Separation Agreement - SOLUTIA INC - 8-5-2004 by SOA-Agreements

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									Exhibit 10(b) AMENDED AND RESTATED SOLUTIA INC. SEPARATION AGREEMENT AND RELEASE OF CLAIMS This Amended and Restated Separation Agreement including a General and Special Release of Claims (this "Agreement") is made as of the 19th day of May, 2004, by and between SOLUTIA INC., a Delaware corporation (the "Company") and Robert A. Clausen (the "Executive"). W I T N E S S E T H: WHEREAS, the Company and Executive entered into the Solutia Inc. Separation Agreement and Release of Claims, dated May 5, 2004 (the "Prior Agreement"); and WHEREAS, the Company and Executive have agreed to amend the Prior Agreement as it relates to Section 10 (a), Release and Waiver of Claims Against the Executive; and WHEREAS, with the exception of Section 10(a), none of the other mutual covenants, conditions and obligations set forth in the Prior Agreement have been amended and, therefore, have remained identical in this Agreement; NOW, THEREFORE, in consideration of the mutual covenants, conditions and obligations set forth herein, and other good and valuable consideration, the receipt and sufficiency of which are acknowledged, the parties hereby agree as follows: 1. Resignation. The Executive hereby resigns from his position as Vice Chairman of the Board, Chief Financial Officer and Chief Administrative Officer of the Company and also resigns as an officer and director of all subsidiaries and affiliates of the Company effective as of May 4, 2004. From May 4, 2004 through May 31, 2004, or through the last day of the month in which the United States Bankruptcy Court for the Southern District of New York (the "Bankruptcy Court") approves this Agreement, whichever is later (the "Resignation Date"), Executive shall continue to be an employee of the Company and his cash compensation will be limited solely to his base salary. During this transition period, Executive will be relieved of further duties, with the exception that Executive agrees to give the Company and its new chief executive officer his business cooperation and assistance in facilitating the transition of the Company's leadership from Executive to the new chief executive officer. 2. Effectiveness Of Agreement. Except for Section 1 hereof, this Agreement shall not be effective until both (i) it shall have been approved by the Bankruptcy Court and such approval has become final for purposes of appeal and no timely appeal has been taken and (ii) the seven day revocation period provided by Section 12, which shall commence upon the date of such approval, shall have expired without the Agreement having been revoked ("Effective Date").

3. Payment To Executive. (a) In consideration for the Executive's compliance with all of his obligations hereunder, including without limitation, his provision of consulting services pursuant to Section 5, his waiver of his claim to various benefits and payments pursuant to Section 3, and his execution of the release and waiver of claims pursuant to Section 9, the Company shall pay or cause to be paid to Executive on the Effective Date (or, if not a business day, the first business day thereafter), in a lump sum, a severance benefit of one million one hundred sixty thousand dollars ($1,160,000) less applicable withholding taxes in the manner prescribed in the following sentence. The parties shall cooperate in taking appropriate actions to (i) increase the face amount of the Irrevocable Standby Letter Of Credit # 114, dated July 18, 2003, issued by the Business Bank to Executive (the "Letter of Credit") by one hundred sixty thousand dollars ($160,000) and (ii) authorize The Business Bank of St. Louis (the "Business

3. Payment To Executive. (a) In consideration for the Executive's compliance with all of his obligations hereunder, including without limitation, his provision of consulting services pursuant to Section 5, his waiver of his claim to various benefits and payments pursuant to Section 3, and his execution of the release and waiver of claims pursuant to Section 9, the Company shall pay or cause to be paid to Executive on the Effective Date (or, if not a business day, the first business day thereafter), in a lump sum, a severance benefit of one million one hundred sixty thousand dollars ($1,160,000) less applicable withholding taxes in the manner prescribed in the following sentence. The parties shall cooperate in taking appropriate actions to (i) increase the face amount of the Irrevocable Standby Letter Of Credit # 114, dated July 18, 2003, issued by the Business Bank to Executive (the "Letter of Credit") by one hundred sixty thousand dollars ($160,000) and (ii) authorize The Business Bank of St. Louis (the "Business Bank") to honor Executive's draft for an amount equal to one million one hundred sixty thousand dollars ($1,160,000) less applicable withholding taxes delivered to the Business Bank under the Letter of Credit, as increased pursuant to paragraph (a)(i), and Executive and the Company shall cooperate to authorize and cause the Business Bank either to (a) remit the appropriate withholding taxes directly to the appropriate Federal, state and local tax authorities for the benefit of Executive, or (b) pay such amounts over to the Company which agrees to remit such amounts to the appropriate Federal, state and local tax authorities for the benefit of Executive. Such severance payment shall be in complete satisfaction and discharge of any and all obligations of the Company to the Executive with respect to, and Executive hereby waives any and all claims it may have against the Company and/or Pharmacia Corporation, Monsanto Corporation, and Pfizer Inc. for, salary, bonus, long or short term incentives, accrued vacation pay, employee benefits, perquisites, deferred compensation, severance or separation pay, and any and all other payments or benefits of any type pursuant to any employment agreement, retention agreement, change in control agreement or program or plan now, previously or hereafter maintained by the Company, including, without limitation, the Employment Agreement dated February 28, 1998, the Retention Agreement dated June 30, 2003, the Solutia Inc. ERISA Parity Pension Plan, the Solutia Inc. ERISA Parity Savings and Investment Plan, and the Solutia Inc. Deferred Compensation Plan, except as otherwise set forth in this Agreement; provided, however, that Executive shall retain his rights under the Solutia Inc. Savings and Investment Plan and the Solutia Inc. Employees' Pension Plan, and provided further that the severance payment shall not be treated as compensation of the Executive or otherwise taken into account for purposes of calculating contributions to be made for his benefit or benefits to be received by him under the Solutia Inc. Savings and Investment Plan and the Solutia Inc. Employees' Pension Plan. (b) Split-Dollar Insurance. The Company has given notice to Executive of its election to terminate the Split-Dollar Agreement - Collateral Assignment By Executive/Owner, entered into on August 11, 1989 between the Executive and Monsanto Company, to which agreement the Company is successor-in-interest (the "Collateral Assignment Agreement"), pursuant to Article XIII, Section 2 thereof. Executive shall surrender to Connecticut General Life Insurance Company ("Connecticut General") life insurance policy number 5052671Z with the request that Connecticut General pay to the Company from the proceeds of such surrender an amount equal to the sum of the Company's Interest in each such Policy (as defined in the Collateral Assignment Agreement). Upon its receipt from Connecticut General of such amount, the Company will release its interest in the policy referenced in the preceding sentence. Its 2

release of its interest in the policy shall constitute a discharge and satisfaction in full of any and all obligations to the Company under the Collateral Assignment Agreement. (c) Non-disparagement. The Executive and the Company agree that, before and after his termination of employment with the Company, neither of them will make any statement or communication of information by whatever means relating to his employment with the Company that may be reasonably interpreted to be critical of or derogatory to the other party to this Agreement, including, in the case of the Company, its officers, directors and employees, provided, however, that nothing in this paragraph is intended to keep either party from testifying truthfully under subpoena or other legal process before any court or administrative agency of competent jurisdiction. (d) Election to Continue or Convert Welfare Benefits. This Agreement shall not adversely affect the rights of the Executive and/or his eligible spouse and dependents to elect to (i) continue (or convert to individual coverage), after the Resignation Date and at such individual's own expense, any of the group health, life insurance and/or

release of its interest in the policy shall constitute a discharge and satisfaction in full of any and all obligations to the Company under the Collateral Assignment Agreement. (c) Non-disparagement. The Executive and the Company agree that, before and after his termination of employment with the Company, neither of them will make any statement or communication of information by whatever means relating to his employment with the Company that may be reasonably interpreted to be critical of or derogatory to the other party to this Agreement, including, in the case of the Company, its officers, directors and employees, provided, however, that nothing in this paragraph is intended to keep either party from testifying truthfully under subpoena or other legal process before any court or administrative agency of competent jurisdiction. (d) Election to Continue or Convert Welfare Benefits. This Agreement shall not adversely affect the rights of the Executive and/or his eligible spouse and dependents to elect to (i) continue (or convert to individual coverage), after the Resignation Date and at such individual's own expense, any of the group health, life insurance and/or disability income insurance benefits provided to him by the Company as of the Resignation Date, but only to the extent any such individual is entitled to such rights under applicable state or federal law, including COBRA, or the terms of the applicable Company plan or insurance contract, and (ii) participate in the Solutia Inc. Medical Benefits Plan for Retirees (Post Settlement) pursuant to the terms of such plan. (e) Restricted Stock. The Company agrees that nothing in this Agreement shall serve as a waiver of Executive's rights to the Restricted Stock awarded to him pursuant to the terms of the Solutia Inc. 1997 Stock-Based Incentive Plan and the Solutia Inc. 1998-1999 Long-Term Incentive Plan. 4. Exclusive Separation Payments And Benefits. The Executive and the Company acknowledge and agree that this Agreement is intended to be the exclusive separation arrangement between the Company and the Executive. Accordingly, unless otherwise agreed to in writing signed by the Executive and the Company, the Executive and the Company agree that the Executive shall not be entitled to any remuneration, payments or other benefits under any other severance or separation plan or arrangement of the Company (other than the payments provided to the Executive pursuant to this Agreement). The payments and other benefits provided by this Agreement include any severance or termination benefits that may be required by applicable law. 5. Consulting Services. The Company shall engage the Executive as a consultant from the Resignation Date through the date at which both (x) the Bankruptcy Court shall have confirmed a plan of reorganization of the Company under Chapter 11 of the United States Bankruptcy Code and (y) such confirmation shall have become non-appealable, but such period shall not extend beyond December 31, 2005 (the "Consulting Period"). During the Consulting Period, Executive shall provide the Company with advisory services from time to time as reasonably requested by the Company subject to Executive's reasonable availability, not to exceed a maximum of two 3

hundred (200) hours per calendar year, including travel time associated with the provision of such advisory services. In his role as a consultant, the Executive shall work directly for the Company's Chief Executive Officer or his designee. The Executive shall not be entitled to any additional consideration for his services as a consultant for the first forty (40) hours of advisory services, including travel time associated with the provision of such advisory services, that the Executive provides the Company. Thereafter, the Executive shall be compensated at the rate of two hundred dollars ($200) per hour for each hour of advisory services and associated travel that the Executive provides to the Company. The Executive's reasonable travel and other business expenses shall be reimbursed upon presentation of supporting documentation. 6. Cooperation with Litigation. Executive agrees to make himself available upon notice from the Company or its attorneys, to be deposed, to testify at a hearing or trial, to assist in any current litigation or potential litigation, or to comply with any other

hundred (200) hours per calendar year, including travel time associated with the provision of such advisory services. In his role as a consultant, the Executive shall work directly for the Company's Chief Executive Officer or his designee. The Executive shall not be entitled to any additional consideration for his services as a consultant for the first forty (40) hours of advisory services, including travel time associated with the provision of such advisory services, that the Executive provides the Company. Thereafter, the Executive shall be compensated at the rate of two hundred dollars ($200) per hour for each hour of advisory services and associated travel that the Executive provides to the Company. The Executive's reasonable travel and other business expenses shall be reimbursed upon presentation of supporting documentation. 6. Cooperation with Litigation. Executive agrees to make himself available upon notice from the Company or its attorneys, to be deposed, to testify at a hearing or trial, to assist in any current litigation or potential litigation, or to comply with any other reasonable request by the Company in conjunction with any lawsuit, potential lawsuit, or claim that involves issues relating to Executive's job responsibilities or to decisions made during his employment with the Company. Additionally, should Executive receive any contact to be interviewed, subpoena or notice of deposition to testify to any investigation or action, he will notify the Company's General Counsel within three (3) days of contact for interview, subpoena or deposition, or as soon as reasonably practicable. Should the Company file a motion to quash, a protective order or any other similar filing with the court, Executive agrees to refrain from being interviewed, testifying at trial or by deposition until the court has ruled on such motion. Executive shall not be entitled to any additional consideration for his services provided pursuant to this Section 6, provided, however, that the Company agrees to reimburse Executive for any reasonable out-of-pocket expenses incurred by Executive as a result of such assistance, including the cost of travel or lost compensation. Should the Executive provide a significant amount of time performing such service, Executive may request that the Company reimburse him for his time, and such request may be honored at the Company's discretion. Nothing in this Section 6 shall be construed in any way as limiting or otherwise influencing Executive's testimony in any such proceeding or to discourage Executive in any way from providing testimony that is honest and truthful. 7. Confidential Information. As used herein, "Confidential Information" means all technical and business information of the Company and its subsidiaries, whether patentable or not, which is of a confidential, trade secret and/or proprietary character and which was either developed by the Executive (alone or with others) or to which the Executive has had access during the Executive's employment. "Confidential Information" shall also include confidential evaluations of, and the confidential use or non-use by the Company or any subsidiary of, technical or business information in the public domain. The Executive shall use the Executive's best efforts and diligence to protect the confidential, trade secret and/or proprietary character of all Confidential Information. The Executive shall not, directly or indirectly, use (for the Executive or another) or disclose any Confidential Information, for so long as it shall remain proprietary or protectible as confidential or trade secret information, except as may be necessary for the performance of the Executive's consulting duties with the Company. The Executive shall deliver promptly to the Company, at 4

the termination of the Consulting Period, or at any other time at the Company's request, without retaining any copies, all documents and other material in the Executive's possession relating, directly or indirectly, to any Confidential Information. Each of the Executive's obligations in this Section 7 shall also apply to the confidential, trade secret and proprietary information learned or acquired by the Executive during the Executive's employment from others with whom the Company or any subsidiary has a business relationship. The Executive understands that the Executive is not to disclose to the Company or any subsidiary, or use for its benefit, any of the confidential, trade secret or proprietary information of others, including any of the Executive's former employers. 8. Competitive Activity. The Executive shall not, directly or indirectly (whether as owner, partner, consultant, employee or otherwise), at any time during the period of two years following his Resignation Date engage in or contribute his knowledge to

the termination of the Consulting Period, or at any other time at the Company's request, without retaining any copies, all documents and other material in the Executive's possession relating, directly or indirectly, to any Confidential Information. Each of the Executive's obligations in this Section 7 shall also apply to the confidential, trade secret and proprietary information learned or acquired by the Executive during the Executive's employment from others with whom the Company or any subsidiary has a business relationship. The Executive understands that the Executive is not to disclose to the Company or any subsidiary, or use for its benefit, any of the confidential, trade secret or proprietary information of others, including any of the Executive's former employers. 8. Competitive Activity. The Executive shall not, directly or indirectly (whether as owner, partner, consultant, employee or otherwise), at any time during the period of two years following his Resignation Date engage in or contribute his knowledge to any work or activity that involves a product, process, apparatus, service or development which is then competitive with or similar to a product, process, apparatus, service or development on which he worked or with respect to which he had access to Confidential Information while employed by the Company or an affiliate at any time during the period of five years immediately prior to his Resignation Date ("Competitive Work"). However, the Executive shall be permitted to engage in such proposed work or activity, and the Company shall furnish him a written consent to that effect signed by an officer of the Company, if the Executive shall have furnished to the Company clear and convincing written evidence, including assurances from the Executive and his new employer, that the fulfillment of his duties in such proposed work or activity would not likely cause him to disclose, base judgment upon, or use any Confidential Information. In addition, for a period of two years following his Resignation Date, the Executive shall not, directly or indirectly, induce or attempt to induce a salaried employee of the Company or any of its affiliates to accept employment or affiliation involving Competitive Work with another firm or corporation of which the Executive is an employee, owner, partner or consultant. 9. Release and Waiver of Claims Against the Company. (a) The Executive, on behalf of himself, his agents, heirs, successors, assigns, executors and administrators, in consideration for the payment and other consideration provided for under this Agreement, hereby forever releases and discharges the Company and its successors, their affiliated entities and controlling persons, and their past and present directors, employees, agents, attorneys, accountants, representatives, plan fiduciaries, successors and assigns from any and all known and unknown causes of action, actions, judgments, liens, indebtedness, damages, losses, claims, liabilities, and demands of whatsoever kind and character in any manner whatsoever arising on or prior to the Effective Date of this Agreement, including but not limited to (i) any claim for breach of contract, breach of implied covenant, breach of oral or written promise, wrongful termination, intentional infliction of emotional distress, defamation, interference with contract relations or prospective economic advantage, negligence, misrepresentation or employment discrimination, and including without limitation alleged violations of Title VII of the Civil Rights Act of 1964, as amended, prohibiting discrimination based on race, color, religion, sex or national origin; the Family and Medical Leave Act; the 5

Americans With Disabilities Act prohibiting discrimination based on disability; the Age Discrimination in Employment Act prohibiting discrimination based on age over 40; other federal, state and local laws, ordinances and regulations; and any unemployment or workers' compensation law; (ii) any and all liability that was or may have been alleged against or imputed to the Company by the Executive or by anyone acting on his behalf; (iii) all claims for wages, monetary or equitable relief, employment or reemployment with the Company in any position, and any punitive, compensatory or liquidated damages; and (iv) all rights to and claims for attorneys' fees and costs; provided, however, that this release shall not extend to the obligations of the Company that are specifically recited or referred to in this Agreement. The Executive expressly waives any and all rights granted by any federal, state or local laws or ordinances or regulations that are intended to protect the Executive from waiving unknown claims. (b) The Executive shall not file or cause to be filed any action, suit, claim, charge or proceeding with any federal, state or local court or agency relating to any claim within the scope of this Section 9. The Executive represents and warrants that he has not assigned any claim released herein, or authorized any other person to assert any

Americans With Disabilities Act prohibiting discrimination based on disability; the Age Discrimination in Employment Act prohibiting discrimination based on age over 40; other federal, state and local laws, ordinances and regulations; and any unemployment or workers' compensation law; (ii) any and all liability that was or may have been alleged against or imputed to the Company by the Executive or by anyone acting on his behalf; (iii) all claims for wages, monetary or equitable relief, employment or reemployment with the Company in any position, and any punitive, compensatory or liquidated damages; and (iv) all rights to and claims for attorneys' fees and costs; provided, however, that this release shall not extend to the obligations of the Company that are specifically recited or referred to in this Agreement. The Executive expressly waives any and all rights granted by any federal, state or local laws or ordinances or regulations that are intended to protect the Executive from waiving unknown claims. (b) The Executive shall not file or cause to be filed any action, suit, claim, charge or proceeding with any federal, state or local court or agency relating to any claim within the scope of this Section 9. The Executive represents and warrants that he has not assigned any claim released herein, or authorized any other person to assert any claim on his behalf. (c) In the event any action, suit, claim, charge or proceeding within the scope of this Section 9 is brought by any government agency, putative class representative or other third party to vindicate any alleged rights of the Executive, (i) the Executive shall, except to the extent required or compelled by law, legal process or subpoena, refrain from participating, testifying or producing documents therein, and (ii) all damages, inclusive of attorneys' fees, if any, required to be paid to the Executive by the Company as a consequence of such action, suit, claim, charge or proceeding shall be repaid to the Company by the Executive within ten (10) days of his receipt thereof. (d) Notwithstanding anything in this Agreement to the contrary, in the event of a violation of this Section 9 by the Executive, the Company's obligations pursuant to this Agreement shall cease as of the date of such violation and the Executive shall be liable to the Company for any actual damages the Company suffers as a result of such violation, including costs, expenses and all attorneys' fees and expenses. 10. Release and Waiver of Claims Against the Executive. (a) The Company shall use its commercially reasonable efforts to seek Bankruptcy Court approval of a release from the Company in favor of the Executive, in connection with the plan of reorganization of the Company under Chapter 11 of the United States Bankruptcy Code; provided, however, that any such release from the Company to the Executive shall not apply to any act of fraud or criminal conduct by the Executive of which the Company is not aware as of the date of this Agreement, nor to any act of non-compliance with the terms of this Agreement by the Executive. (b) In further consideration for the Executive's compliance with all of his obligations hereunder, the Company further agrees to indemnify Executive and hold Executive harmless to the maximum extent permitted by law from and against any claims, damages, liabilities, losses, costs or expenses in connection with or arising out of the performance by Executive of his provision of consulting services pursuant to Section 5 of this Agreement, other than any such 6

claims, damages, liabilities, losses, costs or expenses arising out of any act of fraud or criminal conduct by Executive. This indemnification shall apply with respect to any act or omission occurring during any period of time during which Executive provides consulting services pursuant to Section 5 of this Agreement. In addition, the Company agrees that it will maintain full coverage for Executive under its liability insurance polic(y)(ies) so long as the Executive provides consulting services pursuant to Section 5 of this Agreement. 11. No Admission of Wrongdoing. The release and waiver of claims by the Company in Section 10 of this Agreement, and the payment by the Company of that portion of the amounts set forth in this Agreement to which the Executive would not otherwise be entitled, are being given to the Executive in return for the Executive's agreements and covenants contained in this Agreement. Nothing contained in this Agreement shall be construed as an admission of liability or wrongdoing

claims, damages, liabilities, losses, costs or expenses arising out of any act of fraud or criminal conduct by Executive. This indemnification shall apply with respect to any act or omission occurring during any period of time during which Executive provides consulting services pursuant to Section 5 of this Agreement. In addition, the Company agrees that it will maintain full coverage for Executive under its liability insurance polic(y)(ies) so long as the Executive provides consulting services pursuant to Section 5 of this Agreement. 11. No Admission of Wrongdoing. The release and waiver of claims by the Company in Section 10 of this Agreement, and the payment by the Company of that portion of the amounts set forth in this Agreement to which the Executive would not otherwise be entitled, are being given to the Executive in return for the Executive's agreements and covenants contained in this Agreement. Nothing contained in this Agreement shall be construed as an admission of liability or wrongdoing by either the Executive or the Company. 12. Voluntary Execution of Agreement. BY HIS SIGNATURE BELOW, THE EXECUTIVE ACKNOWLEDGES THAT: (A) I HAVE RECEIVED A COPY OF THIS AGREEMENT AND WAS OFFERED A PERIOD OF TWENTY-ONE (21) DAYS TO REVIEW AND CONSIDER IT; (B) IF I SIGN THIS AGREEMENT PRIOR TO THE EXPIRATION OF TWENTY-ONE DAYS, I KNOWINGLY AND VOLUNTARILY WAIVE AND GIVE UP THIS RIGHT OF REVIEW; (C) I HAVE THE RIGHT TO REVOKE THIS AGREEMENT FOR A PERIOD OF SEVEN DAYS AFTER I SIGN IT OR, IF LATER, AFTER APPROVAL OF THIS AGREEMENT BY THE BANKRUPTCY COURT AND SUCH ORDER OF APPROVAL HAS BECOME FINAL FOR PURPOSES OF APPEAL AND NO TIMELY APPEAL HAS BEEN TAKEN, BY MAILING OR DELIVERING A WRITTEN NOTICE OF REVOCATION TO THE CHIEF EXECUTIVE OFFICER OF THE COMPANY, NO LATER THAN THE CLOSE OF BUSINESS ON THE SEVENTH DAY AFTER THE LATER OF THE DAY ON WHICH I SIGNED THIS AGREEMENT OR THE DAY OF ITS APPROVAL BY THE BANKRUPTCY COURT; (D) THIS AGREEMENT SHALL NOT BECOME EFFECTIVE OR ENFORCEABLE UNTIL THE SEVEN DAY REVOCATION PERIOD HAS EXPIRED WITHOUT THE AGREEMENT HAVING BEEN REVOKED; (E) THIS AGREEMENT WILL BE FINAL AND BINDING AFTER THE EXPIRATION OF THE REVOCATION PERIOD REFERRED TO IN (C). I AGREE NOT TO CHALLENGE ITS ENFORCEABILITY; (F) I AM AWARE OF MY RIGHT TO CONSULT AN ATTORNEY, HAVE BEEN ADVISED IN WRITING TO CONSULT WITH AN ATTORNEY, AND HAVE HAD 7

THE OPPORTUNITY TO CONSULT WITH AN ATTORNEY, IF DESIRED, PRIOR TO SIGNING THIS AGREEMENT; (G) NO PROMISE OR INDUCEMENT FOR THIS AGREEMENT HAS BEEN MADE EXCEPT AS SET FORTH IN THIS AGREEMENT; (H) I AM LEGALLY COMPETENT TO EXECUTE THIS AGREEMENT AND ACCEPT FULL RESPONSIBILITY FOR IT; AND (I) I HAVE CAREFULLY READ THIS AGREEMENT INCLUDING THE RELEASE SET FORTH IN SECTION 9, ACKNOWLEDGE THAT I HAVE NOT RELIED ON ANY REPRESENTATION OR

