Document:

EXHIBIT 10.12

 

RESTRICTED SHARE
AGREEMENT

 

THIS AGREEMENT,
entered into as of December 17, 2003 (the “Grant Date”), by and between
                             
(the “Participant”) and Sensus Metering Systems (Bermuda 1) Ltd., a
Bermuda limited company (the “Company”);

 

WITNESSETH THAT:

 

WHEREAS, the
Company maintains the Sensus Restricted Share Program (the “Plan”),
which is incorporated into and forms a part of this Agreement, for the benefit
of employees, directors and consultants of the Company and certain other
Related Companies; and

 

WHEREAS, the
Committee has awarded the Participant a Restricted Share Award under the Plan;

 

NOW, THEREFORE, IT
IS AGREED, by and between the Company and the Participant as follows:

 

1.             Award and Purchase Price; Restrictions on Transfer.  (a) Subject to the terms of this Agreement
and the Plan (including, without limitation, the execution of a non-competition
agreement by the Participant as set forth in Section 3), the
Participant is hereby granted (the “Award”) Restricted Shares (the “Restricted
Shares”) in exchange for $0.01(1) per Restricted Share (the “Purchase
Price”).  The Participant shall pay
an amount in cash to the Company equal to the Purchase Price multiplied by the
number of Restricted Shares awarded within 5 business days after the Grant
Date.  Each Award represents ownership
of one Class B Common Share, par value U.S. $0.01 each, of the Company (a “Share”),
subject to the restrictions and conditions set forth herein.

 

(b)           Shares may not be sold, assigned,
transferred, pledged or otherwise encumbered until the expiration of the
Vesting Period.  After the Vesting
Period, the Shares shall be subject to the restrictions on transfer set forth
in the Management Shareholders Agreement. 
During the Vesting Period, all certificates evidencing the Shares
subject to an Award will be imprinted with the following legend:  “The securities evidenced by this
certificate are subject to the transfer restrictions, forfeiture restrictions
and other provisions of the Restricted Share Agreement dated
               ,
           between Sensus
Metering Systems (Bermuda 1) Ltd. and [name of Participant].

 

2.             Vesting and Forfeiture of Awards.  (a) If the Date of Termination (as defined
below) does not occur during the Vesting Period ending on the applicable
anniversary date with respect to any installment of the Shares set forth on the
schedule below (an “Installment”), then, at the end of the Vesting
Period for such Shares, the Participant shall become vested in those Shares,
and shall own the Shares free of the Pre-Vesting Repurchase provision of Section
4.  With respect to all Shares, the
Vesting Period shall begin on the Grant Date. 
The Vesting Period

 

(1)           The initial grants will be made at a
Purchase Price of $0.01 (reflecting a valuation of $40m of the common equity of
the Company); future grants will be made at Purchase Prices reflecting the then
current valuation of the common equity of the Company.

 

 

with respect to each Installment shown on the schedule
below shall end on the Vesting Date applicable to such Installment:

 

	
  INSTALLMENT

  	
   

  	
  VESTING DATE
  

  APPLICABLE TO 

  INSTALLMENT

  
	
  40% of Restricted
  Shares

  	
   

  	
  Second Anniversary
  of the  Grant Date

  
	
  20% of Restricted
  Shares

  	
   

  	
  Third Anniversary of
  the  Grant Date

  
	
  20% of Restricted
  Shares

  	
   

  	
  Fourth Anniversary
  of the  Grant Date

  
	
  20% of Restricted
  Shares

  	
   

  	
  Fifth Anniversary of
  the  Grant Date

  

 

(b)           Notwithstanding Section 2(a),
the Participant shall become fully vested in Restricted Shares upon the
consummation of a sale of all of the capital stock or all or substantially all
of the assets of the Company, whether by sale, merger, amalgamation,
combination, consolidation or similar business transaction.

