all Equity Securities held at
any time during the term of this Agreement by any Other Stockholder.

                  "PERSON" shall be construed in the broadest sense and means
and includes a natural person, a partnership, a corporation, an association, a
joint stock company, a limited liability company, a trust, a joint venture, an
unincorporated organization and any other entity and any federal, state,
municipal, foreign or other government, governmental department, commission,
board, bureau, agency or instrumentality, or any private or public court or
tribunal.

                  "PRO RATA AMOUNT" means, with respect to any Stockholder, the
quotient obtained by dividing (i) the number of Shares held by such Stockholder
by (ii) the aggregate number of Shares held by all Stockholders or class or type
of Stockholders (as applicable), assuming in each case the conversion or
exchange of all securities by their terms convertible into or exchangeable for
Shares and the exercise of all vested and "in the money" options to purchase or
rights to subscribe for Shares (including warrants) or such convertible or
exchangeable securities.

                  "PUBLIC OFFERING" shall mean an offering of equity securities
of the Corporation or any Subsidiary (or any successor-in-interest of the
foregoing) listed on a nationally recognized exchange which is made pursuant to
an effective registration statement under the Securities Act.

                  "PURCHASE NOTICE" shall have the meaning set forth in Section
3.5(b).

                  "REGULATORY SIDELETTER" shall have the meaning set forth in
Section 3.8.

                  "REQUISITE CLASS B HOLDERS" shall mean the holders of at least
75% of the shares of Class B Common Stock then outstanding.

                  "SALE OF THE CORPORATION" shall mean (i) the sale (in one or a
series of related transactions) of all or substantially all of the Corporation's
assets to a Person or a group of

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Persons acting in concert, (ii) the sale or transfer (in one or a series of
related transactions) of a majority of the outstanding capital stock of the
Corporation, to one Person or a group of Persons acting in concert, or (iii) the
merger or consolidation of the Corporation with or into another Person that is
not an Affiliate of the Corporation, in each case in clauses (ii) and (iii)
above under circumstances in which the holders of a majority in voting power of
the outstanding capital stock of the Corporation, immediately prior to such
transaction, own less than a majority in voting power of the outstanding capital
stock of the Corporation, or voting equity securities of the surviving or
resulting corporation or acquirer, as the case may be, immediately following
such transaction. A sale (or multiple related sales) of assets including,
without limitation, one or more Subsidiaries (whether by way of merger,
consolidation, reorganization or sale of all or substantially all assets or
Securities) which constitutes all or substantially all of the assets of the
Corporation shall be deemed a Sale of the Corporation.

                  "SECOND OFFER" shall have the meaning set forth in Section
3.3(a)(ii).

                  "SECOND OFFERED SHARES" shall have the meaning set forth in
Section 3.3(a)(ii).

                  "SECURITIES ACT" shall mean the Securities Act of 1933, as
amended, or any successor Federal statute, and the rules and regulations of the
Commission thereunder, all as the same shall be in effect from time to time.

                  "SHAREHOLDER ACCEPTANCE" shall have the meaning set forth in
Section 3.3(a)(ii).

                  "SHARES" means all Investor Shares and all Other Stockholder
Shares. Any reference to a number of "Shares" shall treat any warrants or
convertible securities as the number of shares of Common Stock for which it is
then exercisable or convertible.

                  "STOCK EQUIVALENTS" shall have the meaning set forth in
Section 3.6(c)(iii) hereof.

                  "STOCKHOLDERS" means the Investors, the Other Stockholders and
any Future Stockholders.

                  "SUBSIDIARY" means, with respect to any Person, any other
Person the majority of whose equity securities or voting securities are directly
or indirectly owned or controlled by such Person.

                  "TAG-ALONG NOTICE" shall have the meaning set forth in Section
3.4(d).

                  "TERMINATION DATE" means the closing of a Liquidation.

                  "THIRD PARTY" means, with respect to any Stockholder, any
Person that is not (i) the Corporation or (ii) a member of the Group of such
Stockholder.

                  "THL HOLDER" shall mean, collectively, (i) Thomas H. Lee
Equity Fund V, L.P., (ii) Thomas H. Lee Parallel Fund V, L.P., (iii) Thomas H.
Lee Cayman Fund V, L.P., (iv) Putnam Investments Holdings, LLC, (v) Putnam
Investments Employees' Securities Company I

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LLC, (vi) Putnam Investments Employees' Securities Company II LLC, (vii) 1997
Thomas H. Lee Nominee Trust, and (viii) Thomas H. Lee Investors Limited
Partnership.

                  "THL HOLDER DIRECTORS" shall have the meaning set forth in
Section 2(b)(ii).

                  "TRANSFER" means to sell, transfer, assign, pledge,
hypothecate or otherwise dispose of, either voluntarily or involuntarily and
with or without consideration.

                  "TRANSFEREE" means any Person to whom a Stockholder shall
Transfer Shares.

                  "VALUATION METHOD" shall mean that cash shall be valued at the
amount of such cash and short-term securities shall be valued at their face
value.

                                   ARTICLE II

                              BOARD REPRESENTATION

2.1      BOARD REPRESENTATION.

                  (a) The Corporation and the Stockholders shall take all
actions as may be required to ensure that the number of directors constituting
the Board is at all times nine (9), provided that the Board may be increased or
decreased with the written consent of the Requisite Class B Holders; provided,
however, that the consent of the Requisite Class B Holders shall not be required
to decrease the Board pursuant to Section 2.1(d) below. At any time when the
JPMP Holder and the THL Holder are each entitled to nominate three directors,
then the presence of five (5) directors (including at least two (2) of the JPMP
Holder Directors and two (2) of the THL Holder Directors) is required to
constitute a quorum of the Board.

                  (b)      Subject to Section 2.1(c) below:

                           (i) The JPMP Holder shall be entitled (A)(i) if it
         holds at least 25% of the Common Stock Equivalents, to nominate three
         (3) individuals to the Board to serve as directors, (ii) if it holds
         less than 25% but 10% or more of the Common Stock Equivalents, to
         nominate two (2) individuals to the Board to serve as directors, and
         (iii) if it holds less than 10% but more than 0% of the Common Stock
         Equivalents, to nominate one (1) individual to the Board to serve as a
         director (the directors elected pursuant to the preceding clauses
         (A)(i) to A(iii), the "JPMP Holder Directors") until their respective
         successors are elected and qualified, (B) to nominate each successor to
         the JPMP Holder Directors and (C) be entitled to direct the removal
         from the Board of any director nominated under the foregoing clauses
         (A) or (B); provided, however, that the JPMP Holder shall have the
         power to irrevocably assign its rights in the foregoing clauses (A)
         through (C) to J.P. Morgan Partners Global Investors, L.P. To the
         extent that the number of JPMP Holder Directors exceeds the number of
         nominees that the JPMP Holder is entitled to appoint under this clause
         (b)(i), then the JPMP Holder shall cause such excess JPMP Holder
         Director to resign from the Board. The JPMP Holder Directors shall
         initially be Stephen Murray, Stephen McKenna and Kevin O'Brien;

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                           (ii) The THL Holder shall be entitled (A)(i) if it
         holds at least 25% of the Common Stock Equivalents, to nominate three
         (3) individuals to the Board to serve as directors, (ii) if it holds
         less than 25% but 10% or more of the Common Stock Equivalents, to
         nominate two (2) individuals to the Board to serve as directors, and
         (iii) if it holds less than 10% but more than 0% of the Common Stock
         Equivalents, to nominate one (1) individual to the Board to serve as a
         director (the directors elected pursuant to the preceding clauses
         (A)(i) to A(iii), the "THL Holder Directors") until their respective
         successors are elected and qualified, (B) to nominate each successor to
         the THL Holder Directors and (C) be entitled to direct the removal from
         the Board of any director nominated under the foregoing clauses (A) or
         (B). To the extent that the number of THL Holder Directors exceeds the
         number of nominees that the THL Holder is entitled to appoint under
         this clause (b)(ii), then the THL Holder shall cause such excess THL
         Holder Director to resign from the Board. The THL Holder Directors
         shall initially be Anthony DiNovi, Todd Abbrecht and Soren Oberg;

                           (iii) one director (the "Management Director") who
         shall be the chief executive officer of the Corporation (and if such
         director no longer holds such office, then such director shall promptly
         resign from the Board); the Management Director shall initially be
         Harry Hornish; and

                           (iv) the Board, including the affirmative vote of
         either (a) a majority of both the THL Directors and the JPMP Directors
         for as long as the THL Holder and JPMP Holder each own at least 10% of
         the Common Stock Equivalents, (b) a majority of the THL Directors if
         the THL Holder owns at least 10% of the Common Stock Equivalents and
         the JPMP Holder owns less than 10% of the Common Stock Equivalents, or
         (c) a majority of the JPMP Directors if the JPMP Holder owns at least
         10% of the Common Stock Equivalents and the THL Holder owns less than
         10% of the Common Stock Equivalents, shall: (A) nominate two
         individuals, who shall be knowledgeable in the Corporation's industry
         to the Board to serve as directors (the "Independent Directors") until
         their successors are elected and qualified, (B) to nominate each
         successor to the Independent Directors and (C) be entitled to direct
         the removal from the Board of any director nominated under the
         foregoing clauses (A) or (B). The Independent Directors shall not be
         employees of the Corporation or any of its Subsidiaries or Affiliates
         of any Investor; provided, however, that an Independent Director may be
         an Affiliate of (X) the THL Holder if approved by a majority of the
         JPMP Directors or (Y) the JPMP Holder if approved by a majority of the
         THL Directors. The Independent Directors shall initially be Paul M.
         Meister and C. Dean Metropolous.

                  (c) Each nomination or any proposal to remove from the Board
any director shall be made by delivering to the Board a notice signed by the
party or parties entitled to such nomination or proposal. As promptly as
practicable, but in any event within ten (10) days, after delivery of such
notice, the Corporation, the Board and the Stockholders shall take or cause to
be taken such actions as may be reasonably required to cause the election or
removal proposed in such notice. Such actions may include calling a meeting or
soliciting a written consent of the Board, or calling a meeting or soliciting a
written consent of the Stockholders.

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                  (d) In each instance where the number of directors to be
nominated by the JPMP Holder or THL Holder is decreased in accordance with
Section 2.1(b), the Corporation, the Board and the Stockholders shall take or
cause to be taken such corporate actions to decrease the total number of
directors constituting the Board by an identical number.

                  (e) The rights of the JPMP Holder and the THL Holder to
nominate directors pursuant to this Section 2.1 are not transferable to any
Third-Party Transferees of the Shares held by such parties.

2.2      VOTING AGREEMENT.

         Each Stockholder shall vote all Shares held by such Stockholder for the
election to the Board of all individuals nominated in accordance with Section
2.1 and for the removal from the Board of all directors proposed to be removed
in accordance with Section 2.1 and shall take all actions required on its behalf
to give effect to the agreements set forth in this Section 2. Each Stockholder
shall use all reasonable efforts to cause each director originally nominated by
such Stockholder to vote for the election to the Board of all individuals
nominated in accordance with Section 2.1.

2.3      COMMITTEES; SUBSIDIARIES.

                  (a) Each Stockholder shall use all reasonable efforts to cause
each director of the Corporation originally nominated by such Stockholder to
take such corporate actions as may be reasonably required to ensure that the
Board has at all times a compensation committee and an audit committee, each
comprised of three (3) directors, and that one (1) JPMP Holder Director (for so
long as the JPMP Holder holds 10% or more of the Common Stock Equivalents), and
one (1) THL Holder Director (for so long as the THL Holder holds 10% or more of
the Common Stock Equivalents) is a member of each such committee. A majority of
the Compensation Committee shall approve all changes in executive base
compensation, the award of executive bonuses and all option grants (including
the vesting schedules with respect to such option grants); provided, however,
that if the Management Director is a member of such committee he shall not be
entitled to vote on matters related to his own compensation. The Audit Committee
shall approve the engagement of the Corporation's auditors and approve the audit
prior to its issuance each year.

                  (b) The Corporation and each Stockholder shall take, and each
Stockholder shall use all reasonable efforts to cause each director of the
Corporation originally nominated by such Stockholder to take, such corporate
actions as may be reasonably required to ensure that the composition of the
board of directors of all direct and indirect Subsidiaries of the Corporation is
identical to the composition of the Board (with any variations therefrom to be
approved by the written consent of the Requisite Class B Holders).

2.4      MEETINGS; EXPENSES; COMPENSATION.

                  (a) The Corporation shall convene meetings of the Board at
least once every three months. Upon any failure by the Corporation to convene
any meeting required by this paragraph, any Investor Director shall be empowered
to convene such meeting.

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                  (b) The Corporation (or its designee) shall reimburse each
director who is not an employee of the Corporation for his or her reasonable
out-of-pocket expenses (including travel) incurred in connection with the
attendance of meetings of the Board or any committee thereof or the performance
of his or her duties.

