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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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Form 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported) December 2, 1997 (December 12,
1997)
CULLIGAN WATER TECHNOLOGIES, INC.
(Exact name of registrant as specified in itscharter)
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Delaware 51-0350629
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
One Culligan Parkway 60062
Northbrook, Illinois (Zip Code)
(Address of principal
executive offices)
Registrant's telephone number, including area code: (847) 205-6000
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INFORMATION TO BE INCLUDED IN THE REPORT
Item 2. Acquisition or Disposition of Assets
On December 2, 1997, the Registrant declared its recommended cash offer to
acquire all of the outstanding shares of Protean plc, a United Kingdom
corporation ("Protean"), unconditional in all respects. As a result, the
Registrant has successfully completed its offer to acquire Protean. As of
December 2, 1997, the Registrant owned or had received valid acceptances for an
aggregate of 97.9% of Protean's outstanding shares. The Registrant expects to
acquire the remaining outstanding shares of Protean in accordance with United
Kingdom law which will result in Protean becoming an indirect wholly-owned
subsidiary of the Registrant.
Protean manufactures, distributes and services water purification equipment
and analytical and thermal equipment. The companies in the water purification
division of the Protean Group supply equipment which is designed to purify tap
water to the levels needed by scientific, medical and industrial customers. The
companies in the analytical and thermal equipment division supply electric
furnaces and ovens, specialized thermally controlled equipment (including
equipment for freeze-drying and thermal conditioning), instruments and
consumables for use in chromatography, glass and plastic single-use containers
and bench-top analytical equipment.
Protean had total revenues of (Pounds)81.1 million (US$132.5) in the year
ended March 31, 1997, of which (Pounds)38.8 million (US$63.4) related to its
water purification equipment operations and (Pounds)42.4 million (US$69.1)
related to its analytical and thermal equipment operations.
The offer, which was made by Lazard Brothers on behalf of a newly-formed
wholly owned UK subsidiary of the Registrant, valued the whole of the issued
share capital of Protean at approximately $172 million and was recommended to
shareholders by the Protean Board of Directors. The price offered to Protean
shareholders was determined by arms-length negotiations between the Registrant
and Protean's Board of Directors. The source of the funds used in the
acquisition were the borrowings under the Registrant's Credit Agreement dated as
of April 30, 1997 among the Borrowers, as defined therein, Bank of America
Illinois as an Administrative Agent, Swing Line Lender and Letter of Credit
Issuing Lender, Harris Trust and Savings Bank, as Documentation Agent, The First
National Bank of Chicago, as Syndication Agent, and the financial institutions
party thereto and Short-Term Credit Agreement dated as of April 30, 1997 among
the Borrowers, as defined therein, Bank of America Illinois, as Administrative
Agent, Swing Line Lender and Letter of Credit Issuing Lender, Harris Trust and
Savings Bank, as Documentation Agent, the First National Bank of Chicago, as
Syndication Agent, and the financial institutions party thereto filed as
Exhibits 10.14 and 10.15 to the Registrant's Quarterly Report of Form 10-Q for
the quarter ended
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July 31, 1997 and borrowings under a $100 million credit
facility with The First National Bank of Chicago attached as Exhibit 10.19
hereto.
Item 7. Financial Statements and Exhibits
(a) Financial statements of businesses acquired
The consolidated financial statements of Protean required by this Item 7(a)
will be filed by amendment not later than 60 days after the date that this
initial report on Form 8-K was required to be filed.
(b) Proforma financial information
Unaudited proforma condensed financial information required by this Item
7(b) will be filed by amendment not later than 60 days after the date that this
initial report on Form 8-K was required to be filed.
(c) Exhibits
Exhibit 10.19 Credit Agreement dated October 21, 1997
between the Registrant and The First
National Bank of Chicago pages 4-18
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
CULLIGAN WATER TECHNOLOGIES, INC.
Date December 12, 1997 .....................................
Edward A. Christensen
Vice President, General Counsel and
Secretary
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Exhibit 10.19
October 21, 1997
Culligan Water Technologies, Inc.
One Culligan Parkway
Northbrook, IL 60063
Attention: Michael E. Salvati
Vice President, Finance and
Chief Financial Officer
Ladies and Gentlemen:
The First National Bank of Chicago (the "Lender") is pleased to establish a
line of credit in favor of Culligan Water Technologies, Inc. (the "Borrower") in
the amount of $100,000,000, which shall continue from October 21, 1997 through
April 21, 1998 (the "Maturity Date") unless the line of credit is terminated on
an earlier date as set forth below.