 

(c)           In the event that the Company effects
an underwritten initial public offering of its common stock, Shares granted to
Participants under the Plan that have not become vested in accordance with the
vesting schedule in Section 2 shall, at the option of the Company,
(i) be exchanged for stock options of equivalent value based upon the implied
enterprise value of the Company at the date of the initial public offering, or
(ii) be exchanged for other securities of the Company under terms proposed by
the Company.  In making the foregoing
determination, the Company shall have discretion to determine the consideration
to be given in exchange for unvested Shares.

 

3.             Non-Competition/Non-Disclosure
Provisions.

 

(a)           Non-Competition.  In consideration of this Agreement, the
Participant covenants and agrees that during the period the Participant is an
officer, director or employee of the Company or its Related Companies and the
Restricted Period, the Participant shall not, subject to this Section 3,
without the express written approval of the Board of Directors of the Company,
directly or indirectly, in one or a series of transactions, own, manage,
operate, control, invest or acquire an interest in, whether as a proprietor,
partner, shareholder, member, lender, director, officer, employee, joint
venturer, investor, lessor, supplier, customer, agent, representative or other
participant, or otherwise engage or participate in, whether as a proprietor,
partner, shareholder, member, lender, director, officer, employee, joint
venturer, investor, lessor, supplier, customer, agent, representative or other
participant, any business which competes, directly or indirectly, with the
Business in the Market (“Competitive Business”) without regard to (A)
whether the Competitive Business has its office, manufacturing or other
business facilities

 

2

 

within or without the Market, (B) whether any of the
activities of the Participant referred to above occur or are performed within
or without the Market or (C) whether the Participant resides, or reports to an
office, within or without the Market; provided, however, that (x)
the Participant may, anywhere in the Market, directly or indirectly, in one or
a series of transactions, own, invest or acquire an interest in up to two
percent (2%) of the capital share of a corporation whose capital share is
traded publicly, or that (y) such Participant may accept employment with a
successor company to the Company.

 

(b)           Non-Solicitation.  If a Participant’s employment is terminated,
then, subject to this Section 3, the Participant shall not during
the Restricted Period and thereafter (A) directly or indirectly, in one or a
series of transactions, recruit, solicit or otherwise induce or influence any
proprietor, partner, shareholder, member, lender, director, officer, employee,
sales agent, joint venturer, investor, lessor, customer, supplier, agent,
representative or any other person which has a business relationship with the
Company or its Related Companies or had a business relationship with the
Company or its Related Companies within the twenty-four (24) month period
preceding the date of the incident in question, to discontinue, reduce or
modify such employment, agency or business relationship with the Company or its
Related Companies, or (B) employ or seek to employ or cause any Competitive Business
to employ or seek to employ any person or agent who is then (or was at any time
within twelve (12) months prior to the date the Participant or the Competitive
Business employs or seeks to employ such person) employed or retained by the
Company or its Related Companies. 
Notwithstanding the foregoing, nothing herein shall prevent the
Participant from providing a letter of recommendation to an employee with
respect to a future employment opportunity.

 

(c)           Non-Disclosure.  The Participant further agrees, during and
after his employment with the Company and its Related Companies, the Restricted
Period and thereafter, that the Participant will not, directly or indirectly in
one or a series of transactions disclose to any person or use or otherwise
exploit for the Participant’s own benefit or for the benefit of anyone other
than the Company or its subsidiaries any Confidential Information (as defined
below) whether prepared by the Participant or not provided, however,
that any Confidential Information may be disclosed to officers,
representatives, employees and agents of the Company or its Related Companies
who need to know such Confidential Information in order to perform the services
or conduct the operations required or expected of them in the Business.  The Participant shall use his best efforts
to prevent the removal of any Confidential Information from the premises of the
Company or its Related Companies, except as required in his normal course of
employment by the Company or its Related Companies.  The Participant shall use his commercially reasonable efforts to
cause all persons or entities to whom Confidential Information shall be
disclosed by the Participant hereunder to observe the terms and conditions set
forth herein as though each such person or entity was bound hereby.  The Participant shall have no obligation
hereunder to keep confidential any Confidential Information if and to the
extent disclosure of any thereof is specifically required by law; provided,
however, that in the event disclosure is required by applicable law, the
Participant shall provide the Company with prompt notice of such requirement,
prior to making any disclosure, so that the Company may seek an appropriate
protective order.  At the request of the
Company, the Participant agrees to deliver to the Company all Confidential
Information which the Participant may possess or control.  The Participant agrees that all Confidential
Information of the Company and its Related Companies (whether now or hereafter
existing) conceived, discovered or made by him during his

