EXHIBIT 10.2

 

EXECUTION COPY

 

GUARANTY

 

This GUARANTY (as amended, restated, supplemented or otherwise modified, this
“Guaranty”), dated as of February 12, 2016, is made by Watts Water
Technologies, Inc., a Delaware corporation (the “Company”), the Subsidiaries of
the Company set forth on the signature pages hereto (the “Initial Subsidiary
Guarantors” and, together with the Company and any additional Subsidiaries of
the Company that become parties to this Guaranty by executing a Supplement
hereto in the form attached hereto as Annex I, the “Guarantors”), in favor of
JPMorgan Chase Bank, N.A., as Administrative Agent (in such capacity, the
“Administrative Agent”) for the Lenders pursuant to the Credit Agreement
hereinafter defined.

 

PRELIMINARY STATEMENTS

 

WHEREAS, this Guaranty is entered into in connection with that certain Credit
Agreement, dated as of the date hereof (as amended, restated, supplemented or
otherwise modified, the “Credit Agreement”), by and among the Company, Watts
Industries Europe B.V., a private company with limited liability organized under
the laws of The Netherlands (the “Initial Subsidiary Borrower”), certain
Subsidiaries of the Company party thereto pursuant to Section 2.23 thereof (the
“Subsidiary Borrowers” and, collectively with the Company and the Initial
Subsidiary Borrower, the “Borrowers”), the lenders party thereto (the “Lenders”)
and the Administrative Agent (capitalized terms used and not otherwise defined
herein are used with the meanings set forth or incorporated by reference in the
Credit Agreement);

 

WHEREAS, the Company is the parent of each Subsidiary Borrower, and as such will
derive direct and indirect economic benefits from the making of the Loans and
other financial accommodations provided to the Subsidiary Borrowers pursuant to
the Credit Agreement;

 

WHEREAS, each Domestic Subsidiary Borrower is, with respect to the Company and
each other Subsidiary Borrower, a direct or indirect Subsidiary thereof and/or
commonly owned and controlled by the Company, and as such will derive direct and
indirect economic benefits from the making of the Loans and other financial
accommodations provided to such other Borrowers pursuant to the Credit
Agreement;

 

WHEREAS, each Domestic Subsidiary Guarantor is, with respect to each Borrower, a
direct or indirect Subsidiary thereof and/or commonly owned and controlled by
the Company, and as such will derive direct and indirect economic benefits from
the making of the Loans and other financial accommodations provided to the
Borrowers pursuant to the Credit Agreement;

 

WHEREAS, the Domestic Subsidiaries of the Company party hereto as of the date
hereof constitute the Material Domestic Subsidiaries of the Company as of the
date hereof and shall be Domestic Subsidiary Guarantors hereunder; and

 

WHEREAS, in order to induce the Administrative Agent and the Lenders to enter
into the Credit Agreement and other Loan Documents and to induce the Lenders to
make the Loans and other financial accommodations as provided for in the Credit
Agreement, the Company, each Domestic Subsidiary Borrower and each Domestic
Subsidiary Guarantor (collectively, the “Domestic Guarantors”) have agreed to
guarantee payment of the Obligations.

 

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NOW, THEREFORE, in consideration of the premises and the covenants hereinafter
contained, and to induce Lenders to provide the Loans and other financial
accommodations under the Credit Agreement, it is agreed as follows:

 

1.                                      Guaranty.  Each Domestic Guarantor
hereby, jointly and severally, absolutely and unconditionally guarantees, as a
guarantee of payment and not merely as a guarantee of collection, prompt payment
when due, whether at stated maturity, upon acceleration or otherwise, and at all
times thereafter, of any and all existing and future Obligations to the
Administrative Agent, the Lenders, the Issuing Banks and the Affiliates of the
foregoing to whom Obligations are owed, and the respective successors,
endorsees, transferees and assigns of each of the foregoing (each a “Holder of
Obligations” and collectively the “Holders of Obligations”) (including all
renewals, extensions and modifications thereof and all costs, reasonable
attorneys’ fees and expenses incurred by the Holders of Obligations in
connection with the collection or enforcement thereof) (collectively, the
“Guaranteed Obligations” (provided, however, that the definition of “Guaranteed
Obligations” shall not create any guarantee by any Guarantor of (or grant of
security interest by any Guarantor to support, as applicable) any Excluded Swap
Obligations of such Guarantor for purposes of determining any obligations of any
Guarantor)).  This Guaranty shall not be affected by the genuineness, validity,
regularity or enforceability of the Guaranteed Obligations or any instrument or
agreement evidencing any Guaranteed Obligations, or by the existence, validity,
enforceability, perfection, or extent of any collateral therefor, or by any fact
or circumstance relating to the Guaranteed Obligations which might otherwise
constitute a defense to the obligations of any Guarantor under this Guaranty. 
Notwithstanding any provision herein contained to the contrary, each Guarantor’s
liability hereunder shall be limited to an amount not to exceed as of any date
of determination the greater of: (a) the net amount of all Loans and other
extensions of credit (including Letters of Credit) advanced to another Loan
Party under the Credit Agreement and directly or indirectly re-loaned or
otherwise transferred to, or incurred for the benefit of, such Guarantor, plus
interest thereon at the applicable rate specified in the Credit Agreement; or
(b) the amount which could be claimed by the Administrative Agent and the
Holders of Obligations from such Guarantor under this Guaranty without rendering
such claim voidable or avoidable under Section 548 of the Bankruptcy Code of the
United States or under any applicable state Uniform Fraudulent Transfer Act,
Uniform Fraudulent Conveyance Act or similar statute or common law.

