As filed with the Securities and Exchange Commission on August 1, 1997
Registration Statement No. 33-
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM S-8
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
WATTS INDUSTRIES, INC.
(Exact name of Registrant as Specified in Its Charter)
Delaware 04-2916536
(State of Incorporation) (I.R.S. Employer Identification #)
815 Chestnut Street
North Andover, MA 01845
(508) 688-1811
(Address, including zip code, and telephone number, including area code, of
Registrant's principal executive offices)
WATTS INDUSTRIES, INC. 1996 STOCK OPTION PLAN
(Full Title of the Plan)
Thomas J. White, Esq.
Corporate Attorney
Watts Industries, Inc
815 Chestnut Street
North Andover, MA 01845
(508) 688-1811
(Name, address, including zip code, and telephone number, including area
code, of agent for service)
With copy to:
_____________
Robert P. Whalen, Jr., Esq.
Goodwin, Procter & Hoar LLP
Exchange Place
53 State Street
Boston, Massachusetts 02109-2881
(617) 570-1000
CALCULATION OF REGISTRATION FEE
Title of Amount to be Proposed Proposed Amount of
Securities Registered Maximum Maximum Registration
Being (1) Offering Aggregate Fee
Registered Price Per Offering
Share Price
Class A Common 232,500 shares $16.375 (2) $3,807,188 $1,154
Stock, $.10 par 2,767,500 shares $25.125 (3) $69,533,438 $21,071
value
(1) Plus such additional number of shares as may be required pursuant to
the Watts Industries, Inc 1996 Stock Option Plan in the event of a
stock dividend, stock split or similar change in capitalization
affecting the Class A Common Stock of the Registrant.
(2) The aggregate offering price and fee are computed based on the exercise
price of the option to purchase shares of the Registrant's Class A
Common Stock, $.10 par value per share, which have been granted to date
under the Watts Industries, Inc. 1996 Stock Option Plan in accordance
with Rule 457(h) under the Securities Act of 1933.
(3) This estimate is made pursuant to Rule 457(c) and (h) under the
Securities Act of 1933, as amended (the "Securities Act"), solely for
the purpose of determining the amount of the registration fee and is
based upon the average of the high and low prices for the Registrant's
Class A Common Stock, $.10 par value per share, as reported on the New
York Stock Exchange on July 31, 1997.
PART II
INFORMATION REQUIRED IN THE REGISTRATION STATEMENT
Item 3. Incorporation of Certain Documents by Reference.
Watts Industries, Inc. (the "Company") hereby incorporates by
reference the following documents which have previously been
filed with the Securities and Exchange Commission (the
"Commission"):
(a) The Company's Annual Report on Form 10-K for the
fiscal year ended June 30, 1996;
(b) The Company's Quarterly Report on Form 10-Q for the
quarter ended September 30, 1996; the Company's Quarterly
Report on Form 10-Q for the quarter ended December 31,
1996; the Company's Quarterly Report on Form 10-Q for the
quarter ended March 31, 1997; the Company's Current
Report on Form 8-K dated September 4, 1996; and the
Company's Current Report on Form 8-K dated April 4, 1997;
and
(c) The description of the Company's Class A Common
Stock, $.10 par value per share, contained in the
Company's registration statement on Form 8-A dated June
22, 1995, filed with the Securities and Exchange
Commission pursuant to Section 12 of the Exchange Act of
1934, as amended (the "Exchange Act"), and any amendments
or reports filed for the purpose of updating such
description.
In addition, all documents subsequently filed with the
Securities and Exchange Commission by the Company pursuant to
Sections 13(a) and 13(c), Section 14 and Section 15(d) of the
Exchange Act, prior to the filing of a post-effective amendment
hereto that indicates that all securities offered hereunder have
been sold or that deregisters all securities then remaining
unsold, shall be deemed to be incorporated by reference in this
registration statement and to be a part hereof from the date of
filing of such documents.
Item 4. Description of Securities.
Not Applicable.
Item 5. Interests of Named Experts and Counsel.
Not Applicable.
Item 6. Indemnification of Directors and Officers.
Subsection (a) of Section 145 of the Delaware General
Corporation Law (the "DGCL") empowers a corporation to indemnify
any person who was or is a party or is threatened to be made a
party to any threatened, pending or completed action, suit or
proceeding, whether civil, criminal, administrative or
investigative (other than an action by or in the right of the
corporation) by reason of the fact that the person is or was a
director, officer, employee or agent of the corporation, or is or
was serving at the request of the corporation as a director,
officer, employee or agent of another corporation, partnership,
joint venture, trust or other enterprise, against expenses
(including attorneys' fees), judgments, fines and amounts paid in
settlement actually and reasonably incurred by the person in
connection with such action, suit or proceeding if the person
acted in good faith and in a manner the person reasonably
believed to be in or not opposed to the best interests of the
corporation, and, with respect to any criminal action or
proceeding, had no reasonable cause to believe the person's
conduct was unlawful. Under subsection (a) the termination of
any action, suit or proceeding by judgment, order, settlement,
conviction or upon a plea of nolo contendere or its equivalent,
shall not, of itself, create a presumption that the person did
not act in good faith and in a manner which the person reasonably
believed to be in or not opposed to the best interests of the
corporation, and, with respect to any criminal action or
proceeding, had reasonable cause to believe that the person's
conduct was unlawful.
