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Exhibit 10.7
Execution Copy
XXXXXXXX GUARANTY
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FOR VALUE RECEIVED and in consideration of any loan or other financial
accommodation heretofore or hereafter at any time made or granted to WATERLINK,
INC., a Delaware corporation ("Waterlink"), PROVISTA
EINHUNDERTSECHSUNDFUNFZIGSTE VERWALTUNGSGESELLSCHAFT mgH (to be known as
Waterlink (Germany) GmbH), a German corporation ("German Sub"), and/or
GIGANTISSIMO 2061 AB (to be known as Waterlink (Sweden) AB), a Swedish
corporation ("Sweden Sub", and together with Waterlink and German Sub, each a
"Debtor" and collectively, the "Debtors"), XXXXXXXX VENTURE PARTNERS III, L.P.,
a Delaware limited partnership (the "Guarantor") hereby absolutely, irrevocably
and unconditionally guarantees (this "Guaranty") the full and prompt payment
when due, whether by acceleration or otherwise, and at all times thereafter, of
(a) all obligations of Waterlink from time to time existing or arising under or
pursuant to the Credit Agreement, dated as of February 19, 1997, among
Waterlink, the financial institutions from time to time party thereto (the
"Banks") and Bank of America Illinois, as agent (the "Agent") (as from time to
time restated, amended or modified, the "Waterlink Credit Agreement"; any term
used but not otherwise defined herein shall have the meaning ascribed to such
term in the Waterlink Credit Agreement), (b) all obligations of German Sub from
time to time existing or arising under or pursuant to the Credit Agreement,
dated as of February 26, 1997 (as from time to time restated, amended or
modified, the "German Credit Agreement"), between German Sub and Bank of America
National Trust and Savings Association, Frankfurt Branch ("B of A Frankfurt"),
(c) all obligations of Sweden Sub from time to time existing or arising under or
pursuant to the Credit Agreement, dated as of February 26, 1997 (as from time to
time restated, amended or modified, the "Sweden Credit Agreement", and together
with the Waterlink Credit Agreement and the German Credit Agreement, each a
"Credit Agreement" and collectively, the "Credit Agreements"), between Sweden
Sub and Bank of America National Trust and Savings Association, London Branch
("B of A London", and together with the Agent, the Banks and B of A Frankfurt,
each a "Creditor" and collectively, the "Creditors") and (d) all other amounts
from time to time owing to the Creditors by the Debtors under the Loan Documents
(as such term is defined in the relevant Credit Agreement), whether direct or
indirect, absolute or contingent, or now or hereafter existing, or due or to
become due (all such obligations being hereinafter collectively called the
"Obligations"), and the Guarantor further agrees to pay all expenses (including
attorneys' fees and legal expenses) paid or incurred by any Creditor, in
endeavoring to collect the Obligations, or any part thereof, and in enforcing
this Guaranty; PROVIDED, HOWEVER, that (w) the Guarantor's maximum liability
hereunder shall be $2,000,000 (as such amount is permanently reduced from time
to time by an amount equal to the aggregate amount of Subordinated Debt incurred
by Waterlink pursuant to Section 8.05(g) of the Waterlink Credit Agreement and
the proceeds of which are utilized to repay Loans under, and as defined in, the
Waterlink Credit Agreement), (x) such liability shall exist to the extent, and
only to the extent, the aggregate Obligations equal or exceed (1) from the date
hereof to and including March 31, 1997, $20,800,000 or (2) at any time
thereafter, an amount equal to EBITDA of Waterlink listed in item II(2)(b) of
Schedule 1 to the Compliance Certificate delivered by Waterlink for the fiscal
quarter ended March
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31, 1997, multiplied by four, at the time of any acceleration of such
Obligations, (y) the Guarantor shall have 35 days to satisfy any claim made by a
Creditor under this Guaranty and (z) no claim may be initially made by any
Creditor against the Guarantor under this Guaranty at any time on and after June
1, 1997. This Guaranty constitutes a Guaranty of payment when due and not of
collection, and the Guarantor specifically agrees that it shall not be necessary
or required that any Creditor exercise any right, assert any claim or demand, or
enforce any remedy whatsoever against any Debtor (or any other Person) before or
as a condition to the obligations of the Guarantor hereunder.