 

2.                                      No Setoff or Deductions; Taxes. The
Guarantors hereby represent, warrant and jointly and severally agree that, as of
the date of this Guaranty, their obligations under this Guaranty are not subject
to any offsets or defenses against the Administrative Agent or the Holders of
Obligations or any other guarantor of the Guaranteed Obligations of any kind.
The Guarantors further jointly and severally agree that their obligations under
this Guaranty shall not be subject to any counterclaims, offsets or defenses
against the Administrative Agent or any Holder of Obligations or any other
guarantor of the Guaranteed Obligations of any kind which may arise in the
future.  In accordance with Section 2.17 of the Credit Agreement, all payments
required to be made by each Guarantor hereunder shall to the extent permitted by
applicable Laws be made to the Holders of Obligations free and clear of, and
without reduction or withholding for, any Taxes.  If any Guarantor shall be
required by the Code or any other applicable Law to deduct any Taxes from or in
respect of any sum payable hereunder, (a) to the extent that the withholding or
deduction is made on account of Indemnified Taxes or Other Taxes, the sum
payable shall be increased as much as shall be necessary so that after such
withholding or deduction has been made (including deductions applicable to
additional sums payable under this Section 2) the Holders of Obligations receive
an amount equal to the sum they would have received had no such deductions been
made, (b) such Guarantor shall make such deductions as are determined to be
required based upon the information and documentation received pursuant to
Section 2.17(f) of the Credit Agreement, and (c) such Guarantor shall timely pay
the full amount withheld or deducted to the relevant taxing or other authority
in accordance with the Code or such other applicable Law.  Upon the request of
the Administrative Agent, after the payment of such Taxes, each applicable
Guarantor shall furnish to the

 

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Administrative Agent the original or a certified copy of a receipt evidencing
payment thereof, or other evidence of such payment reasonably satisfactory to
the Administrative Agent.  Subject to Section 2.17(d) of the Credit Agreement,
each Guarantor shall jointly and severally indemnify and, within ten (10) days
after demand therefor, pay each Holder of Obligations for the full amount of
Indemnified Taxes or Other Taxes paid by any Holder of Obligations in respect of
any sum payable hereunder (including Indemnified Taxes or Other Taxes imposed or
asserted on or attributable to any amounts payable under this Section 2 by any
Holder of Obligations) and any liability (including penalties, interest and
reasonable expenses) arising therefrom or with respect thereto, whether or not
such Indemnified Taxes or Other Taxes were correctly or legally imposed or
asserted.  Each Guarantor shall be entitled to the benefits of
Section 2.17(g) as if it were a Borrower.

 

3.                                      No Termination.  This Guaranty is a
continuing and irrevocable guaranty of all Guaranteed Obligations now or
hereafter existing and shall remain in full force and effect until all
Guaranteed Obligations and any other amounts payable under this Guaranty are
indefeasibly paid and performed in full and any commitments of the Lenders or
facilities provided by the Lenders with respect to the Guaranteed Obligations
are terminated.  If at any time any payment of the principal of or interest on
any Loan, Obligation or any other amount payable by the Borrower or any other
party under the Credit Agreement, any Swap Contract, any Banking Services
Agreement or any other Loan Document (including a payment effected through
exercise of a right of setoff) is rescinded, or is or must be otherwise restored
or returned upon the insolvency, bankruptcy or reorganization of any Borrower or
otherwise (including pursuant to any settlement entered into by a Holder of
Obligations in its discretion), each of the Guarantors’ obligations hereunder
with respect to such payment shall be reinstated as though such payment had been
due but not made at such time.  Payment by Guarantors shall be made to the
Administrative Agent in immediately available funds in Dollars or, as
applicable, such other currency in which the related Guaranteed Obligations are
required to be paid pursuant to the Credit Agreement, and shall be credited and
applied to the Guaranteed Obligations; provided that, if currency control or
exchange regulations are imposed in the country which issues such currency with
the result that such currency (the “Original Currency”) no longer exists or the
relevant Guarantor is not able to make payment in such Original Currency, then
all payments to be made by such Guarantor hereunder in such currency shall
instead be made when due in Dollars in an amount equal to the Dollar Amount (as
of the date of payment) of such payment due, it being the intention of the
parties hereto that each Guarantor takes all risks of the imposition of any such
currency control or exchange regulations.

