Document:

Exhibit
10.1

WATTS WATER TECHNOLOGIES, INC.

MANAGEMENT
STOCK PURCHASE PLAN

Amended
and Restated as of January 1, 2005 

I.              INTRODUCTION

The purpose of the Watts Water Technologies,
Inc. Management Stock Purchase Plan (the “Plan”) is to provide equity incentive
compensation to selected management employees of Watts Water Technologies, Inc.
(the “Company”) and its subsidiaries. 
Participants in the Plan may elect to receive restricted stock units (“RSUs”)
in lieu of all or a portion of their annual incentive bonus and, in some
circumstances, make after-tax contributions in exchange for RSUs.  Each RSU represents the right to receive one
share of the Company’s Class A Common Stock (the “Stock”) upon the terms and
conditions stated herein.  RSUs are
granted at a discount of 33% from the fair market value of the Stock on the
Valuation Date (as defined in Subsection IV(B) below).  Vested RSUs will be settled in shares of
Stock after a period of deferral selected by the participant, or upon
termination of employment, if earlier.

The Plan is intended to comply with Section 409A
of the Internal Revenue Code of 1986, as amended (the “Code”) and the guidance
promulgated thereunder (“Section 409A”). 
The Plan should be interpreted in a manner to comply with Section
409A.  In addition, this Plan is a “top
hat plan” subject to certain provisions of the Employee Retirement Income
Security Act of 1974.

II.            ADMINISTRATION

The Plan shall be
administered by the Compensation Committee of the Board of Directors of the
Company (the “Committee”).  Each member
of the Committee shall be a “non-employee director” within the meaning of Rule
16b-3 promulgated under the Securities Exchange Act of 1934, as amended (the “Act”).  The Committee shall have complete discretion
and authority with respect to the Plan and its application, except as

expressly limited
herein.  Determinations by the Committee
shall be final and binding on all parties with respect to all matters relating
to the Plan.

III.           ELIGIBILITY

Management
employees of the Company and its subsidiaries as designated by the Committee
shall be eligible to participate in the Plan.

IV.           PARTICIPATION

A.            Restricted Stock
Units.  Participation in the Plan
shall be based on the award of RSUs. 
Each RSU awarded to a participant shall be credited to a bookkeeping
account established and maintained for that participant.

B.            Valuation of RSUs;
Fair Market Value of Stock.  The
value of each RSU, for purposes of the Plan, shall be determined as
follows:  The “Cost” of each RSU shall be
equal to 67% of the fair market value of the Stock on the relevant Valuation
Date.  The “Valuation Date” for each year
is the date that is the third business day after the date that the Company
releases its year-end earnings to the public. 
The “Value” of each RSU shall be equal to its Cost plus simple interest
per annum on such amount at the one-year U.S. Treasury Bill rate (as published
in The Wall Street Journal) in effect on the Valuation Date and each
anniversary thereof.  For all purposes of
the Plan, the “fair market value of the Stock” on any given date shall mean the
last reported sale price at which Stock is traded on such date or, if no Stock
is traded on such date, the most recent date on which Stock was traded, as
reflected on the New York Stock Exchange.

C.            Election to
Participate.  Each year, each
participant may elect to receive an award of RSUs under the Plan in lieu of any
bonus payable for a subsequent calendar year by completing a Bonus Deferral and
RSU Subscription Agreement (“Subscription Agreement”).  The Subscription Agreement shall provide that
the participant elects to receive RSUs in lieu of a specified portion of any
annual incentive bonus to be earned in the following calendar year.  Such portion may be expressed as either (1) a
specified percentage of the participant’s actual bonus amount; (2) the lesser
of a specified 

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percentage or a specified
dollar amount of the participant’s actual bonus amount; or (3) a specified
dollar amount up to 100% of the participant’s targeted maximum bonus.  Any dollar amount specified must be at least
$1,000; and any percentage specified must be at least 10% and not more than
100%.  Amounts specified pursuant to
methods (1) and (2) are entirely contingent on the amount of bonus actually
awarded.  Where the participant specifies
a fixed dollar amount pursuant to method (3), however, the Subscription
Agreement shall provide that, if the specified dollar amount exceeds the actual
bonus amount awarded, the participant undertakes to pay the excess, in cash or
by check, to the Company within five days after the date the participant
receives notice of the bonus amount.

D.            Deferral Beyond
Vesting Period.  Each Subscription
Agreement shall specify a deferral period, beyond the three-year vesting
period, for the RSUs to which it pertains. 
The deferral period shall be expressed as a number of whole years, not
less than three, beginning on the Valuation Date.  Subscription Agreements must be received by
the Company no later than December 31 of the year prior to the year in which
the bonus amount will be earned. 
Notwithstanding the foregoing, to the extent that any bonus deferred
hereunder constitutes “performance-based compensation” within the meaning of
Section 409A, Subscription Agreements with respect to such compensation must be
received by the Company no later than six months before the end of the
so-called performance period to which such bonus relates.

E.             Changes to
Deferral Period before December 31, 2005. 
At any time before December 31, 2005, a participant may change the
deferral period specified in a Subscription Agreement that was in effect prior
to December 31, 2005.

F.             Changes to
Deferral Period after January 1, 2006. 
Effective January 1, 2006, a participant may change the deferral period
specified in a Subscription Agreement to extend the deferral period, provided,
however, that any such change must be made at least 12 months before the
original distribution date.  Any such
change shall not become

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effective for 12 months
after it is made.  In addition, any such
change must extend the deferral period for a minimum of five additional years
from the original distribution date. 
Participants are not permitted to change a deferral to reduce the length
of a deferral period.

G.            Award of RSUs.  On each annual Valuation Date, the Company
shall award RSUs to each participant as follows:  Each participant’s account shall be credited
with a whole number of RSUs determined by dividing the amount (expressed in
dollars) that is determined under his or her Subscription Agreement by the Cost
of each RSU awarded on such date.  No
fractional RSU will be credited and the amount equivalent in value to the
fractional RSU will be paid out to the participant currently in cash.

V.            VESTING AND SETTLEMENT
OF RSUs

A.            Vesting.  A participant shall become vested in the RSUs
that are awarded in a year over a three-year vesting period in which one-third
of the RSUs shall vest on each anniversary of the Valuation Date on which the
RSUs were awarded as long as the participant remains employed by the Company or
a subsidiary on each such anniversary date.

B.            Settlement After
Vesting.  With respect to each vested
RSU, the Company shall issue to the participant one share of Stock within 30
days after the earliest of: (i) the end of the deferral period specified in the
participant’s Subscription Agreement pertaining to such RSU; (ii) the date of
the participant’s termination of employment with the Company and its
subsidiaries; (iii) the date of the participant’s death; or (iv) the date the
participant becomes Disabled (as defined below).

For purposes of this Plan, a participant shall
be “Disabled” if the participant (i) is unable to engage in any substantial
gainful activity by reason of any medically determinable physical or mental
impairment which can be expected to result in death or can be expected to last
for a continuous period of not less than 12 months; or (ii) is, by

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reason
of any medically determinable physical or mental impairment which can be
expected to result in death or can be expected to last for a continuous period
of not less than 12 months, receiving income replacement benefits for a period
of not less than three months under an accident and health plan covering
employees of the participant’s employer.

