Document:

EXHIBIT 10.1

 

MGM RESORTS INTERNATIONAL

 

CHANGE OF CONTROL POLICY FOR EXECUTIVE OFFICERS

 

ADOPTED: JUNE 12, 2012

 

MGM RESORTS INTERNATIONAL
  CHANGE OF CONTROL POLICY FOR EXECUTIVE OFFICERS

 

1. Definitions

 

For purposes of the Change of Control Policy for Executive Officers, the following terms are defined as set forth below (unless the context clearly indicates otherwise):

 

	
Administrator
    	
The third-party accounting, actuarial, consulting or similar firm   retained by the Company prior to a Change of Control to administer this   Policy following a Change of Control.
    
	
 
    	
 
    
	
Annual Base  Salary
    	
The Participant’s base salary as in effect as of the date of a Change   of Control.
    
	
 
    	
 
    
	
Board
    	
The Board of Directors of the Company. 
    
	
 
    	
 
    
	
Change of Control 
    	
“Change   of Control” shall have the meaning given such term in the Current Employment   Agreement, if more favorable; provided that if there is no Current Employment   Agreement or if such agreement does not include such term or a comparable   term, “Change of Control” means the first to occur of:

 

(1) the   date that a reorganization, merger, consolidation, recapitalization, or   similar transaction is consummated, unless: (i) at least 50% of the   outstanding voting securities of the surviving or resulting entity   (including, without limitation, an entity which as a result of such   transaction owns the Company either directly or through one or more   subsidiaries) (“Resulting Entity”) are beneficially owned, directly or   indirectly, by the persons who were the beneficial owners of the outstanding   voting securities of the Corporation immediately prior to such transaction in   substantially the same proportions as their beneficial ownership, immediately   prior to such transaction, of the outstanding voting securities of the   Corporation and (ii) immediately following such transaction no person or   persons acting as a group beneficially owns capital stock of the Resulting   Entity possessing thirty-five percent (35%) or more of the total voting power   of the stock of the Resulting Entity;

 

(2) the   date that a majority of members of the Company’s Board is replaced during any   twelve (12) month period by directors whose appointment or election is not   endorsed by a majority of the members of the Company’s Board before the date   of the appointment or election;

 

(3) the   date that any one person, or persons acting as a group, acquires (or has or   have acquired as of the date of the most recent acquisition by such person or   persons) beneficial ownership of stock of the Company possessing thirty-five   percent (35%) or more of the total voting power of the stock of the Company;   or
    

 

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(4) the date that any one person acquires, or persons acting as   a group acquire (or has or have acquired as of the date of the most recent   acquisition by such person or persons), assets from the Company that have a   total gross fair market value equal to or more than forty percent (40%) of   the total gross fair market value of all of the assets of the Company   immediately before such acquisition or acquisitions.
    
	
 
    	
 
    
	
 
    	
For   the avoidance of doubt, there can only be one Change of Control for purposes   of the Policy.
    
	
 
    	
 
    
	
Code
    	
The Internal Revenue Code of 1986, as amended from time to time.
    
	
 
    	
 
    
	
Committee
    	
The Board’s Compensation Committee or a subcommittee thereof, any   successor thereto or such other committee or subcommittee as may be   designated by the Board to administer the Policy.
    
	
 
    	
 
    
	
Company
    	
MGM Resorts International, or any successor thereto.
    
	
 
    	
 
    
	
Current Employment Agreement
    	
The Participant’s employment agreement with the Company or any of its   affiliates (including, without limitation, any Parent or Subsidiary) in   effect as of the applicable date of determination, if any.
    
	
 
    	
 
    
	
Date of Termination
    	
If the Participant’s employment is terminated by:

 

(i) the Employer with Employer’s Good Cause or by the   Participant for Participant’s Good Cause, the Date of Termination shall be   the date on which the Participant or the Employer, as the case may be,   receives the Notice of Termination (as described in Section 3.2(b)) or   any later date specified therein, as the case may be.

 

(ii) the Employer without Employer’s Good Cause or by the   Participant without Participant’s Good Cause, the Date of Termination shall   be the date on which the Employer or the Participant, as applicable, notifies   the other party of such termination.

 

Notwithstanding the above, in the event that the Participant’s   employment is terminated within six months prior to a Change of Control under   circumstances entitling the Participant to the benefits described in Section 3   hereof, the Participant’s Date of Termination for purposes of Section 3   hereof shall be the date of the Change of Control.
    
	
 
    	
 
    
	
Effective Date
    	
June 12, 2012.  
    

 

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Employer
    	
As applicable, the Company, the Subsidiaries, any Parent and any   affiliated companies.
    
	
 
    	
 
    
	
Employer’s Good Cause
    	
As defined in Section 3.2(a).
    
	
 
    	
 
    
	
Executive Officer
    	
Any executive officer of the Company.
    
	
 
    	
 
    
	
Parent
    	
A parent corporation as defined in Section 424(e) of the   Code.
    
	
 
    	
 
    
	
Participant
    	
An Executive Officer who meets the eligibility requirements of Section 2.1.
    
	
 
    	
 
    
	
Participant’s Good Cause
    	
As defined in Section 3.2(a).
    
	
 
    	
 
    
	
Payment
    	
Any payment or distribution in the nature of compensation (within the   meaning of Section 280G(b)(2) of the Code) to or for the benefit of   the Participant, whether paid or payable pursuant to this Policy or   otherwise.
    
	
 
    	
 
    
	
Policy
    	
This MGM Resorts International Change of Control Policy for Executive   Officers.
    
	
 
    	
 
    
	
Separation Benefits
    	
The amounts and benefits payable or required to be provided in   accordance with Section 3.3 of this Policy.
    
	
 
    	
 
    
	
Subsidiary 
    	
A subsidiary corporation of the Company as defined in Section 424(f) of   the Code or corporation or other entity, whether domestic or foreign, direct   or indirect, in which the Company has or obtains a proprietary interest of   more than fifty percent (50%) by reason of stock ownership or otherwise.
    
	
 
    	
 
    
	
Target Bonus
    	
The annual target bonus award for which a Participant is eligible   under the Company’s Annual Performance-Based Incentive Plan for Executive   Officers, or any successor plan, as in effect as of the date of a Change of   Control (or, if greater, as of the Date of Termination).
    

 

2. Eligibility

 

2.1. Participation. Each Executive Officer set forth on Schedule A hereto shall be a Participant subject to the Policy effective as of the Effective Date and each other employee added to Schedule A by the Committee from time to time shall become a Participant subject to the Policy effective as of the date of such Committee action.

 

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2.2. Duration of Participation. A Participant shall cease to be a Participant subject to the Policy if (i) the Participant terminates employment with the Employer under circumstances not entitling him or her to Separation Benefits or (ii) the Committee determines that Participant shall cease to be subject to the Policy prior to the occurrence of a Change of Control, provided that no Executive Officer may be so removed from Policy participation subsequent to or in connection with a Change of Control that actually occurs.  Additionally, in the event that a Participant was removed from Policy participation in the six months prior to a Change of Control, such Participant will be deemed retroactively eligible to participate in the Policy. Furthermore, a Participant who is entitled to receive benefits under the Policy shall remain a Participant subject to the Policy until the amounts and benefits payable pursuant to the Policy have been paid or provided to the Participant in full.

 

3. Separation Benefits

 

3.1. Right to Separation Benefits. A Participant shall be entitled to receive from the Employer the Separation Benefits as provided in Section 3.3, if a Change of Control occurs and the Participant’s employment with the Employer is terminated under circumstances specified in Section 3.2(a)during the period commencing on the date that is six months prior to such Change of Control and ending on the first anniversary of such Change of Control.  Termination of employment shall have the same meaning as “separation from service” within the meaning of Treasury Regulation § 1.409A-1(h).

 

3.2. Termination of Employment.

 

(a)                         Terminations which give rise to Separation Benefits under this Policy. The circumstances specified in this Section 3.2(a) are any termination of employment with the Employer by action of the Employer without Employer’s Good Cause or by a Participant with Participant’s Good Cause.

