Form 10-Q Xylem Inc. For: Mar 31

May 4, 2021 4:47 PM

EXHIBIT 10.1

February 26, 2020

Matthew Pine

[ADDRESS ON FILE WITH THE COMPANY]

Dear Matthew:

We are pleased to present you with this offer of employment with Xylem Inc. for the position of Senior Vice President & President, Applied Water Systems and Americas Commercial Team reporting directly to Patrick Decker, Xylem’s President and Chief Executive Officer. We are anticipating your start date to be around March 17, 2020, but no later than March 30, 2020. You can operate remotely from your home office for the first twelve months from your joining, within which time we expect to finalize an appropriate Xylem business location for you to relocate to, for which relocation support will be provided, as per Xylem company policy. This offer also confirms that the background check and drug screen has been completed successfully.

•Base Salary: You will be compensated on a bi-weekly basis in the amount of $19,230.77 which is equivalent to $500,000 annually. Annual merit increases are normally scheduled for March of each year and are at the discretion of management. You will be able to participate in the merit increase program beginning in 2021. This position is considered Exempt and not entitled to overtime compensation as provided by Federal Law.

•Incentive Plan: You will be eligible for participation in the Annual Incentive Plan (AIP) beginning with performance year 2020 according to the approved parameters of the plan and provided targets are met. Your bonus target is 75% of base salary. For 2020, you will be eligible for the full year annual incentive, approved bonus awards are typically paid in March for performance from the previous calendar year.

•Annual Long-Term Incentive Plan: You will be eligible to participate in the Xylem Long-Term Incentive Plan (LTIP) and will have an annual target award of $1,100,000 to be provided as 50% Performance Share Units (PSUs), 25% Restricted Stock Units (RSUs) and 25% Stock Options. RSUs and Stock Options vest one-third after each year and the PSUs vest 100% after three years and payable based on the Company's performance. Subsequent annual grants may vary due to management discretion with regard to individual performance and market competitiveness and are subject to approval by the Leadership Development and Compensation Committee (LDCC) of Xylem's Board of Directors.

Your first annual LTIP award will be made effective on/about May 7, 2020 (the first day of the next open window after the trading restriction period after your hire date). The vesting terms, performance targets and grant agreement will be consistent as other senior executives' most recent annual LTIP award expected to be granted on February 27, 2020.

•Special Sign-on LTI Grants: You will be eligible to receive a one-time special sign-on LTIP grant of $5,000,000 which will be awarded as $3,000,000 in Restricted Stock Units and $2,000,000 Stock Options with both vesting one-third after each year over three years. The special sign-on LTIP grant will be issued at the same time as the Annual LTIP above.

•Relocation: You and your family will have the support to relocate per the terms of the US Domestic Relocation Policy (details attached) once an appropriate business location is

determined (anticipated to be determined within 12 months from date of hire). This offer of relocation assistance is contingent upon your relocation being completed no later than December 31, 2021.

•Benefit Plans: A complete benefits package will be made available to you and your eligible dependents, which includes immediate enrollment in medical plans and subject to any enrollment waiting periods as defined by certain life insurance coverage plans. You will also be required to bring in the original birth certificate(s) for your dependent children (if applicable) and your marriage certificate (if applicable) if you wish to cover your dependents under any Xylem sponsored benefit program (i.e., health insurance). A benefits summary is attached for your reference. You will be scheduled for a comprehensive benefit orientation during your first week of employment.

•Paid Time Off (PTO): Xylem provides Paid Time off (PTO) to benefits-eligible employees to enable time off from work for rest and relaxation and to balance their lives. Paid Time Off provides a single bank of hours employees can use for sick, vacation and/or other personal reasons. You will accrue paid time off at the bi-weekly accrual rate of 6.16 hours per pay period (equivalent to 20 days annually) beginning on your date of hire and is based on total eligible hours worked and/or utilized during each pay period. Below is the PTO accrual schedule for completed years of service.

Completed Years of Service

Bi-Weekly
Accrual Rate
(Full-Time)

Equivalent Days Annually
(Full-Time)

Hourly Accrual Rates

Exec. New Hire

6.16 hours

20 days (160 hours)

0.077

7.08 hours

23 days (184 hours)

0.089

7.70 hours

25 days (200 hours)

0.097

9.24 hours

30 days (240 hours)

0.116

•Holidays: Xylem recognizes twelve paid holidays per calendar year for eligible employees. Some of these are floating holidays, which may be assigned and are pro-rated based upon date of hire.

As with all new hires, our offer is contingent on the verification of credentials and other information, including the completion of a criminal history check and, if applicable a credit history check. Your employment is also dependent upon a satisfactory pre-employment drug screening. We can confirm as of the date of this letter, you have successfully passed these pre-employment verifications and screenings. Please note, we will require presentation of documentation verifying your identity and legal ability to work in the United States (I-9). The information must be provided within three (3) days of your hire date.

Additionally, your employment is contingent on your not having entered into a signed agreement with a previous employer that contains a non-competition clause that might affect your ability to accept employment with Xylem. If you have entered into such an agreement, please forward a copy of it to me so we can do a legal review from our side. Your employment and compensation with Xylem are “at will” in that they can be terminated with or without cause, and with or without notice, at any time, at the option of either the Company or yourself. This offer does not constitute a contract of employment or an agreement for a definite or specified period of employment.

At Xylem, our corporate compass is our Code of Conduct. We are committed to conducting business according to the highest ethical standards, treating all employees with respect, creating fair workplaces, and ensuring that our co-workers help us strengthen and protect our reputation as a great employer, business partner and community member. Our Code of Conduct sets the rules that outline the appropriate

business conduct and expected behaviors of all our employees. Each employee will take a required training within three (3) days of their hire date.

Enclosed with this offer is our Business Proprietary Information Agreement, please review this document carefully, and sign and return a copy along with your acceptance of our offer.

Matthew, we are confident you will contribute a great deal to our organization and look forward to having you join the team. Please acknowledge your acceptance of our offer as per terms above, by signing a copy of this letter and sending a scanned copy back to me at Kairus.Tarapore@xyleminc.com no later than March 1, 2020.

Sincerely,

/s/ Kairus Tarapore

Kairus Tarapore

SVP & Chief Human Resources Officer

The above offer is accepted subject to the foregoing conditions.


/s/ Matthew Pine						February 27, 2020
Matthew Pine						Date

Cc: Patrick Decker

Enclosures

•Business Proprietary Information Agreement

•Xylem 2020 Employee Benefits Summary

•Xylem Retirement Savings Plan and Supplemental Retirement Savings Plan Quick Reference

•Xylem U.S. Relocation Policy Overview

•Xylem Stock Ownership Guidelines

•Xylem Senior Executive Severance Pay Plan

•Xylem Special Senior Executive Severance Pay Plan

•Xylem 2019 Executive Compensation brochure

EXHIBIT 10.2


Hayati Yarkadas						February 26, 2020

Individual Employment Contract

BETWEEN

Xylem Europe GmbH,

Bleicheplatz 6

CH-8200 Schaffhausen

HEREINAFTER REFERRED TO AS “Company” ON THE FIRST HAND

AND

Hayati Yarkadas

[ADDRESS ON FILE WITH THE COMPANY]

HEREINAFTER REFERRED TO AS “Employee” ON THE OTHER HAND

THE PARTIES AGREE AS FOLLOWS:

1.APPOINTMENT AND SCOPE OF THE EMPLOYMENT

The Company hereby employs the Employee and the Employee agrees to accept employment in the role of Senior Vice President and President, Water Infrastructure and Europe Commercial Team of the Company on and subject to the terms and conditions specified herein.

This position reports solid line to the President and Chief Executive Officer.

2.DUTIES OF THE EMPLOYEE

The Employee is qualified as a “senior executive” of the Company.

3.TERM AND TERMINATION

The Employment shall commence on/before March 16 and shall last for an unlimited period of time.

The probation period is 2 months.

The Employee represents and warrants that he is not bound by or subject to any court order, agreement, arrangement or undertaking which may in any way restrict or prohibit the Employee from entering into this Agreement or from performing the Employee’s duties under this Agreement.

4.WORKING HOURS, PLACE OF WORK AND OVERTIME

The Employee shall perform the service hereunder in Schaffhausen. The Employee may be required to regularly travel for his work.

As a senior executive and member of the management the Employee shall schedule his working hours by his own. However, he shall consider the demands and needs of the Company and particularly also those of clients and the staff. Whenever necessary, he shall be present.

Compensation for additional hours (=Überstunden) and overtime (=Überzeit) is included in the Employee’s salary and will not be compensated by time off, payments or any other benefits.

5.REMUNERATION

5.1 Basic Annual Salary

The Company shall pay to the Employee a basic annual salary of gross CHF 500,000 per year.