C.            Settlement Prior to
Vesting.  If a participant terminates
his/her employment with the Company, the participant’s nonvested RSUs shall be
canceled and he or she shall receive a cash payment equal to the lesser of (a)
the Value of such RSUs or (b) an amount equal to the number of such RSUs multiplied
by the fair market value of the Stock on the date of the participant’s
termination of employment.

D.            Committee’s
Discretion.  The Committee shall have complete discretion
to determine the circumstances of a participant’s termination of employment,
including whether the same is a result of Disability, and the Committee’s
determination shall be final and binding on all parties and not subject to
review or challenge by any participant or other person.  Except as otherwise provided in Subsection
VIII.(C) hereof, in no event may the Committee apply its discretion to
accelerate the time or schedule of any payment made under the Plan.

E.             Waiting
Period Applicable to Officers.  Notwithstanding the provisions of Subsections
V.(B) and V.(C) above, any participant who is a “key employee” within the
meaning of Section 416(i) of the Code (which generally includes any officers of
the Company) may not receive any payment or settlement with respect to his/her
RSUs in connection with his/her termination of employment until the expiration
of a six month waiting period following such termination of employment.  This waiting period does not apply to the
termination of an officer’s employment as a result of the officer’s death or
Disability (as defined in Subsection V.(B) above).

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VI.           DIVIDEND EQUIVALENT AMOUNTS

Whenever dividends
(other than dividends payable only in shares of Stock) are paid with respect to
Stock, each participant shall be paid an amount in cash equal to the number of
his or her vested RSUs multiplied by the dividend value per share.  In addition, each participant’s account shall
be credited with an amount equal to the number of such participant’s nonvested
RSUs multiplied by the dividend value per share.  Amounts credited with respect to each
nonvested RSU shall be paid, without interest, on the date the participant
becomes vested in such RSU, or when the participant receives payment of his or
her nonvested RSUs pursuant to Subsection V.(C).

VII.         DESIGNATION OF
BENEFICIARY

A participant may
designate one or more beneficiaries to receive payments or shares of Stock in
the event of his/her death.  A
designation of beneficiary may apply to a specified percentage or a participant’s
entire interest in the Plan.  Such
designation, or any change therein, must be in writing and shall be effective
upon receipt by the Company.  If there is
no effective designation of beneficiary, or if no beneficiary survives the
participant, the participant’s estate shall be deemed to be the beneficiary.

VIII.        SHARES ISSUABLE; MAXIMUM
NUMBER OF RSUs; ADJUSTMENTS; CHANGE IN CONTROL

A.            Shares Issuable.  The aggregate maximum number of shares of
Stock reserved and available for issuance under the Plan shall be  1,000,000.  For
purposes of this limitation, the shares of Stock underlying any RSUs that are
canceled shall be added back to the shares of Stock available for issuance
under the Plan.  Shares subject to the
Plan are authorized but unissued shares or shares that were once issued and
subsequently re-acquired by the Company.

B.            Adjustments.  In the event of a stock dividend, stock split
or similar change in capitalization affecting the Stock, the Committee shall
make appropriate adjustments in (i) the number and kind of shares of Stock or
securities with respect to which RSUs shall thereafter be granted, (ii) the
number and kind of shares remaining

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subject to outstanding
RSUs; (iii) the number of RSUs credited to each participant’s account; and (iv)
the method of determining the value of RSUs.

C.            Change in Control.  In the event of any proposed merger,
consolidation, sale, dissolution or liquidation of the Company, all non-vested
RSUs shall become fully vested upon the effective date of such merger,
consolidation, sale, dissolution or liquidation and the Committee in its sole
discretion may, as to any outstanding RSUs, make such substitution or
adjustment in the aggregate number of shares reserved for issuance under the
Plan and the number of shares subject to such RSUs as it may determine on an
equitable basis and as may be permitted by the terms of such transaction, or
terminate such RSUs upon such terms and conditions as it shall provide.  In the event that any such merger,
consolidation, sale, dissolution or liquidation of the Company constitutes a “change
in control event” for purposes of Section 409A, the Committee may terminate the
Plan and make payment with respect to each RSU (taking into account any
adjustment provided for herein), provided that such payment is made within 12
months of such change in control event.

IX.           AMENDMENT OR
TERMINATION OF PLAN

The Company
reserves the right to amend or terminate the Plan at any time, by action of its
Board of Directors, provided that no such action shall adversely affect a
participant’s rights under the Plan with respect to RSUs awarded and vested
before the date of such action, and provided, further, that Plan amendments
shall be subject to approval by the Company’s shareholders to the extent
required by the Act to ensure that awards are exempt under Rule 16b-3
promulgated under the Act or as otherwise required by applicable law, including
the relevant listing requirements of the New York Stock Exchange.

X.            MISCELLANEOUS
PROVISIONS

A.            No Distribution;
Compliance with Legal Requirements. 
The Committee may require each person acquiring shares of Stock under
the Plan to represent to and

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agree with the Company in
writing that such person is acquiring the shares without a view to distribution
thereof.  No shares of Stock shall be
issued until all applicable securities laws and other legal and stock exchange
requirements have been satisfied.  The
Committee may require the placing of such stop-orders and restrictive
legends on certificates for Stock as it deems appropriate.

B.            Withholding.  Participation in the Plan is subject to any
required tax withholding on wages or other income of the participant in
connection with the Plan.  Each
participant agrees, by entering the Plan, that the Company shall have the right
to deduct any such taxes, in its sole discretion, from any amount payable to
the participant under the Plan or from any payment of any kind otherwise due to
the participant.  Participants who wish
to avoid the withholding of shares of Stock otherwise issuable to them under
the Plan should arrange with the Company to pay the amount of taxes required to
be withheld in advance of the settlement date.

C.            Notices; Delivery
of Stock Certificates.  Any notice
required or permitted to be given by the Company or the Committee pursuant to
the Plan shall be deemed given when personally delivered or deposited in the
United States mail, registered or certified, postage prepaid, addressed to the
participant at the last address shown for the participant on the records of the
Company.  Delivery of stock certificates to
persons entitled to receive them under the Plan shall be deemed effected for
all purposes when the Company or a share transfer agent of the Company shall
have deposited such certificates in the United States mail, addressed to such
person at his/her last known address on file with the Company.

D.            Nontransferability
of Rights.  During a participant’s
lifetime, any payment or issuance of shares under the Plan shall be made only
to him/her.  No RSU or other interest
under the Plan shall be subject in any manner to anticipation, alienation,
sale, transfer, assignment, pledge, encumbrance or charge, and any attempt by a
participant or any beneficiary under the Plan to do so shall be void.  No interest under the Plan shall in

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any manner be liable for
or subject to the debts, contracts, liabilities, engagements or torts of a
participant or beneficiary entitled thereto.