2.5      PROTECTIVE PROVISIONS.

                  (a) The Corporation shall not take any of the following
actions without the prior approval of (A) for as long as each of the JPMP Holder
and THL Holder holds at least 10% of the Common Stock Equivalents, both the JPMP
Holder and THL Holder, (B) for as long as the JPMP Holder holds at least 10% of
the Common Stock Equivalents and the THL Holder holds less than 10% of the
Common Stock Equivalents, the JPMP Holder, or (C) for as long as the THL Holder
holds at least 10% of the Common Stock Equivalents and the JPMP Holder holds
less than 10% of the Common Stock Equivalents, the THL Holder:

                           (i) Terminate or materially change the duties of its
         President, Chief Executive Officer, Chief Operating Officer, Chief
         Information Officer, or Chief Financial Officer, amend or revise the
         terms of any employment agreements with any such officer or, if such
         officer is terminated pursuant to this Section 2.5(a), hire a
         replacement for such officer;

                           (ii)     Incur any Indebtedness outside of the
         ordinary course of business;

                           (iii) Enter into any agreement to acquire either
         substantially all of the assets or a controlling interest in the
         capital stock of any other entity;

                           (iv) Make any investment or make any capital
         expenditures, in each case in excess of $250,000 in the aggregate that
         are not included in the annual operating budget approved by the Board;

                           (v) Dispose, either in a single transaction or a
         series of related transactions, of any assets of the Corporation
         outside of the ordinary course of business and other than sales of
         fully depreciated assets or obsolete or surplus tangible personal
         property;

                           (vi) Enter into any contract or agreement with any of
         its Affiliates including, without limitation, for the sale or
         repurchase of any of the Corporation's Equity Securities other than (A)
         repurchase rights existing on or prior to the date of this Agreement,
         (B) any contract or agreement entered into with such Affiliate on terms
         not less favorable to the Corporation than would be obtained in a
         transaction with a Person which is not an Affiliate, or (C) the
         Management Agreement by and between National Waterworks, Inc., THL
         Managers V, LLC and J.P. Morgan Partners, LLC dated as of the date
         hereof;

                           (vii) Effect any changes in the strategic direction
         of lines of business of the Corporation not specified in the annual
         strategic plan delivered in accordance with Section 3.11(c); or

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                           (viii)   agree to take any of the foregoing actions.

         At any time that the Corporation has any Subsidiary, it shall not
permit such Subsidiary to take any of the foregoing actions set forth in this
Section 2.5 (with all references to the Corporation deemed to be references to
such Subsidiary) without the prior approval of the JPMP Holder and/or the THL
Holder set forth in Section 2.5(a) above.

                                   ARTICLE III

                        CERTAIN MATTERS AFFECTING SHARES

3.1      FUTURE STOCKHOLDERS.

         The Corporation shall require each Person that acquires Equity
Securities after the date hereof (a "Future Stockholder"), as a condition to the
effectiveness of such Transfer, to execute a counterpart to this Agreement,
agreeing to be treated as an Investor, if such Person acquires such Equity
Securities from an Investor, or an Other Stockholder, if such Person acquires
such Equity Securities from an Other Stockholder or acquires Equity Securities
directly from the Corporation, whereupon such Person shall be bound by, and
entitled to the benefits of, the provisions of this Agreement relating to
Investors or Other Stockholders, as the case may be.

3.2      LIMITATIONS ON TRANSFERS.

         No Transfer of any Shares by any Stockholder shall become effective
unless and until the transferee (unless already party to this Agreement)
executes and delivers to the Corporation a counterpart to this Agreement,
agreeing to be treated in the same manner as the transferring Stockholder (e.g.,
as either an Investor or an Other Stockholder). Upon such Transfer and such
execution and delivery, the Transferee shall be bound by, and entitled to the
benefits of, this Agreement with respect to the Transferred Shares in the same
manner as the transferring Stockholder. Notwithstanding the provisions of this
Article III, no Stockholder shall Transfer any Shares owned by such Stockholder
to a competitor of the Corporation, as determined by the Board, unless the
Requisite Class B Holders consent to such Transfer. Any attempted Transfer of
Shares by any Stockholder not in accordance with this Section 3.2 shall not be
effective and shall be void. Notwithstanding the foregoing, no shares of Class A
Common Stock may be transferred by Other Stockholders to a Third Party except in
accordance with Sections 3.4 and 3.6 below.

3.3      RIGHT OF FIRST REFUSAL.

                  (a) If any Other Class B Holder (the "Offeror") proposes to
Transfer any shares of Class B Common Stock to any Third Party, the Offeror
shall, before such Transfer:

                           (i) Deliver to the Corporation an offer (the "First
         Offer") to Transfer to the Corporation such shares of Class B Common
         Stock upon the terms set forth in this Section 3.3(a), including (A)
         the number and class of shares of Class B Common Stock to which the
         First Offer relates (the "First Offered Shares") and the name of the
         Offeror, (B) the name and address of the proposed offeree (the
         "Offeree"), (C) the proposed amount and type of consideration
         (including, if the consideration consists in whole or in part of

                                       11
<PAGE>
         non-cash consideration, such information available to the Offeror as
         may be reasonably necessary for the Corporation and the Investors to
         properly analyze the economic value and investment risk of such
         non-cash consideration) and the terms and conditions of payment
         proposed by the Offeror. The First Offer shall remain open and
         irrevocable for a period of 14 days from the date of its receipt by the
         Corporation. The Corporation shall have the right and option to notify
         the Offeror, in a writing (the "Corporate Acceptance") delivered within
         14 days of receipt of the First Offer, of its intent to purchase all or
         any portion of the First Offered Shares at the purchase price and on
         the terms stated in the First Offer.

                           (ii) If the Corporation elects to purchase none or
         less than all of the First Offered Shares or does not deliver a timely
         Corporate Acceptance, the Offeror shall deliver the First Offer,
         revised to take into account any First Offered Shares which the
         Corporation has elected to purchase pursuant to a Corporate Acceptance
         (as so revised, the "Second Offer" and, the number of shares of Class B
         Common Stock to which the Second Offer relates, the "Second Offered
         Shares") to the Investors. Any Investor may accept the Second Offer in
         whole or in part and purchase up to its Pro Rata Amount (based on the
         number of Shares held by all Investors) of all Second Offered Shares
         (with respect to each Investor, its "Full Allotment") by delivering to
         the Offeror a notice (the "Shareholder Acceptance") in writing within
         14 days of receipt of the Second Offer (the "Acceptance Period"). Each
         Investor purchasing its Full Allotment may also offer to purchase its
         Pro Rata Amount (based on the number of Shares held by all Investors
         purchasing their Full Allotments) of any Second Offered Shares not so
         purchased by any other Investor.

                           (iii) Within ten (10) days of the earlier to occur of
         (A) the First Offered Shares or Second Offered Shares being subject to
         a Corporate Acceptance and/or a Shareholder Acceptance and (B) the end
         of the Acceptance Period, the Offeror shall transfer to the Corporation
         or the Investors (as the case may be) against receipt of payment
         therefore, all First Offered Shares and Second Offered Shares as to
         which a Corporate Acceptance or Shareholder Acceptance has been timely
         given.

                           (iv) Thereafter, the Offeror may Transfer any or all
         of the First and Second Offered Shares not purchased by the Corporation
         or the Investors, on terms and conditions no more favorable to the
         Offeree than are described in the First Offer, within 90 days after
         expiration of the Acceptance Period (during which time the Offeror
         shall ensure that compliance with Section 3.4 has occurred). If such
         Transfer is not made within such 90-day period, the provisions of this
         Section 3.3 shall again become effective with respect to the proposed
         Transfer.

                  (b) If any Investor (an "Investor Offeror") proposes to
Transfer any shares of Class B Common Stock (the "Investor Offered Shares") to
any Third Party, such Investor Offeror shall, before such Transfer:

                           (i) Deliver to the other Investors who are not in the
         Investor Offeror's Group (the "Other Investors") an offer (the
         "Investor Offer") to Transfer to the Investor Offerees the Investor
         Offered Shares upon the terms set forth in this Section 3.3(b),

                                       12
<PAGE>
         including (A) the number and class of Investor Offered Shares to which
         such offer relates and the name of the Investor Offeror, (B) the name
         and address of the proposed offeree (the "Investor Offeree"), (C) the
         proposed amount and type of consideration (including, if the
         consideration consists in whole or in part of non-cash consideration,
         such information available to the Investor Offeror as may be reasonably
         necessary for the Other Investors to properly analyze the economic
         value and investment risk of such non-cash consideration) and the terms
         and conditions of payment proposed by the Investor Offeror. The
         Investor Offer shall remain open and irrevocable for a period of 14
         days from the date of its receipt by the Other Investors. Each Other
         Investor shall have the right and option to notify the Investor
         Offeror, in a writing (the "Investor Acceptance") delivered within 14
         days of receipt of the Investor Offer (the "Investor Acceptance
         Period"), of its intent to purchase up to its Pro Rata Amount (based on
         the number of Shares held by all Investors) of all Investor Offered
         Shares (with respect to each Investor, its "Full Investor Allotment")
         at the purchase price and on the terms stated in the Investor Offer.
         Each Other Investor purchasing its Full Investor Allotment may also
         offer to purchase its Pro Rata Amount (based on the number of Shares
         held by all Other Investors purchasing their Full Investor Allotments)
         of any Investor Offered Shares not so purchased by any Other Investor.

                           (ii) Within ten (10) days of the earlier to occur of
         (A) the Investor Offered Shares being subject to an Investor Acceptance
         and (B) the end of the Investor Acceptance Period, the Investor Offeror
         shall transfer to the Investors (as the case may be) against receipt of
         payment therefore, all Investor Offered Shares as to which an Investor
         Acceptance has been timely given.

                           (iii) Thereafter, the Investor Offeror may Transfer
         any or all of the Investor Offered Shares not purchased by the Other
         Investors, on terms and conditions no more favorable to the Investor
         Offeree than are described in the Investor Offer, within 90 days after
         expiration of the Investor Acceptance Period (during which time the
         Investor Offeror shall ensure that compliance with Section 3.4 has
         occurred). If such Transfer is not made within such 90-day period, the
         provisions of this Section 3.3 shall again become effective with
         respect to the proposed Transfer.

                           (iv) Notwithstanding the foregoing, Transfers of
         shares of Class B Common Stock between the JPMP Holder and the THL
         Holder may be made without compliance with this Section 3.3(b).

                  (c) For purposes of this Section 3.3, each Investor may
aggregate his, her or its Pro Rata Amount among other Stockholders in his, her
or its Group to the extent that such other Stockholders in his, her or its Group
do not elect to purchase their respective Pro Rata Amounts.

3.4      CO-SALE RIGHTS.

                  (a) If a Class B Holder (the "Co-Sale Offeree") receives an
offer to Transfer any shares of Class B Common Stock to a Third Party (the
"Co-Sale Offeror"), the Co-Sale Offeree shall, at least 30 days before such
Transfer:

                                       13
<PAGE>
                           (i) Deliver a notice (the "Co-Sale Notice") to the
         Co-Sale Rightholders that sets forth substantially the same information
         as the First Offer in Section 3.3(a)(i) hereof; provided, however, that
         such Co-Sale Notice shall indicate that the Co-Sale Offeror has been
         informed of the co-sale rights provided for in this Section 3.4 and has
         agreed to purchase Shares in accordance with the terms hereof.

                           (ii) The Co-Sale Offeree shall not Transfer any
         Shares to the Co-Sale Offeror unless the Co-Sale Rightholders are
         permitted to Transfer their respective Pro Rata Amount (based upon the
         aggregate number of vested Shares of the Corporation outstanding at
         such time and held by all other Co-Sale Rightholders) of the aggregate
         number of Shares to which the Co-Sale Offer relates at the Equivalent
         Price and on the same terms as the offer to the Co-Sale Offeree.

                  (b) As used herein, the term "Co-Sale Rightholder" means (i)
with respect to an offer by a Third Party to purchase Class B Common Stock in
connection with a Sale of the Corporation, the other Class B Holders and the
Class A Holders; provided, however, that the Class A Holders shall only have the
right to receive a Co-Sale Notice to sell shares of Class A Common Stock
pursuant to this Section 3.4 which have vested (or will vest in connection with
such Sale of the Corporation) in accordance with the restricted stock agreement
governing the purchase of such stock, and (ii) with respect to an offer by a
Third Party to purchase Class B Common Stock other than in connection with a
Sale of the Corporation, the other Class B Holders.

                  (c) The Co-Sale Offeree shall, in addition to complying with
the provisions of this Section 3.4, comply with the other provisions of this
Article III (it being understood that the notice contemplated by Section
3.3(a)(i) and the Co-Sale Notice contemplated by this Section 3.4 may be
included in a single notice).

                  (d) Within 30 days after delivery of the Co-Sale Notice, each
Co-Sale Rightholder may elect to participate in the proposed Transfer by
delivering to such Co-Sale Offeree a notice (the "Tag-Along Notice") specifying
the number of Shares (up to his, her or its Pro Rata Amount based upon the
aggregate number of Equity Securities of the Corporation held by all Co-Sale
Rightholders outstanding at such time, including in the case of Class A Common
Stock, only vested shares) with respect to which such Co-Sale Rightholder shall
exercise his, her or its rights under this Section 3.4. For purposes of this
Section 3.4, each Co-Sale Rightholder may aggregate his, her or its Pro Rata
Amount among other Co-Sale Rightholders in his, her or its Group to the extent
that such other Co-Sale Rightholders in its Group do not elect to sell their
respective Pro Rata Amounts.

                  (e) Any Shares requested to be included in any Co-Sale Notice
shall be Transferred at the same time on the same terms and conditions and at
the Equivalent Price as are set forth in the Co-Sale Notice.

3.5      FIRST OFFER RIGHTS.

                  (a) If the Corporation proposes to offer New Securities to any
Person, the Corporation shall, before such offer, deliver to the Class B Holders
an offer (the "Offer") to issue

                                       14
<PAGE>
to the Class B Holders, such New Securities upon the terms set forth in this
Section 3.5. The Offer shall state that the Corporation proposes to issue New
Securities and specify their number and terms (including purchase price). The
Offer shall remain open and irrevocable for a period of 7 days (the "First Offer
Period") from the date of its delivery.

                  (b) Each Class B Holder may accept the Offer by delivering to
the Corporation a notice (the "Purchase Notice") within the First Offer Period.
The Purchase Notice shall state the number (the "First Offer Number") of New
Securities such Class B Holder desires to purchase. If the sum of all First
Offer Numbers exceeds the number of New Securities, the New Securities shall be
allocated among the Class B Holders that delivered a Purchase Notice in
accordance with their respective Pro Rata Amount (based on the number of shares
of Class B Common Stock held by all such Class B Holders).