Subsection (b) of Section 145 of the DGCL empowers a
corporation to indemnify any person who was or is a party or is
threatened to be made a party to any threatened, pending or
completed action or suit by or in the right of the corporation to
procure a judgment in its favor by reason of the fact that the
person is or was a director, officer, employee or agent of the
corporation, or is or was serving at the request of the
corporation as a director, officer, employee or agent of another
corporation, partnership, joint venture, trust or other
enterprise against expenses (including attorneys' fees) actually
and reasonably incurred by the person in connection with the
defense or settlement of such action or suit if the person acted
in good faith and in a manner the person reasonably believed to
be in or not opposed to the best interests of the corporation and
except that no indemnification shall be made in respect of any
claim, issue or matter as to which such person shall have been
adjudged to be liable to the corporation unless and only to the
extent that the Court of Chancery or the court in which such
action or suit was brought shall determine upon application that,
despite the adjudication of liability but in view of all the
circumstances of the case, such person is fairly and reasonably
entitled to indemnity for such expenses which the Court of
Chancery or such other court shall deem proper.
Subsection (d) of Section 145 of the DGCL permits
indemnification under subsections (a) and (b) of Section 145 only
if authorized in the specific case following a determination that
the individual seeking indemnification has met the standard of
conduct required by the applicable subsection. Such
determination shall be made (1) by a majority vote of the
directors who are not parties to such action, suit or proceeding,
even though less than a quorum, or (2) if there are no such
directors, or if such directors so direct, by independent legal
counsel in a written opinion, or (3) by the stockholders.
Section 145 further provides that to the extent a director or
officer of a corporation has been successful on the merits or
otherwise in defense of any action, suit or proceeding referred
to in subsections (a) and (b) of Section 145, or in the defense
of any claim, issue or matter therein, he or she shall be
indemnified against expenses (including attorneys' fees) actually
and reasonably incurred by him or her in connection therewith;
that indemnification provided for by Section 145 shall not be
deemed exclusive of any other rights to which the indemnified
party may be entitled; that indemnification provided for by
Section 145 shall, unless otherwise provided when authorized or
ratified, continue as to a person who has ceased to be a
director, officer, employee or agent and shall inure to the
benefit of such person's heirs, executors and administrators; and
that the corporation has the power to purchase and maintain
insurance on behalf of a director or officer of the corporation
against any liability asserted against him or her and incurred by
him or her in any such capacity, or arising out of his or her
status as such whether or not the corporation would have the
power to indemnify him or her against such liabilities under
Section 145.
Section 102(b)(7) of the DGCL provides that a certificate of
incorporation may contain a provision eliminating or limiting the
personal liability of a director to the corporation or its
stockholders for monetary damages for breach of fiduciary duty as
a director provided that such provision shall not eliminate or
limit the liability of a director (i) for any breach of the
director's duty of loyalty to the corporation or its
stockholders, (ii) for acts or omissions not in good faith or
which involve intentional misconduct or a knowing violation of
law, (iii) under Section 174 of the DGCL, or (iv) for any
transaction from which the director derived an improper personal
benefit.
Article TENTH of the Company's Restated Certificate of
Incorporation, as amended, states that:
No director of the Company shall be personally liable to the
Company or its stockholders for monetary damages for breach of
fiduciary duty as a director; provided, however, that the
foregoing clause shall not apply to any liability of a director
(i) for any breach of the director's duty of loyalty to the
Company or its stockholders, (ii) for acts or omissions not in
good faith or which involve intentional misconduct or a knowing
violation of law, (iii) under Section 174 of the General
Corporation Law of the State of Delaware, or (iv) for any
transaction from which the director derived an improper personal
benefit. This Article shall not eliminate or limit the liability
of a director for any act or omission occurring prior to the
effective date of this Restated Certificate of Incorporation
under the laws of the State of Delaware.
Article V of the Company's By-laws provides that the Company
shall indemnify, to the fullest extent permitted by the DGCL (as
presently in effect or as hereafter amended):
Any person who was or is a party or is threatened to be made
a party to any threatened, pending or completed action, suit or
proceeding, whether civil, criminal, administrative or
investigative (other than an action or suit by or in the right of
the Company) by reason of the fact that he is or was a director
or officer of the Company, or is or was serving at the request of
the Company as a director or officer of another corporation,
partnership, joint venture, trust or other enterprise, against
expenses (including attorneys' fees), judgments, fines and
amounts paid in settlement actually and reasonably incurred by
him in connection with such suit, action or proceeding if he
acted in good faith and in a manner he reasonably believed to be
in or not opposed to the best interests of the Company, and, with
respect to any criminal action or proceeding, had no reasonable
cause to believe his conduct was unlawful. The termination of
any action, suit or proceeding by judgment, order, settlement,
conviction, or upon a plea of nolo contendere or its equivalent,
shall not, of itself, create a presumption that the person did
not act in good faith and in a manner which he reasonably
believed to be in or not opposed to the best interests of the
Company or, with respect to any criminal action or proceeding,
that the person had reasonable cause to believe that his conduct
was unlawful.