E.             Company’s
Obligations to Be Unfunded and Unsecured. 
The Plan shall at all times be entirely unfunded, and no provision shall
at any time be made with respect to segregating assets of the Company
(including Stock) for payment of any amounts or issuance of any shares of Stock
hereunder.  No participant or other
person shall have any interest in any particular assets of the Company
(including Stock) by reason of the right to receive payment under the Plan, and
any participant or other person shall have only the rights of a general
unsecured creditor of the Company with respect to any rights under the Plan.

F.             Governing Law.  The terms of the Plan shall be governed,
construed, administered and regulated in accordance with the laws of the
Commonwealth of Massachusetts.  In the
event any provision of this Plan shall be determined to be illegal or invalid
for any reason, the other provisions shall continue in full force and effect as
if such illegal or invalid provision had never been included herein.

G.            Effective Date of
Plan.  The Plan became effective as
of October 17, 1995, upon approval by the holders of a majority of the shares
of the Company’s Class A Common Stock and Class B Common Stock,
voting as a single class, present or represented and entitled to vote at a
meeting of the shareholders.

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WATTS
WATER TECHNOLOGIES, INC.

AMENDMENT
NO. 1

TO

WATTS WATER TECHNOLOGIES, INC.

MANAGEMENT STOCK PURCHASE PLAN

AMENDED
AND RESTATED AS OF JANUARY 1, 2005

The Management
Stock Purchase Plan of Watts Water Technologies, Inc. as amended and restated
as of January 1, 2005 (the “Plan”) is hereby amended as follows:

1.             Subsection VIII.A of
the Plan is deleted and replaced with the following:

“A.          Shares Issuable.  The aggregate maximum number of shares of
Stock reserved and available for issuance under the Plan shall be  2,000,000.  For
purposes of this limitation, the shares of Stock underlying any RSUs that are
canceled shall be added back to the shares of Stock available for issuance
under the Plan.  Shares subject to the
Plan are authorized but unissued shares or shares that were once issued and
subsequently re-acquired by the Company.”

2.             Except as amended
hereby, the Plan remains in full force and effect.

Adopted by the Board of
Directors on February 6, 2007

Approved by the
Stockholders on May 2, 2007

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WATTS WATER TECHNOLOGIES, INC.

Amendment No. 2 to Management
Stock Purchase Plan

Amended and Restated as of
January 1, 2005

The Watts Water Technologies, Inc. Management Stock Purchase Plan as
Amended and Restated as of January 1, 2005, pursuant to Section IX thereof, is
hereby amended as follows:

Subsection X(B) is amended
to read in its entirety as follows:

“B.  Withholding.  Participation in the Plan is subject to any
required tax withholding on wages or other income of the participant in
connection with the Plan.  Each
participant agrees, by entering the Plan, that the Company shall have the right
to deduct any such taxes by withholding shares of Stock otherwise issuable to
him under the Plan with an aggregate fair market value (as of the date the
withholding is effected) that would satisfy the minimum required tax
withholding obligation.”

Approved by the
Board of Directors on July 31, 2007.

 11Exihibit 10.2

WATTS
WATER TECHNOLOGIES, INC.

2004
STOCK INCENTIVE PLAN

SECTION 1.  GENERAL PURPOSE OF THE PLAN; DEFINITIONS

The name of the plan is the Watts Water Technologies,
Inc. 2004 Stock Incentive Plan (the “Plan”). 
The purpose of the Plan is to encourage and enable the officers,
employees, Non-Employee Directors and other key persons (including consultants
and prospective employees) of Watts Water Technologies, Inc. (the “Company”)
and its Subsidiaries upon whose judgment, initiative and efforts the Company
largely depends for the successful conduct of its business to acquire a
proprietary interest in the Company.  It
is anticipated that providing such persons with a direct stake in the Company’s
welfare will assure a closer identification of their interests with those of
the Company, thereby stimulating their efforts on the Company’s behalf and
strengthening their desire to remain with the Company.

The following terms shall be defined as set forth
below:

“Act” means the
Securities Act of 1933, as amended, and the rules and regulations thereunder.

“Administrator” is
defined in Section 2(a).

“Award” or “Awards,” except where referring to a
particular category of grant under the Plan, shall include Incentive Stock
Options, Non-Qualified Stock Options, Stock Appreciation Rights, Deferred Stock
Awards, Restricted Stock Awards, Unrestricted Stock Awards and Dividend
Equivalent Rights.

“Board” means the
Board of Directors of the Company.

“Code” means the
Internal Revenue Code of 1986, as amended, and any successor Code, and related
rules, regulations and interpretations.

“Committee” means
the Committee of the Board referred to in Section 2.

“Covered Employee”
means an employee who is a “Covered Employee” within the meaning of
Section 162(m) of the Code.

“Deferred Stock Award”
means Awards granted pursuant to Section 8.

“Dividend Equivalent Right”
means Awards granted pursuant to Section 11.

“Effective Date”
means the date on which the Plan is approved by stockholders as set forth in
Section 17.

“Exchange Act”
means the Securities Exchange Act of 1934, as amended, and the rules and
regulations thereunder.

“Fair Market Value”
of the Stock on any given date means the fair market value of the Stock
determined in good faith by the Administrator; provided, however, that if the
Stock is admitted to quotation on the National Association of Securities
Dealers Automated Quotation System (“NASDAQ”), NASDAQ National System or a
national securities exchange, the determination shall be made by reference to
market quotations.  If there are no
market quotations for such date, the determination shall be made by reference
to the last date preceding such date for which there are market quotations.

“Incentive Stock Option”
means any Stock Option designated and qualified as an “incentive stock option”
as defined in Section 422 of the Code.

“Non-Employee Director”
means a member of the Board who is not also an employee of the Company or any
Subsidiary.

“Non-Qualified Stock Option”
means any Stock Option that is not an Incentive Stock Option.

“Option” or “Stock Option” means any option to
purchase shares of Stock granted pursuant to Section 5.

“Performance Cycle”
means one or more periods of time, which may be of varying and overlapping
durations, as the Administrator may select, over which the attainment of one or
more performance criteria will be measured for the purpose of determining a
grantee’s right to and the payment of a Restricted Stock Award or Deferred
Stock Award.

“Restricted Stock Award”
means Awards granted pursuant to Section 7.

“Stock” means the
Class A Common Stock, par value $.10 per share, of the Company, subject to
adjustments pursuant to Section 3.

“Stock Appreciation Right”
means any Award granted pursuant to Section 6.

“Subsidiary” means
any corporation or other entity (other than the Company) in which the Company
has a controlling interest, either directly or indirectly.

“Unrestricted Stock Award”
means any Award granted pursuant to Section 9.

SECTION 2.  ADMINISTRATION OF PLAN; ADMINISTRATOR
AUTHORITY TO SELECT GRANTEES AND DETERMINE AWARDS

(a)           Committee.  The Plan shall be administered by either the
Board or a committee of not less than two Non-Employee Directors (in either
case, the “Administrator”).

