Exhibit 10.2

 

NON-COMPETITION AGREEMENT (CHINA)

 

This NON-COMPETITION AGREEMENT (“Agreement”) is made on the 8th day of July,
2009 between:

 

(1)           Watts (Shanghai) Management Co., Ltd., whose registered office is
at RM.B-H, 26th Floor, Huamin Empire Plaza, No.726,Yan An Road (West), Shanghai,
PRC ( “Watts Shanghai”); and

 

(2)           Josh C. Fu, whose address is No 52 Tomson Golf Villas, No 1 Long
Dong Avenue, Pu Dong District, Shanghai, 201203 PRC and, holder of United States
of America passport No. 710715410 (“Executive”).

 

The above-named are hereinafter individually referred to as a “Party” and
collectively as the “Parties.”

 

WHEREAS:

 

(a)           Watts Shanghai is an indirect, wholly-owned subsidiary of Watts
Water Technologies, Inc. (“Parent Company”).

 

(b)           During the period from January 1, 2008 to July 8, 2009
(“Termination Date”), the Executive was employed by the Parent Company.  In the
course of the Executive’s employment with the Parent Company, the Executive was
assigned by the Parent Company to work at Watts Shanghai.

 

(c)           The Executive and the Parent Company have signed a letter
agreement (“Letter Agreement”), dated June 15, 2009 , which confirms the
Executive’s resignation of his employment with the Parent Company, and service
to and position with Watts Shanghai, and sets forth the relevant terms and
conditions that the Executive under which the Executive will be eligible for
severance benefits (“Severance Benefits”).

 

(d)           Upon the Executive’s resignation of his employment with the Parent
Company on July 8, 2009  (the “Termination Date”), Watts Shanghai and the
Executive agree to the restrictions set out below in relation to the Executive’s
future employment and business activities in the People’s Republic of China
(“PRC”).

 

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NOW, THEREFORE, WATTS SHANGHAI AND THE EXECUTIVE AGREE AS FOLLOWS:

 

1              NON-DISCLOSURE AND CONFIDENTIAL INFORMATION

 

1.1           THE EXECUTIVE ACKNOWLEDGES THAT DURING THE PERIOD OF TIME THE
EXECUTIVE WAS WORKING WITH WATTS SHANGHAI, THE EXECUTIVE HAS ACQUIRED KNOWLEDGE
OF, AND/OR HAD ACCESS TO, TRADE SECRETS, CONFIDENTIAL AND PROPRIETARY
INFORMATION OF WATTS SHANGHAI AND/OR ITS AFFILIATES AND OF THIRD PARTIES WHICH
IS SUBJECT TO CONFIDENTIALITY AND OTHER AGREEMENTS BY AND BETWEEN WATTS SHANGHAI
AND/OR ITS AFFILIATES AND THOSE THIRD PARTIES (“CONFIDENTIAL INFORMATION”). 
SUCH CONFIDENTIAL INFORMATION, INCLUDES, BUT IS NOT LIMITED TO: FINANCIAL AND
PRICING INFORMATION; BUSINESS, RESEARCH, AND NEW PRODUCT PLANS AND STRATEGIES;
PATENT APPLICATIONS AND INVENTION DISCLOSURES; YIELDS, DESIGNS, EFFICIENCIES,
AND CAPACITIES OF PRODUCTION METHODS, PROCESSES, FACILITIES AND SYSTEMS AT WATTS
SHANGHAI, ITS AFFILIATES, AND ITS CONTRACTORS; CUSTOMER AND VENDOR LISTS, KEY
CONTACTS, HABITS, AND PRODUCT AND PURCHASING PLANS; MARKETING INFORMATION, PLANS
AND STRATEGIES; EXISTING AND ANTICIPATED AGREEMENTS WITH CUSTOMERS, VENDORS, AND
OTHER THIRD PARTIES; PRODUCT DESIGN AND RELATED INFORMATION; INFORMATION
REGARDING THE EMPLOYEES OF WATTS SHANGHAI AND/OR ITS AFFILIATES, THEIR PROJECTS,
AND THEIR SALARIES, BENEFITS AND OTHER PERSONNEL INFORMATION.