THE OPPORTUNITY TO CONSULT WITH AN ATTORNEY, IF DESIRED, PRIOR TO SIGNING THIS AGREEMENT; (G) NO PROMISE OR INDUCEMENT FOR THIS AGREEMENT HAS BEEN MADE EXCEPT AS SET FORTH IN THIS AGREEMENT; (H) I AM LEGALLY COMPETENT TO EXECUTE THIS AGREEMENT AND ACCEPT FULL RESPONSIBILITY FOR IT; AND (I) I HAVE CAREFULLY READ THIS AGREEMENT INCLUDING THE RELEASE SET FORTH IN SECTION 9, ACKNOWLEDGE THAT I HAVE NOT RELIED ON ANY REPRESENTATION OR STATEMENT, WRITTEN OR ORAL, NOT SET FORTH IN THIS DOCUMENT OR THE WRITTEN MATERIALS PRESENTED TO ME WITH THIS AGREEMENT, AND WARRANT AND REPRESENT THAT I AM SIGNING THIS AGREEMENT KNOWINGLY AND VOLUNTARILY. 13. Notices. All notices, requests, demands and other communications required or permitted hereunder shall be in writing, shall be deemed properly given if delivered personally or sent by certified or registered mail, postage prepaid, return receipt requested, or sent by telegram, telex, telecopy or similar form of telecommunication, and shall be deemed to have been given when received. Any such notice, request, demand or communication shall be addressed: (a) if to the Company, to the Chief Executive Officer of the Company; (b) if to the Executive, to his last known home address on file with the Company; or (c) to such other address as the parties shall have furnished to one another in writing. 14. Notice to Executive of Alleged Breach. Should the Company form a reasonable belief that the Executive is breaching or has breached any of the terms of this Agreement, the Company shall provide written notice thereof to the Executive and the Executive shall have ten (10) days to cure any such breach. If the Company fails to provide such notice, the Company shall waive its rights under this Agreement with respect to such breach. 15. Termination and Amendments; Miscellaneous. (a) This Agreement may only be terminated, or the provisions of this Agreement amended or waived, prior to the expiration of the Company's and the Executive's obligations under this Agreement, by a writing signed by the Company and the Executive. (b) The Company may withhold from any amounts payable under this Agreement such federal, state or local taxes as shall be required to be withheld pursuant to any applicable law or regulation. (c) The failure to insist upon strict compliance with any provision hereof, or the failure to assert any right hereunder, shall not be deemed to be a waiver of such provision or right or of any other provision or right under this Agreement. In the event that any term, 8

provision or release of claims or rights contained in this Agreement is found or determined to be illegal or otherwise invalid and unenforceable, whether in whole or in part, such invalidity shall not affect the enforceability of the remaining terms, provisions and releases of claims or rights. (d) Nothing in this Agreement shall confer upon the Executive any right to continue in the employ of the Company or its affiliates, except as set forth in Section 1. (e) This Agreement sets forth the entire agreement and understanding between the parties as to the subject matter hereof and supersedes all prior oral and written and all contemporaneous oral discussions, agreements and understandings of any kind or nature. This Agreement shall inure to the benefit of and be binding upon the parties

provision or release of claims or rights contained in this Agreement is found or determined to be illegal or otherwise invalid and unenforceable, whether in whole or in part, such invalidity shall not affect the enforceability of the remaining terms, provisions and releases of claims or rights. (d) Nothing in this Agreement shall confer upon the Executive any right to continue in the employ of the Company or its affiliates, except as set forth in Section 1. (e) This Agreement sets forth the entire agreement and understanding between the parties as to the subject matter hereof and supersedes all prior oral and written and all contemporaneous oral discussions, agreements and understandings of any kind or nature. This Agreement shall inure to the benefit of and be binding upon the parties hereto and their respective permitted successors and assigns. (f) Any reference within this Agreement to an action, judgment, conclusion, or determination by the Company shall mean an action, judgment, conclusion, or determination of the Board of Directors of the Company or its authorized representative(s). (g) The headings preceding the text of the sections hereof are inserted solely for convenience of reference, and shall not constitute a part of this Agreement, nor shall they affect its meaning, construction or effect. (h) This Agreement shall be governed by, and construed and enforced in accordance with the laws of the State of Missouri. If either Executive or the Company pursues either legal or equitable relief to settle a dispute between them arising under or relating to this Agreement, the party shall bring such an action only in the Circuit Court of St. Louis County, Missouri. (i) This Agreement may be executed in two or more counterparts, all of which shall have the same force and effect as if all parties thereto had executed a single copy. (j) If either Executive or the Company pursues either legal or equitable relief, or both to settle a dispute between them arising under or relating to this Agreement, the prevailing party shall be entitled to recover reasonable attorneys fees and costs incurred in bringing or defending such an action. IN WITNESS WHEREOF, the Company and the Executive have acknowledged and executed this Agreement effective as of the Effective Date, unless revoked by the Executive in the manner set forth in Section 12 above. SOLUTIA INC.
/s/ Robert A. Clausen -------------------------Robert A. Clausen By: /s/ James M. Sullivan ----------------------------------Name: James M. Sullivan --------------------------------Title: Senior Vice President and Chief -------------------------------Financial Officer --------------------------------

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Exhibit 10(c) AGREEMENT AGREEMENT by and between Solutia Inc., a Delaware corporation (the "Company"), and Jeffry N. Quinn (the "Executive"), dated as of the 19th day of July, 2004 (the "Effective Date"). The Board of Directors of the Company (the "Board") has determined that it is in the best interests of the Company and its stakeholders to assure that the Company will have the continued dedication of the Executive until and for a period of time following the Emergence Date (as defined below). To induce the Executive to

Exhibit 10(c) AGREEMENT AGREEMENT by and between Solutia Inc., a Delaware corporation (the "Company"), and Jeffry N. Quinn (the "Executive"), dated as of the 19th day of July, 2004 (the "Effective Date"). The Board of Directors of the Company (the "Board") has determined that it is in the best interests of the Company and its stakeholders to assure that the Company will have the continued dedication of the Executive until and for a period of time following the Emergence Date (as defined below). To induce the Executive to continue to serve the Company through and beyond the Emergence Date, the Company will provide the Executive with, among other things, a special emergence bonus. It is the Board's judgment that such a special emergence bonus arrangement is in the best interest of the Company and its stakeholders, and is consistent with the desire of the Board to maximize the value of the Company. Therefore, in order to accomplish these objectives, the Board has caused the Company to enter into this Agreement. NOW, THEREFORE, IT IS HEREBY AGREED AS FOLLOWS: 1. Special Emergence Bonus. At such time, if ever (the "Emergence Date"), at which the United States Bankruptcy Court for the Southern District of New York (the "Bankruptcy Court") shall have confirmed a plan of reorganization of the Company under Chapter 11 of the United States Bankruptcy Code (the "Chapter 11 Case") and such plan shall have become effective, if the Executive is employed by the Company on the Emergence Date the Executive shall be eligible to receive a special emergence bonus as follows: (a) If the Executive is employed by the Company on the six-month anniversary of the Emergence Date, or if, on or subsequent to the Emergence Date but prior to the six-month anniversary thereof, Executive shall have been terminated by the Company without Cause, shall have resigned for Good Reason, or shall have died or been terminated for Disability, then Executive shall be entitled to receive from the Company a special emergence bonus equal to 50% of the bonus pool as determined pursuant to and in accordance with the terms of the Solutia Inc. Emergence Incentive Bonus Program as set forth in Attachment I hereto. (b) If the Executive shall voluntarily terminate his employment other than for Good Reason or shall be terminated by the Company for Cause, in either case between the Emergence Date and the six-month anniversary thereof, then Executive shall forfeit any and all right to receive a special emergence bonus hereunder. 2. Employment Period. The Company hereby agrees to continue the Executive in its employ, and the Executive hereby agrees to remain in the employ of the Company subject to the terms and conditions of this Agreement, for the period (the "Employment Period") commencing on the Effective Date and ending on the six month anniversary of the Emergence Date. Where the context permits, all references to the Company shall include an affiliate of the Company by which the Executive is employed. As used in this Agreement, the term "affiliate" or "affiliated companies" shall include any company controlled by, controlling or under common control with

the Company. The obligations of the Company and the Executive under this Agreement including, without limitation, the obligations under Sections 1, 5, 6 and 7, shall survive the termination of the Employment Period to the extent necessary to accomplish the purposes thereof. 3. Terms of Employment. (a) Position and Duties. (i) During the Employment Period, (A) the Executive shall serve as President and Chief Executive Officer of the Company, with such authority, duties, responsibilities and reporting requirements as may be reasonably assigned to him from time to time by the Board and (B) the Executive's services shall be performed at the location where the Executive was employed immediately preceding the Effective Date or at any office or location of the Company not more than 50 miles from the Company's headquarters in St. Louis, Missouri.

the Company. The obligations of the Company and the Executive under this Agreement including, without limitation, the obligations under Sections 1, 5, 6 and 7, shall survive the termination of the Employment Period to the extent necessary to accomplish the purposes thereof. 3. Terms of Employment. (a) Position and Duties. (i) During the Employment Period, (A) the Executive shall serve as President and Chief Executive Officer of the Company, with such authority, duties, responsibilities and reporting requirements as may be reasonably assigned to him from time to time by the Board and (B) the Executive's services shall be performed at the location where the Executive was employed immediately preceding the Effective Date or at any office or location of the Company not more than 50 miles from the Company's headquarters in St. Louis, Missouri. (ii) During the Employment Period, the Executive shall serve the Company faithfully, diligently and to the best of his ability, and shall devote substantially all of his time and efforts during normal business hours to the business and affairs of the Company. During the Employment Period it shall not be a violation of this Agreement for the Executive to (A) deliver lectures, fulfill speaking engagements or teach at educational institutions, and (B) manage personal investments, so long as such activities described in clauses A and B do not interfere with the performance of the Executive's responsibilities as an employee of the Company in accordance with this Agreement, and (C) with the advance approval of the Board, serve on corporate, civic or charitable boards or committees. (b) Compensation. (i) Base Salary. During the Employment Period, the Executive shall receive an annual base salary ("Annual Base Salary") of not less than $500,000, which shall be paid in accordance with the Company's normal payroll practices and shall apply retroactively to May 5, 2004. (ii) Annual Bonuses. In addition to Annual Base Salary, the Executive shall participate in the Company's Annual Incentive Program, or any successor annual bonus plan(s), with a target annual bonus opportunity of 150% of his Annual Base Salary. In addition, during the Employment Period, the Executive shall be entitled to participate in all long-term and other incentive plans, practices, policies and programs generally applicable to senior executive officers of the Company and its affiliated companies. (iii) Savings and Retirement Plans. During the Employment Period, the Executive shall be entitled to participate in all savings and retirement plans, practices, policies and programs generally applicable to senior executive officers of the Company and its affiliated companies, subject to the Board's authority to modify or terminate any such plans, practices, policies or programs on a Company-wide basis at any time. 2 (iv) Welfare Benefit Plans. During the Employment Period, the Executive and/or the Executive's family, as the case may be, shall be eligible for participation in and shall receive all benefits under welfare benefit plans, practices, policies and programs provided by the Company and its affiliated companies (including, without limitation, medical, prescription, dental, disability, salary continuance, employee life, group life, accidental death and travel accident insurance plans and programs) to the extent generally applicable to senior executive officers of the Company and its affiliated companies, subject to the Board's authority to modify or terminate any such plans, practices, policies or programs on a Company-wide basis at any time. (v) Expenses. During the Employment Period, the Executive shall be entitled to receive prompt reimbursement, in accordance with Company policy, for all reasonable expenses incurred by the Executive in performing his duties hereunder. (vi) Vacation. During the Employment Period, the Executive shall be entitled to paid vacation in accordance with the plans, policies, programs and practices of the Company and its affiliated companies as in effect from time to time.

(iv) Welfare Benefit Plans. During the Employment Period, the Executive and/or the Executive's family, as the case may be, shall be eligible for participation in and shall receive all benefits under welfare benefit plans, practices, policies and programs provided by the Company and its affiliated companies (including, without limitation, medical, prescription, dental, disability, salary continuance, employee life, group life, accidental death and travel accident insurance plans and programs) to the extent generally applicable to senior executive officers of the Company and its affiliated companies, subject to the Board's authority to modify or terminate any such plans, practices, policies or programs on a Company-wide basis at any time. (v) Expenses. During the Employment Period, the Executive shall be entitled to receive prompt reimbursement, in accordance with Company policy, for all reasonable expenses incurred by the Executive in performing his duties hereunder. (vi) Vacation. During the Employment Period, the Executive shall be entitled to paid vacation in accordance with the plans, policies, programs and practices of the Company and its affiliated companies as in effect from time to time. 4. Termination of Employment. (a) Death or Disability. The Executive's employment shall terminate automatically upon the Executive's death during the Employment Period. If the Company determines in good faith that the Disability of the Executive has occurred during the Employment Period (pursuant to the definition of Disability set forth below), it may give to the Executive written notice in accordance with Section 9(b) of this Agreement of its intention to terminate the Executive's employment. In such event, the Executive's employment with the Company shall terminate effective on the 30th day after receipt of such notice by the Executive (the "Disability Effective Date"), provided that, within the 30 days after such receipt, the Executive shall not have returned to full-time performance of the Executive's duties. For purposes of this Agreement, "Disability" shall mean the Executive's long-term disability for purposes of any reasonable occupation as determined under the Company's disability plan that is applicable to the Executive. (b) Cause. The Company may terminate the Executive's employment during the Employment Period for Cause. For purposes of this Agreement, "Cause" shall mean: (i) the willful and continued failure of the Executive to perform substantially the Executive's duties with the Company or one of its affiliates (other than any such failure resulting from incapacity due to physical or mental illness), after a written demand for substantial performance is delivered to the Executive by the Board of the Company which specifically identifies the manner in which the Board believes that the Executive has not substantially performed the Executive's duties, (ii) the willful engaging by the Executive in illegal conduct or gross misconduct which is materially and demonstrably injurious to the Company; 3

(iii) the Executive's conviction of, or plea of guilty or no contest to, a felony or any other crime involving moral turpitude, fraud, theft, embezzlement or dishonesty; or (iv) the Executive's habitual drug or alcohol abuse. For purposes of this provision, no act or failure to act, on the part of the Executive, shall be considered "willful" unless it is done, or omitted to be done, by the Executive in bad faith or without reasonable belief that the Executive's action or omission was in the best interests of the Company. Any act, or failure to act, based upon authority given pursuant to a resolution duly adopted by the Board or based upon the advice of counsel for the Company shall be conclusively presumed to be done, or omitted to be done, by the Executive in good faith and in the best interests of the Company. The cessation of employment of the Executive shall not be deemed to be for Cause unless and until there shall have been delivered to the Executive a copy of a resolution duly adopted by the affirmative vote of not less than a majority of the entire membership of the Board at a meeting of the Board called and held for such purpose (after reasonable notice is provided to the Executive and the Executive is given an opportunity, together with counsel, in the case of conduct described in subparagraph (i) or (ii) above, to be heard

(iii) the Executive's conviction of, or plea of guilty or no contest to, a felony or any other crime involving moral turpitude, fraud, theft, embezzlement or dishonesty; or (iv) the Executive's habitual drug or alcohol abuse. For purposes of this provision, no act or failure to act, on the part of the Executive, shall be considered "willful" unless it is done, or omitted to be done, by the Executive in bad faith or without reasonable belief that the Executive's action or omission was in the best interests of the Company. Any act, or failure to act, based upon authority given pursuant to a resolution duly adopted by the Board or based upon the advice of counsel for the Company shall be conclusively presumed to be done, or omitted to be done, by the Executive in good faith and in the best interests of the Company. The cessation of employment of the Executive shall not be deemed to be for Cause unless and until there shall have been delivered to the Executive a copy of a resolution duly adopted by the affirmative vote of not less than a majority of the entire membership of the Board at a meeting of the Board called and held for such purpose (after reasonable notice is provided to the Executive and the Executive is given an opportunity, together with counsel, in the case of conduct described in subparagraph (i) or (ii) above, to be heard before the Board), finding that, in the good faith opinion of the Board, the Executive is guilty of the conduct described in subparagraph (i),(ii), (iii) or (iv) above, and specifying the particulars thereof in detail. (c) Good Reason. The Executive's employment may be terminated by the Executive for Good Reason. For purposes of this Agreement, "Good Reason" shall mean: (i) a material failure by the Company to comply with any of the provisions of Section 3(b) of this Agreement relating to compensation, other than an isolated, insubstantial and inadvertent failure not occurring in bad faith and which is remedied by the Company promptly after receipt of notice thereof given by the Executive; (ii) the assignment to the Executive of any duties inconsistent in any respect with the Executive's position as President and Chief Executive Officer and the authority, duties and responsibilities contemplated by Section 3(a) of this Agreement, or any other action by the Company which results in a material diminution in such position, authority, duties or responsibilities, excluding for this purpose an isolated, insubstantial and inadvertent action not taken in bad faith and which is remedied by the Company promptly after receipt of notice thereof given by the Executive; provided, that, a sale by the Company of subtantially all of its assets shall constitute a diminution in Executive's position, authority, duties and responsibilities for purposes of this Section 4(c)(ii); or (iii) the Company's requiring the Executive to be based at any office or location other than as provided in Section 3(a)(i)(B) hereof or the Company's requiring the Executive to travel on Company business to a substantially greater extent than required immediately prior to the Effective Date; provided, however, that the requirement that Executive undertake such additional travel away from St. Louis, Missouri as is 4

reasonably required to enable him to fulfill his responsibilities in connection with the Chapter 11 case shall not constitute "Good Reason". If the Executive terminates his employment for Good Reason pursuant to subparagraph (ii) above as a result of a sale by the Company of substantially all of its assets, then the Executive shall make himself available to the Company as a paid independent consultant for such fee, at such times, over such period of time and for such number of hours as the parties shall reasonably agree, taking account of any new employment that the Executive may undertake. (d) Notice of Termination. Any termination by the Company for Cause, or by the Executive for Good Reason, shall be communicated by Notice of Termination to the other party hereto given in accordance with Section 9(b) of this Agreement. For purposes of this Agreement, a "Notice of Termination" means a written notice which (i) indicates the specific termination provision in this Agreement relied upon, (ii) to the extent applicable, sets forth in reasonable detail the facts and circumstances claimed to provide a basis for termination of the Executive's employment under the provision so indicated and (iii) if the Date of Termination (as defined below) is other than the date of receipt of such notice, specifies the termination date (which date shall be not

reasonably required to enable him to fulfill his responsibilities in connection with the Chapter 11 case shall not constitute "Good Reason". If the Executive terminates his employment for Good Reason pursuant to subparagraph (ii) above as a result of a sale by the Company of substantially all of its assets, then the Executive shall make himself available to the Company as a paid independent consultant for such fee, at such times, over such period of time and for such number of hours as the parties shall reasonably agree, taking account of any new employment that the Executive may undertake. (d) Notice of Termination. Any termination by the Company for Cause, or by the Executive for Good Reason, shall be communicated by Notice of Termination to the other party hereto given in accordance with Section 9(b) of this Agreement. For purposes of this Agreement, a "Notice of Termination" means a written notice which (i) indicates the specific termination provision in this Agreement relied upon, (ii) to the extent applicable, sets forth in reasonable detail the facts and circumstances claimed to provide a basis for termination of the Executive's employment under the provision so indicated and (iii) if the Date of Termination (as defined below) is other than the date of receipt of such notice, specifies the termination date (which date shall be not more than thirty days after the giving of such notice). The failure by the Executive or the Company to set forth in the Notice of Termination any fact or circumstance which contributes to a showing of Good Reason or Cause shall not waive any right of the Executive or the Company, respectively, hereunder or preclude the Executive or the Company, respectively, from asserting such fact or circumstance in enforcing the Executive's or the Company's rights hereunder. (e) Date of Termination. "Date of Termination" means (i) if the Executive's employment is terminated by the Company for Cause, or by the Executive for Good Reason, the date of receipt of the Notice of Termination or any later date specified therein, as the case may be, (ii) if the Executive's employment is terminated by the Company other than for Cause or Disability, the Date of Termination shall be the date on which the Company notifies the Executive of such termination and (iii) if the Executive's employment is terminated by reason of death or Disability, the Date of Termination shall be the date of death of the Executive or the Disability Effective Date, as the case may be. 5. Obligations of the Company upon Termination. (a) Good Reason; Other Than for Cause. If, during the Employment Period, the Company shall terminate the Executive's employment other than for Cause or the Executive shall terminate employment for Good Reason: (i) the Company shall pay to the Executive in a lump sum in cash within ten days of the Date of Termination, the aggregate of the following amounts: A. the sum of (1) the Executive's accrued Annual Base Salary through the Date of Termination, (2) any annual bonus earned by the Executive with respect to the previous year, and (3) any accrued vacation pay, in each case to the extent not theretofore paid (the sum of the amounts described in clauses (1), (2) and (3) shall be hereinafter referred to as the "Accrued Obligations"); 5

B. an amount equal to 125% of Executive's Annual Base Salary immediately prior to the Date of Termination (the "Severance Payment"); and C. if the Date of Termination is on or subsequent to the Emergence Date but not later than the six month anniversary thereof, in lieu of the Severance Payment pursuant to clause (B), Executive shall receive the amount, if any, to which he is entitled under the Solutia Inc. Emergence Incentive Bonus Program at such time as amounts are payable thereunder. (ii) subject to the provisions of Section 9(f) hereof, to the extent not theretofore paid or provided, the Company shall timely pay or provide to the Executive any other amounts or benefits, excluding any severance or separation pay or benefits, required to be paid or provided or which the Executive is eligible to receive under any plan, program, policy, practice, contract or agreement of the Company and its affiliated companies, including, without

B. an amount equal to 125% of Executive's Annual Base Salary immediately prior to the Date of Termination (the "Severance Payment"); and C. if the Date of Termination is on or subsequent to the Emergence Date but not later than the six month anniversary thereof, in lieu of the Severance Payment pursuant to clause (B), Executive shall receive the amount, if any, to which he is entitled under the Solutia Inc. Emergence Incentive Bonus Program at such time as amounts are payable thereunder. (ii) subject to the provisions of Section 9(f) hereof, to the extent not theretofore paid or provided, the Company shall timely pay or provide to the Executive any other amounts or benefits, excluding any severance or separation pay or benefits, required to be paid or provided or which the Executive is eligible to receive under any plan, program, policy, practice, contract or agreement of the Company and its affiliated companies, including, without limitation, the vested benefit, if any, of the Executive under any qualified defined benefit or defined contribution retirement plan of the Company and its affiliated companies in which the Executive participates, in accordance with the terms of such plan (such other amounts and benefits shall be hereinafter referred to as the "Other Benefits"); (iii) the Company shall continue to provide at its expense (on the same basis as at the Executive's Date of Termination) for the continued participation of the Executive and, to the extent applicable, his family, in the Company's medical, dental, vision and life insurance plans and programs, for a period of four months commencing with the Date of Termination; and (iv) upon request of the Executive, the Company shall provide outplacement services to the Executive for up to twelve months and up to an aggregate cost of $25,000. (b) Death. If the Executive's employment is terminated by reason of the Executive's death during the Employment Period, this Agreement shall terminate without further obligations to the Executive's legal representatives under this Agreement, other than for timely payment or provision of the following: (i) Accrued Obligations; (ii) Other Benefits; and (iii) if such termination occurs on or after the Emergence Date but not later than the six-month anniversary thereof, the amount, if any, to which Executive is entitled under the Solutia Inc. Emergence Incentive Bonus Program. Accrued Obligations shall be paid to the Executive's estate or beneficiary, as applicable, in a lump sum in cash within 30 days of the Date of Termination. 6 (c) Disability. If the Executive's employment is terminated by reason of the Executive's Disability during the Employment Period, this Agreement shall terminate without further obligations to the Executive, other than for timely payment or provision of the following: (i) Accrued Obligations; (ii) Other Benefits; and (iii) if such termination occurs on or after the Emergence Date but not later than the six-month anniversary thereof, the amount, if any, to which Executive is entitled under the Solutia Inc. Emergence Incentive Bonus Program. Accrued Obligations shall be paid to the Executive in a lump sum in cash within 30 days of the Date of Termination. (d) Cause; Other than for Good Reason. If the Executive's employment shall be terminated for Cause during the Employment Period, or if the Executive voluntarily terminates employment during the Employment Period, excluding a termination for Good Reason, this Agreement shall terminate without further obligations to the

(c) Disability. If the Executive's employment is terminated by reason of the Executive's Disability during the Employment Period, this Agreement shall terminate without further obligations to the Executive, other than for timely payment or provision of the following: (i) Accrued Obligations; (ii) Other Benefits; and (iii) if such termination occurs on or after the Emergence Date but not later than the six-month anniversary thereof, the amount, if any, to which Executive is entitled under the Solutia Inc. Emergence Incentive Bonus Program. Accrued Obligations shall be paid to the Executive in a lump sum in cash within 30 days of the Date of Termination. (d) Cause; Other than for Good Reason. If the Executive's employment shall be terminated for Cause during the Employment Period, or if the Executive voluntarily terminates employment during the Employment Period, excluding a termination for Good Reason, this Agreement shall terminate without further obligations to the Executive, other than for Accrued Obligations and the timely payment or provision of Other Benefits. In such case, all Accrued Obligations shall be paid to the Executive in a lump sum in cash within 30 days of the Date of Termination. 6. Full Settlement; Legal Fees. The Company's obligation to make the payments provided for in this Agreement and otherwise to perform its obligations hereunder shall not be affected by any set-off, counterclaim, recoupment, defense or other claim, right or action which the Company may have against the Executive or others. In no event shall the Executive be obligated to seek other employment or take any other action by way of mitigation of the amounts payable to the Executive under any of the provisions of this Agreement, and such amounts shall not be reduced whether or not the Executive obtains other employment. The Company agrees to pay, to the full extent permitted by law, all legal fees and expenses which the Executive may reasonably incur as a result of any contest, in which the Executive is the prevailing party, by the Company, the Executive or others of the validity or enforceability of, or liability under, any provision of this Agreement or any guarantee of performance thereof (whether such contest is between the Company and the Executive or between either of them and any third party, and including as a result of any contest by the Executive about the amount of any payment pursuant to this Agreement), plus in each case interest on any payment from the time at which the liability for the applicable legal fees and expenses was incurred by Executive, at the applicable Federal rate provided for in Section 7872(f) (2) (A) of the Internal Revenue Code of 1986, as amended (the "Code"). 7. Confidential Information and Competitive Activity. (a) Confidential Information. As used herein, "Confidential Information" means all technical and business information of the Company and its affiliated companies, whether patentable or not, which is of a confidential, trade secret and/or proprietary character and which is either developed by the Executive (alone or with others) or to which the Executive has had access during the Executive's employment. "Confidential Information" shall also 7

include confidential evaluations of, and the confidential use or non-use by the Company or any affiliated company of, technical or business information in the public domain. The Executive shall use the Executive's best efforts and diligence both during and after employment by the Company to protect the confidential, trade secret and/or proprietary character of all Confidential Information. The Executive shall not, directly or indirectly, use (for the Executive or another) or disclose any Confidential Information, for so long as it shall remain proprietary or protectible as confidential or trade secret information, except as may be necessary for the performance of the Executive's duties with the Company. The Executive shall deliver promptly to the Company, at the termination of the Executive's employment, or at any other time at the Company's request, without retaining any copies, all documents and other material in the Executive's possession relating, directly or indirectly, to any Confidential Information.

