Watts Water (WTS) 10-Q2023 Q1 Quarterly report

(a)The Performance Stock Units granted herein may not be sold, assigned, transferred, pledged or otherwise encumbered or disposed of by the Grantee.

(b)Except as otherwise provided herein, if the Grantee’s employment with the Company and its Subsidiaries is voluntarily or involuntarily terminated for any reason (other than death, disability or due to Normal Retirement (as defined below)) prior to the last day of the Performance Period, all Performance Stock Units shall be immediately and automatically forfeited to the Company upon termination of employment, without payment of any consideration to the Grantee.  The Grantee shall have no further rights with respect to the Performance Stock Units or to receive shares of Stock with respect thereto.

(d)Notwithstanding the foregoing, if the Grantee’s employment or service is terminated due to Normal Retirement (as defined below) prior to the last day of the Performance Period, then the Performance Stock Units shall continue to vest in accordance with the vesting provisions of this Section 2(d) and be settled on the Payment Date, but only if Grantee (i) remains employed with the Company through the last working day of 2023, (ii) has complied with the provisions of Section 10 at all times during his or her employment, (iii) continues to comply with the provisions of Section 10, and (iv) if deemed necessary by the Company to have an enforceable non-compete similar to that provided in Section 10(b), then to execute and not revoke or violate a separate Non-Competition Agreement the terms of which are substantially similar to those set forth in Section 10 below.  For the avoidance of doubt, if (A) the Grantee violates the provisions of Section 10, (B) fails to execute a Non-Competition Agreement as may be requested by the Company, (C) revokes or violates any Non-Competition Agreement so executed, or (D) the obligations set forth in Section 10(b) or the Non-Competition Agreement are deemed unenforceable, then the Performance Stock Units shall not continue to vest pursuant to this Section 2(d) and any unvested Performance Stock Units shall be immediately and automatically forfeited to the Company without any further action required by the Company. The portion of the Performance Stock Units that are eligible to vest in accordance with this Section 2(d) shall be determined by multiplying (A) the Earned Performance Stock Units determined pursuant to Section 3 below for the entire Performance Period, by (B) a fraction, the numerator of which is the number of days the Grantee was continually employed since the beginning of the Performance Period and the denominator of which is the number of days in the Performance Period.

(a)No Performance Stock Units shall be earned or vested unless the Company’s ROIC (as defined below) equals or exceeds ___% (the “Minimum Performance Goal”).

(d)The Revenue CAGR and ROIC goals shall be adjusted to reflect the impact of any acquisition or disposition of an entity, business or business segment during the Performance Period.

(a)Except as otherwise provided for payment upon a Sale Event or under Section 2(c)(ii), any earned Performance Stock Units shall be settled and shares of Stock issued to the Grantee as soon as administratively practicable following the Administrator’s certification of the achievement of the Performance Goals at the end of the Performance Period (such date of settlement being the “Payment Date”); provided, that the Payment Date shall occur no later than March 15 of the year following the end of the Performance Period.  Performance Stock Units earned under Section 2(c)(ii) shall be settled and shares of Stock issued to the Grantee or the Grantee’s beneficiary as soon as administratively practicable following the Grantee’s termination of service, but no later than March 15 of the year following the year of Grantee’s termination of service.  

(b)Notwithstanding anything herein to the contrary, the Company may postpone the issuance of the shares of Stock until it is satisfied that the issuance of such Stock will not violate any applicable law. The actual issuance of the shares of Stock shall be subject to such terms and conditions as the Company may establish from time to time in order to comply with applicable law.

(c)Notwithstanding anything herein to the contrary, the Administrator may adjust the calculation of Revenue CAGR and/or ROIC to exclude certain items that were not contemplated and included in the Company’s 2022 Strategic Plan if, in its sole judgment, such adjustment is appropriate.

(d)Notwithstanding anything herein to the contrary, the Administrator may, in its discretion, grant additional Performance Stock Units to a Grantee at the time of settlement to account for demonstrated quality of performance; provided that the number of Performance Stock Units earned by Grantee under this Agreement may not exceed 200% of the Target Award.