Any person who was or is a party or is threatened to be made
a party to any threatened, pending or completed action or suit by
or in the right of the Company to procure a judgment in its favor
by reason of the fact that he is or was a director or officer of
the Company, or is or was serving at the request of the Company
as a director or officer of another corporation, partnership,
joint venture, trust or other enterprise, against expenses
(including attorneys' fees) actually and reasonably incurred by
him in connection with the defense or settlement of such action
or suit if he acted in good faith and in a manner he reasonably
believed to be in or not opposed to the best interests of the
Company and except that no indemnification shall be made in
respect of any claim, issue or matter as to which such person
shall have been adjudged to be liable for negligence or
misconduct in the performance of his duty to the Company unless,
and only to the extent that, the Court of Chancery of the State
of Delaware or the court in which such action or suit was brought
shall determine upon application that, despite the adjudication
of liability but in view of all the circumstances of the case,
such person is fairly and reasonably entitled to indemnity for
such expenses which the Court of Chancery or such other court
shall deem proper.
To the extent that a director or officer of the Company has
been successful on the merits or otherwise in defense of any
action, suit or proceeding referred to in the two immediately
preceding paragraphs, or in defense of any claim, issue or matter
therein, he shall be indemnified against expenses (including
attorneys' fees) actually and reasonably incurred by him in
connection therewith.
Article V of the Company's By-laws also authorizes the Board
of Directors of the Company, in its discretion to indemnify:
Any person who was or is a party or is threatened to be made
a party to any threatened pending or completed action, suit or
proceeding, whether civil, criminal, administrative or
investigative (other than an action by or in the right of the
Company) by reason of the fact that he is or was an employee or
agent of the Company, or is or was serving at the request of the
Company as a director or as an employee or agent of another
corporation, partnership, joint venture, trust or other
enterprise, against expenses (including attorneys' fees),
judgments, fines and amounts paid in settlement actually and
reasonably incurred by him in connection with such action, suit
or proceeding if he acted in good faith and in a manner he
reasonably believed to be in or not opposed to the best interests
of the Company and, with respect to any criminal action or
proceeding, had no reasonable cause to believe his conduct was
unlawful. The termination of any action, suit or proceeding by
judgment, order, settlement, conviction, or upon a plea of nolo
contendere or its equivalent, shall not, of itself, create a
presumption that the person did not act in good faith and in a
manner which he reasonably believed to be in or not opposed to
the best interests of the Company or, with respect to any
criminal action or proceeding, that the person had reasonable
cause to believe that his conduct was unlawful.
Any person who was or is a party or is threatened to be made
a party to any threatened, pending or completed action or suit by
or in the right of the Company to procure a judgment in its favor
by reason of the fact that he is or was an employee or agent of
the Company, or is or was serving at the request of the Company
as an employee or agent of another corporation, partnership,
joint venture, trust or other enterprise, against expenses
(including attorneys' fees) actually and reasonably incurred by
him in connection with the defense or settlement of such action
or suit if he acted in good faith and in a manner he reasonably
believed to be in or not opposed to the best interests of the
Company and except that no indemnification shall be made in
respect of any claim, issue or matter as to which such person
shall have been adjudged to be liable for negligence or
misconduct in the performance of his duty to the Company unless,
and only to the extent that, the Court of Chancery of the State
of Delaware or the court in which such action or suit was brought
shall determine upon application that, despite the adjudication
of liability but in view of all the circumstances of the case,
such person is fairly and reasonably entitled to indemnify for
such expenses which the Court of Chancery or such other court
shall deem proper.
Article V of the Company's By-laws also includes certain
provisions relating to the scope of the indemnification for
officers and directors of the Company and the procedures for
determining entitlement to indemnification:
Determination of Entitlement. Any indemnification pursuant
to Article V (unless required by law or ordered by a court) shall
be made by the Company only as authorized in the specific case
upon a determination that indemnification of the director,
officer, employee or agent is proper in the circumstances because
he has met the applicable standard of conduct set forth in
Section 1 of Article V. Such determination shall be made (a) by
the Board of Directors by a majority vote of a quorum consisting
of directors who were not parties to such action, suit or
proceeding, or (b) if such a quorum is not obtainable, or, even
if obtainable a quorum of disinterested directors so directs, by
independent legal counsel in a written opinion, or (c) by the
stockholders of the Company.
Advance Payments. Expenses incurred in defending a civil or
criminal action, suit or proceeding may be paid by the Company in
advance of the final disposition of such action, suit or
proceeding, only as authorized by the Board of Directors in the
specific case (including by one or more directors who may be
parties to such action, suit or proceeding), upon receipt of an
undertaking by or on behalf of the director, officer, employee or
agent to repay such amount unless it shall ultimately be
determined that he is entitled to be indemnified by the Company
as authorized in Article V.
Non-Exclusive Nature of Indemnification. The indemnification
provided in Article V shall not be deemed exclusive of any other
rights to which any person, whether or not entitled to be
indemnified hereunder, may be entitled under any statute, by-law,
agreement, vote of stockholders or directors or otherwise, both
as to action in his official capacity and as to action in another
capacity while holding such office, and shall continue as to a
person who has ceased to be a director, officer, employee or
agent and shall inure to the benefit of the heirs, executors and
administrators of such a person. Each person who is or becomes a
director or officer as aforesaid shall be deemed to have served
or to have continued to serve in such capacity in reliance upon
the indemnity provided for in Article V.
Insurance. To the extent obtainable, the Company may
purchase and maintain insurance with reasonable limits on behalf
of any person who is or was a director, officer, employee or
agent of the Company, or is or was serving at the request of the
Company as a director, officer, employee or agent of another
corporation, partnership, joint venture, trust or other
enterprise against any liability asserted against such person and
incurred by such person in any such capacity, or arising out of
such person's status as such, whether or not the Company would
have the power to indemnify such person against such liability
under the provisions of the General Corporation Law of the State
of Delaware (as presently in effect or hereafter amended), the
Restated Certificate of Incorporation or these By-laws.
