Exhibit 10.1

 

WATTS WATER TECHNOLOGIES, INC.

 

EXECUTIVE SEVERANCE PLAN

 

(As Amended and Restated Effective February 8, 2018)

 

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WATTS WATER TECHNOLOGIES, INC.
EXECUTIVE SEVERANCE PLAN

(As Amended and Restated Effective February 8, 2018)

 

ARTICLE I
PURPOSE

 

This Watts Water Technologies, Inc. Executive Severance Plan (the “Plan”)
provides severance benefits to Eligible Executives upon certain terminations of
employment.  The Plan was originally effective June 1, 2014 and was amended and
restated in its current form effective as of February 8, 2018.

 

The Plan is intended (1) to be exempt from Code section 409A, and (2) to be a
welfare plan which is unfunded and is maintained by an employer for the purpose
of providing benefits for a select group of management or “highly compensated
employees” within the meaning of Department of Labor Regulation section
2520.104-24.  Notwithstanding any other provision of this Plan, this Plan shall
be interpreted, operated and administered in a manner consistent with these
intentions.

 

ARTICLE II
DEFINED TERMS

 

Whenever used in the Plan, the following terms shall have the meanings set forth
below:

 

“Cause” shall mean (a) an act constituting a felony; (b) fraud or dishonesty
that results in or is likely to result in economic damage to the Company; or
(c) willful misconduct in the performance of duties.

 

“Change in Control” shall mean the consummation of (a) the dissolution or
liquidation of the Company, (b) the sale of all or substantially all of the
assets of the Company on a consolidated basis to an unrelated person or entity,
(c) a merger, reorganization, consolidation or business combination (whether
directly involving the Company or indirectly involving the Company through one
or more intermediaries) which results in (i) the beneficial holders of the
Company’s voting securities outstanding immediately before such transaction
beneficially owning less than 60% of the combined voting power of the Company or
any person or entity that, as a result of the transaction, controls directly or
indirectly, the Company (the Company or such person or entity, the “Successor
Entity”), or (ii) any person or entity or group of persons or entities that
beneficially owned more than 60% of the combined voting power of the Company
immediately before such transaction beneficially owning less than 60% of the
combined voting power of the Successor Entity immediately after such
transaction, or (d) the sale of all of the Stock to an unrelated person or
entity.  For this purpose, “Stock” means the Class A Common Stock, par value
$.10 per share, of the Company.  For the purposes of clarity, a conversion of
shares of the Company’s Class B Common Stock, par value $.10 per share, into
Class A Common Stock shall not, in and of itself, be deemed a Change in Control.

 

“Code” shall mean the Internal Revenue Code of 1986, as amended.

 

“Committee” shall mean the Compensation Committee of the Board of Directors of
the Company (or its successor).  The Committee shall be the “named fiduciary”
for purposes of ERISA.

 

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“Company” shall mean Watts Water Technologies, Inc.

 

“Eligible Executive” shall have the meaning set forth in Article III.

 

“ERISA” shall mean the Employee Retirement Income Security Act, as amended.

 

“Good Reason” shall mean, without an Eligible Executive’s written consent, (a) a
reduction of more than ten percent (10%) in the Eligible Executive’s annual base
salary and annual bonus target opportunity as in effect immediately prior to the
date of the Change in Control; (b) the Eligible Executive’s mandatory relocation
to an office more than fifty (50) miles from the primary location at which
Eligible Executive is required to perform Eligible Executive’s duties
immediately prior to the date of the Change in Control; or (c) a material
reduction in the Eligible Executive’s responsibilities, duties or authority as
in effect immediately prior to the date of the Change in Control.  In each case,
Eligible Executive must provide the Company with notice of the facts giving rise
to a claim that “Good Reason” exists within 90 days of the initial existence of
such Good Reason event, and the Company shall have a right to remedy such event
within 30 days after receipt of Eligible Executive’s notice.  The Eligible
Employee must resign within twenty-four months from the occurrence of the event
giving rise to Good Reason. It is intended that terminations for Good Reason
under the Plan qualify as involuntary terminations under Code section 409A and
this definition shall be interpreted consistent with that intent.

 

“Plan” shall mean this Watts Water Technologies, Inc. Executive Severance Plan,
as amended from time to time.