 

4.                                      Waiver of Notices.  Each Guarantor
waives notice of the acceptance of this Guaranty and of the extension or
continuation of the Guaranteed Obligations or any part thereof. Each Guarantor
further waives presentment, protest, notice, dishonor or default, demand for
payment and any other notices to which such Guarantor might otherwise be
entitled.

 

5.                                      Subrogation.  No Guarantor shall
exercise any right of subrogation, contribution or similar rights with respect
to any payments it makes under this Guaranty until all of the Guaranteed
Obligations and any amounts payable under this Guaranty are indefeasibly paid
and performed in full and any commitments of the Lenders or facilities provided
by the Lenders with respect to the Guaranteed Obligations are terminated.  If
any amounts are paid to any Guarantor in violation of the foregoing limitation,
then such amounts shall be held in trust for the benefit of the Holders of
Obligations and shall promptly be paid to the Administrative Agent and shall be
credited and applied to the Guaranteed Obligations, whether matured or
unmatured.

 

6.                                      Indemnification.  To the extent that any
Guarantor shall make a payment under this Guaranty (any such payment, a
“Guarantor Payment”) that, taking into account all other Guarantor Payments then
previously or concurrently made by any other Guarantor, exceeds the amount that
such Guarantor would otherwise have paid if each Guarantor had paid the
aggregate Guaranteed Obligations

 

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satisfied by such Guarantor Payment in the same proportion that such Guarantor’s
“Allocable Amount” (as defined below) (as determined immediately prior to such
Guarantor Payment) bore to the aggregate Allocable Amounts of each of the
Guarantors as determined immediately prior to the making of such Guarantor
Payment, then, following the indefeasible payment in full of all Guaranteed
Obligations and any other amounts payable under this Guaranty and the
termination of any commitments of the Lenders or facilities provided by the
Lenders with respect to the Guaranteed Obligations, such Guarantor shall be
entitled to receive contribution and indemnification payments from, and be
reimbursed by, each other Guarantor for the amount of such excess, pro rata
based upon their respective Allocable Amounts in effect immediately prior to
such Guarantor Payment.  As of any date of determination, the “Allocable Amount”
of any Guarantor shall be equal to the excess of the fair saleable value of the
property of such Guarantor over the total liabilities of such Guarantor
(including the maximum amount reasonably expected to become due in respect of
contingent liabilities, calculated, without duplication, assuming each other
Guarantor that is also liable for such contingent liability pays its ratable
share thereof), giving effect to all payments made by other Guarantors as of
such date in a manner to maximize the amount of such contributions. This
Section 6 is intended only to define the relative rights of the Guarantors and
nothing set forth in this Section 6 is intended to or shall impair the
obligations of the Guarantors, jointly and severally, to pay any amounts as and
when the same shall become due and payable in accordance with the terms of this
Guaranty.  The rights of the parties under this Section 6 shall be exercisable
upon the full and indefeasible payment of all Guaranteed Obligations and any
other amounts payable under this Guaranty and the termination of any commitments
of the Lenders or facilities provided by the Lenders with respect to the
Guaranteed Obligations.  The parties hereto acknowledge that the rights of
contribution and indemnification hereunder shall constitute assets of the
Guarantor or Guarantors to which such contribution and indemnification is owing.

 

7.                                      Waiver of Suretyship Defenses.  Each
Guarantor agrees that the Holders of Obligations may, at any time and from time
to time, and without notice to the Guarantor, make any agreement with any
Borrower or with any other person or entity liable on any of the Guaranteed
Obligations for the extension, renewal, payment, compromise, discharge or
release of the Guaranteed Obligations, or for any modification or amendment of
the terms thereof or of any instrument or agreement evidencing the Guaranteed
Obligations, all without in any way impairing, releasing, discharging or
otherwise affecting the obligations of such Guarantor under this Guaranty.  Each
Guarantor waives any defense arising by reason of any disability or other
defense of any Borrower or any other guarantor, or the cessation from any cause
whatsoever of the liability of any Borrower, or any claim that such Guarantor’s
obligations exceed or are more burdensome than those of any Borrower and waives
the benefit of any statute of limitations affecting the liability of such
Guarantor hereunder.  Each Guarantor waives any right to enforce any remedy
which any Holder of Obligations now has or may hereafter have against any
Borrower and waives any benefit of and any right to participate in any security
now or hereafter held by any Holder of Obligations.

