Document:

Exhibit 10.16  

EMPLOYMENT AGREEMENT   

        AGREEMENT
dated April 01, 2003 between   

	 	
ALLIANCE
BANK, N.A., a banking corporation, having a principal place of business at 120 Madison
Street, Syracuse, Onondaga County, New York, the Employer, and   

	 	
JOHN
W. WILSON, residing at 6042 Marigold Lane, Cicero, Onondaga County, New York, the
Employee, as follows:   

	

        1.     
The Employer employs the Employee and the Employee accepts employment upon the terms and
conditions of this agreement.  

        2.     
The term of this agreement shall begin on April 1, 2003 and shall terminate on December
31, 2004 unless extended by mutual agreement of the Employer and the Employee.  

        3.     
The Employer shall pay to the Employee for all services rendered, a salary of $139,000.00
for the calendar year 2003, payable in equal bi-weekly installments. Salary payments
shall be subject to withholding and other applicable taxes.  

        4.     
The Employee shall serve as the president of a leasing company being established by the
Employer, and shall be in charge of the operation of the leasing company, and shall have
full authority and responsibility, subject to the general direction, approval and control
of the company’s board of directors, for formulating policies and administering the
company in all respects.  

        5.     
The Employee shall devote his entire time and attention to the Employer’s business.
During the term of this agreement, the Employee shall not engage in any other business
activity, regardless of whether it is pursued for gain or profit. The Employee, however,
may invest his assets in other companies so long as they do not require the Employee’s
services in the operation of their affairs.  

        6.     
Relative to confidential information and trade secrets belonging to the Employer, the
Employer and the Employee agree as follows:  

	  	a.   	During
the term of this agreement, the Employee may have access to, and become familiar with,
various trade secrets and confidential information belonging to the Employer. The
Employee acknowledges that such confidential information and trade secrets are owned and
shall continue to be owned solely by the Employer. During the term of his employment and
for six months thereafter if such employment terminates without cause or for twelve
months thereafter if such employment terminates for cause, the Employee agrees not to
use, communicate, reveal or otherwise make available such information for any purpose
whatsoever, or to divulge such information to any person, partnership, corporation or
entity other than the Employer or persons expressly designated by the Employer, unless
the Employee is compelled to disclose it by judicial process.   

	

-40-  

	  	b.   	For
a period of twelve months after this agreement has been terminated for cause, regardless
of whether the termination is initiated by the Employer or Employee, the Employee agrees
that he will not, directly or indirectly, solicit any person, company, firm or
corporation who is or was a customer of the Employer during a period of three years prior
to the termination of the Employee’s employment. The Employee agrees not to solicit
such customers on behalf of himself or any other person, firm, company or corporation.   

	  	c.   	The
Employee agrees that for a period of twelve months after the termination of his
employment for cause, he will not accept employment with, or act as a consultant,
contractor, advisor or in any other capacity for a competitor of the Employer, or enter
into competition with the Employer, either by himself or through any entity owned or
managed in whole or in part by the Employee within the State of New York.   

	  	d.   	The
Employee acknowledges that compliance with this paragraph is necessary to protect the
Employer’s business and good will, and that a breach of the clauses contained herein
will irreparably and continually damage Employer, and that an award of money damages will
not be adequate to compensate for such harm. Consequently, the Employee agrees that in
the event he breaches or threatens to breach any of these covenants, the Employer shall
be entitled to both a preliminary or permanent injunction in order to prevent the
continuation of such harm and money damages, insofar as they can be determined,
including, without limitation, all reasonable costs and attorneys’ fees incurred by
the Employer in enforcing the provisions of this agreement. Nothing in this agreement,
however, shall prohibit the Employer from also pursuing any other remedy. As money
damages for the period of time during which the Employee violates these covenants, the
Employer shall be entitled to recover the full amount of any fees, compensation or other
remuneration earned by the Employee as the result of any such breach.   

	

        7.     
The Employee shall be entitled each year to a vacation of three weeks, during which time;
his compensation shall be paid in full.  