                  (c) The issuance of New Securities (against receipt of payment
therefore) to the Class B Holders who delivered a Purchase Notice shall be made
on a business day, as designated by the Corporation, not less than 10 and not
more than 30 days after expiration of the First Offer Period on those terms and
conditions of the Offer not inconsistent with this Section 3.5.

                  (d) If the number of New Securities included in the Offer
exceeds the sum of all First Offer Numbers, the Corporation may issue (against
receipt of payment therefore) such excess or any portion thereof on the terms
and conditions of the Offer to any Person within 90 days after expiration of the
First Offer Period. If such issuance is not made within such 90-day period, the
restrictions provided for in this Section 3.5 shall again become effective.

                  (e) For purposes of this Section 3.5, each Class B Holder may
aggregate his, her or its Pro Rata Amount among other Class B Holders in his,
her or its Group to the extent that other Class B Holders in his, her or its
Group do not elect to purchase their respective Pro Rata Amounts.

3.6      DRAG-ALONG RIGHTS.

                  (a) If at any time the Requisite Class B Holders approve a
Sale of the Corporation (an "Approved Sale"), such holders shall give written
notice thereof to all of the Stockholders. All Stockholders shall consent to and
raise no objections against the Approved Sale, and if the Approved Sale is
structured as (A) a merger, share exchange or consolidation of the Corporation,
or a sale of all or substantially all of the assets of the Corporation, each
Stockholder shall waive any dissenters rights, appraisal rights or similar
rights in connection with such merger, consolidation or asset sale, or (B) a
sale of all the capital stock of the Corporation, the Stockholders shall agree
to sell all their Equity Securities of the Corporation which are the subject of
the Approved Sale, on the terms and conditions of such Approved Sale. The
Stockholders shall take all necessary and desirable actions in connection with
the consummation of the Approved Sale, including obtaining Board consent to the
Approved Sale and the execution of such agreements and such instruments and
other actions reasonably necessary to (1) provide customary representations,
warranties, indemnities, and escrow arrangements relating to such Approved Sale
and (2) effectuate the allocation and distribution of the aggregate
consideration upon the Approved Sale as set forth in Section 3.6(c) below. The
Stockholders shall be

                                       15
<PAGE>
permitted to sell their shares of capital stock pursuant to an Approved Sale
without complying with any other provisions of Article III of this Agreement.

                  (b) The Requisite Class B Holders that have initiated an
Approved Sale pursuant to Section 3.6(a), shall represent and warrant to the
other Stockholders that no direct or indirect collateral benefit or supplemental
consideration (whether or not in the nature of a tangible or intangible asset,
money, property, security or other tangible benefits or opportunities) has been
or is to be paid by such prospective purchaser or any other person to them, in
connection with the Approved Sale and that such Approved Sale is not made as
part of or in connection with any other transaction pursuant to which the
Requisite Class B Holders that have initiated the Approved Sale will receive any
additional benefit or consideration. The foregoing provision shall not be deemed
to prohibit a Sale of the Corporation to any Person merely because such Person
has, is currently having or intends to have a business relationship with one or
more Investors.

                  (c)      The obligations of the Stockholder pursuant to this
Section 3.6 are subject to the satisfaction of the following conditions:

                           (i) upon the consummation of the Approved Sale, each
         Stockholder shall receive the same proportion of the aggregate
         consideration from such Approved Sale that such holder would have
         received if such aggregate consideration has been distributed by the
         Corporation in complete liquidation pursuant to the rights and
         preferences set forth in the Charter as in effect immediately prior to
         such Approved Sale (giving effect to applicable orders of priority and
         the provisions of the various agreements relating to stock or options
         of the Corporation);

                           (ii)     if any Stockholders of a class are given an
         option as to the form and amount of consideration to be received, all
         Stockholders will be given the same option;

                           (iii) all holders of options, warrants or similar
         rights to acquire capital stock of the Corporation ("Stock
         Equivalents") that are then-currently exercisable will be given an
         opportunity to exercise such rights prior to the consummation of the
         Approved Sale (but only to the extent such Stock Equivalents are then
         vested or would be vested on an accelerated basis pursuant to the terms
         of their issuance) and participate in such sale as Stockholders;

                           (iv) no Stockholder shall be obligated to make any
         out-of-pocket expenditure prior to the consummation of the Approved
         Sale (excluding modest expenditures for postage, copies, etc.) and no
         Stockholder shall be obligated to pay any portion (or shall be entitled
         to be reimbursed by the Corporation for that portion paid) that is more
         than its pro rata share (based upon the amount of consideration
         received) of reasonable expenses incurred in connection with a
         consummated Approved Sale; to the extent such costs are incurred for
         the benefit of all Stockholders, and are not otherwise paid by the
         Corporation or the acquiring party (costs incurred by or on behalf of a
         Stockholder for its sole benefit will not be considered costs of the
         transaction hereunder), provided that a Stockholder's liability for
         such expenses shall be capped at the total

                                       16
<PAGE>
         purchase price received by such Stockholder for its shares of capital
         stock, plus Stock Equivalents; and

                           (v) no Stockholder shall be required to provide any
         representations, warranties or indemnities in connection with the
         Approved Sale, other than those required to be made pursuant to Section
         3.6(b) to other Stockholders and those representations, warranties and
         indemnities concerning each Stockholder's valid ownership of shares of
         capital stock and Stock Equivalents, free of all liens and encumbrances
         (other than those arising under applicable securities laws), and each
         Stockholder's authority, power, and right to enter into and consummate
         such purchase or merger agreement without violating any other
         agreement.

                  (d) If the Corporation and any of the Stockholders or their
representatives, enter into any negotiation or transaction for which Rule 506
under the Securities Act (or any similar rule then in effect) may be available
with respect to such negotiation or transaction (including a merger,
consolidation or other reorganization), each Stockholder who is not an
accredited investor (as such term is defined in Rule 501 under the Securities
Act) will, at the request of the Corporation or the Requisite Class B Holders,
appoint a purchaser representative (as such term is defined in Rule 501 under
the Securities Act) reasonably acceptable to the Corporation or the Requisite
Class B Holders.

3.7      INITIAL PUBLIC OFFERING.

                  (a) In the event that the Requisite Class B Holders approve an
Initial Public Offering (by approval of such issuance pursuant to the protective
provisions in the Charter), the Stockholders will take all necessary or
desirable actions in connection with the consummation of the Initial Public
Offering. Prior to the consummation of the Initial Public Offering, the Board,
with the assistance of the managing underwriters of the Initial Public Offering,
shall (i) determine in their reasonable opinion the fair value of the
Corporation (on an enterprise basis) and in doing so shall take into account
such factors as they consider fair and reasonable in the circumstances, and (ii)
following such determination of the fair value of the Corporation, calculate the
amount that would be paid to each class of capital stock if an amount equal to
the aforementioned fair value of the Corporation was distributed on the
anticipated closing date of the Initial Public Offering by the Corporation in
complete liquidation pursuant to the rights and preferences set forth in the
Charter as in effect at the time (giving effect to applicable orders of priority
and the provisions of the various agreements relating to stock or options of the
Corporation).

                  (b) After the determinations in (i) and (ii) of Section 3.7(a)
have been made and written notice thereof has been delivered to the
Stockholders, the Corporation and the Investors shall negotiate, in good faith,
the consideration to be provided to Class B Holders to redeem, recapitalize or
exchange all the issued and outstanding shares of Class B Common Stock, as a
condition to, and prior to the consummation of, the Initial Public Offering,
with respect to the anticipated aggregate Unreturned Original Cost and Unpaid
Yield (as such terms are defined in the Charter) upon the outstanding shares of
Class B Common Stock on the anticipated closing date of the Initial Public
Offering. Such redemption, recapitalization or exchange shall be effective
immediately prior to the Initial Public Offering. If after such redemption,

                                       17
<PAGE>
recapitalization or exchange the Corporation shall elect either not to file or
to withdraw the registration statement related to such Initial Public Offering,
such redemption, recapitalization or exchange shall be deemed to be ineffective
and the Corporation shall return such redeemed, recapitalized or exchanged
shares to the Stockholders and the Stockholders shall return any consideration
received by them from the Corporation in such redemption, recapitalization or
exchange. Such consideration shall have a fair value equal to the aggregate
Unreturned Original Cost and Unpaid Yield. The form of repayment may be
comprised of a combination of cash, not to exceed the amount of cash the
Corporation is contractually permitted to pay at the time in question, and
short-term securities of the Corporation; such consideration to be (i)
reasonably acceptable to the Requisite Class B Holders, (ii) determined and
implemented in a tax-efficient manner by the Investors, and (iii) valued in
accordance with the Valuation Method or on such other basis as is approved by
the Requisite Class B Holders. In addition to such consideration, Class B
Holders shall also be entitled to receive one share of Class A Common Stock for
each share of Class B Common Stock owned, as such number shall be equitably
adjusted to reflect stock splits, dividends, reclassifications, combinations or
similar adjustments to the capital structure of the Corporation. Any short-term
securities issued by the Corporation in accordance with this Section 3.7(b)
shall be repaid by the Corporation within 15 days after the consummation of the
Initial Public Offering.

                  (c) Each Stockholder will, prior to the consummation of the
Initial Public Offering, vote for a redemption, recapitalization or exchange of
the Class B Common Stock to implement the foregoing provisions of this Section
3.7.

                  (d) In connection with the Initial Public Offering, each
Stockholder agrees that he, she or it, shall not sell publicly, make any short
sale of, or otherwise dispose publicly of, any Shares (other than those shares
of Common Stock included in such registration) without the prior written consent
of the Corporation, for a period (the "Lockup Period") designated by the
Corporation in writing to the Stockholders, which period shall begin not more
than 2 days prior to the Registration Date (as defined in the Registration
Rights Agreement) and shall not last more than 180 days after the Registration
Date; provided, however, that all executive officers, directors and stockholders
of the Corporation owning at least 5% of the Common Stock Equivalents must agree
to a Lockup Period of at least the same duration and on substantially similar
terms and; provided, further, that if any stockholder is released from this
Section 3.7(d) with respect to all or any portion of such Stockholder's Shares,
then each other Stockholder shall be released on a pro-rata basis. The managing
underwriters of the Initial Public Offering are intended third party
beneficiaries of the agreements of the Stockholders contained in this Section
3.7(d).

3.8      REGULATORY MATTERS.

                  (a) Cooperation of Other Stockholders. Each Stockholder agrees
to cooperate with the Corporation in all reasonable respects in complying with
the terms and provisions of the letter agreement between the Corporation and the
J.P. Morgan Partners (BHCA), L.P., a copy of which is attached hereto as Exhibit
A, regarding regulatory matters (the "Regulatory Sideletter"), including without
limitation, voting to approve amending the Charter, the Corporation's by-laws or
this Agreement in a manner reasonably acceptable to the Stockholders, the JPMP
Holder or any Affiliate of the JPMP Holder entitled to make such request
pursuant to the Regulatory

                                       18
<PAGE>
Sideletter in order to remedy a Regulatory Problem (as defined in the Regulatory
Sideletter). Anything contained in this Section 3.8 to the contrary
notwithstanding, no Stockholder shall be required under this Section 3.8 to take
any action that would adversely affect in any material respect such
Stockholder's rights under this Agreement or as a stockholder of the
Corporation.

                  (b) Covenant Not to Amend. The Corporation and each
Stockholder agree not to amend or waive the voting or other provisions of the
Charter, the Corporation's by-laws or this Agreement if such amendment or waiver
would cause the JPMP Holder or any of its Affiliates to have a Regulatory
Problem (as defined in the Regulatory Sideletter). The JPMP Holder agrees to
notify the Corporation as to whether or not it would have a Regulatory Problem
promptly after the JPMP Holder has notice of such amendment or waiver.

3.9      DESIGNATION OF PROXY.

         In order to effectuate the provisions of Article II and this Article
III, and in addition to and not in lieu of Sections 2.1 through 2.3 hereof, each
of the Other Stockholders hereby grants to the Management Director a proxy to
vote at any meeting of Stockholders or take any action by written consent in
lieu of such meeting with respect to, all of the Shares owned or held of record
by such Other Stockholders. Such proxy to vote is coupled with an interest and
is therefore irrevocable.

3.10     ACCESS TO RECORDS AND PROPERTIES.

         Until the consummation of an Initial Public Offering, the Corporation
shall permit any Stockholder (other than Other Stockholders) and its employees,
members, stockholders, partners, counsel and other authorized representatives
(collectively, "Authorized Representatives"), during normal business hours and
upon reasonable advance notice (which shall not be less than one-day's prior
notice) to (a) visit and inspect the assets and properties of the Corporation,
(b) examine the books of accounts and records of the Corporation and (c) make
copies of such records and (d) discuss all aspects of the Corporation with any
officers, employees or accountants of the Corporation; provided, however, that
such investigation shall not unreasonably interfere with the operations of the
Corporation. The Corporation will instruct its accountants to discuss such
aspects of the financial condition of the Corporation with any such Stockholder
and its Authorized Representatives as such Stockholder may reasonably request,
and to permit such Stockholder and its Authorized Representatives to inspect,
copy and make extracts from such financial statements, analyses, and other
documents and information (including electronically stored documents and
information) prepared by the accountants with respect to the Corporation as such
Stockholder may reasonably request.

3.11     INFORMATION RIGHTS.

         Until the consummation of the Initial Public Offering, the Corporation
shall provide each Stockholder who owns at least 10% of the Class B Common Stock
then outstanding with the following information:

                  (a) Within 90 days after the end of each fiscal year, an
audited balance sheet of the Corporation as of the end of such fiscal ear, and
an audited statement of income and statement of cashflows of the Corporation for
such year, in each case prepared in accordance

                                       19
<PAGE>
with generally accepted accounting principles and setting forth in comparative
form the figures for the previous fiscal year, all in reasonable detail, and
audited by the Corporation's independent public accountants.