5.2 Incentive

The Employee is at the Company’s discretion eligible to receive an annual incentive target award of 75% of the base salary. For 2020, you will be eligible for the full year annual incentive, approved bonus awards are typically paid in March for performance from the previous calendar year.

The Employee acknowledges that he has no right to receive a guaranteed incentive payment and will not acquire such a right merely by virtue of having received one or more incentive payments during the course of his employment.

5.3 Long-Term Incentive Plan

The Employee is eligible to participate in the Xylem Long-Term Incentive Plan (LTIP) and will have an annual target award of $900,000 be provided as 50% Performance Share Units (PSUs), 25% Restricted Stock Units (RSUs) and 25% Stock Options. RSUs and Stock Options vest one-third after each year and the PSUs vest 100% after three years and payable based on the Company’s performance. Subsequent annual grants may vary due to management discretion with regard to individual performance and market competitiveness and are subject to approval by the Leadership Development and Compensation Committee (LDCC) of Xylem’s Board of Directors.

The Employee will receive the first annual LTIP award effective on/about May 7, 2020 (the first day of the next open window after the trading restriction period after your hire date). The vesting terms and performance targets will be consistent as other senior executives’ most recent annual LTIP award expected to be granted on February 27, 2020.

The equity program is implemented and administered as per approved program parameters as specified in grant agreements to be provided at the time of the grants and subject to review and approval by the LDCC of Xylem’s Board of Directors. Details of the 2019 program are outlined in the enclosed Executive Compensation Brochure (details for 2020 will be published in mid-March, 2020).

5.4 Special One-Time Sign-on Restricted Stock Units (RSUs)

To help make the Xylem offer even more attractive and to give the Employee additional immediate equity compensation linked to the future success of Xylem, the Employee will also be eligible for a one-time, Special Sign-On RSU grant of $250,000. The vesting schedule for the sign-on RSUs will provide that, subject to your continued employment, one-third of the sign-on RSUs vests on each anniversary of the grant date.

The Special Sign-On RSUs will be granted at the same time as the annual LTIP above.

6.CASH ALLOWANCE FOR CAR

A gross cash allowance of CHF 21,350 per annum is paid to the employee in lieu of a company car.

7.DATA PROTECTION

As part of terms and conditions of employment, the Employee gives the Company permission to collect, retain and process information about him, such as age and sex. This will only be used so that the Company can monitor the compliance with law and best practice in terms of equal opportunity and nondiscrimination. The information that the Company holds will be checked with the Employee from time to time to ensure that it remains up to date. Should the Employee’s personal circumstances change the Employee should notify the human resources department immediately.

8.COMMUNICATION INFRASTRUCTURE

The Employee shall comply with the Company’s policies and instructions regarding the use of the Company’s telephones, computers, e-mail system, internet services and software programs (“Communication Infrastructure”). The Employee shall at all times refrain from using the Communication Infrastructure for any inappropriate or illegal purpose.

9.RESTITUTION OF THE COMPANY’S EQUIPMENT

Both, the Company and the Employee, shall make restitution for everything they have received during the period of the employment relationship from the other party, or from third parties for their account at the end of this employment relationship.

In particular, the Employee shall restitute without delay all Company’s tools, materials, data carrier as well as records of any kind.

10.SECRECY

Employee shall not during the term of this Agreement or thereafter make use for his own purpose or disclosure to any third party any confidential information having come to his attention before or during the term of this Agreement pertaining to the Company’s business. All such information and knowledge shall be kept strictly confidential beyond the term of employment.

11.COMPETITION BAN / NON-ENTICEMENT / NON-SOLICITATION

The Employee shall not, for as long as the Employee remains an Employee of the Employer and during a period of six months following the termination of this Agreement, alone, or jointly with, or as manager of, agent for, or Employee of any person or as a shareholder directly or indirectly carry on or be engaged, concerned or interested in any business competitive to the business of the Company with an effect in the city of Schaffhausen plus a radius of 30 km.

The Employee shall not, for as long as he remains an Employee of the Company and during a period of six of months following the termination of this Agreement whether direct nor indirect as manager, agent, employee, shareholder or partner of another entity, solicit, induce or attempt to induce any person who is an Employee of the Company, to leave the Company or to engage in any business that competes with the Company, hire or assist in the hiring of any person who is an Employee of the Company to work for any business that competes with the Company or to solicit, induce or attempt to induce any person or company that is a customer of the Company to discontinue or modify its customer relationship with the Company.

For any violation of this competition ban or non-enticement/non-solicitation clause the Employee hereby undertakes to pay a penalty equal to 3 times Employee’s last monthly salary. Payment of such amount shall not relieve the Employee of the Employee’s obligation not to compete as set out in this clause and the Company remains entitled to seek further damages sustained as a result of Employee’s violation. The Employee acknowledges that the Company may, in addition to the penalty and the compensation of its damages, also ask for the removal of the situation in violation of this competition ban and also ask for an injunction restraining the Employee from violation of this competition ban in accordance with the principles set out in Art. 340b of the Swiss Code of Obligations.

12.FORMER CONTRACTS

This Agreement shall be in substitution for any previous letters of appointment, agreements or arrangements, whether written or oral relating to the Employment. The parties expressly exclude any provisions regarding the “dismissal with the option of altered conditions of employment” (=Änderungskündigung).

13.ENTIRE AGREEMENT

If any part, term or provision of this Agreement shall be held void, illegal, unenforceable, or in conflict with any law having jurisdiction over this Agreement, it shall be adjusted rather than voided, if possible, in order to achieve the intent of the parties to this Employment Contract to the fullest extent possible and the validity of the remaining provisions shall not be affected thereby.

14.AMENDMENT

This Agreement may be modified or amended only by written agreement between the parties and any provision hereof may be waived only by a document signed by the party waiving such provision.

15.ADDITIONAL PROVISIONS, TERMS AND CONDITIONS

The following regulation(s), terms and conditions form an integral part of the employment relationship:

16.EMPLOYEE HANDBOOK

If provisions of said document(s) are differing from the individual employment contract, provisions of the individual employment contract shall prevail. If provisions of said documents are contradictory amongst themselves, the provisions in the document prior to the other documents as according to the order stated hereinabove shall prevail. The statutory provisions of the Code of Obligations (OR) and the Employment Act remain reserved.

The Employee herewith confirms, that he has received the above mentioned documents before signing this employment contract and that he agrees to them.

17.WORK PERMIT / RESIDENCE PERMIT

This Employment Contract becomes effective under the suspensive condition that the Employee has been granted a valid work and residence permission, which the Company will support and sponsor obtaining for the Employee.

18.APPLICABLE LAW

This Agreement and all the rights and obligations of the parties hereto shall be governed by and construed in accordance with the laws of Switzerland.

The place of jurisdiction for disputes arising from this employment relationship shall be either the domicile of the defendant or the place where the Employee usually performs work.


Schaffhausen, February 26, 2020						[PLACE ON FILE WITH THE COMPANY], 27 February 2020



Place, date						Place, date


The Company						The Employee


/s/ Lou Corapi						/s/ Hayati Yarkadas
Lou Corapi						Hayati Yarkadas
VP Finance, Water Infrastructure
and Europe Commercial Team

cc: Patrick Decker

Kairus Tarapore

Enclosures

•Business Proprietary Information Agreement

•Xylem Europe GmbH Pension Fund details

•Xylem Stock Ownership Guidelines

•Xylem Senior Executive Severance Pay Plan

•Xylem Special Senior Executive Severance Pay Plan

•Xylem 2019 Executive Compensation brochure

EXHIBIT 10.3

XYLEM

2011 OMNIBUS INCENTIVE PLAN

[YEAR] NON-QUALIFIED STOCK OPTION AWARD AGREEMENT

This Agreement (the “Agreement”) between Xylem Inc. (the “Company”) and ###PARTICIPANT_NAME### (the “Participant”) is effective as of ###GRANT_DATE###. Terms used in this Agreement that are not defined in this Agreement are defined in the Company’s 2011 Omnibus Incentive Plan (the “Plan”). This Agreement is only being provided in English. The Participant is an employee of the Company or an Affiliate. In recognition of the Participant’s valued services, the Company, through the Leadership Development and Compensation Committee of its Board of Directors (the “Committee”), is providing the Participant an inducement to remain employed and an incentive for increased efforts while employed. In consideration of the terms and conditions in this Agreement, the parties agree as follows:

1.Grant of Non-Qualified Stock Options. The Company confirms the grant on ###GRANT_DATE###, (the “Grant Date”) to the Participant of the option to purchase from the Company all or any part of an aggregate of ###TOTAL_AWARDS### shares (the “Options”), at the purchase price of ###GRANT_PRICE### per share (the “Exercise Price”).