        8.     
The Employer has the right to terminate this agreement at any time for cause, and the
Employer may, without cause, terminate this agreement at any time by giving thirty days
written notice to the Employee. In the event, the Employee, if requested by the Employer,
shall continue to render his services, and shall be paid a regular compensation up to the
date of termination. The Employee may, without cause, terminate this agreement by giving
sixty days written notice to the Employer. In such event, the Employee, in the discretion
of the Employer, shall continue to render his services, and shall be paid his regular
compensation up to the date of termination.  

        9.     
In the event the Employee’s employment is terminated subsequent to the Employer
selling substantially all of its assets to a single purchaser or to a group of associated
purchasers or subsequent to at least two-thirds of the outstanding corporate shares of
the Employer being sold, exchanged or otherwise disposed of in one transaction, or by
reason of a merger or consolidation of the Employer in a transaction in which the Employer’s
shareholders receive less than 50% of the outstanding voting shares of the new or
continuing corporation or, in the event of such a change of control, the employee’s
title, position or responsibilities are materially diminished or the employee is assigned
duties that are inconsistent with his title, position or responsibilities, or if the
employee is relocated to a place of work more than fifty miles from Syracuse, New York,
then, and in that event, the employee, at his option, shall receive a lump sum payment of
one-year’s salary based on present salary and the restrictions provided for in
Paragraph 6 herein shall be reduced to six months.  

-41-  

	

        10.     
The Employee will be eligible for participation in the Employer’s standard health
care plan and is eligible for participation in the Employer’s 401k Plan.  

        11.     
Any controversy or claim arising out of, or relating to, this agreement, or its breach,
shall be settled by arbitration in the City of Syracuse, New York, in accordance with the
then governing rules of the American Arbitration Association. Judgment upon the award
rendered may be entered and enforced in any court of competent jurisdiction.  

        12.     
Any notice required or desired to be given under this agreement shall be deemed given, if
in writing and sent by certified mail, return receipt requested, to the Employee’s
residence or to the Employer’s office as the case may be.  

        13.     
The Employer’s waiver of a breach of any provision of this agreement by the Employee
shall not operate or be construed as a waiver of any subsequent breach by the Employee.
No waiver shall be valid unless in writing and signed by an authorized officer of the
Employer.  

        14.     
The Employee acknowledges that his services are unique and personal. Accordingly, the
Employee may not assign his rights or delegate his duties or obligations under this
agreement. The Employer’s rights and obligations under this agreement shall inure to
the benefit of, and shall be binding upon, the Employer’s successors and assigns.  

        15.     
This agreement contains the entire understanding of the parties. It may not be changed
orally, but only by an agreement in writing signed by the party against whom enforcement
of any waiver, change, modification, extension, or discharge is sought.  

        16.     
This agreement may be executed in two or more counterparts, each of which shall be deemed
an original, but all of which together shall constitute one and the same instrument.  

        IN
WITNESS WHEREOF, the parties have executed this agreement on April 1, 2003.   

	 	 	ALLIANCE BANK, N.A.

By /s/ Jack H. Webb
       ——————————————

       President and Chief Executive Officer

       /s/ John W. Wilson

       —————————————— 

	

-42-Exhibit 10.1

--------------------------------------------------------------------------------
                                 FIRST AMENDMENT
                                       TO
                           REVOLVING CREDIT AGREEMENT
--------------------------------------------------------------------------------

      First Amendment dated as of March 23, 2003 to Revolving Credit Agreement
(the "First Amendment"), by and among WATTS REGULATOR CO., a Massachusetts
corporation (the "Domestic Borrower"), WATTS INDUSTRIES EUROPE B.V., a private
company with limited liability organized under the laws of The Netherlands (the
"Foreign Borrower", and together with the Domestic Borrower, the "Borrowers" and
each individually, a "Borrower"), and FLEET NATIONAL BANK and the other lending
institutions listed on Schedule 1 to the Credit Agreement (as hereinafter
defined) (the "Lenders"), amending certain provisions of the Revolving Credit
Agreement dated as of February 28, 2002 (as amended and in effect from time to
time, the "Credit Agreement") by and among the WATTS INDUSTRIES, INC., a
Delaware corporation (the "Parent"), the Borrowers, the Lenders, and FLEET
NATIONAL BANK in its capacity as administrative agent for the Lenders (the
"Administrative Agent"). Terms not otherwise defined herein which are defined in
the Credit Agreement shall have the same respective meanings herein as therein.

