GUARANTEE AGREEMENT
Exhibit 10.10
GUARANTEE AGREEMENT (this “Agreement”) dated as of February 28, 2008, among each of
the subsidiaries of SOLUTIA INC., a Delaware corporation (the “Borrower”), listed on
Schedule I hereto (each such subsidiary individually, a “Guarantor” and
collectively, the “Guarantors”) in favor of CITIBANK, N.A., as administrative agent for the
Lenders (as defined below) (in such capacity, together with its successors and assigns in such
capacity, the “Administrative Agent”).
Reference is made to the Credit Agreement dated as of February 28, 2008 (as amended, restated,
amended and restated, supplemented or otherwise modified from time to time, the “Bridge Credit
Agreement”), among the Borrower; the lending institutions from time to time parties thereto
(the “Lenders”); the Administrative Agent; XXXXXXX XXXXX CREDIT PARTNERS L.P.
(“GSCP”), as syndication agent; DEUTSCHE BANK AG, NEW YORK BRANCH, as documentation agent;
and CITIGROUP GLOBAL MARKETS INC., GSCP and DEUTSCHE BANK SECURITIES INC., as joint lead arrangers
and joint bookrunners. Capitalized terms used herein without definition shall have the meanings
assigned to such terms in the Bridge Credit Agreement.
The Lenders have agreed to make Loans to the Borrower pursuant to, and upon the terms and
subject to the conditions specified in, the Bridge Credit Agreement. Each of the Guarantors is a
direct or indirect Restricted Subsidiary of the Borrower and acknowledges that it will derive
substantial benefit from the making of the Loans by the Lenders. The obligations of the Lenders to
make Loans are conditioned on, among other things, the execution and delivery by the Guarantors of
a Guarantee Agreement in the form hereof. As consideration therefor and in order to induce the
Lenders to make Loans, the Guarantors are willing to execute this Agreement.
Accordingly, the parties hereto agree as follows:
SECTION 1. Guarantee. Each Guarantor unconditionally and irrevocably guarantees,
jointly with the other Guarantors and severally, as a primary obligor and not merely as a surety,
to the Administrative Agent and each of the Lenders and their respective successors and permitted
assigns the full payment when due (whether at stated maturity or otherwise) of the Obligations (the
“Guaranteed Obligations”). Each Guarantor further agrees that the Guaranteed Obligations
may be extended or renewed, in whole or in part, without notice to or further assent from it, and
that it will remain bound upon its guarantee under this Agreement notwithstanding any extension or
renewal of any Obligation. By execution of this Agreement, each Guarantor agrees to be bound by
the terms of the Bridge Credit Agreement as a Subsidiary Guarantor as if it were a party to the
Bridge Credit Agreement.
SECTION 2. Guaranteed Obligations Not Waived. The obligations of the Guarantors under
Section 1 shall constitute a guaranty of payment when due and not of collection and to the
fullest extent permitted by applicable law, are absolute, irrevocable and unconditional, joint and
several, irrespective of the value, genuineness, validity, regularity or enforceability of the
Guaranteed Obligations of the Borrower under the Bridge Credit Agreement or any other agreement or
instrument referred to herein or therein (including interest, fees, expenses and other charges that
continue to accrue after the commencement of any bankruptcy or other similar proceeding, whether or
not such interest, fees, expenses and other charges are allowed or allowable under any state,
federal or foreign bankruptcy, insolvency, reorganization or other law affecting the rights of
credits generally by or against the Borrower, or in any such bankruptcy or other similar
proceeding), or any substitution, release or exchange of any other guarantee of or security for any
of the Guaranteed Obligations, and, irrespective of any other circumstance whatsoever that might
otherwise constitute a legal or equitable discharge or defense of a surety or Guarantor (except for
payment in full). Without limiting the generality of the foregoing, it is agreed that the
occurrence of
any one or
more of the following shall not alter or impair the liability of the Guarantors hereunder
which shall remain absolute, irrevocable and unconditional under any and all circumstances as
described above to the extent permitted by applicable law:
(i) at any time or from time to time, without notice to the Guarantors, the time for
any performance of or compliance with any of the Guaranteed Obligations shall be extended,
or such performance or compliance shall be waived;
(ii) any of the acts mentioned in any of the provisions of this Agreement or the Bridge
Credit Agreement or any other agreement or instrument referred to herein or therein shall be
done or omitted;
(iii) the maturity of any of the Guaranteed Obligations shall be accelerated, or any of
the Guaranteed Obligations shall be amended in any respect, or any right under the Loan
Documents or any other agreement or instrument referred to therein shall be amended or
waived in any respect or any other guarantee of any of the Guaranteed Obligations shall be
released or exchanged in whole or in part or otherwise dealt with; or
(iv) the release of any other Guarantor pursuant to Section 9(b).