(a) Loans under this line of credit will be evidenced and governed by the
Lender's standard form of master note (the "Note"), a copy of which is attached
hereto, and will bear interest, at the Borrower's option, at:
(i) a rate equal to the Lender's corporate base rate of interest
announced by the Lender from time to time, changing when and as the
corporate base rate changes, with interest payable on the last day of each
month, on the Maturity Date, and on demand thereafter; or
(ii) subject to availability and for a maturity to be agreed upon, at a
fixed rate equal to the sum of .65% per annum plus the Eurodollar rate,
where the Eurodollar rate is the rate at which deposits in U.S. dollars in
the amount and for a maturity corresponding to that of the loan are offered
by the Lender in the offshore interbank market at approximately 10 a.m.
(Chicago time) two business days prior to the date on which such loan is
made, adjusted for maximum statutory reserve requirements.
(b) No interest period for or maturity of a loan hereunder shall extend
beyond the Maturity Date. Interest and fees will be computed on the basis of
actual days elapsed on a 360-day year basis. During the continuance of a
Default (defined below) the Lender may, at its option, by notice to the
Borrower, declare that loans may only be made as, converted into or continued as
loans bearing interest at the corporate base rate of interest. During the
continuance of a Default the Lender may, at its option, by notice to the
Borrower, declare that (i) each loan bearing interest at a rate other than the
corporate base rate shall bear interest for the remainder of the applicable
interest period at the rate otherwise applicable to such interest period plus 2%
per annum and (ii) each loan bearing interest at the corporate base rate shall
bear interest at a rate per annum equal to the corporate base rate plus 2% per
annum.
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(c) The Borrower will use the proceeds of the loans hereunder for the
acquisition of the capital stock of Protean PLC and for other acquisitions
permitted under the Agreement (as defined below) and general corporate purposes.
The Borrower shall not use the proceeds of any credit extended under this line
of credit for the purpose of repaying principal, interest or dividends on any
security issued by the Borrower and underwritten, distributed or placed by First
Chicago Capital Markets, Inc.
(d) The Borrower will perform, comply with and observe for the Lender's
benefit the agreements set forth in Articles VI, VII, VIII and IX of the Credit
Agreement dated as of April 30, 1997 by and among the Borrower, various
Subsidiaries of the Borrower, the lenders party thereto and Bank of America
Illinois, as administrative agent for such lenders (as amended to the date
hereof, the "Agreement"). For purposes hereof, the provisions of the Agreement,
together with related definitions and ancillary provisions, are hereby
incorporated herein by reference, mutatis mutandis, and shall be deemed to
continue in effect for the Lender's benefit as in effect on the date hereof,
whether or not the Agreement remains in effect or is amended, waived or
otherwise modified by the parties thereto.
(e) The Borrower may not borrow under this line of credit unless, after
giving effect to the proposed borrowing, the following statements are true and
correct on the date of borrowing: (i) there exists no Default (as defined below)
or event which, with giving of notice, or lapse of time, or both, would be a
Default and (ii) the representations and warranties set forth in Article VI of
the Agreement are true and correct. Any request by the Borrower for a borrowing
hereunder shall be deemed to be a representation and warranty by the Borrower
that the statements set forth in the previous sentence are true and correct in
all material respects.
(f) All outstanding loans and accrued and unpaid interest, at the option
of the Lender, may be declared immediately due and payable without notice if
there exists any Default hereunder. "Default" means (i) any failure by the
Borrower to pay principal when due or interest, fees, or other obligations
within 5 days of when due under this letter, the Note, or any other agreement or
arrangement with the Lender, (ii) the existence of any default under the Note or
the Guaranty (as defined below), or any violation or failure to comply with any
provision of the Note or the Guaranty, or lack of enforceability of the Guaranty
or (iii) the existence of any Event of Default under and as defined in the
Agreement.
(g) The full amount of this line of credit will be fully guaranteed by
that certain guaranty dated October 21, 1997 (the "Guaranty") executed by each
of the Guarantors (identified on Schedule 6.16 of the Agreement).
(h) The Lender may make assignments and sell participations in this line
of credit, the Note and the loans made hereunder, and may disclose information
pertaining to the Borrower to prospective assignees and participants. Any
assignment will release the Lender of its funding obligation with respect to the
amount assigned and may be made only with the Borrower's consent (which consent
will not unreasonably be withheld). The Borrower agrees that if it fails to pay
any loan when due, any purchaser of a participation interest in such loan shall
be entitled to seek enforcement of this note if the purchaser is permitted to do
so pursuant to the terms of the participation agreement between the Lender and
such purchaser.