 

1.2           THE EXECUTIVE AGREES THAT HE WILL KEEP CONFIDENTIAL ALL NON-PUBLIC
INFORMATION CONCERNING WATTS SHANGHAI AND/OR ITS AFFILIATES THAT WATTS SHANGHAI
ACQUIRED DURING THE COURSE OF HIS WORKING WITH WATTS SHANGHAI AND ALL
DEVELOPMENTS AND INVENTIONS OF WATTS SHANGHAI AND/OR ITS AFFILIATES.

 

2              NON-COMPETITION

 

2.1           THE EXECUTIVE ACKNOWLEDGES THAT DURING THE PERIOD OF TIME THE
EXECUTIVE WAS WORKING FOR WATTS SHANGHAI, THE EXECUTIVE HAS DEVELOPED OR MAY
HAVE HELPED DEVELOP, HAVE ACCESS TO AND LEARN SIGNIFICANT SECRET, CONFIDENTIAL,
AND PROPRIETARY INFORMATION RELATING TO THE BUSINESS OF WATTS SHANGHAI AND/OR
ITS AFFILIATES.  IN ADDITION, THE EXECUTIVE HAS BEEN OR WAS PROVIDED WITH
CONTACT WITH CUSTOMERS, PROSPECTIVE CUSTOMERS, SUPPLIERS AND OTHER VENDORS OF
WATTS

 

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SHANGHAI AND/OR ITS AFFILIATES. THE EXECUTIVE HAS BEEN EXPECTED TO DEVELOP GOOD
CUSTOMER AND/OR VENDOR RELATIONSHIPS, AS WELL AS INTIMATE KNOWLEDGE REGARDING
THE TECHNOLOGY, PRODUCTS, SERVICES, SYSTEMS, METHODS, AND OPERATIONS WATTS
SHANGHAI AND/OR ITS AFFILIATES.

 

2.2           THE EXECUTIVE ALSO ACKNOWLEDGES THAT WATTS SHANGHAI AND/OR ITS
AFFILIATES HAVE INVESTED SUBSTANTIAL RESOURCES AND TIME TO DEVELOPING THE
TECHNOLOGY, PRODUCTS, SERVICES, SYSTEMS, METHODS, AND OPERATIONS, ALL OF WHICH
ARE HIGHLY VALUABLE ASSETS TO THE WATTS SHANGHAI AND/OR ITS AFFILIATES.  THE
EXECUTIVE AGREE THAT THE WATTS SHANGHAI AND/OR ITS AFFILIATES HAVE SPENT AND
WILL CONTINUE TO SPEND SUBSTANTIAL EFFORT, TIME, AND RESOURCES IN DEVELOPING AND
PROTECTING ITS TECHNOLOGY, PRODUCTS, SERVICES, SYSTEMS, METHODS, AND OPERATIONS,
AND RELATIONSHIPS WITH ITS CUSTOMERS AND VENDORS.  THE EXECUTIVE ALSO AGREE THAT
THE COMPETITORS OF WATTS SHANGHAI AND/OR ITS AFFILIATES WOULD OBTAIN AN UNFAIR
ADVANTAGE IF THE EXECUTIVE WERE TO DISCLOSE THE CONFIDENTIAL INFORMATION OF
WATTS SHANGHAI AND/OR ITS AFFILIATES TO A COMPETITOR, USED IT ON A COMPETITOR’S
BEHALF, OR IF THE EXECUTIVE WERE ABLE TO EXPLOIT THE RELATIONSHIPS THE EXECUTIVE
DEVELOPED IN HIS ROLE WITH WATTS SHANGHAI AND/OR ITS AFFILIATES TO SOLICIT
BUSINESS ON BEHALF OF A COMPETITOR.