 

“Protection Period” shall mean the 24-month period beginning on the date of the
first instance of a Change in Control.

 

“Termination of Employment” shall mean an individual’s termination of employment
with the Company and all of its subsidiaries and affiliates.

 

ARTICLE III
ELIGIBILITY

 

An officer of the Company will be eligible for participation in the Plan and
considered an “Eligible Executive” only if, at the time of his Termination of
Employment, he has been designated as an Eligible Executive by the Committee.  A
listing of such Eligible Executives is contained in Appendix A to the Plan.  The
Committee shall revise the listing of Eligible Executives from time to time in
its sole discretion.

 

ARTICLE IV
TERMINATION OUTSIDE PROTECTION PERIOD

 

If an Eligible Executive’s Termination of Employment does not occur during the
Protection Period, this Article IV shall govern the Eligible Executive’s
eligibility for Plan benefits.

 

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4.1                               Entitlement to Benefits

 

An Eligible Executive who (a) is involuntarily terminated without Cause and
(b) signs and does not revoke a separation agreement within the time period
required by law for an effective release of claims, but no more than fifty (50)
days following the date of such Termination of Employment, will be entitled to
receive Plan benefits under this Article IV.  Such separation agreement shall
contain a release of claims against the Company and its affiliates and such
restrictive covenants (e.g., non-competition, non-solicitation, and
non-disparagement covenants) as the Committee determines appropriate in its sole
discretion.

 

An Eligible Executive will not be eligible for severance benefits under this
Article IV if his employment terminates due to his division, location or other
business unit being sold.

 

4.2                               Amount of Benefits

 

An Eligible Executive entitled to benefits under this Article IV shall receive a
lump sum payment, net of all applicable tax withholding, within 60 days of his
Termination of Employment; provided however, that if the period during which the
Eligible Executive may consider and sign the separation agreement would span
more than one taxable year, then such payment shall not be made until the later
taxable year.  The amount of the lump sum payment shall equal the sum of:

 

(a)                                 the monthly premium the Eligible Executive
would have to pay for COBRA medical coverage (based on his coverage in effect at
Termination of Employment) times 12, and

 

(b)                                 the Eligible Executive’s annual base salary
on the date of his Termination of Employment.

 

Notwithstanding the foregoing, if the Eligible Executive is the Chief Executive
Officer of the Company at the time of his Termination of Employment, the amount
in subsection (b) shall be multiplied by two.

 

ARTICLE V
TERMINATION DURING PROTECTION PERIOD

 

If an Eligible Executive’s Termination of Employment occurs during the
Protection Period or under the circumstances described in Section 5.4, this
Article V shall govern the Eligible Executive’s eligibility for Plan benefits.

 

5.1                               Entitlement to Benefits

 

An Eligible Executive who is involuntarily terminated without Cause or resigns
for Good Reason will be entitled to receive Plan benefits under this Article V,
provided such Eligible Executive signs and does not revoke a general release of
claims within the time period required by law, but no more than fifty (50) days
following the date of such Termination of Employment.

 

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5.2                               Amount of Benefits

 

An Eligible Executive entitled to benefits under this Article V shall receive a
lump sum payment, net of all applicable tax withholding, within 60 days of his
Termination of Employment; provided however, that if the period during which the
Eligible Executive may consider and sign the general release of claims would
span more than one taxable year, then such payment shall not be made until the
later taxable year.  The amount of the lump sum payment shall equal the sum of:

 

(a)                                 the monthly premium the Eligible Executive
would have to pay for COBRA medical coverage (based on his coverage in effect at
Termination of Employment) times 24, and

 

(b)                                 two times the sum of the Eligible
Executive’s annual base salary and target annual bonus immediately prior to the
commencement of the Protection Period.