No Duplicate Payments. The Company's indemnification under
Section 1 of Article V of any person who is or was a director,
officer, employee or agent of the Company, or is or was serving
at the request of the Company as a director, officer, employee or
agent of another corporation, partnership, joint venture, trust
or other enterprise, shall be reduced by any amounts such person
receives as indemnification (i) under any policy of insurance
purchased and maintained on such person's behalf by the Company,
(ii) from such other Company, partnership, joint venture, trust
or other enterprise, or (iii) under any other applicable
indemnification provision.
Item 7. Exemption from Registration Claimed.
Not applicable.
Item 8. Exhibits.
The following is a complete list of exhibits filed or
incorporated by reference as part of this registration statement:
Exhibit
4.1 Restated Certificate of Incorporation, as amended,
of the Company. (1)
4.2 Amended and Restated By-laws of the Company. (2)
4.3 Watts Industries, Inc. 1996 Stock Option Plan.
5.1 Opinion of Goodwin, Procter & Hoar LLP as to the
legality of the securities being registered.
23.1 Consent of Goodwin, Procter & Hoar LLP (included
in Exhibit 5.1 to this Registration Statement).
23.2 Consent of Ernst & Young LLP, Independent Auditors.
23.3 Consent of Deloitte & Touche, Independent Auditors.
24.1 Powers of Attorney (included on signature page to
this registration statement).
_____________________
(1) Incorporated by reference to the relevant exhibit to the
Company's Annual Report on Form 10-K filed with the
Commission on September 28, 1995.
(2) Incorporated by reference to the relevant exhibit to the
Company's Current Report on Form 8-K filed with the
Commission on May 15, 1992.
Item 9. Undertakings.
(a) The undersigned registrant hereby undertakes:
(1) To file, during any period in which
offers or sales are being made, a post-effective
amendment to this registration statement:
(i) To include any prospectus
required by Section 10(a)(3) of the
Securities Act;
(ii) To reflect in the
prospectus any facts or events arising after
the effective date of the registration
statement (or the most recent post-effective
amendment thereof) which, individually or in
the aggregate, represent a fundamental change
in the information set forth in the
registration statement. Notwithstanding the
foregoing, any increase or decrease in volume
of securities offered (if the total dollar
value of securities offered would not exceed
that which was registered) and any deviation
from the low or high end of the estimated
maximum offering range may be reflected in
the form of prospectus filed with the
Commission pursuant to Rule 424(b) if, in the
aggregate, the changes in volume and price
represent no more than a 20% change in the
maximum aggregate offering price set forth in
"Calculation of Registration Fee" table in
the effective registration statement; and
(iii) To include any material
information with respect to the plan of
distribution not previously disclosed in the
registration statement or any material change
to such information in the registration
statement;
provided, however, that paragraphs (a)(1)(i) and
(a)(1)(ii) herein do not apply if the information
required to be included in a post-effective amendment by
those paragraphs is contained in periodic reports filed
by the undersigned registrant pursuant to Section 13 or
Section 15(d) of the Exchange Act that are incorporated
by reference in the registration statement;
(2) That, for the purpose of determining any
liability under the Securities Act, each such
post-effective amendment shall be deemed to be a new
registration statement relating to the securities offered
therein, and the offering of such securities at that time
shall be deemed to be the initial bona fide offering
thereof; and
(3) To remove from registration by means of a
post-effective amendment any of the securities being
registered which remain unsold at the termination of the
offering.
(b) The undersigned registrant hereby undertakes that,
for purposes of determining any liability under the
Securities Act, each filing of the registrant's annual
report pursuant to Section 13(a) or 15(d) of the Exchange
Act (and, where applicable, each filing of an employee
benefit plan's annual report pursuant to Section 15(d) of
the Exchange Act) that is incorporated by reference in
the registration statement shall be deemed to be a new
registration statement relating to the securities offered
therein, and the offering of such securities at that time
shall be deemed to be the initial bona fide offering
thereof.
(c) Insofar as indemnification for liabilities
arising under the Securities Act may be permitted to
directors, officers and controlling persons of the
registrant pursuant to the foregoing provisions, or
otherwise, the registrant has been advised that in the
opinion of the Securities and Exchange Commission such
indemnification is against public policy as expressed in
the Securities Act, and is, therefore, unenforceable. In
the event that a claim for indemnification against such
liabilities (other than the payment by the registrant of
expenses incurred or paid by a director, officer or
controlling person of the registrant in the successful
defense of any action, suit or proceeding) is asserted by
such director, officer or controlling person in
connection with the securities being registered, the
registrant will, unless in the opinion of its counsel the
matter has been settled by controlling precedent, submit
to a court of appropriate jurisdiction the question
whether such indemnification by it is against public
policy as expressed in the Securities Act and will be
governed by the final adjudication of such issue.
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933,
Watts Industries, Inc. certifies that it has reasonable grounds
to believe that it meets all of the requirements for filing on
Form S-8 and has duly caused this registration statement to be
signed on its behalf by the undersigned, thereunto duly
authorized, in the Town of North Andover, Commonwealth of
Massachusetts, on this 1st day of August, 1997.
WATTS INDUSTRIES, INC.