 

3

 

employment with the Company or its Related Companies
exclusively belongs to the Company and its Related Companies (and not to the
Participant).  The Participant will
promptly disclose such Confidential Information to the Company and its Related
Companies and perform all actions reasonably requested by the Company and its
direct and indirect subsidiaries to establish and confirm such exclusive
ownership.  As used herein, the term “Confidential
Information” means any confidential information including, without
limitation, any study, data, calculations, software storage media or other
compilation of information, patent, patent application, copyright, trademark,
trade name, service mark, service name, “know-how”, trade secrets, customer
lists, details of client or consultant contracts, pricing policies, operational
methods, marketing plans or strategies, product development techniques or
plans, business acquisition plans or any portion or phase of any scientific or
technical information, ideas, discoveries, designs, computer programs
(including source of object codes), processes, procedures, formulas,
improvements or other proprietary or intellectual property of the Company or its
Related Companies, whether or not in written or tangible form, and whether or
not registered, and including all files, records, manuals, books, catalogues,
memoranda, notes, summaries, plans, reports, records, documents and other
evidence thereof.  The term “Confidential
Information” does not include, and there shall be no obligation hereunder
with respect to, information that becomes generally available to the public
other than as a result of a disclosure by the Participant not permissible
hereunder.

 

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

 

(e)           Specific Performance.  All the parties hereto agree that their
rights under this Section 3 are special and unique and that
violation thereof would not be adequately compensated by money damages and each
grants the others the right to specifically enforce (including injunctive
relief where appropriate) the terms of this Agreement.

 

4.             Repurchase of Shares.  (a)  In the event that the
(x) Committee determines that the Participant has engaged in conduct in
violation of this Agreement, or (y) Participant’s employment with the Company
or a Related Company has been terminated, all Restricted Shares, whether or not
vested, shall be subject to repurchase as described in this Section 4.

 

(b)           Call of Unvested Shares Upon
Termination of Employment.  If
Participant’s employment is terminated at any time by the Company or a Related
Company for any reason or no reason or by the Participant, subject to
applicable law including the Companies Act of 1981 of Bermuda, the Company may
repurchase all or any portion of the Shares awarded to Participant that are not
vested in accordance with Section 2 hereof, at a price per share
equal to the Purchase Price per Share. 
The purchase price for the Shares to be purchased pursuant to this Section 4(b)
is payable, at the option of the Company, in cash, Three Year Junior Notes or a
combination thereof.

 

4

 

(c)           Call of Vested Shares Upon
Termination for Cause, Material Breach or Unsatisfactory Performance or
Voluntary Termination Prior to the Third Anniversary of this Agreement.  If Participant’s employment with the Company
or any Related Company is terminated (x) at any time by the Company or a
Related Company for Cause, Material Breach or Unsatisfactory Performance or (y)
by Participant pursuant to a Voluntary Termination prior to the third
anniversary of this Agreement, subject to applicable law including the
Companies Act of 1981 of Bermuda, the Company may repurchase all or any portion
of the Shares awarded to Participant that are vested in accordance with Section 2
hereof at a price per share equal to the Purchase Price per Share.  The purchase price for the Shares to be
purchased pursuant to this Section 4(c) is payable, at the option
of the Company, in cash, Three Year Junior Notes or a combination thereof.