 

In addition, if an Eligible Executive is entitled to benefits under this
Article V, all unvested equity or equity-based awards of the Company held by the
Eligible Executive will, as of the Eligible Executive’s Termination of
Employment and automatically without any further action by the Company or its
Board of Directors, (i) if not subject to performance based vesting conditions,
become fully vested, non-forfeitable and, if applicable, exercisable, or (ii) if
subject to performance based vesting conditions, become vested, non-forfeitable
and, if applicable, exercisable at the greater of (a) the target award or
performance level or (b) the level that would apply based on actual performance
calculated as if the final day of the Company’s last completed fiscal quarter
prior to the date of the Eligible Executive’s Termination of Employment were the
final day of the applicable performance period (without any reduction to the
overall award to reflect the shortened performance period).  The immediately
preceding sentence will apply to all equity and equity-based awards held by an
Eligible Executive entitled to benefits under this Article V notwithstanding any
contrary terms of the documents governing the equity or equity-based awards (but
subject to Section 5.3) and any stock options or stock appreciation rights that
become exercisable under the immediately preceding sentence will not expire for
at least sixty (60) days following the later of the relevant Change in Control
or the Executive’s Termination of Employment (provided that (x) such awards may
be earlier terminated in connection with a corporate transaction as set forth in
the documents governing the awards and (y) no such stock option or stock
appreciation right will remain outstanding beyond its final expiration date). 
For the avoidance of doubt, nothing in this Section 5.2 will alter the payment
schedule of any non-qualified deferred compensation that is subject to
Section 409A of the Code.

 

5.3                               Excise Tax

 

Notwithstanding anything contained in this Plan to the contrary, if upon or
following a Change in Control, the tax imposed by Code section 4999 or any
similar or successor tax (the “Excise Tax”) applies, solely because of the
Change in Control, to any payments, benefits and/or amounts received by an
Eligible Executive under the Plan or otherwise, including, without limitation,
any amounts received or deemed received, within the meaning of any provision of
the Code, by the Eligible Executive as a result of (and not by way of
limitation) any automatic vesting, lapse of restrictions and/or accelerated
target or performance achievement provisions, or otherwise, applicable to
outstanding grants or awards to the Eligible Executive under any of the
Company’s

 

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incentive plans (collectively, the “Total Payments”), then the Total Payments
shall be reduced (but not below zero) so that the maximum amount of the Total
Payments (after reduction) shall be one dollar ($1.00) less than the amount
which would cause the Total Payments to be subject to the Excise Tax; provided
that such reduction to the Total Payments shall be made only if the total
after-tax benefit to the Eligible Executive is greater after giving effect to
such reduction than if no such reduction had been made.  If such a reduction is
required, the Company shall reduce or eliminate the Total Payments by first
reducing or eliminating any cash severance benefits, then by reducing or
eliminating any accelerated vesting of stock options, then by reducing or
eliminating any accelerated vesting of other equity awards, then by reducing or
eliminating any other remaining Total Payments, in each case in reverse order
beginning with the payments which are to be paid the farthest in time from the
Change in Control.  The preceding provisions of this Section 5.3 shall take
precedence over the provisions of any other plan, arrangement or agreement
governing the Eligible Executive’s rights and entitlements to any benefits or
compensation.

 

All determinations required under this Section shall be made by the Company’s
independent auditors at the Company’s expense and in accordance with Code
section 280G.

 

5.4                               Termination Before Protection Period

 

Notwithstanding anything to the contrary in this Plan, an Eligible Executive who
is involuntarily terminated without Cause in the six-month period immediately
preceding the commencement of the Protection Period will be entitled to receive
the benefits for unvested equity and equity-based awards described in
Section 5.2 and a benefit under this Section 5.4 equal to the amount described
in Section 5.2 less the amount described in Section 4.2 for such Eligible
Executive (regardless of whether the amount described in Section 4.2 is actually
paid), provided such Eligible Executive signs and does not revoke a general
release of claims within the time period required by law, but no more than fifty
(50) days following the Change in Control.  The amount payable under this
Section 5.4 shall be paid in a lump sum payment, net of all applicable tax
withholding, within 60 days of the first instance of a Change in Control;
provided however, that if the period during which the Eligible Executive may
consider and sign the general release of claims would span more than one taxable
year, then such payment shall not be made until the later taxable year.