By:/s/ Timothy P. Horne
Timothy P. Horne, Chairman of the Board and
Chief Executive Officer
KNOW ALL MEN BY THESE PRESENTS, that we, the undersigned
officers and directors of Watts Industries, Inc. hereby severally
constitute and appoint Timothy P. Horne and Kenneth J. McAvoy,
and each of them singly, our true and lawful attorneys with full
power to them, and each of them singly, to sign for us and in our
names in the capacities indicated below, the Registration
Statement on Form S-8 filed herewith and any and all amendments
to said Registration Statement, and generally to do all such
things in our names and in our capacities as officers and
directors to enable Watts Industries, Inc. to comply with the
provisions of the Securities Act of 1933, and all requirements of
the Securities and Exchange Commission, hereby ratifying and
confirming our signatures as they may be signed by our said
attorneys, or any of them, to said Registration Statement and any
and all amendments thereto.
Pursuant to the requirements of the Securities Act of 1933,
this registration statement has been signed by the following
persons in the capacities and on the dates indicated.
Signature Title Date
/s/ Timothy P. Horne Chairman of the Board and August 1, 1997
Timothy P. Horne Chief Executive Officer
/s/ Kenneth J. McAvoy Chief Financial Officer and August 1, 1997
Kenneth J. McAvoy Treasurer, Secretary and
Director
/s/ David A. Bloss, Sr. President, Chief Operating August 1, 1997
David A. Bloss, Sr. Operating Officer and Director
/s/ Frederic B. Horne Corporate Vice President and August 1, 1997
Frederic B. Horne Director
/s/ Noah T. Herndon Director August 1, 1997
Noah T. Herndon
/s/ Wendy E. Lane Director August 1, 1997
Wendy E. Lane
/s/ Gordon W. Moran Director August 1, 1997
Gordon W. Moran
/s/ Daniel J. Murphy, III Director August 1, 1997
Daniel J. Murphy, III
EXHIBIT INDEX
Exhibit No. Description Page
4.1 Restated Certificate of Incorporation, as amended (1)
4.2 Amended and Restated By-laws (2)
4.3 Watts Industries, Inc. 1996 Stock Option Plan
5.1 Opinion of Goodwin, Procter & Hoar LLP as to the
legality of the securities being registered
23.1 Consent of Goodwin, Procter & Hoar LLP (included
in Exhibit 5.1 hereto)
23.2 Consent of Ernst & Young LLP, Independent Auditors
23.3 Consent of Deloitte & Touche, Independent Auditors
24.1 Powers of Attorney (included on signature page to
this registration statement)
_________________________
(1) Incorporated by reference to the relevant exhibit to the
Company's Annual Report on Form 10-K filed with the
Commission on September 28, 1995.
(2) Incorporated by reference to the relevant exhibit to the
Company's Current Report on Form 8-K filed with the
Commission on May 15, 1992.
Exhibit 4.3
WATTS INDUSTRIES, INC.
1996 STOCK OPTION PLAN
1. PURPOSE
The Watts Industries, Inc. 1996 Stock Option Plan (the
"Plan") is intended as a performance incentive for officers and
other employees of Watts Industries, Inc. (the "Company") or its
Subsidiaries (as hereinafter defined) to enable the persons to
whom options to purchase Common Stock (as defined in Section 3
below) are granted (the "Optionees") to acquire or increase a
proprietary interest in the success of the Company. The Company
intends that this purpose will be effected by the granting of
"incentive stock options" ("Incentive Options") as defined in
Section 422 of the Internal Revenue Code of 1986, as amended (the
"Code"), and nonqualified stock options ("Nonqualified Options")
under the Plan. The term "Subsidiaries" shall include any
corporation (other than the Company) in any unbroken chain of
corporations, beginning with the Company if each of the
corporations (other than the last corporation in the unbroken
chain) owns stock possessing 50% or more of the total combined
voting power of all classes of stock in one of the other
corporations in the chain. Shares of Common Stock acquired or
acquirable upon exercise of options are referred to herein as
"Option Shares."
2. OPTIONS TO BE ISSUED AND ADMINISTRATION
(a) Options granted under the Plan may be either
Incentive Options or Nonqualified Options, and shall be
designated as such at the time of grant. To the extent that any
option intended to be an Incentive Option shall fail to qualify
as an "incentive stock option" under the Code, such option shall
be deemed to be a Nonqualified Option. Nonqualified Options may
not be granted pursuant to the Plan until the earlier to occur of
(i) the date on which the sum of (x) the number of shares of
Common Stock purchased pursuant to the Watts Industries, Inc.
1989 Nonqualified Stock Option Plan, as amended (the "1989
Plan"), and (y) the number of shares of Common Stock subject to
outstanding Nonqualified Options issued under the 1989 Plan
equals the maximum number of shares of Common Stock reserved for
issuance under the 1989 Plan as set forth in Section 1 of the
1989 Plan and (ii) the expiration of the 1989 Plan.
(b) The Plan shall be administered by either the Board
of Directors of the Company or the Stock Option and Compensation
Committee of the Board of Directors or any successor committee
thereto appointed by the Board of Directors (the "Committee").
Action by the Committee shall require the affirmative vote of a
majority of all its members. Each member of the Committee shall
be an "outside director" within the meaning of Section 162(m) of
the Code and the regulations promulgated thereunder, and a "non-
employee director" within the meaning of Rule 16b-3(a)(3) of the
Securities Exchange Act of 1934, as amended. All references to
the "Committee" herein may also be deemed to refer to the Board
of Directors.