include confidential evaluations of, and the confidential use or non-use by the Company or any affiliated company of, technical or business information in the public domain. The Executive shall use the Executive's best efforts and diligence both during and after employment by the Company to protect the confidential, trade secret and/or proprietary character of all Confidential Information. The Executive shall not, directly or indirectly, use (for the Executive or another) or disclose any Confidential Information, for so long as it shall remain proprietary or protectible as confidential or trade secret information, except as may be necessary for the performance of the Executive's duties with the Company. The Executive shall deliver promptly to the Company, at the termination of the Executive's employment, or at any other time at the Company's request, without retaining any copies, all documents and other material in the Executive's possession relating, directly or indirectly, to any Confidential Information. Each of the Executive's obligations in this Section shall also apply to the confidential, trade secret and proprietary information learned or acquired by the Executive during the Executive's employment from others with whom the Company or any affiliated company has a business relationship. The Executive understands that the Executive is not to disclose to the Company or any affiliated company, or use for its benefit, any of the confidential, trade secret or proprietary information of others, including any of the Executive's former employers. (b) Competitive Activity; Nonsolicitation. In the event that, during the Employment Period, Executive shall voluntarily terminate his employment hereunder, be terminated by the Company without Cause, or terminate his employment hereunder for Good Reason, then the Executive shall not, directly or indirectly (whether as owner, partner, consultant, employee or otherwise), at any time during the six months following termination of his employment with the Company or any affiliate for any reason, engage in or contribute his knowledge to any work or activity that involves a product, process, apparatus, service or development which is then competitive with or similar to a product, process, apparatus, service or development on which he worked or with respect to which he had access to Confidential Information while employed by the Company or an affiliate at any time during the period of five years immediately prior to his Date of Termination ("Competitive Work"). However, the Executive shall be permitted to engage in such proposed work or activity, and the Company shall furnish him a written consent to that effect signed by an officer of the Company, if the Executive shall have furnished to the Company clear and convincing written evidence, including assurances from the Executive and his new employer, that the fulfillment of his duties in such proposed work or activity would not likely cause him to disclose, base judgment upon, or use any Confidential Information. In addition, during his employment by the Company or an affiliate and for a period of six months thereafter, the Executive shall not, directly or indirectly, (i) induce or attempt to induce a salaried employee of the Company or any of its affiliates to accept employment or affiliation involving Competitive Work with another firm or corporation of which the Executive is an employee, owner, partner or consultant, or (ii) induce or attempt to induce any customer, supplier, licensee or other person having a business relationship with the Company to cease doing business with the Company or interfere materially with the relationship 8

between the Company and any such customer, supplier, licensee or other person having a business relationship with the Company. (c) Injunctive Relief. Executive agrees that the restrictions imposed upon him by this Section 7 are fair and reasonable considering the nature of the Company's business and are reasonably required for the protection of the Company. Executive also acknowledges that a breach of any of the provisions of this Section 7 may result in continuing and irreparable damages to the Company for which there may be no adequate remedy at law, and that the Company, in addition to all other relief available to it, shall be entitled to the issuance of a temporary restraining order, preliminary injunction and permanent injunction restraining the Executive from committing or continuing to commit any breach of the provisions of this Section 7. (d) Blue Pencil. If, at any time, the provisions of this Section 7 shall be determined to be invalid or unenforceable

between the Company and any such customer, supplier, licensee or other person having a business relationship with the Company. (c) Injunctive Relief. Executive agrees that the restrictions imposed upon him by this Section 7 are fair and reasonable considering the nature of the Company's business and are reasonably required for the protection of the Company. Executive also acknowledges that a breach of any of the provisions of this Section 7 may result in continuing and irreparable damages to the Company for which there may be no adequate remedy at law, and that the Company, in addition to all other relief available to it, shall be entitled to the issuance of a temporary restraining order, preliminary injunction and permanent injunction restraining the Executive from committing or continuing to commit any breach of the provisions of this Section 7. (d) Blue Pencil. If, at any time, the provisions of this Section 7 shall be determined to be invalid or unenforceable under any applicable law, by reason of being vague or unreasonable as to area, duration or scope of activity, this Agreement shall be considered divisible and shall become and be immediately amended to only such area, duration and scope of activity as shall be determined to be reasonable and enforceable by the court or other body having jurisdiction over the matter and the Executive and the Company agree that this Agreement as amended shall be valid and binding as though any invalid or unenforceable provision had not been included herein. 8. Successors. (a) This Agreement is personal to the Executive and without the prior written consent of the Company shall not be assignable by the Executive otherwise than by will or the laws of descent and distribution. This Agreement shall inure to the benefit of and be enforceable by the Executive's legal representatives. (b) This Agreement shall inure to the benefit of and be binding upon the Company and its successors and assigns. 9. Miscellaneous. (a) This Agreement shall be governed by and construed in accordance with the laws of the State of Delaware, without reference to principles of conflict of laws. The captions of this Agreement are not part of the provisions hereof and shall have no force or effect. This Agreement may not be amended or modified otherwise than by a written agreement executed by the parties hereto or their respective successors and legal representatives. (b) All notices and other communications hereunder shall be in writing and shall be given by hand delivery to the other party or by registered or certified mail, return receipt requested, postage prepaid, addressed as follows: 9

If to the Executive: Jeffry N. Quinn [home address] If to the Company: Paul H. Hatfield Chairman of the Board Solutia Inc. P.O. Box 66760 St. Louis, MO 63166-6760 With a copy to:

If to the Executive: Jeffry N. Quinn [home address] If to the Company: Paul H. Hatfield Chairman of the Board Solutia Inc. P.O. Box 66760 St. Louis, MO 63166-6760 With a copy to: Rosemary L. Klein Vice President, Secretary and General Counsel - Corporate and External Affairs Solutia Inc. P.O. Box 66760 St. Louis, MO 63166-6760 or to such other address as either party shall have furnished to the other in writing in accordance herewith. Notice and communications shall be effective when actually received by the addressee. (c) The invalidity or unenforceability of any one or more provisions of this Agreement shall not affect the validity or enforceability of any other provision of this Agreement, which shall remain in full force and effect. (d) The Company may withhold from any amounts payable under this Agreement such Federal, state, local or foreign taxes as shall be required to be withheld pursuant to any applicable law or regulation. (e) The Executive's or the Company's failure to insist upon strict compliance with any provision of this Agreement or the failure to assert any right the Executive or the Company may have hereunder shall not be deemed to be a waiver of such provision or right or any other provision or right of this Agreement. (f) This Agreement constitutes the entire agreement between the parties with respect to the subject matter hereof and supersedes all prior agreements, oral and written, between the parties hereto with respect to the subject matter hereof. This Agreement also supersedes, without limitation, the Employment Agreement dated as of February 26, 2003 between the Company and the Executive (the "Change in Control Agreement"), the Agreement dated as of December, 2003 between the Company and the Executive (the "Retention Agreement") and any other prior employment agreement between the Company and the 10

Executive and the Executive waives all rights with respect to such agreements, including, without limitation, any claims for damages related to such agreements; provided, that this Agreement shall have no effect on the Executive's rights under any plan, program, policy or practice provided by the Company or any of its affiliated companies except that the benefits and other payments provided for pursuant to Section 5 hereof shall be in lieu of any severance or separation pay or benefits to which the Executive might otherwise be entitled under any plan, program, policy or arrangement of the Company and its affiliates. In consideration of the promises set forth in the Agreement, and of the mutual releases set forth in this paragraph, each party hereto relinquishes all rights, and releases the other from all promises, liabilities and commitments that may have existed under the Change in Control Agreement, the Retention Agreement, and any other employment agreements, which shall be null and void and of no further effect. (g) No amounts shall be payable pursuant to Section 5(a)(i)(B) or 5(d) of this Agreement unless and until the Executive shall have executed and delivered a waiver and release of claims against the Company substantially in

Executive and the Executive waives all rights with respect to such agreements, including, without limitation, any claims for damages related to such agreements; provided, that this Agreement shall have no effect on the Executive's rights under any plan, program, policy or practice provided by the Company or any of its affiliated companies except that the benefits and other payments provided for pursuant to Section 5 hereof shall be in lieu of any severance or separation pay or benefits to which the Executive might otherwise be entitled under any plan, program, policy or arrangement of the Company and its affiliates. In consideration of the promises set forth in the Agreement, and of the mutual releases set forth in this paragraph, each party hereto relinquishes all rights, and releases the other from all promises, liabilities and commitments that may have existed under the Change in Control Agreement, the Retention Agreement, and any other employment agreements, which shall be null and void and of no further effect. (g) No amounts shall be payable pursuant to Section 5(a)(i)(B) or 5(d) of this Agreement unless and until the Executive shall have executed and delivered a waiver and release of claims against the Company substantially in the form attached hereto as Exhibit A. (h) Except as otherwise provided by Section 7(c), in the event of any dispute, controversy or claim arising out of or relating to this Agreement or Executive's employment or termination thereof, the parties hereby agree to settle such dispute, controversy or claim in a binding arbitration by a single arbitrator in accordance with the Commercial Arbitration Rules of the American Arbitration Association, which arbitration shall be conducted in St. Louis, Missouri. The parties agree that the arbitral award shall be final and non-appealable and, except as otherwise provided by Section 7(c), shall be the sole and exclusive remedy between the parties hereunder. The parties agree that judgment on the arbitral award may be entered in any court having competent jurisdiction over the parties or their assets. IN WITNESS WHEREOF, the Executive has hereunto set the Executive's hand and, pursuant to the authorization from its Board of Directors, the Company has caused these presents to be executed in its name on its behalf, all as of the day and year first above written.
/s/ Jeffry N. Quinn ------------------------------------Jeffry N. Quinn

SOLUTIA INC.
By: /s/ Paul H. Hatfield --------------------------------Paul H. Hatfield Chairman of the Board

11 Exhibit A WAIVER AND RELEASE Reference is made to that Agreement (the "Agreement"), dated as of July 19, 2004, by and between Solutia, Inc., a Delaware Corporation (the "Company"), and Jeffry N. Quinn (the "Executive"). This Waiver and Release (this "Waiver") is made as of the __ day of ____________, 200_, by the Executive pursuant to Section 9(g) of the Agreement. Release and Waiver of Claims Against the Company (a) The Executive, on behalf of himself, his agents, heirs, successors, assigns, executors and administrators, in consideration for the payments and other consideration provided for under the Agreement, hereby forever releases and discharges the Company and its successors, their affiliated entities, and their past and present directors, employees, agents, attorneys, accountants, representatives, plan fiduciaries, successors and assigns

Exhibit A WAIVER AND RELEASE Reference is made to that Agreement (the "Agreement"), dated as of July 19, 2004, by and between Solutia, Inc., a Delaware Corporation (the "Company"), and Jeffry N. Quinn (the "Executive"). This Waiver and Release (this "Waiver") is made as of the __ day of ____________, 200_, by the Executive pursuant to Section 9(g) of the Agreement. Release and Waiver of Claims Against the Company (a) The Executive, on behalf of himself, his agents, heirs, successors, assigns, executors and administrators, in consideration for the payments and other consideration provided for under the Agreement, hereby forever releases and discharges the Company and its successors, their affiliated entities, and their past and present directors, employees, agents, attorneys, accountants, representatives, plan fiduciaries, successors and assigns from any and all known and unknown causes of action, actions, judgments, liens, indebtedness, damages, losses, claims, liabilities, and demands of whatsoever kind and character in any manner whatsoever arising on or prior to the date of this Waiver, including but not limited to (i) any claim for breach of contract, breach of implied covenant, breach of oral or written promise, wrongful termination, intentional infliction of emotional distress, defamation, interference with contract relations or prospective economic advantage, negligence, misrepresentation or employment discrimination, and including without limitation alleged violations of Title VII of the Civil Rights Act of 1964, as amended, prohibiting discrimination based on race, color, religion, sex or national origin; the Family and Medical Leave Act; the Americans With Disabilities Act; the Age Discrimination in Employment Act; other federal, state and local laws, ordinances and regulations; and any unemployment or workers' compensation law, excepting only those obligations of the Company expressly recited in the Agreement or this Waiver and any claims to benefits under the Company's employee benefit plans as defined exclusively in written plan documents; (ii) any and all liability that was or may have been alleged against or imputed to the Company by the Executive or by anyone acting on his behalf; (iii) all claims for wages, monetary or equitable relief, employment or reemployment with the Company in any position, and any punitive, compensatory or liquidated damages; and (iv) all rights to and claims for attorneys' fees and costs except as otherwise provided herein or in the Agreement. (b) The Executive shall not file or cause to be filed any action, suit, claim, charge or proceeding with any federal, state or local court or agency relating to any claim within the scope of this Waiver. In the event there is presently pending any action, suit, claim, charge or proceeding within the scope of this Waiver, or if such a proceeding is commenced in the future, the Executive shall promptly withdraw it, with prejudice, to the extent he has the power to do so. The Executive represents and warrants that he has not assigned any claim released herein, or authorized any other person to assert any claim on his behalf. (c) In the event any action, suit, claim, charge or proceeding within the scope of this Waiver is brought by any government agency, putative class representative or other third party to vindicate any alleged rights of the Executive, (i) the Executive shall, except to the extent 12

required or compelled by law, legal process or subpoena, refrain from participating, testifying or producing documents therein, and (ii) all damages, inclusive of attorneys' fees, if any, required to be paid to the Executive by the Company as a consequence of such action, suit, claim, charge or proceeding shall be repaid to the Company by the Executive within ten (10) days of his receipt thereof. (d) In the event of a breach of this Waiver by the Executive, the Company's obligations pursuant to the Agreement shall cease as of the date of such breach. Furthermore, the Executive understands that his breach of the provisions of this Waiver will cause monetary damages to the Company. Thus, should the Executive breach the provisions of this Waiver, he shall be required to pay the Company, as liquidated damages, the amount of the consideration paid by the Company to the Executive pursuant to the Agreement plus all costs and expenses, including all attorneys' fees and expenses, that the Company incurs in enforcing this Waiver. The Executive agrees that the foregoing amount of liquidated damages is reasonable and necessary, and does not constitute a penalty.

required or compelled by law, legal process or subpoena, refrain from participating, testifying or producing documents therein, and (ii) all damages, inclusive of attorneys' fees, if any, required to be paid to the Executive by the Company as a consequence of such action, suit, claim, charge or proceeding shall be repaid to the Company by the Executive within ten (10) days of his receipt thereof. (d) In the event of a breach of this Waiver by the Executive, the Company's obligations pursuant to the Agreement shall cease as of the date of such breach. Furthermore, the Executive understands that his breach of the provisions of this Waiver will cause monetary damages to the Company. Thus, should the Executive breach the provisions of this Waiver, he shall be required to pay the Company, as liquidated damages, the amount of the consideration paid by the Company to the Executive pursuant to the Agreement plus all costs and expenses, including all attorneys' fees and expenses, that the Company incurs in enforcing this Waiver. The Executive agrees that the foregoing amount of liquidated damages is reasonable and necessary, and does not constitute a penalty. Voluntary Execution of Waiver. BY HIS SIGNATURE BELOW, THE EXECUTIVE ACKNOWLEDGES THAT: (A) I HAVE RECEIVED A COPY OF THIS WAIVER AND WAS OFFERED A PERIOD OF TWENTY-ONE (21) DAYS TO REVIEW AND CONSIDER IT; (B) IF I SIGN THIS WAIVER PRIOR TO THE EXPIRATION OF TWENTY-ONE (21) DAYS, I KNOWINGLY AND VOLUNTARILY WAIVE AND GIVE UP THIS RIGHT OF REVIEW; (C) I HAVE THE RIGHT TO REVOKE THIS WAIVER FOR A PERIOD OF SEVEN (7) DAYS AFTER I SIGN IT BY MAILING OR DELIVERING A WRITTEN NOTICE OF REVOCATION TO THE COMPANY'S CHAIRMAN OF THE BOARD OR GENERAL COUNSEL, NO LATER THAN THE CLOSE OF BUSINESS ON THE SEVENTH DAY AFTER THE DAY ON WHICH I SIGNED THIS WAIVER; (D) THIS WAIVER SHALL NOT BECOME EFFECTIVE OR ENFORCEABLE UNTIL THE SEVEN DAY REVOCATION PERIOD HAS EXPIRED WITHOUT THE WAIVER HAVING BEEN REVOKED; (E) THIS WAIVER WILL BE FINAL AND BINDING AFTER THE EXPIRATION OF THE REVOCATION PERIOD REFERRED TO IN (C). I AGREE NOT TO CHALLENGE ITS ENFORCEABILITY; (F) I AM AWARE OF MY RIGHT TO CONSULT AN ATTORNEY, HAVE BEEN ADVISED IN WRITING TO CONSULT WITH AN ATTORNEY, AND HAVE HAD THE OPPORTUNITY TO CONSULT WITH AN ATTORNEY, IF DESIRED, PRIOR TO SIGNING THIS WAIVER; 13

(G) NO PROMISE OR INDUCEMENT FOR THIS WAIVER HAS BEEN MADE EXCEPT AS SET FORTH IN THIS WAIVER; (H) I AM LEGALLY COMPETENT TO EXECUTE THIS WAIVER AND ACCEPT FULL RESPONSIBILITY FOR IT; AND (I) I HAVE CAREFULLY READ THIS WAIVER, ACKNOWLEDGE THAT I HAVE NOT RELIED ON ANY REPRESENTATION OR STATEMENT, WRITTEN OR ORAL, NOT SET FORTH IN THIS DOCUMENT OR THE AGREEMENT, AND WARRANT AND REPRESENT THAT I AM SIGNING THIS WAIVER KNOWINGLY AND VOLUNTARILY. Intending to be legally bound, I have signed this Waiver as of the date first set forth above. Jeffry N. Quinn

(G) NO PROMISE OR INDUCEMENT FOR THIS WAIVER HAS BEEN MADE EXCEPT AS SET FORTH IN THIS WAIVER; (H) I AM LEGALLY COMPETENT TO EXECUTE THIS WAIVER AND ACCEPT FULL RESPONSIBILITY FOR IT; AND (I) I HAVE CAREFULLY READ THIS WAIVER, ACKNOWLEDGE THAT I HAVE NOT RELIED ON ANY REPRESENTATION OR STATEMENT, WRITTEN OR ORAL, NOT SET FORTH IN THIS DOCUMENT OR THE AGREEMENT, AND WARRANT AND REPRESENT THAT I AM SIGNING THIS WAIVER KNOWINGLY AND VOLUNTARILY. Intending to be legally bound, I have signed this Waiver as of the date first set forth above. Jeffry N. Quinn 14

ATTACHMENT I SOLUTIA INC. EMERGENCE INCENTIVE BONUS PROGRAM Participation Participation in the bonus pool established under the Solutia Inc. Emergence Incentive Bonus Program shall be extended to those key senior executives of the Company and in such percentages as shall be determined by the Board of Directors. Performance Measures The aggregate dollar value of the bonus pool shall be calculated by reference to three metrics as follows: a. 25% allocation for achieving target EBITDA* for the 12-month period ending on the six-month anniversary of the day at which both (x) the United States Bankruptcy Court for the Southern District of New York shall have confirmed a plan of reorganization of the Company under Chapter 11 of the United States Bankruptcy Code, and (y) such confirmation shall have become non-appealable (the "Emergence Date"); b. 25% allocation for achieving target Enterprise Value based on market value on six-month anniversary of the Emergence Date;** and c. 50% allocation for achieving target Unsecured Creditor Recoveries based on trading prices as of six-month anniversary of the Emergence Date.*** The portion of the bonus pool allocated to each metric can exceed 100%, but the aggregate pool cannot exceed $7.5 million. Thus, up to $2,343,750 can be earned for the pool based on EBITDA, up to $2,250,000 based on enterprise value, and up to $5,625,000 based on unsecured creditor recovery, provided the aggregate does not exceed $7.5 million. The EBITDA, Enterprise Value and Creditor Recovery Metrics are as follows: EBITDA
Performance Relative to Plan ----------------------------------------------------------------------------------------------------------------------------------%Earned 70% 75% 80% 85% 90% 95% 100% 105% 110% 115% 120%

ATTACHMENT I SOLUTIA INC. EMERGENCE INCENTIVE BONUS PROGRAM Participation Participation in the bonus pool established under the Solutia Inc. Emergence Incentive Bonus Program shall be extended to those key senior executives of the Company and in such percentages as shall be determined by the Board of Directors. Performance Measures The aggregate dollar value of the bonus pool shall be calculated by reference to three metrics as follows: a. 25% allocation for achieving target EBITDA* for the 12-month period ending on the six-month anniversary of the day at which both (x) the United States Bankruptcy Court for the Southern District of New York shall have confirmed a plan of reorganization of the Company under Chapter 11 of the United States Bankruptcy Code, and (y) such confirmation shall have become non-appealable (the "Emergence Date"); b. 25% allocation for achieving target Enterprise Value based on market value on six-month anniversary of the Emergence Date;** and c. 50% allocation for achieving target Unsecured Creditor Recoveries based on trading prices as of six-month anniversary of the Emergence Date.*** The portion of the bonus pool allocated to each metric can exceed 100%, but the aggregate pool cannot exceed $7.5 million. Thus, up to $2,343,750 can be earned for the pool based on EBITDA, up to $2,250,000 based on enterprise value, and up to $5,625,000 based on unsecured creditor recovery, provided the aggregate does not exceed $7.5 million. The EBITDA, Enterprise Value and Creditor Recovery Metrics are as follows: EBITDA
Performance Relative to Plan ----------------------------------------------------------------------------------------------------------------------------------%Earned 70% 75% 80% 85% 90% 95% 100% 105% 110% 115% 120% -------------------------------------------------------------------------------------------------------% of $1.875M Pool (25% of $7.5M) 0% 0% 0% 0% 0% 20% 30% 55% 75% 100% 125% --------------------------------------------------------------------------------------------------------

15 ENTERPRISE VALUE
Enterprise Value (in billions) -------------------------------------------------------------------------------------------------------------------------------------% Earned $1.20 $1.30 $1.40 $1.50 $1.60 $1.70 $1.80 $1.90 $2.00 $2.10 $2.20 $2.30 --------------------------------------------------------------------------------------------------------% of $1.875M Pool (25% of $7.5M) 0% 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% ---------------------------------------------------------------------------------------------------------

ENTERPRISE VALUE
Enterprise Value (in billions) -------------------------------------------------------------------------------------------------------------------------------------% Earned $1.20 $1.30 $1.40 $1.50 $1.60 $1.70 $1.80 $1.90 $2.00 $2.10 $2.20 $2.30 --------------------------------------------------------------------------------------------------------% of $1.875M Pool (25% of $7.5M) 0% 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% ---------------------------------------------------------------------------------------------------------

UNSECURED CREDITOR RECOVERY
Unsecured Creditor Recovery (%) --------------------------------------------------------------------------------------------------------------------------------------% Earned 30% 35% 40% 45% 50% 55% 60% 65% 70% 75% 80% 85% 90% --------------------------------------------------------------------------------------------------------% of $3.75 M UCR Pool (50% of $7.5M) 0% 0% 0% 0% 20% 30% 40% 50% 60% 70% 80% 95% 110% ---------------------------------------------------------------------------------------------------------

The percentage of the bonus pool attributable to the EBITDA, enterprise value or unsecured creditor recovery metric, as applicable, when performance falls between data points in the tables above, shall be determined by using straight line interpolation. Payments Under Program The bonus pool shall be distributed as soon as practicable after the six-month anniversary of the Emergence Date. Each participant who is employed by the Company as of the six-month anniversary of the Emergence Date, or who was employed by the Company as of the Emergence Date and prior to the six-month anniversary thereof shall have been terminated without Cause (as defined in his employment agreement), shall have resigned for Good Reason (as defined in his employment agreement), or shall have died or been terminated for Disability (as defined in his employment agreement), shall receive a cash payment, net of withholding taxes, equal to his allocable share of the bonus pool. The Board of Directors, in its discretion, may make such payment to a participant who is still employed by the Company as of the six-month anniversary of the Emergence Date, by delivering to the participant common stock of the Company with a fair market value equal to the bonus pool payment due to the participant, provided the Company's common stock is actively traded on a recognized securities exchange. If payment is made by delivering common stock, the participant shall have the right to satisfy any withholding tax obligation by having the Company withhold shares of stock with a fair market value equal to the applicable withholding taxes, and the stock shall be valued both for purposes of withholding and for determining the number of shares to be delivered to the participant, at the average common stock trading price for the 20 trading days ending with the day preceding the delivery of stock to the participant. No portion of the bonus pool shall be payable to a participant whose employment by the Company was terminated for Cause or by voluntary resignation on or before the six-month anniversary of the Emergence Date. 16

* EBITDA metric should be measured on a trailing-twelve months basis as of six-months post-emergence relative to the Company's business plan presented to the Committee on April 14, 2004. Pharmaceutical Services should be carved out for purposes of calculating the EBITDA Metric bonus > A sale of Pharmaceutical Services would require interim period adjustments to EBITDA and the benefits of a sale should be picked up in the Unsecured Creditor Recovery metric. Joint venture income should be included.