      WHEREAS, the Borrowers and the Lenders have agreed to modify certain terms
and conditions of the Credit Agreement as specifically set forth in this First
Amendment;

      NOW, THEREFORE, in consideration of the premises and the mutual agreements
contained herein and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto hereby agree as
follows:

      ss.1. Amendment to ss.1 of the Credit Agreement. Section 1.1 of the Credit
Agreement is hereby amended as follows:

      (a) the definition of "Consolidated Total Assets" is hereby amended by
deleting such definition in its entirety and restating it as follows:

            Consolidated Total Assets. The sum of (a) all assets ("consolidated
      balance sheet assets") of the Parent and its Subsidiaries determined on a
      consolidated basis in accordance with GAAP, provided, however, in the
      event a Defeasance Event has occurred and is continuing with respect to
      all or any portion of the Indenture Debt, that portion of the Defeased
      Amount shall not be included as a consolidated balance sheet asset for
      purposes of this definition, plus (b) without duplication, all assets
      leased by the Parent or any Subsidiary as lessee under any Synthetic Lease
      to the extent that such assets would have been consolidated balance sheet
      assets had the Synthetic Lease been treated for accounting purposes as a
      Capitalized Lease, plus (c) without duplication, all sold receivables
      referred to in clause (g) of the definition of the term "Indebtedness" to
<PAGE>
                                       -2-

      the extent that such receivables would have been consolidated balance
      sheet assets had they not been sold.

      (b) the definition of "Consolidated Total Funded Debt" is hereby amended
by deleting such definition in its entirety and restating it as follows:

            Consolidated Total Funded Debt. With respect to the Parent and its
      Subsidiaries, the sum, without duplication, of (a) the aggregate amount of
      Indebtedness of the Parent and its Subsidiaries, on a consolidated basis,
      relating to (i) the borrowing of money or the obtaining of credit,
      including the issuance of notes or bonds, provided, however, in the event
      a Defeasance Event has occurred and is continuing with respect to all or
      any portion of the Indenture Debt, that portion of the Indenture Debt
      which constitutes the Defeased Amount shall not be included as
      Indebtedness for purposes of this subparagraph (a)(i) so long as such
      amount continues to be the subject of the Defeasance Event; (ii) the
      deferred purchase price of assets (other than trade payables incurred in
      the ordinary course of business), (iii) in respect of any Synthetic Leases
      or any Capitalized Leases, and (iv) the maximum drawing amount of all
      letters of credit outstanding in excess of aggregate amount equal to
      $20,000,000, and bankers' acceptances plus (b) Indebtedness of the type
      referred to in clause (a) of another Person guaranteed by the Parent or
      any of its Subsidiaries. For the avoidance of doubt, any Indebtedness of
      the Parent and its Subsidiaries consisting of derivative contracts shall
      not be included as Consolidated Total Funded Debt.

      (c) the definition of "Consolidated Total Liabilities" is hereby amended
by deleting such definition in its entirety and restating it as follows:

            Consolidated Total Liabilities. All liabilities of the Parent and
      its Subsidiaries determined on a consolidated basis in accordance with
      GAAP and classified as such on the consolidated balance sheet of the
      Parent and its Subsidiaries and all other Indebtedness of the Parent and
      its Subsidiaries, whether or not so classified, provided, however, in the
      event a Defeasance Event has occurred and is continuing with respect to
      all or any portion of the Indenture Debt, that portion of the Indenture
      Debt which equals the Defeased Amount shall not be included as a liability
      or Indebtedness for purposes of this definition.

