/ Sourcing Policy and Procedure
SUBJECT:United States Foreign Corrupt Practices Act – Annex A & B
NUMBER: Rev 1 / ISSUED:
12/14/2012 / LATEST REVISION: 12/14/2012 / PAGE:
OF

COMPLIANCE CERTIFICATION

I, [SIGNATOR], on my own behalf and on behalf of [SUPPLIER COMPANY NAME], represent and warrant that I have received and reviewed Watts Water Technologies, Inc.’s (“WWT”) Anti-Corruption Policy (the “Policy”)(attached as Annex A) and a summary of the provisions of the U.S. Foreign Corrupt Practices Act (“FCPA”) and U.S. laws prohibiting private corruption, and similar laws of other countries (together, the “International Anti-Corruption Laws”) (Attached as Annex B). I understand the Policy and the International Anti-Corruption Laws that prohibit corruptly paying, giving or offering or promising to give or pay any money or anything else of value to or for the benefit of a Foreign Official or to any other person while knowing that all or part of the payment or thing of value will be offered or passed on to a Foreign Official in connection with any aspect of [WATTS ENTITY NAME]business. I further understand that the term “Foreign Official” includes any:

  • officer or employee of a non-U.S. government or public international organization, or any department or agency of such a government or organization;
  • officer or employee of a non-U.S. government-owned or controlled company;
  • non-U.S. political party;
  • non-U.S. political party official;
  • candidate for non-U.S. political office; or
  • anyone acting in an official capacity on behalf of any of the foregoing (whether paid or unpaid).

I hereby affirm my and [SUPPLIER COMPANY NAME]’s obligation and agreement to comply with the International Anti-Corruption Laws and other laws which may be applicable to [SUPPLIER COMPANY NAME], and the Policy. In addition, I hereby confirm that neither I nor any other owner, director, officer or employee of [SUPPLIER COMPANY NAME], has made, offered or promised to make or will make, offer or promise to make, directly or indirectly, an improper or corrupt payment or gift of anything of value to or for the benefit of a Foreign Official or to any other person while knowing that all or a portion of such payment or thing of value will be offered, given or promised to a Foreign Official. I further confirm that if I or anyone else working for or on behalf of [SUPPLIER COMPANY NAME], should learn of information regarding any such improper payment or offer, or any other violation of the International Anti-Corruption Laws or the Policyin connection with our work for [WATTS ENTITY NAME], we will immediately advise [WATTS SOURCING CONTACT], of our knowledge or suspicion.

[SUPPLIER COMPANY NAME]

By: ______Attested By: ______

Signed: ______Signed: ______

Title: ______Title: ______

Date: ______Date: ______

ANNEX A – ANTI-CORRUPTION POLICY

PURPOSE

Watts Water Technologies, Inc. (the “Company”) expects its employees to comply with all applicable anti-corruption laws, including the United States Foreign Corrupt Practices Act (“FCPA”) and other locally applicable anti-corruption laws in all of the countries in which it operates. This Policy supplements the Company’s Code of Business Conduct, which includes a commitment to observe the standards of conduct set forth in the U.S. Foreign Corrupt Practices Act (the "FCPA"), as well as with local anti-corruption, currency and other laws applicable in foreign countries in which the Company operates. Compliance with such laws is particularly important since the Company operates in some jurisdictions in which (i) government officials are frequently engaged in commercial and financial activities, (ii) corruption and related problems could be an issue, and (iii) legal standards and enforcement policies are developing, but are often unclear and inconsistently applied. In such circumstances, special vigilance is important to ensure compliance with the FCPA and applicable local anti-corruption laws.

This Policy applies to all employees, directors, officers, agents, consultants and representatives of the Company and its subsidiaries and divisions world-wide, in their transactions with, and on behalf of, the Company. This policy also extends to Intermediaries (as defined herein) who conduct business on behalf of the Company. Failure to comply with this Policy may result in significant civil and criminal penalties for the Company and the individuals involved and are grounds for disciplinary action against such individuals, up to and including termination.

This policy supersedes and replaces the Foreign Corrupt Practices Act Policy issued October 4, 2006 and the Anti-Bribery Policy Issued July 21, 2009.

LOCATIONS AFFECTED

All Watts sites.

GENERAL PROHIBITION

Except as provided in this policy and as further provided in the Business Courtesies Compliance Guidelines, no offers, payments, promises to pay or authorizations to pay any money, make any gifts or provide anything of value with the intent of securing business or an inappropriate business advantage will be made by or on behalf of the Company to:

  1. Any Government Official;
  2. Any Political Party or official thereof or any candidate for political office;
  3. Any Non-Commercial Organization with ties to the government, a Government Official or Political Party; or
  4. Any Intermediary or person, while knowing or having reason to know that all or any portion of any payment will be offered, given or promised, directly or indirectly to any of the above.

Furthermore, the Company, its officers, employees, and agents are prohibited from giving, offering, receiving or promising Anything of Value to or from an Intermediary with the intent to improperly obtain, retain or provide business opportunities or any other Business Advantage.