 

For purposes of this Policy, “Employer’s Good Cause” shall have the meaning given such term in the Current Employment Agreement; provided that if there is no Current Employment Agreement or if such agreement does not include such term or a comparable term, “Employer’s Good Cause” shall mean:

 

(i)            Participant’s failure to reasonably abide by Employer’s policies and procedures, misconduct, insubordination, failure to perform the duties required of Participant up to reasonable standards established by the Employer’s senior management, or material breach of Participant’s Current Employment Agreement, which failure or breach is not cured by the Participant within ten (10) days after written notice thereof from Employer specifying the facts and circumstances of the alleged failure or breach, provided, however, that such notice and opportunity to cure shall not be required if, in the good faith judgment of the Board, such breach is not capable of being cured within ten (10) days;

 

(ii)           Participant’s failure or inability to apply for and obtain any license, qualification, clearance or other similar approval which the Employer or any regulatory authority which has jurisdiction over the Employer requests or requires that the Participant obtain;

 

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(iii)          The Employer is directed by any governmental authority in Nevada, New Jersey, Michigan, Mississippi, Illinois, Macau S.A.R., or any other jurisdiction in which the Employer is engaged in a gaming business or where the Employer has applied to (or during the term of the Participant’s employment under the Current Employment Agreement, may apply to) engage in a gaming business to cease business with the Participant; or

 

(iv)          Any of the Employer’s gaming business licenses are threatened to be, or are, denied, curtailed, suspended or revoked as a result of the Participant’s employment by the Employer or as a result of the Participant’s actions.

 

For purposes of this Policy, “Participant’s Good Cause” shall have the meaning given such term in the Current Employment Agreement; provided that if there is no Current Employment Agreement or if such agreement does not include such term or a comparable term, “Participant’s Good Cause” shall mean:

 

(i)            The failure of Employer to pay Participant any compensation when due; or

 

(ii)           A material reduction in the scope of duties or responsibilities of Participant or any reduction in Participant’s salary or Target Bonus.

 

If circumstances constituting Participant’s Good Cause occur, the Participant shall give the Employer thirty (30) days’ advance written notice specifying the facts and circumstances of the alleged breach.  During such thirty (30) day period, the Employer may either cure the breach (in which case such notice will be considered withdrawn) or declare that the Employer disputes that Participant’s Good Cause exists, in which case Participant’s Good Cause shall not exist until the dispute is resolved in accordance with the methods for resolving disputes specified in Exhibit A hereto.

 

(b)                         Notice of termination. Any termination of employment initiated by the Employer for Employer’s Good Cause, or by the Participant for Employee’s Good Cause, shall be communicated by a Notice of Termination to the other party. For purposes of this Policy, a “Notice of Termination” means a written notice which (i) indicates the specific termination provision in this Policy relied upon, and (ii) to the extent applicable, sets forth in reasonable detail the facts and circumstances claimed to provide a basis for termination of the Participant’s employment under the provision so indicated. The failure by the Participant or the Employer to set forth in the Notice of Termination any fact or circumstance which contributes to a showing of Employer’s Good Cause or Employee’s Good Cause shall not waive any right of the Employer or the Participant, respectively, hereunder or preclude the Employer or the Participant, respectively, from asserting such fact or circumstance in enforcing the Employer’s or the Participant’s rights hereunder.

 

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3.3. Separation Benefits. If a Participant’s employment is terminated under the circumstances set forth in Section 3.2(a) entitling the Participant to Separation Benefits, and if the Participant executes the general release of claims described in Section 3.5 within 21 days following the Date of Termination, then, contingent upon the expiration of any revocation period provided in such release within 30 days following the Date of Termination, the Participant shall become entitled to the benefits set forth in items (a) through (e) below (the “Separation Benefits”):

 

(a)                         The Employer shall pay to the Participant, in a lump sum in cash within 30 days after the Date of Termination, or on earlier date as required by applicable law, the sum of (A) the Participant’s Annual Base Salary through the Date of Termination to the extent not theretofore paid, (B) any bonus attributable to the Company’s most recently completed fiscal year to the extent not previously paid, and (C) any accrued vacation pay, in each case to the extent not theretofore paid. The sum of the amounts described in sub clauses (A), (B), and (C), shall be referred to as the “Accrued Obligations”.

 

(b)                         The Employer also shall pay to the Participant, in a lump sum in cash within 30 days after the Date of Termination, an amount (“Separation Pay”) equal to the product of (A) two and (B) the sum of (x) the Participant’s Annual Base Salary and (y) the Participant’s Target Bonus; provided, however, that the Separation Pay amount pursuant to this clause (b) shall not exceed $4,000,000 per Participant (or, in the case of a Participant who served as the Chief Executive Officer of the Company up to six (6) months prior to the Change of Control (not taking into account any change in title that would qualify as Employee’s Good Cause), $10,000,000).

 

(c)                          The Employer also shall pay to the Participant, in a lump sum in cash within 30 days after the Date of Termination, an amount (“Benefits Pay”) equal in value to 24 months of continued health and other insurance benefits provided by the Employer to the Participant immediately prior to the Change of Control (or, if greater, as of the Date of Termination).

 

(d)                         Notwithstanding anything to the contrary in the Company’s 2005 Omnibus Incentive Plan, or any successor thereto under which equity awards are granted, or the applicable award agreements with respect to any such equity awards, the Participant’s outstanding equity awards, if any, shall accelerate and vest in full, and with respect to any stock appreciation rights, the Participant may exercise such awards until the date that is one (1) year following the Date of Termination or the expiration of the maximum term of the award, if earlier.

 

3.4. Payment Obligations Absolute.  Upon a Change of Control and termination of employment under the circumstances described in Section 3.2(a), subject to Participant’s execution of a general release, the obligations of the Employer to pay or provide the Separation Benefits described in Section 3.3 shall be absolute and unconditional and shall not be affected by any circumstances, including, without limitation, any set-off, counterclaim, recoupment, defense or other right which the Employer may have against any Participant. In no event shall a Participant be obligated to seek other employment or take any other action by way of mitigation of the amounts payable to a Participant under any of the provisions of this Policy, nor shall the amount of any payment or value of any benefits hereunder be reduced by any compensation or benefits earned by a Participant as a result of employment by another employer.

 

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3.5.     General Release of Claims.  Upon a Change of Control and termination of employment under the circumstances described in Section 3.2(a), the obligations of the Employer to pay or provide the Separation Benefits described in Section 3.3 are contingent on the Participant’s (for him/herself, his/her heirs, legal representatives and assigns) agreement to execute a general release in the form and substance to be provided by Employer, releasing the Employer, its affiliated companies and their officers, directors, agents and employees from any claims or causes of action of any kind that the Participant might have against any one or more of them as of the date of the release, regarding his/her employment or the termination of that employment.  A form of such release is attached hereto as Exhibit B.

 

3.6. Non-Exclusivity of Rights; Non-Duplication of Benefits. Nothing in this Policy shall prevent or limit the Participant’s continuing or future participation in any plan, program, policy or practice provided by the Employer and for which the Participant may qualify, nor shall anything herein limit or otherwise affect such rights as the Participant may have under any contract or agreement with the Employer; provided, however, that any payments under this Policy shall be reduced by any cash severance payments and/or insurance continuation benefits payable under any Current Employment Agreement. Amounts or benefits which the Participant is otherwise entitled to receive under any plan, policy, practice or program of or any contract or agreement with the Employer shall be payable in accordance with such plan, policy, practice or program or contract or agreement, except as explicitly modified by this Policy.

 

4. Successor to Company

 

This Policy shall bind any successor of the Company, its assets or its businesses (whether direct or indirect, by purchase, merger, consolidation or otherwise), in the same manner and to the same extent that the Company or its Subsidiaries would be obligated under this Policy if no succession had taken place.

 

In the case of any transaction in which a successor would not by the foregoing provision or by operation of law be bound by this Policy, the Company shall require such successor expressly and unconditionally to assume and agree to perform the Company’s or its Subsidiaries’ obligations under this Policy, in the same manner and to the same extent that the Company would be required to perform if no such succession had taken place. The term “Company,” as used in this Policy, shall mean the Company as hereinbefore defined and any successor or assignee to the business or assets which by reason hereof becomes bound by this Policy.

 

5. Duration, Amendment and Termination

 

5.1. Duration. This Policy shall remain in effect until terminated as provided in Section 5.2. Notwithstanding the foregoing, if a Change of Control occurs, this Policy shall continue in full force and effect and shall not terminate or expire until after all Participants who become entitled to any payments or benefits hereunder shall have received such payments or benefits in full.