Nature of the Grant:

(a) The grant of Options is voluntary and occasional and does not create any contractual or other right to receive future grants of Options, or benefits in lieu of Options, even if Options have been granted in the past. All decisions with respect to future grants will be at the sole discretion of the Company;

(b) The Participant is voluntarily participating in the Plan;

(c) The Options are not part of normal or expected compensation for any purpose, including for purposes of calculating any severance, resignation, termination, redundancy, dismissal, end-of-service payments, bonuses, pension or retirement or welfare benefits or similar payments;

(d) Future value of the underlying shares is unknown, indeterminable and cannot be predicted with certainty;

(e) No claim or entitlement to compensation or damages will arise from forfeiture of the Options resulting from the termination of the Participant's employment; and

(f) The Company will not be liable for any foreign exchange rate fluctuation between the Participant’s local currency and the United States Dollar that may affect the value of the Options or of any amounts due to the Participant on exercise of the Options or on the subsequent sale of any shares acquired on exercise.

2.Terms and Conditions. The Options are subject to the following additional terms and conditions:

(a) Expiration Date. The Options will expire on ###EXPIRY_DATE###, or, if the Participant’s employment terminates before that date, on the date specified in subsection 2(e) below.

(b) Exercise of Options. The Options cannot be exercised until vested.

(c) Vesting. Options will vest if the Participant has been actively employed by the Company or an Affiliate from the Grant Date through the vesting date. Active employment does not include any potential severance period.

Subject to subsections 2(a), 2(d), and 2(e), the Options will vest in 3 installments as follows:

###VEST_SCHEDULE_TABLE###

March 1, 2021, March 1, 2022, March 1, 2023 are the respective “Vest Period Start Dates” for each of the 3 installments.

(d) Effect of Change in Control. In the event of a Change in Control prior to the vesting date, if the acquiring or surviving company in the transaction assumes or continues any then outstanding Options, then the unvested Options will continue to vest based on the Options’ service-based vesting criteria until the vesting date. If the Participant's active employment with the Company or an Affiliate is terminated by the Company or an Affiliate without Cause or by the Participant (for applicable Participants only) for Good Reason within 2 years of a Change in Control, any unvested and any converted Options will become 100% vested on the termination date. Any vested Options will expire on the earlier of ###EXPIRY_DATE###, or the date 3 months after the Participant's termination of active employment.

“Cause” means (i) the Participant’s willful and continued failure to substantially perform his, her or their duties with the Company or an Affiliate (other than any such failure resulting from the Participant’s incapacity due to physical or mental illness) or (ii) the Participant willfully engaging in conduct that demonstrably and materially injures the Company or its Affiliates, monetarily or otherwise. “Willful” means the action is done or omitted in bad faith or without reasonable belief that the action or omission was in the best interests of the Company.

“Good Reason” means (i) a reduction in annual target total cash compensation (base salary and target bonus), (ii) the assignment of any duties inconsistent in any material adverse respect with the Participant’s position, authority, duties or responsibilities, (iii) any other action by the Company or an Affiliate which results in a material diminution in such position, authority, duties or responsibilities; or (iv) the Company or an Affiliate requiring the Participant to relocate to a work location 50 miles or more from the location where the Participant was principally working immediately prior to the Change in Control. The Participant must give notice within 90 days of any Good Reason event.

Good Reason only applies to Company or Affiliate employees who are, at the time of termination of employment, covered by the Xylem Special Senior Executive Severance Pay Plan or the Xylem Enhanced Severance Pay Plan and will exclude an isolated, insubstantial and inadvertent action not taken in bad faith that is resolved by the Company or an Affiliate within 30 days of receiving notice.

(e) Effect of Termination of Employment. Options will only vest while the Participant is actively employed by the Company or an Affiliate. If the Participant's active employment with the Company or an Affiliate is terminated for any reason prior to the vesting date, and such termination constitutes a “separation from service” within the meaning of Section 409A of the Code and any related regulations or other effective guidance promulgated thereunder (“Section 409A”), subject to subsection 2(d), the following would apply to any outstanding Options:

(i) Termination due to Death or Disability. Any unvested Options will immediately become 100% vested on the Participant’s termination of employment. Any vested Options will expire on the

earlier of ###EXPIRY_DATE###, or the date 3 years after the Participant’s termination of employment.

(ii) Termination due to Retirement or while Retirement Eligible. A prorated portion (as described below) of the unvested Options with a vesting date within 12 months of termination will immediately vest on the Participant’s termination of employment. All other unvested Options will automatically be forfeited. Any vested Options will expire on the earlier of ###EXPIRY_DATE###, or the date 3 years after the Participant’s termination of employment.

(iii) Termination other than for Death, Disability and Retirement. Any unvested Options will automatically forfeit on the date of the Participant’s termination of employment. Any vested portion of the Options will expire on the earlier of ###EXPIRY_DATE###, or the date 3 months after the Participant’s termination of employment.

“Disability” means the complete and permanent inability of the Participant to perform all duties under the terms of his, her or their employment, as determined by the Company based on evidence, including independent medical reports and data, as deemed appropriate or necessary.

“Retirement” means the termination of the Participant's employment (either by the Company or an Affiliate, or the Participant), if, at the time of such termination, the Participant is at least age 55 and has completed 10 years of service with the Company or an Affiliate, or the Participant is age 65 or older.

Prorated Vesting Upon Retirement. The prorated portion of the Options that vests on the Participant’s termination of employment due to the Participant's Retirement will be determined by multiplying the total number of unvested Options with a vesting date within 12 months of termination by a fraction, of which the numerator is the number of full months (not to exceed 12) the Participant has been continually employed since the Vest Period Start Date, and the denominator is 12. For this purpose, full months of employment will be based on monthly anniversaries of the Grant Date, not calendar months.

(f) Payment of Exercise Price. Permissible methods for payment of the Exercise Price on exercise of the Options are described in Section 6.6 of the Plan, or, if the Plan is amended, successor provisions. In addition to the methods of exercise permitted by Section 6.6 of the Plan, the Participant may exercise all or part of the Options by way of (i) broker-assisted cashless exercise in a manner consistent with the Federal Reserve Board's Regulation T, unless the Committee determines that this is prohibited by law, or (ii) net-settlement, where the Participant directs the Company to withhold shares that otherwise would be issued upon exercise of the Options having an aggregate Fair Market Value on the date of the exercise equal to the Exercise Price, or the portion being exercised by way of net-settlement (rounding up to the nearest whole share).

(g) Tax Withholding. The Company will have the power and the right to deduct or withhold, or require the Participant to remit to the Company, all applicable federal, state, and local taxes, domestic or foreign, required by law or regulation to be withheld with respect to the exercise of the Options. The Participant may elect to satisfy the withholding requirement, in whole or in part, by having the Company withhold shares that otherwise would be issued upon exercise of the Options, with the number of shares withheld having a Fair Market Value on the date the tax is to be determined equal to the minimum statutory total tax that could be imposed on the transaction (or such other amount that will not cause an adverse accounting consequence or cost) (rounding up to the nearest whole share). Any election will be subject to any restrictions or limitations that the Committee, in its sole discretion, deems appropriate.

(h) Automatic Exercise in Certain Circumstances. Subject to subsection 2(i) of this Agreement, if any Options held by an active Participant are otherwise exercisable but remain unexercised at the

close of business on ###EXPIRY_DATE###, and if on that date the Fair Market Value of the shares subject to the exercisable but unexercised Options exceeds the aggregate payment that would have been required to exercise the Options, the Participant will automatically be paid an amount of Company shares having a Fair Market Value equal to such excess (rounding up to the nearest whole share), if any, and the Options will be cancelled. An automatic exercise will not occur if the Participant (and, if applicable, the Participant’s authorized legal representative) waives this subsection 2(h) in writing.

The Participant acknowledges that tax and other legal requirements must be met prior to any settlement of Options under this subsection and consents to any tax or other consequences that may arise in connection with this subsection.

(i) Compliance with Laws and Regulations. Notwithstanding anything to the contrary in this Agreement, the Company will not be obligated to issue any shares under this Agreement issuance of the shares, or the exercise of the Options by the Participant, violates or is not in compliance with any laws, rules or regulations of the United States or any state or country. The Participant understands that, if applicable, the laws of the country where the Participant is working at the time of grant, vesting, and/or exercise of the Options (including any rules or regulations governing securities, foreign exchange, tax, labor or other matters) may restrict or prevent exercise of the Options or may subject the Participant to additional procedural or regulatory requirements that the Participant is solely responsible for and that the Participant will have to independently fulfill. The Company reserves the right to impose other requirements on the Participant’s participation in the Plan, awards under the Plan, and any shares acquired under the Plan, if the Company determines the requirement is necessary or advisable to comply with applicable law or facilitate the administration of the Plan.