* EBITDA metric should be measured on a trailing-twelve months basis as of six-months post-emergence relative to the Company's business plan presented to the Committee on April 14, 2004. Pharmaceutical Services should be carved out for purposes of calculating the EBITDA Metric bonus > A sale of Pharmaceutical Services would require interim period adjustments to EBITDA and the benefits of a sale should be picked up in the Unsecured Creditor Recovery metric. Joint venture income should be included. Budgeted restructuring costs that are typically accounted for below the operating income line should be included. Assets sale adjustment mechanism needs to be established. ** Enterprise value should be calculated 6 months post-emergence as follows: 20 day average common stock trading price multiplied by the most recent common shares outstanding Plus: 20-day average trading price of preferred stock multiplied by the amount of preferred shares outstanding, if any Plus: Market value of debt securities Plus: Net proceeds from asset sales, if used to pay down debt. *** The unsecured creditor recovery metric should be based on the 20-day average trading value of securities distributed to all unsecured creditors at 6-months post-emergence divided by the total amount of allowed unsecured claims (including Monsanto claims, if any) in the Company's confirmed Plan of Reorganization. 17

Exhibit 10(d) AGREEMENT AGREEMENT by and between Solutia Inc., a Delaware corporation (the "Company"), and James M. Sullivan (the "Executive"), dated as of the 19th day of July, 2004 (the "Effective Date"). The Board of Directors of the Company (the "Board") has determined that it is in the best interests of the Company and its stakeholders to assure that the Company will have the continued dedication of the Executive until and for a period of time following the Emergence Date (as defined below). To induce the Executive to continue to serve the Company through and beyond the Emergence Date, the Company will provide the Executive with, among other things, a special emergence bonus. It is the Board's judgment that such a special emergence bonus arrangement is in the best interest of the Company and its stakeholders, and is consistent with the desire of the Board to maximize the value of the Company. Therefore, in order to accomplish these objectives, the Board has caused the Company to enter into this Agreement. NOW, THEREFORE, IT IS HEREBY AGREED AS FOLLOWS: 1. Special Emergence Bonus Payments. At such time, if ever (the "Emergence Date"), at which the United States Bankruptcy Court for the Southern District of New York (the "Bankruptcy Court") shall have confirmed a plan of reorganization of the Company under Chapter 11 of the United States Bankruptcy Code and such plan shall have become effective, if the Executive is employed by the Company on the Emergence Date the Executive shall be eligible to receive a special emergence bonus as follows:

Exhibit 10(d) AGREEMENT AGREEMENT by and between Solutia Inc., a Delaware corporation (the "Company"), and James M. Sullivan (the "Executive"), dated as of the 19th day of July, 2004 (the "Effective Date"). The Board of Directors of the Company (the "Board") has determined that it is in the best interests of the Company and its stakeholders to assure that the Company will have the continued dedication of the Executive until and for a period of time following the Emergence Date (as defined below). To induce the Executive to continue to serve the Company through and beyond the Emergence Date, the Company will provide the Executive with, among other things, a special emergence bonus. It is the Board's judgment that such a special emergence bonus arrangement is in the best interest of the Company and its stakeholders, and is consistent with the desire of the Board to maximize the value of the Company. Therefore, in order to accomplish these objectives, the Board has caused the Company to enter into this Agreement. NOW, THEREFORE, IT IS HEREBY AGREED AS FOLLOWS: 1. Special Emergence Bonus Payments. At such time, if ever (the "Emergence Date"), at which the United States Bankruptcy Court for the Southern District of New York (the "Bankruptcy Court") shall have confirmed a plan of reorganization of the Company under Chapter 11 of the United States Bankruptcy Code and such plan shall have become effective, if the Executive is employed by the Company on the Emergence Date the Executive shall be eligible to receive a special emergence bonus as follows: (a) If the Executive is employed by the Company on the six-month anniversary of the Emergence Date, or if, on or subsequent to the Emergence Date but prior to the six-month anniversary thereof, Executive shall have been terminated by the Company without Cause, shall have resigned for Good Reason, or shall have died or been terminated for Disability, then Executive shall be entitled to receive from the Company a special emergence bonus equal to 20% of the bonus pool as determined pursuant to and in accordance with the terms of the Solutia Inc. Emergence Incentive Bonus Program as set forth in Attachment I hereto. (b) If the Executive shall voluntarily terminate his employment other than for Good Reason or shall be terminated by the Company for Cause, in either case between the Emergence Date and the six-month anniversary thereof, then Executive shall forfeit any and all right to receive a special emergence bonus hereunder. 2. Employment Period. The Company hereby agrees to continue the Executive in its employ, and the Executive hereby agrees to remain in the employ of the Company subject to the terms and conditions of this Agreement, for the period (the "Employment Period") commencing on the Effective Date and ending on the sixth month anniversary of the Emergence Date. Where the context permits, all references to the Company shall include an affiliate of the Company by which the Executive is employed. As used in this Agreement, the term "affiliate" or "affiliated companies" shall include any company controlled by, controlling or under common control with 1

the Company. The obligations of the Company and the Executive under this Agreement including, without limitation, the obligations under Sections 1, 5, 6 and 7, shall survive the termination of the Employment Period to the extent necessary to accomplish the purposes thereof. 3. Terms of Employment. (a) Position and Duties. (i) During the Employment Period, (A) the Executive shall serve as Senior Vice President and Chief Financial Officer of the Company, with such authority, duties, responsibilities and reporting requirements as may be reasonably assigned to him from time to time by the Company's Chief Executive Officer and (B) the Executive's

the Company. The obligations of the Company and the Executive under this Agreement including, without limitation, the obligations under Sections 1, 5, 6 and 7, shall survive the termination of the Employment Period to the extent necessary to accomplish the purposes thereof. 3. Terms of Employment. (a) Position and Duties. (i) During the Employment Period, (A) the Executive shall serve as Senior Vice President and Chief Financial Officer of the Company, with such authority, duties, responsibilities and reporting requirements as may be reasonably assigned to him from time to time by the Company's Chief Executive Officer and (B) the Executive's services shall be performed at the location where the Executive was employed immediately preceding the Effective Date or at any office or location of the Company not more than 50 miles from the Company's headquarters in St. Louis, Missouri. (ii) During the Employment Period, the Executive shall serve the Company faithfully, diligently and to the best of his ability, and shall devote substantially all of his time and efforts during normal business hours to the business and affairs of the Company. During the Employment Period it shall not be a violation of this Agreement for the Executive to (A) deliver lectures, fulfill speaking engagements or teach at educational institutions, and (B) manage personal investments, so long as such activities described in clauses A and B do not interfere with the performance of the Executive's responsibilities as an employee of the Company in accordance with this Agreement, and (C) with the advance approval of the Board, serve on corporate, civic or charitable boards or committees. (b) Compensation. (i) Base Salary. During the Employment Period, the Executive shall receive an annual base salary ("Annual Base Salary") of not less than $275,000, which shall be paid in accordance with the Company's normal payroll practices and shall apply retroactively to May 5, 2004. (ii) Annual Bonuses. In addition to Annual Base Salary, the Executive shall participate in the Company's Annual Incentive Program, or any successor annual bonus plan(s), with a target annual bonus opportunity of 75% of his Annual Base Salary. The Executive shall receive an annual bonus of $100,000 with respect to calendar year 2003. In addition, during the Employment Period, the Executive shall be entitled to participate in all long-term and other incentive plans, practices, policies and programs generally applicable to senior executive officers of the Company and its affiliated companies. (iii) Savings and Retirement Plans. During the Employment Period, the Executive shall be entitled to participate in all savings and retirement plans, practices, policies and programs generally applicable to senior executive officers of the Company 2

and its affiliated companies, subject to the Board's authority to modify or terminate any such plans, practices, policies or programs on a Company-wide basis at any time. (iv) Welfare Benefit Plans. During the Employment Period, the Executive and/or the Executive's family, as the case may be, shall be eligible for participation in and shall receive all benefits under welfare benefit plans, practices, policies and programs provided by the Company and its affiliated companies (including, without limitation, medical, prescription, dental, disability, salary continuance, employee life, group life, accidental death and travel accident insurance plans and programs) to the extent generally applicable to senior executive officers of the Company and its affiliated companies, subject to the Board's authority to modify or terminate any such plans, practices, policies or programs on a Company-wide basis at any time. (v) Expenses. During the Employment Period, the Executive shall be entitled to receive prompt reimbursement, in accordance with Company policy, for all reasonable expenses incurred by the Executive in performing his duties hereunder.

and its affiliated companies, subject to the Board's authority to modify or terminate any such plans, practices, policies or programs on a Company-wide basis at any time. (iv) Welfare Benefit Plans. During the Employment Period, the Executive and/or the Executive's family, as the case may be, shall be eligible for participation in and shall receive all benefits under welfare benefit plans, practices, policies and programs provided by the Company and its affiliated companies (including, without limitation, medical, prescription, dental, disability, salary continuance, employee life, group life, accidental death and travel accident insurance plans and programs) to the extent generally applicable to senior executive officers of the Company and its affiliated companies, subject to the Board's authority to modify or terminate any such plans, practices, policies or programs on a Company-wide basis at any time. (v) Expenses. During the Employment Period, the Executive shall be entitled to receive prompt reimbursement, in accordance with Company policy, for all reasonable expenses incurred by the Executive in performing his duties hereunder. (vi) Vacation. During the Employment Period, the Executive shall be entitled to paid vacation in accordance with the plans, policies, programs and practices of the Company and its affiliated companies as in effect from time to time. 4. Termination of Employment. (a) Death or Disability. The Executive's employment shall terminate automatically upon the Executive's death during the Employment Period. If the Company determines in good faith that the Disability of the Executive has occurred during the Employment Period (pursuant to the definition of Disability set forth below), it may give to the Executive written notice in accordance with Section 9(b) of this Agreement of its intention to terminate the Executive's employment. In such event, the Executive's employment with the Company shall terminate effective on the 30th day after receipt of such notice by the Executive (the "Disability Effective Date"), provided that, within the 30 days after such receipt, the Executive shall not have returned to full-time performance of the Executive's duties. For purposes of this Agreement, "Disability" shall mean the Executive's long-term disability for purposes of any reasonable occupation as determined under the Company's disability plan that is applicable to the Executive. (b) Cause. The Company may terminate the Executive's employment during the Employment Period for Cause. For purposes of this Agreement, "Cause" shall mean: (i) the willful and continued failure of the Executive to perform substantially the Executive's duties with the Company or one of its affiliates (other than any such failure resulting from incapacity due to physical or mental illness), after a written demand for substantial performance is delivered to the Executive by the Board or the Chief Executive Officer of the Company which specifically identifies the manner in which the Board or Chief Executive Officer believes that the Executive has not substantially performed the Executive's duties; 3

(ii) the willful engaging by the Executive in illegal conduct or gross misconduct which is materially and demonstrably injurious to the Company; (iii) the Executive's conviction of, or plea of guilty or no contest to, a felony or any other crime involving moral turpitude, fraud, theft, embezzlement or dishonesty; or (iv) the Executive's habitual drug or alcohol abuse. For purposes of this provision, no act or failure to act, on the part of the Executive, shall be considered "willful" unless it is done, or omitted to be done, by the Executive in bad faith or without reasonable belief that the Executive's action or omission was in the best interests of the Company. Any act, or failure to act, based upon authority given pursuant to a resolution duly adopted by the Board or upon the instructions of the Chief Executive Officer or a senior officer of the Company or based upon the advice of counsel for the Company shall be conclusively presumed to be done, or omitted to be done, by the Executive in good faith and in the best interests

(ii) the willful engaging by the Executive in illegal conduct or gross misconduct which is materially and demonstrably injurious to the Company; (iii) the Executive's conviction of, or plea of guilty or no contest to, a felony or any other crime involving moral turpitude, fraud, theft, embezzlement or dishonesty; or (iv) the Executive's habitual drug or alcohol abuse. For purposes of this provision, no act or failure to act, on the part of the Executive, shall be considered "willful" unless it is done, or omitted to be done, by the Executive in bad faith or without reasonable belief that the Executive's action or omission was in the best interests of the Company. Any act, or failure to act, based upon authority given pursuant to a resolution duly adopted by the Board or upon the instructions of the Chief Executive Officer or a senior officer of the Company or based upon the advice of counsel for the Company shall be conclusively presumed to be done, or omitted to be done, by the Executive in good faith and in the best interests of the Company. The cessation of employment of the Executive shall not be deemed to be for Cause unless and until there shall have been delivered to the Executive a copy of a resolution duly adopted by the affirmative vote of not less than a majority of the entire membership of the Board at a meeting of the Board called and held for such purpose (after reasonable notice is provided to the Executive and the Executive is given an opportunity, together with counsel, in the case of conduct described in subparagraph (i) or (ii) above, to be heard before the Board), finding that, in the good faith opinion of the Board, the Executive is guilty of the conduct described in subparagraph (i), (ii), (iii) or (iv) above, and specifying the particulars thereof in detail. (c) Good Reason. The Executive's employment may be terminated by the Executive for Good Reason. For purposes of this Agreement, "Good Reason" shall mean: (i) a material failure by the Company to comply with any of the provisions of Section 3(b) of this Agreement relating to compensation, other than an isolated, insubstantial and inadvertent failure not occurring in bad faith and which is remedied by the Company promptly after receipt of notice thereof given by the Executive; (ii) the assignment to the Executive of any duties inconsistent in any respect with the Executive's position as Senior Vice President and Chief Financial Officer of the Company and the authority, duties and responsibilities contemplated by Section 3(a) of this Agreement, or any other action by the Company which results in a material diminution in such position, authority, duties or responsibilities, excluding for this purpose an isolated, insubstantial and inadvertent action not taken in bad faith and which is remedied by the Company promptly after receipt of notice thereof given by the Executive; provided, that, a sale by the Company of substantially all of its assets shall constitute a diminution in Executive's position, authority, duties and responsibilities for purposes of this Section 4(c)(ii); or 4

(iii) the Company's requiring the Executive to be based at any office or location other than as provided in Section 3(a)(i)(B) hereof or the Company's requiring the Executive to travel on Company business to a substantially greater extent than required immediately prior to the Effective Date. If the executive terminates his employment for Good Reason pursuant to subparagraph (ii) above, as a result of a sale by the Company of substantially all of its assets, then the Executive shall make himself available to the Company as a paid independent consultant for such fee, at such times, over such period of time and for such number of hours as the parties shall reasonably agree, taking account of any new employment that the Executive may undertake. (d) Notice of Termination. Any termination by the Company for Cause, or by the Executive for Good Reason, shall be communicated by Notice of Termination to the other party hereto given in accordance with Section 9(b) of this Agreement. For purposes of this Agreement, a "Notice of Termination" means a written notice which (i) indicates the specific termination provision in this Agreement relied upon, (ii) to the extent applicable, sets forth in reasonable detail the facts and circumstances claimed to provide a basis for termination of the Executive's employment under the provision so indicated and (iii) if the Date of Termination (as defined below) is other than the date of receipt of such notice, specifies the termination date (which date shall be not

(iii) the Company's requiring the Executive to be based at any office or location other than as provided in Section 3(a)(i)(B) hereof or the Company's requiring the Executive to travel on Company business to a substantially greater extent than required immediately prior to the Effective Date. If the executive terminates his employment for Good Reason pursuant to subparagraph (ii) above, as a result of a sale by the Company of substantially all of its assets, then the Executive shall make himself available to the Company as a paid independent consultant for such fee, at such times, over such period of time and for such number of hours as the parties shall reasonably agree, taking account of any new employment that the Executive may undertake. (d) Notice of Termination. Any termination by the Company for Cause, or by the Executive for Good Reason, shall be communicated by Notice of Termination to the other party hereto given in accordance with Section 9(b) of this Agreement. For purposes of this Agreement, a "Notice of Termination" means a written notice which (i) indicates the specific termination provision in this Agreement relied upon, (ii) to the extent applicable, sets forth in reasonable detail the facts and circumstances claimed to provide a basis for termination of the Executive's employment under the provision so indicated and (iii) if the Date of Termination (as defined below) is other than the date of receipt of such notice, specifies the termination date (which date shall be not more than thirty days after the giving of such notice). The failure by the Executive or the Company to set forth in the Notice of Termination any fact or circumstance which contributes to a showing of Good Reason or Cause shall not waive any right of the Executive or the Company, respectively, hereunder or preclude the Executive or the Company, respectively, from asserting such fact or circumstance in enforcing the Executive's or the Company's rights hereunder. (e) Date of Termination. "Date of Termination" means (i) if the Executive's employment is terminated by the Company for Cause, or by the Executive for Good Reason, the date of receipt of the Notice of Termination or any later date specified therein, as the case may be, (ii) if the Executive's employment is terminated by the Company other than for Cause or Disability, the Date of Termination shall be the date on which the Company notifies the Executive of such termination and (iii) if the Executive's employment is terminated by reason of death or Disability, the Date of Termination shall be the date of death of the Executive or the Disability Effective Date, as the case may be. 5. Obligations of the Company upon Termination. (a) Good Reason; Other Than for Cause. If, during the Employment Period, the Company shall terminate the Executive's employment other than for Cause or the Executive shall terminate employment for Good Reason: (i) the Company shall pay to the Executive in a lump sum in cash within ten days of the Date of Termination, the aggregate of the following amounts: A. the sum of (1) the Executive's accrued Annual Base Salary through the Date of Termination, (2) any annual bonus earned by the Executive with respect to the previous year, and (3) any accrued vacation pay, in each case 5

to the extent not theretofore paid (the sum of the amounts described in clauses (1), (2) and (3) shall be hereinafter referred to as the "Accrued Obligations"); B. an amount equal to 125% of Executive's Annual Base Salary immediately prior to the Date of Termination (the "Severance Payment"); and C. if the Date of Termination is on or subsequent to the Emergence Date but not later than the six month anniversary thereof, in lieu of the Severance Payment pursuant to clause (B), Executive shall receive the amount, if any, to which he is entitled under the Solutia Inc. Emergence Incentive Bonus Program at such time as amounts are payable thereunder. (ii) subject to the provisions of Sections (9)(f) hereof, to the extent not theretofore paid or provided, the Company shall timely pay or provide to the Executive any other amounts or benefits, excluding any severance or

to the extent not theretofore paid (the sum of the amounts described in clauses (1), (2) and (3) shall be hereinafter referred to as the "Accrued Obligations"); B. an amount equal to 125% of Executive's Annual Base Salary immediately prior to the Date of Termination (the "Severance Payment"); and C. if the Date of Termination is on or subsequent to the Emergence Date but not later than the six month anniversary thereof, in lieu of the Severance Payment pursuant to clause (B), Executive shall receive the amount, if any, to which he is entitled under the Solutia Inc. Emergence Incentive Bonus Program at such time as amounts are payable thereunder. (ii) subject to the provisions of Sections (9)(f) hereof, to the extent not theretofore paid or provided, the Company shall timely pay or provide to the Executive any other amounts or benefits, excluding any severance or separation pay or benefits, required to be paid or provided or which the Executive is eligible to receive under any plan, program, policy, practice, contract or agreement of the Company and its affiliated companies, including, without limitation, the vested benefit, if any, of the Executive under any qualified defined benefit or defined contribution retirement plan of the Company and its affiliated companies in which the Executive participates, in accordance with the terms of such plan (such other amounts and benefits shall be hereinafter referred to as the "Other Benefits"); (iii) the Company shall continue to provide at its expense (on the same basis as at the Executive's Date of Termination) for the continued participation of the Executive and, to the extent applicable, his family, in the Company's medical, dental, vision and life insurance plans and programs, for a period of four months commencing with the Date of Termination; and (iv) upon request of the Executive, the Company shall provide outplacement services to the Executive for up to twelve months and up to an aggregate cost of $25,000. (b) Death. If the Executive's employment is terminated by reason of the Executive's death during the Employment Period, this Agreement shall terminate without further obligations to the Executive's legal representatives under this Agreement, other than for timely payment or provision of the following: (i) Accrued Obligations; (ii) Other Benefits; and (iii) if such termination occurs on or after the Emergence Date but not later than the six-month anniversary thereof, the amount, if any, to which Executive is entitled under the Solutia Inc. Emergence Incentive Bonus Program. 6

Accrued Obligations shall be paid to the Executive's estate or beneficiary, as applicable, in a lump sum in cash within 30 days of the Date of Termination. (c) Disability. If the Executive's employment is terminated by reason of the Executive's Disability during the Employment Period, this Agreement shall terminate without further obligations to the Executive, other than for timely payment or provision of the following: (i) Accrued Obligations; (ii) Other Benefits; and (iii) if such termination occurs on or after the Emergence Date but not later than the six-month anniversary thereof, the amount, if any, to which Executive is entitled under the Solutia Inc. Emergence Incentive Bonus Program. Accrued Obligations shall be paid to the Executive in a lump sum in cash within 30 days of the Date of Termination.

Accrued Obligations shall be paid to the Executive's estate or beneficiary, as applicable, in a lump sum in cash within 30 days of the Date of Termination. (c) Disability. If the Executive's employment is terminated by reason of the Executive's Disability during the Employment Period, this Agreement shall terminate without further obligations to the Executive, other than for timely payment or provision of the following: (i) Accrued Obligations; (ii) Other Benefits; and (iii) if such termination occurs on or after the Emergence Date but not later than the six-month anniversary thereof, the amount, if any, to which Executive is entitled under the Solutia Inc. Emergence Incentive Bonus Program. Accrued Obligations shall be paid to the Executive in a lump sum in cash within 30 days of the Date of Termination. (d) Cause; Other than for Good Reason. If the Executive's employment shall be terminated for Cause during the Employment Period, or if the Executive voluntarily terminates employment during the Employment Period, excluding a termination for Good Reason, this Agreement shall terminate without further obligations to the Executive, other than for Accrued Obligations and the timely payment or provision of Other Benefits. In such case, all Accrued Obligations shall be paid to the Executive in a lump sum in cash within 30 days of the Date of Termination. 6. Full Settlement; Legal Fees. The Company's obligation to make the payments provided for in this Agreement and otherwise to perform its obligations hereunder shall not be affected by any set-off, counterclaim, recoupment, defense or other claim, right or action which the Company may have against the Executive or others. In no event shall the Executive be obligated to seek other employment or take any other action by way of mitigation of the amounts payable to the Executive under any of the provisions of this Agreement, and such amounts shall not be reduced whether or not the Executive obtains other employment. The Company agrees to pay, to the full extent permitted by law, all legal fees and expenses which the Executive may reasonably incur as a result of any contest, in which the Executive is the prevailing party, by the Company, the Executive or others of the validity or enforceability of, or liability under, any provision of this Agreement or any guarantee of performance thereof (whether such contest is between the Company and the Executive or between either of them and any third party, and including as a result of any contest by the Executive about the amount of any payment pursuant to this Agreement), plus in each case interest on any payment from the time at which the liability for the applicable legal fees and expenses was incurred by Executive, at the applicable Federal rate provided for in Section 7872(f) (2) (A) of the Internal Revenue Code of 1986, as amended (the "Code"). 7. Confidential Information and Competitive Activity. (a) Confidential Information. As used herein, "Confidential Information" means all technical and business information of the Company and its affiliated companies, 7

whether patentable or not, which is of a confidential, trade secret and/or proprietary character and which is either developed by the Executive (alone or with others) or to which the Executive has had access during the Executive's employment. "Confidential Information" shall also include confidential evaluations of, and the confidential use or non-use by the Company or any affiliated company of, technical or business information in the public domain. The Executive shall use the Executive's best efforts and diligence both during and after employment by the Company to protect the confidential, trade secret and/or proprietary character of all Confidential Information. The Executive shall not, directly or indirectly, use (for the Executive or another) or disclose any Confidential Information, for so long as it shall remain proprietary or protectible as confidential or trade secret information, except as may be necessary for the performance of the Executive's duties with the Company.

whether patentable or not, which is of a confidential, trade secret and/or proprietary character and which is either developed by the Executive (alone or with others) or to which the Executive has had access during the Executive's employment. "Confidential Information" shall also include confidential evaluations of, and the confidential use or non-use by the Company or any affiliated company of, technical or business information in the public domain. The Executive shall use the Executive's best efforts and diligence both during and after employment by the Company to protect the confidential, trade secret and/or proprietary character of all Confidential Information. The Executive shall not, directly or indirectly, use (for the Executive or another) or disclose any Confidential Information, for so long as it shall remain proprietary or protectible as confidential or trade secret information, except as may be necessary for the performance of the Executive's duties with the Company. The Executive shall deliver promptly to the Company, at the termination of the Executive's employment, or at any other time at the Company's request, without retaining any copies, all documents and other material in the Executive's possession relating, directly or indirectly, to any Confidential Information. Each of the Executive's obligations in this Section shall also apply to the confidential, trade secret and proprietary information learned or acquired by the Executive during the Executive's employment from others with whom the Company or any affiliated company has a business relationship. The Executive understands that the Executive is not to disclose to the Company or any affiliated company, or use for its benefit, any of the confidential, trade secret or proprietary information of others, including any of the Executive's former employers. (b) Competitive Activity; Nonsolicitation. In the event that, during the Employment Period, Executive shall voluntarily terminate his employment hereunder, be terminated by the Company without Cause, or terminate his employment hereunder for Good Reason, then the Executive shall not, directly or indirectly (whether as owner, partner, consultant, employee or otherwise), at any time during the six months following termination of his employment with the Company or any affiliate for any reason, engage in or contribute his knowledge to any work or activity that involves a product, process, apparatus, service or development which is then competitive with or similar to a product, process, apparatus, service or development on which he worked or with respect to which he had access to Confidential Information while employed by the Company or an affiliate at any time during the period of five years immediately prior to his Date of Termination ("Competitive Work"). However, the Executive shall be permitted to engage in such proposed work or activity, and the Company shall furnish him a written consent to that effect signed by an officer of the Company, if the Executive shall have furnished to the Company clear and convincing written evidence, including assurances from the Executive and his new employer, that the fulfillment of his duties in such proposed work or activity would not likely cause him to disclose, base judgment upon, or use any Confidential Information. In addition, during his employment by the Company or an affiliate and for a period of six months thereafter, the Executive shall not, directly or indirectly, (i) induce or attempt to induce a salaried employee of the Company or any of its affiliates to accept employment or affiliation involving Competitive Work with another firm or corporation of 8

which the Executive is an employee, owner, partner or consultant, or (ii) induce or attempt to induce any customer, supplier, licensee or other person having a business relationship with the Company to cease doing business with the Company or interfere materially with the relationship between the Company and any such customer, supplier, licensee or other person having a business relationship with the Company. (c) Injunctive Relief. Executive agrees that the restrictions imposed upon him by this Section 7 are fair and reasonable considering the nature of the Company's business and are reasonably required for the protection of the Company. Executive also acknowledges that a breach of any of the provisions of this Section 7 may result in continuing and irreparable damages to the Company for which there may be no adequate remedy at law, and that the Company, in addition to all other relief available to it, shall be entitled to the issuance of a temporary restraining order, preliminary injunction and permanent injunction restraining the Executive from committing or continuing to commit any breach of the provisions of this Section 7.