The Guarantor agrees that, in the event of the dissolution or
insolvency of a Debtor or the inability of a Debtor to pay debts as they mature,
or an assignment by a Debtor for the benefit of creditors, or the institution of
any proceeding by or against a Debtor alleging that such Debtor is insolvent or
unable to pay debts as they mature, and if such event shall, subject to clause
(z) of the first paragraph of this Guaranty, occur at a time when any of the
Obligations may not then be due and payable, the Guarantor will pay to the
relevant Creditor forthwith the full amount that would be payable hereunder by
the Guarantor if all Obligations were then due and payable.
This Guaranty, subject to clause (z) of the first paragraph of this
Guaranty, shall in all respects be a continuing, absolute and unconditional
guaranty, and shall remain in full force and effect (notwithstanding, without
limitation, that at any time or from time to time all Obligations may have been
paid in full).
The Guarantor further agrees that, if at any time all or any part of
any payment theretofore applied by any Creditor to any of the Obligations is or
must be rescinded or returned by such Creditor for any reason whatsoever
(including, without limitation, the insolvency, bankruptcy or reorganization of
a Debtor, such Obligations, subject to clause (z) of the first paragraph of this
Guaranty, shall, for the purposes of this Guaranty, to the extent that such
payment is or must be rescinded or returned, be deemed to have continued in
existence, notwithstanding such application by such Creditor, and this guaranty
shall continue to be effective or be reinstated, as the case may be, as to such
Obligations, all as though such application by such Creditor had not been made.
Any Creditor may, from time to time, at its sole discretion and without
notice to the Guarantor, take any or all of the following actions: (a) retain or
obtain a security interest in any property to secure any of the Obligations or
any obligation hereunder; (b) retain or obtain the primary or secondary
obligation of any obligor or obligors, in addition to the Guarantor, with
respect to any of the Obligations; (c) extend or renew for one or more periods
(whether or not longer than the original period), alter, amend or exchange any
of the Obligations or any of the documentation pertaining thereto, or release or
compromise any obligation of the Guarantor hereunder or any obligation of any
nature of any other obligor with respect to any of the Obligations; (d) release
its security interest in, or surrender, release or permit any substitution or
exchange for, all or any part of any property securing any of the Obligations or
any obligation hereunder, or extend or renew for one or more periods (whether or
not longer than the original period) or release, compromise, alter or exchange
any obligations of any nature of any obligor with respect to any such property;
and (e) resort to the Guarantor for payment, subject to clause (z) of the first
paragraph of this Guaranty, of any of the Obligations, whether or not such
Creditor (i) shall have resorted to any property
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securing any of the Obligations or any obligation hereunder or (ii) shall have
proceeded against any other obligor primarily or secondarily obligated with
respect to any of the Obligations (all of the actions referred to in preceding
clauses (i) and (ii) being hereby expressly waived by the Guarantor).
Any amounts received by a Creditor from whatsoever source on account of
the Obligations may be applied by it toward the payment of such of the
Obligations, and in such order of application, as such Creditor may from time to
time elect.
Until such time as the Creditors shall have received payment of the
full amount of all Obligations and of all obligations of the Guarantor
hereunder, no payment made by or for the account of the Guarantor pursuant to
this Guaranty shall entitle the Guarantor by subrogation or otherwise to any
payment by a Debtor or from or out of any property of such Debtor and the
Guarantor shall not exercise any right or remedy against any Debtor or any
property of any Debtor by reason of any performance by the Guarantor of this
Guaranty.
The Guarantor hereby expressly waives: (a) notice of the acceptance by
any Creditor of this Guaranty, (b) notice of the existence or creation or
nonpayment of all or any of the Obligations, (c) presentment, demand, notice of
dishonor, protest, and all other notices whatsoever, and (d) all diligence in
collection or protection of or realization upon the Obligations or any thereof,
any obligation hereunder, or any security for or guaranty of any of the
foregoing.
Until the irrevocable payment in full of all of the Obligations (other
than Obligations under the relevant Credit Agreement with a Creditor which
expressly survive the termination of such agreement) and termination of all
Commitments (as defined in the relevant Credit Agreement), (a) the Guarantor
waives any right of subrogation, reimbursement, indemnification and contribution
(contractual, statutory or otherwise), including any claim or right of
subrogation under the Bankruptcy Code or any successor statute, against any
Debtor arising from the existence or performance of this Guaranty and (b) the
Guarantor waives any right to enforce any remedy which any Creditor now has or
may hereafter have against any Debtor, and waives any benefit of, and any right
to participate in, any security now or hereafter held by a Creditor securing the
Obligations. Upon such irrevocable payment and termination, the Debtors shall
jointly and severally indemnify the Guarantor for the full amount of any payment
made by the Guarantor under this Guaranty and such Guarantor shall be subrogated
to the rights of the person to whom such payment shall have been made to the
extent of such payment.