(j) Participant Acknowledgements. The Participant acknowledges and agrees that:

(i) Participant Obligations. In partial consideration for the award of these Options, if at any time during the period between the Grant Date and the 12-month period following the Participant’s termination of Employment (the “Obligation Period”), the Participant: (i) directly or indirectly, hires or solicits or arranges for the hiring or solicitation of any employee or customer of the Company or its Affiliates, or encourages any employee to leave the Company or an Affiliate; (ii) uses, discloses, misappropriates or transfers confidential or proprietary information concerning the Company or its Affiliates (except as required by the Participant’s work responsibilities with the Company or its Affiliates); or (iii) engages in any activity in violation of Company policies, including the Company’s Code of Conduct, or engages in conduct adverse to the best interests of the Company or its Affiliates; then the Options, whether previously vested or not, will be cancelled in full, and the Participant will be required to return to the Company any shares received on exercise of vested Options or the pre-tax income derived from any disposition of any shares received upon exercise of vested Options, unless the Company, in its sole discretion, elects not to cancel the Options.

The obligations in this subsection are in addition to any other agreements related to non-solicitation and preservation of Company confidential and proprietary information entered into between the Participant and the Company, or otherwise applicable to the Participant, and nothing in this Agreement is intended to waive, modify, alter or amend the terms of any such other agreement. THE PARTICIPANT UNDERSTANDS THAT THIS SUBSECTION IS NOT INTENDED TO AND DOES NOT PROHIBIT THE CONDUCT DESCRIBED, BUT PROVIDES FOR THE CANCELLATION OF THE AWARD IN FULL AND A RETURN TO THE COMPANY OF ANY SHARES RECEIVED UPON SETTLEMENT OF EXERCISED VESTED OPTIONS OR THE GROSS TAXABLE PROCEEDS FROM THE DISPOSITION OF ANY SHARES RECEIVED UPON SETTLEMENT OF EXERCISED VESTED OPTIONS IF THE PARTICIPANT SHOULD CHOOSE TO VIOLATE THIS PARAGRAPH DURING THE

OBLIGATION PERIOD. Nothing in this Agreement prohibits the Participant from voluntarily communicating, without notice to or approval by the Company, with any federal government agency about a potential violation of a federal law or regulation.

(ii) Electronic Delivery and Acceptance. The Participant consents to electronic delivery of any Plan documents. The Participant consents to any and all procedures that the Company has established or may establish for an electronic signature system for delivery and acceptance of Plan related documents. The Participant agrees that his, her or their electronic signature is the same as, and will have the same force and effect as, his, her or their manual signature. Participant agrees that these procedures and delivery may be effected by a third party engaged by the Company to provide administrative services related to the Plan.

(iii) Right of Set-Off. If the Company in its reasonable judgment determines that the Participant owes the Company or an Affiliate any amount due to any loan, obligation or indebtedness, including amounts owed under the Company’s tax equalization program or the Company’s policies with respect to travel and business expenses, and if the Participant has not satisfied such obligation(s), then the Company may instruct the plan administrator to withhold and/or sell shares acquired by the Participant on exercise of the Options (to the extent such shares are not subject to Code Section 409A), or the Company may deduct funds equal to the amount of the obligation from other funds due to the Participant from the Company to the maximum extent permitted by Code Section 409A.

(iv) Data Privacy. Participant acknowledges and consents to the collection, use, processing and transfer of personal data. Participant is not obliged to consent to such collection, use, processing and transfer of personal data. However, failure to provide the consent may affect Participant’s ability to participate in the Plan. The Company holds certain personal information about Participant, that may include his/her name, home address and telephone number, date of birth, social security number or other employee identification number, salary grade, hire data, salary, nationality, job title, or details of all options or performance stock units or any other entitlement to shares of stock awarded, canceled, purchased, vested, or unvested, for the purpose of managing and administering the Plan (“Data”). The Company and its Affiliates will transfer Data amongst themselves as necessary for the purpose of implementation, administration and management of Participant’s participation in the Plan, and the Company or its Affiliates may each further transfer Data to any third parties assisting the Company with the implementation, administration and management of the Plan. These recipients may be located throughout the world, including the United States. The Participant authorizes them to receive, possess, use, retain and transfer the Data, in electronic or other form, for the purposes of implementing, administering and managing participation in the Plan, including any transfer of Data that may be required for the administration of the Plan and/or the subsequent holding of shares of stock on Participant’s behalf to a broker or other third party with whom Participant may elect to deposit any shares of stock acquired pursuant to the Plan. Participant may, at any time, review Data, require any necessary amendments to it or withdraw this consent in writing by contacting Participant’s designated Human Resources professional; however, withdrawing consent may affect Participant’s ability to participate in the Plan. All Data will be managed in compliance with the Company’s Data Privacy Guidelines and applicable employee notifications, which may contain more stringent requirements, but in any case will not be less stringent than subsection 2(j)(iv).

(k) Governing Law. This Agreement is issued, and the Options are granted, in Rye Brook, New York and will be governed and construed in accordance with the laws of the State of New York, excluding any conflicts or choice of law rule or principle that might otherwise refer construction or interpretation of this Agreement to the substantive law of another jurisdiction.

By signing a copy of this Agreement, the Participant acknowledges that s/he has received a copy of the Plan and that s/he has read and understands the Plan and this Agreement and agrees to their terms and conditions. The Participant also acknowledges that the Options awarded under to this Agreement must be exercised prior to the expiration date, that it is the Participant's responsibility to exercise the Options, and that the Company has no further responsibility to notify the Participant of the expiration of the Options.


Agreed to:						XYLEM INC.


						/s/ Patrick K. Decker


Participant						Patrick K. Decker, President and CEO


(Online Acceptance Constitutes Agreement)


Dated:									Dated: ###GRANT_DATE###

Enclosures

EXHIBIT 10.4

XYLEM

2011 OMNIBUS INCENTIVE PLAN

[YEAR] PERFORMANCE SHARE UNIT AGREEMENT

This Agreement (the “Agreement”) between Xylem Inc. (the “Company”) and ###PARTICIPANT_NAME### (the “Participant”) is effective as of ###GRANT_DATE###. Capitalized terms that are not defined in this Agreement are defined in the Company’s 2011 Omnibus Incentive Plan (the “Plan”). This Agreement is only being provided in English. The Participant is an employee of the Company or an Affiliate. In recognition of the Participant’s valued services, the Company, through the Leadership Development and Compensation Committee of its Board of Directors (the “Committee”), is providing the Participant an inducement to remain employed and an incentive for increased efforts while employed. In consideration of the terms and conditions in this Agreement, the parties agree as follows:

1.Grant of Performance Share Units. The Company confirms the grant on ###GRANT_DATE### (the “Grant Date”) to the Participant, the target number of ###TOTAL_AWARDS### Performance Share Units (“PSUs”). All PSUs granted under this agreement are intended to be Performance Based Awards. The PSUs are notional units of measurement denominated in shares of common stock (i.e., one Performance Share Unit is equivalent in value to one share of common stock of the Company).

The PSUs represent an unfunded, unsecured right to receive shares and dividend equivalent payments in the future if the conditions in the Plan and this Agreement are satisfied.

Nature of the Grant:

(a) The grant of the PSUs is voluntary and occasional and does not create any contractual or other right to receive future grants of PSUs, or benefits in lieu of PSUs, even if PSUs have been granted in the past. All decisions with respect to future PSUs or other grants, if any, will be at the sole discretion of the Company;

(b) The Participant is voluntarily participating in the Plan;

(c) The PSUs and the shares subject to the PSUs, are not part of normal or expected compensation for any purpose, including for purposes of calculating any severance, resignation, termination, redundancy, dismissal, end-of-service payments, bonuses, pension or retirement or welfare benefits or similar payments;

(d) Future value of the underlying shares is unknown, indeterminable and cannot be predicted with certainty;

(e) No claim or entitlement to compensation or damages will arise from forfeiture of the PSUs resulting from the termination of the Participant's employment; and

(f) The Company will not be liable for any foreign exchange rate fluctuation between the Participant’s local currency and the United States Dollar that may affect the value of the PSUs or of any amounts due to the Participant pursuant to the settlement of the PSUs or the subsequent sale of any shares acquired upon settlement.

2.Terms and Conditions. The PSUs are subject to the following additional terms and conditions:

(a) Restrictions. Except as otherwise provided in the Plan and this Agreement, the PSUs cannot be sold, assigned, pledged, exchanged, transferred, hypothecated or encumbered, other than to the Company as a result of forfeiture.