(i) This line of credit shall be effective as of the date of this letter
when the Borrower has signed and returned to the Lender a copy of this letter
and has provided the Lender with executed
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originals of the Note, the Guaranty, the fee letter supplied by the Lender (and
any fees identified therein as due), resolutions, incumbency certificates, and
an opinion of counsel in form and substance satisfactory to the Lender.
(j) THIS LETTER AND THE NOTE SHALL BE GOVERNED BY THE INTERNAL LAWS OF THE
STATE OF ILLINOIS. BOTH PARTIES HERETO HEREBY WAIVE TRIAL BY JURY IN THE EVENT
THIS LETTER OR THE NOTE BECOMES THE SUBJECT OF A DISPUTE.
If this letter reflects the Borrower's understanding, please cause it to be
executed and returned to my attention, together with the other items referred to
in paragraph (i).
Very truly yours,
THE FIRST NATIONAL BANK OF CHICAGO
By:_________________________________
Title:______________________________
Accepted and agreed:
CULLIGAN WATER TECHNOLOGIES, INC.
By:____________________________
Title: Vice President, Finance
Date:__________________________
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MASTER NOTE
Chicago, Illinois
$100,000,000 Date: October 21, 1997
FOR VALUE RECEIVED, CULLIGAN WATER TECHNOLOGIES, INC. (the "Borrower")
promises to pay to the order of THE FIRST NATIONAL BANK OF CHICAGO (the
"Lender"), in lawful money of the United States at the office of the Lender at
One First National Plaza, Chicago, Illinois, or as the Lender may otherwise
direct, the lesser of One Hundred Million Dollars ($100,000,000.00) or the
aggregate outstanding unpaid principal amount of loans advanced hereunder,
together with interest as provided below. All principal amounts outstanding
under this Note, together with any unpaid interest, shall be due and payable on
the Maturity Date.
The Borrower and the Lender may agree to a fixed interest rate and a
specific maturity for a loan (a "fixed rate loan") at the time of borrowing.
Interest on each fixed rate loan shall be payable upon the maturity of such
fixed rate loan and, in the case of a fixed rate loan with an original maturity
in excess of three months, interest shall also be payable on the last day of
each three-month interval while such fixed rate loan is outstanding.
Any fixed rate loan not paid at maturity and any other loan as to which a
fixed rate is not agreed shall bear interest at a rate equal to the sum of the
corporate base rate of interest announced by the Lender from time to time,
changing when and as the corporate base rate changes. Interest on all loans
bearing interest at a rate related to the corporate base rate shall be payable
on the last day of each quarter, on the maturity date of this Note (whether due
to acceleration or otherwise) and on demand thereafter.
Any person authorized to borrow on behalf of the Borrower (an "authorized
person") may request a loan hereunder by telephone or telex. The Borrower agrees
that, in implementing this arrangement, the Lender is authorized to honor
requests which it believes, in good faith, to emanate from an authorized person
acting pursuant to this note, whether in fact that be the case or not. If the
Lender requests a written confirmation, the Borrower will confirm the terms of
each loan so requested by mailing a confirmation letter to the Lender signed by
any authorized person. If the Lender elects to confirm the terms of a loan to
the Borrower, the Borrower will notify the Lender in writing within 10 days
after the Borrower's receipt of such confirmation if it believes such
confirmation to be inaccurate, and the Borrower hereby waives any right to
contest the accuracy of such confirmation after such 10-day period.
The Borrower hereby authorizes the Lender to record loans, maturities,
repayments, interest rates and payment dates on the schedule attached to this
note or otherwise in accordance with the Lender's usual practice. The obligation
of the Borrower to repay each loan made hereunder shall be absolute and
unconditional notwithstanding any failure of the Lender to enter such amounts of
such schedule or to receive written confirmation of the transaction from the
Borrower and, in the event of disagreement as to the terms of a transaction, the
Lender's records shall govern, absent manifest error. The Borrower hereby
authorizes the Lender to deposit the proceeds of loans to, and to charge
payments of principal and interest against, the Borrower's deposit account with
the Lender.
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Each payment of principal or interest hereunder shall be made in
immediately available funds. If any payment shall become due and payable on a
Saturday, Sunday or legal holiday under the laws of Illinois, such payment shall
be made on the next succeeding business day in Illinois and any such extended
time of the payment of principal or interest shall be included in computing
interest at the rate this note bears in connection with such payment. All
interest hereunder shall be computed for the actual number of days elapsed on a
360-day year basis.