(b)           Powers of Administrator.  The Administrator shall have the power and
authority to grant Awards consistent with the terms of the Plan, including the
power and authority:

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(i)            to select the individuals to whom Awards
may from time to time be granted;

(ii)           to determine the time or times of grant, and
the extent, if any, of Incentive Stock Options, Non-Qualified Stock Options,
Stock Appreciation Rights, Restricted Stock Awards, Deferred Stock Awards,
Unrestricted Stock Awards and Dividend Equivalent Rights, or any combination of
the foregoing, granted to any one or more grantees;

(iii)          to determine the number of shares of Stock to
be covered by any Award;

(iv)          to determine and modify from time to time the
terms and conditions, including restrictions, not inconsistent with the terms
of the Plan, of any Award, which terms and conditions may differ among
individual Awards and grantees, and to approve the form of written instruments
evidencing the Awards;

(v)           to accelerate at any time the exercisability
or vesting of all or any portion of any Award;

(vi)          subject to the provisions of
Section 5(a)(ii), to extend at any time the period in which Stock Options
may be exercised;

(vii)         to determine at any time whether, to what
extent, and under what circumstances distribution or the receipt of Stock and
other amounts payable with respect to an Award shall be deferred either
automatically or at the election of the grantee and whether and to what extent
the Company shall pay or credit amounts constituting interest (at rates
determined by the Administrator) or dividends or deemed dividends on such
deferrals; and

(viii)        at any time to adopt, alter and repeal such
rules, guidelines and practices for administration of the Plan and for its own
acts and proceedings as it shall deem advisable; to interpret the terms and
provisions of the Plan and any Award (including related written instruments);
to make all determinations it deems advisable for the administration of the
Plan; to decide all disputes arising in connection with the Plan; and to
otherwise supervise the administration of the Plan.

All decisions and interpretations of the Administrator
shall be binding on all persons, including the Company and Plan grantees.

(c)           Delegation of Authority to Grant Awards.  The Administrator, in its discretion, may
delegate to the Chief Executive Officer of the Company all or part of the
Administrator’s authority and duties with respect to the granting of Awards at
Fair Market Value, to individuals who are not subject to the reporting and
other provisions of Section 16 of the Exchange Act or “covered employees”
within the meaning of Section 162(m) of the Code.  Any such delegation by the Administrator
shall include a limitation as to the amount of Awards that may be granted
during the period of the delegation and shall contain guidelines as to the
determination of the exercise price of any Stock Option or Stock Appreciation
Right, the conversion ratio or price of other Awards and the vesting
criteria.  The Administrator may revoke
or amend the terms of a delegation at any time but such action shall not invalidate
any prior actions of the Administrator’s delegate or delegates that were
consistent with the terms of the Plan.

 3
 

(d)           Indemnification.  Neither the Board nor the Committee, nor any
member of either or any delegatee thereof, shall be liable for any act,
omission, interpretation, construction or determination made in good faith in
connection with the Plan, and the members of the Board and the Committee (and
any delegatee thereof) shall be entitled in all cases to indemnification and
reimbursement by the Company in respect of any claim, loss, damage or expense
(including, without limitation, reasonable attorneys’ fees) arising or
resulting therefrom to the fullest extent permitted by law and/or under any
directors’ and officers’ liability insurance coverage which may be in effect
from time to time.

SECTION 3.  STOCK ISSUABLE UNDER THE PLAN; MERGERS;
SUBSTITUTION

(a)           Stock Issuable.  The maximum number of shares of Stock
reserved and available for issuance under the Plan shall be 3,000,000 shares,
subject to adjustment as provided in Section 3(b); provided that not more
than 2,000,000 shares shall be issued in the form of Unrestricted Stock Awards,
Restricted Stock Awards or Deferred Stock Awards (excluding for purposes of
such 2,000,000 share limitation, the shares of Stock underlying any Awards
granted in lieu of cash compensation or fees). 
For purposes of these limitations, the shares of Stock underlying any
Awards (including any awards granted pursuant to the Watts Industries, Inc.
1996 Stock Option Plan) which are forfeited, canceled, held back upon exercise
of an Option or settlement of an Award to cover the exercise price or tax
withholding, reacquired by the Company prior to vesting, satisfied without the
issuance of Stock or otherwise terminated (other than by exercise) shall be
added back to the shares of Stock available for issuance under the Plan.  Subject to such overall limitations, shares
of Stock may be issued up to such maximum number pursuant to any type or types
of Award; provided, however, that Stock Options or Stock Appreciation Rights
with respect to no more than 300,000 shares of Stock may be granted to any one
individual grantee during any one calendar year period.  The shares available for issuance under the
Plan may be authorized but unissued shares of Stock or shares of Stock
reacquired by the Company and held in its treasury.

(b)           Changes
in Stock.  Subject to
Section 3(c) hereof, if, as a result of any reorganization,
recapitalization, reclassification, stock dividend, stock split, reverse stock
split or other similar change in the Company’s capital stock, the outstanding
shares of Stock are increased or decreased or are exchanged for a different
number or kind of shares or other securities of the Company, or additional
shares or new or different shares or other securities of the Company or other
non-cash assets are distributed with respect to such shares of Stock or other
securities, or, if, as a result of any merger or consolidation, sale of all or
substantially all of the assets of the Company, the outstanding shares of Stock
are converted into or exchanged for a different number or kind of securities of
the Company or any successor entity (or a parent or subsidiary thereof), the
Administrator shall make an appropriate or proportionate adjustment in (i) the
maximum number of shares reserved for issuance under the Plan, including the
maximum number of shares that may be issued in the form of Unrestricted Stock
Awards, Restricted Stock Awards or Deferred Stock Awards, (ii) the number of Stock
Options or Stock Appreciation Rights that can be granted to any one individual
grantee and the maximum number of shares that may be granted under a
Performance-based Award, (iii) the number and kind of shares or other
securities subject to any then outstanding Awards under the Plan, (iv) the
repurchase price per share subject to each outstanding Restricted Stock Award,
and (v) the price for each share subject to any then outstanding Stock Options
and Stock Appreciation Rights under the Plan,

 4
 

without changing the aggregate exercise price
(i.e., the exercise price multiplied by the number of Stock Options and Stock
Appreciation Rights) as to which such Stock Options and Stock Appreciation
Rights remain exercisable.  The
adjustment by the Administrator shall be final, binding and conclusive.  No fractional shares of Stock shall be issued
under the Plan resulting from any such adjustment, but the Administrator in its
discretion may make a cash payment in lieu of fractional shares.

The Administrator may also adjust the number of shares
subject to outstanding Awards and the exercise price and the terms of
outstanding Awards to take into consideration material changes in accounting
practices or principles, extraordinary dividends, acquisitions or dispositions
of stock or property or any other event if it is determined by the
Administrator that such adjustment is appropriate to avoid distortion in the
operation of the Plan, provided that no such adjustment shall be made in the
case of an Incentive Stock Option, without the consent of the grantee, if it
would constitute a modification, extension or renewal of the Option within the
meaning of Section 424(h) of the Code.