The Guarantors hereby expressly waive, to the extent permitted by applicable law, diligence,
presentment, demand of payment, protest and all notices whatsoever, and any requirement that the
Administrative Agent or any Lender exhaust any right, power or remedy or proceed against the
Borrower under this Agreement or the Bridge Credit Agreement or any other agreement or instrument
referred to herein or therein, or against any other Person under any other guarantee of, or
security for, any of the Guaranteed Obligations. The Guarantors waive, to the extent permitted by
applicable law, any and all notice of the creation, renewal, extension, waiver, termination or
accrual of any of the Guaranteed Obligations and notice of or proof of reliance by the
Administrative Agent or any Lender upon this Agreement or acceptance of this Agreement, and the
Guaranteed Obligations, and any of them, shall conclusively be deemed to have been created,
contracted or incurred in reliance upon this Agreement and the guarantees contained herein, and all
dealings between the Borrower, the Administrative Agent and the Lenders shall likewise be
conclusively presumed to have been had or consummated in reliance upon this Agreement. This
Agreement shall be construed as a continuing, absolute, irrevocable and unconditional guarantee of
payment without regard to any right of offset with respect to the Guaranteed Obligations at any
time or from time to time held by the Administrative Agent or the Lenders, and the obligations and
liabilities of the Guarantors hereunder shall not be conditioned or contingent upon the pursuit by
the Administrative Agent or Lenders or any other Person at any time of any right or remedy against
Borrower or against any other Person which may be or become liable in respect of all or any part of
the Guaranteed Obligations or against any guarantee therefor or right of offset with respect
thereto. This Agreement shall remain in full force and effect and be binding in accordance with
and to the extent of its terms upon the Guarantors and the successors and permitted assigns
thereof, and shall inure to the benefit of the Administrative Agent and the Lenders, and their
respective successors and permitted assigns.
SECTION 3. Guarantee of Payment. Each Guarantor hereby jointly and severally agrees
that its guarantee constitutes a guarantee of payment when due and not of collection of the
Guaranteed Obligations, and waives, to the extent permitted by applicable law, any right to require
that any resort be had by the Administrative Agent or any Lender to any balance of any deposit
account or credit on the books of the Administrative Agent or any Lender in favor of the Borrower
or any other Person.
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SECTION 4. No Discharge or Diminishment of Guarantee. The obligations of each
Guarantor hereunder shall not be subject to any reduction, limitation, impairment or termination
for any reason (other than the payment in full in cash of the Guaranteed Obligations (other than contingent
indemnification obligations)), including any claim of waiver, release, surrender, alteration or
compromise of any of the Guaranteed Obligations, and shall not be subject to (to the extent
permitted by applicable law) any defense (other than payment in full in cash of the Guaranteed
Obligations (other than contingent indemnification obligations)) or setoff, counterclaim,
recoupment or termination whatsoever by reason of the invalidity, illegality or unenforceability of
the Guaranteed Obligations or otherwise. Without limiting the generality of the foregoing, the
obligations of each Guarantor hereunder shall not be discharged or impaired or otherwise affected
by the failure of the Administrative Agent or any Lender to assert any claim or demand or to
enforce any remedy under the Bridge Credit Agreement, any other Loan Document or any other
agreement, by any waiver or modification of any provision of any thereof, by any default, failure
or delay, willful or otherwise, in the performance of the Guaranteed Obligations, or by any other
act or omission that may or might in any manner or to any extent vary the risk of any Guarantor or
that would otherwise operate as a discharge of each Guarantor as a matter of law or equity (other
than the payment in full in cash of all the Guaranteed Obligations (other than contingent
indemnification obligations)).
SECTION 5. Defenses of Borrower Waived. To the fullest extent permitted by applicable
law, each of the Guarantors waives any defense based on or arising out of any defense of any Loan
Party or the unenforceability of the Guaranteed Obligations or any part thereof from any cause, or
the cessation from any cause of the liability of any Loan Party, other than the payment in full in
cash of the Guaranteed Obligations (other than contingent indemnification obligations). The
Administrative Agent and the Lenders may, at their election, compromise or adjust any part of the
Guaranteed Obligations, make any other accommodation with any Loan Party or any other guarantor or
exercise any other right or remedy available to them against any Loan Party or any other guarantor,
without affecting or impairing in any way the liability of any Guarantor hereunder except to the
extent the Guaranteed Obligations have been fully paid in cash (other than contingent
indemnification obligations). To the extent permitted by applicable law, each of the Guarantors
waives any defense arising out of any such election even though such election operates, pursuant to
applicable law, to impair or to extinguish any right of reimbursement or subrogation or other right
or remedy of such Guarantor against any Loan Party or any other Guarantor or guarantor, as the case
may be, or any security.