If any change in any law, rule, regulation or directive (including, without
limitation, Regulation D of the Board of Governors of the Federal Reserve
System) imposes any condition the result of which is to increase the cost to the
Lender of making, funding or maintaining any fixed rate loan hereunder or
reduces any amount receivable by the Lender hereunder in connection with a fixed
rate loan, the Borrower shall pay the Lender the amount of such increased
expense incurred or the reduction in any amount received which the Lender
determines is attributable to making, funding and maintaining the fixed rate
loans hereunder. A fixed rate loan may not be prepaid prior to the agreed
maturity of the loan without the written consent of the Lender. If, for any
reason, any payment of a fixed rate loan occurs prior to maturity of that loan,
the Borrower will indemnify the Lender for any loss or cost resulting therefrom,
including, without limitation, any loss or cost in liquidating or employing
deposits acquired to fund or maintain the fixed rate loan. Loans bearing
interest at a rate related to the corporate base rate may be prepaid by the
Borrower, without premium or penalty.
The Borrower expressly waives any presentment, demand, protest or notice in
connection with this note now, or hereafter, required by applicable law and
agrees to pay all costs and expenses of collection. This note shall be governed
by the internal law (and not the law of conflicts) of the State of Illinois,
giving effect, however, to federal laws applicable to national Lenders.
This Note is issued pursuant to, and is entitled to the benefits of, the
Line of Credit Letter, dated as of October 21, 1997 (the "Letter") addressed by
the Lender to the Borrower to which Letter, as it may be amended from time to
time, reference is hereby made for a statement of the terms and conditions
governing this Note, including (i) the terms and conditions under which the
maturity date hereof may be accelerated and (ii) a reference to the Guaranty
which supports this Note. Capitalized terms used herein and not otherwise
defined herein are used with the meanings attributed to them in the Letter.
CULLIGAN WATER TECHNOLOGIES, INC.
By:_____________________________
Title: Vice President, Finance
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SCHEDULE
to be attached and become a part of
the Master Note dated October 21, 1997
executed by Culligan Water Technologies, Inc.
and payable to
The First National Bank of Chicago
<TABLE>
<S> <C> <C> <C> <C> <C> <C>
Unpaid Initials
Amount of Principal of Person
Date of Amount of Interest Principal Balance Making
Transaction Loan Maturity Rate Payment of Note Notation
</TABLE>
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SUBSIDIARY GUARANTY
THIS SUBSIDIARY GUARANTY (this "Guaranty") is made as of the 21st day of
October 1997, by the entities listed on Schedule "1" attached hereto
(collectively, the "Subsidiary Guarantors") in favor of the Lender under the
Line of Credit referred to below;
WITNESSETH:
WHEREAS, CULLIGAN WATER TECHNOLOGIES, INC., a Delaware corporation (the
"Principal") and THE FIRST NATIONAL BANK OF CHICAGO (together with its
successors and assigns, the "Lender") have entered into a certain letter
agreement dated as of even date herewith evidencing a line of credit (as same
may be amended or modified from time to time, the "Line of Credit"), providing,
subject to the terms and conditions thereof, for extensions of credit to be made
by the Lender to the Principal;
WHEREAS, it is a condition precedent to the Lender's executing the Line of
Credit that each of the Subsidiary Guarantors execute and deliver this Guaranty
whereby each of the Subsidiary Guarantors shall guarantee the payment when due,
subject to Section 9 hereof, of all principal, interest and other amounts that
shall be at any time payable by the Principal under the Line of Credit, the
Notes and any other documents executed in connection therewith (the "Loan
Documents"); and
WHEREAS, in consideration of the financial and other support that the
Principal has provided, and such financial and other support as the Principal
may in the future provide, to the Subsidiary Guarantors, and in order to induce
the Lender to enter into the Line of Credit, each of the Subsidiary Guarantors
is willing to guarantee the obligations of the Principal under the Line of
Credit, the Notes, and the other Loan Documents;
NOW, THEREFORE, in consideration of the premises and other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto agree as follows:
SECTION l. Definitions. Terms defined in the Line of Credit and not
otherwise defined herein have, as used herein, the respective meanings provided
for therein.