If you are prohibited from making any payment, gift, offer, or promise directly, you are also prohibited from making it indirectly. You may not instruct, authorize, or allow a third party to make or offer a prohibited payment or gift on your behalf, and you may not make or offer a payment or gift to a third party knowing or having reason to know that it will likely be given improperly to a government official.

This prohibition should be interpreted broadly. The Definitions and Sections I through VIII of this policy are essential to understanding the scope of the prohibition against corruption in international business transactions.

DEFINITIONS

Anything of Value or Value– “Anything of value” or “value” includes not only cash and cash equivalents, but also gifts, entertainment, accommodations, and anything else of tangible or intangible value. Business entertainment, gifts and accommodations for Government Officials are permitted only as described below.

Business Advantage – ”Business Advantage” paymentsinclude payments to obtain business or to gain any other advantage, such as reduction in taxes, tolerance of non-compliance with laws, or other favors or preferential treatment.

Government Official – “Government Official” includes officers and employees, regardless of rank, of local governments, national governments, government-owned or government-controlled companies, and public international organizations, such as the United Nations or World Bank. “Government Official” also includes political parties, party officials, and candidates for public office, or any person acting in an official capacity for or on behalf of any such government or department, agency or instrumentality, or for or on behalf of any such public international organization. A "GovernmentOfficial" includes not only a person who performs traditional governmental or administrative functions, but also an employee of an entity in which a governmental body has an ownership interest (even a minority interest). Such employee could still qualify as a Government Official even if he or she performs business-related functions as an employee of such entity engaged in commercial, rather than governmental, activities. For example, an employee of a state owned enterprise could be a “Government Official” for purposes of the FCPA.

Intermediary – “Intermediary” includes (a) an individual not employed by the Company or (b) an entity not owned by the Company that provides services or engages in business activities for the Company, or may interact with others, including Government Officials, on behalf of the Company. Some examples include agents, representatives, distributors, channel partners, sponsors, advisors, consultants, joint venture partners and their employees, contractors, subcontractors, suppliers, and other service providers.

Non-commercial Organization– “Non-Commercial Organization” includes an organization which does not have profit-making as its main activity or purpose and which does not distribute profits between individuals or entities. A non-commercial organization includes a consumer cooperative, public association or religious organization, charity and other funds, as well as an institution, which is established by a proprietor to perform managerial, socio-cultural or other functions of a non-commercial nature. Design institutes and standards-setting organizations are included in this definition.

Political Party– “Political Party” includes a public association formed for the purposes of individuals’ participation in the society’s political life through formation and expression of their political will, participation in social and political actions, in elections and referendums, as well as for the purposes to represent individuals’ interests before state authorities and bodies of local governments, including official persons or a candidates of a Political Party, as well as those persons’ relatives, close ones, personal friends and affiliated persons.

POLICY

I.KNOWLEDGE STANDARD:

In order to violate the FCPA, actual knowledge of a prohibited payment is not required. If an individual knows that a prohibited payment is substantially certain or highly probable to occur or has a firm belief that such circumstance exists or such result is substantially certain to occur, such circumstances may constitute "knowledge" which could result in an FCPA violation. Deliberate avoidance of knowledge, wilful blindness or conscious disregard of such knowledge will not avoid liability.

II.FACILITATION PAYMENTS:

The FCPA permits, under very limited circumstances, facilitation payments. For example, a nominal payment to a low-level customs official to expedite non-discretionary clearance of goods may be permitted in jurisdictions where such payments are common. However, facilitation payments may violate local law or local enforcement policies. Therefore, no facilitation payments may be offered or given without pre-approval by the Office of the General Counsel, through the use of the Business Courtesies Report Form. Under no circumstances will a payment be authorized unless all of the following criteria are met:

  1. the assistance for which the facilitation payment is to be made is clearly an action which the person receiving payment is legally required (not merely permitted) to provide, and the payment is made only to facilitate such action;
  2. the payment is nominal (usually less than US $100);
  3. the payment is customary and legally permitted in the jurisdiction in question;
  4. no reasonable alternative to making the payment exists;
  5. the duties of the person receiving the payment are essentially ministerial or clerical;
  6. the payment has been approved in advance by the Office of the General Counsel; and
  7. the payment can be accurately recorded in the books and records of the Company with appropriate documentation supporting the payment details.

No fictitious invoices or documents shall be created in connection with such payments, and no accounting record or document shall be falsified in any manner which may obscure or disguise the true nature of the transaction.

III.BUSINESS COURTESIES:

Watts’s employees must follow the Company’s Business Courtesies Compliance Guidelines pertaining to the giving or receiving of business courtesies. In general, a business courtesy may only be offered, given or received if all of the following conditions are met:

(i) The business courtesy must be reasonable in amount and offered or given in an open and transparent manner so that it cannot be reasonably perceived as an attempt to gain an unfair business advantage.

(ii)Business courtesies given by Company representatives must be offered only in connection with the promotion, demonstration or explanation of Company products or services or generalized goodwill purposes.

(iii)Under no circumstances may a business courtesy be offered or given where the purpose is to wrongfully influence a Government Official or business decision-maker to misuse their positions or influence their acts.