which the Executive is an employee, owner, partner or consultant, or (ii) induce or attempt to induce any customer, supplier, licensee or other person having a business relationship with the Company to cease doing business with the Company or interfere materially with the relationship between the Company and any such customer, supplier, licensee or other person having a business relationship with the Company. (c) Injunctive Relief. Executive agrees that the restrictions imposed upon him by this Section 7 are fair and reasonable considering the nature of the Company's business and are reasonably required for the protection of the Company. Executive also acknowledges that a breach of any of the provisions of this Section 7 may result in continuing and irreparable damages to the Company for which there may be no adequate remedy at law, and that the Company, in addition to all other relief available to it, shall be entitled to the issuance of a temporary restraining order, preliminary injunction and permanent injunction restraining the Executive from committing or continuing to commit any breach of the provisions of this Section 7. (d) Blue Pencil. If, at any time, the provisions of this Section 7 shall be determined to be invalid or unenforceable under any applicable law, by reason of being vague or unreasonable as to area, duration or scope of activity, this Agreement shall be considered divisible and shall become and be immediately amended to only such area, duration and scope of activity as shall be determined to be reasonable and enforceable by the court or other body having jurisdiction over the matter and the Executive and the Company agree that this Agreement as amended shall be valid and binding as though any invalid or unenforceable provision had not been included herein. 8. Successors. (a) This Agreement is personal to the Executive and without the prior written consent of the Company shall not be assignable by the Executive otherwise than by will or the laws of descent and distribution. This Agreement shall inure to the benefit of and be enforceable by the Executive's legal representatives. (b) This Agreement shall inure to the benefit of and be binding upon the Company and its successors and assigns. 9. Miscellaneous. (a) This Agreement shall be governed by and construed in accordance with the laws of the State of Delaware, without reference to principles of conflict of laws. The captions of this Agreement are not part of the provisions hereof and shall have no force or effect. This Agreement may not be amended or modified otherwise than by a written agreement executed by the parties hereto or their respective successors and legal representatives. (b) All notices and other communications hereunder shall be in writing and shall be given by hand delivery to the other party or by registered or certified mail, return receipt requested, postage prepaid, addressed as follows: 9

If to the Executive: James M. Sullivan [home address] If to the Company: Jeffry N. Quinn, Esq. President and Chief Executive Officer Solutia Inc. P.O. Box 66760 St. Louis, MO 63166-6760 With a copy to:

If to the Executive: James M. Sullivan [home address] If to the Company: Jeffry N. Quinn, Esq. President and Chief Executive Officer Solutia Inc. P.O. Box 66760 St. Louis, MO 63166-6760 With a copy to: Rosemary L. Klein Vice President, Secretary and General Counsel - Corporate and External Affairs Solutia Inc. P.O. Box 66760 St. Louis, MO 63166-6760 or to such other address as either party shall have furnished to the other in writing in accordance herewith. Notice and communications shall be effective when actually received by the addressee. (c) The invalidity or unenforceability of any one or more provisions of this Agreement shall not affect the validity or enforceability of any other provision of this Agreement, which shall remain in full force and effect. (d) The Company may withhold from any amounts payable under this Agreement such Federal, state, local or foreign taxes as shall be required to be withheld pursuant to any applicable law or regulation. (e) The Executive's or the Company's failure to insist upon strict compliance with any provision of this Agreement or the failure to assert any right the Executive or the Company may have hereunder shall not be deemed to be a waiver of such provision or right or any other provision or right of this Agreement. (f) This Agreement constitutes the entire agreement between the parties with respect to the subject matter hereof and supersedes all prior agreements, oral and written, between the parties hereto with respect to the subject matter hereof. This Agreement also supersedes, without limitation, the Employment Agreement dated as of December 1, 1999 between the Company and the Executive (the "Change in Control Agreement"), the agreement dated as of December 15, 2003 between the Company and the Executive (the "Retention Agreement"), and any other prior employment agreement between the Company and the 10

Executive and the Executive waives all rights with respect to such agreements, including, without limitation, any claims for damages related to such agreements; provided, that this Agreement shall have no effect on the Executive's rights under any plan, program, policy or practice provided by the Company or any of its affiliated companies except that the benefits and other payments provided for pursuant to Section 5 hereof shall be in lieu of any severance or separation pay or benefits to which the Executive might otherwise be entitled under any plan, program, policy or arrangement of the Company and its affiliates. In consideration of the promises set forth in the Agreement, and of the mutual releases set forth in this paragraph, each party hereto relinquishes all rights, and releases the other from all promises, liabilities and commitments that may have existed under the Change in Control Agreement, the Retention Agreement, and any other employment agreements, which shall be null and void and of no further effect. (g) No amounts shall be payable pursuant to Section 5(a)(i)(B) or 5(d) of this Agreement unless and until the Executive shall have executed and delivered a waiver and release of claims against the Company substantially in the form attached hereto as Exhibit A.

Executive and the Executive waives all rights with respect to such agreements, including, without limitation, any claims for damages related to such agreements; provided, that this Agreement shall have no effect on the Executive's rights under any plan, program, policy or practice provided by the Company or any of its affiliated companies except that the benefits and other payments provided for pursuant to Section 5 hereof shall be in lieu of any severance or separation pay or benefits to which the Executive might otherwise be entitled under any plan, program, policy or arrangement of the Company and its affiliates. In consideration of the promises set forth in the Agreement, and of the mutual releases set forth in this paragraph, each party hereto relinquishes all rights, and releases the other from all promises, liabilities and commitments that may have existed under the Change in Control Agreement, the Retention Agreement, and any other employment agreements, which shall be null and void and of no further effect. (g) No amounts shall be payable pursuant to Section 5(a)(i)(B) or 5(d) of this Agreement unless and until the Executive shall have executed and delivered a waiver and release of claims against the Company substantially in the form attached hereto as Exhibit A. (h) Except as otherwise provided by Section 7(c), in the event of any dispute, controversy or claim arising out of or relating to this Agreement or Executive's employment or termination thereof, the parties hereby agree to settle such dispute, controversy or claim in a binding arbitration by a single arbitrator in accordance with the Commercial Arbitration Rules of the American Arbitration Association, which arbitration shall be conducted in St. Louis, Missouri. The parties agree that the arbitral award shall be final and non-appealable and, except as otherwise provided by Section 7(c), shall be the sole and exclusive remedy between the parties hereunder. The parties agree that judgment on the arbitral award may be entered in any court having competent jurisdiction over the parties or their assets. IN WITNESS WHEREOF, the Executive has hereunto set the Executive's hand and, pursuant to the authorization from its Board of Directors, the Company has caused these presents to be executed in its name on its behalf, all as of the day and year first above written.
/s/ James M. Sullivan ---------------------------------------James M. Sullivan

SOLUTIA INC.
By: /s/ Jeffry N. Quinn ------------------------------------Jeffry N. Quinn President and Chief Executive Officer

11 Exhibit A WAIVER AND RELEASE Reference is made to that Agreement (the "Agreement"), dated as of July 19, 2004, by and between Solutia, Inc., a Delaware Corporation (the "Company"), and James M. Sullivan (the "Executive"). This Waiver and Release (this "Waiver") is made as of the __ day of ____________, 200_, by the Executive pursuant to Section 9(g) of the Agreement. Release and Waiver of Claims Against the Company (a) The Executive, on behalf of himself, his agents, heirs, successors, assigns, executors and administrators, in consideration for the payments and other consideration provided for under the Agreement, hereby forever releases and discharges the Company and its successors, their affiliated entities, and their past and present directors, employees, agents, attorneys, accountants, representatives, plan fiduciaries, successors and assigns

Exhibit A WAIVER AND RELEASE Reference is made to that Agreement (the "Agreement"), dated as of July 19, 2004, by and between Solutia, Inc., a Delaware Corporation (the "Company"), and James M. Sullivan (the "Executive"). This Waiver and Release (this "Waiver") is made as of the __ day of ____________, 200_, by the Executive pursuant to Section 9(g) of the Agreement. Release and Waiver of Claims Against the Company (a) The Executive, on behalf of himself, his agents, heirs, successors, assigns, executors and administrators, in consideration for the payments and other consideration provided for under the Agreement, hereby forever releases and discharges the Company and its successors, their affiliated entities, and their past and present directors, employees, agents, attorneys, accountants, representatives, plan fiduciaries, successors and assigns from any and all known and unknown causes of action, actions, judgments, liens, indebtedness, damages, losses, claims, liabilities, and demands of whatsoever kind and character in any manner whatsoever arising on or prior to the date of this Waiver, including but not limited to (i) any claim for breach of contract, breach of implied covenant, breach of oral or written promise, wrongful termination, intentional infliction of emotional distress, defamation, interference with contract relations or prospective economic advantage, negligence, misrepresentation or employment discrimination, and including without limitation alleged violations of Title VII of the Civil Rights Act of 1964, as amended, prohibiting discrimination based on race, color, religion, sex or national origin; the Family and Medical Leave Act; the Americans With Disabilities Act; the Age Discrimination in Employment Act; other federal, state and local laws, ordinances and regulations; and any unemployment or workers' compensation law, excepting only those obligations of the Company expressly recited in the Agreement or this Waiver and any claims to benefits under the Company's employee benefit plans as defined exclusively in written plan documents; (ii) any and all liability that was or may have been alleged against or imputed to the Company by the Executive or by anyone acting on his behalf; (iii) all claims for wages, monetary or equitable relief, employment or reemployment with the Company in any position, and any punitive, compensatory or liquidated damages; and (iv) all rights to and claims for attorneys' fees and costs except as otherwise provided herein or in the Agreement. (b) The Executive shall not file or cause to be filed any action, suit, claim, charge or proceeding with any federal, state or local court or agency relating to any claim within the scope of this Waiver. In the event there is presently pending any action, suit, claim, charge or proceeding within the scope of this Waiver, or if such a proceeding is commenced in the future, the Executive shall promptly withdraw it, with prejudice, to the extent he has the power to do so. The Executive represents and warrants that he has not assigned any claim released herein, or authorized any other person to assert any claim on his behalf. (c) In the event any action, suit, claim, charge or proceeding within the scope of this Waiver is brought by any government agency, putative class representative or other third party to vindicate any alleged rights of the Executive, (i) the Executive shall, except to the extent 12

required or compelled by law, legal process or subpoena, refrain from participating, testifying or producing documents therein, and (ii) all damages, inclusive of attorneys' fees, if any, required to be paid to the Executive by the Company as a consequence of such action, suit, claim, charge or proceeding shall be repaid to the Company by the Executive within ten (10) days of his receipt thereof. (d) In the event of a breach of this Waiver by the Executive, the Company's obligations pursuant to the Agreement shall cease as of the date of such breach. Furthermore, the Executive understands that his breach of the provisions of this Waiver will cause monetary damages to the Company. Thus, should the Executive breach the provisions of this Waiver, he shall be required to pay the Company, as liquidated damages, the amount of the consideration paid by the Company to the Executive pursuant to the Agreement plus all costs and expenses, including all attorneys' fees and expenses, that the Company incurs in enforcing this Waiver. The Executive agrees that the foregoing amount of liquidated damages is reasonable and necessary, and does not constitute a penalty.

required or compelled by law, legal process or subpoena, refrain from participating, testifying or producing documents therein, and (ii) all damages, inclusive of attorneys' fees, if any, required to be paid to the Executive by the Company as a consequence of such action, suit, claim, charge or proceeding shall be repaid to the Company by the Executive within ten (10) days of his receipt thereof. (d) In the event of a breach of this Waiver by the Executive, the Company's obligations pursuant to the Agreement shall cease as of the date of such breach. Furthermore, the Executive understands that his breach of the provisions of this Waiver will cause monetary damages to the Company. Thus, should the Executive breach the provisions of this Waiver, he shall be required to pay the Company, as liquidated damages, the amount of the consideration paid by the Company to the Executive pursuant to the Agreement plus all costs and expenses, including all attorneys' fees and expenses, that the Company incurs in enforcing this Waiver. The Executive agrees that the foregoing amount of liquidated damages is reasonable and necessary, and does not constitute a penalty. Voluntary Execution of Waiver. BY HIS SIGNATURE BELOW, THE EXECUTIVE ACKNOWLEDGES THAT: (A) I HAVE RECEIVED A COPY OF THIS WAIVER AND WAS OFFERED A PERIOD OF TWENTY-ONE (21) DAYS TO REVIEW AND CONSIDER IT; (B) IF I SIGN THIS WAIVER PRIOR TO THE EXPIRATION OF TWENTY-ONE (21) DAYS, I KNOWINGLY AND VOLUNTARILY WAIVE AND GIVE UP THIS RIGHT OF REVIEW; (C) I HAVE THE RIGHT TO REVOKE THIS WAIVER FOR A PERIOD OF SEVEN (7) DAYS AFTER I SIGN IT BY MAILING OR DELIVERING A WRITTEN NOTICE OF REVOCATION TO THE COMPANY'S CHIEF EXECUTIVE OFFICER OR GENERAL COUNSEL, NO LATER THAN THE CLOSE OF BUSINESS ON THE SEVENTH DAY AFTER THE DAY ON WHICH I SIGNED THIS WAIVER; (D) THIS WAIVER SHALL NOT BECOME EFFECTIVE OR ENFORCEABLE UNTIL THE SEVEN DAY REVOCATION PERIOD HAS EXPIRED WITHOUT THE WAIVER HAVING BEEN REVOKED; (E) THIS WAIVER WILL BE FINAL AND BINDING AFTER THE EXPIRATION OF THE REVOCATION PERIOD REFERRED TO IN (C). I AGREE NOT TO CHALLENGE ITS ENFORCEABILITY; (F) I AM AWARE OF MY RIGHT TO CONSULT AN ATTORNEY, HAVE BEEN ADVISED IN WRITING TO CONSULT WITH AN ATTORNEY, AND HAVE HAD THE OPPORTUNITY TO CONSULT WITH AN ATTORNEY, IF DESIRED, PRIOR TO SIGNING THIS WAIVER; 13

(G) NO PROMISE OR INDUCEMENT FOR THIS WAIVER HAS BEEN MADE EXCEPT AS SET FORTH IN THIS WAIVER; (H) I AM LEGALLY COMPETENT TO EXECUTE THIS WAIVER AND ACCEPT FULL RESPONSIBILITY FOR IT; AND (I) I HAVE CAREFULLY READ THIS WAIVER, ACKNOWLEDGE THAT I HAVE NOT RELIED ON ANY REPRESENTATION OR STATEMENT, WRITTEN OR ORAL, NOT SET FORTH IN THIS DOCUMENT OR THE AGREEMENT, AND WARRANT AND REPRESENT THAT I AM SIGNING THIS WAIVER KNOWINGLY AND VOLUNTARILY. Intending to be legally bound, I have signed this Waiver as of the date first set forth above.

(G) NO PROMISE OR INDUCEMENT FOR THIS WAIVER HAS BEEN MADE EXCEPT AS SET FORTH IN THIS WAIVER; (H) I AM LEGALLY COMPETENT TO EXECUTE THIS WAIVER AND ACCEPT FULL RESPONSIBILITY FOR IT; AND (I) I HAVE CAREFULLY READ THIS WAIVER, ACKNOWLEDGE THAT I HAVE NOT RELIED ON ANY REPRESENTATION OR STATEMENT, WRITTEN OR ORAL, NOT SET FORTH IN THIS DOCUMENT OR THE AGREEMENT, AND WARRANT AND REPRESENT THAT I AM SIGNING THIS WAIVER KNOWINGLY AND VOLUNTARILY. Intending to be legally bound, I have signed this Waiver as of the date first set forth above. James M. Sullivan 14

ATTACHMENT I SOLUTIA INC. EMERGENCE INCENTIVE BONUS PROGRAM Participation Participation in the bonus pool established under the Solutia Inc. Emergence Incentive Bonus Program shall be extended to those key senior executives of the Company and in such percentages as shall be determined by the Board of Directors. Performance Measures The aggregate dollar value of the bonus pool shall be calculated by reference to three metrics as follows: a. 25% allocation for achieving target EBITDA* for the 12-month period ending on the six-month anniversary of the day at which both (x) the United States Bankruptcy Court for the Southern District of New York shall have confirmed a plan of reorganization of the Company under Chapter 11 of the United States Bankruptcy Code, and (y) such confirmation shall have become non-appealable (the "Emergence Date"); b. 25% allocation for achieving target Enterprise Value based on market value on six-month anniversary of the Emergence Date;** and c. 50% allocation for achieving target Unsecured Creditor Recoveries based on trading prices as of six-month anniversary of the Emergence Date.*** The portion of the bonus pool allocated to each metric can exceed 100%, but the aggregate pool cannot exceed $7.5 million. Thus, up to $2,343,750 can be earned for the pool based on EBITDA, up to $2,250,000 based on enterprise value, and up to $5,625,000 based on unsecured creditor recovery, provided the aggregate does not exceed $7.5 million. The EBITDA, Enterprise Value and Creditor Recovery Metrics are as follows: EBITDA
Performance Relative to Plan -----------------------------------------------------------------------------------------------------------------------------------%Earned 70% 75% 80% 85% 90% 95% 100% 105% 110% 115% 120% ---------------------------------------------------------------------------------------------------------

ATTACHMENT I SOLUTIA INC. EMERGENCE INCENTIVE BONUS PROGRAM Participation Participation in the bonus pool established under the Solutia Inc. Emergence Incentive Bonus Program shall be extended to those key senior executives of the Company and in such percentages as shall be determined by the Board of Directors. Performance Measures The aggregate dollar value of the bonus pool shall be calculated by reference to three metrics as follows: a. 25% allocation for achieving target EBITDA* for the 12-month period ending on the six-month anniversary of the day at which both (x) the United States Bankruptcy Court for the Southern District of New York shall have confirmed a plan of reorganization of the Company under Chapter 11 of the United States Bankruptcy Code, and (y) such confirmation shall have become non-appealable (the "Emergence Date"); b. 25% allocation for achieving target Enterprise Value based on market value on six-month anniversary of the Emergence Date;** and c. 50% allocation for achieving target Unsecured Creditor Recoveries based on trading prices as of six-month anniversary of the Emergence Date.*** The portion of the bonus pool allocated to each metric can exceed 100%, but the aggregate pool cannot exceed $7.5 million. Thus, up to $2,343,750 can be earned for the pool based on EBITDA, up to $2,250,000 based on enterprise value, and up to $5,625,000 based on unsecured creditor recovery, provided the aggregate does not exceed $7.5 million. The EBITDA, Enterprise Value and Creditor Recovery Metrics are as follows: EBITDA
Performance Relative to Plan -----------------------------------------------------------------------------------------------------------------------------------%Earned 70% 75% 80% 85% 90% 95% 100% 105% 110% 115% 120% --------------------------------------------------------------------------------------------------------% of $1.875M Pool (25% of $7.5M) 0% 0% 0% 0% 0% 20% 30% 55% 75% 100% 125% ---------------------------------------------------------------------------------------------------------

15
ENTERPRISE VALUE ---------------Enterprise Value (in billions) -------------------------------------------------------------------------------------------------------------------------------------% Earned $1.20 $1.30 $1.40 $1.50 $1.60 $1.70 $1.80 $1.90 $2.00 $2.10 $2.20 $2.30 --------------------------------------------------------------------------------------------------------% of $1.875M Pool (25% of $7.5M) 0% 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% ---------------------------------------------------------------------------------------------------------

UNSECURED CREDITOR RECOVERY ---------------------------

ENTERPRISE VALUE ---------------Enterprise Value (in billions) -------------------------------------------------------------------------------------------------------------------------------------% Earned $1.20 $1.30 $1.40 $1.50 $1.60 $1.70 $1.80 $1.90 $2.00 $2.10 $2.20 $2.30 --------------------------------------------------------------------------------------------------------% of $1.875M Pool (25% of $7.5M) 0% 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% ---------------------------------------------------------------------------------------------------------

UNSECURED CREDITOR RECOVERY --------------------------Unsecured Creditor Recovery (%) --------------------------------------------------------------------------------------------------------------------------------------% Earned 30% 35% 40% 45% 50% 55% 60% 65% 70% 75% 80% 85% 90% --------------------------------------------------------------------------------------------------------% of $3.75 M UCR Pool (50% of $7.5M) 0% 0% 0% 0% 20% 30% 40% 50% 60% 70% 80% 95% 110% ---------------------------------------------------------------------------------------------------------

The percentage of the bonus pool attributable to the EBITDA, enterprise value or unsecured creditor recovery metric, as applicable, when performance falls between data points in the tables above, shall be determined by using straight line interpolation. Payments Under Program The bonus pool shall be distributed as soon as practicable after the six-month anniversary of the Emergence Date. Each participant who is employed by the Company as of the six-month anniversary of the Emergence Date, or who was employed by the Company as of the Emergence Date and prior to the six-month anniversary thereof shall have been terminated without Cause (as defined in his employment agreement), shall have resigned for Good Reason (as defined in his employment agreement), or shall have died or been terminated for Disability (as defined in his employment agreement), shall receive a cash payment, net of withholding taxes, equal to his allocable share of the bonus pool. The Board of Directors, in its discretion, may make such payment to a participant who is still employed by the Company as of the six-month anniversary of the Emergence Date, by delivering to the participant common stock of the Company with a fair market value equal to the bonus pool payment due to the participant, provided the Company's common stock is actively traded on a recognized securities exchange. If payment is made by delivering common stock, the participant shall have the right to satisfy any withholding tax obligation by having the Company withhold shares of stock with a fair market value equal to the applicable withholding taxes, and the stock shall be valued both for purposes of withholding and for determining the number of shares to be delivered to the participant, at the average common stock trading price for the 20 trading days ending with the day preceding the delivery of stock to the participant. No portion of the bonus pool shall be payable to a participant whose employment by the Company was terminated for Cause or by voluntary resignation on or before the six-month anniversary of the Emergence Date. 16

* EBITDA metric should be measured on a trailing-twelve months basis as of six-months post-emergence relative to the Company's business plan presented to the Committee on April 14, 2004. Pharmaceutical Services should be carved out for purposes of calculating the EBITDA Metric bonus > A sale of Pharmaceutical Services would require interim period adjustments to EBITDA and the benefits of a sale should be picked up in the Unsecured Creditor Recovery metric. Joint venture income should be included.

* EBITDA metric should be measured on a trailing-twelve months basis as of six-months post-emergence relative to the Company's business plan presented to the Committee on April 14, 2004. Pharmaceutical Services should be carved out for purposes of calculating the EBITDA Metric bonus > A sale of Pharmaceutical Services would require interim period adjustments to EBITDA and the benefits of a sale should be picked up in the Unsecured Creditor Recovery metric. Joint venture income should be included. Budgeted restructuring costs that are typically accounted for below the operating income line should be included. Assets sale adjustment mechanism needs to be established. ** Enterprise value should be calculated 6 months post-emergence as follows: 20 day average common stock trading price multiplied by the most recent common shares outstanding Plus: 20-day average trading price of preferred stock multiplied by the amount of preferred shares outstanding, if any Plus: Market value of debt securities Plus: Net proceeds from asset sales, if used to pay down debt. *** The unsecured creditor recovery metric should be based on the 20-day average trading value of securities distributed to all unsecured creditors at 6-months post-emergence divided by the total amount of allowed unsecured claims (including Monsanto claims, if any) in the Company's confirmed Plan of Reorganization. 17

Exhibit 10(e) AGREEMENT AGREEMENT by and between Solutia Inc., a Delaware corporation (the "Company"), and John F. Saucier (the "Executive"), dated as of the 19th day of July 2004 (the "Effective Date"). The Board of Directors of the Company (the "Board") has determined that it is in the best interests of the Company and its stakeholders to assure that the Company will have the continued dedication of the Executive for a substantial period of time. To induce the Executive to continue to serve the Company until June 30, 2006, the Company will provide the Executive with, among other things, a cash retention payment, payable in installments, and a special transaction bonus. It is the Board's judgment that such a retention arrangement and special bonus arrangement is in the best interest of the Company and its stakeholders, and is consistent with the desire of the Board to maximize the value of the Company. Therefore, in order to accomplish these objectives, the Board has caused the Company to enter into this Agreement. NOW, THEREFORE, IT IS HEREBY AGREED AS FOLLOWS: 1. Retention and Special Bonus Payments. (a) The Company shall pay to the Executive a cash retention payment of $600,000 in four equal installments of $150,000 payable on each of the date on which this agreement is approved by the United States Bankruptcy Court for the Southern District of New York, December 31, 2004, June 30, 2005 and December 31, 2005, provided that, with respect to each such installment payment, the Executive has been continuously employed by the Company from the Effective Date through the date of such installment payment.

