FORM OF XYLEM 2011 OMNIBUS INCENTIVE PLAN [YEAR] NON-QUALIFIED STOCK OPTION AWARD AGREEMENT

Grant of Options. In accordance with, and subject to, the terms and conditions of the Plan and this Agreement, the Company hereby confirms the grant on [Month] [day], [year], (the “Grant Date”) to the Optionee of the option to purchase from the Company all or any part of an aggregate of [#,###] shares (the “Options”), at the purchase price of [$##.##] per share (the “Exercise Price”). All Options shall be Nonqualified Stock Options.

Terms and Conditions. It is understood and agreed that the Options are subject to the following terms and conditions:

Expiration Date. The Options shall expire on March [day], [year+10], or, if the Optionee’s employment terminates before that date, on the date specified in subsection 2(e) below.

Exercise of Options. The Options may not be exercised until it has become vested.

Vesting. Options may only vest while the Optionee is actively employed by the Company or an Affiliate. Subject to subsections 2(a), 2(d) and 2(e), the Options shall vest in three installments as follows:

1/3 of the Options shall vest on March [day], [year+1],

1/3 of the Options shall vest on March [day], [year+2], and

1/3 of the Options shall vest on March [day], [year+3].

Effect of Acceleration Event. Subject to subsections 2(a) and 2(e), any unvested Options shall vest in full upon an Acceleration Event.

Effect of Termination of Employment. Options may only vest while the Grantee is actively employed by the Company or an Affiliate. If the Optionee’s active employment is terminated before [the Expiration Date], the following would apply to any outstanding Options:

Termination due to Death or Disability (as defined below). Any unvested Options shall immediately become 100% vested upon the Optionee’s termination of employment. Any vested Options shall expire on the earlier of [the Expiration Date], or the date three years after the Optionee’s termination of active employment.

Termination due to Retirement (as defined below). A prorated portion (as defined below) of any unvested Options shall immediately vest upon the Optionee’s termination of employment. Any vested Options shall expire on the earlier of [the Expiration Date], or the date three years after the Optionee’s termination of employment.

Termination other than Death, Disability and Retirement. Any unvested Options shall automatically expire upon the Optionee’s termination of employment. Any vested portion of the Options shall expire on the earlier of [the Expiration Date], or the date three months after the Optionee’s termination of employment.

Notwithstanding the foregoing, if an Optionee’s active employment is terminated on or within two years after an Acceleration Event (A) by the Company (or an Affiliate, as the case may be) for other than Cause (as determined by the Committee), and not because of the Optionee’s Death, Disability, or Retirement, or (B) by the Optionee because the Optionee in good faith believed that as a result of such Acceleration Event he or she was unable effectively to discharge his or her present duties or the duties of the position the Optionee occupied just prior to the occurrence of such Acceleration Event, any unvested Options shall immediately become 100% vested upon the Optionee’s termination of employment and any vested Options shall expire on the earlier of [the Expiration Date], or the date seven months after the Optionee’s termination of employment.

Payment of Exercise Price. Permissible methods for payment of the Exercise Price upon exercise of the Options are described in Section 6.6 of the Plan, or, if the Plan is amended, successor provisions. In addition to the methods of exercise permitted by Section 6.6 of the Plan, the Optionee may exercise all or part of the Options by way of (i) broker-assisted cashless exercise in a manner consistent with the Federal Reserve Board's Regulation T, unless the Committee determines that such exercise method is prohibited by law, or (ii) net-settlement, whereby the Optionee directs the Company to withhold shares that otherwise would be issued upon exercise of the Options having an aggregate Fair Market Value on the date of the exercise equal to the Exercise Price, or the portion thereof being exercised by way of net-settlement (rounding up to the nearest whole share).

Tax Withholding. The Company shall have the power and the right to deduct or withhold, or require the Optionee to remit to the Company, all applicable federal, state, and local taxes, domestic or foreign, required by law or regulation to be withheld with respect to the exercise of the Options. The Optionee may elect to satisfy the withholding requirement, in whole or in part, by having the Company withhold shares that otherwise would be issued upon exercise of the Options, with the number of shares withheld having a Fair Market Value on the date the tax is to be determined equal to the minimum statutory total tax that could be imposed on the transaction (rounding up to the nearest whole share). Any such election shall be subject to any restrictions or limitations that the Committee, in its sole discretion, deems appropriate.

Compliance with Laws and Regulations. The Options shall not be exercised at any time when the exercise or the delivery of shares hereunder would be in violation of any law, rule, or regulation that the Company may find to be valid and applicable.

Optionee Bound by Plan and Rules. The Optionee hereby acknowledges receipt of a copy of the Plan and this Agreement and agrees to be bound by the terms and provisions thereof as amended from time to time. The Optionee agrees to be bound by any rules and regulations for administering the Plan as may be adopted by the Committee during the life of the Options. Terms used herein and not otherwise defined shall be as defined in the Plan.

Governing Law. This Agreement is issued, and the Options evidenced hereby are granted, in White Plains, New York and shall be governed and construed in accordance with the laws of the State of New York, excluding any conflicts or choice of law rule or principle that might otherwise refer construction or interpretation of this Agreement to the substantive law of another jurisdiction.