(b) Voting and Dividend Equivalent Rights. The Participant will not have any privileges of a stockholder of the Company with respect to the PSUs, including without limitation any right to vote such shares or to receive dividends, unless and until shares are delivered to the Participant on the vesting of the PSUs. Dividend equivalents will be earned for each PSU that vests and the amount will equal the total dividends declared on a share, where the record date of the dividend is between the Grant Date of this Award and the date a share is issued on vesting of the PSU. Any dividend equivalents earned will be paid in cash to the Participant as and when the shares subject to the vested PSUs are issued. No dividend equivalents will be earned or paid with respect to any portion of the PSUs that are not earned and/or do not vest. Dividend equivalents will not accrue interest.

(c) Earning of PSUs. The Participant can earn between 0% and 175% of the target number of PSUs granted under this Agreement, with vesting to be based on the achievement of a 3-year average Xylem adjusted operational Return on Invested Capital (“ROIC”) performance target and 3-year Xylem Total Shareholder Return (“TSR”) relative to companies in the S&P 500 index (excluding Financial Services companies) pursuant to the performance scales set forth on Exhibit A, by the end of the 3-year performance period covering fiscal years [Grant Date]-year-[Grant Date + 3 years]-year (the “Performance Period”). The Committee will determine and certify the results of the level of achievement against such targets and the associated number of PSUs earned as described in Exhibit A.

Vesting and Payment. Any earned PSUs will vest on [Grant Date + 3 years] (the “Vesting Date”) so long as the Participant has been actively employed by the Company or an Affiliate from the Grant Date through the Vesting Date. Active employment does not include any potential severance period.

Except as provided in subsection 2(h), on vesting of the PSUs, including vesting pursuant to subsections 2(d) or 2(e), the Company will deliver to the Participant (i) one share for each vested PSU, with any fractional shares resulting from proration pursuant to subsection 2(d) and 2(e) to be rounded to the nearest whole share, and (ii) an amount in cash attributable to dividend equivalents earned in accordance with subsection 2(b), less shares withheld in accordance with subsection 2(f).

(d) Effect of Change in Control. In the event of a Change in Control prior to the end of the Performance Period, if the acquiring or surviving company in the transaction assumes or continues any then-outstanding PSUs, any unvested PSUs will be deemed to have satisfied all applicable performance targets at the target level (i.e. 100%), and will be converted to service-based restricted stock units, which will continue to vest based on the PSUs’ service-based vesting criteria until the Vesting Date.

If the Participant’s active employment with the Company or an Affiliate is terminated by the Company or an Affiliate without Cause or by the Participant for Good Reason (for applicable Participants only) within 2 years of a Change in Control, any converted and any unvested PSUs will become 100% vested on the termination date.

If the acquiring or surviving company in the transaction does not assume or continue outstanding awards under the Plan, immediately prior to the Change in Control, any unvested PSUs will become 100% vested based on deemed performance at the target level (i.e. 100%).

“Good Reason” means, without the Participant’s express written consent (i) a reduction in annual target total cash compensation (base salary and target bonus), (ii) the assignment of any duties inconsistent in any material adverse respect with the Participant’s position, authority, duties or responsibilities, (iii) any other action by the Company or an Affiliate which results in a material diminution in such position, authority, duties or responsibilities; or (iv) the Company or an Affiliate requiring the Participant to relocate to a work location 50 miles or more from the location where the Participant was principally working immediately prior to the Change in Control. The Participant must give notice within 90 days of any Good Reason event.

Good Reason only applies to Company or Affiliate employees who are at the time of termination of employment, or were at any time during the 2 year period immediately preceding the Change in Control, covered by the Xylem Special Senior Executive Severance Pay Plan or the Xylem Enhanced Severance Pay Plan and will exclude an isolated, insubstantial and inadvertent action not taken in bad faith that is resolved by the Company or an Affiliate within 30 days of receiving notice.

(e) Effect of Termination of Employment. Earned PSUs will only vest if the Participant is actively employed by the Company or an Affiliate through the Vesting Date. If the Participant's active employment is terminated for any reason prior to the Vesting Date, and the termination constitutes a “separation from service” within the meaning of Section 409A of the Code and any related regulations or other effective guidance promulgated thereunder (“Section 409A”), subject to subsection 2(d), the following would apply to any unvested PSUs:

(i) Termination due to Death, Disability, or Retirement. A prorated portion (as described below) of the unvested PSUs will remain outstanding and therefore continue to be eligible to vest based on actual Company performance during the Performance Period. A prorated portion (as described below) of the earned PSUs will be paid out on the Vesting Date.

(ii) Termination other than for Death, Disability, or Retirement. All PSUs will automatically be forfeited.

“Disability” means the complete and permanent inability of the Participant to perform all duties under the terms of his, her or their employment, as determined by the Committee upon the basis of such evidence, including independent medical reports and data, as the Committee deems appropriate or necessary.

Prorated Vesting. The prorated portion of the PSUs that vests on the Vesting Date following the Participant's Death, Disability or Retirement (or while Retirement Eligible) will be determined by multiplying the total number of PSUs the Participant would have earned based on actual performance by a fraction, of which the numerator is the number of months (not to exceed 36) the Participant had been continually employed since the beginning of the Performance Period until his, her or their Death, Disability or Retirement and the denominator is 36.

(f) Tax Withholding. The Company may make such provisions and take such actions as necessary for the withholding of all applicable taxes attributable to the PSUs and any related dividend equivalents. Unless the Committee determines otherwise, the minimum statutory tax withholding required to be withheld on delivery of the shares (or such other amount that will not cause an adverse accounting consequence or cost) and payment of dividend equivalents will be satisfied by withholding a number of shares having an aggregate Fair Market Value equal to the minimum statutory tax required to be withheld (or such other amount that will not cause an adverse accounting consequence or cost). If this withholding would result in a fractional share being withheld, the number of shares withheld will be rounded up to the nearest whole share. Notwithstanding the foregoing, the Participant may elect to satisfy these tax withholding requirements by timely remitting this amount by cash or check or any other method that is acceptable to the Company, rather than by withholding of shares. This election must be made in accordance with any conditions and restrictions the Company may establish. If FICA taxes are required to be withheld while the PSUs are outstanding, the withholding will be made in a manner determined by the Company.

(g) Participant Acknowledgements. The Participant acknowledges and agrees that:

(i) Participant Obligations. In partial consideration for the award of these PSUs, if at any time during the period between the Grant Date and the 12-month period following the Participant’s termination of Employment (the “Obligation Period”), the Participant: (i) directly or indirectly, hires or solicits or arranges for the hiring or solicitation of any employee of the Company or its Affiliates, or encourages any employee to leave the Company or an Affiliate; (ii) directly or indirectly, assist in soliciting in competition with the Company the business of any current customer, distributor or dealer or other sales or distribution channel partners of the Company; (iii) uses, discloses, misappropriates or transfers confidential or proprietary information concerning the Company or its Affiliates (except as required by the Participant’s work responsibilities with the Company or its Affiliates); or (iv) engages in any activity in violation of Company policies, including the Company’s Code of Conduct, or engages in conduct materially adverse to the best interests of the Company or its Affiliates; the PSUs, whether previously vested or not, may be cancelled in full, and the Participant may be required to return to the Company any shares received on settlement of vested PSUs or the net after-tax income from any disposition of any shares received upon settlement of vested PSUs, unless the Committee, in its sole discretion, elects not to cancel the PSUs and/or elects not to recover any income from settled and vested PSUs or unless applicable law prohibits such action.

The obligations in this subsection are in addition to any other agreements related to non-solicitation and preservation of Company confidential and proprietary information entered into between the Participant and the Company, or otherwise applicable to the Participant, and nothing in this Agreement is intended to waive, modify, alter or amend the terms of any such other agreement. THE PARTICIPANT UNDERSTANDS THAT THIS SUBSECTION IS NOT INTENDED TO AND DOES NOT PROHIBIT THE CONDUCT DESCRIBED, BUT PROVIDES FOR THE CANCELLATION OF THE AWARD IN FULL AND A RETURN TO THE COMPANY OF ANY SHARES RECEIVED ON SETTLEMENT OF VESTED PSUS OR THE NET AFTER-TAX INCOME FROM THE DISPOSITION OF ANY SHARES RECEIVED UPON SETTLEMENT OF VESTED PSUS IF THE PARTICIPANT SHOULD CHOOSE TO VIOLATE THIS PARAGRAPH DURING THE OBLIGATION PERIOD. Nothing in this Agreement prohibits the Participant from voluntarily communicating, without notice to or approval by the Company, with any federal government agency about a potential violation of a federal law or regulation.