 

8.                                      Exhaustion of Other Remedies Not
Required.  The obligations of each Guarantor hereunder are those of primary
obligor, and not merely as surety, and are independent of the Guaranteed
Obligations.  Each Guarantor waives diligence by the Holders of Obligations and
action on delinquency in respect of the Guaranteed Obligations or any part
thereof, including, without limitation any provisions of law requiring any
Holder of Obligations to exhaust any right or remedy or to take any action
against any Borrower, any other guarantor or any other person, entity or
property before enforcing this Guaranty against such Guarantor.

 

9.                                      Reinstatement.  Notwithstanding anything
in this Guaranty to the contrary, this Guaranty shall continue to be effective
or be reinstated, as the case may be, if at any time any payment of any portion
of the Guaranteed Obligations is revoked, terminated, rescinded or reduced or
must otherwise be restored or returned upon the insolvency, bankruptcy or
reorganization of any Borrower or any other

 

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person or entity or otherwise, as if such payment had not been made and whether
or not the Administrative Agent or any other Holder of Obligations is in
possession of or has released this Guaranty and regardless of any prior
revocation, rescission, termination or reduction.

 

10.                               Subordination.  Each Guarantor hereby
subordinates the payment of all obligations and indebtedness of any Loan Party
owing to such Guarantor, whether now existing or hereafter arising, including
but not limited to any obligation of any Loan Party to such Guarantor as
subrogee of the Holders of Obligations or resulting from such Guarantor’s
performance under this Guaranty, to the indefeasible payment in full of all
Guaranteed Obligations. Upon the occurrence of, and during the continuation of,
an Event of Default, if the Administrative Agent, on behalf of the Holders of
Obligations, so requests, any such obligation or indebtedness of any Loan Party
to such Guarantor shall be enforced and performance received by such Guarantor
as trustee for the Holders of Obligations and the proceeds thereof shall be paid
over to the Administrative Agent on account of the Guaranteed Obligations and
shall be credited and applied to the Guaranteed Obligations, whether matured or
unmatured, but without reducing or affecting in any manner the liability of any
Guarantor under this Guaranty.

 

11.                               Stay of Acceleration.  In the event that
acceleration of the time for payment of any of the Guaranteed Obligations is
stayed, upon the insolvency, bankruptcy or reorganization of any Borrower or any
other person or entity, or otherwise, all such amounts shall nonetheless be
payable by each Guarantor immediately upon demand by the Administrative Agent.

 

12.                               Expenses.  Each Guarantor shall pay on demand
all out-of-pocket expenses (including reasonable attorneys’ fees and expenses)
in any way relating to the enforcement or protection of the Holders’ of
Obligations rights under this Guaranty, including any incurred in the
preservation, protection or enforcement of any rights of the Holders of
Obligations in any case commenced by or against such Guarantor under Chapter 11
of the Bankruptcy Code of the United States or any similar or successor
statute.  The obligations of each Guarantor under the preceding sentence shall
survive termination of this Guaranty.

 

13.                               Amendments.  No provision of this Guaranty may
be waived, amended, supplemented or modified, except by a written instrument
executed by the Administrative Agent and each Guarantor.

 

14.                               No Waiver; Enforceability.  No failure by the
Holders of Obligations to exercise, and no delay in exercising, any right,
remedy or power hereunder shall operate as a waiver thereof; nor shall any
single or partial exercise of any right, remedy or power hereunder preclude any
other or further exercise thereof or the exercise of any other right.  The
remedies herein provided are cumulative and not exclusive of any remedies
provided by law or in equity.  The unenforceability or invalidity of any
provision of this Guaranty shall not affect the enforceability or validity of
any other provision herein. The obligations hereunder shall not be affected,
limited or impaired by any acts of any legislative body or governmental
authority affecting any Borrower, including but not limited to, any restrictions
on or regarding the conversion of currency or repatriation or control of funds
or any total or partial expropriation of any Borrower’s property, or by any
economic, political, regulatory or other events in the countries where such
Borrower is located.