SECTION 2.01 Representations and Warranties. Each of the Subsidiary
Guarantors represents and warrants (which representations and warranties shall
be deemed to have been renewed upon each borrowing date under the Line of
Credit) that:
(a) it (i) is a corporation duly organized, validly existing and in
good standing under the laws of its jurisdiction of incorporation; (ii) has all
requisite corporate power, and has all material governmental licenses,
authorizations, consents and approvals necessary to own its assets and carry on
its business as now being or as proposed to be conducted; and (iii) is qualified
to do
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business in all jurisdictions in which the nature of the business
conducted by it makes such qualification necessary and where failure so to
qualify would have a Material Adverse Effect.
(b) it has all necessary corporate power and authority to execute,
deliver and perform its obligations under this Guaranty; the execution, delivery
and performance of this Guaranty have been duly authorized by all necessary
corporate action; and this Guaranty has been duly and validly executed and
delivered by it and constitutes its legal, valid and binding obligation,
enforceable in accordance with its terms, except as the enforceability thereof
may be limited by bankruptcy, insolvency, reorganization, or moratorium or other
similar laws relating to the enforcement of creditors' rights generally and by
general equitable principles.
(c) neither the execution and delivery by it of this Guaranty nor
compliance with the terms and provisions hereof will conflict with or result in
a breach of, or require any consent under, its articles or certificate of
incorporation or by-laws or any applicable law or regulation, or any order,
writ, injunction or decree of any court or governmental authority or agency, or
any agreement or instrument to which it is a party or by which it is bound or to
which it is subject, or constitute a default under any such agreement or
instrument, or result in the creation or imposition of any Lien upon any of its
revenues or assets pursuant to the terms of any such agreement or instrument.
SECTION 2.02 Covenants. Each of the Subsidiary Guarantors covenants that,
so long as the Lender has any commitment outstanding under the Line of Credit or
any amount payable under the Line of Credit or any Note shall remain unpaid,
that it will, and, if necessary, will enable the Principal to fully comply with
those covenants and agreements incorporated by reference into the Line of
Credit.
SECTION 3. The Guaranty. Subject to Section 9 hereof, each of the
Subsidiary Guarantors hereby unconditionally guarantees the full and punctual
payment (whether at stated maturity, upon acceleration or otherwise) of the
principal of and interest on each Note issued by the Principal pursuant to the
Line of Credit, and the full and punctual payment of all other amounts payable
by the Principal under the Line of Credit and the other Loan Documents (all of
the foregoing, subject to the provisions of Section 9 hereof, being referred to
collectively as the "Guaranteed Obligations"). Upon failure by the Principal to
pay punctually any such amount, each of the Subsidiary Guarantors agrees that it
shall forthwith on demand pay the amount not so paid at the place and in the
manner specified in the Line of Credit, any Note or the relevant Loan Document,
as the case may be.
SECTION 4. Guaranty Unconditional. Subject to Section 9 hereof, the
obligations of each of the Subsidiary Guarantors hereunder shall be
unconditional and absolute and, without limiting the generality of the
foregoing, shall not be released, discharged or otherwise affected by:
(i) any extension, renewal, settlement, compromise, waiver or release in
respect of any obligation of the Principal under the Line of Credit, any
Note, or any other Loan Document, by operation of law or otherwise or any
obligation of any other guarantor of any of the Guaranteed Obligations;
(ii) any modification or amendment of or supplement to the Line of Credit,
any Note, or any other Loan Document;
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(iii) any release, nonperfection or invalidity of any direct or indirect
security for any obligation of the Principal under the Line of Credit, any
Note, any Loan Document, or any obligations of any other guarantor of any
of the Guaranteed Obligations;
(iv) any change in the corporate existence, structure or ownership of the
Principal or any other guarantor of any of the Guaranteed Obligations, or
any insolvency, bankruptcy, reorganization or other similar proceeding
affecting the Principal, or any other guarantor of the Guaranteed
Obligations, or its assets or any resulting release or discharge of any
obligation of the Principal, or any other guarantor of any of the
Guaranteed Obligations;
(v) the existence of any claim, setoff or other rights which the
Subsidiary Guarantors may have at any time against the Principal, any other
guarantor of any of the Guaranteed Obligations, the Lender or any other
Person, whether in connection herewith or any unrelated transactions;
(vi) any invalidity or unenforceability relating to or against the
Principal, or any other guarantor of any of the Guaranteed Obligations, for
any reason related to the Line of Credit, any other Loan Document, or any
provision of applicable law or regulation purporting to prohibit the
payment by the Principal, or any other guarantor of the Guaranteed
Obligations, of the principal of or interest on any Note or any other
amount payable by the Principal under the Line of Credit, the Notes, or any
other Loan Document; or
(vii) any other act or omission to act or delay of any kind by the
Principal, any other guarantor of the Guaranteed Obligations, the Lender or
any other Person or any other circumstance whatsoever which might, but for
the provisions of this paragraph, constitute a legal or equitable discharge
of any Subsidiary Guarantor's obligations hereunder.