 

(d)           Call of Vested Shares Upon
Termination For Other Than Cause, Material Breach or Unsatisfactory Performance
or Voluntary Termination after the Third Anniversary of this Agreement or
Material Reduction.  If
Participant’s employment with the Company or a Related Company is terminated
(x) at any time by the Company or a Related Company for no or any reason other
than Cause, Material Breach or Unsatisfactory Performance or (y) by Participant
pursuant to a Voluntary Termination after the third anniversary of this
Agreement or a Material Reduction, subject to applicable law including the
Companies Act of 1981 of Bermuda, the Company may repurchase the Shares awarded
to Participant that are vested in accordance with Section 2 hereof
at a purchase price per share equal to the greater of the Purchase Price per
Share or Fair Market Value per share. 
The purchase price for the Call Securities to be purchased pursuant to
this Section 4(d) is payable, at the option of the Company, in
cash, Three Year Junior Notes or a combination thereof.

 

(e)           Expiration of Repurchase Option.  If the Company does not deliver to the
Participant a written notice (a “Call Notice”) of its intention to
exercise the call rights set forth in this Section 4 within six
months of termination of employment of a Participant or violation of this
Agreement by the Participant, such call rights will expire.  This Section 4 shall terminate
upon the consummation of a sale of all of the capital stock or all or
substantially all of the assets of the Company, whether by sale, merger,
amalgamation, combination, consolidation or similar business transaction.

 

(f)            Restrictions on Payments by the
Company.  Notwithstanding anything
to the contrary contained in this Agreement, all repurchases pursuant to this Section 4,
including issuances of and payments by the Company on the Three Year Junior
Notes, shall be subject to (i) applicable restrictions contained in any
applicable law, (ii) restrictions contained in the Company’s and its
subsidiaries’ debt and equity financing agreements, including the Credit
Agreement and the Indenture, each as amended and in effect from time to time,
and any Senior Indebtedness (as defined in the Three Year Junior Notes) and
(iii) the availability of cash to make any lump sum cash payments.  If any such restrictions or unavailability
prohibit the repurchase of Shares hereunder which the Company is otherwise
entitled or required to make, the Company may make such repurchases as soon as
it is permitted to do so under such restrictions.

 

(g)           Timing Considerations.  In the event the Company makes payments in
cash pursuant to the provisions of Section 4, such payments will be
made within 90 days of the date of

 

5

 

the call.  In
the event that the Company makes payments in Three Year Junior Notes, such
notes will be executed and delivered within 90 days of the date of the call.

 

5.             Definitions. 
Except where the context clearly implies or indicates the contrary, a
word, term, or phrase used in the Plan is similarly used in this
Agreement.  For purposes of this Agreement
the following terms shall have the meaning as set forth below:

 

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

 

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

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

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

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

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

(F)                                 Turbine
Gas Meters;

(G)                                Pressure
Regulation Products;

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

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

(J)                                   Heat
Meters (Velocity and Ultrasonic);

(K)                               Heat
Integrators;

(L)                                 Bulk
Hot Water Meters;

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

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

(O)                               Instrumentation
for any of the foregoing;

(P)                                 Meter
accuracy testing and recalibration services;

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

 

the business of
providing other products and services as follows:

 

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

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

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

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

 

(b)           “Cause” means any of the following:

 

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

 

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

 

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

 

6

 

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

 

(v)           Participant’s
material violation, with the actual knowledge of Participant, of any
obligations imposed upon Participant, personally, as opposed to upon the
Company, whether as a shareholder or otherwise, under any material agreement or
instrument relating to the Company or any Related Company, this Agreement, the
Bye-Laws of the Company; the Management Shareholders Agreement, or the Plan and
related agreements, if applicable; or

 

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

 

(c)           “Credit Agreement” shall mean
the Credit Agreement, dated as of December 17, 2003, among Sensus Metering
Systems Inc., a Delaware corporation, LuxCo 2, Sensus Metering Systems (Bermuda
2) Ltd., a company organized under the laws of Bermuda, the Lenders (as defined
therein), Credit Suisse First Boston, as administrative and collateral agent
for the lenders as such agreement may be amended, waived or otherwise modified
from time to time.