 

2.3           IN VIEW OF THE CONFIDENTIAL INFORMATION OF WATTS SHANGHAI, WHICH
THE EXECUTIVE HAS HAD ACCESS TO DURING THE PERIOD OF TIME THE EXECUTIVE WAS
WORKING FOR WATTS SHANGHAI, THE EXECUTIVE AGREES THAT FOR A PERIOD OF NINE
(9) MONTHS FOLLOWING THE TERMINATION DATE (“NON-COMPETE TERM”), FOR ANY REASON,
THE EXECUTIVE WILL NOT DIRECTLY OR INDIRECTLY, ON HIS OWN BEHALF, OR AS AN
EMPLOYEE, REPRESENTATIVE OR AGENT OF A THIRD PARTY, BY OWNERSHIP OR ANY TYPE OF
INTEREST IN ANY BUSINESS ENTERPRISE, OR BY ANY OTHER MEANS WHATSOEVER, ENGAGE IN
ANY BUSINESS LOCATED IN OR OTHERWISE ENGAGING IN BUSINESS IN THE PRC THAT
DESIGNS, MANUFACTURES OR SELLS WATER-BASED HEATING, VENTILATION OR AIR
CONDITIONING (“HVAC”) PRODUCTS, WATER DISTRIBUTION PRODUCTS, WATER SAFETY
PRODUCTS OR FLOW CONTROL PRODUCTS PRIMARILY FOR THE HVAC, WATER DISTRIBUTION,
WATER QUALITY, WATER SAFETY, WATER FLOW CONTROL OR WATER CONSERVATION MARKETS
(COLLECTIVELY, A “COMPETITOR’S BUSINESS”), OR BECOME ASSOCIATED WITH OR RENDER
SERVICES TO A COMPETITOR’S BUSINESS SO ENGAGED.

 

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3              NON-SOLICITATION OF CUSTOMERS

 

3.1           THE EXECUTIVE AGREES THAT FOR A PERIOD OF NINE (9) MONTHS
FOLLOWING THE TERMINATION DATE FOR ANY REASON (WHETHER WITH OR WITHOUT CAUSE)
THE EXECUTIVE SHALL NOT, DIRECTLY OR INDIRECTLY, CALL UPON OR SOLICIT ANY
CUSTOMER OF WATTS SHANGHAI AND/OR ITS AFFILIATES FOR ANY PURPOSE OR BUSINESS
THAT IS COMPETITIVE WITH THE  BUSINESS OF WATTS SHANGHAI AND/OR ITS AFFILIATES,
NOR SHALL THE EXECUTIVE PERMIT A COMPETITOR’S BUSINESS CONTROLLED DIRECTLY OR
INDIRECTLY BY THE EXECUTIVE TO DO SO.  MERE OWNERSHIP AS A PASSIVE INVESTOR OF
NOT MORE THAN FIVE PERCENT (5%) OF THE SECURITIES OF A CORPORATION OR OTHER
BUSINESS ENTERPRISE SHALL NOT BE DEEMED CONTROL OF OR AN ASSOCIATION WITH SUCH
CORPORATION OR ENTERPRISE FOR PURPOSES OF THIS AGREEMENT.

 

4              NON-SOLICITATION OF EMPLOYEES

 

4.1           THE EXECUTIVE AGREES THAT FOR A PERIOD OF NINE (9) MONTHS
FOLLOWING THE TERMINATION DATE, THE EXECUTIVE SHALL NOT DIRECTLY OR INDIRECTLY,
PERSONALLY OR THROUGH OTHERS, SOLICIT OR ATTEMPT TO SOLICIT (ON HIS OWN BEHALF
OR ON BEHALF OF ANY OTHER PERSON OR ENTITY) THE EMPLOYMENT OR TERMINATION OF ANY
EMPLOYEE OR CONSULTANT OF THE WATTS SHANGHAI AND/OR ITS AFFILIATES.  THIS
PROVISION SHALL NOT APPLY TO EMPLOYEES OF WATTS SHANGHAI AND/OR ITS AFFILIATES
THAT HAVE BEEN TERMINATED FOR A PERIOD OF SIX MONTHS OR LONGER.