Exhibit 10(e) AGREEMENT AGREEMENT by and between Solutia Inc., a Delaware corporation (the "Company"), and John F. Saucier (the "Executive"), dated as of the 19th day of July 2004 (the "Effective Date"). The Board of Directors of the Company (the "Board") has determined that it is in the best interests of the Company and its stakeholders to assure that the Company will have the continued dedication of the Executive for a substantial period of time. To induce the Executive to continue to serve the Company until June 30, 2006, the Company will provide the Executive with, among other things, a cash retention payment, payable in installments, and a special transaction bonus. It is the Board's judgment that such a retention arrangement and special bonus arrangement is in the best interest of the Company and its stakeholders, and is consistent with the desire of the Board to maximize the value of the Company. Therefore, in order to accomplish these objectives, the Board has caused the Company to enter into this Agreement. NOW, THEREFORE, IT IS HEREBY AGREED AS FOLLOWS: 1. Retention and Special Bonus Payments. (a) The Company shall pay to the Executive a cash retention payment of $600,000 in four equal installments of $150,000 payable on each of the date on which this agreement is approved by the United States Bankruptcy Court for the Southern District of New York, December 31, 2004, June 30, 2005 and December 31, 2005, provided that, with respect to each such installment payment, the Executive has been continuously employed by the Company from the Effective Date through the date of such installment payment. (b) If, upon the occurrence of a Change in Control, the Executive (i) is employed by the Company and (ii) is not offered an employment agreement providing terms of employment substantially similar to those under which he is employed at the Effective Date, then the Company shall pay to the Executive both (x) a special bonus of $400,000, and (y) any cash retention payments referred to in Section 1(a) that have accrued but not theretofore been paid, both such special bonus and retention payments to be paid in a lump sum in cash within ten days of the Company's receipt from the Executive of a Waiver and Release executed and delivered in the manner described in Section 10(g) hereof. If the special bonus is paid to the Executive pursuant to this paragraph, then no amounts except for the Accrued Obligations (as defined below), if any, and the Other Benefits (as defined below), if any, shall be payable to the Executive pursuant to Section 5. 2. Employment Period. The Company hereby agrees to continue the Executive in its employ, and the Executive hereby agrees to remain in the employ of the Company subject to the terms and conditions of this Agreement, for the period (the "Employment Period") commencing on the Effective Date and ending on June 30, 2006. Where the context permits, all references to the Company shall include an affiliate of the Company by which the Executive is employed. As used in this Agreement, the term "affiliate" or "affiliated companies" shall include any company controlled by, controlling or under common control with the Company. The obligations of the Company and the Executive under this Agreement including, without limitation, the obligations

under Sections 5, 6 and 7, shall survive the termination of the Employment Period to the extent necessary to accomplish the purposes thereof. 3. Terms of Employment. (a) Position and Duties. (i) During the Employment Period, (A) the Executive shall serve as President, Integrated Nylon of the Company, with such authority, duties, responsibilities and reporting requirements as may be reasonably assigned to him from time to time by the Company's Chief Executive Officer and (B) the Executive's services shall be performed at the location where the Executive was employed immediately preceding the Effective Date or at any office or location of the Company not more than 50 miles from the Company's headquarters in St. Louis, Missouri.

under Sections 5, 6 and 7, shall survive the termination of the Employment Period to the extent necessary to accomplish the purposes thereof. 3. Terms of Employment. (a) Position and Duties. (i) During the Employment Period, (A) the Executive shall serve as President, Integrated Nylon of the Company, with such authority, duties, responsibilities and reporting requirements as may be reasonably assigned to him from time to time by the Company's Chief Executive Officer and (B) the Executive's services shall be performed at the location where the Executive was employed immediately preceding the Effective Date or at any office or location of the Company not more than 50 miles from the Company's headquarters in St. Louis, Missouri. (ii) During the Employment Period, the Executive shall serve the Company faithfully, diligently and to the best of his ability, and shall devote substantially all of his time and efforts during normal business hours to the business and affairs of the Company. During the Employment Period it shall not be a violation of this Agreement for the Executive to (A) deliver lectures, fulfill speaking engagements or teach at educational institutions, and (B) manage personal investments, so long as such activities described in clauses A and B do not interfere with the performance of the Executive's responsibilities as an employee of the Company in accordance with this Agreement, and (C) with the advance approval of the Board, serve on corporate, civic or charitable boards or committees. (b) Compensation. (i) Base Salary. The Executive shall receive an annual base salary ("Annual Base Salary") of not less than $320,000 which shall be retroactive to May 5, 2004, and which shall be paid in accordance with the Company's normal payroll practices. (ii) Annual Bonuses. In addition to Annual Base Salary, the Executive shall participate in the Company's Annual Incentive Program, or any successor annual bonus plan(s), with a target annual bonus opportunity equal to 100% of his Annual Base Salary. In addition, during the Employment Period, the Executive shall be entitled to participate in all long-term and other incentive plans, practices, policies and programs generally applicable to senior executives of the Company and its affiliated companies. (iii) Savings and Retirement Plans. During the Employment Period, the Executive shall be entitled to participate in all savings and retirement plans, practices, policies and programs generally applicable to senior executives of the Company and its affiliated companies, subject to the Board's authority to modify or terminate any such plans, practices, policies and programs on a Company-wide basis at any time. (iv) Welfare Benefit Plans. During the Employment Period, the Executive and/or the Executive's family, as the case may be, shall be eligible for 2

participation in and shall receive all benefits under welfare benefit plans, practices, policies and programs provided by the Company and its affiliated companies (including, without limitation, medical, prescription, dental, disability, salary continuance, employee life, group life, accidental death and travel accident insurance plans and programs) to the extent generally applicable to senior executives of the Company and its affiliated companies, subject to the Board's authority to modify or terminate any such plans, practices, policies and programs on a Company-wide basis at any time. (v) Expenses. During the Employment Period, the Executive shall be entitled to receive prompt reimbursement, in accordance with Company policy, for all reasonable expenses incurred by the Executive in performing his duties hereunder. (vi) Vacation. During the Employment Period, the Executive shall be entitled to paid vacation in accordance with the plans, policies, programs and practices of the Company and its affiliated companies as in effect from time to

participation in and shall receive all benefits under welfare benefit plans, practices, policies and programs provided by the Company and its affiliated companies (including, without limitation, medical, prescription, dental, disability, salary continuance, employee life, group life, accidental death and travel accident insurance plans and programs) to the extent generally applicable to senior executives of the Company and its affiliated companies, subject to the Board's authority to modify or terminate any such plans, practices, policies and programs on a Company-wide basis at any time. (v) Expenses. During the Employment Period, the Executive shall be entitled to receive prompt reimbursement, in accordance with Company policy, for all reasonable expenses incurred by the Executive in performing his duties hereunder. (vi) Vacation. During the Employment Period, the Executive shall be entitled to paid vacation in accordance with the plans, policies, programs and practices of the Company and its affiliated companies as in effect from time to time. 4. Termination of Employment. (a) Death or Disability. The Executive's employment shall terminate automatically upon the Executive's death during the Employment Period. If the Company determines in good faith that the Disability of the Executive has occurred during the Employment Period (pursuant to the definition of Disability set forth below), it may give to the Executive written notice in accordance with Section 9(b) of this Agreement of its intention to terminate the Executive's employment. In such event, the Executive's employment with the Company shall terminate effective on the 30th day after receipt of such notice by the Executive (the "Disability Effective Date"), provided that, within the 30 days after such receipt, the Executive shall not have returned to full-time performance of the Executive's duties. For purposes of this Agreement, "Disability" shall mean the Executive's long-term disability for purposes of any reasonable occupation as determined under the Company's disability plan that is applicable to the Executive. (b) Cause. The Company may terminate the Executive's employment during the Employment Period for Cause. For purposes of this Agreement, "Cause" shall mean: (i) the willful and continued failure of the Executive to perform substantially the Executive's duties with the Company or one of its affiliates (other than any such failure resulting from incapacity due to physical or mental illness), after a written demand for substantial performance is delivered to the Executive by the Board or the Chief Executive Officer of the Company which specifically identifies the manner in which the Board or Chief Executive Officer believes that the Executive has not substantially performed the Executive's duties; (ii) the willful engaging by the Executive in illegal conduct or gross misconduct which is materially and demonstrably injurious to the Company; (iii) the Executive's conviction of, or plea of guilty or no contest to, a felony or any other crime involving moral turpitude, fraud, theft, embezzlement or dishonesty; or 3

(iv) the Executive's habitual drug or alcohol abuse. For purposes of this provision, no act or failure to act, on the part of the Executive, shall be considered "willful" unless it is done, or omitted to be done, by the Executive in bad faith or without reasonable belief that the Executive's action or omission was in the best interests of the Company. Any act, or failure to act, based upon authority given pursuant to a resolution duly adopted by the Board or upon the instructions of the Chief Executive Officer or a senior officer of the Company or based upon the advice of counsel for the Company shall be conclusively presumed to be done, or omitted to be done, by the Executive in good faith and in the best interests of the Company. The cessation of employment of the Executive shall not be deemed to be for Cause unless and until there shall have been delivered to the Executive a copy of a resolution duly adopted by the affirmative vote of not less than a majority of the entire membership of the Board at a meeting of the Board called and held for such purpose (after reasonable notice is provided to the Executive and the Executive is given an opportunity,

(iv) the Executive's habitual drug or alcohol abuse. For purposes of this provision, no act or failure to act, on the part of the Executive, shall be considered "willful" unless it is done, or omitted to be done, by the Executive in bad faith or without reasonable belief that the Executive's action or omission was in the best interests of the Company. Any act, or failure to act, based upon authority given pursuant to a resolution duly adopted by the Board or upon the instructions of the Chief Executive Officer or a senior officer of the Company or based upon the advice of counsel for the Company shall be conclusively presumed to be done, or omitted to be done, by the Executive in good faith and in the best interests of the Company. The cessation of employment of the Executive shall not be deemed to be for Cause unless and until there shall have been delivered to the Executive a copy of a resolution duly adopted by the affirmative vote of not less than a majority of the entire membership of the Board at a meeting of the Board called and held for such purpose (after reasonable notice is provided to the Executive and the Executive is given an opportunity, together with counsel, in the case of conduct described in subparagraph (i) or (ii) above, to be heard before the Board), finding that, in the good faith opinion of the Board, the Executive is guilty of the conduct described in subparagraph (i), (ii), (iii) or (iv) above, and specifying the particulars thereof in detail. (c) Good Reason. The Executive's employment may be terminated by the Executive for Good Reason. For purposes of this Agreement, "Good Reason" shall mean: (i) a material failure by the Company to comply with any of the provisions of Section 3(b) of this Agreement relating to compensation, other than an isolated, insubstantial and inadvertent failure not occurring in bad faith and which is remedied by the Company promptly after receipt of notice thereof given by the Executive; (ii) the assignment to the Executive of any duties inconsistent in any respect with the Executive's position as President, Integrated Nylon, and the authority, duties and responsibilities contemplated by Section 3(a) of this Agreement, or any other action by the Company which results in a material diminution in such position, authority, duties or responsibilities, excluding for this purpose an isolated, insubstantial and inadvertent action not taken in bad faith and which is remedied by the Company promptly after receipt of notice thereof given by the Executive; or (iii) the Company's requiring the Executive to be based at any office or location other than as provided in Section 3(a)(i)(B) hereof or the Company's requiring the Executive to travel on Company business to a substantially greater extent than required immediately prior to the Effective Date. (d) Notice of Termination. Any termination by the Company for Cause, or by the Executive for Good Reason, shall be communicated by Notice of Termination to the other party hereto given in accordance with Section 9(b) of this Agreement. For purposes of this Agreement, a "Notice of Termination" means a written notice which (i) indicates the specific termination provision in this Agreement relied upon, (ii) to the extent applicable, sets forth in reasonable detail the facts and circumstances claimed to provide a basis for termination of the 4

Executive's employment under the provision so indicated and (iii) if the Date of Termination (as defined below) is other than the date of receipt of such notice, specifies the termination date (which date shall be not more than thirty days after the giving of such notice). The failure by the Executive or the Company to set forth in the Notice of Termination any fact or circumstance which contributes to a showing of Good Reason or Cause shall not waive any right of the Executive or the Company, respectively, hereunder or preclude the Executive or the Company, respectively, from asserting such fact or circumstance in enforcing the Executive's or the Company's rights hereunder. (e) Date of Termination. "Date of Termination" means (i) if the Executive's employment is terminated by the Company for Cause, or by the Executive for Good Reason, the date of receipt of the Notice of Termination or any later date specified therein, as the case may be, (ii) if the Executive's employment is terminated by the Company other than for Cause or Disability, the Date of Termination shall be the date on which the Company notifies the Executive of such termination and (iii) if the Executive's employment is terminated by reason of death or Disability, the Date of Termination shall be the date of death of the Executive or the Disability Effective Date,

Executive's employment under the provision so indicated and (iii) if the Date of Termination (as defined below) is other than the date of receipt of such notice, specifies the termination date (which date shall be not more than thirty days after the giving of such notice). The failure by the Executive or the Company to set forth in the Notice of Termination any fact or circumstance which contributes to a showing of Good Reason or Cause shall not waive any right of the Executive or the Company, respectively, hereunder or preclude the Executive or the Company, respectively, from asserting such fact or circumstance in enforcing the Executive's or the Company's rights hereunder. (e) Date of Termination. "Date of Termination" means (i) if the Executive's employment is terminated by the Company for Cause, or by the Executive for Good Reason, the date of receipt of the Notice of Termination or any later date specified therein, as the case may be, (ii) if the Executive's employment is terminated by the Company other than for Cause or Disability, the Date of Termination shall be the date on which the Company notifies the Executive of such termination and (iii) if the Executive's employment is terminated by reason of death or Disability, the Date of Termination shall be the date of death of the Executive or the Disability Effective Date, as the case may be. (f) Change in Control. "Change in Control" means a sale of substantially all of the assets of the Company's Integrated Nylon reporting segment. 5. Obligations of the Company upon Termination. (a) Good Reason; Other Than for Cause. If, during the Employment Period, the Company shall terminate the Executive's employment other than for Cause or the Executive shall terminate employment for Good Reason: (i) the Company shall pay to the Executive in a lump sum in cash within ten days of its receipt from the Executive of a Waiver and Release executed and delivered pursuant to Section 10(g) hereof, the aggregate of the following amounts: A. the sum of (1) the Executive's accrued Annual Base Salary through the Date of Termination, (2) any annual bonus earned by the Executive with respect to the previous year, and (3) any accrued vacation pay, in each case to the extent not theretofore paid (the sum of the amounts described in clauses (1), (2) and (3) shall be hereinafter referred to as the "Accrued Obligations"); and B. the sum of (1) an amount equal to 100% of his Annual Base Salary, and (2) the cash retention payments referred to in Section 1(a) hereof but only to the extent not theretofore paid to the Executive, following which payment no additional amount shall thereafter be paid pursuant to Section 1(a) hereof. (ii) subject to the provisions of Section 9(f) hereof, to the extent not theretofore paid or provided, the Company shall timely pay or provide to the Executive any other amounts or benefits, excluding any severance or separation pay or benefits, required to be paid or provided or which the Executive is eligible to receive under any plan, program, policy, practice, contract or agreement of the Company and its affiliated companies, including, without limitation, the vested benefit, if any, of the Executive 5

under any qualified defined benefit or defined contribution retirement plan of the Company and its affiliated companies in which the Executive participates, in accordance with the terms of such plan (such other amounts and benefits shall be hereinafter referred to as the "Other Benefits"); (iii) the Company shall continue to provide at its expense (on the same basis as at the Executive's Date of Termination) for the continued participation of the Executive and, to the extent applicable, his family, in the Company's medical, dental, vision and life insurance plans and programs, for a period of four months commencing with the Date of Termination; and (iv) upon request of the Executive, the Company shall provide outplacement services to the Executive for up to twelve months and up to an aggregate cost of $25,000.

under any qualified defined benefit or defined contribution retirement plan of the Company and its affiliated companies in which the Executive participates, in accordance with the terms of such plan (such other amounts and benefits shall be hereinafter referred to as the "Other Benefits"); (iii) the Company shall continue to provide at its expense (on the same basis as at the Executive's Date of Termination) for the continued participation of the Executive and, to the extent applicable, his family, in the Company's medical, dental, vision and life insurance plans and programs, for a period of four months commencing with the Date of Termination; and (iv) upon request of the Executive, the Company shall provide outplacement services to the Executive for up to twelve months and up to an aggregate cost of $25,000. (b) Death. If the Executive's employment is terminated by reason of the Executive's death during the Employment Period, this Agreement shall terminate without further obligations to the Executive's legal representatives under this Agreement, other than for timely payment or provision of the following: (i) Accrued Obligations; (ii) Other Benefits; (iii) an amount equal to the product of (x) $400,000 and (y) a fraction, the numerator of which is the number of whole months that have elapsed from July 1, 2004 through the Date of Termination, and the denominator of which is 24; and (iv) an amount equal to the product of (x) any amounts described in Section 1(a) that remain unpaid, and (y) a fraction, the numerator of which is the number of days that have elapsed from the Effective Date through the Date of Termination, and the denominator of which is the number of days between the Effective Date and June 30, 2006. Accrued Obligations shall be paid to the Executive's estate or beneficiary, as applicable, in a lump sum in cash within 30 days of the Date of Termination. (c) Disability. If the Executive's employment is terminated by reason of the Executive's Disability during the Employment Period, this Agreement shall terminate without further obligations to the Executive, other than for timely payment or provision of the following: (i) Accrued Obligations; (ii) Other Benefits; (iii) an amount equal to the product of (x) $400,000 and (y) a fraction, the numerator of which is the number of whole months that have elapsed from July 1, 2004 through the Date of Termination, and the denominator of which is 24; and 6

(iv) an amount equal to the product of (x) any amounts described in Section 1(a) that remain unpaid, and (y) a fraction, the numerator of which is the number of days that have elapsed from the Effective Date through the Date of Termination, and the denominator of which is the number of days between the Effective Date and June 30, 2006. Accrued Obligations shall be paid to the Executive in a lump sum in cash within 30 days of the Date of Termination. (d) Cause; Other than for Good Reason. If the Executive's employment shall be terminated for Cause during the Employment Period, or if the Executive voluntarily terminates employment during the Employment Period, excluding a termination for Good Reason, this Agreement shall terminate without further obligations to the

(iv) an amount equal to the product of (x) any amounts described in Section 1(a) that remain unpaid, and (y) a fraction, the numerator of which is the number of days that have elapsed from the Effective Date through the Date of Termination, and the denominator of which is the number of days between the Effective Date and June 30, 2006. Accrued Obligations shall be paid to the Executive in a lump sum in cash within 30 days of the Date of Termination. (d) Cause; Other than for Good Reason. If the Executive's employment shall be terminated for Cause during the Employment Period, or if the Executive voluntarily terminates employment during the Employment Period, excluding a termination for Good Reason, this Agreement shall terminate without further obligations to the Executive, other than for Accrued Obligations and the timely payment or provision of Other Benefits. In such case, all Accrued Obligations shall be paid to the Executive in a lump sum in cash within 30 days of the Date of Termination. 6. Full Settlement; Legal Fees. The Company's obligation to make the payments provided for in this Agreement and otherwise to perform its obligations hereunder shall not be affected by any set-off, counterclaim, recoupment, defense or other claim, right or action which the Company may have against the Executive or others. In no event shall the Executive be obligated to seek other employment or take any other action by way of mitigation of the amounts payable to the Executive under any of the provisions of this Agreement, and such amounts shall not be reduced whether or not the Executive obtains other employment. The Company agrees to pay, to the full extent permitted by law, all legal fees and expenses which the Executive may reasonably incur as a result of any contest, in which the Executive is the prevailing party, by the Company, the Executive or others of the validity or enforceability of, or liability under, any provision of this Agreement or any guarantee of performance thereof (whether such contest is between the Company and the Executive or between either of them and any third party, and including as a result of any contest by the Executive about the amount of any payment pursuant to this Agreement), plus in each case interest on any payment from the time at which the liability for the applicable legal fees and expenses was incurred by Executive, at the applicable Federal rate provided for in Section 7872(f) (2) (A) of the Internal Revenue Code of 1986, as amended (the "Code"). 7. Confidential Information and Competitive Activity. (a) Confidential Information. As used herein, "Confidential Information" means all technical and business information of the Company and its affiliated companies, whether patentable or not, which is of a confidential, trade secret and/or proprietary character and which is either developed by the Executive (alone or with others) or to which the Executive has had access during the Executive's employment. "Confidential Information" shall also include confidential evaluations of, and the confidential use or non-use by the Company or any affiliated company of, technical or business information in the public domain. The Executive shall use the Executive's best efforts and diligence both during and after employment by the Company to protect the confidential, trade secret and/or proprietary character of all Confidential Information. The Executive shall not, directly or indirectly, use (for the 7

Executive or another) or disclose any Confidential Information, for so long as it shall remain proprietary or protectible as confidential or trade secret information, except as may be necessary for the performance of the Executive's duties with the Company. The Executive shall deliver promptly to the Company, at the termination of the Executive's employment, or at any other time at the Company's request, without retaining any copies, all documents and other material in the Executive's possession relating, directly or indirectly, to any Confidential Information. Each of the Executive's obligations in this Section shall also apply to the confidential, trade secret and proprietary information learned or acquired by the Executive during the Executive's employment from others with whom the Company or any affiliated company has a business relationship.

Executive or another) or disclose any Confidential Information, for so long as it shall remain proprietary or protectible as confidential or trade secret information, except as may be necessary for the performance of the Executive's duties with the Company. The Executive shall deliver promptly to the Company, at the termination of the Executive's employment, or at any other time at the Company's request, without retaining any copies, all documents and other material in the Executive's possession relating, directly or indirectly, to any Confidential Information. Each of the Executive's obligations in this Section shall also apply to the confidential, trade secret and proprietary information learned or acquired by the Executive during the Executive's employment from others with whom the Company or any affiliated company has a business relationship. The Executive understands that the Executive is not to disclose to the Company or any affiliated company, or use for its benefit, any of the confidential, trade secret or proprietary information of others, including any of the Executive's former employers. (b) Competitive Activity; Nonsolicitation. In the event that, during the Employment Period, Executive shall voluntarily terminate his employment hereunder be terminated by the Company without Cause or terminate his employment hereunder for Good Reason, then the Executive shall not, directly or indirectly (whether as owner, partner, consultant, employee or otherwise), at any time during the six months following termination of his employment with the Company or any affiliate for any reason, engage in or contribute his knowledge to any work or activity that involves a product, process, apparatus, service or development which is then competitive with or similar to a product, process, apparatus, service or development on which he worked or with respect to which he had access to Confidential Information while employed by the Company or an affiliate at any time during the period of five years immediately prior to his Date of Termination ("Competitive Work"). However, the Executive shall be permitted to engage in such proposed work or activity, and the Company shall furnish him a written consent to that effect signed by an officer of the Company, if the Executive shall have furnished to the Company clear and convincing written evidence, including assurances from the Executive and his new employer, that the fulfillment of his duties in such proposed work or activity would not likely cause him to disclose, base judgment upon, or use any Confidential Information. In addition, during his employment by the Company or an affiliate and for a period of six months thereafter, the Executive shall not, directly or indirectly, (i) induce or attempt to induce a salaried employee of the Company or any of its affiliates to accept employment or affiliation involving Competitive Work with another firm or corporation of which the Executive is an employee, owner, partner or consultant, or (ii) induce or attempt to induce any customer, supplier, licensee or other person having a business relationship with the Company to cease doing business with the Company or interfere materially with the relationship between the Company and any such customer, supplier, licensee or other person having a business relationship with the Company. (c) Injunctive Relief. Executive agrees that the restrictions imposed upon him by this Section 7 are fair and reasonable considering the nature of the Company's business and are reasonably required for the protection of the Company. Executive also acknowledges that a 8

breach of any of the provisions of this Section 7 may result in continuing and irreparable damages to the Company for which there may be no adequate remedy at law, and that the Company, in addition to all other relief available to it, shall be entitled to the issuance of a temporary restraining order, preliminary injunction and permanent injunction restraining the Executive from committing or continuing to commit any breach of the provisions of this Section 7. (d) Blue Pencil. If, at any time, the provisions of this Section 7 shall be determined to be invalid or unenforceable under any applicable law, by reason of being vague or unreasonable as to area, duration or scope of activity, this Agreement shall be considered divisible and shall become and be immediately amended to only such area, duration and scope of activity as shall be determined to be reasonable and enforceable by the court or other body having jurisdiction over the matter and the Executive and the Company agree that this Agreement shall be valid and binding as though any invalid or unenforceable provision had not been included herein.

breach of any of the provisions of this Section 7 may result in continuing and irreparable damages to the Company for which there may be no adequate remedy at law, and that the Company, in addition to all other relief available to it, shall be entitled to the issuance of a temporary restraining order, preliminary injunction and permanent injunction restraining the Executive from committing or continuing to commit any breach of the provisions of this Section 7. (d) Blue Pencil. If, at any time, the provisions of this Section 7 shall be determined to be invalid or unenforceable under any applicable law, by reason of being vague or unreasonable as to area, duration or scope of activity, this Agreement shall be considered divisible and shall become and be immediately amended to only such area, duration and scope of activity as shall be determined to be reasonable and enforceable by the court or other body having jurisdiction over the matter and the Executive and the Company agree that this Agreement shall be valid and binding as though any invalid or unenforceable provision had not been included herein. 8. Successors. (a) This Agreement is personal to the Executive and without the prior written consent of the Company shall not be assignable by the Executive otherwise than by will or the laws of descent and distribution. This Agreement shall inure to the benefit of and be enforceable by the Executive's legal representatives. (b) This Agreement shall inure to the benefit of and be binding upon the Company and its successors and assigns. 9. Miscellaneous. (a) This Agreement shall be governed by and construed in accordance with the laws of the State of Delaware, without reference to principles of conflict of laws. The captions of this Agreement are not part of the provisions hereof and shall have no force or effect. This Agreement may not be amended or modified otherwise than by a written agreement executed by the parties hereto or their respective successors and legal representatives. (b) All notices and other communications hereunder shall be in writing and shall be given by hand delivery to the other party or by registered or certified mail, return receipt requested, postage prepaid, addressed as follows: If to the Executive: John F. Saucier [home address] 9

If to the Company: Jeffry N. Quinn, Esq. President and Chief Executive Officer Solutia Inc. P.O. Box 66760 St. Louis, MO 63166-6760 With a copy to: Rosemary L. Klein Vice President, Secretary and General Counsel - Corporate and External Affairs Solutia Inc. P.O. Box 66760 St. Louis, MO 63166-6760 or to such other address as either party shall have furnished to the other in writing in accordance herewith. Notice and communications shall be effective when actually received by the addressee.