 

15.                               Binding Effect; Assignment.  This Guaranty
shall (a) subject to Section 9.14 of the Credit Agreement, bind each Guarantor
and its successors and assigns; provided, that no Guarantor may assign its
rights or obligations under this Guaranty without the prior written consent of
each Lender (and any attempted assignment without such consent shall be void)
and (b) inure to the benefit of the Administrative Agent and the Holders of
Obligations and their respective successors and assigns and any Holder of
Obligations may, subject to the terms and conditions of the Credit Agreement,
without notice to the Guarantor and without affecting the Guarantor’s
obligations hereunder, assign or sell participations in

 

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the Guaranteed Obligations and this Guaranty, in whole or in part.  Each
Guarantor agrees that the Administrative Agent or any Holder of Obligations may,
subject to the terms and conditions of the Credit Agreement, disclose to any
prospective purchaser of all or part of the Guaranteed Obligations any and all
information in such Person’s possession concerning such Guarantor, this Guaranty
and any security for this Guaranty.

 

16.                               Condition of the Borrowers.  Each Guarantor
acknowledges and agrees that it has the sole responsibility for, and has
adequate means of, obtaining from each Borrower such information concerning the
financial condition, business and operations of such Borrower as such Guarantor
requires, and that neither the Administrative Agent nor any Holder of
Obligations has any duty, and such Guarantor is not relying on any Holder of
Obligations at any time, to disclose to such Guarantor any information relating
to the business, operations or financial condition of any Borrower.

 

17.                               Setoff.  If and to the extent any payment is
not made when due hereunder, each Holder of Obligations and each of their
respective Affiliates is hereby authorized at any time and from time to time, to
the fullest extent permitted by applicable law, to set off and apply any and all
deposits (general or special, time or demand, provisional or final, in whatever
currency) at any time held and other obligations (in whatever currency) at any
time owing by such Holder of Obligations or any such Affiliate to or for the
credit or the account of any Guarantor against any and all of the obligations of
such Guarantor now or hereafter existing under this Guaranty or any other Loan
Document to such Holder of Obligations, irrespective of whether or not such
Holder of Obligations shall have made any demand under this Guaranty or any
other Loan Document and although such obligations of such Guarantor may be
contingent or unmatured or are owed to a branch or office of such Holder of
Obligations different from the branch or office holding such deposit or
obligated on such indebtedness.  The rights of each Holder of Obligations and
their respective Affiliates under this Section 17 are in addition to other
rights and remedies (including other rights of setoff) that such Holder of
Obligations or its respective Affiliates may have.  Each Holder of Obligations
agrees to notify the Company and the Administrative Agent promptly after any
such setoff and application; provided, that the failure to give such notice
shall not affect the validity of such setoff and application.

 

18.                               Representations and Warranties.  Each
Guarantor represents and warrants that:

 

(a)                                 Such Guarantor (i) is duly organized or
formed and validly existing and (ii) is in good standing (to the extent such
concept is applicable to such entity), in each case under the Laws of the
jurisdiction of its incorporation or organization;

 

(b)                                 Such Guarantor has all requisite power and
authority and all requisite governmental licenses, authorizations, consents and
approvals to (i) own or lease its assets and carry on its business and
(ii) execute, deliver and perform its obligations under this Guaranty; and

 

(c)                                  The making and performance of this Guaranty
by such Guarantor have been duly authorized by all necessary corporate or other
organizational action, and do not and will not (i) contravene the terms of any
of such Guarantor’s Organization Documents; (ii) result in the creation of any
Lien under (x) any Contractual Obligation to which such Guarantor is a party or
affecting such Guarantor or the properties of such Guarantor or any of its
Subsidiaries or (y) any order, injunction, writ or decree of any Governmental
Authority or any arbitral award to which such Guarantor or its property is
subject; (iii) conflict with or result in any breach or contravention of, or
require any payment to be made under (x) any material Contractual Obligation to
which such Guarantor is a party or affecting such Guarantor or the properties of
such Guarantor or any of its Subsidiaries or (ii) any material order,
injunction, writ or decree of

 

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any Governmental Authority or any material arbitral award to which such
Guarantor or its property is subject; or (iv) violate in any material respect
any Law;

 

except in each case referred to in clause (a)(ii) or (b)(i) above, to the extent
that failure to do so could not reasonably be expected to have a Material
Adverse Effect.