(c)           Mergers and Other Transactions.  In the case of and subject to the
consummation of (i) the dissolution or liquidation of the Company,
(ii) the sale of all or substantially all of the assets of the Company on
a consolidated basis to an unrelated person or entity, (iii) a merger,
reorganization or consolidation in which the outstanding shares of Stock are
converted into or exchanged for a different kind of securities of the successor
entity and the holders of the Company’s outstanding voting power immediately
prior to such transaction do not own a majority of the outstanding voting power
of the successor entity immediately upon completion of such transaction, or
(iv) the sale of all of the Stock of the Company to an unrelated person or
entity (in each case, a “Sale Event”), all Options and Stock Appreciation
Rights that are not exercisable immediately prior to the effective time of the
Sale Event shall become fully exercisable as of the effective time of the Sale
Event and all other Awards shall become fully vested and nonforfeitable as of
the effective time of the Sale Event, except as the Administrator may otherwise
specify with respect to particular Awards. 
Upon the effective time of the Sale Event, the Plan and all outstanding
Awards granted hereunder shall terminate, unless provision is made in
connection with the Sale Event in the sole discretion of the parties thereto
for the assumption or continuation of Awards theretofore granted by the
successor entity, or the substitution of such Awards with new Awards of the
successor entity or parent thereof, with appropriate adjustment as to the
number and kind of shares and, if appropriate, the per share exercise prices,
as such parties shall agree (after taking into account any acceleration
hereunder).  In the event of such
termination, each grantee shall be permitted, within a specified period of time
prior to the consummation of the Sale Event as determined by the Administrator,
to exercise all outstanding Options and Stock Appreciation Rights held by such
grantee, including those that will become exercisable upon the consummation of
the Sale Event; provided, however, that the exercise of Options and Stock
Appreciation Rights not exercisable prior to the Sale Event shall be subject to
the consummation of the Sale Event.

Notwithstanding anything to the contrary in this
Section 3(c), in the event of a Sale Event pursuant to which holders of
the Stock of the Company will receive upon consummation thereof a cash payment
for each share surrendered in the Sale Event, the Company shall have the right,
but not the obligation, to make or provide for a cash payment to the grantees
holding Options and Stock Appreciation Rights, in exchange for the cancellation
thereof, in an amount equal to the

 5
 

difference between (A)
the value as determined by the Administrator of the consideration payable per
share of Stock pursuant to the Sale Event (the “Sale Price”) times the number
of shares of Stock subject to outstanding Options and Stock Appreciation Rights
(to the extent then exercisable at prices not in excess of the Sale Price) and
(B) the aggregate exercise price of all such outstanding Options and Stock
Appreciation Rights.

(d)           Substitute Awards.  The Administrator may grant Awards under the
Plan in substitution for stock and stock based awards held by employees,
directors or other key persons of another corporation in connection with the
merger or consolidation of the employing corporation with the Company or a
Subsidiary or the acquisition by the Company or a Subsidiary of property or
stock of the employing corporation.  The
Administrator may direct that the substitute awards be granted on such terms
and conditions as the Administrator considers appropriate in the
circumstances.  Any substitute Awards
granted under the Plan shall not count against the share limitation set forth
in Section 3(a).

SECTION 4.  ELIGIBILITY

Grantees under the
Plan will be such full or part-time officers and other employees, Non-Employee
Directors and key persons (including consultants and prospective employees) of
the Company and its Subsidiaries as are selected from time to time by the
Administrator in its sole discretion.

SECTION 5.  STOCK OPTIONS

Any Stock Option granted under the Plan shall be in
such form as the Administrator may from time to time approve.

Stock Options granted under the Plan may be either
Incentive Stock Options or Non-Qualified Stock Options.  Incentive Stock Options may be granted only
to employees of the Company or any Subsidiary that is a “subsidiary corporation”
within the meaning of Section 424(f) of the Code.  To the extent that any Option does not
qualify as an Incentive Stock Option, it shall be deemed a Non-Qualified Stock
Option.

(a)           Stock Options.  Stock Options granted pursuant to this
Section 5(a) shall be subject to the following terms and conditions and
shall contain such additional terms and conditions, not inconsistent with the
terms of the Plan, as the Administrator shall deem desirable.  If the Administrator so determines, Stock
Options may be granted in lieu of cash compensation at the optionee’s election,
subject to such terms and conditions as the Administrator may establish.

(i)            Exercise Price.  The exercise price per share for the Stock
covered by a Stock Option granted pursuant to this Section 5(a) shall be
determined by the Administrator at the time of grant but shall not be less than
50 percent of the Fair Market Value on the date of grant for Non-Qualified
Stock Options and 100 percent of the Fair Market Value on the date of grant for
Incentive Stock Options (other than options granted in lieu of cash
compensation).  If an employee owns or is
deemed to own (by reason of the attribution rules of Section 424(d) of the
Code) more than 10 percent of the combined voting power of all classes of stock
of the Company or any parent or subsidiary corporation and an Incentive Stock
Option is granted to

 6
 

such employee, the option price of such
Incentive Stock Option shall be not less than 110 percent of the Fair Market
Value on the grant date.

(ii)           Option Term.  The term of each Stock Option shall be fixed
by the Administrator, but no Stock Option shall be exercisable more than 10
years after the date the Stock Option is granted.  If an employee owns or is deemed to own (by
reason of the attribution rules of Section 424(d) of the Code) more than
10 percent of the combined voting power of all classes of stock of the Company
or any parent or subsidiary corporation and an Incentive Stock Option is
granted to such employee, the term of such Stock Option shall be no more than
five years from the date of grant.

(iii)          Exercisability; Rights of a Stockholder.  Stock Options shall become exercisable at
such time or times, whether or not in installments, as shall be determined by
the Administrator at or after the grant date. 
The Administrator may at any time accelerate the exercisability of all
or any portion of any Stock Option.  An
optionee shall have the rights of a stockholder only as to shares acquired upon
the exercise of a Stock Option and not as to unexercised Stock Options.

(iv)          Method of Exercise.  Stock Options may be exercised in whole or in
part, by giving written notice of exercise to the Company, specifying the
number of shares to be purchased. 
Payment of the purchase price may be made by one or more of the
following methods to the extent provided in the Option Award agreement:

(A)           In
cash, by certified or bank check or other instrument acceptable to the
Administrator;

(B)           Through
the delivery (or attestation to the ownership) of shares of Stock that have
been purchased by the optionee on the open market or that have been
beneficially owned by the optionee for at least six months and are not then
subject to restrictions under any Company plan. 
Such surrendered shares shall be valued at Fair Market Value on the
exercise date; or

(C)           By
the optionee delivering to the Company a properly executed exercise notice together
with irrevocable instructions to a broker to promptly deliver to the Company
cash or a check payable and acceptable to the Company for the purchase price;
provided that in the event the optionee chooses to pay the purchase price as so
provided, the optionee and the broker shall comply with such procedures and
enter into such agreements of indemnity and other agreements as the
Administrator shall prescribe as a condition of such payment procedure.