 

5.2. Amendment and Termination. The Policy may be terminated or amended in any respect by resolution adopted by the Committee prior to the occurrence of a Change of Control. However, after the Board has knowledge of a possible transaction or event that if consummated would constitute a Change of Control, this Policy may not be terminated or amended in any manner which would adversely affect the rights or potential rights of Participants, unless and until the Board has determined that all transactions or events that, if consummated, would constitute a

 

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Change of Control have been abandoned and will not be consummated, and, provided that, the Board does not have knowledge of other transactions or events that, if consummated, would constitute a Change of Control. If a Change of Control occurs, the Policy shall no longer be subject to amendment, change, substitution, deletion, revocation or termination in any respect that adversely affects the rights of Participants, and no Participant shall be removed from Policy participation.

 

6. Miscellaneous

 

6.1. Legal Fees. The Employer agrees to pay, to the full extent permitted by law, all reasonable legal fees and expenses which the Participant may reasonably incur as a result of any contest by the Employer, the Participant or others of the validity or enforceability of, or liability under, any provision of this Policy or any guarantee of performance thereof (including as a result of any contest by the Participant about the amount of any payment pursuant to this Policy); provided that the Employer shall have no obligation under this Section 6.1 to the extent the resolution of any such contest includes a finding denying, in total, the Participant’s claims in such contest.

 

6.2. Employment Status. This Policy does not constitute a contract of employment or impose on the Participant, the Company or the Participant’s Employer any obligation to retain the Participant as an employee or to change the Employer’s policies regarding termination of employment.

 

6.3. Tax Withholding. The Employer may withhold from any amounts payable under this Policy such federal, state, local or foreign taxes as shall be required to be withheld pursuant to any applicable law or regulation.

 

6.4. Validity and Severability. The invalidity or unenforceability of any provision of the Policy shall not affect the validity or enforceability of any other provision of the Policy, which shall remain in full force and effect, and any prohibition or unenforceability in any jurisdiction shall not invalidate or render unenforceable such provision in any other jurisdiction.

 

6.5. Governing Law. The validity, interpretation, construction and performance of the Policy shall in all respects be governed by the laws of the State of Delaware, without reference to principles of conflict of law.

 

6.6. Section 409A of the Code. Notwithstanding anything herein to the contrary:

 

(a)                           The Policy shall be interpreted, construed and operated to reflect the intent of the Company that all aspects of the Policy shall be interpreted either to be exempt from the provisions of Section 409A of the Code or, to the extent subject to Section 409A of the Code, comply with Section 409A of the Code and any regulations and other guidance thereunder.  This Policy may be amended at any time, without the consent of any Participant, to avoid the application of Section 409A of the Code in a particular circumstance or to the extent determined necessary or desirable to satisfy any of the requirements under Section 409A of the Code, but the Employer shall not be under any obligation to make any such amendment.  Nothing in the Policy shall provide a basis for any person to take action against the Employer based on matters covered by Section 409A of the Code, including the tax treatment of any award made under the Policy, and the Employer shall not under any circumstances have any liability to any Participant or other person for any taxes, penalties or interest due on amounts paid or payable under the Policy, including taxes, penalties or interest imposed under Section 409A of the Code.

 

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(b)                           To the extent that any payment or benefit pursuant to this Policy constitutes a “deferral of compensation” subject to Section 409A of the Code (after taking into account to the maximum extent possible any applicable exemptions) (a “409A Payment”) treated as payable upon a separation from service (as defined under Section 409A of the Code, then, if on the date of the Participant’s separation from service, the Participant is a specified employee (as defined under Section 409A of the Code), then to the minimum extent required for the Participant not to incur additional taxes pursuant to Section 409A of the Code, no such 409A Payment shall be made to the Participant sooner than the earlier of (i) six (6) months after the Participant’s separation from service; or (ii) the date of the Participant’s death, at which time all such delayed payments shall be paid in lump sum without interest.

 

(c)                            No 409A Payment payable under this Policy shall be subject to acceleration or to any change in the specified time or method of payment, except as otherwise provided under this Policy and consistent with Section 409A.  If under this Policy, a 409A Payment is to be paid in two or more installments, for purposes of Section 409A, each installment shall be treated as a separate payment.

 

6.7 Claim Procedure. If a Participant makes a written request alleging a right to receive Separation Benefits under the Policy or alleging a right to receive an adjustment in benefits being paid under the Policy, the Company shall treat it as a claim for benefits. All claims for Separation Benefits under the Policy shall be sent to the General Counsel of the Company and must be received within 30 days after the Date of Termination. If the Company determines that any individual who has claimed a right to receive Separation Benefits under the Policy is not entitled to receive all or a part of the benefits claimed, it will inform the claimant in writing of its determination and the reasons therefore in terms calculated to be understood by the claimant. The notice will be sent within 90 days of the written request, unless the Company determines additional time, not exceeding 90 days, is needed and provides the Participant with notice, during the initial 90-day period, of the circumstances requiring the extension of time and the length of the extension. The notice shall make specific reference to the pertinent Policy provisions on which the denial is based, and describe any additional material or information that is necessary. Such notice shall, in addition, inform the claimant what procedure the claimant should follow to take advantage of the review procedures set forth below in the event the claimant desires to contest the denial of the claim. The claimant may within 90 days thereafter submit in writing to the Administrator a notice that the claimant contests the denial of his or her claim by the Company and desires a further review. The Administrator shall within 60 days thereafter review the claim and authorize the claimant to appear personally and review the pertinent documents and submit issues and comments relating to the claim to the persons responsible for making the determination on behalf of the Administrator. The Administrator will render its final decision with specific reasons therefor in writing and will transmit it to the claimant within 60 days of the written request for review, unless the Administrator determines additional time, not exceeding 60 days, is needed, and so notifies the Participant during the initial 60-day period. The Committee may revise the foregoing procedures as it determines necessary to comply with changes in the applicable U.S. Department of Labor regulations.

 

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6.8. Unfunded Status. This Policy is intended to be an unfunded plan and to qualify as a severance pay plan within the meaning of Department of Labor regulations Section 2510.3-2(b). All payments pursuant to the Policy shall be made from the general funds of the Employer and no special or separate fund shall be established or other segregation of assets made to assure payment. No Participant or other person shall have under any circumstances any interest in any particular property or assets of the Employer as a result of being subject to the Policy.  Notwithstanding the foregoing, the Committee may authorize the creation of trusts or other arrangements to assist in accumulating funds to meet the obligations created under the Policy; provided, however, that, unless the Committee otherwise determines, the existence of such trusts or other arrangements is consistent with the “unfunded” status of the Policy.

 

6.9. Reliance on Adoption of Policy. Subject to Section 5.2, each person who shall become a Participant shall be deemed to have served and continue to serve in such capacity in reliance upon the Change on Control provisions contained in this Policy.

 

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SCHEDULE A

 

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EXHIBIT A

 

ARBITRATION

 

This Exhibit A sets forth the methods for resolving disputes should any arise under the Policy, and accordingly, this Exhibit A shall be considered a part of the Policy.

 

1.              Except for a claim by either Participant or the Company for injunctive relief where such would be otherwise authorized by law, any controversy or claim arising out of or relating to the Policy or the breach hereof including without limitation any claim involving the interpretation or application of the Policy, shall be submitted to binding arbitration in accordance with the employment arbitration rules then in effect of the Judicial Arbitration and Mediation Service (“JAMS”), to the extent not inconsistent with this paragraph.  This Exhibit A covers any claim Participant might have against any officer, director, employee, or agent of the Company, or any of the Company’s subsidiaries, divisions, and affiliates, and all successors and assigns of any of them.  The promises by the Company and Participant to arbitrate differences, rather than litigate them before courts or other bodies, provide consideration for each other, in addition to other consideration provided under the Policy.

 

2.              Claims Subject to Arbitration.  This Exhibit A contemplates mandatory arbitration to the fullest extent permitted by law.  Only claims that are justiciable under applicable state or federal law are covered by this Exhibit A.  Such claims include any and all alleged violations of any state or federal law whether common law, statutory, arising under regulation or ordinance, or any other law, brought by any current or former employees.