SECTION 6. Agreement to Pay; Subordination. In furtherance of the foregoing and not
in limitation of any other right that the Administrative Agent or any Lender has at law or in
equity against any Guarantor by virtue hereof, upon the failure of any Loan Party to pay any
Obligation when and as the same shall become due, whether at maturity, by acceleration, after
notice of prepayment or otherwise, promptly upon notice from the Administrative Agent each
Guarantor hereby promises to and will forthwith pay, or cause to be paid, to the Administrative
Agent or such Lender as designated thereby in cash or the amount of such unpaid Guaranteed
Obligations. Upon payment by any Guarantor of any sums to the Administrative Agent or any Lender
as provided above, all rights of such Guarantor against any Loan Party arising as a result thereof
by way of right of subrogation, contribution, reimbursement, indemnity or otherwise shall in all
respects be subordinate and junior in right of payment to the prior payment in full in cash of all
the Guaranteed Obligations (other than contingent indemnification obligations). In addition, any
indebtedness of any Loan Party now or hereafter held by any Guarantor is hereby subordinated in
right of payment to the prior payment in full in cash of the Guaranteed Obligations (other than
contingent indemnification obligations). If any amount shall erroneously be paid to any Guarantor
on account of (i) such subrogation, contribution, reimbursement, indemnity or similar right or
(ii) any such indebtedness of any Loan Party, such amount shall be held for the benefit of the
Lenders and shall forthwith be paid to the Administrative Agent to be credited against the payment
of the Guaranteed Obligations, whether matured or unmatured, in accordance with the terms of the
Loan Documents.
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SECTION 7. Information. Each of the Guarantors assumes all responsibility for being
and keeping itself informed of each other Loan Party’s financial condition and assets, and of all
other circumstances bearing upon the risk of nonpayment of the Guaranteed Obligations and the nature,
scope and extent of the risks that such Guarantor incurs hereunder, and agrees that neither the
Administrative Agent nor any of the Lenders will have any duty to advise any of the Guarantors of
information known to it or any of them regarding such circumstances or risks.
SECTION 8. Representations and Warranties. Each of the Guarantors represents and
warrants as to itself that all representations and warranties relating to it contained in the
Bridge Credit Agreement are true and correct (or true and correct in all material respects if not
otherwise qualified by materiality or a Material Adverse Effect) as of the date hereof (unless
expressly stated to relate to an earlier date, in which case such representations and warranties
shall be true and correct (or true and correct in all material respects if not otherwise qualified
by materiality or a Material Adverse Effect) as of such earlier date).
SECTION 9. Termination. (a) The Guarantees made hereunder (i) shall automatically
terminate when all the Guaranteed Obligations (other than contingent indemnification obligations)
have been paid in full in cash and (ii) shall continue to be effective or be reinstated, as the
case may be, if at any time any payment in respect thereof, of any Obligation is rescinded or must
otherwise be restored by the Administrative Agent or any Lender or any Guarantor upon the
bankruptcy or reorganization of the Borrower, any Guarantor or otherwise. In connection with any
termination referred to above, the Administrative Agent shall promptly execute and deliver to such
Guarantor or Guarantor’s designee, at such Guarantor’s expense, any documents or instruments which
such Guarantor shall reasonably request from time to time in writing to evidence such termination
and release.
(b) If the Equity Interests of a Guarantor are sold, transferred or otherwise disposed of to a
Person that is not an Affiliate pursuant to a transaction permitted by Section 6.05 of the Bridge
Credit Agreement that results in such Guarantor ceasing to be a Subsidiary, or upon the
effectiveness of any written consent pursuant to Section 9.08 of the Bridge Credit Agreement to the
release of the guarantee granted by such Guarantor hereby, such Guarantor shall be automatically
released from its obligations under this Agreement without further action. In connection with such
release, the Administrative Agent shall promptly execute and deliver to such Guarantor, at such
Guarantor’s expense, all documents that such Guarantor shall reasonably request to evidence such
termination or release. Any execution and delivery of documents pursuant to this Section 9(b)
shall be without recourse to or warranty by the Administrative Agent.