Payment instruments will be received subject to
collection.  The delivery of certificates
representing the shares of Stock to be purchased pursuant to the exercise of a
Stock Option will be contingent upon receipt from the optionee (or a purchaser
acting in his stead in accordance with the provisions of the Stock Option) by
the Company of the full purchase price for such shares and the fulfillment of
any other requirements contained in the Option Award agreement or applicable
provisions of laws.  In the event an
optionee chooses to pay the purchase price by previously-owned shares of Stock
through the attestation method, the number of shares of Stock

 7
 

transferred to the optionee upon the exercise of the
Stock Option shall be net of the number of shares attested to.

(v)           Annual Limit on Incentive Stock Options.  To the extent required for “incentive stock
option” treatment under Section 422 of the Code, the aggregate Fair Market
Value (determined as of the time of grant) of the shares of Stock with respect
to which Incentive Stock Options granted under this Plan and any other plan of
the Company or its parent and subsidiary corporations become exercisable for
the first time by an optionee during any calendar year shall not exceed
$100,000.  To the extent that any Stock
Option exceeds this limit, it shall constitute a Non-Qualified Stock Option.

(b)           Non-transferability of Options.  No Stock Option shall be transferable by the
optionee otherwise than by will or by the laws of descent and distribution and
all Stock Options shall be exercisable, during the optionee’s lifetime, only by
the optionee, or by the optionee’s legal representative or guardian in the
event of the optionee’s incapacity. 
Notwithstanding the foregoing, the Administrator, in its sole
discretion, may provide in the Award agreement regarding a given Option that
the optionee may transfer his Non-Qualified Stock Options to members of
his immediate family, to trusts for the benefit of such family members, or to
partnerships in which such family members are the only partners, provided that
the transferee agrees in writing with the Company to be bound by all of the
terms and conditions of this Plan and the applicable Option.

SECTION 6.  STOCK APPRECIATION RIGHTS

(a)           Nature of Stock Appreciation Rights.  A Stock Appreciation Right is an Award
entitling the recipient to receive an amount in cash or shares of Stock or a
combination thereof having a value equal to the excess of the Fair Market Value
of the Stock on the date of exercise over the exercise price of the Stock
Appreciation Right, which price shall not be less than 50 percent of the Fair
Market Value of the Stock on the date of grant (or more than the option
exercise price per share, if the Stock Appreciation Right was granted in tandem
with a Stock Option) multiplied by the number of shares of Stock with respect
to which the Stock Appreciation Right shall have been exercised, with the
Administrator having the right to determine the form of payment.

(b)           Grant and Exercise of Stock Appreciation
Rights.  Stock Appreciation Rights
may be granted by the Administrator in tandem with, or independently of, any
Stock Option granted pursuant to Section 5 of the Plan.  In the case of a Stock Appreciation Right
granted in tandem with a Non-Qualified Stock Option, such Stock Appreciation
Right may be granted either at or after the time of the grant of such
Option.  In the case of a Stock
Appreciation Right granted in tandem with an Incentive Stock Option, such Stock
Appreciation Right may be granted only at the time of the grant of the Option.

A Stock Appreciation Right or applicable portion
thereof granted in tandem with a Stock Option shall terminate and no longer be
exercisable upon the termination or exercise of the related Option.

 8
 

(c)           Terms and Conditions of Stock
Appreciation Rights.  Stock
Appreciation Rights shall be subject to such terms and conditions as shall be
determined from time to time by the Administrator, subject to the following:

(i)            Stock Appreciation Rights granted in tandem
with Options shall be exercisable at such time or times and to the extent that
the related Stock Options shall be exercisable.

(ii)           Upon exercise of a Stock Appreciation Right,
the applicable portion of any related Option shall be surrendered.

(iii)          All Stock Appreciation Rights shall be
exercisable during the grantee’s lifetime only by the grantee or the grantee’s
legal representative.

SECTION 7.  RESTRICTED STOCK AWARDS

(a)           Nature of Restricted Stock Awards.  A Restricted Stock Award is an Award
entitling the recipient to acquire, at such purchase price as determined by the
Administrator, shares of Stock subject to such restrictions and conditions as
the Administrator may determine at the time of grant (“Restricted Stock”).  Conditions may be based on continuing
employment (or other service relationship) and/or achievement of pre-established
performance goals and objectives.  The
grant of a Restricted Stock Award is contingent on the grantee executing the
Restricted Stock Award agreement.  The
terms and conditions of each such agreement shall be determined by the
Administrator, and such terms and conditions may differ among individual Awards
and grantees.

(b)           Rights as a Stockholder.  Upon execution of a written instrument
setting forth the Restricted Stock Award and payment of any applicable purchase
price, a grantee shall have the rights of a stockholder with respect to the
voting of the Restricted Stock, subject to such conditions contained in the
written instrument evidencing the Restricted Stock Award.  Unless the Administrator shall otherwise
determine, certificates evidencing the Restricted Stock shall remain in the
possession of the Company until such Restricted Stock is vested as provided in
Section 7(d) below, and the grantee shall be required, as a condition of
the grant, to deliver to the Company a stock power endorsed in blank.

(c)           Restrictions.  Restricted Stock may not be sold, assigned,
transferred, pledged or otherwise encumbered or disposed of except as
specifically provided herein or in the Restricted Stock Award agreement.  If a grantee’s employment (or other service
relationship) with the Company and its Subsidiaries terminates for any reason,
the Company shall have the right to repurchase Restricted Stock that has not
vested at the time of termination at its original purchase price, from the
grantee or the grantee’s legal representative.

(d)           Vesting of Restricted Stock.  The Administrator at the time of grant shall
specify the date or dates and/or the attainment of pre-established performance
goals, objectives and other conditions on which the non-transferability of the
Restricted Stock and the Company’s right of repurchase or forfeiture shall
lapse.  Notwithstanding the foregoing, in
the event that any such Restricted Stock shall have a performance based goal,
the restriction period with respect to such shares shall not be less than one
year and in the event that any such Restricted Stock shall have a

 9
 

time based restriction, the restriction
period with respect to such shares shall not be less than three years.  Subsequent to such date or dates and/or the
attainment of such pre-established performance goals, objectives and other
conditions, the shares on which all restrictions have lapsed shall no longer be
Restricted Stock and shall be deemed “vested.” 
Except as may otherwise be provided by the Administrator either in the
Award agreement or, subject to Section 14 below, in writing after the
Award agreement is issued, a grantee’s rights in any shares of Restricted Stock
that have not vested shall automatically terminate upon the grantee’s
termination of employment (or other service relationship) with the Company and
its Subsidiaries and such shares shall be subject to the Company’s right of
repurchase as provided in Section 7(c) above.