 

5              CONSIDERATION

 

5.1           IN CONSIDERATION OF THE EXECUTIVE’S BEING SUBJECT TO THE
RESTRICTIONS PROVIDED BY THIS AGREEMENT, THE PARENT COMPANY, FOR AND ON BEHALF
OF WATTS SHANGHAI, WILL MAKE PAYMENTS (“COMPENSATION”) TO THE EXECUTIVE. THE
EXECUTIVE ACKNOWLEDGES AND AGREES THAT THE COMPENSATION IS INCLUDED IN THE TOTAL
AMOUNT OF THE SEVERANCE BENEFITS WHICH WILL BE PROVIDED BY THE PARENT COMPANY
ACCORDING TO THE LETTER AGREEMENT.

 

5.2           THE EXECUTIVE AGREES THAT THE COMPENSATION SET OUT UNDER THIS
ARTICLE 5 IS FAIR AND REASONABLE COMPENSATION FOR HIS RESTRICTION UNDER THIS
AGREEMENT.  THE EXECUTIVE WILL NOT SEEK OR DEMAND ANY OTHER COMPENSATION FROM
WATTS SHANGHAI AND/OR IT AFFILIATES.  SHOULD THERE BE ANY CHANGE IN THE
APPLICABLE

 

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LAWS OR REGULATIONS SUCH THAT THE COMPENSATION WOULD NO LONGER BE SUFFICIENT TO
RENDER THE RESTRICTION UNDER THIS AGREEMENT ENFORCEABLE UNDER PRC LAW, WATTS
SHANGHAI AND/OR ITS AFFILIATES SHALL HAVE THE RIGHT TO PAY TO THE EXECUTIVE THE
AMOUNT NECESSARY TO MAKE UP FOR ANY INSUFFICIENCY IN THE COMPENSATION AND RENDER
THE EXECUTIVE’S OBLIGATION UNDER THIS AGREEMENT ENFORCEABLE.

 

5.3           THE EXECUTIVE AGREES THAT THE RESTRICTIONS UNDER THIS AGREEMENT
ARE REASONABLE, NO GREATER THAN WHAT IS REQUIRED TO PROTECT WATTS SHANGHAI
AND/OR ITS AFFILIATES’ LEGITIMATE INTERESTS WITH RESPECT TO TRADE SECRETS,
CONFIDENTIAL INFORMATION AND CUSTOMERS, AND CUSTOMER RELATIONSHIPS, AND DO NOT
IMPAIR OR PREVENT THE EXECUTIVE FROM EARNING A LIVING.

 

5.4           IT IS THE INTENTION OF BOTH PARTIES TO RESTRICT THE EXECUTIVE’S
ACTIVITIES ONLY TO THE EXTENT NECESSARY FOR THE PROTECTION OF THE WATTS SHANGHAI
AND/OR ITS AFFILIATES’ LEGITIMATE BUSINESS INTERESTS. TO THE EXTENT THAT THIS
RESTRICTIVE COVENANTS OF THIS AGREEMENT SHALL BE DETERMINED TO BE INVALID OR
UNENFORCEABLE IN ANY RESPECT OR TO ANY EXTENT, THE COVENANTS SHALL NOT BE
RENDERED INVALID, BUT INSTEAD SHALL BE AUTOMATICALLY AMENDED FOR SUCH LESSER
TERM OR TO SUCH LESSER EXTENT, OR IN SUCH OTHER DEGREE, AS MAY GRANT WATTS
SHANGHAI AND/OR ITS AFFILIATES THE MAXIMUM PROTECTION AND RESTRICTIONS ON YOUR
ACTIVITIES PERMITTED BY APPLICABLE LAW IN SUCH CIRCUMSTANCES. THE RESTRICTIONS
CONTAINED IN THIS AGREEMENT SHALL BE EXTENDED BY THE LENGTH OF TIME DURING WHICH
THE EXECUTIVE SHALL HAVE BEEN IN BREACH OF ANY OF SAID PROVISIONS.