All rights of subrogation of the Guarantor hereunder shall be fully
subordinated in time and priority of payment to the Obligations and all other
indebtedness of each Debtor to each Creditor.
Any Creditor may, from time to time, without notice to the Guarantor,
assign or transfer any or all of the Obligations or any interest therein; and,
notwithstanding any such assignment or transfer or any subsequent assignment or
transfer thereof, such Obligations, subject to clause (z) of the first paragraph
of this Guaranty, shall be and remain Obligations for the purposes of this
Guaranty, and each and every immediate and successive assignee or transferee of
any of the Obligations or of any interest therein shall, to the extent of the
interest of such assignee or transferee in the Obligations,
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be entitled to the benefits of this Guaranty to the same extent as if such
assignee or transferee were a Creditor.
The Guarantor hereby warrants to each Creditor that it now has and will
continue to have independent means of obtaining information concerning the
affairs, financial condition and business of each Debtor. No Creditor shall have
any duty or responsibility to provide the Guarantor with any credit or other
information concerning the affairs, financial condition or business of any
Debtor that may come into the possession of such Creditor.
The Guarantor represents and warrants to each Creditor that:
(a) the Guarantor:
(i) is a limited partnership duly organized, validly existing
and in good standing under the laws of Delaware and Ohio;
(ii) has the power and authority and all governmental
licenses, authorizations, consents and approvals to own its assets, carry on its
business and to execute, deliver, and perform its obligations under this
Guaranty;
(iii) is in compliance with all Requirements of Law; except to
the extent that the failure to do so could not reasonably be expected to have a
material adverse change in, or a material adverse effect upon, the operations,
business, properties, condition (financial or otherwise) or prospects of the
Guarantor or materially impare the ability of the Guarantor to perform under
this Guaranty or a material adverse effect upon the legality, validity, binding
effect or enforceability against the Guarantor or this Guaranty (collectively, a
"Material Adverse Effect");
(b) the execution, delivery and performance by the Guarantor of this
Guaranty has been duly authorized by all necessary partnership action, and do
not and will not:
(i) contravene the terms its limited partnership agreement;
(ii) conflict with or result in any breach or contravention
of, or the creation of any Lien under, any document evidencing any Contractual
Obligation to which it is a party or any order, injunction, writ or decree of
any Governmental Authority to which it or its property is subject; or
(iii) violate any Requirement of Law;
(c) no approval, consent, exemption, authorization, or other action by,
or notice to, or filing with, any Governmental Authority is necessary or
required in connection with the execution, delivery or performance by, or
enforcement against, the Guarantor of this Guaranty;
(d) there are no actions, suits, proceedings, claims or disputes
pending, or to the best knowledge of the Guarantor, threatened or contemplates,
at law, in equity, in arbitration or before
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any Governmental Authority, against the Guarantor which: (i) purport to affect
or pertain to this Guaranty; or (ii) if determined adversely to the Guarantor,
would reasonably be expected to have a Material Adverse Effect. No injunction,
writ, temporary restraining order or any order of any nature has been issued by
any court or other Governmental Authority purporting to enjoin or restrain the
execution, delivery or performance of this Guaranty, or directing that the
transactions provided for herein not be consummated as herein provided. As of
the date hereof, the Guarantor is not in default under or with respect to any
Contractual Obligation in any respect which, individually or together with all
such defaults, could reasonably be expected to have a Material Adverse Effect;
(e) the Guarantor is Solvent both before and after giving effect to
this Guaranty;
(f) the Guarantor, as of the date hereof, has funds available to it
under its limited partnership agreement free and clear of any Liens, prior
commitments or any guaranty (other than this Guaranty), in an amount at least
equal to $2,000,000.
(g) none of the representations or warranties made by the Guarantor in
this Guaranty, and none of the statements contained in any exhibit, report,
statement or certificate furnished by or on behalf of the Guarantor in
connection with this Guaranty, contains any untrue statement of a material fact
or omits any material fact required to be stated therein or necessary to make
the statements made therein, in light of the circumstances under which they are
made, not misleading as of the time when made or delivered.