SECTION 5. Discharge Only Upon Payment In Full: Reinstatement In Certain
Circumstances. Each of the Subsidiary Guarantor's obligations hereunder shall
remain in full force and effect until all Guaranteed Obligations shall have been
paid in full and the commitment under the Line of Credit shall have terminated
or expired. If at any time any payment of the principal of or interest on any
Note or any other amount payable by the Principal or any other party under the
Line of Credit or any other Loan Document is rescinded or must be otherwise
restored or returned upon the insolvency, bankruptcy or reorganization of the
Principal or otherwise, each of the Subsidiary Guarantor's obligations hereunder
with respect to such payment shall be reinstated as though such payment had been
due but not made at such time.
SECTION 6. Waiver of Notice. Each of the Subsidiary Guarantors
irrevocably waives acceptance hereof, presentment, demand, protest and, to the
fullest extent permitted by law, any notice not provided for herein, as well as
any requirement that at any time any action be taken by any Person against the
Principal, any other guarantor of the Guaranteed Obligations, or any other
Person.
SECTION 7. Subrogation. Each of the Subsidiary Guarantors hereby agrees
not to assert any right, claim or cause of action, including, without
limitation, a claim for subrogation, reimbursement, indemnification or
otherwise, against the Principal arising out of or by reason of this Guaranty or
the obligations hereunder, including, without limitation, the payment or
securing or purchasing of any of the Guaranteed Obligations by any of the
Subsidiary Guarantors unless and until the Guaranteed Obligations are paid in
full and any commitment to lend under the Line of Credit and other Loan
Documents is terminated.
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SECTION 8. Stay of Acceleration. If acceleration of the time for payment
of any amount payable by the Principal under the Line of Credit, any Note or any
other Loan Document is stayed upon the insolvency, bankruptcy or reorganization
of the Principal, all such amounts otherwise subject to acceleration under the
terms of the Line of Credit, any Note or any other Loan Document shall
nonetheless be payable by each of the Subsidiary Guarantors hereunder forthwith
on demand by the Lender.
SECTION 9. Limitation on Obligations. (a) It is the intention of each of
the Subsidiary Guarantors and the Lenders that each of the Subsidiary
Guarantor's obligations hereunder shall be in, but not in excess of, as of any
date, the greater of the following (such greater amount determined hereunder
being the relevant Subsidiary Guarantor's "Maximum Liability"): (i) the
aggregate amount of all monies received by the Subsidiary Guarantor from the
Principal after the date hereof (whether by loan, capital infusion or other
means), or (ii) the maximum amount (such amount being the Subsidiary Guarantor's
"Alternative Limitation") not subject to avoidance under Title 11 of the United
States Code, as same may be amended from time to time, or any applicable state
law (collectively, the "Bankruptcy Code"). As to the Alternative Limitation of
the Subsidiary Guarantors, to the extent such obligations would otherwise be
subject to avoidance under the Bankruptcy Code if the Subsidiary Guarantor is
not deemed to have received valuable consideration, fair value or reasonably
equivalent value for its obligations hereunder, any Subsidiary Guarantor's
obligations hereunder shall be reduced to that amount which, after giving effect
thereto, would not render the Subsidiary Guarantor insolvent, or leave the
Subsidiary Guarantor with an unreasonably small capital to conduct its business,
or cause the Subsidiary Guarantor to have incurred debts (or intended to have
incurred debts) beyond its ability to pay such debts as they mature, at the time
such obligations are deemed to have been incurred under the Bankruptcy Code. As
used herein, the terms "insolvent" and "unreasonably small capital" shall
likewise be determined in accordance with the Bankruptcy Code. This Section
9(a) with respect to the Alternative Limitation of the Subsidiary Guarantor is
intended solely to preserve the rights of the Agent hereunder to the maximum
extent not subject to avoidance under the Bankruptcy Code, and neither the
Subsidiary Guarantor nor any other person or entity shall have any right or
claim under this Section 9(a) with respect to the Alternative Limitation, except
to the extent necessary so that the obligations of the Subsidiary Guarantor
hereunder shall not be rendered voidable under the Bankruptcy Code.