 

3.              Non-Waiver of Substantive Rights.  This Exhibit A does not waive any rights or remedies available under applicable statutes or common law.  However, it does waive Participant’s right to pursue those rights and remedies in a judicial forum.  By accepting benefits under the Policy, the Participant shall be deemed to have voluntarily agreed to arbitrate his or her claims covered by this Exhibit A.

 

4.              Time Limit to Pursue Arbitration; Initiation:  To ensure timely resolution of disputes, Participant and the Company must initiate arbitration within the statute of limitations (deadline for filing) provided for by applicable law pertaining to the claim.  The failure to initiate arbitration within this time limit will bar any such claim.  The parties understand that the Company and Participant are waiving any longer statutes of limitations that would otherwise apply, and any aggrieved party is encouraged to give written notice of any claim as soon as possible after the event(s) in dispute so that arbitration of any differences may take place promptly.  The parties agree that the aggrieved party must, within the time frame provided by this Exhibit A, give written notice of a claim.  In the event such notice is to be provided to the Company, the Participant shall provide a copy of such notice of a claim to the Company’s Executive Vice President and General Counsel.  Written notice shall identify and describe the nature of the claim, the supporting facts and the relief or remedy sought.

 

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5.              Selecting an Arbitrator:  This Exhibit A mandates Arbitration under the then current rules of the Judicial Arbitration and Mediation Service (JAMS) regarding employment disputes.  The arbitrator shall be either a retired judge or an attorney experienced in employment law and licensed to practice in the state in which arbitration is convened.  The parties shall select one arbitrator from among a list of three qualified neutral arbitrators provided by JAMS.  If the parties are unable to agree on the arbitrator, each party shall strike one name and the remaining named arbitrator shall be selected.

 

6.              Representation/Arbitration Rights and Procedures:

 

a.              Participant may be represented by an attorney of his/her choice at his/her own expense.

 

b.              The arbitrator shall apply the substantive law (and the law of remedies, if applicable) of Nevada (without regard to its choice of law provisions) and/or federal law when applicable.  In all cases, this Exhibit A shall provide for the broadest level of arbitration of claims between the Company and Participant under Nevada or applicable federal law.  The arbitrator is without jurisdiction to apply any different substantive law or law of remedies.

 

c.               The arbitrator shall have no authority to award non-economic damages or punitive damages except where such relief is specifically authorized by an applicable state or federal statute or common law.  In such a situation, the arbitrator shall specify in the award the specific statute or other basis under which such relief is granted.

 

d.              The applicable law with respect to privilege, including attorney-client privilege, work product, and offers to compromise must be followed.

 

e.               The parties shall have the right to conduct reasonable discovery, including written and oral (deposition) discovery and to subpoena and/or request copies of records, documents and other relevant discoverable information consistent with the procedural rules of JAMS.  The arbitrator shall decide disputes regarding the scope of discovery and shall have authority to regulate the conduct of any hearing and/or trial proceeding.  The arbitrator shall have the right to entertain a motion to dismiss and/or motion for summary judgment.

 

f.                The parties shall exchange witness lists at least 30 days prior to the trial/hearing procedure.  The arbitrator shall have subpoena power so that either Participant or the Company may summon witnesses.  The arbitrator shall use the Federal Rules of Evidence.  Both parties have the right to file a post hearing brief.  Any party, at its own expense, may arrange for and pay the cost of a court reporter to provide a stenographic record of the proceedings.

 

g.               Any arbitration hearing or proceeding shall take place in private, not open to the public, in Las Vegas, Nevada.

 

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7.                                      Arbitrator’s Award: The arbitrator shall issue a written decision containing the specific issues raised by the parties, the specific findings of fact, and the specific conclusions of law.  The award shall be rendered promptly, typically within 30 days after conclusion of the arbitration hearing, or the submission of post-hearing briefs if requested.  The arbitrator may not award any relief or remedy in excess of what a court could grant under applicable law.  The arbitrator’s decision is final and binding on both parties.  Judgment upon an award rendered by the arbitrator may be entered in any court having competent jurisdiction.

 

a.              Either party may bring an action in any court of competent jurisdiction to compel arbitration under this Exhibit A and to enforce an arbitration award.

 

b.              In the event of any administrative or judicial action by any agency or third party to adjudicate a claim on behalf of Participant which is subject to arbitration under this Exhibit A, Participant hereby waives the right to participate in any monetary or other recovery obtained by such agency or third party in any such action, and Participant’s sole remedy with respect to any such claim shall be any award decreed by an arbitrator pursuant to the provisions of this Exhibit A.

 

8.                                      Fees and Expenses: The Company shall be responsible for paying any filing fee and the fees and costs of the arbitrator; provided, however, that if Participant is the party initiating the claim, Participant will contribute an amount equal to the filing fee to initiate a claim in the court of general jurisdiction in the state in which Participant is (or was last) employed by the Company.  Participant and the Company shall each pay for their own expenses, attorney’s fees (a party’s responsibility for his/her/its own attorney’s fees is only limited by any applicable statute specifically providing that attorney’s fees may be awarded as a remedy), and costs and fees regarding witness, photocopying and other preparation expenses.  If any party prevails on a statutory claim that affords the prevailing party attorney’s fees and costs, or if there is a written agreement providing for attorney’s fees and/or costs, the arbitrator may award reasonable attorney’s fees and/or costs to the prevailing party, applying the same standards a court would apply under the law applicable to the claim(s).

 

9.                                      The arbitration provisions of this Exhibit A shall survive the termination of Participant’s employment with the Company.  These arbitration provisions can only be modified or revoked in a writing signed by both parties and which expressly states an intent to modify or revoke the provisions of this Exhibit A.

 

10.                               The arbitration provisions of this Exhibit A do not alter or affect the termination provisions of the Policy.

 

11.                               Capitalized terms not defined in this Exhibit A shall have the same definition as in the Policy to which this is Exhibit A.

 

12.                               If any provision of this Exhibit A is adjudged to be void or otherwise unenforceable, in whole or in part, such adjudication shall not affect the validity of the remainder of Exhibit A.  All other provisions shall remain in full force and effect.

 

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ACKNOWLEDGMENT

 

BOTH PARTIES ACKNOWLEDGE THAT:  THEY HAVE CAREFULLY READ THIS EXHIBIT A IN ITS ENTIRETY, THEY UNDERSTAND ITS TERMS, EXHIBIT A CONSTITUTES A MATERIAL TERM AND CONDITION OF POLICY TO WHICH IT IS EXHIBIT A, AND THEY AGREE TO ABIDE BY ITS TERMS.

 

The parties also specifically acknowledge that by accepting benefits under the Policy and thereby agreeing to the terms of this Exhibit A, they are waiving the right to pursue claims covered by this Exhibit A in a judicial forum and instead agree to arbitrate all such claims before an arbitrator without a court or jury.  It is specifically understood that this Exhibit A does not waive any rights or remedies which are available under applicable state and federal statutes or common law.  Both parties enter into this Exhibit A voluntarily and not in reliance on any promises or representation by the other party other than those contained in the Agreement or in this Exhibit A.

 

Participant further acknowledges that Participant has been given the opportunity to discuss this Exhibit A with Participant’s private legal counsel and that Participant has availed himself/herself of that opportunity to the extent Participant wishes to do so.

 

*              *              *

 

16Exhibit 10.1

 

 

815 Chestnut Street · North Andover, MA · 01845-6098 · Tel. (978) 688-1811

 

June 14, 2012

 

William C. McCartney

7 Bradley Road
 Andover, MA 01810

 

Re:                             Retention Agreement

 

Dear Bill:

 

You have stated your intention to retire as Chief Financial Officer from Watts Water Technologies, Inc. (the “Company”), but have agreed to consider remaining in the position to assist in the search for a successor and to transition your responsibilities.  As outlined in this letter, the Company is prepared to provide you a retention benefit to remain with the Company through December 14, 2012 to allow for the orderly transition of your duties to a new Chief Financial Officer.