(c) Subject to the terms and conditions of the Plan,
the Committee shall have the power:
(i) To determine from time to time the options to
be issued to eligible persons under the Plan and to prescribe the
terms and provisions (which need not be identical) of options
issued under the Plan to such persons;
(ii) To construe and interpret the Plan and
issuances thereunder and to establish, amend, and revoke rules
and regulations for administration of the Plan. In this
connection, the Committee may correct any defect or supply any
omission, or reconcile any inconsistency in the Plan, in any
option agreement in the manner and to the extent it shall deem
necessary or expedient to make the Plan fully effective with all
decisions and determinations by the Committee in the exercise of
this power to be final and binding upon the Company and the
Optionees;
(iii) To accelerate the exercisability or
vesting of all or any portion of any option;
(iv) Subject to the provisions of Section 5(a), to
extend the period in which options may be exercised; and
(v) Generally, to exercise such powers and to
perform such acts as are deemed necessary or expedient to promote
the best interests of the Company with respect to the Plan.
3. STOCK
The stock subject to the options granted under the Plan,
shall be shares of the Company's authorized but unissued Class A
Common Stock, par value $.10 per share (the "Common Stock"). The
total number of shares that may be issued under the Plan shall
not exceed an aggregate of 3,000,000 shares of Common Stock.
Such numbers shall be subject to adjustment as provided in
Section 7 hereof.
4. ELIGIBILITY
(a) Options may be granted or issued only to officers
or other full-time employees of the Company or its Subsidiaries,
including members of the Board of Directors who are also
full-time employees of the Company or its Subsidiaries.
(b) No person shall be eligible to receive any
Incentive Option under the Plan if, at the date of grant, such
person beneficially owns (or is deemed to own under Section
424(d) of the Code) stock representing in excess of ten percent
of the voting power of all outstanding capital stock of the
Company or of any "parent corporation" or "subsidiary
corporation", as defined in Sections 424(e) and 424(f),
respectively, of the Code, unless notwithstanding anything in
this Plan to the contrary (i) the exercise price for Common Stock
subject to such option is at least 110% of the fair market value
of such Common Stock at the time of the grant determined as
provided below and (ii) the option by its terms is not
exercisable after the expiration of five years from the date of
grant thereof.
(c) Notwithstanding any other provision of the Plan,
the aggregate fair market value (determined as of the time the
option is granted) of the Common Stock with respect to which
Incentive Options are exercisable for the first time by any
individual during any calendar year (under all plans of the
Company and of all parent corporations and subsidiary
corporations, within the meaning of Sections 424(e) and 424(f),
respectively, of the Code) shall not exceed $100,000. Any
Incentive Option granted under the Plan in excess of the
foregoing limitation shall be deemed a Nonqualified Option.
(d) Options with respect to no more than 100,000
shares of Common Stock may be granted to any one individual
during any one calendar year period.
5. TERMS OF THE OPTION AGREEMENTS
Subject to the terms and conditions of the Plan, each option
agreement shall contain such provisions as the Committee shall
from time to time deem appropriate. Option agreements need not
be identical, but each option agreement by appropriate language
shall include the substance of all of the following provisions:
(a) Expiration; Termination of Employment.
Notwithstanding any other provision of the Plan or of any option
agreement, each option shall expire on the date specified in the
option agreement, which date in the case of any Incentive Option
shall not be more than ten years after the date on which the
option was granted (subject to Section 4(b)). The Committee may
in its discretion specify, at the time an option is granted under
the Plan and subject to the agreement of the applicable Optionee
thereafter, a period or periods within which such option may be
exercised following retirement of the Optionee or termination of
the Optionee's employment with the Company or its Subsidiaries
for any reason, or upon the happening of any other event.
(b) Minimum Shares Exercisable. Option agreements may
in the discretion of the Committee set forth a minimum number of
shares with respect to which an option may be exercised at any
one time.
(c) Exercise. Options shall be exercisable in such
installments (which need not be equal) and at such time or times
(including upon the occurrence of such event or events) as may be
designated by the Committee. To the extent not exercised,
installments shall accumulate and be exercisable, in whole or in
part, at any time after becoming exercisable, but not later than
the date the option expires.
(d) Exercise Price. The exercise price per share of
Common Stock subject to each option shall be determined by the
Committee; provided, however, that the exercise price per share
of Common Stock subject to each Incentive Option shall not be
less than the fair market value of the Common Stock on the date
such Incentive Option is granted and the exercise price per share
of Common Stock subject to each Nonqualified Option shall not be
less than fifty percent (50%) of the fair market value of the
Common Stock on the date such Nonqualified Option is granted.
For the purposes of the Plan, the fair market value of the shares
subject to options granted hereunder shall be determined in good
faith by the Committee; provided, however, that if the Common
Stock is admitted to trading on a national securities exchange or
the NASDAQ National Market on the date the option is granted, the
fair market value shall not be less than the closing price
reported for the Common Stock on such exchange or system for such
date or, if no sales were reported for such date, for the last
date preceding such date for which a sale was reported.
(e) Rights of Optionees. No Optionee shall be deemed
for any purpose to be the owner of any shares of Common Stock
subject to any option unless and until (i) the option shall have
been exercised pursuant to the terms thereof, (ii) all
requirements under applicable law and regulations shall have been
complied with to the satisfaction of the Company, (iii) the
Company shall have issued and delivered the shares to the
Optionee, and (iv) the Optionee's name shall have been entered as
a stockholder of record on the books of the Company. Thereupon,
the Optionee shall have full dividend and other ownership rights
with respect to such shares of Common Stock. Nothing in this
Plan or in any option shall confer upon any Optionee any right to
continue in the employ of the Company or any of its Subsidiaries
or interfere in any way with any right of the Company or any of
its Subsidiaries to terminate the Optionee's employment at any
time.