 

6              DAMAGES

 

6.1           IF WATTS SHANGHAI AND/OR ITS AFFILIATES INCURS AND/OR SEEKS
REDRESS FOR ANY VIOLATION BY THE EXECUTIVE OF THIS AGREEMENT, THE EXECUTIVE
PROMISES AND AGREES TO PAY ALL COSTS, COURT COSTS, FEES AND EXPENSES, INCLUDING
ACTUAL ATTORNEY’S FEES, INCURRED BY  WATTS SHANGHAI AND/OR ITS AFFILIATES TO
ENFORCE THIS AGREEMENT AND/OR RECOVER AND COLLECT DAMAGES FOR ANY VIOLATION,
WHETHER OR NOT LITIGATION IS COMMENCED.

 

6.2           THE EXECUTIVE ACKNOWLEDGE THAT ANY VIOLATION OF THE RESTRICTIONS
UNDER THIS AGREEMENT WOULD RESULT IN IRREPARABLE INJURY TO WATTS SHANGHAI AND/OR
ITS

 

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AFFILIATES, WHICH ARE SERIOUS YET DIFFICULT TO MEASURE.  THE EXECUTIVE THEREFORE
AGREES TO PAY TO WATTS SHANGHAI AND/OR ITS AFFILIATES A ONE-TIME LIQUIDATED
DAMAGES PAYMENT WHICH IS EQUIVALENT TO THREE TIMES THE TOTAL AMOUNT OF THE
SEVERANCE BENEFITS, IF THE EXECUTIVE VIOLATES THE RESTRICTIONS IN THIS
AGREEMENT. THE EXECUTIVE AGREES THAT THE LIQUIDATED DAMAGES UNDER THIS ARTICLE 
ARE FAIR AND REASONABLE TO COMPENSATE WATTS SHANGHAI  AND/OR ITS AFFILIATES IN
THE EVENT THAT THE EXECUTIVE VIOLATES THE RESTRICTION UNDER THIS AGREEMENT.

 

7              AFFILIATES

 

7.1           ARTICLES 1, 2, 3 AND 4 SHALL APPLY AS THOUGH REFERENCES TO THE
“AFFILIATE” WERE SUBSTITUTED FOR REFERENCES TO “WATTS SHANGHAI.”  THE
OBLIGATIONS UNDERTAKEN BY THE EXECUTIVE PURSUANT TO THIS AGREEMENT SHALL, WITH
RESPECT TO EACH AFFILIATE, CONSTITUTE A SEPARATE AND DISTINCT COVENANT AND THE
INVALIDITY OR UNENFORCEABILITY OF ANY SUCH COVENANT SHALL NOT AFFECT THE
VALIDITY OR ENFORCEABILITY OF THE COVENANTS IN FAVOR OF WATTS SHANGHAI OR ANY
OTHER AFFILIATE.

 

7.2           WATTS SHANGHAI HEREBY SIGNS THIS AGREEMENT ON BEHALF OF ALL ITS
AFFILIATES AND ANY BREACH OF THE ABOVE MENTIONED ARTICLES VIS-À-VIS ANY
AFFILIATE SHALL CONSTITUTE A BREACH OF THIS AGREEMENT AND UPON SUBSEQUENT
WRITTEN AUTHORIZATION FROM THE HARMED AFFILIATE, WATTS SHANGHAI MAY SUE THE
EXECUTIVE FOR HIS BREACH OF THIS AGREEMENT. THE EXECUTIVE AGREES THAT, IF
REQUIRED TO DO SO BY WATTS SHANGHAI, HE WILL ENTER INTO COVENANTS IN THE SAME
TERMS AS THOSE SET OUT IN ARTICLES 1,2, 3 AND 4 HEREOF DIRECTLY WITH ALL OR ANY
OF SUCH AFFILIATES, MUTATIS MUTANDIS.