      (d) Section 1.1 of the Credit Agreement is further amended by inserting
the following definitions in the appropriate alphabetical order:

            Defeasance Event. The occurrence of a refinancing of all or any
      portion of the Indenture Debt with Refinanced Indenture Debt whereby all
      or any portion of the proceeds of the Refinanced Indenture Debt are paid
      over to the trustee under the Senior Notes Indenture pursuant to, and in
      accordance with, Section 10 of the Senior Notes Indenture (with the amount
      so paid over to such trustee to be held by such trustee and used to make
      the scheduled interest payments on the Senior Notes and to pay the
      principal amount of the Senior Notes upon the maturity of the Senior Notes
      being hereinafter referred to as the "Defeased Amount").
<PAGE>
                                       -3-

            Defeased Amount. As defined in the definition of "Defeasance Event".

      ss.2. Amendment to ss.8 of the Credit Agreement. Section 8.1(c) of the
Credit Agreement is hereby amended by inserting immediately after the words "any
refinancings of the Indenture Debt (the "Refinanced Indenture Debt")" the words
"(and, for the avoidance of doubt, which refinancings shall include a
refinancing of the Indenture Debt in which a Defeasance Event has occurred)".

      ss.3. Conditions to Effectiveness. This First Amendment shall not become
effective until the Administrative Agent receives a counterpart of this First
Amendment, executed by the Borrowers, the Required Lenders and the Guarantors.

      ss.4. Representations and Warranties. Each Borrower hereby repeats, on and
as of the date hereof, each of the representations and warranties made by it in
ss.6 of the Credit Agreement (except to the extent of changes resulting from
transactions contemplated or permitted by the Credit Agreement and the other
Loan Documents and changes occurring in the ordinary course of business that
singly or in the aggregate are not materially adverse, and to the extent that
such representations and warranties relate expressly to an earlier date),
provided, that all references therein to the Credit Agreement shall refer to
such Credit Agreement as amended hereby. In addition, each Borrower hereby
represents and warrants that the execution and delivery by such Borrower of this
First Amendment and the performance by such Borrower of all of its agreements
and obligations under the Credit Agreement as amended hereby are within the
authority of such Borrower and have been duly authorized by all necessary action
on the part of such Borrower.

      ss.5. Ratification, Etc. Except as expressly amended hereby, the Credit
Agreement, the other Loan Documents (which, for the avoidance of doubt, shall
included the Guaranties) and all documents, instruments and agreements related
thereto are hereby ratified and confirmed in all respects and shall continue in
full force and effect. The Credit Agreement and this First Amendment shall be
read and construed as a single agreement. All references in the Credit Agreement
or any related agreement or instrument to the Credit Agreement shall hereafter
refer to the Credit Agreement as amended hereby.

      ss.6. No Waiver. Nothing contained herein shall constitute a waiver of,
impair or otherwise affect any Obligations, any other obligation of the
Borrowers or any rights of the Administrative Agent or the Lenders consequent
thereon.

      ss.7. Counterparts. This First Amendment may be executed in one or more
counterparts, each of which shall be deemed an original but which together shall
constitute one and the same instrument.

      ss.8. Governing Law. THIS FIRST AMENDMENT SHALL BE GOVERNED BY, AND
CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE COMMONWEALTH OF MASSACHUSETTS
(WITHOUT REFERENCE TO CONFLICT OF LAWS).

      IN WITNESS WHEREOF, the parties hereto have executed this First Amendment
as a document under seal as of the date first above written.
<PAGE>
                                      -4-

                                        WATTS REGULATOR CO.

                                        By:
                                            -------------------------------
                                             Name:
                                             Title:

                                        WATTS INDUSTRIES EUROPE B.V.

                                        By:
                                             -------------------------------
                                              Name:
                                              Title:

                                        FLEET NATIONAL BANK

                                        By:
                                            -------------------------------
                                             Name:
                                             Title:

                                        BANK OF AMERICA, N.A.

                                         By:
                                            -------------------------------
                                             Name:
                                             Title:

                                        CITIZENS BANK OF MASSACHUSETTS

                                        By:
                                            -------------------------------
                                             Name:
                                             Title:

                                        MELLON BANK, N.A.

                                        By:
                                            -------------------------------
                                             Name:
                                             Title:
<PAGE>
                                       -5-

                                        FIRST UNION NATIONAL BANK

                                        By:
                                            -------------------------------
                                             Name:
                                             Title:

                                        BROWN BROTHERS HARRIMAN & CO.

                                        By:
                                            -------------------------------
                                             Name:
                                             Title:

                                        JPMORGAN CHASE BANK

                                        By:
                                            -------------------------------
                                             Name:
                                             Title:

                                        KEYBANK NATIONAL ASSOCIATION

                                        By:
                                            -------------------------------
                                             Name:
                                             Title:

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