                  (b) Within 45 days after the end of each of the first three
fiscal quarters of each fiscal year, unaudited balance sheets of the Corporation
as of the end of such fiscal quarter, unaudited statements of income, and
unaudited statements of cash flows for such fiscal quarter and for the current
fiscal year to date. Such financial statements shall be prepared in accordance
with generally accepted accounting principles consistently applied (other than
omission of accompanying notes) and compared with both the actual results from
the corresponding quarter of the previous fiscal year and the budget for the
current fiscal year, all in reasonable detail and signed by the principal
financial or accounting officer of the Corporation.

                  (c) Within 15 days after the end of each month of each fiscal
year, unaudited balance sheets of the Corporation as of the end of such month,
unaudited statements of income, and unaudited statements of cash flows for such
month and for the current fiscal year to date. Such financial statements shall
be prepared in accordance with generally accepted accounting principles
consistently applied (other than omission of accompanying notes) and compared
with both the actual results from the corresponding month of the previous fiscal
year and the budget (including any reforecasts) for the current fiscal year, all
in reasonable detail and signed by the principal financial or accounting officer
of the Corporation.

                  (d)      Promptly at the end of each month of each fiscal
year, the management report for such month.

                  (e) Thirty days prior to the beginning of each fiscal year, a
copy of an annual budget with line items compared to the previous year's budget
and an annual strategic plan for such fiscal year.

3.12     CONFIDENTIAL INFORMATION.

         Except as otherwise required by law, each Stockholder and Authorized
Representative shall hold in confidence all nonpublic information of the
Corporation provided or made available to such Stockholder and Authorized
Representative until such time as such information has become publicly available
other than as a consequence of any breach by such Stockholder or Authorized
Representative of its confidentiality obligations hereunder (provided that such
information may be disclosed to any other Stockholder, Authorized Representative
or transferee in a Permitted Transfer such Stockholder and shall not use such
information for any purpose other than exercise of its rights as a holder of
Shares).

                                       20
<PAGE>
                                   ARTICLE IV

                                  MISCELLANEOUS

4.1      TERMINATION. This Agreement shall automatically terminate and be of no
further force or effect as of the Termination Date.

4.2      LEGEND ON STOCK CERTIFICATES.

         Each certificate representing shares of capital stock that are subject
to this Agreement shall bear legends substantially in the following form:

         "THE SALE, TRANSFER, ASSIGNMENT, PLEDGE, OR ENCUMBRANCE OF THE
         SECURITIES REPRESENTED BY THIS CERTIFICATE AND THE RIGHTS OF THE HOLDER
         OF SUCH SECURITIES IN RESPECT OF THE ELECTION OF DIRECTORS ARE SUBJECT
         TO A STOCKHOLDERS' AGREEMENT DATED NOVEMBER 22, 2002, AMONG NATIONAL
         WATERWORKS HOLDINGS, INC. AND CERTAIN HOLDERS OF ITS OUTSTANDING
         CAPITAL STOCK. COPIES OF SUCH AGREEMENT MAY BE OBTAINED AT NO COST BY
         WRITTEN REQUEST MADE BY THE HOLDER OF RECORD OF THIS CERTIFICATE TO THE
         SECRETARY OF NATIONAL WATERWORKS HOLDINGS, INC."

         "THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE BEEN ACQUIRED FOR
         INVESTMENT AND HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF
         1933, AS AMENDED, OR ANY STATE SECURITIES OR BLUE SKY LAWS. THESE
         SECURITIES MAY NOT BE SOLD OR TRANSFERRED IN THE ABSENCE OF SUCH
         REGISTRATION OR AN EXEMPTION THEREFROM UNDER SAID ACT OR LAWS."

         The Corporation shall make a notation regarding the above restriction
in its stock books, and no Shares shall be transferred on the books of the
Corporation except in accordance with this Agreement and the above restriction.

4.3      GOVERNING LAW; CONSENT TO JURISDICTION AND VENUE; WAIVER OF JURY TRIAL.

         This Agreement shall be governed by and construed in accordance with
the laws of the State of Delaware, without giving effect to any law or rule that
would cause the laws of any jurisdiction other than the State of Delaware to be
applied.

         ANY ACTION OR PROCEEDING AGAINST THE PARTIES RELATING IN ANY WAY TO
THIS AGREEMENT MAY BE BROUGHT AND ENFORCED IN THE COURTS OF THE STATE OF NEW
YORK OR THE UNITED STATES DISTRICT COURT FOR THE SOUTHERN DISTRICT OF NEW YORK,
TO THE EXTENT

                                       21
<PAGE>
SUBJECT MATTER JURISDICTION EXISTS THEREFOR, AND THE PARTIES IRREVOCABLY SUBMIT
TO THE JURISDICTION OF BOTH SUCH COURTS IN RESPECT OF ANY SUCH ACTION OR
PROCEEDING. EACH OF THE PARTIES IRREVOCABLY WAIVE, TO THE FULLEST EXTENT
PERMITTED BY LAW, ANY OBJECTION THAT THEY MAY NOW OR HEREAFTER HAVE TO THE
LAYING OF VENUE OF ANY SUCH ACTION OR PROCEEDING IN THE COURTS OF THE STATE OF
NEW YORK LOCATED IN NEW YORK COUNTY OR THE SOUTHERN DISTRICT OF NEW YORK AND ANY
CLAIM THAT ANY SUCH ACTION OR PROCEEDING BROUGHT IN ANY SUCH COURT HAS BEEN
BROUGHT IN ANY INCONVENIENT FORUM. ANY JUDGMENT MAY BE ENTERED IN ANY COURT
HAVING JURISDICTION THEREOF.

         EACH OF THE PARTIES HERETO HEREBY IRREVOCABLY WAIVES ALL RIGHT TO TRIAL
BY JURY IN ANY ACTION, PROCEEDING OR COUNTERCLAIM ARISING OUT OF OR RELATING TO
THIS AGREEMENT.

4.4      SEVERABILITY.

         It is the desire and intent of the parties that the provisions of this
Agreement be enforced to the fullest extent permissible under the law and public
policies applied in each jurisdiction in which enforcement is sought.
Accordingly, in the event that any provision of this Agreement would be held in
any jurisdiction to be invalid, prohibited or unenforceable for any reason, such
provision, as to such jurisdiction, shall be ineffective, without invalidating
the remaining provisions of this Agreement or affecting the validity or
enforceability of such provision in any other jurisdiction. Notwithstanding the
foregoing, if such provision could be more narrowly drawn so as not be invalid,
prohibited or unenforceable in such jurisdiction, it shall, as to such
jurisdiction, be so narrowly drawn, without invalidating the remaining
provisions of this Agreement or affecting the validity or enforceability of such
provision in any other jurisdiction.

4.5      ASSIGNMENTS; SUCCESSORS AND ASSIGNS.

         Except in connection with any Transfer of Shares in accordance with
this Agreement, the rights of each party under this Agreement may not be
assigned. This Agreement shall bind and inure to the benefit of the parties and
their respective successors, permitted assigns, legal representatives and heirs.

4.6      AMENDMENTS; WAIVERS.

         This Agreement may only be modified or amended by an instrument in
writing signed by the Corporation and the Requisite Class B Holders; provided,
however, that any amendment which adversely affects the rights of the holders of
the Class A Common Stock differently from the holders of the Class B Common
Stock shall require the consent of the holders of at least a majority of the
Class A Common Stock then outstanding; and provided, further, that the
Corporation shall automatically amend Annex I hereto without the consent of the
Requisite Class B Holders or holders of a majority of the Class A Common Stock
then outstanding and distribute such amended Annex I to each of the Stockholders
upon any change in any Stockholder's information thereon, such as a change in
the Stockholder's notice information and a Transfer of

                                       22
<PAGE>
Shares by a Stockholder in accordance with this Agreement and the addition of
Future Stockholders in accordance with Section 3.1. Any waiver of any provision
of this Agreement requested by any party hereto must be granted in advance, in
writing by the party granting such waiver. The Requisite Class B Holders may
grant a waiver or effect any modification or amendment on behalf of all of the
holders of Class B Common Stock and the holders of a majority of the Class A
Common Stock then outstanding may grant a waiver on behalf of all other holders
of Class A Common Stock.

4.7      NOTICES.

         All notices, requests, consents and other communications hereunder to
any party shall be deemed to be sufficient if contained in a written instrument
delivered in person or sent by telecopy, nationally-recognized overnight courier
or first class registered or certified mail, return receipt requested, postage
prepaid, addressed to such party at the address set forth below or such other
address as may hereafter be designated in writing by such party to the other
parties:

                           (i)      if to the Corporation, to:

                             National Waterworks Holdings, Inc.
                             American Plaza
                             200 West Highway 6 - Suite 620
                             Waco, Texas 76712
                             Telephone:  254-772-5355
                             Telecopy:  254-772-5716
                             Attention: President

                             With a copy to the Investors to their respective
                             addresses set forth on Annex I hereto:

                           (ii)     if to the Stockholders, to their respective
         addresses set forth on Annex I hereto.

         All such notices, requests, consents and other communications shall be
deemed to have been delivered (a) in the case of personal delivery or delivery
by telecopy, on the date of such delivery, (b) in the case of dispatch by
nationally-recognized overnight courier, on the next business day following such
dispatch and (c) in the case of mailing, on the third business day after the
posting thereof.

4.8      HEADINGS.

         The headings of the sections of this Agreement have been inserted for
convenience of reference only and shall not be deemed to be a part of this
Agreement.

4.9      NOUNS AND PRONOUNS.

         Whenever the context may require, any pronouns used herein shall
include the corresponding masculine, feminine or neuter forms, and the singular
form of names and pronouns shall include the plural and vice versa.

                                       23
<PAGE>
4.10     APPROVALS.

         When any reference is made herein to an action to be taken or consent
or approval to be granted by either the JPMP Holder or the THL Holder, the
holder or holders of a majority of the Equity Securities then held by the JPMP
Holder or the THL Holder, respectively, shall be sufficient to cause such action
to be taken or such consent or approval to be granted.

4.11     ENTIRE AGREEMENT.

         This Agreement contains the entire agreement among the parties with
respect to the subject matter hereof and supersedes all prior agreements and
understandings with respect to such subject matter. The parties hereto represent
and warrant that there are no other agreements or understandings regarding any
of the subject matter hereof other than as set forth herein and covenant not to
enter into any such agreements or understandings after the date hereof except
pursuant to an amendment, modification or waiver of the provisions of this
Agreement.

4.12     COUNTERPARTS.

         This Agreement may be executed in any number of original or facsimile
counterparts, and each such counterpart hereof shall be deemed to be an original
instrument, but all such counterparts together shall constitute but one
agreement.

                                       24
<PAGE>
                  IN WITNESS WHEREOF, the parties hereto have executed this
Stockholders' Agreement on the date first written above.

                                   NATIONAL WATERWORKS HOLDINGS, INC.

                                   By:   /s/ Harry K. Hornish
                                         --------------------
                                         Name:  Harry K. Hornish
                                         Title: President and C.E.O.

                                   INVESTORS:

                                   J.P. MORGAN PARTNERS (BHCA), L.P.

                                   By:   JPMP MASTER FUND MANAGER, L.P.,
                                         its general partner

                                   By:   JPMP CAPITAL CORP.,
                                         its general partner

                                   By:   /s/ Stephen Murray

                                         ------------------
                                         Name:  Stephen Murray
                                         Title: Partner

                                   J.P. MORGAN PARTNERS Global investors, l.p.

                                   By:   JPMP GLOBAL INVESTORS, L.P.,
                                         its general partner

                                   By:   JPMP CAPITAL CORP.,
                                         its general partner

                                   By:   /s/ Stephen Murray

                                         ------------------
                                         Name:  Stephen Murray
                                         Title: Partner

                                       25
<PAGE>
                                   J.P. MORGAN PARTNERS GLOBAL INVESTORS
                                   (CAYMAN), L.P.

                                   By:   JPMP GLOBAL INVESTORS, L.P.,
                                         a general partner

                                   By:   JPMP CAPITAL CORP.,
                                         its general partner

                                   By:   /s/ Stephen Murray

                                         ------------------
                                         Name:  Stephen Murray
                                         Title: Partner

                                   J.P. MORGAN PARTNERS Global investors A, l.p.

                                   By:   JPMP GLOBAL INVESTORS, L.P.,
                                         a general partner

                                   By:   JPMP CAPITAL CORP.,
                                         its general partner

                                   By:   /s/ Stephen Murray

                                         ------------------
                                         Name:  Stephen Murray
                                         Title: Partner

                                   J.P. MORGAN PARTNERS GLOBAL INVESTORS
                                   (CAYMAN) II, L.P.

                                   By:   JPMP GLOBAL INVESTORS, L.P.,
                                         a general partner

                                   By:   JPMP CAPITAL CORP.,
                                         its general partner

                                   By:   /s/ Stephen Murray

                                         ------------------
                                         Name:  Stephen Murray
                                         Title: Partner

                                       26
<PAGE>
                                   THOMAS H. LEE EQUITY FUND V, L.P.

                                   By:  THL EQUITY ADVISORS V, LLC,
                                          its general partner

                                   By:  THOMAS H. LEE PARTNERS, L.P.,
                                        its sole member

                                   By:  THOMAS H. LEE ADVISORS, LLC,
                                        its general partner

                                   By:  /s/ Anthony Dinovi

                                        ------------------
                                        Name:  Anthony DiNovi
                                        Title: Principal Managing Director

                                   THOMAS H. LEE PARALLEL FUND V, L.P.