 

(d)           “Date of Termination” means
the first day occurring on or after the Grant Date on which the Participant is
not employed by the Company or any Related Company, regardless of the reason
for the termination of employment; provided that a termination of
employment shall not be deemed to occur by reason of a transfer of the
Participant between the Company and a Related Company or between two Related
Companies; and further provided that the Participant’s employment shall not be
considered terminated while the Participant is on a leave of absence from the
Company or a Related Company approved by the Participant’s employer.  If, as a result of a sale or other
transaction, the Participant’s employer ceases to be a Related Company (and the
Participant’s employer is or becomes an entity that is separate from the
Company), and the Participant is not, at the end of the 30-day period
following the transaction, employed by the Company or an entity that is then a
Related Company, then the occurrence of such transaction shall be treated as
the Participant’s Date of Termination caused by the Participant being
discharged by the employer.

 

(e)           “Determination Period” shall
mean last four consecutive completed fiscal quarters as set forth on the
audited financial statements of the Company immediately preceding the “call”
exercised pursuant to Section 2 for which Fair Market Value shall
be used to determine the repurchase price.

 

(f)            “Disability” means due to
physical or mental disability the Participant is unable to perform, and does
not perform, as certified by a mutually agreeable competent medical physician,
his material duties owed to the Company or its subsidiaries hereunder for 180
days in any continuous 210 day period. 
The final determination of Disability shall be made in the reasonable
judgment of the Board of Directors.  In
the event of any inconsistency between the definition of disability herein and
the definition of such term in any employment agreement

 

7

 

between the Participant and the Company then in
effect, the definition of such term in such employment agreement shall control
for purposes of the Plan.

 

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

 

(h)           “Fair
Market Value” means the quotient obtained by dividing (a) an
amount equal to (A) 5.0 multiplied by EBITDA for the Determination Period less
(B) the aggregate amount of Indebtedness, as defined in the Credit Agreement,
including, but not limited to, indebtedness for borrowed money and capitalized
leases of the Company as of the end of the Determination Period (including,
without limitation, interest accrued but unpaid or paid-in-kind as of the end
of the Determination Period) less (C) the aggregate liquidation value of
the Series A Preference Shares of the Company outstanding at the end of the
Determination Period (including, without limitation, dividends accrued but
unpaid or paid-in-kind in respect of such preference share as of the end of the
Determination Period) less (D) the aggregate liquidation value of the
Class A Common Shares of the Company outstanding at the end of the
Determination Period less (E) the aggregate liquidation value of any
class or series of equity securities of the Company ranking senior in right of
payment upon a liquidation of the Company to the Class B Common Shares
outstanding at the end of the Determination Period less (F) the aggregate
amount that would have been payable by the Company in respect of any equity
appreciation or similar rights outstanding as of the end of the Determination
Period assuming the exercise in full of any and all such rights (whether vested
or not) as of such date, by (b) the aggregate number of Class A Common Shares
and Class B Common Shares issued and outstanding on a fully diluted basis as of
the last day of the Determination Period. 
For this purpose, “fully diluted basis” shall assume the full
exercise of all outstanding options, warrants, stock appreciation and other
rights in relation to Common Shares and the full conversion (if dilutive) of
all convertible securities, and other obligations, irrespective of whether then
exercisable or convertible, and further irrespective of any vesting,
repurchase, call or other restrictions or limitations.

 

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

 

(j)            “Management Shareholders
Agreement” means the Management Subscription and Shareholders Agreement,
dated March 5, 2004, among the Company and the shareholders party thereto, as
amended from time to time in accordance with its terms.