 

To be eligible to receive the retention benefit, you must satisfy the eligibility requirements described in the “Description of Retention Benefit” set forth at Attachment A to this Retention Agreement (“Retention Agreement”).  These requirements include your signing and returning, but not revoking, this Retention Agreement to Kenneth R. Lepage by July 6, 2012,  and signing and returning, but not revoking, the Release of Claims at Attachment B no earlier than on December 14, 2012, but no later than on January 4, 2013.  By signing and returning this Retention Agreement, and not revoking your acceptance, you will be agreeing to the terms and conditions set forth in the numbered paragraphs below, including the release of claims set forth in Paragraph 3.  Therefore, you are advised to consult with an attorney before signing this Retention Agreement and you have been given more than twenty-one (21) days to do so.  If you sign this Retention Agreement, you may change your mind and revoke your agreement during the seven (7) day period after you have signed it.  If you do not so revoke, this Retention Agreement will become a binding agreement between you and the Company upon the expiration of the seven (7) day revocation period.

 

If you choose not to sign and return this Retention Agreement by July 6, 2012,  or if you timely revoke your acceptance in writing, you will not receive any retention benefits from the Company.  You will, however, receive payment on your last day of employment  for any wages and unused vacation time accrued through that date.  Also, regardless of signing this Retention Agreement, you may elect to continue receiving group sponsored health insurance pursuant to the federal “COBRA” law, 29 U.S.C. § 1161 et  seq.  You shall pay all premium costs for “COBRA” on a monthly basis for as long as, and to the

 

 

extent that, you remain eligible for COBRA continuation.  You should consult the COBRA materials to be provided by the Company for details regarding these benefits.  All other benefits, including life insurance and long-term disability insurance, will cease upon your last day of employment.

 

The following numbered paragraphs set forth the terms and conditions that will apply if you timely sign and return this Retention Agreement and do not revoke it within the seven (7) day period:

 

1.                                      Retirement Date:  Your effective date of retirement from the Company will be December 14, 2012 (the “Retirement Date”).  The Company may determine your services are no longer required before this date.  As of the Retirement Date, your salary will stop, and any entitlement you have or might have under a Company-provided benefit plan, program, contract or practice will terminate, except as required by federal or state law, or as otherwise described Attachment A.

 

2.                                      Description of Retention Benefit:  The terms and conditions of the retention benefit to be paid to you are described in the “Description of Retention Benefit” attached as Attachment A (the “retention benefit”).  In connection with the retention benefit that may be provided to you pursuant to this Retention Agreement, the Company shall withhold and remit to the tax authorities the amounts required under applicable law, and you shall solely and ultimately be responsible for all applicable taxes with respect to such retention benefits under applicable law.  You acknowledge that you are not relying upon advice or representation of the Company with respect to the tax treatment of any of the retention benefits set forth in Attachment A.

 

3.                                      Release:  This section of this Retention Agreement is a release of legal claims.  In this section, you are agreeing to forfeit your right to bring a legal action against the Company and the other releasees defined below for all claims that arose up to the date of this Retention Agreement.  Please carefully review this section with your attorney, or other trusted advisor, and do not sign this document unless you understand what this section says.

 

(a)                                 In exchange for the amounts and benefits described in Attachment A, which are in addition to anything of value to which you are entitled to receive, you and your representatives, agents, estate, heirs, successors and assigns, absolutely and unconditionally release, remiss, discharge, indemnify and hold harmless the Company Releasees, from any and all legally waivable claims that you have against the Company Releasees.  Other than as permitted in Paragraph 3(d) below, this means that by signing this Retention Agreement, you are agreeing not to bring a legal action against the Company Releasees for any type of claim arising from conduct that occurred any time in the past and up to and through the date you sign this document. Company Releasees is defined to include the Company, Watts Water Technologies, Inc. and/or any of their respective parents, subsidiaries or affiliates, predecessors, successors or assigns, as well

 

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as their respective current and/or former directors, shareholders/stockholders, officers, employees, attorneys and/or agents, all both individually and in their official capacities.

 

(b)                                 This release includes, but is not limited to, any waivable claims you have against the Company Releasees based on conduct that occurred any time in the past and up to and through the date you sign this Retention Agreement that arises from any federal, state or local law, regulation or constitution dealing with either employment, employment benefits or employment discrimination. By way of example, this release includes the laws or regulations concerning discrimination on the basis of race, color, creed, religion, age, sex, sex harassment, sexual orientation, national origin, ancestry, genetic carrier status, handicap or disability, veteran status, any military service or application for military service, or any other category protected under federal or state law.  This release also includes any claim you may have for breach of contract, whether oral or written, express or implied; any tort claims; any claims for equity or employee benefits of any other kind; or any other legally waivable statutory and/or common law claims.

 

(c)                                  For avoidance of doubt, by signing this Retention Agreement you are agreeing not to bring any waivable claims against the Company Releasees (other than as permitted in Paragraph 3(d) below) under the following nonexclusive list of discrimination and employment statutes:  Title VII of the Civil Rights Act of 1964, The Age Discrimination In Employment Act of 1967, The Americans With Disabilities Act, The ADA Amendments Act, The Equal Pay Act, The Lilly Ledbetter Fair Pay Act, the Family and Medical Leave Act, The Worker Adjustment and Retraining Notification Act (“WARN”), The Rehabilitation Act of 1973, The Fair Credit Reporting Act, The Employee Retirement Income Security Act (“ERISA”), Executive Order 11246, and Executive Order 11141, The Genetic Information Nondiscrimination Act of 2008, The Massachusetts Fair Employment Practices Law (M.G.L. ch. 151B), The Massachusetts Equal Rights Act, The Massachusetts Equal Pay Act, The Massachusetts Privacy Statute, the Massachusetts Maternity Leave Act, The Massachusetts Small Necessities Leave Act, The Massachusetts Labor and Industries Act, The Massachusetts Civil Rights Act, and all other federal, state and local laws, all as amended.

 

(d)                                 This release does not include any claim under the workers compensation or unemployment compensation statutes or any other claim, which, as a matter of law, cannot be released by private agreement.  Also, this Retention Agreement is not intended to affect the rights and responsibilities of government agencies such as the Equal Employment Opportunity Commission (the “EEOC”), or any comparable state or local agency, to enforce the laws within their jurisdiction. This means that by signing this Retention Agreement you may still exercise your protected right to file a charge with, or participate in an investigation or proceeding conducted by, the EEOC or any other state, federal or local government entity; provided, however, if the EEOC or any other state, federal or local government entity commences an investigation or other legal action on your behalf, you specifically waive and release your right to recover, if any, monetary damages or other benefits or remedies of any sort whatsoever arising from the governmental action.

 

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4.                                      Waiver of Rights and Claims Under the Age Discrimination in Employment Act of 1967:

 

Since you are 40 years of age or older, you are being informed that you have or may have specific rights and/or claims under the Age Discrimination in Employment Act of 1967 (ADEA) and you agree that:

 

(a)                                 in consideration for the amounts described in Attachment A to this Retention Agreement, which you are not otherwise entitled to receive, you specifically and voluntarily waive such rights and/or claims under the ADEA you might have against the Company Releasees to the extent such rights and/or claims arose prior to the date this Retention Agreement was executed;

 

(b)                                 you understand that rights or claims under the ADEA which may arise after the date this Retention Agreement is executed are not waived by you;

 

(c)                                  you are advised to consider the terms of this Retention Agreement carefully and consult with or seek advice from an attorney of your choice or any other person of your choosing prior to executing this Retention Agreement;

 

(d)                                 you have carefully read and fully understand all of the provisions of this Retention Agreement, and you knowingly and voluntarily agree to all of the terms set forth in this Retention Agreement; and

 

(e)                                              in entering into this Retention Agreement you are not relying on any representation, promise or inducement made by the Company or its attorneys with the exception of those promises described in this document.

 

5.                                      Period for Review and Consideration of the Retention Agreement:

 

(a)  You acknowledge that you were informed and understand that you have twenty-one (21) days to review this Retention Agreement and consider its terms before signing it.

 

(b)  The 21-day review period will not be affected or extended by any revisions, whether material or immaterial, that might be made to this Retention Agreement.

 

6.                                      Non-Disclosure and Confidential Information:  Unless compelled by law, you agree that you will keep confidential all non-public information concerning the Company or any of the Company Releasees that you acquired during the course of your employment with the Company and all developments and inventions.  You further agree to comply with any obligations regarding confidential information, non-solicitation, non-competition and inventions set forth in any agreements previously entered into by you with the Company or its predecessors. Such provisions and obligations shall remain in

 

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effect notwithstanding this Retention Agreement and the ending of your employment.  You acknowledge that during the course of your employment with the Company you have acquired knowledge of, and/or had access to, trade secrets, confidential and proprietary information of the Company and of third parties which is subject to confidentiality and other agreements by and between the Company 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 the Company 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 Company employees, their projects, and their salaries, benefits and other personnel information.  You agree that you will not use or disclose to others any Confidential Information.