                                   By:  THL EQUITY ADVISORS V, LLC,
                                        its general partner

                                   By:  THOMAS H. LEE PARTNERS, L.P.,
                                        its sole member

                                   By:  THOMAS H. LEE ADVISORS, LLC,
                                        its general partner

                                   By:  /s/ Anthony Dinovi

                                        ------------------
                                        Name:  Anthony DiNovi
                                        Title: Principal Managing Director

                                       27
<PAGE>
                                   THOMAS H. LEE EQUITY (CAYMAN) FUND V, L.P.

                                   By:  THL EQUITY ADVISORS V, LLC,
                                        its general partner

                                   By:  THOMAS H. LEE PARTNERS, L.P.,
                                        its sole member

                                   By:  THOMAS H. LEE ADVISORS, LLC,
                                        its general partner

                                   By:  /s/ Anthony Dinovi

                                        ------------------
                                        Name:  Anthony DiNovi
                                        Title: Principal Managing Director

                                   PUTNAM INVESTMENTS HOLDINGS, LLC

                                   By:  /s/ William H. Wolverton
                                        ------------------------
                                        Name:  William H. Wolverton
                                        Title: Managing Director

                                   PUTNAM INVESTMENTS EMPLOYEES' SECURITIES
                                  COMPANY I LLC

                                   By:  /s/ William H. Wolverton
                                        ------------------------
                                        Name:  William H. Wolverton
                                        Title: Managing Director

                                   PUTNAM INVESTMENTS EMPLOYEES' SECURITIES
                                 COMPANY II LLC

                                   By:  /s/ William H. Wolverton
                                        ------------------------
                                        Name:  William H. Wolverton
                                        Title: Managing Director

                                       28
<PAGE>
                                   1997 THOMAS H. LEE NOMINEE TRUST

                                   By:  State Street Bank and Trust Company, not
                                        personally, but solely as Trustee under
                                        the 1997 Thomas H. Lee Nominee Trust

                                   By:  /s/ Gerald R. Wheeler
                                        ---------------------
                                        Name:  Gerald R. Wheeler
                                        Title: Vice President

                                   THOMAS H. LEE INVESTORS LIMITED PARTNERSHIP

                                   By:  THL Investment Management Corp.,
                                        its general partner

                                   By:  /s/ Thomas H. Lee
                                        -----------------
                                        Name: Thomas H. Lee
                                        Title: Chief Executive Officer

                                   /s/  Harry K. Hornish
                                   --------------------
                                   Harry K. Hornish, Jr.

                                   /s/ Mechelle Slaughter

                                   ----------------------
                                   Mechelle Slaughter

                                   /s/ Terry Howell

                                   ----------------
                                  Terry Howell

                                 /s/ Rob Hickson

                                   ---------------
                                   Rob Hickson

                                  /s/ Ed Maczko

                                   -------------
                                    Ed Maczko

                                  /s/ Ron Hood

                                   ------------
                                    Ron Hood

                  -Signature Page to Stockholders' Agreement-
<PAGE>
                                                     /s/ Jerry Webb

                                                     --------------
                                                     Jerry Webb

                                                     /s/ Irving Welchons

                                                     -------------------
                                                     Irving Welchons

                                                     /s/ Jack Schaller

                                                     -----------------
                                                     Jack Schaller

                                                     /s/ Joe Walker

                                                     --------------
                                                     Joe Walker

                                                     /s/ Phil Keipp

                                                     --------------
                                                     Phil Keipp

                                                     /s/ Jack Olson

                                                     --------------
                                                     Jack Olson

                                                     LATONA NW INVESTMENT, LLC

                                                     By:  /s/ Paul Meister

                                                          ----------------
                                                          Name: Paul Meister
                                                          Title: Manager

                   -Signature Page to Stockholders' Agreement-
<PAGE>
                                                                         ANNEX I

<TABLE>
<CAPTION>

                                                                                                    CLASS A

                               STOCKHOLDERS                                    CLASS B COMMON       COMMON
<S>                                                                            <C>                  <C>
J.P. Morgan Partners (BHCA), L.P.                                               1,622,232.59

J.P. Morgan Partners Global Investors, L.P.                                       257,062.33

J.P. Morgan Partners Global Investors (Cayman), L.P.                              130,472.86

J.P. Morgan Partners Global Investors (Cayman ) II, L.P.                           14,540.40

J.P. Morgan Partners Global Investors A, L.P.                                      35,042.82
</TABLE>

in each case:
c/o J.P. Morgan Partners
1221 Avenue of the Americas, 40th Floor

New York, New York  10020
Attention:  Official Notices Clerk
FBO Stephen P. Murray
Telephone: (212) 899-3400

with a copy to:

O'Melveny & Myers LLP
30 Rockefeller Plaza
New York, New York  10112
Telephone:  212-408-2469
Facsimile:  212-408-2420
Attn:  Gregory Gilbert, Esq.

<TABLE>

<S>                                                                               <C>
Thomas H. Lee Equity Fund V, L.P.                                                 1,586,701

Thomas H. Lee Parallel Fund V, L.P.                                                 411,684

Thomas H. Lee Cayman Fund V, L.P.                                                    21,863

Putnam Investments Holdings, LLC                                                     12,398

Putnam Investments Employees' Securities Company I LLC                               10,656

Putnam Investments Employees' Securities Company II LLC                               9,516

1997 Thomas H. Lee Nominee Trust                                                      2,503

Thomas H. Lee Investors Limited Partnership                                           4,030
</TABLE>
<PAGE>
                                  STOCKHOLDERS

                                 CLASS B COMMON

                                 CLASS A COMMON

in each case:
c/o Thomas H. Lee Partners, L.P.
75 State Street
Suite 2600
Boston, MA 02109
Telephone:  617-227-1050
Facsimile:  617-227-3514
Attn:  Anthony DiNovi

with a copy to:

Weil, Gotshal & Manges LLP
101 Federal Street

Boston, MA 02110
Telephone:  617-772-8377
Facsimile:  617-772-8333
Attn: James Westra, Esq.
<PAGE>
                                  STOCKHOLDERS

                                 CLASS B COMMON

                                 CLASS A COMMON

<TABLE>

<S>                                                                              <C>                 <C>
Harry K. Hornish                                                                 20,400.00           190,359.21
7333 Westover Road
Waco, Texas 76710

Mechelle Slaughter                                                               10,200.00            95,179.60
27131 Whispering Meadow WB7
Whitney, TX 76692

Terry Howell                                                                      2,700.00            47,589.80
121 Parkway Drive
Thomasville, GA 31792

Rob Hickson                                                                       4,200.00            23,794.90
4971 Bayou Hills Road
Parker, CO 80134

Ed Maczko                                                                         4,200.00            23,794.90
804 Cross Lane
Southlake, TX 76092

Ron Hood                                                                          3,000.00            23,794.90
706 Southridge Street
Mesquite, NV 84027

Jerry Webb                                                                        4,200.00            23,794.90
203 Stratford Way
Thomasville, GA 31792

Irving Welchons                                                                   4,200.00            23,794.90
10312 Betsy Ross Court
Charlotte, NC 28277

Jack Schaller                                                                     4,200.00            23,794.90
17102 Somerset Field Court
Chesterfield MO 63005

Joe Walker                                                                        1,266.00            11,897.45
8205 Woodcreek
Waco, TX 76712

Phil Keipp                                                                        1,266.00            11,897.45
906 Prince Drive
St. Charles, MO 63301
</TABLE>
<PAGE>
                                  STOCKHOLDERS

                                 CLASS B COMMON

                                 CLASS A COMMON

<TABLE>

<S>                                                                               <C>                 <C>
Jack Olson                                                                         1,266.00           11,897.45
102 Pony Circle
Thomasville, GA 31792

Latona NW Investment, LLC                                                         20,000.00
</TABLE>
<PAGE>
================================================================================

                     NATIONAL WATERWORKS HOLDINGS, INC.

                       STOCKHOLDERS' AGREEMENT

                          NOVEMBER 22, 2002

================================================================================
<PAGE>
                          TABLE OF CONTENTS

<TABLE>
<CAPTION>

                                                                                                               PAGE

<S>                                                                                                            <C>
ARTICLE I DEFINITIONS; RULES OF CONSTRUCTION..................................................................    1

ARTICLE II BOARD REPRESENTATION...............................................................................    7

   2.1    BOARD REPRESENTATION................................................................................    7
   2.2    VOTING AGREEMENT....................................................................................    9
   2.3    COMMITTEES; SUBSIDIARIES............................................................................    9
   2.4    MEETINGS; EXPENSES; COMPENSATION....................................................................    9
   2.5    PROTECTIVE PROVISIONS...............................................................................   10

ARTICLE III...................................................................................................   11

   CERTAIN MATTERS AFFECTING SHARES...........................................................................   11
   3.1    FUTURE STOCKHOLDERS.................................................................................   11
   3.2    LIMITATIONS ON TRANSFERS............................................................................   11
   3.3    RIGHT OF FIRST REFUSAL..............................................................................   11
   3.4    CO-SALE RIGHTS......................................................................................   13
   3.5    FIRST OFFER RIGHTS..................................................................................   14
   3.6    DRAG-ALONG RIGHTS...................................................................................   15
   3.7    INITIAL PUBLIC OFFERING.............................................................................   17
   3.8    REGULATORY MATTERS..................................................................................   18
   3.9    DESIGNATION OF PROXY................................................................................   19
   3.10   ACCESS TO RECORDS AND PROPERTIES....................................................................   19
   3.11   INFORMATION RIGHTS..................................................................................   19
   3.12   CONFIDENTIAL INFORMATION............................................................................   20

ARTICLE IV MISCELLANEOUS......................................................................................   21

   4.1    TERMINATION.  THIS AGREEMENT SHALL AUTOMATICALLY TERMINATE AND BE OF NO FURTHER FORCE OR EFFECT
   AS OF THE TERMINATION DATE.................................................................................   21
   4.2    LEGEND ON STOCK CERTIFICATES........................................................................   21
   4.3    GOVERNING LAW; CONSENT TO JURISDICTION AND VENUE; WAIVER OF JURY TRIAL..............................   21
   4.4    SEVERABILITY........................................................................................   22
   4.5    ASSIGNMENTS; SUCCESSORS AND ASSIGNS.................................................................   22
   4.6    AMENDMENTS; WAIVERS.................................................................................   22
   4.7    NOTICES.............................................................................................   23
   4.8    HEADINGS............................................................................................   23
   4.9    NOUNS AND PRONOUNS..................................................................................   23
   4.10   APPROVALS...........................................................................................   24
   4.11   ENTIRE AGREEMENT....................................................................................   24
   4.12   COUNTERPARTS........................................................................................   24
</TABLE>

                                  i<PAGE>
                                                                    EXHIBIT 10.8

                                                REGISTRATION RIGHTS AGREEMENT,
                                       dated as of November 22, 2002, (the
                                       "Agreement") among NATIONAL WATERWORKS
                                       HOLDINGS, INC., a Delaware corporation
                                       (the "Corporation") and the STOCKHOLDERS
                                       (as herein defined).

                  The Stockholders own or may acquire shares of the Common Stock
(as hereinafter defined) of the Corporation. The Corporation and the
Stockholders deem it to be in their respective best interests to set forth their
rights in connection with public offerings and sales of the Common Stock.

                  NOW, THEREFORE, in consideration of the premises and mutual
covenants and obligations hereinafter set forth, the Corporation and the
Stockholders hereby agree as follows:

         SECTION 1.  DEFINITIONS.

                  As used in this Agreement, the following terms shall have the
following meanings:

                  "AFFILIATE" means, with respect to any Person, any (a)
director, officer, limited or general partner, member or Stockholder holding 5%
or more of the outstanding capital stock or other equity interests of such
Person, (b) any spouse, parent, sibling or descendant of such Person (or a
spouse, parent, sibling or descendant of a Person specified in clause (a) above
relating to such Person) and (c) other Person that, directly or indirectly,
through one or more intermediaries, controls, or is controlled by, or is under
common control with, such Person. The term "control" includes, without
limitation, the possession, directly or indirectly, of the power to direct the
management and policies of a Person, whether through the ownership of voting
securities, by contract or otherwise.

                  "BOARD" means the Board of Directors of the Corporation.

                  "CLASS A COMMON STOCK" means the Class A Common Stock, $0.01
par value per share, of the Corporation.

                  "CLASS B COMMON STOCK" means the Class B Common Stock, $0.01
par value per share, of the Corporation.

                  "COMMISSION" means the Securities and Exchange Commission or
any other agency at the time administering the Securities Act.

                  "COMMON STOCK" means the Class B Common Stock and the Class A
Common Stock issued upon the redemption, exchange or recapitalization of the
Class B Common Stock in accordance with Section 3.7 of the Stockholders'
Agreement, collectively.
<PAGE>
                  "EXCHANGE ACT" means the Securities Exchange Act of 1934, as
amended, or any successor statute, and the rules and regulations of the
Commission promulgated thereunder, all as the same shall be in effect from time
to time.

                  "IPO" shall mean the Corporation's initial registration of its
or any Subsidiary's (or successor in interest of the foregoing) equity
securities listed on a nationally recognized exchange which is made pursuant to
an effective registration statement under the Securities Act.

                  "INVESTOR STOCKHOLDERS" means the JPMP Holder, the THL Holder
and each of their transferees and assignees.

                  "INVESTORS' COUNSEL" shall have the meaning set forth in
Section 5(b).

                  "JPMP HOLDER" shall mean, collectively, (i) J.P. Morgan
Partners (BHCA), L.P., (ii) J.P. Morgan Partners Global Investors, L.P., (iii)
J.P. Morgan Partners Global Investors (Cayman), L.P., (iv) J.P. Morgan Partners
Global Investors (Cayman II), L.P., and (v) J.P. Morgan Partners Global
Investors A, L.P. and each of their Affiliates.