 

(k)           “Material Breach” means:

 

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

 

(ii)           Participant’s
willful, continual and material neglect or failure to discharge such
Participant’s duties, responsibilities or obligations prescribed by this
Agreement or

 

8

 

of any other agreement between the Company or its Related Companies or
by the Company (other than arising solely due to physical or mental
disability);

 

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

 

(iv)          Participant’s
violation of any non-competition, non-disparagement or confidentiality
agreement with the Company or its direct or indirect subsidiaries, including
without limitation, those set forth in Section 3
of this Agreement, or any other agreements with the Company or its direct or
indirect subsidiaries; and

 

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

 

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

 

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

 

(m)          “Plan Definitions” Except where
the context clearly implies or indicates the contrary, a word, term, or phrase
used in the Plan is similarly used in this Agreement.

 

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

 

(o)           “Regulations” means any laws,
ordinances, regulations or rules of any governmental, regulatory or
administrative body, agent or authority, any court or judicial authority, or
any public, private or industry regulatory authority.

 

(p)           “Restricted Period” shall mean
the period of 24 months from and after the date of termination of employment.

 

(q)           “Shareholders Agreement” means
the Shareholders Agreement, dated December 17, 2003, among certain
shareholders of the Company, as amended from time to time in accordance with
its terms.

 

(r)            “Three
Year Junior Notes” means a promissory note of the Company in the
form attached hereto as Exhibit 1.

 

9

 

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

 

(t)            “Vesting Period” shall have
the meaning ascribed to it in Section 2 above.

 

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

 

6.             Heirs and Successors.  This Agreement shall be binding upon, and inure to the benefit
of, the Company and its successors and assigns, and upon any person acquiring,
whether by merger, consolidation, purchase of assets or otherwise, all or
substantially all of the Company’s assets and business.  If any rights of the Participant or benefits
distributable to the Participant under this Agreement have not been exercised
or distributed, respectively, at the time of the Participant’s death, such
rights shall be exercisable by the Designated Beneficiary, and such benefits
shall be distributed to the Designated Beneficiary, in accordance with the
provisions of this Agreement, the Plan and the Bye-Laws.  The “Designated Beneficiary” shall be the
beneficiary or beneficiaries designated by the Participant in a writing filed
with the Executive Team in such form and at such time as the Executive Team
shall require.  If a deceased
Participant fails to designate a beneficiary, or if the Designated Beneficiary
does not survive the Participant, any rights that would have been exercisable
by the Participant and any benefits distributable to the Participant shall be
exercised by or distributed to the legal representative of the estate of the
Participant.  If a deceased Participant
designates a beneficiary and the Designated Beneficiary survives the
Participant but dies before the Designated Beneficiary’s exercise of all rights
under this Agreement or before the complete distribution of benefits to the
Designated Beneficiary under this Agreement, then any rights that would have
been exercisable by the Designated Beneficiary shall be exercised by the legal
representative of the estate of the Designated Beneficiary, and any benefits
distributable to the Designated Beneficiary shall be distributed to the legal
representative of the estate of the Designated Beneficiary.  Any rights of a beneficiary and benefits
distributable to a beneficiary under this Agreement shall be subject to the
terms and restrictions of the Bye-Laws.

 

7.             Administration. 
The authority to manage and control the operation and administration of
this Agreement shall be vested in the Board (except as delegated to the
Executive Team), and the Board shall have all powers with respect to this
Agreement as it has with respect to the Plan. 
Any interpretation of the Agreement by the Board or the Executive Team
and any decision made by either of them with respect to the Agreement is final
and binding.

 

8.             Plan Governs. 
Notwithstanding anything in this Agreement to the contrary, the terms of
this Agreement shall be subject to the terms of the Plan, a copy of which may
be obtained by the Participant from the office of the Secretary of the Company.