 

7.                                      Non-Competition and Non-Solicitation:  For purposes of this section, “Company” shall include the Company and any of its parents, subsidiaries or affiliates.  In your employment with the Company, you have developed or helped develop, had access to and learned significant secret, confidential, and proprietary information relating to the business of the Company.  In addition, you have been provided with contact with customers, prospective customers, suppliers and other vendors of the Company.  You have been expected to develop good customer and/or vendor relationships, as well as intimate knowledge regarding the Company’s technology, products, services, systems, methods, and operations.

 

You also acknowledge that the Company has invested substantial resources and time to developing the technology, products, services, systems, methods, and operations, all of which are highly valuable assets to the Company.  You agree that the Company has 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.  You also agree that the Company’s competitors would obtain an unfair advantage if you were to disclose the Company’s Confidential Information (as defined above) to a competitor, used it on a competitor’s behalf, or if you were able to exploit the relationships you developed in your role with the Company to solicit business on behalf of a competitor.

 

Accordingly, you agree that:

 

(a)         You shall not, either alone or in association with others, for a period of twenty-four (24) months after the termination of your employment, directly or indirectly, on your own behalf, or as an employee, representative or agent of a third party, by ownership or any type of interest in any business enterprise listed on Attachment C or any entity that directly, or indirectly through one or more intermediaries, controls, or is controlled by, or is under common control with a business enterprise listed on Attachment C (collectively, a

 

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“Competitor’s Business”), or become associated with or render services to a Competitor’s Business so engaged.

 

(b)         You shall not, either alone or in association with others, for a period of twenty-four (24) months after termination of your employment, directly or indirectly, call upon or solicit any Company customer for any purpose or business that is competitive with the Company’s business, nor shall you permit any company or business controlled directly or indirectly by you 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 or otherwise violate the terms of this Retention Agreement.

 

(c)          You shall not, either alone or in association with others, for a period of twenty-four (24) months after termination of your employment, directly or indirectly solicit, induce or attempt to induce, any employee or independent contractor of the Company to terminate his or her employment or other engagement with the Company or hire or attempt to hire as an employee, or any person who is employed by the Company at any time while you were employed by the Company; provided, that this provision shall not apply to the solicitation, hiring or other engagement of any individual whose employment or other engagement with the Company has been terminated for a period of six (6) months or longer.

 

You may serve on the Board of any public or private company or as a manager of any limited partnership provided that the company or partnership is not a Competitor’s Business.

 

You agree that these restrictions are reasonable, no greater than what is required to protect the Company’s legitimate interests with respect to trade secrets, confidential information and customers, and customer relationships, and do not impair or prevent you from earning a living.

 

It is the intention of the parties to restrict your activities only to the extent necessary for the protection of the Company’s legitimate business interests.  To the extent that this restrictive covenant of this Retention Agreement shall be determined to be invalid or unenforceable in any respect or to any extent, the covenant 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 the Company the maximum protection and restrictions on your activities permitted by applicable law in such circumstances.  The non-competition and non-solicitation obligations contained in this Retention Agreement shall be extended by the length of time during which you shall have been in breach of any of said provisions.

 

If you violate the provisions of any of the preceding paragraphs of this section, you shall continue to be bound by the restrictions set forth in such section until the period equal to the period of restriction has expired without any violation.

 

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8.                                      Resignation of Positions:  This Retention Agreement confirms your resignation of your employment with Watts Water Technologies, Inc. and all of its subsidiaries (collectively, the “Company”) on December 14, 2012, and your resignation from any and all other offices or positions you officially or unofficially hold with respect to any divisions or business units of the Company on your Retirement Date.

 

9.                                      Cooperation:  You agree to make yourself available upon reasonable notice from the Company or its attorneys to provide testimony as a witness through declarations, affidavits, depositions or at a hearing or trial, and to work with the Company in preparation for such event, and to cooperate with any other reasonable request by the Company in connection with the investigation, defense or prosecution of any mediation, arbitration, administrative hearing, or lawsuit to which the Company is a party, currently pending or filed after the Retirement Date.  If the Company so requests your cooperation in connection with any legal matter then the Company agrees to pay for any reasonable out-of-pocket expenses, such as economy class airfare or lodging, that you incur in connection with assisting the Company, provided you notify the Company in advance of what your reasonable expenses are expected to be and receive prior written approval from the Company for such expenses.

 

10.                               Non-Disparagement:  Other than as permitted in Paragraph 3(d), you understand and agree that as a condition for payment to you of the retention benefit, you shall not make any false, disparaging or derogatory statements in public or private to any person, entity or media outlet regarding the Company or the Company Releasees, or about the Company’s or the Company Releasees’ business affairs, practices, products, services, and financial condition.

 

11.                               Amendment:  This Retention Agreement shall be binding upon the parties and may not be abandoned, supplemented, changed or modified in any manner, orally or otherwise, except by an instrument in writing of concurrent or subsequent date signed by a duly authorized representative of the parties hereto.  You may not assign any of your rights or delegate any of your duties under this Retention Agreement.  The rights and obligations of the Company will inure to the benefit of the Company’s successors and assigns.

 

12.                               Waiver of Rights:  No delay or omission by the Company in exercising any right under this Retention Agreement shall operate as a waiver of that or any other right.  A waiver or consent given by the Company on any one occasion shall be effective only in that instance and shall not be construed as a bar to or waiver of any right on any other occasion.

 

13.                               Relief:  You acknowledge that any violation of the confidentiality, non-compete, or non-solicitation provisions of this Retention Agreement at Paragraphs 6 and 7 above, would result in irreparable injury to the Company.  Accordingly, in addition to, and not in lieu of, all other rights and remedies available to the Company, it shall be automatically

 

7

 

entitled to a temporary restraining order and a temporary or preliminary injunction and to obtain all other available equitable remedies including a permanent injunction in order to restrain and enjoin any breach of the confidentiality, non-competition, or non-solicitation provisions in this Retention Agreement.  The exercise of the Company’s right to obtain injunctive relief for any actual or threatened damage or injury caused by you shall not prejudice its right to seek and obtain damages, as further referenced in Paragraph 14, herein.

 

14.                               Enforcement and Consequences of Breach:  Other than as permitted in Paragraph 3(d) above, you agree that if you assert any claim against the Company or any of the other Company Releasees in violation of the release and waiver in Paragraph 3, or if the Company incurs and/or seeks redress for any violation by you of the Retention Agreement, you promise and agree to pay all costs, court costs, fees and expenses, including actual attorney’s fees, incurred by the Company, and/or any Company Releasees, to enforce this Retention Agreement and/or recover and collect damages for any violation, whether or not litigation is commenced.  However, nothing in this Retention Agreement will interfere with your right to challenge the enforceability of this Retention Agreement’s release of claims under the ADEA, and you shall not be required to tender back payments made to you nor will you be liable for the costs and attorneys’ fees that the Company and other Company Releasees incur in connection with a challenge by you of the foregoing release of claims under the ADEA.

 

15.                               Cessation and Repayment of Retention Benefit:  By signing below, you are acknowledging and agreeing that if the Company is sued or incurs the cost of resolving and/or settling a matter that arises from violations of the law, fraud and/or financial improprieties committed by you or at your direction while you were employed by the Company, the Company will cease paying the balance of any unpaid retention benefits to you.  In addition, under the foregoing circumstances and upon demand from the Company, you will be obligated to repay any amounts already paid to you by the Company under this Retention Agreement, including the value of all equity awards accelerated pursuant to this Retention Agreement.  You acknowledge and agree that the Company’s actions will not constitute a breach of this Retention Agreement, that you will remain bound by the release and waiver provisions set out in Paragraphs 3 and 4 above and that the Company may pursue all other available legal and equitable remedies against you, including, but not limited to, enforcement of your confidentiality, non-competition, and/or non-solicitation obligations.