                  "PERSON" shall be construed in the broadest sense and means
and includes a natural person, a partnership, a corporation, an association, a
joint stock company, a limited liability company, a trust, a joint venture, an
unincorporated organization and any other entity and any federal, state,
municipal, foreign or other government, governmental department, commission,
board, bureau, agency or instrumentality, or any private or public court or
tribunal.

                  "PRIMARY SHARES" means at any time authorized but unissued
shares of Common Stock.

                  "REGISTRABLE SHARES" means the shares of Common Stock held by
the Stockholders which constitute Restricted Shares.

                  "REGISTRATION DATE" means the date upon which the registration
statement pursuant to an IPO shall have been declared effective.

                  "REQUISITE HOLDERS" means the holders of at least seventy-five
percent (75%) of the shares of Common Stock then outstanding.

                  "REQUISITE REQUESTING HOLDERS" means, with respect to any
registration of Registrable Shares by the Corporation in accordance with Section
2 of this Agreement, Stockholders who in the aggregate hold at least
seventy-five percent (75%) of the Registrable Shares requested to be registered
pursuant to such registration.

                  "RESTRICTED SHARES" means shares of Common Stock held by any
Stockholder, and includes (i) shares of Common Stock which may be issued as a
dividend or distribution, (ii) any other securities which by their terms are
exercisable or exchangeable for or convertible into Common Stock or which may be
exchanged or recapitalized for shares of Common Stock, and (iii) any securities
received in respect of the foregoing, in each case in clauses (i) through (iii)
which are held by such Stockholder. As to any particular Restricted Shares, once
issued, such Restricted Shares shall cease to be Restricted Shares when (i) they
have been registered under

                                        2
<PAGE>
the Securities Act, the registration statement in connection therewith has been
declared effective and they have been disposed of pursuant to such effective
registration statement, (ii) they are eligible to be sold or distributed
pursuant to Rule 144 (including, without limitation, Rule 144(k)) in a single
transaction by any Stockholder without limitation, or (iii) they shall have
ceased to be outstanding.

                  "RULE 144" means Rule 144 promulgated under the Securities Act
or any successor rule thereto or any complementary rule thereto (such as Rule
144A).

                  "SECURITIES ACT" means the Securities Act of 1933, as amended,
or any successor statute, and the rules and regulations of the Commission
thereunder, all as the same shall be in effect from time to time.

                  "STOCKHOLDERS" means the stockholders listed on Annex I hereto
and their respective successors, assignees and transferees who execute a
counterpart to this Agreement in accordance with Section 13.

                  "STOCKHOLDERS AGREEMENT" means the Stockholders' Agreement
between the Corporation and the other parties thereto dated as of the date
hereof, as the same may be amended or supplemented from time to time.

                  "THL HOLDER" shall mean, collectively, (i) Thomas H. Lee
Equity Fund V, L.P., (ii) Thomas H.Lee Parallel Fund V, L.P., (iii) Thomas H.
Lee Cayman Fund V, L.P., (iv) Putnam Investments Holdings, LLC, (v) Putnam
Investments Employees' Securities Company I LLC, (vi) Putnam Investments
Employees' Securities Company II LLC, (vii) 1997 Thomas H. Lee Nominee Trust,
and (viii) Thomas H. Lee Investors Limited Partnership.

         SECTION 2. REQUIRED REGISTRATION.

            (a) At any time after the Registration Date, if either the JPMP
Holder or THL Holder shall request that the Corporation effect the registration
of Registrable Shares under the Securities Act with an anticipated aggregate
offering price to the public of not less than $25,000,000.00, the Corporation
shall promptly use its best efforts to effect the registration under the
Securities Act of such Registrable Shares. Upon such request, then the
Corporation shall promptly give written notice to the other Stockholders of its
requirement to so register such offering and, upon the written request,
delivered to the Corporation within ten (10) days after delivery of any such
notice by the Company, of the other Stockholders to include in such registration
Registrable Shares (which request shall specify the number of Registrable Shares
proposed to be included in such registration), the Corporation shall, whether or
not any other Stockholders request to include any Registrable Shares in such
registration, subject to Section 2(b) below, promptly use its best efforts to
effect such registration under the Securities Act of an offering of the
Registrable Shares which the Corporation has been so requested to register for
sale in accordance with the method of distribution specified in the initiating
request.

            (b) Notwithstanding anything contained in this Section 2 to the
contrary, the Corporation shall not be obligated to effect any registration
under the Securities Act except in accordance with the following provisions:

                                        3
<PAGE>
                  (i) The Corporation shall not be obligated to file and cause
         to become effective more than (i) three (3) registration statements
         initiated by the JPMP Holder and (ii) three (3) registration statements
         initiated by THL Holder, in each case pursuant to Section 2(a) above,
         on Form S-1 promulgated under the Securities Act (or any successor form
         thereto).

                  (ii) The Corporation may delay the filing or effectiveness of
         any registration statement for a period of up to 90 days after the date
         of a request for registration pursuant to Section 2(a) if at the time
         of such request: (X) the Corporation is engaged, or has fixed plans to
         engage within 15 days of the time of such request, in a firm commitment
         underwritten public offering of Primary Shares in which the holders of
         Registrable Shares have been or will be permitted to include all the
         Registrable Shares so requested to be registered pursuant to Section 3
         or (Y) the Board reasonably determines that such registration and
         offering would interfere with any material transaction involving the
         Corporation; provided, however, that the Corporation shall only be
         entitled to invoke its rights under this Section 2(b)(ii) one time
         during each fiscal year of the Corporation during the duration of this
         Agreement.

                  (iii) If the managing underwriter advises the Corporation that
         the inclusion of all Registrable Shares and/or Primary Shares proposed
         to be included in such registration would interfere with the successful
         marketing (including pricing) of the Registrable Shares proposed to be
         included in such registration, then the number of Registrable Shares
         and/or Primary Shares proposed to be included in such registration
         shall be included in the following order:

                           (A)     first, the Primary Shares; and

                           (B) second, the Registrable Shares held by the
            Stockholders (or, if necessary, such Registrable Shares pro rata
            among the holders thereof based upon the number of Registrable
            Shares requested to be registered by each Stockholder).

                  (iv) If the Requisite Requesting Holders so elect, the
         offering of such Registrable Shares pursuant to such registration shall
         be in the form of an underwritten offering, provided, however, that no
         Stockholder participating in such registration shall unreasonably
         withhold consent to such election by another Stockholder participating
         in such registration. The Requisite Requesting Holders shall select one
         or more nationally recognized firms of investment bankers reasonably
         acceptable to the Corporation to act as the lead managing underwriter
         or underwriters in connection with such offering.

                  (v) At any time before the registration statement covering
         such Registrable Shares becomes effective, such Requisite Requesting
         Holders may request the Corporation to withdraw or not to file the
         registration statement. In that event, unless such request of
         withdrawal was caused by, or made in response to, a material adverse
         effect or a similar event related to the business, properties,
         condition, or operations of the Corporation not known (without imputing
         the knowledge of any other Person to such holders) by the holders
         initiating such request at the time their request was made, or other

                                        4
<PAGE>
         material facts not known to such holders at the time their request was
         made, such holders shall be deemed to have used one of their
         registration rights under Section 2(a).

         SECTION 3.  PIGGYBACK REGISTRATION.

                  If the Corporation at any time proposes for any reason to
register Primary Shares under the Securities Act (other than on Form S-4 or Form
S-8 promulgated under the Securities Act (or any successor forms thereto)), it
shall give written notice to the Stockholders of its intention to so register
such Primary Shares at least 30 days before the initial filing of the
registration statement related thereto and, upon the request, delivered to the
Corporation within 20 days after delivery of any such notice by the Corporation,
of a Stockholder to include in such registration Registrable Shares (which
request shall specify the number of Registrable Shares proposed to be included
in such registration), the Corporation shall use its best efforts to cause all
such Registrable Shares to be included in such registration on the same terms
and conditions as the securities otherwise being sold in such registration;
provided, however, that if the managing underwriter advises the Corporation that
the inclusion of all Registrable Shares requested to be included in such
registration would interfere with the successful marketing (including pricing)
of the Primary Shares proposed to be registered by the Corporation, then the
number of Primary Shares and Registrable Shares proposed to be included in such
registration shall be included in the order set forth in Section 2(b)(iii).

         SECTION 4. REGISTRATIONS ON FORM S-3.

                  Anything contained in Section 2 to the contrary
notwithstanding, at such time as the Corporation shall have qualified for the
use of Form S-3 promulgated under the Securities Act or any successor form
thereto, the Investor Stockholders shall have the right to request an unlimited
number of registrations of Registrable Shares on Form S-3 (which may, at such
holders' request, be shelf registrations pursuant to Rule 415 promulgated under
the Securities Act) or its successor form, which request or requests shall (i)
specify the number of Registrable Shares intended to be sold or disposed of and
the holders thereof, (ii) state whether the intended method of disposition of
such Registrable Shares is an underwritten offering or a shelf registration and
(iii) relate to Registrable Shares having an aggregate offering price of at
least $10,000,000. A requested registration on Form S-3 (or its successor form)
in compliance with this Section 4 shall not count as a registration statement
initiated pursuant to Section 2(a) but shall otherwise be treated as a
registration initiated pursuant to Section 2(b) (including Section 2(b)(iii).

         SECTION 5. PREPARATION AND FILING.

                  If and whenever the Corporation is under an obligation
pursuant to the provisions of this Agreement to effect the registration of any
Registrable Shares, the Corporation shall, as expeditiously as practicable:

            (a) use its best efforts to cause a registration statement that
registers such Registrable Shares to become and remain effective until all of
such Registrable Shares have been disposed of and, in connection with a
registration pursuant to Section 2, use its best efforts to cause management to
participate in any marketing activities, such as roadshows, reasonably

                                        5
<PAGE>
requested by the managing underwriter in connection with the sale of Registrable
Shares requested to be registered;

            (b) furnish, at least five business days before filing a
registration statement that registers such Registrable Shares, a prospectus
relating thereto or any amendments or supplements relating to such a
registration statement or prospectus, to one counsel selected by the Requisite
Requesting Holders (provided that no holder participating in such registration
shall unreasonably withhold consent to the selection of counsel by the
Stockholder requesting such registration) (the "Investors' Counsel"), copies of
all such documents proposed to be filed (it being understood that such
five-business-day period need not apply to successive drafts of the same
document proposed to be filed so long as such successive drafts are supplied to
the Investors' Counsel in advance of the proposed filing by a period of time
that is customary and reasonable under the circumstances);

            (c) prepare and file with the Commission such amendments and
supplements to such registration statement and the prospectus used in connection
therewith as may be necessary to keep such registration statement effective
until all of such Registrable Shares have been disposed of and to comply with
the provisions of the Securities Act with respect to the sale or other
disposition of such Registrable Shares;

            (d) notify in writing the Investors' Counsel (i) of the receipt by
the Corporation of any notification with respect to any comments by the
Commission with respect to such registration statement or prospectus or any
amendment or supplement thereto or any request by the Commission for the
amending or supplementing thereof or for additional information with respect
thereto, (ii) of the receipt by the Corporation of any notification with respect
to the issuance by the Commission of any stop order suspending the effectiveness
of such registration statement or prospectus or any amendment or supplement
thereto or the initiation or threatening of any proceeding for that purpose and
(iii) of the receipt by the Corporation of any notification with respect to the
suspension of the qualification of such Registrable Shares for sale in any
jurisdiction or the initiation or threatening of any proceeding for such
purposes;

            (e) use its best efforts to register or qualify such Registrable
Shares under such other securities or blue sky laws of such jurisdictions as the
holders of Registrable Shares reasonably request and do any and all other acts
and things which may be reasonably necessary or advisable to enable the
Stockholders to consummate the disposition in such jurisdictions of the
Registrable Shares owned by the Stockholders; provided, however, that the
Corporation will not be required to qualify generally to do business, subject
itself to general taxation or consent to general service of process in any
jurisdiction where it would not otherwise be required to do so but for this
paragraph (e);

            (f) furnish to the holders of such Registrable Shares such number of
copies of a summary prospectus, if any, or other prospectus, including a
preliminary prospectus, in conformity with the requirements of the Securities
Act, and such other documents as such Stockholders may reasonably request in
order to facilitate the public sale or other disposition of such Registrable
Shares;

                                        6
<PAGE>
            (g) without limiting subsection (e) above, use its best efforts to
cause such Registrable Shares to be registered with or approved by such other
governmental agencies or authorities as may be necessary by virtue of the
business and operations of the Corporation to enable the Stockholders holding
such Registrable Shares to consummate the disposition of such Registrable
Shares;

            (h) notify the holders of such Registrable Shares on a timely basis
at any time when a prospectus relating to such Registrable Shares or any
document related thereto includes an untrue statement of a material fact or
omits to state a material fact required to be stated therein or necessary to
make the statements therein not misleading in light of the circumstances then
existing and, at the request of the Stockholders prepare and furnish to such
holders a reasonable number of copies of a supplement to or an amendment of such
prospectus as may be necessary so that, as thereafter delivered to the offerees
of such shares, such prospectus shall not include an untrue statement of a
material fact or omit to state a material fact required to be stated therein or
necessary to make the statements therein not misleading in light of the
circumstances then existing;

            (i) make available upon reasonable notice and during normal business
hours, for inspection by the Stockholders holding such Registrable Shares, any
underwriter participating in any disposition pursuant to such registration
statement and any attorney, accountant or other agent retained by the
Stockholders or underwriter (collectively, the "Inspectors"), all pertinent
financial and other records, pertinent documents and properties of the
Corporation (collectively, the "Records"), as shall be reasonably necessary to
enable them to exercise their due diligence responsibility, and cause the
Corporation's officers, directors and employees to supply all information
(together with the Records, the "Information") reasonably requested by any such
Inspector in connection with such registration statement. Any of the Information
which the Corporation determines in good faith to be confidential, and of which
determination the Inspectors are so notified, shall not be disclosed by the
Inspectors unless (i) the disclosure of such Information is necessary to avoid
or correct a material misstatement or omission in the registration statement,
(ii) the release of such Information is ordered pursuant to a subpoena or other
order from a court or governmental agency or authority of competent
jurisdiction, (iii) such Information has been made generally available to the
public through no breach of the nondisclosure obligations of the Inspectors or
their Affiliates or (iv) such disclosure is required to be made under applicable
law;

            (j) use its best efforts to obtain from its independent certified
public accountants "cold comfort" letters in customary form and at customary
times and covering matters of the type customarily covered by cold comfort
letters;

            (k)   use its best efforts to obtain from its counsel an opinion or
opinions in customary form;

            (l)   provide a transfer agent and registrar (which may be the same
entity and which may be the Corporation) for such Registrable Shares;

                                        7
<PAGE>
            (m) promptly issue to any underwriter to which the Stockholders
holding such Registrable Shares may sell shares in such offering certificates
evidencing such Registrable Shares;

            (n) list such Registrable Shares on any national securities exchange
on which any shares of the Common Stock are listed or, if the Common Stock is
not listed on a national securities exchange, use its best efforts to qualify
such Registrable Shares for inclusion on the automated quotation system of the
National Association of Securities Dealers, Inc. (the "NASD"), or such other
national securities exchange as the holders of a majority of such Registrable
Shares shall reasonably request;

            (o) otherwise use its best efforts to comply with all applicable
rules and regulations of the Commission and make available to its
securityholders, as soon as reasonably practicable, earnings statements covering
a period of 12 months beginning within three months after the effective date of
the subject registration statement; and

            (p) otherwise use its best efforts to take all other steps necessary
to effect the registration of such Registrable Shares contemplated hereby.