 

10

 

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

 

10.           Severability.  In case any one or more of the provisions or
parts of a provision contained in this Agreement shall, for any reason, be held
to be invalid, illegal or unenforceable in any respect in any jurisdiction,
such invalidity, illegality or unenforceability shall not affect any other
provision or part of a provision of this Agreement or any other jurisdiction,
but this Agreement shall be reformed and construed in any such jurisdiction as
if such invalid or illegal or unenforceable provision or part of a provision
had never been contained herein and such provision or part shall be reformed so
that it would be valid, legal and enforceable to the maximum extent permitted
in such jurisdiction.

 

11.           Amendment.  This Agreement may be amended in accordance
with the provisions of the Plan, and may otherwise be amended by written
agreement of the Participant and the Company without the consent of any other
person.

 

12.           Applicable Law.  The provisions of this Agreement shall be
construed in accordance with the laws of the State of New York, without regard
to the conflict of law provisions of any jurisdiction.

 

13.           Administration.  The authority to administer and interpret
this Agreement shall be vested in the Committee, and the Committee shall have
all the powers with respect to this Agreement as it has with respect to the
Plan.  Any interpretation of the
Agreement by the Committee and any decision made by it with respect to the
Agreement is final and binding on all persons.

 

14.           Plan Governs.  The terms of this Agreement shall be subject
to the terms of the Plan, a copy of which may be obtained by the Participant
from the office of the Secretary of the Company.  The Plan is hereby incorporated herein by reference into and
forms a part of this Agreement.

 

11

 

IN WITNESS
WHEREOF, the Participant has hereunto set his hand, and the Company has caused
these presents to be executed in its name and on its behalf, all as of the
Grant Date.

 

	
   

  	
  PARTICIPANT

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  SENSUS METERING SYSTEMS
  (BERMUDA 1) LTD.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By

  	
   

  
	
   

  	
  Its

  	
   

  

 

 

Exhibit 1

 

Form of Three Year
Junior NoteEXHIBIT 10.13

 

SENSUS METERING SYSTEMS (BERMUDA 1) LTD.

 

CONSULTANT SUBSCRIPTION AND SHAREHOLDERS AGREEMENT

 

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

 

1.                                       Share
Subscriptions.

 

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

 

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

 

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

 

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

 

 

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

 

2.                                       Proposed
Transactions.

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

2

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

3

 

financing. 
Each Shareholder further agrees that such Shareholder’s ability to
transfer Securities is subject to the limitations, restrictions and conditions
of the Shareholder Agreement and the operative documents in connection with the
financing.

 

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

 

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

 

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

 

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

 

4

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

5

 

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

 

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

 

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

 

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

 

6

 

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

 

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

 

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

 

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

 

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

 

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

 

8.                                       Repurchase
Provisions.

 

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

 

7

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

8

 

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

 

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

 

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

 

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

 

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

 

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

 

9.                                       Non-Competition/Non-Disclosure
Provisions.

 

(a)                                  Non-Solicitation.  If a Shareholder’s engagement as a  consultant is terminated, then, subject to
this Section 9, such Shareholder shall not for 24 months after
termination as a consultant (the “Restricted Period”) (A) directly
or indirectly, in one or a series of transactions, recruit, solicit or
otherwise induce or influence any proprietor, partner,

 

9

 

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

 

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

 

10

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

(iv)                              From
any Shareholder to the Company.

 

11

 

(c)                                  Transfer
to Permitted Transferees.  Subject
to the provisions of Section 10(d), each Permitted Transferee of
any Shareholder to which Shares are Transferred shall, and such Shareholder
shall cause such Permitted Transferee to, Transfer back to such Shareholder (or
to another Permitted Transferee of such Shareholder) any Shares it owns if such
Permitted Transferee ceases to be a Permitted Transferee of such Shareholder.