 

16.                               Validity:  Should any provision of this Retention Agreement be declared or be determined by any court of competent jurisdiction to be illegal or invalid, the validity of the remaining parts, terms or provisions shall not be affected thereby and said illegal or invalid part, term or provision shall be deemed not to be a part of this Retention Agreement.

 

17.                               Confidentiality:  Other than as permitted in Paragraph 3(d) above, you understand and agree that the terms and contents of this Retention Agreement, and the contents of the negotiations and discussions resulting in this Retention Agreement, shall

 

8

 

be maintained as confidential by you, your agents and your representatives and none of the above shall be disclosed except to the extent required by federal or state law or as otherwise agreed to in writing by an authorized agent of the Company.

 

18.                               Nature of Agreement:  You  understand and agree that this Retention Agreement is a Retention Agreement and does not constitute an admission of liability or wrongdoing on the part of the Company.

 

19.                               Acknowledgments:  You acknowledge that you have been given at least twenty-one (21) days to consider this Retention Agreement, including Attachment A, B and C, and that the Company advised you in writing to consult with an attorney of your own choosing prior to signing this Retention Agreement.  You understand that you may revoke this Retention Agreement for a period of seven (7) days after you sign it, and that this Retention Agreement shall not be effective or enforceable until the expiration of this seven (7) day revocation period.  You understand and agree that by entering into this Retention Agreement you are waiving any and all rights or claims you might have under the Age Discrimination in Employment Act, as amended by the Older Workers Benefit Protection Act (“ADEA”).  You understand and agree that such waiver and release of claims under the ADEA does not apply to any rights or claims that may arise under the ADEA after the date of execution of this Retention Agreement, and that nothing in this Retention Agreement prohibits you from challenging the validity of this Retention Agreement’s waiver and release of claims under the ADEA.  You also understand and agree that you have received consideration beyond that to which you were previously entitled.

 

20.                               Voluntary Assent:  You affirm that no other promises or agreements of any kind have been made to or with you by any person or entity whatsoever to cause you to sign this Retention Agreement, and that you fully understand the meaning and intent of this Retention Agreement.  You state and represent that you have had an opportunity to discuss fully and review the terms of this Retention Agreement, including Attachment A, B, and C, with an attorney.  You further state and represent that you have carefully read this Retention Agreement, including Attachment A, B, and C, understand the contents herein, freely and voluntarily assent to all of the terms and conditions hereof, and sign your name of your own free act.

 

21.                               Applicable Law and Consent to Jurisdiction:  This Retention Agreement shall be interpreted and construed solely by the laws of the Commonwealth of Massachusetts, without regard to conflict of laws provisions.  You hereby irrevocably submit to and acknowledge and recognize the exclusive jurisdiction of the courts of the Commonwealth of Massachusetts, or if appropriate, a federal court located in the Commonwealth of Massachusetts (which courts, for purposes of this Retention Agreement, are the only courts of competent jurisdiction), over any suit, action or other proceeding arising out of, under or in connection with this Retention Agreement or the subject matter hereof.

 

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22.          Entire Agreement:  This Retention Agreement, including Attachment A, B, and C, contains and constitutes the entire understanding and agreement between the parties hereto with respect to your retention benefits and the settlement of claims against the Company, except as provided in Paragraph 6 above, and cancels all previous oral and written negotiations, agreements, commitments and writings in connection therewith.  Nothing in this Retention Agreement shall affect the terms or validity of the Indemnification Agreement dated February 10, 2004 between you and the Company and such Indemnification Agreement shall continue in full force and effect in accordance with its terms.

 

23.          Effective Date:  You may revoke this Retention Agreement for a period of seven (7) days after signing it.  In order to revoke the Retention Agreement, you must submit a written notice of revocation to Kenneth R. Lepage located at 815 Chestnut Street, North Andover, Massachusetts, 01845, lepagekr@watts.com, or by FAX (978-688-2976).  This written notice may be sent by mail, email, fax, or hand-delivery.  If sent my mail, the revocation must be post-marked no later than the seventh day from the date you signed this Retention Agreement.  If the written notice is sent by fax, email or hand-delivery, it must be received by Kenneth R. Lepage no later than the close of business on the seventh day.  The Retention Agreement will not become effective or enforceable, and no payments will be made, until this revocation period has expired (“Effective Date”) without being exercised.

 

If you have any questions about the matters covered in this Retention Agreement, please call Kenneth R. Lepage at 978-689-6234.

 

Very truly yours,

 

Watts Water Technologies, Inc. (also for and on behalf of its subsidiaries)

 

 

	
By:
    	
/s/   David J. Coghlan
    	
 
    
	
 
    	
Name:   David J. Coghlan
    	
 
    
	
 
    	
Title:   Chief Executive Officer
    	
 
    

 

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I hereby agree to the terms and conditions set forth above and in Attachment A, B, and C.  I have been given at least twenty-one (21) days to consider this Retention Agreement (including Attachment A, B, and C) and I have chosen to execute this on the date below.  I have been advised to consult an attorney before signing this Retention Agreement.  I acknowledge that I have not relied on any representation or statement other than those contained in this Retention Agreement.  I intend that this Retention Agreement will become a binding agreement between the Company and me if I do not revoke my acceptance in seven (7) days.

 

 

	
/s/   William C. McCartney
    	
 
    	
6/14/12
    
	
William   C. McCartney
    	
 
    	
Date
    

 

To be returned by July 6, 2012

 

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IF YOU DO NOT WISH TO USE THE 21-DAY PERIOD,

PLEASE CAREFULLY REVIEW AND SIGN THIS DOCUMENT

 

I, William C. McCartney, acknowledge that I was informed and understand that I have 21-days within which to consider the attached Retention Agreement, have been advised of my right to consult with an attorney regarding this Retention Agreement and have considered carefully every provision of this Retention Agreement, and that after having engaged in those actions, I prefer to and have requested that I enter into this Retention Agreement prior to the expiration of the 21-day period.

 

 

	
Dated:
    	
6/14/12
    	
 
    	
/s/   William C. McCartney
    
	
 
    	
 
    	
 
    	
William   C. McCartney
    

 

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ATTACHMENT A

 

DESCRIPTION OF RETENTION BENEFIT

 

Retention Benefit Eligibility Requirements:  You will be eligible for the Retention Benefit described below, provided that: (i) you timely sign, and do not revoke, this Retention Agreement; (ii) you have not terminated your employment prior to your Retirement Date and you have not been terminated for Cause; (iii) you have effectively transitioned your responsibilities and duties to the new Chief Financial Officer and performed your duties in a professional and timely manner; and  (iv) you timely sign, and do not revoke, the Release of Claims at Attachment B.  For purposes of this Retention Agreement, Cause shall mean: (a) an act by you constituting a felony or a misdemeanor involving moral turpitude; (b) fraud or dishonesty on your part that results in or is likely to result in economic damage to the Company; (c) gross negligence or misconduct in the performance of your duties; or (d) refusal to attempt in good faith to implement a reasonable directive of the Company or failure to perform your assigned duties.

 

1.          The Company will pay you $690,000, representing twenty-four (24) months of your base salary, less all applicable taxes and withholdings (“Salary”).  The Company will also pay you an amount equivalent to the amount you would have received as a discretionary bonus for 2012 under the Executive Incentive Bonus Plan if you had remained an employee of the Company through December 31, 2012, as determined by the Compensation Committee, less all applicable taxes and withholdings (“Bonus” and, together with Salary, the “Retention Pay”).  The Salary payment will be paid in one lump sum on the first business day after the eighth (8th) day after your Retirement Date, provided you have executed, timely returned, and not revoked this Retention Agreement and Attachment B.  Should you fail to do so by the eighth (8th) day after your Retirement date, the Salary payment will be paid in one lump sum in accordance with the Company’s normal payroll practices after the date you have executed, timely returned, and not revoked this Retention Agreement and Attachment B.  The Bonus payment will be paid in one lump sum in accordance with the Company’s normal bonus payment practices after the approval of 2012 discretionary bonus payments under the Executive Incentive Bonus Plan by the Compensation Committee, but in no event later than March 15, 2013, provided you have executed, timely returned, and not revoked this Retention Agreement and Attachment B.

 

2.          The Company will accelerate vesting of all of your unvested stock options and restricted stock awards as of December 14, 2012.  The Company will also extend the post-Retirement Date exercise period for all of your stock options to the earlier of December 14, 2015 or the expiration date of the stock option.