 

19.                               Foreign Currency.  If any claim arising under
or related to this Guaranty is reduced to judgment denominated in a currency
(the “Judgment Currency”) other than the currencies in which the applicable
Guaranteed Obligations are denominated (collectively the “Obligations
Currency”), the judgment shall be for the equivalent in the Judgment Currency of
the amount of the claim denominated in the Obligations Currency included in the
judgment, determined as of the date of judgment.  The equivalent of any
Obligations Currency amount in any Judgment Currency shall be calculated at the
Exchange Rate for the purchase of the Obligations Currency with the Judgment
Currency. Each Guarantor shall indemnify the Holders of Obligations and hold the
Holders of Obligations harmless from and against all loss or damage resulting
from any change in exchange rates between the date any claim is reduced to
judgment and the date of payment thereof by any Guarantor. If the Administrative
Agent so notifies the Guarantors in writing, at the Administrative Agent’s sole
and absolute discretion, payments under this Guaranty shall be the Dollar Amount
of the Guaranteed Obligations or any portion thereof, determined as of the date
payment is made.

 

20.                               Further Assurances.  Each Guarantor agrees,
upon the written request of the Administrative Agent, to execute and deliver to
the Administrative Agent, from time to time, any additional instruments or
documents reasonably considered necessary by Administrative Agent to cause this
Guaranty to be, become or remain valid and effective in accordance with its
terms.

 

21.                               Notices.  Except as otherwise provided herein,
whenever it is provided herein that any notice, demand, request, consent,
approval, declaration or other communication shall or may be given to or served
upon any of the parties by any other party, or whenever any of the parties
desires to give and serve upon any other party any communication with respect to
this Guaranty, each such notice, demand, request, consent, approval, declaration
or other communication shall be in writing and shall be given in the manner, and
deemed received, as provided for in the Credit Agreement, with respect to the
Administrative Agent at its notice address therein and with respect to any
Guarantor at the address set forth for the Company in the Credit Agreement or
such other address or telecopy number as such party may hereafter specify for
such purpose by notice to the Administrative Agent as provided for in the Credit
Agreement.

 

22.                               GOVERNING LAW.  THIS GUARANTY SHALL BE
GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW
YORK.

 

23.                               SUBMISSION TO JURISDICTION.  EACH GUARANTOR
IRREVOCABLY AND UNCONDITIONALLY SUBMITS, FOR ITSELF AND ITS PROPERTY, TO THE
EXCLUSIVE JURISDICTION OF THE SUPREME COURT OF THE STATE OF NEW YORK SITTING IN
NEW YORK COUNTY, BOROUGH OF MANHATTAN, AND OF THE UNITED STATES DISTRICT COURT
FOR THE SOUTHERN DISTRICT OF NEW YORK, AND ANY APPELLATE COURT FROM ANY
THEREOF, IN ANY ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO THIS GUARANTY
OR ANY OTHER LOAN DOCUMENT, OR FOR RECOGNITION OR ENFORCEMENT OF ANY JUDGMENT,
AND EACH OF THE PARTIES HERETO IRREVOCABLY AND UNCONDITIONALLY AGREES THAT ALL
CLAIMS IN RESPECT OF ANY SUCH ACTION OR PROCEEDING MAY BE HEARD AND DETERMINED
IN SUCH NEW YORK STATE COURT OR, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE
LAW, IN SUCH FEDERAL COURT.  EACH OF THE PARTIES HERETO AGREES THAT A FINAL
JUDGMENT IN ANY

 

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SUCH ACTION OR PROCEEDING SHALL BE CONCLUSIVE AND MAY BE ENFORCED IN OTHER
JURISDICTIONS BY SUIT ON THE JUDGMENT OR IN ANY OTHER MANNER PROVIDED BY LAW. 
NOTHING IN THIS GUARANTY OR IN ANY OTHER LOAN DOCUMENT SHALL AFFECT ANY RIGHT
THAT THE ADMINISTRATIVE AGENT OR ANY HOLDER OF OBLIGATIONS MAY OTHERWISE HAVE TO
BRING ANY ACTION OR PROCEEDING RELATING TO THIS GUARANTY OR ANY OTHER LOAN
DOCUMENT AGAINST ANY GUARANTOR OR ITS PROPERTIES IN THE COURTS OF ANY
JURISDICTION.

 

24.                               WAIVER OF VENUE; SERVICE OF PROCESS.  EACH
GUARANTOR IRREVOCABLY AND UNCONDITIONALLY WAIVES, TO THE FULLEST EXTENT
PERMITTED BY APPLICABLE LAW, ANY OBJECTION THAT IT MAY NOW OR HEREAFTER HAVE TO
THE LAYING OF VENUE OF ANY ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO
THIS GUARANTY OR ANY OTHER LOAN DOCUMENT IN ANY COURT REFERRED TO IN
SECTION 23.  EACH OF THE PARTIES HERETO HEREBY IRREVOCABLY WAIVES, TO THE
FULLEST EXTENT PERMITTED BY APPLICABLE LAW, THE DEFENSE OF AN INCONVENIENT FORUM
TO THE MAINTENANCE OF SUCH ACTION OR PROCEEDING IN ANY SUCH COURT.  EACH PARTY
HERETO IRREVOCABLY CONSENTS TO SERVICE OF PROCESS IN THE MANNER PROVIDED FOR
NOTICES IN SECTION 21.  NOTHING IN THIS GUARANTY WILL AFFECT THE RIGHT OF ANY
PARTY HERETO TO SERVE PROCESS IN ANY OTHER MANNER PERMITTED BY APPLICABLE LAW.