(iii) Right of Set-Off. If the Company in its reasonable judgment determines that the Participant owes the Company or an Affiliate any amount due to any loan, obligation or indebtedness, including amounts owed under the Company’s tax equalization program or the Company’s policies with respect to travel and business expenses, and the Participant has not satisfied these obligation(s), the Company may instruct the plan administrator to withhold and/or sell shares acquired by the Participant on settlement of the PSUs (to the extent such PSUs are not subject to Code Section 409A), or the Company may deduct funds equal to the amount of the obligation from other funds due to the Participant from the Company to the maximum extent permitted by Code Section 409A.

(iv) Data Privacy. Participant acknowledges and consents to the collection, use, processing and transfer of personal data. Participant is not obliged to consent to such collection, use, processing and transfer of personal data. However, failure to provide the consent may affect Participant’s ability to participate in the Plan. The Company holds certain personal information about Participant, that may include his/her name, home address and telephone number, date of birth, social security number or other employee identification number, salary grade, hire data, salary, nationality, job title, or details of all options or performance stock units or any other entitlement to shares of stock awarded, canceled, purchased, vested, or unvested, for the purpose of managing and administering the Plan (“Data”). The Company and its Affiliates will transfer Data amongst themselves as necessary for the purpose of implementation, administration and management of Participant’s participation in the Plan, and the Company or its Affiliates may each further transfer Data to any third parties assisting the Company with the implementation, administration and management of the Plan. These recipients may be located throughout the world, including the United States. The Participant authorizes them to receive, possess, use, retain and transfer the Data, in electronic or other form, for the purposes of implementing, administering and managing participation in the Plan, including any transfer of Data that may be required for the administration of the Plan and/or the subsequent holding of shares of stock on Participant’s behalf to a broker or other third party with whom Participant may elect to deposit any shares of stock acquired pursuant to the Plan. Participant may, at any time, review Data, require any necessary amendments to it or withdraw consent in writing by contacting Participant’s designated Human Resources professional; however, withdrawing consent may affect Participant’s ability to participate in the Plan. All Data will be managed in compliance with the Company’s Data Privacy Guidelines and applicable employee notifications, which may contain more stringent requirements, but in any case will not be less stringent than subsection 2(g)(iv).

(v) Stock Ownership Guidelines. If the Participant is or becomes subject to the Company’s Stock Ownership Guidelines and applicable retention requirements, the Participant may be limited in selling shares obtained upon settlement of the PSUs.

(vi) Clawback Policy. If the Participant is covered by the Company’s Clawback Policy, the Participant agrees that the PSUs are subject to the Policy and may be subject to recovery (in whole or in part) by the Company. The Participant agrees that the Clawback Policy may be amended from time to time by the Committee, including amendments to comply with applicable laws, regulations or stock exchange listing requirements.

(h) Section 409A Compliance. It is intended that the Plan and this Agreement comply with the requirements of Section 409A to the extent applicable and the Plan and this Agreement will be interpreted accordingly.

(i) If it is determined that all or a portion of the Award constitutes deferred compensation for the purposes of Section 409A, and if the Participant is a “specified employee,” as defined in Section 409A(a)(2)(B)(i) of the Code, at the time of the Participant’s separation from service, then, to the extent required under Section 409A, any shares that would otherwise be distributed (along with the cash value of all dividend equivalents that would be payable) on the Participant’s separation from service, will instead be delivered (and, in the case of the dividend equivalents, paid) on the earlier of (x) the first business day of the seventh month following the date of the Participant’s separation from service or (y) the Participant’s death.

(ii) If it is determined that all or a portion of the Award constitutes deferred compensation for the purposes of Section 409A, upon an Change in Control that does not constitute a “change in the ownership” or a “change in the effective control” of the Company or a “change in the ownership of a substantial portion of a corporation’s assets” (as those terms are used in Section 409A), the PSUs will vest at the time of the Change in Control, but distribution of any PSUs (or related dividend equivalents) that constitute deferred compensation for the purposes of Section 409A will not be accelerated (i.e., distribution will occur when it would have occurred absent the Change in Control).

(i) Governing Law. This Agreement is issued, and the PSUs are granted, in Rye Brook, New York, and will be governed and construed in accordance with the laws of the State of New York, excluding any conflicts or choice of law rule or principle that might otherwise refer construction or interpretation of this Agreement to the substantive law of another jurisdiction.


Agreed to:						XYLEM INC.


						/s/ Patrick K. Decker


Participant						Patrick K. Decker, President and CEO


(Online Acceptance Constitutes Agreement)


Dated:									Dated: ###GRANT_DATE###

Enclosures

Exhibit A

Three-year Performance Targets and Payout Scale

The payout scale for performance metrics below provides for PSUs to be earned above 100% for above target performance and below 100% for below target performance.


			Adjusted Operational ROIC (50%)						Relative TSR* (50%)

Results are interpolated between threshold and the bottom end of the target range, and between the

top end of the target range and maximum.

*Measured against S&P 500 less Financial Services companies. Payout capped at target if Xylem’s 3-year TSR is negative.

EXHIBIT 10.5

XYLEM

2011 OMNIBUS INCENTIVE PLAN

[YEAR] RESTRICTED STOCK UNIT AGREEMENT

This Agreement (the “Agreement”) between Xylem Inc. (the “Company”) and [Participant Name] (the “Participant”) is effective as of [Grant Date]. Capitalized terms that are not defined in this Agreement are defined in the Company’s 2011 Omnibus Incentive Plan (the “Plan”). This Agreement is only being provided in English. The Participant is an employee of the Company or an Affiliate. In recognition of the Participant’s valued services, the Company, through the Leadership Development and Compensation Committee of its Board of Directors (the “Committee”), is providing the Participant an inducement to remain employed and an incentive for increased efforts while employed. In consideration of the terms and conditions in this Agreement, the parties agree as follows:

1. Grant of Restricted Stock Units. The Company hereby confirms the grant on [Grant date] (the “Grant Date”) to the Participant of [#,###] Restricted Stock Units (“RSUs”). The RSUs are notional units of measurement denominated in shares of common stock (i.e., one Restricted Stock Unit is equivalent in value to one share of common stock of the Company).

The RSUs represent an unfunded, unsecured right to receive shares and dividend equivalent payments in the future if the conditions in the Plan and this Agreement are satisfied.

Nature of the Grant:

(a) The grant of the RSUs is voluntary and occasional and does not create any contractual or other right to receive future grants of RSUs, or benefits in lieu of RSUs, even if RSUs have been granted in the past. All decisions with respect to future RSUs or other grants, if any, will be at the sole discretion of the Company;

(b) The Participant is voluntarily participating in the Plan;

(c) The RSUs and the shares subject to the RSUs, are not part of normal or expected compensation for any purpose, including for purposes of calculating any severance, resignation, termination, redundancy, dismissal, end-of-service payments, bonuses, pension or retirement or welfare benefits or similar payments;

(d) Future value of the underlying shares is unknown, indeterminable and cannot be predicted with certainty;

(e) No claim or entitlement to compensation or damages will arise from forfeiture of the RSUs resulting from the termination of the Participant's employment; and

(f) The Company will not be liable for any foreign exchange rate fluctuation between the Participant’s local currency and the United States Dollar that may affect the value of the RSUs or of any amounts due to the Participant pursuant to the settlement of the RSUs or the subsequent sale of any shares acquired upon settlement.

2. Terms and Conditions. It is understood and agreed that the RSUs are subject to the following terms and conditions:

(a) Restrictions. Except as otherwise provided in the Plan and this Agreement, neither this Award nor any RSUs subject to this Award may be sold, assigned, pledged, exchanged, transferred, hypothecated or encumbered, other than to the Company as a result of forfeiture of the RSUs.

(b) Voting and Dividend Equivalent Rights. The Participant will not have any privileges of a stockholder of the Company with respect to the RSUs or any shares that may be delivered under this Agreement, including without limitation any right to vote the shares or to receive dividends, unless and until the shares are delivered on vesting of the RSUs. Dividend equivalents will be earned with respect to each RSU that vests and the amount will be equal to the total dividends declared on a share, where the record date of the dividend is between the Grant Date of this Award and the date a share is issued on vesting of the RSU. Any dividend equivalents earned will be paid in cash to the Participant when the shares subject to the vested RSUs are issued. No dividend equivalents will be earned or paid with respect to any portion of the RSUs that do not vest. Dividend equivalents will not accrue interest.

(c) Vesting and Payment. RSUs will vest as long as the Participant has been actively employed by the Company or an Affiliate from the Grant Date through the vesting date. Active employment does not include any potential severance period. The RSUs will vest in 3 installments as follows:

• 1/3rd of the RSUs will vest [ ],

• 1/3rd of the RSUs will vest [ ], and

• 1/3rd of the RSUs will vest [ ].