(f) Transfer. No option granted hereunder shall be
transferable by the Optionee other than by will or by the laws of
descent and distribution, and such option may be exercised during
the Optionee's lifetime only by the Optionee. Notwithstanding
the foregoing, the Committee may provide in an option agreement
that the Optionee may transfer, without consideration for the
transfer, such Optionee's Nonqualified Options to charitable or
other non-profit organizations that are exempt from taxation
under the Code, to members of his or her immediate family, to
trusts for the benefit of such family members and to partnerships
in which such family members are the only partners.
6. METHOD OF EXERCISE; PAYMENT OF PURCHASE PRICE
(a) Any option granted under the Plan may, to the
extent then exercisable, be exercised by the Optionee in whole
or, subject to Section 5(b) hereof, in part by delivering to the
Company on any business day a written notice specifying the
number of shares of Common Stock the Optionee then desires to
purchase pursuant to the exercise of an option (the "Notice").
(b) Payment for the shares of Common Stock purchased
pursuant to the exercise of an option shall be made either: (i)
in cash, or by certified or bank check or other payment
acceptable to the Company, equal to the option exercise price for
the number of shares specified in the Notice (the "Total Option
Price"); (ii) if authorized by the applicable option agreement
and if permitted by law, by delivery of shares of Common Stock
that the Optionee may freely transfer and that have been held by
the Optionee free of any substantial risk of forfeiture for at
least six months having a fair market value, determined by
reference to the provisions of Section 5(d) hereof, equal to or
less than the Total Option Price, plus cash in an amount equal to
the difference, if any, of the Total Option Price less the fair
market value of such shares of Common Stock; or (iii) if
authorized by the applicable option agreement, by the Optionee
delivering the Notice to the Company together with irrevocable
instructions to a broker to promptly deliver the Total Option
Price to the Company in cash or by other method of payment
acceptable to the Company; provided, however, that the Optionee
and the broker shall comply with such procedures and enter into
such agreements of indemnity or other agreements as the Company
shall prescribe as a condition of payment under this clause
(iii).
(c) Payment instruments will be received subject to
collection. The delivery of certificates representing shares of
Common Stock to be purchased pursuant to the exercise of an
option will be contingent upon the Company's receipt of the Total
Option Price and of any written representations from the Optionee
required by the Committee, and the fulfillment of any other
requirements contained in the option agreement or applicable
provisions of law.
7. ADJUSTMENT UPON CHANGES IN CAPITALIZATION
(a) Subject to Section 8 hereof, if the shares of the
Company's Common Stock as a whole are increased, decreased,
changed into or exchanged for a different number or kind of
shares or securities of the Company, whether through merger,
consolidation, reorganization, recapitalization,
reclassification, stock dividend, stock split, combination of
shares, exchange of shares, change in corporate structure or the
like, an appropriate and proportionate adjustment shall be made
in the number and kind of shares subject to the Plan, and in the
number, kind, and per share exercise price of shares subject to
unexercised options or portions thereof granted prior to any such
change. Subject to Section 8 hereof, in the event of any such
adjustment in an outstanding option, the Optionee thereafter
shall have the right to purchase the number of shares under such
option at the per share price, as so adjusted, which the Optionee
could purchase at the total purchase price applicable to the
option immediately prior to such adjustment.
(b) Adjustments under this Section 7 shall be
determined by the Committee and such determinations shall be
final, binding and conclusive. The Committee shall have the
discretion and power in any such event to determine and to make
effective provisions for acceleration of the time or times at
which any option or portion thereof shall become exercisable.
8. EFFECT OF CERTAIN TRANSACTIONS
In the case of (i) the dissolution or liquidation of the
Company, (ii) a merger, reorganization or consolidation in which
the Company is acquired by another person or entity (other than a
holding company formed by the Company) or in which the Company is
not the surviving corporation, (iii) the sale of all or
substantially all of the assets of the Company to another person
or entity or (iv) the sale of all of the stock of the Company to
an unrelated person or entity, the Plan and the options issued
hereunder shall terminate upon the effectiveness of any such
transaction or event. Notwithstanding the foregoing, in the
event of any transaction which will result in such a termination,
the Company shall give written notice of such transaction to the
Optionee at least sixty (60) days prior to the effective date of
any such transaction or the record date on which shareholders of
the Company entitled to participate in such transaction shall be
determined, whichever shall first occur. Not later than thirty
(30) days prior to the effective date of such transaction, the
Optionee shall be entitled to purchase, subject to the
consummation of such transaction, all or any part of the Option
Shares (all of which shall be deemed vested as of the date of
such written notice), and this Option shall expire as to any
Option Shares not purchased prior to such date unless the Board
of Directors otherwise determines.
9. TAX WITHHOLDING
(a) Each Optionee shall, no later than the exercise
date of any option, pay to the Company, or make arrangements
satisfactory to the Company 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
Optionee.
(b) An Optionee may elect to have his tax withholding
obligation satisfied, in whole or in part, by (i) authorizing the
Company to withhold from shares of Common Stock to be issued
pursuant to any option the number of shares with an aggregate
fair market value (determined by reference to the provisions of
Section 5(d) hereof), that would satisfy the withholding amount
due or (ii) transferring to the Company shares of Common Stock
owned by the Optionee with an aggregate fair market value
(determined by reference to the provisions of Section 5(d)
hereof) that would satisfy the withholding amount due.