(e)Notwithstanding anything herein to the contrary, the Administrator may, in its discretion, decrease the number of Performance Stock Units earned by the Grantee at the time of settlement in exceptional circumstances or for good reason.

(a)In consideration of the Company entering into this Agreement with the Grantee, the Grantee agrees that throughout his or her term of employment with the Company and for a period of twelve (12) months following the Grantee’s date of termination with the Company, the Grantee shall not, directly or indirectly: (i) divert or attempt to divert or assist others in diverting any business of the Company by soliciting, contacting or communicating with any customer or supplier of the Company with whom the Grantee has direct or indirect contact or upon termination of employment has had direct or indirect contact during the twelve (12) month period immediately preceding the Grantee’s date of termination with the Company; (ii) solicit, induce, attempt to induce or assist others in attempting to induce any employee or other service provider of the Company with whom the Grantee has worked or had material contact with, during the twelve (12) month period immediately preceding the termination of the Grantee’s employment, to leave the employment of the Company or a subsidiary of the Company or to accept employment or affiliation with any other company or firm of which the Grantee becomes an employee, owner, partner or consultant; or (iii) make any statements, orally or in writing, cause to be published or in any way disseminate any information concerning the Company or any subsidiaries of the Company concerning the Company’s business, business operations or business practices that in any way, in form or substance, harms, disparages or otherwise casts an unfavorable light upon the Company or any subsidiaries of the Company or upon any of their reputations or standing in the business community or the community as a whole.  The provisions of this Section 10 do not prohibit the Grantee from communicating with, cooperating with, or providing information to the Securities and Exchange Commission, the Department of Labor, the EEOC, the NLRB, or any government agency that might be interpreted as disparaging.  In consideration of the Company entering into this Agreement with the Grantee, the Grantee further agrees that throughout his or her term of employment with the Company, except on behalf of the Company, the Grantee shall not, directly or indirectly, engage in or participate in, or prepare to engage in or participate in, the Business, or provide services in any capacity to any person or entity engaged in or preparing to engage in the Business in competition with the Company. For purposes of this Section 10 and each subpart, “Company” shall include the Company and any parent company, subsidiary, or affiliated company of the Company and any of their respective successors or assigns.

(b)In consideration of the continued vesting of the Grantee’s Performance Stock Units pursuant to Section 2(d) above, the Grantee agrees that throughout his or her term of employment with the Company and following the Grantee’s termination with the Company due to Normal Retirement through the Payment Date, the Grantee will not, directly or indirectly, either through any form of ownership (other than ownership of securities of a publicly-held corporation of which the Grantee owns, or has real or contingent rights to own, two percent (2%) or less of any class of outstanding securities) or as a director, officer, principal, agent, employee, employer, advisor, consultant, investor, member, partner or in any other individual or representative capacity whatsoever, either for Grantee’s own benefit or for the benefit of any other person, (i) engage or participate in, or prepare to engage in or participate in, the Business or (ii) manage, join, operate, lend to, invest in, control, or render any services to any person or entity engaged in or preparing to engage in the Business, in each case (i) and (ii) in competition with the Company anywhere in the Restricted Territory.  For purposes of this Agreement, the “Restricted Territory” means each city, county, state, territory and country in which (i) Grantee provided services or had a material presence or influence at any time during the last two (2) years of Grantee’s employment with the

(c)The Grantee and the Company acknowledge and mutually agree that the continued vesting of the Performance Stock Units pursuant to Section 2(d) above following the Grantee’s termination is sufficient consideration to enforce the non-competition provision set forth in Section 10(b) above.  The non-competition provision set forth in Section 10(b) shall take effect on the date Grantee accepts this Agreement through the E*TRADE website.

(a)Notice hereunder shall be given to the Company at its principal place of business, and shall be given to the Grantee at the address on file with the Company, or in either case at such other address as one party may subsequently furnish to the other party in writing.