            (q) Each holder of the Registrable Shares, upon receipt of any
notice from the Corporation of any event of the kind described in Section 5(h)
hereof, shall forthwith discontinue disposition of the Registrable Shares
pursuant to the registration statement covering such Registrable Shares until
such holder's receipt of the copies of the supplemented or amended prospectus
contemplated by Section 5(h) hereof, and, if so directed by the Corporation,
such holder shall deliver to the Corporation all copies, other than permanent
file copies then in such holder's possession, of the prospectus covering such
Registrable Shares at the time of receipt of such notice.

         SECTION 6.  EXPENSES.

                  All expenses incurred by the Corporation and the Stockholders
in complying with their obligations pursuant to this Agreement and in connection
with the registration and disposition of Registrable Shares, including, without
limitation, all registration and filing fees (including all expenses incident to
filing with the NASD), fees and expenses of complying with securities and blue
sky laws, printing expenses, fees and expenses of the Corporation's counsel and
accountants and fees and expenses of the Investors' Counsel shall be paid by the
Corporation; provided, however, that all underwriting discounts, selling
commissions applicable to the Registrable Shares shall be borne by the holders
selling such Registrable Shares, in proportion to the number of Registrable
Shares sold by each such holder.

         SECTION 7.  INDEMNIFICATION.

            (a) In connection with any registration of any Registrable Shares
under the Securities Act pursuant to this Agreement, the Corporation shall
indemnify and hold harmless the holders of Registrable Shares, each of such
holder's officers, directors, employees, members, partners, and advisors and
their respective Affiliates, each underwriter, broker or any other person acting
on behalf of the holders of Registrable Shares and each other Person, if any,
who controls any of the foregoing Persons within the meaning of the Securities
Act against any

                                        8
<PAGE>
losses, claims, damages, liabilities, or actions joint or several (or actions in
respect thereof), to which any of the foregoing persons may become subject under
the Securities Act or otherwise, insofar as such losses, claims, damages or
liabilities (or actions in respect thereof) arise out of or are based upon an
untrue statement or allegedly untrue statement of a material fact contained in
the registration statement under which such Registrable Shares were registered
under the Securities Act, any preliminary prospectus or final prospectus
contained therein or otherwise filed with the Commission, any amendment or
supplement thereto or any document incident to registration or qualification of
any Registrable Shares, or arise out of or are based upon the omission or
alleged omission to state therein a material fact required to be stated therein
or necessary to make the statements therein not misleading or, with respect to
any prospectus, necessary to make the statements therein in light of the
circumstances under which they were made not misleading, or any violation by the
Corporation of the Securities Act or state securities or blue sky laws
applicable to the Corporation or relating to action or inaction required of the
Corporation in connection with such registration or qualification under such
state securities or blue sky laws; and shall reimburse such Persons for any
legal or other expenses reasonably incurred by any of them in connection with
investigating or defending any such loss, claim, damage, liability or action;
provided, however, that the Corporation shall not be liable in any such case to
the extent that any such loss, claim, damage, liability or action (including any
legal or other expenses incurred) arises out of or is based upon an untrue
statement or allegedly untrue statement or omission or alleged omission made in
said registration statement, preliminary prospectus, final prospectus,
amendment, supplement or document incident to registration or qualification of
any Registrable Shares in reliance upon and in conformity with written
information furnished to the Corporation by the holders of Registrable Shares
specifically for use in the preparation thereof; provided further, however, that
the foregoing indemnity agreement is subject to the condition that, insofar as
it relates to any untrue statement, allegedly untrue statement, omission or
alleged omission made in any preliminary prospectus but eliminated or remedied
in the final prospectus, such indemnity agreement shall not inure to the benefit
of any of such Persons if a copy of such final prospectus had been made
available to such Persons and such final prospectus was not delivered to the
purchaser of the Registrable Shares with or prior to the written confirmation of
the sale of such Registrable Shares.

            (b) In connection with any registration of Registrable Shares under
the Securities Act pursuant to this Agreement, each holder of Registrable Shares
shall severally (based on the percentage of all Registrable and Primary Shares
included in such registration that were owned by such holder) and not jointly
and severally indemnify and hold harmless (in the same manner and to the same
extent as set forth in Section 7(a)) the Corporation, each director of the
Corporation, each officer of the Corporation who shall sign such registration
statement, each underwriter, broker or other person acting on behalf of the
holders of Registrable Shares and each person who controls any of the foregoing
persons within the meaning of the Securities Act with respect to any statement
or omission from such registration statement, any preliminary prospectus or
final prospectus contained therein or otherwise filed with the Commission, any
amendment or supplement thereto or any document incident to registration or
qualification of any Registrable Shares, if such statement or omission was made
in reliance upon and in conformity with written information furnished to the
Corporation or such underwriter by such holder of Registrable Shares
specifically for use in connection with the preparation of such registration
statement, preliminary prospectus, final prospectus, amendment, supplement or
document; provided, however, that the maximum amount of liability in respect of
such

                                        9
<PAGE>
indemnification shall be limited, in the case of each holder of Registrable
Shares, to an amount equal to the net proceeds actually received by such holder
from the sale of Registrable Shares effected pursuant to such registration.

            (c) Promptly after receipt by an indemnified party of notice of the
commencement of any action involving a claim referred to in this Section 7, such
indemnified party will, if a claim in respect thereof is made against an
indemnifying party, give written notice to the latter of the commencement of
such action. The failure of any indemnified party to notify an indemnifying
party of any such action shall not (unless such failure shall have a material
adverse effect on the indemnifying party) relieve the indemnifying party from
any liability in respect of such action that it may have to such indemnified
party hereunder. In case any such action is brought against an indemnified
party, the indemnifying party will be entitled to participate in and to assume
the defense thereof, jointly with any other indemnifying party similarly
notified to the extent that it may wish, with counsel reasonably satisfactory to
such indemnified party, and after notice from the indemnifying party to such
indemnified party of its election so to assume the defense thereof, the
indemnifying party shall not be responsible for any legal or other expenses
subsequently incurred by the indemnified party in connection with the defense
thereof; provided, however, that if any indemnified party shall have reasonably
concluded that there may be one or more legal or equitable defenses available to
such indemnified party which are additional to or conflict with those available
to the indemnifying party, or that such claim or litigation involves or could
have an effect upon matters beyond the scope of the indemnity agreement provided
hereunder, the indemnifying party shall not have the right to assume the defense
of such action on behalf of such indemnified party (but shall have the right to
participate therein with counsel of its choice) and such indemnifying party
shall reimburse such indemnified party and any Person controlling such
indemnified party for that portion of the fees and expenses of any counsel
retained by the indemnified party which is reasonably related to the matters
covered by the indemnity agreement provided hereunder. If the indemnifying party
is not entitled to, or elects not to, assume the defense of a claim, it will not
be obligated to pay the fees and expenses of more than one counsel with respect
to such claim.

            (d) If the indemnification provided for hereunder is held by a court
of competent jurisdiction to be unavailable to an indemnified party with respect
to any loss, claim, damage, liability or action referred to herein, then the
indemnifying party, in lieu of indemnifying such indemnified party hereunder,
shall contribute to the amounts paid or payable by such indemnified party as a
result of such loss, claim, damage, liability or action in such proportion as is
appropriate to reflect the relative fault of the indemnifying party on the one
hand and of the indemnified party on the other in connection with the statements
or omissions which resulted in such loss, claim, damage, liability or action as
well as any other relevant equitable considerations. The relative fault of the
indemnifying party and of the indemnified party shall be determined by reference
to, among other things, whether the untrue or alleged untrue statement of a
material fact or the omission or alleged omission to state a material fact
relates to information supplied by the indemnifying party or by the indemnified
party and the parties' relative intent, knowledge, access to information and
opportunity to correct or prevent such statement or omission. The parties agree
that it would not be just and equitable if contribution pursuant hereto were
determined by pro rata allocation or by any other method or allocation which
does not take account of the equitable considerations referred to herein. No
person guilty or liable of fraudulent misrepresentation shall be entitled to
contribution from any person.

                                       10
<PAGE>
         SECTION 8.  INFORMATION BY HOLDER.

                  The Stockholders shall furnish to the Corporation such written
information regarding the Stockholders and the distribution proposed by any
Stockholders as the Corporation may reasonably request in writing and as shall
be reasonably required in connection with any registration referred to in this
Agreement.

         SECTION 9.  EXCHANGE ACT COMPLIANCE.

                  From the Registration Date or such earlier date as a
registration statement filed by the Corporation pursuant to the Exchange Act
relating to any class of the Corporation's securities shall have become
effective, the Corporation shall comply with all of the reporting requirements
of the Exchange Act applicable to it and shall comply with all other public
information reporting requirements of the Commission which are conditions to the
availability of Rule 144. The Corporation shall cooperate with the Stockholders
in supplying such information as may be necessary for the Stockholders to
complete and file any information reporting forms presently or hereafter
required by the Commission as a condition to the availability of Rule 144.

         Section 10.  NO CONFLICT OF RIGHTS; FUTURE RIGHTS.

                  The Corporation shall not, after the date hereof, grant any
registration rights which conflict with or impair the rights granted to the
Stockholders hereby. If at any time following the date hereof, the Corporation
shall grant to any present or future Stockholder of the Corporation rights to in
any manner cause or participate in any registration statement of the Corporation
that, in the judgment of the Stockholders, are superior to or conflict with the
rights granted to the Stockholders hereby, such grant shall be null, void and
ultra vires.

          SECTION 11.  TERMINATION.

                  This Agreement shall terminate and be of no further force or
effect when there shall no longer be any Registrable Shares outstanding.

          SECTION 12.  BENEFITS OF AGREEMENT; THIRD PARTY BENEFICIARIES.

                  Except as provided herein, this Agreement shall bind and inure
to the benefit of the Corporation, the Stockholders and subject to Section 13,
the respective successors and assigns of the Corporation and the Stockholders.

          SECTION 13.  ASSIGNMENT.

                  Each Stockholder may assign its rights hereunder to any
purchaser or transferee of Registrable Shares; provided, however, that such
purchaser or transferee shall, as a condition to the effectiveness of such
assignment, be required to execute a counterpart to this Agreement, whereupon
such purchaser or transferee shall have the benefits of, and shall be subject to
the restrictions contained in this Agreement as if such purchaser or transferee
was originally included in the definition of Stockholder herein and had
originally been a party hereto. Notwithstanding the foregoing, neither the JPMP
Holder nor the THL Holder may assign its right to request that the Corporation
effect the registration of Registrable Shares pursuant to

                                       11
<PAGE>
Section 2(a). The Corporation may not assign any rights hereunder without the
consent of the Requisite Holders.

          SECTION 14.  ENTIRE AGREEMENT.

                  This Agreement, and the other writings referred to herein or
delivered pursuant hereto, contain the entire agreement among the parties hereto
with respect to the subject matter hereof and supersede all prior and
contemporaneous arrangements or understandings with respect thereto.

          SECTION 15.  NOTICES.

                  All notices, requests, consents and other communications
hereunder to any party shall be deemed to be sufficient if contained in a
written instrument delivered in person or sent by telecopy,
nationally-recognized overnight courier or first class registered or certified
mail, return receipt requested, postage prepaid, addressed to such party at the
address set forth below or such other address as may hereafter be designated in
writing by such party to the other parties:

                           (i)  if to the Corporation, to:

                                    National Waterworks Holdings, Inc.
                                    American Plaza
                                    200 West Highway 6 - Suite 620
                                    Waco, Texas 76712
                                    Telephone:  254-772-5355
                                    Telecopy:  254-772-5716
                                    Attention: President

                           With a copy to the JPMP Holder and the THL Holder to
                           their respective addresses set forth on Annex I
                           hereto:

                           (ii)  if to the Stockholders, to their respective
          addresses set forth on Annex I hereto.