SECTION 8.  DEFERRED STOCK AWARDS

(a)           Nature of Deferred Stock Awards.   A Deferred Stock Award is an Award of
phantom stock units to a grantee, subject to restrictions and conditions as the
Administrator may determine at the time of grant.  Conditions may be based on continuing
employment (or other service relationship) and/or achievement of
pre-established performance goals and objectives.  The grant of a Deferred Stock Award is
contingent on the grantee executing the Deferred Stock Award agreement.  The terms and conditions of each such
agreement shall be determined by the Administrator, and such terms and
conditions may differ among individual Awards and grantees.  Notwithstanding the foregoing, in the event
that the vesting of any such Deferred Stock Award is subject to attainment of a
performance based goal, the vesting period with respect to such award shall not
be less than one year and in the event that the vesting of any such Deferred
Stock Award shall be time-based, the vesting period with respect to such award
shall not be less than three years.  At
the end of the deferral period, the Deferred Stock Award, to the extent vested,
shall be paid to the grantee in the form of shares of Stock.

(b)           Election to Receive Deferred Stock Awards
in Lieu of Compensation.  The
Administrator may, in its sole discretion, permit a grantee to elect to receive
a portion of the cash compensation or Restricted Stock Award otherwise due to
such grantee in the form of a Deferred Stock Award.  Any such election shall be made in writing
and shall be delivered to the Company no later than the date specified by the
Administrator and in accordance with rules and procedures established by the
Administrator.  The Administrator shall
have the sole right to determine whether and under what circumstances to permit
such elections and to impose such limitations and other terms and conditions
thereon as the Administrator deems appropriate.

(c)           Rights as a Stockholder.  During the deferral period, a grantee shall
have no rights as a stockholder; provided, however, that the grantee may be
credited with Dividend Equivalent Rights with respect to the phantom stock
units underlying his Deferred Stock Award, subject to such terms and conditions
as the Administrator may determine.

(d)           Restrictions.  A Deferred Stock Award may not be sold,
assigned, transferred, pledged or otherwise encumbered or disposed of during
the deferral period.

(e)           Termination.  Except as may otherwise be provided by the
Administrator either in the Award agreement or, subject to Section 14
below, in writing after the Award agreement is issued, a grantee’s right in all
Deferred Stock Awards that have not vested shall automatically

 10
 

terminate upon the grantee’s termination of
employment (or cessation of service relationship) with the Company and its
Subsidiaries for any reason.

SECTION 9.  UNRESTRICTED STOCK AWARDS

Grant or Sale of
Unrestricted Stock. 
The Administrator may, in its sole discretion, grant (or sell at par
value or such higher purchase price determined by the Administrator) an
Unrestricted Stock Award to any grantee pursuant to which such grantee may
receive shares of Stock free of any restrictions (“Unrestricted Stock”) under
the Plan.  Unrestricted Stock Awards may
be granted in respect of past services or other valid consideration, or in lieu
of cash compensation due to such grantee.

SECTION 10.  PERFORMANCE-BASED AWARDS TO COVERED
EMPLOYEES

Notwithstanding anything to the contrary contained
herein, if any Restricted Stock Award or Deferred Stock Award granted to a
Covered Employee is intended to qualify as “Performance-based Compensation”
under Section 162(m) of the Code and the regulations promulgated
thereunder (a “Performance-based Award”), such Award shall comply with the
provisions set forth below:

(a)           Performance Criteria.  The performance criteria used in performance
goals governing Performance-based Awards granted to Covered Employees may
include any or all of the following:  (i)
the Company’s return on equity, assets, capital or investment:  (ii) pre-tax or after-tax profit levels of
the Company or any Subsidiary, a division, an operating unit or a business
segment of the Company, or any combination of the foregoing; (iii) cash flow,
funds from operations or similar measure; (iv) total shareholder return; (v)
changes in the market price of the Stock; (vi) sales or market share; or (vii) earnings
per share.

(b)           Grant of Performance-based Awards.  With respect to each Performance-based Award
granted to a Covered Employee, the Committee shall select, within the first 90
days of a Performance Cycle (or, if shorter, within the maximum period allowed
under Section 162(m) of the Code) the performance criteria for such grant,
and the achievement targets with respect to each performance criterion
(including a threshold level of performance below which no amount will become
payable with respect to such Award). 
Each Performance-based Award will specify the amount payable, or the
formula for determining the amount payable, upon achievement of the various
applicable performance targets.  The
performance criteria established by the Committee may be (but need not be)
different for each Performance Cycle and different goals may be applicable to
Performance-based Awards to different Covered Employees.

(c)           Payment of Performance-based Awards.  Following the completion of a Performance
Cycle, the Committee shall meet to review and certify in writing whether, and
to what extent, the performance criteria for the Performance Cycle have been
achieved and, if so, to also calculate and certify in writing the amount of the
Performance-based Awards earned for the Performance Cycle.  The Committee shall then determine the actual
size of each Covered Employee’s Performance-based Award, and, in doing so, may
reduce or eliminate the amount of the Performance-based Award for a Covered
Employee if, in its sole judgment, such reduction or elimination is
appropriate.

 11
 

(d)           Maximum Award Payable.  The maximum Performance-based Award payable
to any one Covered Employee under the Plan for a Performance Cycle is 300,000
Shares (subject to adjustment as provided in Section 3(b) hereof).

SECTION 11.  DIVIDEND EQUIVALENT RIGHTS

(a)           Dividend Equivalent Rights.  A Dividend Equivalent Right is an Award
entitling the grantee to receive credits based on cash dividends that would
have been paid on the shares of Stock specified in the Dividend Equivalent
Right (or other award to which it relates) if such shares had been issued to
and held by the grantee.  A Dividend
Equivalent Right may be granted hereunder to any grantee as a component of
another Award or as a freestanding award. 
The terms and conditions of Dividend Equivalent Rights shall be
specified in the Award agreement. 
Dividend equivalents credited to the holder of a Dividend Equivalent
Right may be paid currently or may be deemed to be reinvested in additional
shares of Stock, which may thereafter accrue additional equivalents.  Any such reinvestment shall be at Fair Market
Value on the date of reinvestment or such other price as may then apply under a
dividend reinvestment plan sponsored by the Company, if any.  Dividend Equivalent Rights may be settled in
cash or shares of Stock or a combination thereof, in a single installment or
installments.  A Dividend Equivalent
Right granted as a component of another Award may provide that such Dividend Equivalent
Right shall be settled upon exercise, settlement, or payment of, or lapse of
restrictions on, such other award, and that such Dividend Equivalent Right
shall expire or be forfeited or annulled under the same conditions as such
other award.  A Dividend Equivalent Right
granted as a component of another Award may also contain terms and conditions
different from such other award.

(b)           Interest Equivalents.  Any Award under this Plan that is settled in
whole or in part in cash on a deferred basis may provide in the grant for
interest equivalents to be credited with respect to such cash payment.  Interest equivalents may be compounded and
shall be paid upon such terms and conditions as may be specified by the grant.

(c)           Termination.  Except as may otherwise be provided by the
Administrator either in the Award agreement or, subject to Section 14
below, in writing after the Award agreement is issued, a grantee’s rights in
all Dividend Equivalent Rights or interest equivalents shall automatically
terminate upon the grantee’s termination of employment (or cessation of service
relationship) with the Company and its Subsidiaries for any reason.