 

25.                               WAIVER OF JURY TRIAL.  EACH PARTY HERETO
HEREBY IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW,
ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY IN ANY LEGAL PROCEEDING DIRECTLY OR
INDIRECTLY ARISING OUT OF OR RELATING TO THIS GUARANTY OR ANY OTHER LOAN
DOCUMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY (WHETHER BASED ON
CONTRACT, TORT OR ANY OTHER THEORY).  EACH PARTY HERETO (A) CERTIFIES THAT NO
REPRESENTATIVE, AGENT OR ATTORNEY OF ANY OTHER PERSON HAS REPRESENTED, EXPRESSLY
OR OTHERWISE, THAT SUCH OTHER PERSON WOULD NOT, IN THE EVENT OF LITIGATION, SEEK
TO ENFORCE THE FOREGOING WAIVER AND (B) ACKNOWLEDGES THAT IT AND THE OTHER
PARTIES HERETO HAVE BEEN INDUCED TO ENTER INTO THIS GUARANTY AND THE OTHER LOAN
DOCUMENTS BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS
SECTION 25.

 

26.                               Headings.  Section headings in this Guaranty
are for convenience of reference only and shall not govern the interpretation of
any provision of this Guaranty.

 

27.                               Additional Guarantors.  Certain Subsidiaries
of the Company shall be required to become, and the Company will promptly cause
each such Subsidiary to become, in accordance with the Credit Agreement, a
Guarantor and be made a party to this Guaranty pursuant to this Section by the
execution and delivery by the Administrative Agent and such Subsidiary of a
supplement in the form of Annex I hereto and such additional documentation and
legal opinions as the Administrative Agent may reasonably request.  The
execution and delivery of any such instrument shall not require the consent of
any Guarantor hereunder.  The rights and obligations of each Guarantor hereunder
shall remain in full force and effect notwithstanding the addition of any new
Guarantor as a party to this Guaranty.  Notwithstanding anything to the contrary
in this Guaranty and pursuant to Section 5.14(c) of the Credit Agreement, no
(x) Foreign Subsidiary that is a CFC, (y) Subsidiary substantially all of the
assets of which consist of Equity Interests or securities in one or more Foreign
Subsidiaries that are CFCs, so long as such Subsidiary does not conduct any
business or activities other than the ownership of such Equity Interests and/or
securities and does not incur and is not otherwise liable for any Indebtedness
or other liabilities or

 

8

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(z) Subsidiary whose Equity Interests are beneficially owned directly or
indirectly by a Foreign Subsidiary that is a CFC, shall be required to become a
Guarantor.

 

28.                               Counterparts.  This Guaranty may be executed
in counterparts (and by different parties hereto in different counterparts),
each of which shall constitute an original, but all of which when taken together
shall constitute a single contract.  Delivery of an executed counterpart of a
signature page of this Guaranty by telecopy, e-mailed .pdf or any other
electronic means that reproduces an image of the actual executed signature
page shall be effective as delivery of a manually executed counterpart of this
Agreement.  The words “execution,” “signed,” “signature,” “delivery,” and words
of like import in or relating to any document to be signed in connection with
this Guaranty and the transactions contemplated hereby shall be deemed to
include Electronic Signatures, deliveries or the keeping of records in
electronic form, each of which shall be of the same legal effect, validity or
enforceability as a manually executed signature, physical delivery thereof or
the use of a paper-based recordkeeping system, as the case may be, to the extent
and as provided for in any applicable law, including the Federal Electronic
Signatures in Global and National Commerce Act, the New York State Electronic
Signatures and Records Act, or any other similar state laws based on the Uniform
Electronic Transactions Act.

 

29.                               Termination of Guarantors.  The obligations of
any Guarantor under this Guaranty shall automatically terminate in accordance
with Section 9.14 of the Credit Agreement.