[ ], [ ], and [ ] are the respective “Vest Period Start Date” for each of the 3 installments.

Except as provided in subsection 2(i), on vesting of the RSUs, including vesting pursuant to subsections 2(d) or 2(e), the Company will deliver to the Participant (i) one share for each vested RSU, with any fractional shares resulting from proration pursuant to subsection 2(e), if applicable, to be rounded to the nearest whole share, and (ii) an amount in cash attributable to dividend equivalents earned in accordance with subsection 2(b), less shares withheld in accordance with subsection 2(f).

(d) Effect of Change in control. In the event of a Change in Control prior to the end of the vesting date, if the acquiring or surviving company in the transaction assumes or continues any then-outstanding RSUs under the Plan, any unvested RSUs will continue to vest based on the RSUs’ service-based vesting criteria until the vesting date.

If the Participant’s active employment with the Company or an Affiliate is terminated by the Company or an Affiliate without Cause or by the Participant for Good Reason (for applicable Participants only) within 2 years of a Change in Control, any assumed unvested RSUs will become 100% vested on the termination date.

If the acquiring or surviving company in the transaction does not assume or continue outstanding awards under the Plan, immediately prior to the Change in Control any unvested RSUs will become 100% vested.

(e) Effect of Termination of Employment. RSUs will only vest if the Participant is actively employed by the Company or an Affiliate prior to the vesting date. If the Participant's active employment with the Company or an Affiliate is terminated for any reason prior to the vesting date, and the termination constitutes a “separation from service” within the meaning of Section 409A of the Code and any related regulations or other effective guidance promulgated thereunder (“Section 409A”), subject to subsection 2(d), the following would apply to any unvested RSUs on the date of the Participant’s termination of employment:

(i) Termination due to Death or Disability. Any unvested RSUs will immediately become 100% vested.

(ii) Termination due to Retirement or while Retirement Eligible. A prorated portion (as described below) of unvested RSUs with a vesting date within 12 months of termination shall immediately vest on the Participant’s termination of employment. All other unvested RSUs will automatically be forfeited.

(iii) Termination other than for Death, Disability and Retirement. All unvested RSUs will automatically be forfeited.

Prorated Vesting Upon Retirement. The prorated portion of the RSUs that vests upon the Participant’s termination of employment due to the Participant's Retirement will be determined by multiplying the total number of unvested RSUs with vesting date within 12 months of termination by a fraction, of which the numerator is the number of full months (not to exceed 12) the Participant has been continually employed since the most recent Vest Period Start Date, and the denominator is 12. For this purpose, full months of employment shall be based on monthly anniversaries of the Vest Period Start Date, not calendar months.

(f) Tax Withholding. The Company may make such provisions and take such actions as it may deem necessary for the withholding of all applicable taxes attributable to the RSUs and any related dividend equivalents. Unless the Committee determines otherwise, the minimum statutory tax withholding required to be withheld upon delivery of the shares (or such other amount that will not cause an adverse accounting consequence or cost) and payment of dividend equivalents will be satisfied by withholding a number of shares having an aggregate Fair Market Value equal to the minimum statutory tax required to be withheld (or such other amount that will not cause an adverse accounting consequence or cost). If this withholding would result in a fractional share being withheld, the number of shares withheld will be rounded up to the nearest whole share. Notwithstanding the foregoing, the Participant may elect to satisfy these tax withholding requirements by timely remitting this amount by cash or check or any other method that is acceptable to the Company, rather than by withholding of shares. This election must be made in accordance with any conditions and restrictions the Company may establish. If FICA taxes are required to be withheld while the RSUs are outstanding, the withholding will be made in a manner determined by the Company.

(g) Participant Acknowledgements. The Participant acknowledges and agrees that:

(i) Participant Obligations. In partial consideration for the award of these RSUs, if at any time during the period between the Grant Date and the 12-month period following the Participant’s termination of Employment (the “Obligation Period”), the Participant: (i) directly or indirectly, hires or solicits or arranges for the hiring or solicitation of any employee or customer of the Company or its Affiliates, or encourages any employee to leave the Company or an Affiliate; (ii) directly or indirectly, assist in soliciting in competition with the Company the business of any current customer, distributor or dealer or other sales or distribution channel partners of the Company; (iii) uses, discloses, misappropriates or transfers confidential or proprietary information concerning the Company or its Affiliates (except as required by the Participant’s work responsibilities with the Company or its Affiliates); or (iv) engages in any activity in violation of Company policies, including the Company’s Code of Conduct, or engages in conduct materially adverse to the best interests of the Company or its Affiliates; the RSUs, whether previously vested or not, may be cancelled in full, and the Participant may be required to return to the Company any shares received on settlement of vested RSUs or the net after-tax income from the disposition of any shares received upon settlement of vested RSUs, unless the Committee, in its sole discretion, elects not to cancel the RSUs and/or elects not to recover any income from settled RSUs or unless applicable law prohibits such action.

The obligations in this subsection are in addition to any other agreements related to non-solicitation and preservation of Company confidential and proprietary information entered into between the Participant and the Company, or otherwise applicable to the Participant, and nothing in this Agreement is intended to waive, modify, alter or amend the terms of any such other agreement. THE PARTICIPANT UNDERSTANDS THAT THIS SUBSECTION IS NOT INTENDED TO AND DOES NOT PROHIBIT THE CONDUCT DESCRIBED, BUT PROVIDES FOR THE CANCELLATION OF THE AWARDS IN FULL AND A RETURN TO THE COMPANY OF ANY SHARES RECEIVED UPON SETTLEMENT OF VESTED RSUS OR THE NET AFTER-TAX INCOME FROM THE DISPOSITION OF ANY SHARES RECEIVED UPON SETTLEMENT OF VESTED RSUS IF THE PARTICIPANT SHOULD CHOOSE TO VIOLATE THIS SUBSECTION DURING THE OBLIGATION PERIOD. Nothing in this Agreement prohibits the Participant from voluntarily communicating, without notice to or approval by the Company, with any federal government agency about a potential violation of a federal law or regulation.

(ii) Electronic Delivery and Acceptance. The Participant consents to electronic delivery of any Plan documents. The Participant consents to any and all procedures that the Company has

established or may establish for an electronic signature system for delivery and acceptance of Plan related documents. The Participant agrees that his, her or their electronic signature is the same as, and will have the same force and effect as, his, her or their manual signature. Participant agrees that these procedures and delivery may be effected by a third party engaged by the Company to provide administrative services related to the Plan.

(iii) Right of Set-Off. If the Company in its reasonable judgment determines that the Participant owes the Company or an Affiliate any amount due to any loan, obligation or indebtedness, including amounts owed under the Company’s tax equalization program or the Company’s policies with respect to travel and business expenses, and the Participant has not satisfied these obligation(s), the Company may instruct the plan administrator to withhold and/or sell shares acquired by the Participant on settlement of the RSUs (to the extent such RSUs are not subject to Code Section 409A), or the Company may deduct funds equal to the amount of the obligation from other funds due to the Participant from the Company to the maximum extent permitted by Code Section 409A.

(vi) Clawback Policy. If the Participant is covered by the Company’s Clawback Policy, the Participant agrees that the RSUs are subject to the Policy and may be subject to recovery (in whole or in part) by the Company. The Participant agrees that the Clawback Policy may be amended from time to time by the Committee, including amendments to comply with applicable laws, regulations or stock exchange listing requirements.

(h) Section 409A Compliance. It is intended that the Plan and this Agreement comply with the requirements of Section 409A to the extent applicable, and the Plan and this Agreement shall be interpreted accordingly.

(i) If it is determined that all or a portion of the Award constitutes deferred compensation for the purposes of Section 409A, and if the Participant is a “specified employee,” as defined in Section 409A(a)(2)(B)(i) of the Code, at the time of the Participant ’s separation from service, then, to the extent required under Section 409A, any shares that would otherwise be distributed (along with the cash value of all dividend equivalents that would be payable) upon the Participant ’s separation from service, shall instead be delivered (and, in the case of the dividend equivalents, paid) on the earlier of (x) the first business day of the seventh month following the date of the Participant ’s separation from service or (y) the Participant ’s death.

(ii) If it is determined that all or a portion of the Award constitutes deferred compensation for the purposes of Section 409A, upon an Change in Control that does not constitute a “change in the ownership” or a “change in the effective control” of the Company or a “change in the ownership of a substantial portion of a corporation’s assets” (as those terms are used in Section 409A), the RSUs will vest at the time of the Change in Control, but distribution of any RSUs (or related dividend equivalents) that constitute deferred compensation for the purposes of Section 409A will not be accelerated (i.e., distribution will occur when it would have occurred absent the Change in Control).