                  All such notices, requests, consents and other communications
shall be deemed to have been delivered (a) in the case of personal delivery or
delivery by telecopy, on the date of such delivery, (b) in the case of dispatch
by nationally-recognized overnight courier, on the next business day following
such dispatch and (c) in the case of mailing, on the third business day after
the posting thereof.

          SECTION 16.  MODIFICATIONS; AMENDMENTS; WAIVERS.

                  The terms and provisions of this Agreement may not be modified
or amended except pursuant to a writing signed by the Corporation and Requisite
Holders. Any waiver of any provision of this Agreement requested by any party
hereto must be granted in advance, in writing by the party granting such waiver;
provided, however, that the Requisite Holders may grant a waiver on behalf of
all Stockholders.

                                       12
<PAGE>
          SECTION 17.  COUNTERPARTS; FACSIMILE SIGNATURES.

                  This Agreement may be executed in any number of original or
facsimile counterparts, and each such counterpart hereof shall be deemed to be
an original instrument, but all such counterparts together shall constitute but
one agreement.

          SECTION 18.  HEADINGS.

                  The headings of the various sections of this Agreement have
been inserted for convenience of reference only and shall not be deemed to be a
part of this Agreement.

          SECTION 19.  GOVERNING LAW; CONSENT TO JURISDICTION AND VENUE; WAIVER
                       OF JURY TRIAL.

                  This Agreement shall be governed by and construed in
accordance with the laws of the State of Delaware, without giving effect to any
law or rule that would cause the laws of any jurisdiction other than the State
of Delaware to be applied.

                  ANY ACTION OR PROCEEDING AGAINST THE PARTIES RELATING IN ANY
WAY TO THIS AGREEMENT MAY BE BROUGHT AND ENFORCED IN THE COURTS OF THE STATE OF
NEW YORK OR THE UNITED STATES DISTRICT COURT FOR THE SOUTHERN DISTRICT OF NEW
YORK, TO THE EXTENT SUBJECT MATTER JURISDICTION EXISTS THEREFOR, AND THE PARTIES
IRREVOCABLY SUBMIT TO THE JURISDICTION OF BOTH SUCH COURTS IN RESPECT OF ANY
SUCH ACTION OR PROCEEDING. EACH OF THE PARTIES IRREVOCABLY WAIVE, TO THE FULLEST
EXTENT PERMITTED BY LAW, ANY OBJECTION THAT THEY MAY NOW OR HEREAFTER HAVE TO
THE LAYING OF VENUE OF ANY SUCH ACTION OR PROCEEDING IN THE COURTS OF THE STATE
OF NEW YORK LOCATED IN NEW YORK COUNTY OR THE SOUTHERN DISTRICT OF NEW YORK AND
ANY CLAIM THAT ANY SUCH ACTION OR PROCEEDING BROUGHT IN ANY SUCH COURT HAS BEEN
BROUGHT IN ANY INCONVENIENT FORUM. ANY JUDGMENT MAY BE ENTERED IN ANY COURT
HAVING JURISDICTION THEREOF.

                  EACH OF THE PARTIES HERETO HEREBY IRREVOCABLY WAIVES ALL RIGHT
TO TRIAL BY JURY IN ANY ACTION, PROCEEDING OR COUNTERCLAIM ARISING OUT OF OR
RELATING TO THIS AGREEMENT.

          SECTION 20.  SEVERABILITY.

                  It is the desire and intent of the parties that the provisions
of this Agreement be enforced to the fullest extent permissible under the law
and public policies applied in each jurisdiction in which enforcement is sought.
Accordingly, in the event that any provision of this Agreement would be held in
any jurisdiction to be invalid, prohibited or unenforceable for any reason, such
provision, as to such jurisdiction, shall be ineffective, without invalidating
the remaining provisions of this Agreement or affecting the validity or
enforceability of such provision in any other jurisdiction. Notwithstanding the
foregoing, if such provision could be more narrowly drawn so as not be invalid,
prohibited or unenforceable in such jurisdiction, it

                                       13
<PAGE>
shall, as to such jurisdiction, be so narrowly drawn, without invalidating the
remaining provisions of this Agreement or affecting the validity or
enforceability of such provision in any other jurisdiction.

                                     * * * *

                                       14
<PAGE>
                  IN WITNESS WHEREOF, the parties hereto have executed this
Registration Rights Agreement on the date first written above.

                                              NATIONAL WATERWORKS HOLDINGS, INC.

                                              By: /s/ Harry K. Hornish
                                                  --------------------
                                                  Name:  Harry K. Hornish
                                                  Title: President and C.E.O.

                                              INVESTORS:

                                              J.P. MORGAN PARTNERS (BHCA), L.P.

                                              By: JPMP MASTER FUND MANAGER,
                                                  L.P.,
                                                  its general partner

                                              By: JPMP CAPITAL CORP.,
                                                  its general partner

                                              By: /s/ Stephen Murray

                                                  --------------------
                                                  Name: Stephen Murray
                                                  Title: Partner

                                              J.P. MORGAN PARTNERS GLOBAL
                                              INVESTORS, L.P.

                                              By: JPMP GLOBAL INVESTORS, L.P.,
                                                  its general partner

                                              By: JPMP CAPITAL CORP.,
                                                  its general partner

                                              By: /s/ Stephen Murray

                                                  ------------------
                                                  Name:  Stephen Murray
                                                  Title: Partner

                                       15
<PAGE>
                                              J.P. MORGAN PARTNERS GLOBAL
                                              INVESTORS (CAYMAN), L.P.

                                              By: JPMP GLOBAL INVESTORS, L.P.,
                                                  a general partner

                                              By: JPMP CAPITAL CORP.,
                                                  its general partner

                                              By: /s/ Stephen Murray

                                                  ------------------
                                                  Name:  Stephen Murray
                                                  Title: Partner

                                              J.P. MORGAN PARTNERS GLOBAL
                                              INVESTORS A, L.P.

                                              By: JPMP GLOBAL INVESTORS, L.P.,
                                                  a general partner

                                              By: JPMP CAPITAL CORP.,
                                                  its general partner

                                              By: /s/ Stephen Murray

                                                  ------------------
                                                  Name:  Stephen Murray
                                                  Title: Partner

                                              J.P. MORGAN PARTNERS GLOBAL
                                              INVESTORS (CAYMAN) II, L.P.

                                              By: JPMP GLOBAL INVESTORS, L.P.,
                                                  a general partner

                                              By: JPMP CAPITAL CORP.,
                                                  its general partner

                                              By: /s/ Stephen Murray

                                                  ------------------
                                                  Name:  Stephen Murray
                                                  Title: Partner

                                       16
<PAGE>
                                              THOMAS H. LEE EQUITY FUND V, L.P.

                                              By: THL EQUITY ADVISORS V, LLC,
                                                  its general partner

                                              By: THOMAS H. LEE PARTNERS, L.P.,
                                                  its sole member

                                              By: THOMAS H. LEE ADVISORS, LLC,
                                                  its general partner

                                              By: /s/ Anthony Dinovi

                                                  ------------------
                                                  Name:  Anthony DiNovi
                                                  Title: Principal Managing

                                                         Director

                                              THOMAS H. LEE PARALLEL FUND
                                              V, L.P.

                                              By: THL EQUITY ADVISORS V, LLC,
                                                  its general partner

                                              By: THOMAS H. LEE PARTNERS, L.P.,
                                                  its sole member

                                              By: THOMAS H. LEE ADVISORS, LLC,
                                                  its general partner

                                              By: /s/ Anthony Dinovi

                                                  ------------------
                                                  Name:  Anthony DiNovi
                                                  Title: Principal Managing
                                                  Director

                                       17
<PAGE>
                                              THOMAS H. LEE EQUITY (CAYMAN)
                                              FUND V, L.P.

                                              By: THL EQUITY ADVISORS V, LLC,
                                                  its general partner

                                              By: THOMAS H. LEE PARTNERS, L.P.,
                                                  its sole member

                                              By: THOMAS H. LEE ADVISORS, LLC,
                                                  its general partner

                                              By: /s/ Anthony Dinovi

                                                  ------------------
                                                  Name:  Anthony DiNovi
                                                  Title: Principal Managing

                                                         Director

                                              PUTNAM INVESTMENTS HOLDINGS, LLC

                                              By: /s/ William H. Wolverton
                                                  ------------------------
                                                  Name:  William H. Wolverton
                                                  Title: Managing Director

                                              PUTNAM INVESTMENTS EMPLOYEES'
                                              SECURITIES COMPANY I LLC

                                              By: /s/ William H. Wolverton
                                                  ------------------------
                                                  Name:  William H. Wolverton
                                                  Title: Managing Director

                                              PUTNAM INVESTMENTS EMPLOYEES'
                                              SECURITIES COMPANY II LLC

                                              By: /s/ William H. Wolverton
                                                  ------------------------
                                                  Name:  William H. Wolverton
                                                  Title: Managing Director

                                       18
<PAGE>
                                              1997 THOMAS H. LEE NOMINEE TRUST

                                              By: State Street Bank and Trust
                                                  Company, not personally, but
                                                  solely as Trustee under the
                                                  1997 Thomas H. Lee Nominee
                                                  Trust

                                              By: /s/ Gerald R. Wheeler
                                                  ---------------------
                                                  Name:  Gerald R. Wheeler
                                                  Title: Vice President

                                              THOMAS H. LEE INVESTORS LIMITED
                                              PARTNERSHIP

                                              By: THL Investment Management
                                                  Corp., its general partner

                                              By: /s/ Thomas H. Lee
                                                  -----------------
                                                  Name:  Thomas H. Lee
                                                  Title: Chief Executive Officer

                                              /s/ Harry K. Hornish
                                              --------------------
                                              Harry K. Hornish, Jr.

                                              /s/ Mechelle Slaughter

                                              ----------------------
                                              Mechelle Slaughter

                                              /s/ Terry Howell

                                              ----------------
                                              Terry Howell

                                              /s/ Rob Hickson

                                              ---------------
                                              Rob Hickson

                                              /s/ Ed Maczko

                                              -------------
                                              Ed Maczko

                                              /s/ Ron Hood

                                              ------------
                                              Ron Hood

                -Signature Page to Registration Rights Agreement-
<PAGE>
                                              /s/ Jerry Webb

                                              --------------
                                              Jerry Webb

                                              /s/ Irving Welchons

                                              -------------------
                                              Irving Welchons

                                              /s/ Jack Schaller

                                              -----------------
                                              Jack Schaller

                                              /s/ Joe Walker

                                              --------------
                                              Joe Walker

                                              /s/ Phil Keipp

                                              --------------
                                              Phil Keipp

                                              /s/ Jack Olson

                                              --------------
                                              Jack Olson

                                              LATONA NW INVESTMENT, LLC

                                              By: /s/ Paul Meister

                                                  ----------------
                                                  Name:  Paul Meister
                                                  Title: Manager

                -Signature Page to Registration Rights Agreement-
<PAGE>
                                                                         ANNEX I

                                  STOCKHOLDERS

J.P. Morgan Partners (BHCA), L.P.

J.P. Morgan Partners Global Investors, L.P.

J.P. Morgan Partners Global Investors (Cayman), L.P.

J.P. Morgan Partners Global Investors (Cayman ) II, L.P.

J.P. Morgan Partners Global Investors A, L.P.

in each case:
c/o J.P. Morgan Partners
1221 Avenue of the Americas, 40th Floor

New York, New York  10020
Attention:  Official Notices Clerk
FBO Stephen P. Murray
Telephone: (212) 899-3400

with a copy to:

O'Melveny & Myers LLP
30 Rockefeller Plaza
New York, New York  10112
Telephone:  212-408-2469
Facsimile:  212-408-2420
Attn:  Gregory Gilbert, Esq.

Thomas H. Lee Equity Fund V, L.P.

Thomas H. Lee Parallel Fund V, L.P.

Thomas H. Lee Cayman Fund V, L.P.

Putnam Investments Holdings, LLC

Putnam Investments Employees' Securities Company I LLC

Putnam Investments Employees' Securities Company II LLC

1997 Thomas H. Lee Nominee Trust

Thomas H. Lee Investors Limited Partnership

                                              21
<PAGE>
in each case:
c/o Thomas H. Lee Partners, L.P.
75 State Street
Suite 2600
Boston, MA 02109
Telephone:  617-227-1050
Facsimile:  617-227-3514
Attn:  Anthony DiNovi

with a copy to:

Weil, Gotshal & Manges LLP
101 Federal Street

Boston, MA 02110
Telephone:  617-772-8377
Facsimile:  617-772-8333
Attn: James Westra, Esq.

Harry K. Hornish
7333 Westover Road
Waco, Texas 76710

Mechelle Slaughter
27131 Whispering Meadow WB7
Whitney, TX 76692

Terry Howell
121 Parkway Drive
Thomasville, GA 31792

Rob Hickson
4971 Bayou Hills Road
Parker, CO 80134

Ed Maczko
804 Cross Lane

Southlake, TX 76092

Ron Hood
706 Southridge Street
Mesquite, NV 84027

Jerry Webb
203 Stratford Way
Thomasville, GA 31792

                                       22
<PAGE>
Irving Welchons
10312 Betsy Ross Court
Charlotte, NC 28277

Jack Schaller
17102 Somerset Field Court
Chesterfield MO 63005

Joe Walker
8205 Woodcreek
Waco, TX 76712

Phil Keipp
906 Prince Drive

St. Charles, MO 63301

Jack Olson
102 Pony Circle

Thomasville, GA 31792

Latona NW Investment, LLC

                                       23
<PAGE>
================================================================================

                       NATIONAL WATERWORKS HOLDINGS, INC.

                          REGISTRATION RIGHTS AGREEMENT

                                NOVEMBER 22, 2002

================================================================================

                                       24

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