 

7.3           AS USED HEREIN, AN “AFFILIATE” SHALL MEAN IN RELATION TO WATTS
SHANGHAI, ANY DIRECT OR INDIRECT SUBSIDIARY OF WATTS SHANGHAI OR ANY DIRECT OR
INDIRECT CHINESE SUBSIDIARY OF WATTS WATER TECHNOLOGIES, INC.  THE AFFILIATES
INCLUDE BUT ARE NOT LIMITED TO WATTS PLUMBING TECHNOLOGIES (TAIZHOU) CO. LTD.,
TIANJIN WATTS VALVE COMPANY LTD., WATTS VALVE (CHANGSHA) CO., LTD., WATTS VALVE
(NINGBO) CO., LTD., AND WATTS (NINGBO) INTERNATIONAL TRADING CO., LTD.

 

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8              GENERAL

 

8.1           THE PARTIES AGREE THAT THE TERMS OF THIS AGREEMENT ARE
CONFIDENTIAL AND SHALL NOT BE DISCLOSED BY ANY PARTY (OTHER THAN THEIR
RESPECTIVE PROFESSIONAL ADVISORS IN STRICT CONFIDENCE AND, IN THE CASE OF WATTS
SHANGHAI, ITS SHAREHOLDERS AND DIRECTORS), UNLESS REQUIRED TO DO SO BY LAW.

 

8.2           THE EXECUTIVE UNDERTAKES NOT KNOWINGLY TO MAKE, PUBLISH OR
OTHERWISE ISSUE AND DETRIMENTAL OR DEROGATORY STATEMENTS CONCERNING WATTS
SHANGHAI OR ANY OF WATTS SHANGHAI’S OFFICERS, DIRECTORS OR EMPLOYEES.

 

8.3           THIS AGREEMENT CONSTITUTES THE ENTIRE UNDERSTANDING BETWEEN THE
PARTIES RELATING TO THE SUBJECT MATTER HEREOF, AND MAY NOT BE MODIFIED OR
AMENDED EXCEPT BY INSTRUMENT IN WRITING BY BOTH PARTIES.

 

8.4           ANY WAIVER BY WATTS SHANGHAI OF A BREACH OF ANY PROVISIONS OF THE
AGREEMENT SHALL NOT OPERATE OR BE CONSTRUED AS A WAIVER OF ANY SUBSEQUENT BREACH
OF SUCH PROVISION OR ANY OTHER PROVISION HEREOF.  WATTS SHANGHAI SHALL NOT BE
DEEMED TO HAVE ISSUED A WAIVER OF ANY BREACH OF THIS AGREEMENT BY THE EXECUTIVE
UNLESS IT HAS DONE SO IN WRITING AND UNLESS SUCH WRITTEN WAIVER WAS SIGNED BY AN
AUTHORIZED REPRESENTATIVE OF WATTS SHANGHAI.

 

8.5           THIS AGREEMENT MAY BE EXECUTED IN SEVERAL COUNTERPARTS, EACH OF
WHICH IS DEEMED AN ORIGINAL BUT ALL OF WHICH CONSTITUTE ONE AND THE SAME
INSTRUMENT, AND DELIVERY OF AN EXECUTED COUNTERPART BY FAX OR E-MAIL SHALL BE
EQUALLY EFFECTIVE AS DELIVERY OF A MANUALLY EXECUTED COUNTERPART OF THIS
AGREEMENT.

 

8.6           THIS AGREEMENT SHALL BE GOVERNED BY THE LAWS OF THE PEOPLE’S
REPUBLIC OF CHINA AND THE PARTIES SHALL SUBMIT TO THE NON-EXCLUSIVE JURISDICTION
OF THE COURTS OF THE PEOPLE’S REPUBLIC OF CHINA.

 

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AS WITNESS WHEREOF THE PARTIES HAVE EXECUTED THIS AGREEMENT ON THE FIRST DATE
WRITTEN ABOVE.

 

WATTS SHANGHAI:

 

/s/ Michael P. Flanders          9 July 2009

 

 

 

 

 

For and on behalf of

Watts (Shanghai) Management Co., Ltd.

Name: Michael P. Flanders

Title: President, Asia

 

 

[Watts Shanghai Chop]

 

EXECUTIVE:

 

/s/ Josh C. Fu          July 8, 2009

 

 

Josh C. Fu

 

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