Exhibit 10.3

 

NON-QUALIFIED STOCK OPTION AGREEMENT
FOR COMPANY EMPLOYEES, NON-EMPLOYEE DIRECTORS

AND CONSULTANTS

 

UNDER THE WATTS WATER TECHNOLOGIES, INC.
SECOND AMENDED AND RESTATED 2004 STOCK INCENTIVE PLAN

 

The grant to the optionee (the “Optionee”) of an option (the “Stock Option”) to
purchase on or prior to the expiration date (the “Expiration Date”) all or part
of the number of shares of Class A Common Stock, par value $.10 per share (the
“Option Shares”), of Watts Water Technologies, Inc. (the “Company”) at a price
per share (the “Option Exercise Price”), all as set forth in the Stock Option
grant notification provided through the Optionee’s stock plan account on the
E*TRADE website, is subject to the provisions of the Company’s Second Amended
and Restated 2004 Stock Incentive Plan (the “Plan”) and the terms and conditions
contained in this Non-Qualified Stock Option Agreement (the “Agreement”).  By
accepting the grant of the Stock Option on the E*TRADE website, the Optionee
agrees to the terms and conditions of this Agreement.

 

1.                                      Exercisability Schedule.  No portion of
this Stock Option may be exercised until such portion shall have become
exercisable.  Except as set forth below, and subject to the discretion of the
Administrator (as defined in Section 2 of the Plan) to accelerate the
exercisability schedule hereunder, this Stock Option shall be exercisable in
accordance with the following schedule: 25% of the Option Shares shall become
exercisable on the first anniversary of the date of grant, an additional 25% of
the Option Shares shall become exercisable on the second anniversary of the date
of grant, an additional 25% of the Option Shares shall become exercisable on the
third anniversary of the date of grant and the remaining 25% of the Option
Shares shall become exercisable on the fourth anniversary of the date of grant.

 

Once exercisable, this Stock Option shall continue to be exercisable at any time
or times prior to the close of business on the Expiration Date, unless the Stock
Option is terminated sooner as provided herein.

 

2.                                      Manner of Exercise.

 

(a)                                 The Optionee may exercise this Stock Option
only in the following manner:  from time to time on or prior to the Expiration
Date of this Stock Option, the Optionee may give written notice to the
Administrator of his or her election to purchase some or all of the Option
Shares purchasable at the time of such notice.  This notice shall specify the
number of Option Shares to be purchased.

 

Payment of the purchase price for the Option Shares may be made by one or more
of the following methods:  (i) in cash, by certified or bank check or other
instrument acceptable to the Administrator; (ii) through the delivery (or
attestation to the ownership) of shares of Stock that have been purchased by the
Optionee on the open market or that have been beneficially owned by the Optionee
for at least six months and are not then subject to any restrictions under any
Company plan; (iii) by the Optionee delivering to the Company a properly
executed exercise

 

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notice together with irrevocable instructions to a broker to promptly deliver to
the Company cash or a check payable and acceptable to the Company to pay the
option purchase price, provided that in the event the Optionee chooses to pay
the option purchase price as so provided, the Optionee and the broker shall
comply with such procedures and enter into such agreements of indemnity and
other agreements as the Administrator shall prescribe as a condition of such
payment procedure; or (iv) a combination of (i), (ii) and (iii) above.  Payment
instruments will be received subject to collection.

 

The delivery of certificates representing the Option Shares will be contingent
upon the Company’s receipt from the Optionee of full payment for the Option
Shares, as set forth above and any agreement, statement or other evidence that
the Company may require to satisfy itself that the issuance of Stock to be
purchased pursuant to the exercise of Stock Options under the Plan and any
subsequent resale of the shares of Stock will be in compliance with applicable
laws and regulations.  In the event the Optionee chooses to pay the purchase
price by previously-owned shares of Stock through the attestation method, the
number of shares of Stock transferred to the Optionee upon the exercise of the
Stock Option shall be net of the Shares attested to.

 

(b)                                 Certificates for shares of Stock purchased
upon exercise of this Stock Option shall be issued and delivered to the Optionee
upon compliance to the satisfaction of the Administrator with all requirements
under applicable laws or regulations in connection with such issuance and with
the requirements hereof and of the Plan.  The determination of the Administrator
as to such compliance shall be final and binding on the Optionee.  The Optionee
shall not be deemed to be the holder of, or to have any of the rights of a
holder with respect to, any shares of Stock subject to this Stock Option unless
and until this Stock Option shall have been exercised pursuant to the terms
hereof, the Company shall have issued and delivered the shares to the Optionee,
and the Optionee’s name shall have been entered as the stockholder of record on
the books of the Company.  Thereupon, the Optionee shall have full voting,
dividend and other ownership rights with respect to such shares of Stock.