 

ARTICLE VI
ADMINISTRATION OF THE PLAN

 

6.1                               General Administration

 

The Committee shall be responsible for the operation and administration of the
Plan and for carrying out the provisions hereof.  The Committee shall have the
full authority and discretion to make, amend, interpret, and enforce all
appropriate rules and regulations for the administration of this Plan and decide
or resolve any and all questions, including interpretations of this Plan, as may
arise in connection with this Plan.  Any such action taken by the Committee
shall be final and conclusive on any party.  To the extent the Committee has
been granted discretionary authority under the Plan, the Committee’s prior
exercise of such authority shall not obligate it to exercise its authority in a
like fashion thereafter.  The Committee shall be entitled to rely conclusively
upon all tables, valuations, certificates, opinions and reports furnished by any
actuary, accountant,

 

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controller, counsel or other person employed or engaged by the Company with
respect to the Plan.  The Committee may, from time to time, employ agents and
delegate to such agents, including employees of the Company, such administrative
or other duties as it sees fit.

 

6.2                               Claims for Benefits

 

(a)                                 Filing a Claim.  An Eligible Executive or
his authorized representative may file a claim for benefits under the Plan.  Any
claim must be in writing and submitted to the Committee at the Company’s
corporate headquarters office.  Claimants will be notified in writing of
approved claims, which will be processed as claimed. A claim is considered
approved only if its approval is communicated in writing to a claimant.

 

(b)                                 Denial of Claim.  In the case of the denial
of a claim respecting benefits paid or payable with respect to an Eligible
Executive, a written notice will be furnished to the claimant within 90 days of
the date on which the claim is received by the Committee.  If special
circumstances (such as for a hearing) require a longer period, the claimant will
be notified in writing, prior to the expiration of the 90-day period, of the
reasons for an extension of time; provided, however, that no extensions will be
permitted beyond 90 days after the expiration of the initial 90-day period.

 

(c)                                  Reasons for Denial.  A denial or partial
denial of a claim will be dated and will clearly set forth:

 

(i)                                     the specific reason or reasons for the
denial;

 

(ii)                                  specific reference to pertinent Plan
provisions on which the denial is based;

 

(iii)                               a description of any additional material or
information necessary for the claimant to perfect the claim and an explanation
of why such material or information is necessary; and

 

(iv)                              an explanation of the procedure for review of
the denied or partially denied claim set forth below, including the claimant’s
right to bring a civil action under ERISA section 502(a) following an adverse
benefit determination on review.

 

(d)                                 Review of Denial.  Upon denial of a claim,
in whole or in part, a claimant or his duly authorized representative will have
the right to submit a written request to the Committee for a full and fair
review of the denied claim by filing a written notice of appeal with the
Committee within 60 days of the receipt by the claimant of written notice of the
denial of the claim.  A claimant or the claimant’s authorized representative
will have, upon request and free of charge, reasonable access to, and copies of,
all documents, records, and other information relevant to the claimant’s claim
for benefits and may submit issues and comments in writing.  The review will
take into account all comments, documents, records, and other information
submitted by the claimant relating to the claim, without regard to whether such
information was submitted or considered in the initial benefit determination.

 

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If the claimant fails to file a request for review within 60 days of the denial
notification, the claim will be deemed abandoned and the claimant precluded from
reasserting it.  If the claimant does file a request for review, his request
must include a description of the issues and evidence he deems relevant. 
Failure to raise issues or present evidence on review will preclude those issues
or evidence from being presented in any subsequent proceeding or judicial review
of the claim.

 

(e)                                  Decision Upon Review.  The Committee will
provide a prompt written decision on review.  If the claim is denied on review,
the decision shall set forth:

 

(i)                                     the specific reason or reasons for the
adverse determination;

 

(ii)                                  specific reference to pertinent Plan
provisions on which the adverse determination is based;

 

(iii)                               a statement that the claimant is entitled to
receive, upon request and free of charge, reasonable access to, and copies of,
all documents, records, and other information relevant to the claimant’s claim
for benefits; and

 

(iv)                              a statement describing any voluntary appeal
procedures offered by the Plan and the claimant’s right to obtain the
information about such procedures, as well as a statement of the claimant’s
right to bring an action under ERISA section 502(a).

 

A decision will be rendered no more than 60 days after the Committee’s receipt
of the request for review, except that such period may be extended for an
additional 60 days if the Committee determines that special circumstances (such
as for a hearing) require such extension.  If an extension of time is required,
written notice of the extension will be furnished to the claimant before the end
of the initial 60-day period.