SECTION 12.  TAX WITHHOLDING

(a)           Payment by Grantee.  Each grantee shall, no later than the date as
of which the value of an Award or of any Stock or other amounts received
thereunder first becomes includable in the gross income of the grantee for
Federal income tax purposes, pay to the Company, or make arrangements
satisfactory to the Administrator regarding payment of, any Federal, state, or
local taxes of any kind required by law to be withheld with respect to such
income.  The Company and its Subsidiaries
shall, to the extent permitted by law, have the right to deduct any such taxes
from any payment of any kind otherwise due to the grantee.  The Company’s obligation to deliver stock
certificates to any grantee is subject to and conditioned on tax obligations
being satisfied by the grantee.

 12
 

(b)           Payment in Stock.  Subject to approval by the Administrator, a
grantee may elect to have the minimum required tax withholding obligation
satisfied, in whole or in part, by (i) authorizing the Company to withhold from
shares of Stock to be issued pursuant to any Award a number of shares with an
aggregate Fair Market Value (as of the date the withholding is effected) that would
satisfy the withholding amount due, or (ii) transferring to the Company shares
of Stock owned by the grantee with an aggregate Fair Market Value (as of the
date the withholding is effected) that would satisfy the withholding amount
due.

SECTION 13.  TRANSFER, LEAVE OF ABSENCE, ETC.

For purposes of the Plan, the following events shall
not be deemed a termination of employment:

(a)           a transfer to the employment of the Company
from a Subsidiary or from the Company to a Subsidiary, or from one Subsidiary
to another; or

(b)           an approved leave of absence for military
service or sickness, or for any other purpose approved by the Company, if the
employee’s right to re-employment is guaranteed either by a statute or by
contract or under the policy pursuant to which the leave of absence was granted
or if the Administrator otherwise so provides in writing.

SECTION 14.  AMENDMENTS AND TERMINATION

The Board may, at any time, amend or discontinue the
Plan and the Administrator may, at any time, amend or cancel any outstanding
Award for the purpose of satisfying changes in law or for any other lawful
purpose, but no such action shall adversely affect rights under any outstanding
Award without the holder’s consent. 
Except as provided in Section 3(b) or 3(c), in no event may the
Administrator exercise its discretion to reduce the exercise price of
outstanding Stock Options or effect repricing through cancellation and
re-grants.  Any material Plan amendments
(other than amendments that curtail the scope of the Plan), including any Plan
amendments that (i) increase the number of shares reserved for issuance under
the Plan, (ii) expand the type of Awards available, materially expand the
eligibility to participate or materially extend the term of the Plan, or (iii)
materially change the method of determining Fair Market Value, shall be subject
to approval by the Company stockholders entitled to vote at a meeting of
stockholders.  In addition, to the extent
determined by the Administrator to be required by the Code to ensure that Incentive
Stock Options granted under the Plan are qualified under Section 422 of
the Code or to ensure that compensation earned under Awards qualifies as
performance-based compensation under Section 162(m) of the Code, Plan
amendments shall be subject to approval by the Company stockholders entitled to
vote at a meeting of stockholders. 
Nothing in this Section 14 shall limit the Administrator’s
authority to take any action permitted pursuant to Section 3(c).

SECTION 15.  STATUS OF PLAN

With respect to the portion of any Award that has not
been exercised and any payments in cash, Stock or other consideration not
received by a grantee, a grantee shall have no rights greater than those of a
general creditor of the Company unless the Administrator shall otherwise
expressly determine in connection with any Award or Awards.  In its sole discretion, the

 13
 

Administrator may
authorize the creation of trusts or other arrangements to meet the Company’s
obligations to deliver Stock or make payments with respect to Awards hereunder,
provided that the existence of such trusts or other arrangements is consistent
with the foregoing sentence.

SECTION 16.  GENERAL PROVISIONS

(a)           No Distribution; Compliance with Legal
Requirements.  The Administrator may
require each person acquiring Stock pursuant to an Award to represent to and
agree with the Company in writing that such person is acquiring the shares
without a view to distribution thereof.

No shares of Stock shall be issued pursuant to an
Award until all applicable securities law and other legal and stock exchange or
similar requirements have been satisfied. 
The Administrator may require the placing of such stop-orders and
restrictive legends on certificates for Stock and Awards as it deems
appropriate.

(b)           Delivery of Stock Certificates.  Stock certificates to grantees under this
Plan shall be deemed delivered for all purposes when the Company or a stock
transfer agent of the Company shall have mailed such certificates in the United
States mail, addressed to the grantee, at the grantee’s last known address on
file with the Company.

(c)           Other Compensation Arrangements; No
Employment Rights.  Nothing contained
in this Plan shall prevent the Board from adopting other or additional
compensation arrangements, including trusts, and such arrangements may be
either generally applicable or applicable only in specific cases.  The adoption of this Plan and the grant of
Awards do not confer upon any employee any right to continued employment with
the Company or any Subsidiary.

(d)           Trading Policy Restrictions.  Option exercises and other Awards under the
Plan shall be subject to such Company’s insider trading policy and procedures,
as in effect from time to time.

(e)           Designation of Beneficiary.  Each grantee to whom an Award has been made
under the Plan may designate a beneficiary or beneficiaries to exercise any
Award or receive any payment under any Award payable on or after the grantee’s
death.  Any such designation shall be on
a form provided for that purpose by the Administrator and shall not be
effective until received by the Administrator. 
If no beneficiary has been designated by a deceased grantee, or if the
designated beneficiaries have predeceased the grantee, the beneficiary shall be
the grantee’s estate.

SECTION 17.  EFFECTIVE DATE OF PLAN

This Plan shall become effective upon approval by the
holders of a majority of the votes cast at a meeting of stockholders at which a
quorum is present.  Subject to such
approval by the stockholders and to the requirement that no Stock may be issued
hereunder prior to such approval, Stock Options and other Awards may be granted
hereunder on and after adoption of

 14
 

this Plan by the
Board.  No grants of Stock Options and
other Awards may be made hereunder after February 9, 2014.

SECTION 18.  GOVERNING LAW

This Plan and all Awards and actions taken thereunder
shall be governed by, and construed in accordance with, the laws of the State
of Delaware, applied without regard to conflict of law principles.

DATE APPROVED BY BOARD OF
DIRECTORS:  February 10, 2004

DATE APPROVED BY STOCKHOLDERS:  May 5, 2004

 15
 

WATTS
WATER TECHNOLOGIES, INC.

First
Amendment to 2004 Stock Incentive Plan

The Watts Water
Technologies, Inc. 2004 Stock Incentive Plan, pursuant to Section 14 thereof,
is hereby amended as follows:

Subsection 12(b) is amended by adding the following
sentence at the end thereof to read in its entirety as follows:

“Notwithstanding
the preceding provisions of this Section 12, in the case of Restricted Stock
Awards the Company shall have the right to satisfy the minimum required tax
withholding obligation by withholding from shares of Stock no longer subject to
repurchase or forfeiture a number of shares with an aggregate Fair Market Value
(as of the date the withholding is effected) that would satisfy the withholding
amount due.”

Approved by the
Board of Directors on July 31, 2007.

 16

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