 

(c)                                  The minimum number of shares with respect
to which this Stock Option may be exercised at any one time shall be 100 shares,
unless the number of shares with respect to which this Stock Option is being
exercised is the total number of shares subject to exercise under this Stock
Option at the time.

 

(d)                                 Notwithstanding any other provision hereof
or of the Plan, no portion of this Stock Option shall be exercisable after the
Expiration Date hereof.

 

3.                                      Termination of Employment or Service. 
If the Optionee’s employment by or service with the Company or a Subsidiary (as
defined in the Plan) is terminated, the period within which to exercise the
Stock Option may be subject to earlier termination as set forth below.

 

(a)                                 Termination Due to Death.  If the Optionee’s
employment or service terminates by reason of death, any Stock Option held by
the Optionee shall become fully exercisable and may thereafter be exercised by
the Optionee’s legal representative or legatee for a period of 12 months from
the date of death or until the Expiration Date, if earlier.

 

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(b)                                 Termination Due to Disability.  If the
Optionee’s employment or service terminates by reason of disability (as
determined by the Administrator), any Stock Option held by the Optionee shall
become fully exercisable and may thereafter be exercised by the Optionee for a
period of 12 months from the date of termination or until the Expiration Date,
if earlier.

 

(c)                                  Termination for Cause.  If the Optionee’s
employment or service terminates for Cause, any Stock Option held by the
Optionee shall terminate immediately and be of no further force and effect.  For
purposes hereof, “Cause” shall mean a vote by the Board resolving that the
Optionee shall be dismissed as a result of (i) any material breach by the
Optionee of any agreement between the Optionee and the Company; (ii) the
indictment of the Optionee in connection with a felony or a crime involving
moral turpitude; or (iii) any material misconduct or willful and deliberate
non-performance (other than by reason of disability) by the Optionee of the
Optionee’s duties to the Company.

 

(d)                                 Other Termination.  If the Optionee’s
employment or service terminates for any reason other than death, disability or
Cause, and unless otherwise determined by the Administrator, any Stock Option
held by the Optionee may be exercised, to the extent exercisable on the date of
termination, for a period of six months from the date of termination or until
the Expiration Date, if earlier.  Any Stock Option that is not exercisable upon
the Optionee’s termination of employment or service shall terminate immediately
and be of no further force or effect.

 

The Administrator’s determination of the reason for termination of the
Optionee’s employment or service shall be conclusive and binding on the Optionee
and his or her representatives or legatees.

 

4.                                      Incorporation of Plan.  Notwithstanding
anything herein to the contrary, this Stock Option shall be subject to and
governed by all the terms and conditions of the Plan, including the powers of
the Administrator set forth in  Section 2(b) of the Plan.  Capitalized terms in
this Agreement shall have the meaning specified in the Plan, unless a different
meaning is specified herein.

 

5.                                      Limitations on Transferability.  This
Agreement is personal to the Optionee, is non-assignable and is not transferable
in any manner, by operation of law or otherwise, other than by will or the laws
of descent and distribution.  This Stock Option is exercisable, during the
Optionee’s lifetime, only by the Optionee, and thereafter, only by the
Optionee’s legal representative or legatee.

 

6.                                      Tax Withholding.  The Optionee shall,
not later than the date as of which the exercise of this Stock Option becomes a
taxable event for Federal income tax purposes, pay to the Company or make
arrangements satisfactory to the Administrator for payment of any Federal,
state, and local taxes required by law to be withheld on account of such taxable
event.  The Optionee may elect to have the minimum required tax withholding
obligation satisfied, in whole or in part, by (i) authorizing the Company to
withhold from shares of Stock to be issued, or (ii) transferring to the Company,
a number of shares of Stock with an aggregate Fair Market Value that would
satisfy the withholding amount due.

 

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7.                                      Compensation Recovery Policy. 
Notwithstanding anything contained in this Agreement to the contrary, all Stock
Options awarded under this Agreement, and any any profits realized by the
Optionee from the sale of Class A Common Stock obtained by the Optionee upon
exercise of this Stock Option shall be subject to forfeiture or repayment
pursuant to the terms of the Company’s Compensation Recovery Policy as in effect
from time to time, including any amendments necessary for compliance with the
requirements of the Dodd-Frank Wall Street Reform and Consumer Protection Act.

 

8.                                      Miscellaneous.

 

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

 

(b)                                 This Stock Option does not confer upon the
Optionee any rights with respect to continuance of employment by or service with
the Company or any Subsidiary.

 

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