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

11.                                 Rights
of First Refusal for New Securities.

 

(a)                                  The
Company hereby grants to each of the Shareholders a right of first refusal to
purchase New Securities (as defined below) which the Company may, from time to
time, propose to issue and sell.  Such
right of first refusal shall allow each Shareholder to purchase its pro rata
share based on its percentage ownership of the New Securities proposed to be
issued, determined with reference to the percentage ownership of Class A Common
Shares of each Shareholder relative to all other holders of Class A Common
Shares before the proposed issuance of New Securities.  In the event a Shareholder does not purchase
any or all of its pro rata share based on its percentage ownership of New
Securities, the remaining Shareholders shall each have the right to purchase
its pro rata share based on its percentage ownership of such

 

12

 

unpurchased New Securities until all of the
New Securities are purchased or until no other Shareholder desires to purchase
any more New Securities.  The right of
first refusal granted hereunder shall terminate if unexercised within 30
calendar days after receipt of the New Securities Notice described in Section 11(c)
below.

 

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

 

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

 

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

 

12.                                 Drag
Along.

 

(a)                                  If
Resolute Investors (as defined in the Shareholder Agreement) holding, in the
aggregate, at least 50 percent (50%) of the Common Shares (the “Selling
Shareholders”) agree to enter into a transaction which would result in the
Transfer of all the Common Shares owned by the Selling Shareholders to a
non-Affiliate third party (the “Drag-Along Buyer”), the Selling
Shareholders may deliver written notice (a “Drag-Along Notice”) to each
other

 

13

 

Shareholder (the “Drag-Along Shareholders”),
stating that such Selling Shareholders wish to exercise their rights under this
Section 12 with respect to such Transfer, and setting forth the
name and address of the Drag-Along Buyer, the number of Common Shares proposed
to be Transferred, the proposed amount and form of the consideration, and all
other material terms and conditions offered by the Drag-Along Buyer.

 

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

 

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

 

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

 

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

 

14

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

15

 

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

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

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

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

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

(F)                                 Turbine
Gas Meters;

(G)                                Pressure
Regulation Products;

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

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

(J)                                   Heat
Meters (Velocity and Ultrasonic);

(K)                               Heat
Integrators;

(L)                                 Bulk
Hot Water Meters;

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

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

(O)                               Instrumentation
for any of the foregoing;

(P)                                 Meter
accuracy testing and recalibration services;

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

 

the business of providing
other products and services as follows:

 

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

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

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

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

 

“Cause” means any of the following:

 

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

 

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

 

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

 

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

 

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

 

16

 

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

 

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

 

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

 

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

 

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

 

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

 

(f)                                    “Fair Market Value” means,

 

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

 

17

 

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

 

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

 

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

 

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

 

(i)                                     “Material Breach” means:

 

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

 

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

 

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

 

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

 

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

 

18

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

19

 

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

 

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

 

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

 

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

 

20

 

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

 

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

 

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

 

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

 

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

 

19.                                 Miscellaneous.

 

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

 

21

 

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

 

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

 

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

 

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

 

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

 

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

 

22

 

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

 

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

 

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

 

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

 

23

 

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

 

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

 

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

 

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

 

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

 

24

 

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

 

	
   

  	
  SENSUS METERING
  SYSTEMS

  
	
   

  	
  (BERMUDA 1) LTD.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
  Name:  Jonathan F. Boucher

  
	
   

  	
  Title:

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  CONSULTANT  SHAREHOLDERS:

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  	
   

  

 

 

EXHIBIT 1

 

Purchase Schedule

 

	
  Shareholder

  	
   

  	
  Class A

  Common

  Shares

  	
   

  	
  Consideration

  Paid for Class A

  Common Shares

  	
   

  	
  Series A

  Preference

  Shares

  	
   

  	
  Consideration

  Paid for

  Preference Shares

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  

 

 

EXHIBIT 2

 

Form of Three Year Junior Note

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