If to the Company: Jeffry N. Quinn, Esq. President and Chief Executive Officer Solutia Inc. P.O. Box 66760 St. Louis, MO 63166-6760 With a copy to: Rosemary L. Klein Vice President, Secretary and General Counsel - Corporate and External Affairs Solutia Inc. P.O. Box 66760 St. Louis, MO 63166-6760 or to such other address as either party shall have furnished to the other in writing in accordance herewith. Notice and communications shall be effective when actually received by the addressee. (c) The invalidity or unenforceability of any one or more provisions of this Agreement shall not affect the validity or enforceability of any other provision of this Agreement, which shall remain in full force and effect. (d) The Company may withhold from any amounts payable under this Agreement such Federal, state, local or foreign taxes as shall be required to be withheld pursuant to any applicable law or regulation. (e) The Executive's or the Company's failure to insist upon strict compliance with any provision of this Agreement or the failure to assert any right the Executive or the Company may have hereunder shall not be deemed to be a waiver of such provision or right or any other provision or right of this Agreement. (f) This Agreement constitutes the entire agreement between the parties with respect to the subject matter hereof and supersedes all prior agreements, oral and written, between the parties hereto with respect to the subject matter hereof. This Agreement also supersedes, without limitation, the Employment Agreement dated as of February 28, 1998, between the Company and the Executive (the "Change in Control Agreement"), the agreement dated as of December 15, 2003 between the Company and the Executive (the "Retention Agreement"), and any other prior employment agreement between the Company and the Executive; provided, that this Agreement shall have no effect on the Executive's rights under any plan, program, policy or practice provided by the Company or any of its affiliated companies except that the benefits and other payments provided for pursuant to Section 5 hereof shall be in lieu of any severance or separation pay or benefits to which the Executive might otherwise be entitled under any plan, program, policy or arrangement of the Company and its affiliates. In 10

consideration of the promises set forth in the Agreement, and of the mutual releases set forth in this paragraph, each party hereto relinquishes all rights, and releases the other from all promises, liabilities and commitments that may have existed under the Change in Control Agreement, the Retention Agreement, and any other employment agreements, which shall be null and void and of no further effect. (g) No amounts shall be payable pursuant to Section 1(b), 5(a) or 5(d) of this Agreement unless and until the Executive shall have executed and delivered a waiver and release of claims against the Company substantially in the form attached hereto as Exhibit A. (h) Except as otherwise provided by Section 7(c), in the event of any dispute, controversy or claim arising out of or relating to this Agreement or Executive's employment or termination thereof, the parties hereby agree to settle such dispute, controversy or claim in a binding arbitration by a single arbitrator in accordance with the Commercial Arbitration Rules of the American Arbitration Association, which arbitration shall be conducted in St. Louis, Missouri. The parties agree that the arbitral award shall be final and non-appealable and, except as otherwise provided by Section 7(c), shall be the sole and exclusive remedy between the parties hereunder. The

consideration of the promises set forth in the Agreement, and of the mutual releases set forth in this paragraph, each party hereto relinquishes all rights, and releases the other from all promises, liabilities and commitments that may have existed under the Change in Control Agreement, the Retention Agreement, and any other employment agreements, which shall be null and void and of no further effect. (g) No amounts shall be payable pursuant to Section 1(b), 5(a) or 5(d) of this Agreement unless and until the Executive shall have executed and delivered a waiver and release of claims against the Company substantially in the form attached hereto as Exhibit A. (h) Except as otherwise provided by Section 7(c), in the event of any dispute, controversy or claim arising out of or relating to this Agreement or Executive's employment or termination thereof, the parties hereby agree to settle such dispute, controversy or claim in a binding arbitration by a single arbitrator in accordance with the Commercial Arbitration Rules of the American Arbitration Association, which arbitration shall be conducted in St. Louis, Missouri. The parties agree that the arbitral award shall be final and non-appealable and, except as otherwise provided by Section 7(c), shall be the sole and exclusive remedy between the parties hereunder. The parties agree that judgment on the arbitral award may be entered in any court having competent jurisdiction over the parties or their assets. IN WITNESS WHEREOF, the Executive has hereunto set the Executive's hand and, pursuant to the authorization from its Board of Directors, the Company has caused these presents to be executed in its name on its behalf, all as of the day and year first above written.
/s/ John F. Saucier ---------------------------------------John F. Saucier

SOLUTIA INC.
By: /s/ Jeffry N. Quinn ------------------------------------Jeffry N. Quinn President and Chief Executive Officer

11 Exhibit A WAIVER AND RELEASE Reference is made to that Agreement (the "Agreement"), dated as of July 19, 2004, by and between Solutia, Inc., a Delaware Corporation (the "Company"), and John F. Saucier (the "Executive"). This Waiver and Release (this "Waiver") is made as of the __ day of ____________, 200_, by the Executive pursuant to Section 9(g) of the Agreement. Release and Waiver of Claims Against the Company (a) The Executive, on behalf of himself, his agents, heirs, successors, assigns, executors and administrators, in consideration for the payments and other consideration provided for under the Agreement, hereby forever releases and discharges the Company and its successors, their affiliated entities, and their past and present directors, employees, agents, attorneys, accountants, representatives, plan fiduciaries, successors and assigns from any and all known and unknown causes of action, actions, judgments, liens, indebtedness, damages, losses, claims, liabilities, and demands of whatsoever kind and character in any manner whatsoever arising on or prior to the date of this Waiver, including but not limited to (i) any claim for breach of contract, breach of implied covenant, breach of oral or written promise, wrongful termination, intentional infliction of emotional distress, defamation, interference with contract relations or prospective economic advantage, negligence, misrepresentation or employment discrimination, and including without limitation alleged violations of Title VII of

Exhibit A WAIVER AND RELEASE Reference is made to that Agreement (the "Agreement"), dated as of July 19, 2004, by and between Solutia, Inc., a Delaware Corporation (the "Company"), and John F. Saucier (the "Executive"). This Waiver and Release (this "Waiver") is made as of the __ day of ____________, 200_, by the Executive pursuant to Section 9(g) of the Agreement. Release and Waiver of Claims Against the Company (a) The Executive, on behalf of himself, his agents, heirs, successors, assigns, executors and administrators, in consideration for the payments and other consideration provided for under the Agreement, hereby forever releases and discharges the Company and its successors, their affiliated entities, and their past and present directors, employees, agents, attorneys, accountants, representatives, plan fiduciaries, successors and assigns from any and all known and unknown causes of action, actions, judgments, liens, indebtedness, damages, losses, claims, liabilities, and demands of whatsoever kind and character in any manner whatsoever arising on or prior to the date of this Waiver, including but not limited to (i) any claim for breach of contract, breach of implied covenant, breach of oral or written promise, wrongful termination, intentional infliction of emotional distress, defamation, interference with contract relations or prospective economic advantage, negligence, misrepresentation or employment discrimination, and including without limitation alleged violations of Title VII of the Civil Rights Act of 1964, as amended, prohibiting discrimination based on race, color, religion, sex or national origin; the Family and Medical Leave Act; the Americans With Disabilities Act; the Age Discrimination in Employment Act; other federal, state and local laws, ordinances and regulations; and any unemployment or workers' compensation law, excepting only those obligations of the Company expressly recited in the Agreement or this Waiver and any claims to benefits under the Company's employee benefit plans as defined exclusively in written plan documents; (ii) any and all liability that was or may have been alleged against or imputed to the Company by the Executive or by anyone acting on his behalf; (iii) all claims for wages, monetary or equitable relief, employment or reemployment with the Company in any position, and any punitive, compensatory or liquidated damages; and (iv) all rights to and claims for attorneys' fees and costs except as otherwise provided herein or in the Agreement. (b) The Executive shall not file or cause to be filed any action, suit, claim, charge or proceeding with any federal, state or local court or agency relating to any claim within the scope of this Waiver. In the event there is presently pending any action, suit, claim, charge or proceeding within the scope of this Waiver, or if such a proceeding is commenced in the future, the Executive shall promptly withdraw it, with prejudice, to the extent he has the power to do so. The Executive represents and warrants that he has not assigned any claim released herein, or authorized any other person to assert any claim on his behalf. (c) In the event any action, suit, claim, charge or proceeding within the scope of this Waiver is brought by any government agency, putative class representative or other third party to 12

vindicate any alleged rights of the Executive, (i) the Executive shall, except to the extent required or compelled by law, legal process or subpoena, refrain from participating, testifying or producing documents therein, and (ii) all damages, inclusive of attorneys' fees, if any, required to be paid to the Executive by the Company as a consequence of such action, suit, claim, charge or proceeding shall be repaid to the Company by the Executive within ten (10) days of his receipt thereof. (d) In the event of a breach of this Waiver by the Executive, the Company's obligations pursuant to the Agreement shall cease as of the date of such breach. Furthermore, the Executive understands that his breach of the provisions of this Waiver will cause monetary damages to the Company. Thus, should the Executive breach the provisions of this Waiver, he shall be required to pay the Company, as liquidated damages, the amount of the consideration paid by the Company to the Executive pursuant to the Agreement plus all costs and expenses, including all attorneys' fees and expenses, that the Company incurs in enforcing this Waiver. The Executive agrees that the foregoing amount of liquidated damages is reasonable and necessary, and does not constitute a penalty.

vindicate any alleged rights of the Executive, (i) the Executive shall, except to the extent required or compelled by law, legal process or subpoena, refrain from participating, testifying or producing documents therein, and (ii) all damages, inclusive of attorneys' fees, if any, required to be paid to the Executive by the Company as a consequence of such action, suit, claim, charge or proceeding shall be repaid to the Company by the Executive within ten (10) days of his receipt thereof. (d) In the event of a breach of this Waiver by the Executive, the Company's obligations pursuant to the Agreement shall cease as of the date of such breach. Furthermore, the Executive understands that his breach of the provisions of this Waiver will cause monetary damages to the Company. Thus, should the Executive breach the provisions of this Waiver, he shall be required to pay the Company, as liquidated damages, the amount of the consideration paid by the Company to the Executive pursuant to the Agreement plus all costs and expenses, including all attorneys' fees and expenses, that the Company incurs in enforcing this Waiver. The Executive agrees that the foregoing amount of liquidated damages is reasonable and necessary, and does not constitute a penalty. Voluntary Execution of Waiver. BY HIS SIGNATURE BELOW, THE EXECUTIVE ACKNOWLEDGES THAT: (A) I HAVE RECEIVED A COPY OF THIS WAIVER AND WAS OFFERED A PERIOD OF TWENTY-ONE (21) DAYS TO REVIEW AND CONSIDER IT; (B) IF I SIGN THIS WAIVER PRIOR TO THE EXPIRATION OF TWENTY-ONE (21) DAYS, I KNOWINGLY AND VOLUNTARILY WAIVE AND GIVE UP THIS RIGHT OF REVIEW; (C) I HAVE THE RIGHT TO REVOKE THIS WAIVER FOR A PERIOD OF SEVEN (7) DAYS AFTER I SIGN IT BY MAILING OR DELIVERING A WRITTEN NOTICE OF REVOCATION TO THE COMPANY'S CHIEF EXECUTIVE OFFICER OR GENERAL COUNSEL, NO LATER THAN THE CLOSE OF BUSINESS ON THE SEVENTH DAY AFTER THE DAY ON WHICH I SIGNED THIS WAIVER; (D) THIS WAIVER SHALL NOT BECOME EFFECTIVE OR ENFORCEABLE UNTIL THE SEVEN DAY REVOCATION PERIOD HAS EXPIRED WITHOUT THE WAIVER HAVING BEEN REVOKED; (E) THIS WAIVER WILL BE FINAL AND BINDING AFTER THE EXPIRATION OF THE REVOCATION PERIOD REFERRED TO IN (C). I AGREE NOT TO CHALLENGE ITS ENFORCEABILITY; (F) I AM AWARE OF MY RIGHT TO CONSULT AN ATTORNEY, HAVE BEEN ADVISED IN WRITING TO CONSULT WITH AN ATTORNEY, AND HAVE HAD THE OPPORTUNITY TO CONSULT WITH AN ATTORNEY, IF DESIRED, PRIOR TO SIGNING THIS WAIVER; 13

(G) NO PROMISE OR INDUCEMENT FOR THIS WAIVER HAS BEEN MADE EXCEPT AS SET FORTH IN THIS WAIVER; (H) I AM LEGALLY COMPETENT TO EXECUTE THIS WAIVER AND ACCEPT FULL RESPONSIBILITY FOR IT; AND (I) I HAVE CAREFULLY READ THIS WAIVER, ACKNOWLEDGE THAT I HAVE NOT RELIED ON ANY REPRESENTATION OR STATEMENT, WRITTEN OR ORAL, NOT SET FORTH IN THIS DOCUMENT OR THE AGREEMENT, AND WARRANT AND REPRESENT THAT I AM SIGNING THIS WAIVER KNOWINGLY AND VOLUNTARILY. Intending to be legally bound, I have signed this Waiver as of the date first set forth above.

(G) NO PROMISE OR INDUCEMENT FOR THIS WAIVER HAS BEEN MADE EXCEPT AS SET FORTH IN THIS WAIVER; (H) I AM LEGALLY COMPETENT TO EXECUTE THIS WAIVER AND ACCEPT FULL RESPONSIBILITY FOR IT; AND (I) I HAVE CAREFULLY READ THIS WAIVER, ACKNOWLEDGE THAT I HAVE NOT RELIED ON ANY REPRESENTATION OR STATEMENT, WRITTEN OR ORAL, NOT SET FORTH IN THIS DOCUMENT OR THE AGREEMENT, AND WARRANT AND REPRESENT THAT I AM SIGNING THIS WAIVER KNOWINGLY AND VOLUNTARILY. Intending to be legally bound, I have signed this Waiver as of the date first set forth above. John F. Saucier 14

Exhibit 10(f) AMENDMENT NO. 2 TO FINANCING AGREEMENT AND WAIVER THIS AMENDMENT NO. 2 TO FINANCING AGREEMENT AND WAIVER, dated as of July 20, 2004 (this "Amendment"), by and among Solutia Inc., as a debtor and debtor-in-possession, a Delaware corporation (the "Parent"), and Solutia Business Enterprises, Inc., as a debtor and debtor-in-possession, a New York corporation, ("Solutia Business" and together with the Parent, each a "Borrower" and collectively, the "Borrowers"), each subsidiary of the Parent listed as a "Guarantor" on the signature pages hereto, each as a debtor and debtor-in-possession (each a "Guarantor" and collectively, the "Guarantors"), the lenders from time to time party hereto (each a "Lender" and collectively, the "Lenders"), the issuers from time to time party hereto (each an "Issuer" and collectively, the "Issuers"), Citicorp USA, Inc. ("CUSA"), as collateral agent for the Lenders (in such capacity, the "Collateral Agent"), CUSA, as administrative agent for the Lenders (in such capacity, the "Administrative Agent"), and CUSA and Wells Fargo Foothill, LLC, as co-documentation agents for the Lenders, (in such capacity, the "Documentation Agent" and together with the Collateral Agent and the Administrative Agent, each an "Agent" and collectively, the "Agents"). RECITALS: WHEREAS, the Borrowers, the Guarantors, the Lenders, the Issuers, and the Agents have heretofore entered into that certain Financing Agreement, dated as of January 16, 2004, as amended by that certain Amendment No. 1 to Financing Agreement and Waiver, dated as of March 1, 2004 (as so amended, the "Financing Agreement"); WHEREAS, the Borrowers, the Guarantors, the Lenders, the Issuers and the Agents now desire to amend the Financing Agreement in certain respects, as hereinafter provided; and WHEREAS, the Borrowers have requested the Lenders to waive compliance with certain provisions of the Financing Agreement. NOW, THEREFORE, in consideration of the premises set forth above, the terms and conditions contained herein and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto agree as follows: ARTICLE I DEFINITIONS

Exhibit 10(f) AMENDMENT NO. 2 TO FINANCING AGREEMENT AND WAIVER THIS AMENDMENT NO. 2 TO FINANCING AGREEMENT AND WAIVER, dated as of July 20, 2004 (this "Amendment"), by and among Solutia Inc., as a debtor and debtor-in-possession, a Delaware corporation (the "Parent"), and Solutia Business Enterprises, Inc., as a debtor and debtor-in-possession, a New York corporation, ("Solutia Business" and together with the Parent, each a "Borrower" and collectively, the "Borrowers"), each subsidiary of the Parent listed as a "Guarantor" on the signature pages hereto, each as a debtor and debtor-in-possession (each a "Guarantor" and collectively, the "Guarantors"), the lenders from time to time party hereto (each a "Lender" and collectively, the "Lenders"), the issuers from time to time party hereto (each an "Issuer" and collectively, the "Issuers"), Citicorp USA, Inc. ("CUSA"), as collateral agent for the Lenders (in such capacity, the "Collateral Agent"), CUSA, as administrative agent for the Lenders (in such capacity, the "Administrative Agent"), and CUSA and Wells Fargo Foothill, LLC, as co-documentation agents for the Lenders, (in such capacity, the "Documentation Agent" and together with the Collateral Agent and the Administrative Agent, each an "Agent" and collectively, the "Agents"). RECITALS: WHEREAS, the Borrowers, the Guarantors, the Lenders, the Issuers, and the Agents have heretofore entered into that certain Financing Agreement, dated as of January 16, 2004, as amended by that certain Amendment No. 1 to Financing Agreement and Waiver, dated as of March 1, 2004 (as so amended, the "Financing Agreement"); WHEREAS, the Borrowers, the Guarantors, the Lenders, the Issuers and the Agents now desire to amend the Financing Agreement in certain respects, as hereinafter provided; and WHEREAS, the Borrowers have requested the Lenders to waive compliance with certain provisions of the Financing Agreement. NOW, THEREFORE, in consideration of the premises set forth above, the terms and conditions contained herein and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto agree as follows: ARTICLE I DEFINITIONS Section 1.01 Definitions. Unless otherwise defined or the context otherwise requires, terms for which meanings are provided in the Financing Agreement shall have such meanings when used in this Amendment.

ARTICLE II AMENDMENTS Section 2.01 Amendments to Section 1.01 of the Financing Agreement. (a) Section 1.01 of the Financing Agreement is hereby amended by inserting the following definitions of "Astaris Deferral Agreement", "Astaris Deferred Receivables", "Astaris Operating Agreement", "Chlorobenzene Business", "Liquidity Event", "Permitted Non-Cash Consideration", "Specified Intellectual Property", and "Specified Service Contracts" in the proper alphabetical position: "'Astaris Deferral Agreement' means a written contract between Astaris and the Parent regarding the deferral of payments referred to in Section 8.02(j)(v) under the Astaris Operating Agreement, providing for repayment of all

ARTICLE II AMENDMENTS Section 2.01 Amendments to Section 1.01 of the Financing Agreement. (a) Section 1.01 of the Financing Agreement is hereby amended by inserting the following definitions of "Astaris Deferral Agreement", "Astaris Deferred Receivables", "Astaris Operating Agreement", "Chlorobenzene Business", "Liquidity Event", "Permitted Non-Cash Consideration", "Specified Intellectual Property", and "Specified Service Contracts" in the proper alphabetical position: "'Astaris Deferral Agreement' means a written contract between Astaris and the Parent regarding the deferral of payments referred to in Section 8.02(j)(v) under the Astaris Operating Agreement, providing for repayment of all Astaris Deferred Receivables no later than the earlier of (i) a Liquidity Event, or (ii) October 1, 2005." "'Astaris Deferred Receivables' means Receivables payable with respect to the Astaris Operating Agreement that have been outstanding for more than 30 days." "'Astaris Operating Agreement' means the Master Lease and Operating Agreement, dated as of April 1, 2000, between Astaris and the Parent, as amended from time to time." "'Chlorobenzene Business' means the line of business operated out of the Krummrich, Illinois and Anniston, Alabama facilities which produces Mono-chlorobenzenes and Di-chlorobenzenes primarily for use in herbicides, general and process solvents, dies, pigments, deodorizers and pesticides." "'Liquidity Event' means, with respect to a Person, means any one of the following: (i) a merger or consolidation of such Person with or into another Person, (ii) the sale, transfer or lease of all or or a substantial portion of the assets of such Person, (iii) a sale of Capital Stock of such Person, or (iv) an issuance of funded Indebtedness of such Person." "'Permitted Non-Cash Consideration' means preferred stock, notes, or other contracts providing for payment of an obligation in cash over time." "'Specified Intellectual Property' means, with respect to the permitted disposition of any Subsidiary, line of business, or facility, intellectual property used or useful with respect to such Subsidiary, line of business, or facility, the disposition of which would not cause a Material Adverse Effect, or a material adverse effect on any other Loan Party or other Subsidiary." 2 "'Specified Service Contracts' means, with respect to the permitted disposition of any Subsidiary, line of business, or facility, service contracts used or useful with respect to such Subsidiary, line of business, or facility, the disposition of which would not cause a Material Adverse Effect, or a material adverse effect on any other Loan Party or other Subsidiary." (b) Section 1.01 of the Financing Agreement is hereby amended by inserting the words "or loss" after the word "income" appearing in clause (f) of the definition of "Consolidated Net Income" therein. (c) Section 1.01 of the Financing Agreement is hereby amended by deleting clause (x) of the proviso to the definition of "Contingent Obligation" appearing therein and inserting the following new clause (x) in lieu thereof: "(x) customary indemnification obligations which are (I) provided in the ordinary course to the directors, officers, employees, agents, independent contractors or service providers of the Parent or any of its Subsidiaries, (II) in connection with the sale or disposition of property, or (III) in connection with the execution in the ordinary course of business of customer supply contracts, service contracts and equipment or real property leases (or the assumption or extension of such agreements),"

"'Specified Service Contracts' means, with respect to the permitted disposition of any Subsidiary, line of business, or facility, service contracts used or useful with respect to such Subsidiary, line of business, or facility, the disposition of which would not cause a Material Adverse Effect, or a material adverse effect on any other Loan Party or other Subsidiary." (b) Section 1.01 of the Financing Agreement is hereby amended by inserting the words "or loss" after the word "income" appearing in clause (f) of the definition of "Consolidated Net Income" therein. (c) Section 1.01 of the Financing Agreement is hereby amended by deleting clause (x) of the proviso to the definition of "Contingent Obligation" appearing therein and inserting the following new clause (x) in lieu thereof: "(x) customary indemnification obligations which are (I) provided in the ordinary course to the directors, officers, employees, agents, independent contractors or service providers of the Parent or any of its Subsidiaries, (II) in connection with the sale or disposition of property, or (III) in connection with the execution in the ordinary course of business of customer supply contracts, service contracts and equipment or real property leases (or the assumption or extension of such agreements)," (d) Section 1.01 of the Financing Agreement is hereby amended by deleting the proviso appearing at the end of the definition of "Extraordinary Receipts" appearing therein and inserting the following words in lieu thereof: "provided that "Extraordinary Receipts" shall not include cash received by the Parent or any of its Subsidiaries (y) amounting to less than $10,000 per receipt, without limitation as to aggregate amount, or (z) amounting to $10,000 or more per receipt and less than $50,000 per receipt, up to an aggregate exclusion under this clause (z) of $1,000,000 for all such receipts per Fiscal Year." (e) Section 1.01 of the Financing Agreement is hereby amended by deleting clause (c) of the definition of "Permitted Indebtedness" appearing therein and inserting the following new clause (c) in lieu thereof: "(c) Indebtedness evidenced by Capitalized Lease Obligations entered into after the Filing Date in order to finance Capital Expenditures made by the Loan Parties or their Subsidiaries in accordance with the provisions of Section 8.02(g), which Indebtedness, when aggregated with the principal amount of all Indebtedness incurred under this clause (c) and clause (d) of this definition, does not exceed $10,000,000 at any time outstanding;" (f) Section 1.01 of the Financing Agreement is hereby amended by inserting the words "(or substantially equivalent foreign instruments pursuant to which the issuer agrees to honor a draft or a demand for payment made by the third party)" after 3

the words "letters of credit" appearing in sub-clause (y) of clause (i) of the definition of "Permitted Indebtedness" therein. (g) Section 1.01 of the Financing Agreement is hereby amended by (i) deleting the word "and" appearing at the end of clause (j) of the definition of "Permitted Liens" therein, (ii) deleting the period appearing at the end of clause (k) of such definition and inserting a semicolon in lieu thereof, and (iii) inserting the following new clauses (l), (m) and (n) at the end thereof: "(l) sales of receivables permitted by Section 8.02(c)(i)(J); (m) sales of inventory subject to return permitted by Section 9.05(h); and (n) institutional controls permitted by governmental entities on real properties in connection with environmental remediation activities, including, without limitation, land-use restrictions, natural resource-use restrictions, well restriction areas, deed restrictions, deed notices, declaration of environmental restrictions, access controls, monitoring requirements, site posting requirements, information distribution, notification in closure letter, restrictive covenants, and Federal/State/county/local registries, in each case that do not materially impair the value of such property and do not materially impair such property's use by any Loan Party or any of its Subsidiaries in the

the words "letters of credit" appearing in sub-clause (y) of clause (i) of the definition of "Permitted Indebtedness" therein. (g) Section 1.01 of the Financing Agreement is hereby amended by (i) deleting the word "and" appearing at the end of clause (j) of the definition of "Permitted Liens" therein, (ii) deleting the period appearing at the end of clause (k) of such definition and inserting a semicolon in lieu thereof, and (iii) inserting the following new clauses (l), (m) and (n) at the end thereof: "(l) sales of receivables permitted by Section 8.02(c)(i)(J); (m) sales of inventory subject to return permitted by Section 9.05(h); and (n) institutional controls permitted by governmental entities on real properties in connection with environmental remediation activities, including, without limitation, land-use restrictions, natural resource-use restrictions, well restriction areas, deed restrictions, deed notices, declaration of environmental restrictions, access controls, monitoring requirements, site posting requirements, information distribution, notification in closure letter, restrictive covenants, and Federal/State/county/local registries, in each case that do not materially impair the value of such property and do not materially impair such property's use by any Loan Party or any of its Subsidiaries in the normal conduct of such Person's business." (h) Section 1.01 of the Financing Agreement is hereby amended by deleting the definition of "Solutia Therminol Investment" appearing therein and inserting the following new definition in lieu thereof: "'Solutia Therminol Investment' means the investment by Solutia Chemical Co. Ltd. Suzhou in Solutia Therminol Co. Ltd., which shall be accomplished, first, by a dividend from Solutia Chemical Co. Ltd. Suzhou to each of Solutia Greater China, Inc. and Jiangsu Chemical Pesticide Group Company Ltd., and, second, by corresponding capital contributions from Solutia Greater China, Inc. and Jiangsu Chemical Pesticide Group Company Ltd. into Solutia Therminol Co. Ltd. Suzhou, it being understood that such investment will involve no transfer of cash from the United States." Section 2.02 Amendment to Section 2.05 of the Financing Agreement. Section 2.05 of the Financing Agreement is hereby amended in the manner set forth below: (a) Section 2.05(a)(iii) is hereby amended and restated to read in its entirety as follows: "(iii) [intentionally omitted]." 4