 

30.                               Keepwell.  Each Qualified ECP Guarantor hereby
jointly and severally absolutely, unconditionally and irrevocably undertakes to
provide such funds or other support as may be needed from time to time by each
other Guarantor to honor all of its obligations under this Guaranty in respect
of Specified Swap Obligations (provided, however, that each Qualified ECP
Guarantor shall only be liable under this Section 30 for the maximum amount of
such liability that can be hereby incurred without rendering its obligations
under this Section 30 or otherwise under this Guaranty voidable under applicable
law relating to fraudulent conveyance or fraudulent transfer, and not for any
greater amount).  The obligations of each Qualified ECP Guarantor under this
Section 30 shall remain in full force and effect until a discharge of such
Qualified ECP Guarantor’s Guaranteed Obligations in accordance with the terms
hereof and the other Loan Documents.  Each Qualified ECP Guarantor intends that
this Section 30 constitute, and this Section 30 shall be deemed to constitute, a
“keepwell, support, or other agreement” for the benefit of each other Guarantor
for all purposes of Section 1a(18)(A)(v)(II) of the Commodity Exchange Act.  As
used herein, “Qualified ECP Guarantor” means, in respect of any Specified Swap
Obligation, each Guarantor that has total assets exceeding $10,000,000 at the
time the relevant Guarantee or grant of the relevant security interest becomes
or would become effective with respect to such Specified Swap Obligation or such
other Person as constitutes an ECP and can cause another Person to qualify as an
ECP at such time by entering into a keepwell under Section 1a(18)(A)(v)(II) of
the Commodity Exchange Act.

 

[Remainder of page intentionally left blank.]

 

9

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IN WITNESS WHEREOF, the parties hereto have executed and delivered this Guaranty
as of the date first above written.

 

 

 

 

WATTS WATER TECHNOLOGIES, INC.

 

 

 

 

 

 

By:

/s/ Timothy M. MacPhee

 

Name: Timothy M. MacPhee

 

Title: Treasurer

 

Signature Page to Guaranty

 

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INITIAL SUBSIDIARY GUARANTORS:

 

 

 

 

 

WATTS REGULATOR CO.

 

 

 

 

 

 

By:

/s/ Timothy M. MacPhee

 

Name: Timothy M. MacPhee

 

Title: Treasurer

 

 

 

DORMONT MANUFACTURING COMPANY

 

 

 

 

 

 

By:

/s/ Timothy M. MacPhee

 

Name: Timothy M. MacPhee

 

Title: Treasurer

 

 

 

 

 

WATTS WATER QUALITY AND CONDITIONING PRODUCTS, INC.

 

 

 

 

 

 

By:

/s/ Timothy M. MacPhee

 

Name: Timothy M. MacPhee

 

Title: Treasurer

 

 

 

 

 

AERCO INTERNATIONAL, INC.

 

 

 

 

 

 

By:

/s/ Timothy M. MacPhee

 

Name: Timothy M. MacPhee

 

Title: Treasurer

 

Signature Page to Guaranty

 

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ACKNOWLEDGED AND AGREED:

 

 

 

JPMORGAN CHASE BANK, N.A., as

 

Administrative Agent

 

 

 

 

 

 

By:

/s/ Peter M. Killea

 

Name: Peter M. Killea

 

Title: Executive Director

 

 

Signature Page to Guaranty

 

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ANNEX I TO
GUARANTY

 

Reference is hereby made to the Guaranty (as from time to time amended,
restated, supplemented or otherwise modified, the “Guaranty”), dated as of
February 12, 2016, made by Watts Water Technologies, Inc., a Delaware
corporation (the “Company”), certain Subsidiaries of the Company (collectively,
the “Initial Subsidiary Guarantors” and, together with the Company and any
additional Subsidiaries of the Company that become parties to the Guaranty by
executing a Supplement thereto in the form attached thereto as Annex I, the
“Guarantors”), in favor of JPMorgan Chase Bank, N.A., as Administrative Agent
(in such capacity, the “Administrative Agent”).  Each capitalized term used
herein and not defined herein shall have the meaning given to it in the
Guaranty.

 

By its execution below, the undersigned, [NAME OF NEW GUARANTOR], a
[                                    ], agrees to become, and does hereby
become, a Guarantor under the Guaranty and agrees to be bound by such Guaranty
as if originally a party thereto.  By its execution below, the undersigned
represents and warrants that all of the representations and warranties contained
in Section 18 of the Guaranty are true and correct in all respects as of the
date hereof.  The undersigned shall constitute a Domestic Subsidiary Guarantor
for all purposes under the Guaranty and the other Loan Documents.

 

IN WITNESS WHEREOF, [NAME OF NEW GUARANTOR], a [                       ] has
executed and delivered this Annex I counterpart to the Guaranty as of this
                   day of              ,     .

 

 

 

 

[NAME OF NEW GUARANTOR]

 

 

 

 

 

 

By:

 

 

Name:

 

Title:

 

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