(iv)The giving and acceptance of the business courtesy must be legal and permissible under local law, government regulations and the policies of the organization that employs the person who is offering or receiving the courtesy

(v)Business courtesies given by Company representatives must be authorized at an appropriate Company management level, have the requisite approvals for those types of business courtesies that require pre-approval, and be promptly and accurately reflected on the books and records of the Company.

(vi) Business entertainment at venues that include “adult entertainment” are prohibited, even if employees and/or other participants pay personally for the related costs and do not seek reimbursement.

(vii)Cash or cash equivalents, such as gift cards, gift certificates, or prepaid credit cards, no matter how small in value, are never permissible as a business courtesy.

(viii) With respect to Government Officials, Non-Commercial Organizations and Political Parties in particular, there must be a valid business purpose and the entertainment must be reasonable in view of such business purpose. Entertainment must provide an opportunity to address business issues, and must not be lavish or otherwise prove embarrassing for the Company.

Please refer to the Business Courtesies Compliance Guidelines for more specific guidance pertaining to permissible business courtesies. Many types of business courtesies require pre-approval (in the case of courtesies given) or reporting (in the case of Business Courtesies received) and require accurate recordkeeping (in the case of government officials and courtesies where the employee is a recipient). Requests for approval and/or reporting receipt of business courtesies can be accomplished through the use of the Company’s Business Courtesies Report Form, or by application/report to the site controller for the employee. Appeals to rejected requests for approval may be submitted to the Office of the General Counsel or the Regional Corporate Controller (Americas, Asia or EMEA). In all cases that entertainment or travel expenses for Government Officials are incurred, the expenses must be supported by receipts and accurately recorded in the Company’s books. To the extent possible, all expenses related to Business Courtesies should be paid directly to the vendor of the services rather than tender payment to the intended recipient of the Business Courtesy.

IV.INTERMEDIARIES, JOINT VENTURE PARTNERS, RED FLAGS

Intermediaries:

Any payment made to Intermediaries must be commensurate with the amount of work performed by an Intermediary, properly invoiced, and not at a level that could induce an Intermediary to perform improper acts. Payments made to Intermediaries should be reviewed carefully prior to being made in accordance with the Company’s accounting policies and referred to the Office of the General Counsel if the review uncovers any unfavorable information or “red flags”.

Payments or Value received from Intermediaries by employees, agents, representatives, and the like must always be consistent with the Business Courtesies Guidelines, and referred for approval if required under the Guidelines to avoid the appearance of a conflict of interest or other improper intent to influence the business relationship between the Intermediary and the Company or its representatives.

Joint Venture Partners:

In the jurisdictions in which the Company operates, there may be an instance where government-owned or government-controlled entities might occasionally serve as joint venture partners for the Company. Should this occur, special care must be taken to comply with the FCPA and local laws to the extent personnel from any such partner may be involved in the joint venture's business or otherwise perform services for the joint venture or the Company. Such personnel, who would likely be considered "Government Officials" under this policy, may serve as members of the Board of Directors of a joint venture only in accordance with Company policies regarding such service. Such individuals may be employed or act as officers of such joint venture only (i) pursuant to arrangements with the Company's government-owned or government-controlled joint venture partner, which specifically authorizes such activity, (ii) if such employment or actions comply with applicable local laws, and (iii) it has been approved by the Office of the General Counsel.

Red Flags:

During the due diligence process and during the course of a relationship with international Intermediaries, special attention should be given to so-called “red flags.” A red flag is a fact or circumstance that serves as a warning signal that an Intermediary may act corruptly. The existence of one or even more red flags does not necessarily preclude the retention of the Intermediary, but additional due diligence will be required to resolve all issues the red flags raise.

In evaluating such potential Intermediaries, and during any subsequent relationship with such parties, Company employees must be conscious of any “red flags” that may be present or arise. A list of examples of red flags is included in the Business Courtesies “Frequently Asked Questions” (FAQs) included with the Business Courtesies Compliance Guidelines. Red Flags may also be accessed by clicking on the “Red Flags” tab on the Business Courtesies Report Form. Failure to address a red flag -- by either determining that it does not indicate potential past or future corruption or by deciding not to engage or continue a relationship with the particular Intermediary -- may lead to the Company being held liable for any improper acts of the Intermediary. It is the responsibility of the employee that observes a red flag to refer the matter to the Office of the General Counsel.

V.DOCUMENTING EXPENSES AND RECORD-KEEPING

Any appearance of impropriety must be avoided when providing or receiving gifts, travel, and entertainment to or from Government Officials and Intermediaries. Please refer to the Business Courtesies Compliance Guidelines for guidance on the appropriate means to document business courtesies. Please also refer to the Company’s Global Travel & Entertainment Policy for appropriate expense reimbursement policies and procedures.

Record-Keeping

Employees must help to ensure that corporate books and records (which include virtually all forms of business documentation) accurately and fairly reflect, in reasonable detail, all transactions and dispositions of assets. No undisclosed or unrecorded fund or asset may be established or maintained for any purpose. No employee shall participate in falsifying any accounting or other business record, and all employees must respond fully and truthfully to any questions from the Company’s internal or independent auditors.