10. AMENDMENT OF THE PLAN
The Board of Directors may discontinue the Plan or amend the
Plan at any time. Plan amendments shall be subject to approval
by the Company's stockholders if and to the extent determined by
the Committee to be necessary to ensure that Incentive Options
granted under the Plan are qualified under Section 422 of the
Code. Except as provided in Sections 7 and 8 hereof, rights and
obligations under any option granted before any discontinuance or
amendment of the Plan shall not be altered or impaired by such
discontinuance or amendment, except with the consent of the
Optionee.
11. NONEXCLUSIVITY OF THE PLAN
Neither the adoption of the Plan by the Board of Directors
nor the submission of the Plan to the stockholders of the Company
for approval shall be construed as creating any limitations on
the power of the Board of Directors to adopt such other incentive
arrangements as it may deem desirable, including, without
limitation, the granting of stock or stock options otherwise than
under the Plan, and such arrangements may be either applicable
generally or only in specific cases.
12. GOVERNMENT AND OTHER REGULATIONS; GOVERNING LAW
(a) The obligation of the Company to deliver shares of
Common Stock with respect to options granted under the Plan shall
be subject to all applicable laws, rules and regulations,
including all applicable federal and state securities laws, and
the obtaining of all such approvals by governmental agencies as
may be deemed necessary or appropriate by the Committee.
(b) The Plan shall be governed by Delaware law, except
to the extent that such law is preempted by federal law.
(c) Transactions under the Plan are intended to comply
with Rule 16b-3, as amended through August 15, 1996.
13. EFFECTIVE DATE OF PLAN; STOCKHOLDER APPROVAL
The Plan shall become effective upon the date that it is
approved by the Board of Directors of the Company; provided,
however, that the Plan shall be subject to the approval of the
Company's stockholders in accordance with applicable laws and
regulations at an annual or special meeting held within twelve
months of such effective date. No options granted under the Plan
prior to such stockholder approval may be exercised until such
approval has been obtained. No Incentive Options may be granted
under the Plan on or after the tenth anniversary of the effective
date of the Plan.
Adopted as of August 6, 1996
Exhibit 5.1
August 1, 1997
Watts Industries, Inc.
815 Chestnut Street
North Andover, MA 01845
Re: Watts Industries, Inc. 1996 Stock Option Plan
Ladies and Gentlemen:
This opinion is furnished in connection with the
registration pursuant to the Securities Act of 1933, as amended
(the "Act"), of 3,000,000 shares (the "Shares") of Class A Common
Stock, par value $.10 per share (the "Class A Common Stock"), of
Watts Industries, Inc. (the "Company") which may be issued
pursuant to options granted under the Watts Industries, Inc. 1996
Stock Option Plan (the "Plan").
We have acted as counsel to the Company in connection with
the registration of the Shares under the Act. We have examined
the Restated Certificate of Incorporation, as amended, and the
Amended and Restated By-laws of the Company; such records of the
corporate proceedings of the Company as we deemed necessary; the
Plan; a registration statement on Form S-8 under the Act relating
to the Shares (the "Registration Statement"); and such other
certificates, receipts, records and documents as we considered
necessary for the purposes of this opinion. We have assumed the
genuineness of all signatures, the conformity to the originals of
all documents reviewed by us as copies, the authenticity and
completeness of all original documents reviewed by us in original
form, and the legal competence of each individual executing a
document.
We are attorneys admitted to practice in the Commonwealth of
Massachusetts. We express no opinion concerning the laws of any
jurisdictions other than the laws of the United States of
America, the Commonwealth of Massachusetts and the corporate laws
of the State of Delaware.
Based upon the foregoing, we are of the opinion that upon
the issuance and delivery of, and payment for, the Shares, in
accordance with the terms of the Registration Statement and the
Plan, the Shares will be legally issued, fully paid and non-
assessable shares of the Company's Class A Common Stock.
The foregoing opinion assumes that all requisite steps will
be taken to comply with the requirements of the Act and
applicable requirements of state laws regulating the offer and
sale of securities. The foregoing opinion further assumes that
the purchase price paid for the Shares will be in excess of the
par value thereof.
We hereby consent to the filing of this opinion as an
exhibit to the Registration Statement.
Very truly yours,
GOODWIN, PROCTER & HOAR LLP
Exhibit 23.2
Consent of Ernst & Young LLP, Independent Auditors
We consent to the incorporation by reference in the Registration Statement
(Form S-8) and related Prospectus pertaining to the
Watts Industries, Inc. 1996 Stock Option Plan of our report dated August 6,
1996, with respect to the consolidated financial statements and schedule
of Watts Industries, Inc. included in its Annual Report (Form 10-K)
for the year ended June 30, 1996, filed with the Securities
and Exchange Commission.
ERNST & YOUNG LLP
Boston, Massachusetts
August 1, 1997
Exhibit 23.3
August 1, 1997
Independent Auditors' Consent
We consent to the incorporation by reference in this Registration Statement
of Watts Industries, Inc. on Form S-8 of our report dated August 6, 1996
appearing in the Annual Report on Form 10-K of Watts Industries, Inc. for
the year ended June 30, 1996.
Leiden, The Netherlands
Deloitte & Touche