 

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ATTACHMENT B

 

RELEASE OF CLAIMS

 

1.              Acknowledgments of Consideration.  You acknowledge that the promises you are providing in the Release of Claims are a material inducement and consideration for the Company entering into the Retention Agreement, to which this Release of Claims is an attachment (the “Retention Agreement”).  You acknowledge that, in connection with the Retention Agreement to which this Release of Claims is attached, you are receiving substantial payments and benefits from the Company, which benefits constitute substantial and adequate consideration for this Release of Claims.

 

2.              Release — This section of the Release of Claims is a release of legal claims.  In this section, you are agreeing to forfeit your right to sue the Company and the other releasees defined below for all claims that arose up to the date of the Release of Claims.  Please carefully review this section with your attorney, or other trusted advisor, and do not sign this document unless you understand what this section says.

 

(a)         In exchange for the amounts and benefits described in Attachment A of the Retention Agreement, which are in addition to anything of value to which you are entitled to receive, you and your representatives, agents, estate, heirs, successors and assigns, absolutely and unconditionally release, remiss, discharge, indemnify and hold harmless the Company Releasees, from any and all legally waivable claims that you have against the Company Releasees.  Other than as permitted in Paragraph 3(d) below, this means that by signing this Release of Claims, you are agreeing not to bring a legal action against the Company Releasees for any type of claim arising from conduct that occurred any time in the past and up to and through the date you sign this document. Company Releasees is defined to include the Company, Watts Water Technologies, Inc. and/or any of their respective parents, subsidiaries or affiliates, predecessors, successors or assigns, as well as their respective current and/or former directors, shareholders/stockholders, officers, employees, attorneys and/or agents, all both individually and in their official capacities.

 

(b)         This release includes, but is not limited to, any waivable claims you have against the Company Releasees based on conduct that occurred any time in the past and up to and through the date you sign this Release of Claims that arises from any federal, state or local law, regulation or constitution dealing with either employment, employment benefits or employment discrimination. By way of example, this release includes the laws or regulations concerning discrimination on the basis of race, color, creed, religion, age, sex, sex harassment, sexual orientation, national origin, ancestry, genetic carrier status, handicap or disability, veteran status, any military service or application for 

 

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military service, or any other category protected under federal or state law.  This release also includes any claim you may have for breach of contract, whether oral or written, express or implied; any tort claims; any claims for equity or employee benefits of any other kind; or any other legally waivable statutory and/or common law claims.

 

(c)          For avoidance of doubt, by signing this Release of Claims you are agreeing not to bring any waivable claims against the Company Releasees (other than as permitted in Paragraph 3(d) below) under the following nonexclusive list of discrimination and employment statutes:  Title VII of the Civil Rights Act of 1964, The Age Discrimination In Employment Act of 1967, The Americans With Disabilities Act, The ADA Amendments Act, The Equal Pay Act, The Lilly Ledbetter Fair Pay Act, the Family and Medical Leave Act, The Worker Adjustment and Retraining Notification Act (“WARN”), The Rehabilitation Act of 1973, The Fair Credit Reporting Act, The Employee Retirement Income Security Act (“ERISA”), Executive Order 11246, and Executive Order 11141, The Genetic Information Nondiscrimination Act of 2008, The Massachusetts Fair Employment Practices Law (M.G.L. ch. 151B), The Massachusetts Equal Rights Act, The Massachusetts Equal Pay Act, The Massachusetts Privacy Statute, the Massachusetts Maternity Leave Act, The Massachusetts Small Necessities Leave Act, The Massachusetts Labor and Industries Act, The Massachusetts Civil Rights Act, and all other federal, state and local laws, all as amended.

 

(d)         This release does not include any claim under the workers compensation or unemployment compensation statutes or any other claim, which, as a matter of law, cannot be released by private agreement.  Also, this Release of Claims is not intended to affect the rights and responsibilities of government agencies such as the Equal Employment Opportunity Commission (the “EEOC”), or any comparable state or local agency, to enforce the laws within their jurisdiction. This means that by signing this Release of Claims you may still exercise your protected right to file a charge with, or participate in an investigation or proceeding conducted by, the EEOC or any other state, federal or local government entity; provided, however, if the EEOC or any other state, federal or local government entity commences an investigation or other legal action on your behalf, you specifically waive and release your right to recover, if any, monetary damages or other benefits or remedies of any sort whatsoever arising from the governmental action.

 

3.              Waiver of Rights and Claims Under the Age Discrimination in Employment Act of 1967:

 

Since you are 40 years of age or older, you are being informed that you have or may have specific rights and/or claims under the Age Discrimination in Employment Act of 1967 (ADEA) and you agree that:

 

(a)         in consideration for the amounts described in Attachment A to the Retention Agreement, which you are not otherwise entitled to receive, you specifically 

 

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and voluntarily waive such rights and/or claims under the ADEA you might have against the Company Releasees to the extent such rights and/or claims arose prior to the date this Release of Claims was executed;

 

(b)         you understand that rights or claims under the ADEA which may arise after the date this Release of Claims is executed are not waived by you;

 

(c)          you are advised to consider the terms of this Release of Claims carefully and consult with or seek advice from an attorney of your choice or any other person of your choosing prior to executing this Release of Claims;

 

(d)         you have carefully read and fully understand all of the provisions of this Release of Claims, and you knowingly and voluntarily agree to all of the terms set forth in this Release of Claims; and

 

(e)          in entering into this Release of Claims you are not relying on any representation, promise or inducement made by the Company or its attorneys with the exception of those promises described in this document.

 

4.              Period for Review and Consideration of Release of Claims:

 

(a)         You acknowledge that you were informed and understand that you have twenty-one (21) days to review this Release of Claims and consider its terms before signing it.

 

(b)         The 21-day review period will not be affected or extended by any revisions, whether material or immaterial, that might be made to this Release of Claims.

 

5.              Return of Company Property:  You confirm that you have returned to the Company in good working (including all copies thereof) order all keys, files, records, equipment (including, but not limited to, computer hardware, software and printers, wireless handheld devices, cellular phones and pagers), Company identification, Company proprietary and confidential information and any other Company -owned property in your possession or control and have left intact all electronic Company documents, including, but not limited to, those that you developed or helped to develop during your employment.  You further confirm that you have cancelled all accounts for your benefit, if any, in the Company’s name, including, but not limited to, credit cards, telephone charge cards, cellular phone and/or pager accounts and computer accounts.

 

6.              Payment of Business Expenses and All Other Compensation:  You acknowledge that you have been reimbursed by the Company for all business expenses incurred in conjunction with the performance of your employment and that no other reimbursements are owed to you.  You further acknowledge that you 

 

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have received payment in full for all services rendered in conjunction with your employment by the Company and that no other compensation is owed to you, other than as provided in this Retention Agreement.

 

7.              Entire Release.  This Release of Claims and the Retention Agreement to which it is attached constitute the entire agreement between you and the Company with respect to the subject matter hereof and supersedes all prior negotiations and agreements, whether written or oral, relating to the subject matter.

 

I acknowledge that the execution of this Release of Claims is in further consideration of the Retention benefit set forth in the Retention Agreement, to which I acknowledge I would not be entitled if I did not sign this Release of Claims.  I hereby agree to the terms and conditions set forth above.  I have been given at least twenty-one (21) days to consider this Release of Claims and I have chosen to execute this on the date below.  I have been advised to consult an attorney before signing this Release of Claims.  I acknowledge that I have not relied on any representation or statement other than those contained in this Release of Claims.  I intend that this Release of Claims will become a binding agreement between the Company and me if I do not revoke my acceptance in seven (7) days.

 

Employee:

 

	
By:
    	
 
    	
 
    	
 
    
	
 
    	
William   C. McCartney
    	
 
    	
Date
    

 

DO NOT SIGN BEFORE RETIREMENT DATE — TO BE RETURNED TO KENNETH R. LEPAGE NO EARLIER THAN DECEMBER 14, 2012 BUT NO LATER THAN JANUARY 4, 2013.

 

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ATTACHMENT C

 

Acorn Engineering Company

 

Jay R. Smith Mfg. Co.

 

Aalberts Industries N.V.

 

Reliance Worldwide Corporation

 

Rexnord Corporation

 

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