(b) Each of the Subsidiary Guarantors agrees that the Guaranteed
Obligations may at any time and from time to-time exceed the Maximum Liability
of each Subsidiary Guarantor, and may exceed the aggregate Maximum Liability of
all other Subsidiary Guarantors, without impairing this Guaranty or affecting
the rights and remedies of the Lender hereunder. Nothing in this Section 9(b)
shall be construed to increase any Subsidiary Guarantor's obligations hereunder
beyond its Maximum Liability.
(c) In the event any Subsidiary Guarantor (a "Paying Subsidiary
Guarantor") shall make any payment or payments under this Guaranty or shall
suffer any loss as a result of any realization upon any collateral granted by it
to secure its obligations under this Guaranty, each other Subsidiary Guarantor
(each a "Non-Paying Subsidiary Guarantor") shall contribute to such Paying
Subsidiary Guarantor an amount equal to such Non-Paying Subsidiary Guarantor's
"Pro Rata Share" of such payment or payments made, or losses suffered, by such
Paying Subsidiary Guarantor. For the purposes hereof, each Non-Paying Subsidiary
Guarantor's "Pro Rata Share" with respect to any such payment or loss by a
Paying Subsidiary Guarantor shall be determined as of the date on which such
payment or loss was made by reference to the ratio of (i) such Non-Paying
Subsidiary
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Guarantor's Maximum Liability as of such date (without giving effect
to any right to receive, or obligation to make, any contribution hereunder) to
(ii) the aggregate Maximum Liability of all Subsidiary Guarantors hereunder
(including such Paying Subsidiary Guarantor) as of such date (without giving
effect to any right to receive, or obligation to make, any contribution
hereunder). Nothing in this Section 9 (c) shall affect any Subsidiary
Guarantor's several liability for the entire amount of the Guaranteed
Obligations (up to such Subsidiary Guarantor's Maximum Liability). Each of the
Subsidiary Guarantors covenants and agrees that its right to receive any
contribution under this Guaranty from a Non-Paying Subsidiary Guarantor shall be
subordinate and junior in right of payment to all the Guaranteed Obligations.
The provisions of this Section 9(c) are for the benefit of both the Agent and
the Subsidiary Guarantors and may be enforced by any one, or more, or all of
them in accordance with the terms hereof.
SECTION 10. Notices. All notices, requests and other communications to
any party hereunder shall be given or made by telecopier or other writing and
telecopied, or mailed or delivered to the intended recipient in care of the
Principal at its address or telecopier number set forth in the Agreement or such
other address or telecopy number as the Principal may hereafter specify for such
purpose by notice to the Lender. Except as otherwise provided in this Guaranty,
all such communications shall be deemed to have been duly given when transmitted
by telecopier, or personally delivered or, in the case of a mailed notice sent
by certified mail return-receipt requested, on the date set forth on the receipt
(provided, that any refusal to accept any such notice shall be deemed to be
notice thereof as of the time of any such refusal), in each case given or
addressed as aforesaid.
SECTION 11. No Waivers. No failure or delay by the Lender in exercising
any right, power or privilege hereunder shall operate as a waiver thereof nor
shall any single or partial exercise thereof preclude any other or further
exercise thereof or the exercise of any other right, power or privilege. The
rights and remedies provided in this Guaranty, the Line of Credit, the Notes,
and the other Loan Documents shall be cumulative and not exclusive of any rights
or remedies provided by law.
SECTION 12. Successors and Assigns. This Guaranty is for the benefit of
the Lender and its successors and permitted assigns and in the event of an
assignment of any amounts payable under the Line of Credit, the Notes, or the
other Loan Documents, the rights hereunder, to the extent applicable to the
indebtedness so assigned, may be transferred with such indebtedness. This
Guaranty shall be binding upon each of the Subsidiary Guarantors and their
respective successors and permitted assigns.
SECTION 13. Changes in Writing. Neither this Guaranty nor any provision
hereof may be changed, waived, discharged or terminated orally, but only in
writing signed by each of the Subsidiary Guarantors and the Lender.
SECTION 14. GOVERNING LAW SUBMISSION TO JURISDICTION WAIVER OF JURY TRIAL.
THIS GUARANTY SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAW OF
THE STATE OF ILLINOIS. EACH OF THE SUBSIDIARY GUARANTORS HEREBY SUBMITS TO THE
NONEXCLUSIVE JURISDICTION OF THE UNITED STATES DISTRICT COURT FOR THE NORTHERN
DISTRICT OF ILLINOIS AND OF ANY ILLINOIS STATE COURT SITTING IN CHICAGO,
ILLINOIS AND FOR PURPOSES OF ALL LEGAL PROCEEDINGS ARISING OUT OF OR RELATING TO
THIS GUARANTY (INCLUDING, WITHOUT LIMITATION, ANY OF THE OTHER LOAN DOCUMENTS)
OR THE TRANSACTIONS CONTEMPLATED HEREBY.