The Guarantor hereby agrees that it shall (a) at all times on or prior
to June 1, 1997 have funds available to it under its limited partnership
agreement free and clear of any Liens, prior commitments or any guaranty (other
than this Guaranty), in an amount at least equal to $2,000,000, and (b) deliver
a certificate to each Creditor every fourteen days, commencing March 12, 1997,
stating that the Guarantor remains in compliance with the provisions of the
preceding clause (a).
No delay on the part of any Creditor in the exercise of any right or
remedy shall operate as a waiver thereof, and no single or partial exercise by
any Creditor of any right or remedy shall preclude other or further exercise
thereof or the exercise of any other right or remedy; nor shall any modification
or waiver of any of the provisions of this Guaranty be binding upon any Creditor
except as expressly set forth in a writing duly signed and delivered (or
consented to) by or on behalf of each Creditor. No action of any Creditor
permitted hereunder shall in any way affect or impair the rights of any Creditor
and the obligations of the Guarantor under this Guaranty. For the purposes of
this Guaranty, Obligations shall include all obligations of each Debtor to each
Creditor arising under or in connection with the agreements relating to the
Obligations, notwithstanding any right or power of a Debtor or anyone else to
assert any claim or defense as to the invalidity or unenforceability of any such
obligation, and no such claim or defense shall affect or impair the obligations
of the Guarantor hereunder. The obligations of the Guarantor under this Guaranty
shall be absolute and unconditional irrespective of any circumstance whatsoever
that might constitute a legal or equitable discharge or defense of the
Guarantor. The Guarantors hereby acknowledge that, except as provided in the
first paragraph of this Guaranty, there are no conditions to the effectiveness
of this Guaranty.
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This Guaranty shall be binding upon the Guarantor, and upon the legal
representatives, successors and assigns of the Guarantors; and all references
herein to a Debtor and to the Guarantor, respectively, shall be deemed to
include any successor or successors, whether immediate or remote, to such
entities.
This Guaranty has been delivered at Chicago, Illinois, and shall be
construed in accordance with and governed by the internal laws of the State of
Illinois. Wherever possible each provision of this Guaranty shall be interpreted
in such manner as to be effective and valid under applicable law, but if any
provision of this Guaranty shall be prohibited by or invalid under such law,
such provision shall be ineffective to the extent of such prohibition or
invalidity, without invalidating the remainder of such provision or the
remaining provisions of this Guaranty.
The Guarantor hereby expressly waives any right to a trial by jury in
any action or proceeding to enforce or defend any rights under this Guaranty or
under any amendment, instrument, document or agreement delivered or that may in
the future be delivered in connection herewith or arising from any banking
relationship existing in connection with this Guaranty, and agrees that any such
action or proceeding shall be tried before a court and not before a jury.
* * *
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IN WITNESS WHEREOF, the Guarantors have executed this Guaranty by their
duly authorized officers as of the 4th day of March, 1997.
XXXXXXXX VENTURE PARTNERS III, L.P.
By: XXXXXXXX VENTURE MANAGEMENT III,
L.P., as General Partner
By: PINKAS FAMILY PARTNERS, L.P.,
a General Partner
By _____________________________________
Name: ______________________________
Title: General Partner
Acknowledged and Agreed as of
the 4th day of March, 1997:
WATERLINK, INC.
By ________________________
Name: __________________
Title: _________________
PROVISTA EINHUNDERTSECHSUNDFUNFZIGSTE
VERWALTUNGSGESELLSCHAFT mbH (to be known
as WATERLINK (GERMANY) GmbH)
By:______________________
Title:___________________
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GIGANTISSIMO 2061 AB (to be known as
WATERLINK (SWEDEN) AB)
By: _________________________
Title: ______________________
BANK OF AMERICA ILLINOIS,
as Agent
By __________________________
Name: _________________
Title: ________________
BANK OF AMERICA NATIONAL TRUST
AND SAVINGS ASSOCIATION,
FRANKFURT BRANCH
By __________________________
Name: _________________
Title: ________________
BANK OF AMERICA NATIONAL TRUST
AND SAVINGS ASSOCIATION,
LONDON BRANCH
By __________________________
Name: _________________
Title: ________________
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