(i) Governing Law. This Agreement is issued and the RSUs are granted in Rye Brook, New York, and will be governed and construed in accordance with the laws of the State of New York, excluding any conflicts or choice of law rule or principle that might otherwise refer construction or interpretation of this Agreement to the substantive law of another jurisdiction.


Agreed to:						XYLEM INC.


						/s/ Patrick K. Decker


Participant						Patrick K. Decker, President and CEO


(Online Acceptance Constitutes Agreement)


Dated:									Dated: [Grant Date]

Enclosures

EXHIBIT 10.6

XYLEM

2011 OMNIBUS INCENTIVE PLAN

2021 ESG PERFORMANCE SHARE UNIT AGREEMENT

1. Grant of Performance Share Units. The Company confirms the grant on ###GRANT_DATE### (the “Grant Date”) to the Participant, the target number of ###TOTAL_AWARDS### Performance Share Units (“PSUs”). All PSUs granted under this agreement are intended to be Performance Based Awards. The PSUs are notional units of measurement denominated in shares of common stock (i.e., one Performance Share Unit is equivalent in value to one share of common stock of the Company).

The PSUs represent an unfunded, unsecured right to receive shares and dividend equivalent payments in the future if the conditions in the Plan and this Agreement are satisfied.

Nature of the Grant:

(b) The Participant is voluntarily participating in the Plan;

(d) Future value of the underlying shares is unknown, indeterminable and cannot be predicted with certainty;

(e) No claim or entitlement to compensation or damages will arise from forfeiture of the PSUs resulting from the termination of the Participant's employment; and

(f) The Company will not be liable for any foreign exchange rate fluctuation between the Participant’s local currency and the United States Dollar that may affect the value of the PSUs or of any amounts due to the Participant pursuant to the settlement of the PSUs or the subsequent sale of any shares acquired upon settlement.

2. Terms and Conditions. The PSUs are subject to the following additional terms and conditions:

(c) Earning of PSUs. The Participant can earn between 0% and 100% of the target number of PSUs granted under this Agreement, with vesting to be based on the achievement relative to 5 sustainability-based performance targets (Women in Leadership, Process Water Recycling, CO2 Reduction, Pollution Prevention, and Non-Revenue Water Reduction) and set forth on Exhibit A, by the end of the 5-year performance period covering fiscal years 2021-2025 (the “Performance Period”). The Committee will determine and certify the results of the level of achievement against such targets and the associated number of PSUs earned as described in Exhibit A.

Vesting and Payment. Any earned PSUs will vest on March 1, 2026 (the “Vesting Date”) so long as the Participant has been actively employed by the Company or an Affiliate from the Grant Date through the Vesting Date. Active employment does not include any potential severance period.

conduct that demonstrably and materially injures the Company or its Affiliates, monetarily or otherwise. “Willful” means the action is done or omitted in bad faith or without reasonable belief that the action or omission was in the best interests of the Company.

(ii) Termination other than for Death, Disability, or Retirement. All PSUs will automatically be forfeited.

Prorated Vesting. The prorated portion of the PSUs that vests on the Vesting Date following the Participant's Death, Disability or Retirement (or while Retirement Eligible) will be determined by multiplying the total number of PSUs the Participant would have earned based on actual performance by a fraction, of which the numerator is the number of months (not to exceed 60) the Participant had been continually employed since the beginning of the Performance Period until his, her or their Death, Disability or Retirement and the denominator is 60.

(f) Tax Withholding. The Company may make such provisions and take such actions as necessary for the withholding of all applicable taxes attributable to the PSUs and any related dividend

equivalents. Unless the Committee determines otherwise, the minimum statutory tax withholding required to be withheld on delivery of the shares (or such other amount that will not cause an adverse accounting consequence or cost) and payment of dividend equivalents will be satisfied by withholding a number of shares having an aggregate Fair Market Value equal to the minimum statutory tax required to be withheld (or such other amount that will not cause an adverse accounting consequence or cost). If this withholding would result in a fractional share being withheld, the number of shares withheld will be rounded up to the nearest whole share. Notwithstanding the foregoing, the Participant may elect to satisfy these tax withholding requirements by timely remitting this amount by cash or check or any other method that is acceptable to the Company, rather than by withholding of shares. This election must be made in accordance with any conditions and restrictions the Company may establish. If FICA taxes are required to be withheld while the PSUs are outstanding, the withholding will be made in a manner determined by the Company.

(g) Participant Acknowledgements. The Participant acknowledges and agrees that:

(i) Participant Obligations. In partial consideration for the award of these PSUs, if at any time during the period between the Grant Date and the 12-month period following the Participant’s termination of Employment (the “Obligation Period”), the Participant: (i) directly or indirectly, hires or solicits or arranges for the hiring or solicitation of any employee of the Company or its Affiliates, or encourages any employee to leave the Company or an Affiliate; (ii) directly or indirectly, assists in soliciting in competition with the Company the business of any current customer, distributor or dealer or other sales or distribution channel partners of the Company; (iii) uses, discloses, misappropriates or transfers confidential or proprietary information concerning the Company or its Affiliates (except as required by the Participant’s work responsibilities with the Company or its Affiliates); or (iv) engages in any activity in violation of Company policies, including the Company’s Code of Conduct, or engages in conduct materially adverse to the best interests of the Company or its Affiliates; the PSUs, whether previously vested or not, may be cancelled in full, and the Participant may be required to return to the Company any shares received on settlement of vested PSUs or the net after-tax income from any disposition of any shares received upon settlement of vested PSUs, unless the Committee, in its sole discretion, elects not to cancel the PSUs and/or elects not to recover any income from settled and vested PSUs or unless applicable law prohibits such action.

The obligations in this subsection are in addition to any other agreements related to non-solicitation and preservation of Company confidential and proprietary information entered into between the Participant and the Company, or otherwise applicable to the Participant, and nothing in this Agreement is intended to waive, modify, alter or amend the terms of any such other agreement. THE PARTICIPANT UNDERSTANDS THAT THIS SUBSECTION IS NOT INTENDED TO AND DOES NOT PROHIBIT THE CONDUCT DESCRIBED, BUT PROVIDES FOR THE CANCELLATION OF THE AWARD IN FULL AND A RETURN TO THE COMPANY OF ANY SHARES RECEIVED ON SETTLEMENT OF VESTED PSUS OR THE NET AFTER-TAX INCOME FROM THE DISPOSITION OF ANY SHARES RECEIVED UPON SETTLEMENT OF VESTED PSUS IF THE PARTICIPANT SHOULD CHOOSE TO VIOLATE THIS PARAGRAPH DURING THE OBLIGATION PERIOD. Nothing in this Agreement prohibits the Participant from voluntarily communicating, without notice to or approval by the Company, with any federal government agency about a potential violation of a federal law or regulation.

the same as, and will have the same force and effect as, his, her or their manual signature. Participant agrees that these procedures and delivery may be effected by a third party engaged by the Company to provide administrative services related to the Plan.

(iii) Right of Set-Off. If the Company in its reasonable judgment determines that the Participant owes the Company or an Affiliate any amount due to any loan, obligation or indebtedness, including amounts owed under the Company’s tax equalization program or the Company’s policies with respect to travel and business expenses, and the Participant has not satisfied these obligation(s), the Company may instruct the plan administrator to withhold and/or sell shares acquired by the Participant on settlement of the PSUs (to the extent such PSUs are not subject to Code Section 409A), or the Company may deduct funds equal to the amount of the obligation from other funds due to the Participant from the Company to the maximum extent permitted by Code Section 409A.


Agreed to:						XYLEM INC.


						/s/ Patrick K. Decker


Participant						Patrick K. Decker, President and CEO


(Online Acceptance Constitutes Agreement)


Dated:									Dated: ###GRANT_DATE###

Enclosures

Exhibit A

2021-2025 Performance Targets and Payout Calculations

For the 2021-2025 performance period, the LDCC has decided that the ESG PSUs will be granted at target (100%) with actual payout based on the following:

• 5 equally-weighted targets (20% each of target)

• Discrete performance for each target; that is, simple “pass/fail” payout per target (i.e., 100% payout for achieving/ exceeding and 0% for missing the applicable PSU target)


/s/ Sandra E. Rowland
Sandra E. Rowland
Senior Vice President and Chief Financial Officer
May 4, 2021

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Form 10-Q Xylem Inc. For: Mar 31

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			/s/ Patrick K. Decker
			Patrick K. Decker President and Chief Executive Officer


			/s/ Sandra E. Rowland
			Sandra E. Rowland Senior Vice President and Chief Financial Officer


/s/ Patrick K. Decker
Patrick K. Decker
President and Chief Executive Officer
May 4, 2021