SECTION 10. Successors and Assigns; Several Agreement. (a) This Agreement shall be
binding upon each Guarantor and their respective permitted successors and assigns, and shall inure
to the benefit of such Guarantor, the Administrative Agent and the Lenders and their respective
permitted successors and assigns, except that no Guarantor shall have the right to assign or
transfer its rights or obligations hereunder or any interest herein (and any such attempted
assignment or transfer shall be void) except as permitted by the Bridge Credit Agreement.
(b) This Agreement shall be construed as a separate agreement with respect to each Guarantor
and may be amended, modified, supplemented, waived or released with respect to any Guarantor
without the approval of any other Guarantor and without affecting the obligations of any other
Guarantor hereunder.
SECTION 11. Waivers; Amendment. (a) No failure or delay of the Administrative Agent
or any Lender in exercising any power or right hereunder shall operate as a waiver thereof, nor
shall any single or partial exercise of any such right or power, or any abandonment or
discontinuance of steps to enforce such a right or power, preclude any other or further exercise
thereof or the exercise of any other right or power. The rights and remedies herein provided are
cumulative, may be exercised singly or concurrently and are not exclusive of any rights or remedies
provided by law or in the other Loan Docu-
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ments. No waiver of any provisions of this Agreement or any other Loan Document or consent to
any departure by any Guarantor therefrom shall in any event be effective unless the same shall be
permitted by paragraph (b) below, and then such waiver or consent shall be effective only in the
specific instance and for the purpose for which given. No notice to or demand on any Guarantor in
any case shall entitle such Guarantor or any other Guarantor to any other or further notice or
demand in similar or other circumstances.
(b) Neither this Agreement nor any provision hereof may be waived, amended or modified except
pursuant to an agreement or agreements in writing entered into in accordance with Section 9.08 of
the Bridge Credit Agreement.
SECTION 12. Governing Law. THIS AGREEMENT SHALL BE CONSTRUED IN ACCORDANCE WITH AND
GOVERNED BY THE LAWS OF THE STATE OF NEW YORK.
SECTION 13. Notices. All communications and notices hereunder shall (except as
otherwise expressly permitted herein) be in writing and given as provided in Section 9.01 of the
Bridge Credit Agreement.
SECTION 14. Survival of Agreement; Severability. (a) All covenants, agreements,
representations and warranties made by any Guarantor herein and in the certificates or other
instruments prepared or delivered in connection with or pursuant to this Agreement or any other
Loan Document shall be considered to have been relied upon by the Administrative Agent and the
Lenders and shall survive the making by the Lenders of the Loans, regardless of any investigation
made by the Lenders or on their behalf, and shall continue in full force and effect until this
Agreement shall terminate.
(b) In the event any one or more of the provisions contained in this Agreement should be held
invalid, illegal or unenforceable in any respect, the validity, legality and enforceability of the
remaining provisions contained herein shall not in any way be affected or impaired thereby (it
being understood that the invalidity of a particular provision in a particular jurisdiction shall
not in and of itself affect the validity of such provision in any other jurisdiction). The parties
shall endeavor in good faith negotiations to replace the invalid, illegal or unenforceable
provisions with valid provisions the economic effect of which comes as close as possible to that of
the invalid, illegal or unenforceable provisions.
SECTION 15. Counterparts. This Agreement may be executed in two or more counterparts,
each of which shall constitute an original but all of which when taken together shall constitute a
single contract (subject to Section 10) and shall become effective as provided in Section 10.
Delivery of an executed signature page to this Agreement by facsimile or other electronic
transmission shall be effective as delivery of a manually executed counterpart hereof.
SECTION 16. Rules of Interpretation; Headings. (a) The rules of interpretation
specified in Section 1.03 of the Bridge Credit Agreement shall be applicable to this Agreement.
(b) Section headings used herein are for the purpose of reference only, are not part of this
Agreement and are not to affect the construction of, or to be taken into consideration in
interpreting this Agreement.
SECTION 17. Jurisdiction; Consent to Service of Process. (a) Each party hereto
hereby irrevocably and unconditionally submits, for itself and its property, to the nonexclusive
jurisdiction of any New York State court or Federal court of the United States of America 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 Agreement or the other Loan Documents, or for
recognition or enforcement of any judgment, and
each of
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the parties hereto hereby 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 extent permitted by law, in such Federal court. Each of the parties hereto agrees that
a final judgment in any 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
Agreement shall affect any right that the Administrative Agent or any Lender may otherwise have to
bring any action or proceeding relating to this Agreement or the other Loan Documents against any
Guarantor or its properties in the courts of any jurisdiction.