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EACH OF THE SUBSIDIARY GUARANTORS IRREVOCABLY WAIVES, TO THE FULLEST EXTENT
PERMITTED BY LAW, ANY OBJECTION WHICH ANY OF THEM MAY NOW OR HEREAFTER HAVE TO
THE LAYING OF THE VENUE OF ANY SUCH PROCEEDING BROUGHT IN SUCH A COURT AND ANY
CLAIM THAT ANY SUCH PROCEEDING BROUGHT IN SUCH A COURT HAS BEEN BROUGHT IN AN
INCONVENIENT FORUM. EACH OF THE SUBSIDIARY GUARANTORS, AND THE LENDER ACCEPTING
THIS GUARANTY, HEREBY IRREVOCABLY WAIVES ANY AND ALL RIGHT TO TRIAL BY JURY IN
ANY LEGAL PROCEEDING ARISING OUT OF OR RELATING TO THIS GUARANTY OR THE
TRANSACTIONS CONTEMPLATED HEREBY.
SECTION 15. Taxes. etc. All payments required to be made by any of the
Subsidiary Guarantors hereunder shall be made without setoff or counterclaim and
free and clear of and without deduction or withholding for or on account of, any
present or future taxes, levies, imposts, duties or other charges of whatsoever
nature imposed by any government or any political or taxing authority thereof,
provided, however, that if any of the Subsidiary Guarantors is required by law
to make such deduction or withholding, such Subsidiary Guarantor shall forthwith
pay to the Lender, such additional amount as results in the net amount received
by the Lender, equaling the full amount which would have been received by the
Lender, had no such deduction or withholding been made.
IN WITNESS WHEREOF, each of the Subsidiary Guarantors has caused this
Guaranty to be duly executed, under seal, by its authorized officer as of the
day and year first above written.
CULLIGAN INTERNATIONAL COMPANY
By:
----------------------------
Title: Vice President, Finance
BRUNER CORPORATION
By:
----------------------------
Title: Vice President, Finance
CULLIGAN DES PLAINES VALLEY
WATER CONDITIONING, INC.
By:
----------------------------
Title: Vice President, Finance
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CULLIGAN DISTRIBUTION SERVICES, INC.
By:
-------------------------------
Title: Vice President, Finance
CULLIGAN PENINSULA INDUSTRIAL
WATER CONDITIONING CO.
By:
-------------------------------
Title: Vice President, Finance
CULLIGAN WATER COMPANY OF
SAN DIEGO, INC.
By:
-------------------------------
Title: Vice President, Finance
CULLIGAN WATER CONDITIONING OF
ORANGE COUNTY
By:
-------------------------------
Title: Vice President, Finance
CULLIGAN WATER CONDITIONING OF
SOUTH BEND, INC
By:
-------------------------------
Title: Vice President, Finance
CWC FINANCE CORP.
By:
-------------------------------
Title: Vice President, Finance
16
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EVERPURE, INC.
By:
----------------------------
Title: Vice President, Finance
GREATER CHICAGO CULLIGAN WATER
CONDITIONING, INC.
By:
----------------------------
Title: Vice President, Finance
INDIANA SOFT WATER SERVICE, INC.
By:
----------------------------
Title: Vice President, Finance
PLYMOUTH PRODUCTS, INC.
By:
----------------------------
Title: Vice President, Finance
17
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SCHEDULE "1"
SUBSIDIARY GUARANTORS
Subsidiary State of
Guarantor Incorporation
- --------- -------------
Culligan International Company Delaware
Bruner Corporation Delaware
Culligan Des Plaines Valley Water Conditioning, Inc. Illinois
Culligan Distribution Services, Inc. Iowa
Culligan Peninsula Industrial Water Conditioning Co. California
Culligan Water Company of San Diego, Inc. Delaware
Culligan Water Conditioning of Orange County California
Culligan Water Conditioning of South Bend, Inc. Indiana
CWC Finance Corp. Illinois
Everpure, Inc. Nevada
Greater Chicago Culligan Water Conditioning, Inc. Illinois
Indiana Soft Water Service, Inc. Indiana
Plymouth Products, Inc. Delaware
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