 

(f)                                   Protection Period Terminations.  If an
Eligible Executive files a claim related to a Termination of Employment
occurring during the Protection Period, all of the time periods related to the
Committee’s decisions described in this Section 6.2 shall be reduced by
two-thirds (e.g., from 90 days to 30 days).

 

(g)                                  Limitations Period.  Any suit or legal
action initiated by a claimant under the Plan must be brought by the claimant no
later than one year following a final decision on the claim for benefits by the
Committee.  The one-year limitation on suits for benefits will apply in any
forum where a claimant initiates such suit or legal action.

 

6.3                               Indemnification

 

To the extent not covered by insurance, the Company shall indemnify the
Committee, each employee, officer, director, and agent of the Company, and all
persons formerly serving in such capacities, against any and all liabilities or
expenses, including all legal fees relating thereto, arising in connection with
the exercise of their duties and responsibilities with respect to the Plan,
provided however that the Company shall not indemnify any person for liabilities
or expenses due to that person’s own gross negligence or willful misconduct.

 

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ARTICLE VII
TERMINATION AND AMENDMENT OF PLAN

 

7.1                               Termination of Plan

 

The Company’s Board of Directors may terminate the Plan at any time, without
prior notice.  Upon termination of the Plan, except with respect to benefits due
resulting from a Termination of Employment prior to such Plan termination, all
rights to benefits hereunder, if any, shall cease.  Any separation agreement
executed by an Eligible Executive under Section 4.1 shall survive the Plan’s
termination.

 

7.2                               Amendment of Plan

 

The severance benefits provided for in the Plan are not vested benefits. 
Accordingly, the Company reserves the right in its sole and absolute discretion,
to amend or modify the Plan at any time, in whole or in part, including any or
all of the provisions of the Plan, by action of its Board of Directors, without
prior notice.

 

7.3                               Protection Period Changes

 

Notwithstanding anything in the Plan to the contrary, no amendment or
termination of the Plan, including deletions to the listing of Eligible
Executives, may occur during the Protection Period without the written consent
of all Eligible Executives.

 

7.4                               Successors to the Company

 

The Company will require any successor (whether direct or indirect, by purchase,
merger, consolidation, or otherwise) of all or substantially all of the business
and/or assets of the Company to expressly assume and agree to perform the
Company’s obligations under this Plan in the same manner and to the same extent
that the Company would be required to perform them if such succession had not
taken place.

 

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ARTICLE VIII
MISCELLANEOUS

 

8.1                               Funding

 

The benefits provided herein shall be funded by the Company’s general assets. 
The Plan shall constitute an unfunded mechanism for the Company to pay Plan
benefits to Eligible Executives determined to be entitled to payments
hereunder.  No fund or trust is created with respect to the Plan, and no
Eligible Executive shall have any security or other interest in the assets of
the Company.

 

8.2                               No Contract of Employment

 

The Plan does not constitute or imply the existence of an employment contract
between the Company or any affiliate and any Eligible Executive.  Employment
with the Company is “at will.”

 

8.3                               Governing Law

 

To the extent not governed by federal law, the Plan shall be interpreted under
the laws of the State of Delaware notwithstanding any conflict of law
principles.

 

8.4                               Severability

 

In the event any provision of the Plan shall be held invalid or illegal for any
reason, any illegality or invalidity shall not affect the remaining parts of the
Plan, but the Plan shall be construed and enforced as if the illegal or invalid
provision had never been inserted.

 

8.5                               Words and Headings

 

Words in the masculine gender shall include the feminine and the singular shall
include the plural, and vice versa, unless qualified by the context.  Any
headings used herein are included for ease of reference only, and are not to be
construed so as to alter the terms hereof.

 

THIS PLAN WAS ORIGINALLY ADOPTED BY THE COMPANY’S BOARD OF DIRECTORS ON MAY 26,
2014 AND AMENDED AND RESTATED IN THE CURRENT FORM ON FEBRUARY 8, 2018.

 

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APPENDIX A

 

ELIGIBLE EXECUTIVES

(as of February 8, 2018)

 

Jennifer L. Congdon
Kenneth R. Lepage

Elie Melhem
Munish Nanda
Robert J. Pagano, Jr.

Navalpakkam Ramakrishnan

Todd A. Trapp

 

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