(b) Each party hereto hereby irrevocably and unconditionally waives, to the fullest extent it
may legally and effectively do so, any objection which it may now or hereafter have to the laying
of venue of any suit, action or proceeding arising out of or relating to this Agreement or the
other Loan Documents in any New York State or Federal court referred to in paragraph (a) of this
Section. Each of the parties hereto hereby irrevocably waives, to the fullest extent permitted by
law, the defense of an inconvenient forum to the maintenance of such action or proceeding in any
such court.
(c) Each party to this Agreement irrevocably consents to service of process in the manner
provided for in Section 9.15 of the Bridge Credit Agreement. Nothing in this Agreement will affect
the right of any party to this Agreement to serve process in any other manner permitted by law.
SECTION 18. WAIVER OF JURY TRIAL. EACH PARTY HERETO HEREBY WAIVES, TO THE FULLEST
EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY
LITIGATION DIRECTLY OR INDIRECTLY ARISING OUT OF, UNDER OR IN CONNECTION WITH THIS AGREEMENT OR ANY
OF THE OTHER LOAN DOCUMENTS.
SECTION 19. Additional Guarantors. To the extent any Subsidiary shall be required to
become a Guarantor pursuant to Section 5.15 of the Bridge Credit Agreement, upon execution and
delivery by the Administrative Agent and such Subsidiary of an instrument in the form of Annex I
hereto, such Subsidiary shall become a Guarantor hereunder with the same force and effect as if
originally named as a Guarantor herein. The execution and delivery of any such instrument shall
not require the consent of any other 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 Agreement.
SECTION 20. Right of Setoff. If an Event of Default shall have occurred and be
continuing, each Lender and its Affiliates is hereby authorized at any time and from time to time,
to the fullest extent permitted by law, to set off and apply any and all deposits (general or
special, time or demand, provisional or final) at any time held and other indebtedness at any time
owing by such Lender or its Affiliates, in each case whether direct or indirect, absolute or
contingent, matured or unmatured, to or for the credit or the account of any Guarantor against any
of and all the obligations of such Guarantor now or hereafter existing under this Agreement and
other Loan Documents held by such Lender, irrespective of whether or not such Lender or its
Affiliates shall have made any demand under this Agreement or such other Loan Document upon any
amount becoming due and payable by the Borrower under the Bridge Credit Agreement (whether at
stated maturity, by acceleration or otherwise). In connection with exercising its rights pursuant
to the previous sentence, a Lender or its Affiliates may at any time use any Guarantor’s credit
balances with the Lender or its Affiliates to purchase at the Lender’s or its Affiliates’
applicable spot rate of exchange any other currency or currencies which the Lender or its
Affiliates considers necessary to reduce or discharge any amount due by such Guarantor to the
Lender or its Affiliates, and may apply that currency or those currencies in or towards payment of
those amounts. The rights of each Lender or its Affiliates under this Section are in addition to
other rights and remedies (including other rights of setoff) which such Lender or its Affiliates
may have. Each Lender or its Affiliates agrees promptly to notify
such Guarantor and the Administrative Agent after making any such setoff; provided
that the failure to give such notice shall not affect the validity of such setoff.
[Signature Pages Follow]
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IN WITNESS WHEREOF, the parties hereto have duly executed this Agreement as of the day and
year first above written.
XXXXXX ROAD MANAGEMENT COMPANY
CPFILMS INC.
FLEXSYS AMERICA CO.
FLEXSYS AMERICA L.P.
by FLEXSYS AMERICA CO.,
its general partner
MONCHEM INTERNATIONAL, INC.
SOLUTIA BUSINESS ENTERPRISES INC.
SOLUTIA GREATER CHINA, INC.
SOLUTIA INTER-AMERICA, INC.
SOLUTIA OVERSEAS, INC.
SOLUTIA SYSTEMS, INC.
CPFILMS INC.
FLEXSYS AMERICA CO.
FLEXSYS AMERICA L.P.
by FLEXSYS AMERICA CO.,
its general partner
MONCHEM INTERNATIONAL, INC.
SOLUTIA BUSINESS ENTERPRISES INC.
SOLUTIA GREATER CHINA, INC.
SOLUTIA INTER-AMERICA, INC.
SOLUTIA OVERSEAS, INC.
SOLUTIA SYSTEMS, INC.
| By: | /s/Xxxxx X. Xxxxxxxx | |||
| Name: | Xxxxx X. Xxxxxxxx | |||
| Title: | Authorized Officer | |||
| CITIBANK, N.A., as Administrative Agent |
||||
| By: | /s/Xxxxx Xxxxxxxxxx | |||
| Name: | Xxxxx Xxxxxxxxxx | |||
| Title: | Vice President | |||