(b) The first sentence of Section 2.05(c)(iii) is hereby amended and restated to read in its entirety as follows: "Immediately upon any Disposition by any Loan Party or its Subsidiaries (other than a Disposition of assets of Solutia Europe or any of its Subsidiaries or a Disposition of assets pursuant to Section 8.02(c)(i)(L)), the Borrowers shall prepay the outstanding principal amount of the Loans in an amount equal to 100% of the Net Cash Proceeds received by such Person in connection with such Disposition; provided, however, that so long as no Default or Event of Default has occurred and is continuing on the date such Person receives such Net Cash Proceeds, (A) with respect to the first $5,000,000 of Net Cash Proceeds received in respect of Dispositions pursuant to Section 8.02(c)(i)(F) of assets listed on Part III of Schedule 8.02(c)(i), no prepayment shall be required, and (B) with respect to the next $10,000,000 of Net Cash Proceeds received in respect of Dispositions pursuant to Section 8.02(c)(i)(F) of assets listed on Part III of Schedule 8.02(c)(i), the Borrowers shall prepay the outstanding principal amount of the Loans in an amount equal to 50% of the Net Cash Proceeds received by such Person in connection with such Disposition." (c) Section 2.05(c) is hereby amended by inserting the following sentence at the end of Section 2.05(c)(iii): "In the event of a Disposition of businesses comprising assets owned by both (x) any Loan Party or its

(b) The first sentence of Section 2.05(c)(iii) is hereby amended and restated to read in its entirety as follows: "Immediately upon any Disposition by any Loan Party or its Subsidiaries (other than a Disposition of assets of Solutia Europe or any of its Subsidiaries or a Disposition of assets pursuant to Section 8.02(c)(i)(L)), the Borrowers shall prepay the outstanding principal amount of the Loans in an amount equal to 100% of the Net Cash Proceeds received by such Person in connection with such Disposition; provided, however, that so long as no Default or Event of Default has occurred and is continuing on the date such Person receives such Net Cash Proceeds, (A) with respect to the first $5,000,000 of Net Cash Proceeds received in respect of Dispositions pursuant to Section 8.02(c)(i)(F) of assets listed on Part III of Schedule 8.02(c)(i), no prepayment shall be required, and (B) with respect to the next $10,000,000 of Net Cash Proceeds received in respect of Dispositions pursuant to Section 8.02(c)(i)(F) of assets listed on Part III of Schedule 8.02(c)(i), the Borrowers shall prepay the outstanding principal amount of the Loans in an amount equal to 50% of the Net Cash Proceeds received by such Person in connection with such Disposition." (c) Section 2.05(c) is hereby amended by inserting the following sentence at the end of Section 2.05(c)(iii): "In the event of a Disposition of businesses comprising assets owned by both (x) any Loan Party or its Subsidiaries (other than Solutia Europe and its Subsidiaries) (the "DIP Assets") and (y) Solutia Europe or its Subsidiaries (the "Euro Assets"), including either of the transactions listed as items 2 and 3 on Part II of Schedule 8.02(c)(i), the amount of any payments required to be made under this clause (iii) related to the DIP Assets shall be determined by allocating the Net Cash Proceeds of such Disposition between the DIP Assets and the Euro Assets based upon the relative value of such assets, such allocation to be satisfactory to the Administrative Agent in its discretion, provided that it shall be understood that no mandatory prepayments shall be required in the event that any such Disposition shall involve only the assets of Solutia Europe or any of its Subsidiaries." (d) Section 2.05(c)(v) is hereby amended and restated to read in its entirety as follows: "(iii) [intentionally omitted]." (e) Section 2.05(c)(vii)(A) is hereby amended by deleting the words "the Agents" appearing therein and inserting in lieu thereof the words "the Administrative Agent and the Collateral Agent". (f) Section 2.05(c)(vii)(B) is hereby amended and restated to read in its entirety as follows: 5 "(B) the Borrowers shall not be required to make a prepayment under clause (iii) or (iv) of this Section 2.05(c) (except in the event that prepayment would otherwise be required by another provision of this Agreement, including clause (vi) of this Section 2.05(c), in which event prepayment shall be made in accordance with such other provision), unless the aggregate amount of Net Cash Proceeds received as a result of the events described in such Sections exceeds $7,500,000 and any such required prepayment under such Sections shall be limited to the Net Cash Proceeds and Extraordinary Receipts, net of any reasonable expenses incurred in connection with such Extraordinary Receipts, exceeding $7,500,000." (g) Section 2.05(d) is hereby amended by (i) inserting the word "and" at the end of Section 2.05(d)(ii), (ii) deleting the text "; and" appearing at the end of Section 2.05(d)(iii) and inserting a period in lieu thereof, and (iii) deleting Section 2.05(d)(iv) in its entirety. Section 2.03 Amendment to Section 6.01 of the Financing Agreement. Section 6.01(n) of the Financing Agreement is hereby amended by inserting the words ", either directly or by contributing the principal and interest thereof to Solutia Europe in exchange for the issuance of new stock," after the words "convert all or a portion thereof" appearing in clause (B) thereof. Section 2.04 Amendment to Section 7.01 of the Financing Agreement. Section 7.01 of the Financing Agreement is hereby amended in the manner set forth below:

"(B) the Borrowers shall not be required to make a prepayment under clause (iii) or (iv) of this Section 2.05(c) (except in the event that prepayment would otherwise be required by another provision of this Agreement, including clause (vi) of this Section 2.05(c), in which event prepayment shall be made in accordance with such other provision), unless the aggregate amount of Net Cash Proceeds received as a result of the events described in such Sections exceeds $7,500,000 and any such required prepayment under such Sections shall be limited to the Net Cash Proceeds and Extraordinary Receipts, net of any reasonable expenses incurred in connection with such Extraordinary Receipts, exceeding $7,500,000." (g) Section 2.05(d) is hereby amended by (i) inserting the word "and" at the end of Section 2.05(d)(ii), (ii) deleting the text "; and" appearing at the end of Section 2.05(d)(iii) and inserting a period in lieu thereof, and (iii) deleting Section 2.05(d)(iv) in its entirety. Section 2.03 Amendment to Section 6.01 of the Financing Agreement. Section 6.01(n) of the Financing Agreement is hereby amended by inserting the words ", either directly or by contributing the principal and interest thereof to Solutia Europe in exchange for the issuance of new stock," after the words "convert all or a portion thereof" appearing in clause (B) thereof. Section 2.04 Amendment to Section 7.01 of the Financing Agreement. Section 7.01 of the Financing Agreement is hereby amended in the manner set forth below: (a) Section 7.01(o)(ii) is hereby amended by inserting the words ", except to the extent rejected by any Loan Party following the Petition Date in accordance with the terms hereof" following the words "is in full force and effect" appearing in the fourth sentence therein. (b) Section 7.01(r)(xvi) of the Financing Agreement is hereby amended and restated to read in its entirety as follows: "(xvi) based upon the best information available to the Loan Parties on July 20, 2004, the Loan Parties have a good faith belief that they will not (A) exceed by $5,000,000 any of the annual or aggregate Environmental Liabilities and Costs for any of the "Operating Facilities" set forth on Part B of Schedule 7.01(r) or (B) exceed by ten percent (10%) or more the combined annual or aggregate Environmental Liabilities and Costs for all of such "Operating Facilities" set forth on Part B of Schedule 7.01(r); and". Section 2.05 Amendment to Section 8.01 of the Financing Agreement. Section 8.01 of the Financing Agreement is hereby amended in the manner set forth below: (a) The first paragraph of Section 8.01(a) is hereby amended and restated to read in its entirety as follows: 6 "(a) Reporting Requirements. Furnish (which may be effectuated via electronic mail in accordance with the electronic mail address designated by each Agent and each Lender to the Administrative Borrower in writing, provided that, if any such Agent requests that such reports or other information be delivered by mail, telecopier or courier, then such reports or other information shall be delivered by such manner in accordance with Section 13.01) to each Agent and each Lender:" (b) Section 8.01(a)(xviii) is hereby amended by deleting the words "written reports" appearing therein and inserting the words "material written reports and presentations" in lieu thereof. (c) Section 8.01(b) is hereby amended by inserting the words "(x) with a Current Value in excess of $5,000,000 in the case of a fee interest, or (y) requiring the payment of annual rent exceeding in the aggregate $2,500,000 in the case of a leasehold interest," after the words "one or more Mortgages creating on the real property of such Subsidiary" appearing in sub-clause (D) of clause (i) thereof. (d) Section 8.01(d) is hereby amended by inserting the words "other than the Significant Subsidiary described in item 3 on Part II of Schedule 8.02(c)(i) in connection with the disposition of the business described in such item" after the words "makes such qualification necessary".

"(a) Reporting Requirements. Furnish (which may be effectuated via electronic mail in accordance with the electronic mail address designated by each Agent and each Lender to the Administrative Borrower in writing, provided that, if any such Agent requests that such reports or other information be delivered by mail, telecopier or courier, then such reports or other information shall be delivered by such manner in accordance with Section 13.01) to each Agent and each Lender:" (b) Section 8.01(a)(xviii) is hereby amended by deleting the words "written reports" appearing therein and inserting the words "material written reports and presentations" in lieu thereof. (c) Section 8.01(b) is hereby amended by inserting the words "(x) with a Current Value in excess of $5,000,000 in the case of a fee interest, or (y) requiring the payment of annual rent exceeding in the aggregate $2,500,000 in the case of a leasehold interest," after the words "one or more Mortgages creating on the real property of such Subsidiary" appearing in sub-clause (D) of clause (i) thereof. (d) Section 8.01(d) is hereby amended by inserting the words "other than the Significant Subsidiary described in item 3 on Part II of Schedule 8.02(c)(i) in connection with the disposition of the business described in such item" after the words "makes such qualification necessary". (e) Section 8.01(h) is hereby amended by inserting the words "(as adjusted appropriately to take into account changes to business operations and liabilities subject to compromise)" after the words "insurance maintained by the Parent and its Subsidiaries on the Facility Effective Date" in contained in the first sentence therein. (f) Clause (iii) of Section 8.01(j) is hereby amended and restated to read in its entirety as follows: "(iii) provide the Administrative Agent and the Collateral Agent written notice within ten (10) days of any Release of a Hazardous Material in excess of any reportable quantity from or onto property owned or operated by it or any of its Subsidiaries for which it is reasonably foreseeable that such Release would result in the need to take any Remedial Actions of soil, groundwater, or surface water required under Environmental Laws;" (g) Clause (v) of Section 8.01(j) is hereby amended and restated to read in its entirety as follows: "(v) provide the Collateral Agent with prompt written notice if the Loan Parties will (A) exceed by $5,000,000 any of the annual or aggregate Environmental Liabilities and Costs for any of the "Operating Facilities" set forth on Part B of Schedule 7.01(r) or (B) exceed by ten percent (10%) or more the combined annual or aggregate Environmental Liabilities and Costs for all of such "Operating Facilities" set forth on Part B of Schedule 7.01(r); and" 7

(h) Section 8.01(r) is hereby amended by inserting the following new clause (iv): "(iv) As soon as practicable but not later than September 30, 2004, or such later date as may be agreed to by the Administrative Agent in its sole discretion, either (A) deliver to the Administrative Agent an Astaris Deferral Agreement, together with any necessary approvals of the Bankruptcy Court with respect thereto, such agreement and approvals to be reasonably satisfactory in form and substance to the Administrative Agent, or (B) commence collecting all Receivables with respect to the Astaris Operating Agreement on a basis no less frequent than monthly, such that no Receivables arising after September 30, 2004 (or such later date) with respect to such agreement become Astaris Deferred Receivables, provided, however, that if Astaris were to become a debtor in a case under the Bankruptcy Code, the Loan Parties' failure to comply with this Section 8.01(r)(iv) shall not be an Event of Default so long as, and to the extent that, the Loan Parties are prevented from enforcing their rights with respect to the Astaris Deferred Receivables by operation of the automatic stay of Section 362 of the Bankruptcy Code." Section 2.06 Amendment to Section 8.02 of the Financing Agreement. Section 8.02 of the Financing Agreement is hereby amended in the manner set forth below: (a) Section 8.02(c)(i) is hereby amended and restated to read in its entirety as follows:

(h) Section 8.01(r) is hereby amended by inserting the following new clause (iv): "(iv) As soon as practicable but not later than September 30, 2004, or such later date as may be agreed to by the Administrative Agent in its sole discretion, either (A) deliver to the Administrative Agent an Astaris Deferral Agreement, together with any necessary approvals of the Bankruptcy Court with respect thereto, such agreement and approvals to be reasonably satisfactory in form and substance to the Administrative Agent, or (B) commence collecting all Receivables with respect to the Astaris Operating Agreement on a basis no less frequent than monthly, such that no Receivables arising after September 30, 2004 (or such later date) with respect to such agreement become Astaris Deferred Receivables, provided, however, that if Astaris were to become a debtor in a case under the Bankruptcy Code, the Loan Parties' failure to comply with this Section 8.01(r)(iv) shall not be an Event of Default so long as, and to the extent that, the Loan Parties are prevented from enforcing their rights with respect to the Astaris Deferred Receivables by operation of the automatic stay of Section 362 of the Bankruptcy Code." Section 2.06 Amendment to Section 8.02 of the Financing Agreement. Section 8.02 of the Financing Agreement is hereby amended in the manner set forth below: (a) Section 8.02(c)(i) is hereby amended and restated to read in its entirety as follows: "(i) any Loan Party and its Subsidiaries may (A) sell Inventory in the ordinary course of business, (B) sell or otherwise dispose of obsolete or worn-out equipment or equipment no longer used in the ordinary course of business, (C) sell or otherwise dispose of other property or assets for cash in an aggregate amount not less than the fair market value of such property or assets, (D) enter into licensing arrangements entered into in the ordinary course of business, (E) sell or otherwise dispose of its properties or assets to any Loan Party; (F) sell or otherwise dispose of the assets described on Parts I, II and III of Schedule 8.02(c)(i) for cash in an aggregate amount not less than the fair market value of such property or assets (in each case except as otherwise expressly provided on such schedule); (G) sell or otherwise dispose of other property or assets for cash in an aggregate amount not less than the fair market value of such property or assets in an amount not to exceed $500,000 per transaction pursuant to sales procedures established by the Bankruptcy Court for non-core assets sales pursuant to an order dated March 29, 2004; (H) sell or otherwise dispose of other property or assets for cash in an aggregate amount not less than the fair market value of such property or assets pursuant to any motion under Section 363 of the Bankruptcy Code to which no Lender or Agent files an objection; (I) sell or otherwise dispose of other property or assets related to Subsidiaries or business lines that are liquidated or wound down in accordance with Section 8.02(c)(iv) or (vii); (J) sell accounts receivable (including sales of such accounts receivable at a 8 discount to face value) for cash in an amount not less than the fair market value of such accounts receivable, as follows: (I) Subsidiaries who are not Loan Parties may sell, as part of one or more financings, on a non-recourse basis, at a discount of not greater than 5% of face value, up to $5,000,000 in aggregate principal amount of Accounts Receivable during any 90-day period (measured on a rolling basis); (II) Subsidiaries who are not Loan Parties may sell, as part of one or more financings, on a recourse basis, at a discount of not greater than 5% of face value, up to $2,000,000 in aggregate principal amount of Accounts Receivable during any 90-day period (measured on a rolling basis); and (III) any Loan Party and its Subsidiaries may sell, on a non-recourse basis, up to $5,000,000 in aggregate principal amount of additional Accounts Receivable in addition to those specified in subclauses (I) and (II) above; (K) enter into leases and subleases of real property in the ordinary course of business and subject to the other provisions herein; and (L) make charitable donations, subject to approval of the Bankruptcy Court (as required) and so long as no Default or Event of Default shall have occurred and be continuing either before or after giving effect to any such donation, (y) of cash or property in the ordinary course of business consistent with past practices, such donations not to exceed $5,000 in value for each donation and not to exceed $50,000 in aggregate amount and (z) of parcels of real property specified on Part IV of Schedule 8.02(c)(i); provided that the Net Cash Proceeds of such Dispositions (x) in the case of clauses (B) and (C) above, do not exceed $5,000,000 in the aggregate in any 12-month period (Net Cash Proceeds of earn-out payments referred to in Section 8.02(e)(xiv) to be included as of the date when actually received), (y) in the case of clauses (G) through (I) above, do not exceed $5,000,000 in the aggregate, and (z) in all cases, are paid to the Administrative Agent for the benefit of the Lenders pursuant to the terms of

discount to face value) for cash in an amount not less than the fair market value of such accounts receivable, as follows: (I) Subsidiaries who are not Loan Parties may sell, as part of one or more financings, on a non-recourse basis, at a discount of not greater than 5% of face value, up to $5,000,000 in aggregate principal amount of Accounts Receivable during any 90-day period (measured on a rolling basis); (II) Subsidiaries who are not Loan Parties may sell, as part of one or more financings, on a recourse basis, at a discount of not greater than 5% of face value, up to $2,000,000 in aggregate principal amount of Accounts Receivable during any 90-day period (measured on a rolling basis); and (III) any Loan Party and its Subsidiaries may sell, on a non-recourse basis, up to $5,000,000 in aggregate principal amount of additional Accounts Receivable in addition to those specified in subclauses (I) and (II) above; (K) enter into leases and subleases of real property in the ordinary course of business and subject to the other provisions herein; and (L) make charitable donations, subject to approval of the Bankruptcy Court (as required) and so long as no Default or Event of Default shall have occurred and be continuing either before or after giving effect to any such donation, (y) of cash or property in the ordinary course of business consistent with past practices, such donations not to exceed $5,000 in value for each donation and not to exceed $50,000 in aggregate amount and (z) of parcels of real property specified on Part IV of Schedule 8.02(c)(i); provided that the Net Cash Proceeds of such Dispositions (x) in the case of clauses (B) and (C) above, do not exceed $5,000,000 in the aggregate in any 12-month period (Net Cash Proceeds of earn-out payments referred to in Section 8.02(e)(xiv) to be included as of the date when actually received), (y) in the case of clauses (G) through (I) above, do not exceed $5,000,000 in the aggregate, and (z) in all cases, are paid to the Administrative Agent for the benefit of the Lenders pursuant to the terms of Section 2.05(c); provided, further, that other than (x) parcels of real property set forth on Part III of Schedule 8.02(c)(i), (y) sales or other dispositions of Principal Properties or portions thereof pursuant to clause (G) above, and (z) dispositions of immaterial portions of any Principal Property that are subject and subordinate to the Lien of the Collateral Agent for the benefit of the Lenders (including, without limitation, the entry into leases and subleases and the grant of easements), no Loan Party may sell or otherwise dispose of any Principal Property." (b) Section 8.02(c) is hereby further amended by (i) deleting the word "and" appearing at the end of Section 8.02(c)(iv), (ii) deleting the period appearing at the end of Section 8.02(c)(v) and inserting a semicolon in lieu thereof, and (iii) inserting the following Sections 8.02(c)(vi) through 8.02(c)(ix): "(vi) any Loan Party and its Subsidiaries may, subject to approval of the Bankruptcy Court (as required), purchase or otherwise acquire all or substantially all of the assets of entities having an aggregate value of not more than $1,000,000, such purchases and acquisitions not to exceed $5,000,000 in the aggregate; (vii) any Loan Party and its Subsidiaries may, so long as (A) no other provision of this Agreement would be violated thereby, and (B) no 9 Default or Event of Default shall have occurred and be continuing either before or after giving effect to such transaction, wind down businesses or operations constituting (x) business lines generating less than 2% of consolidated revenue of the Loan Parties; (y) the Chlorobenzene Business; or (z) the business described in item 10.C on Part III of Schedule 8.02(c)(i); (viii) Parent may, so long as (A) no other provision of this Agreement would be violated thereby, and (B) no Default or Event of Default shall have occurred and be continuing either before or after giving effect to such transaction, liquidate the "Significant Subsidiary" described in item 3 on Part II of Schedule 8.02(c)(i) in connection with the disposition of the business described in such item in accordance with Section 8.02(c)(i)(F) hereof; and (ix) (A) CarboGen AG and Amcis AG may be merged into or consolidated or amalgamated with each other, so long as (x) no other provision of this Agreement would be violated thereby, and (y) no Default or Event of Default shall have occurred and be continuing either before or after giving effect to such transaction, and (B) Solutia Services International SCA/Comm.VA may be merged into, or consolidated or amalgamated with, Solutia Europe, so long as (x) no other provision of this Agreement would be violated thereby, (y) no Default or Event of Default shall have occurred and be continuing either before or after giving effect to such transaction, and (z) all of the non-voting Capital Stock and 65% of the voting Capital Stock of the surviving Foreign Subsidiary is the subject of a Pledge Agreement, which is in full force and effect on the date of and immediately after giving

Default or Event of Default shall have occurred and be continuing either before or after giving effect to such transaction, wind down businesses or operations constituting (x) business lines generating less than 2% of consolidated revenue of the Loan Parties; (y) the Chlorobenzene Business; or (z) the business described in item 10.C on Part III of Schedule 8.02(c)(i); (viii) Parent may, so long as (A) no other provision of this Agreement would be violated thereby, and (B) no Default or Event of Default shall have occurred and be continuing either before or after giving effect to such transaction, liquidate the "Significant Subsidiary" described in item 3 on Part II of Schedule 8.02(c)(i) in connection with the disposition of the business described in such item in accordance with Section 8.02(c)(i)(F) hereof; and (ix) (A) CarboGen AG and Amcis AG may be merged into or consolidated or amalgamated with each other, so long as (x) no other provision of this Agreement would be violated thereby, and (y) no Default or Event of Default shall have occurred and be continuing either before or after giving effect to such transaction, and (B) Solutia Services International SCA/Comm.VA may be merged into, or consolidated or amalgamated with, Solutia Europe, so long as (x) no other provision of this Agreement would be violated thereby, (y) no Default or Event of Default shall have occurred and be continuing either before or after giving effect to such transaction, and (z) all of the non-voting Capital Stock and 65% of the voting Capital Stock of the surviving Foreign Subsidiary is the subject of a Pledge Agreement, which is in full force and effect on the date of and immediately after giving effect to such merger, consolidation or amalgamation." (c) Section 8.02(d) is hereby amended by deleting the period appearing at the end thereof and inserting the words ", other than changes permitted by Section 8.02(c)(vii)(z)." in lieu thereof. (d) Section 8.02(e)(xii)(A) is hereby amended by inserting the words "invested by any Loan Party or any Subsidiary thereof" immediately following the figure "$3,000,000". (e) Section 8.02(e) is hereby amended by (i) deleting the word "and" appearing at the end of Section 8.02(e)(xii), (ii) deleting the period appearing at the end of Section 8.02(e)(xiii) and inserting a semicolon in lieu thereof, and (iii) inserting the following Sections 8.02(e)(xiv) through 8.02(e)(xvi): "(xiv) earn-out provisions contained in transactions permitted by Section 8.02(c); (xv) investments in common Capital Stock of Solutia Europe issued pursuant to a conversion pursuant to Section 6.01(n), whether direct or indirect, of the intercompany convertible bond made by Solutia Europe to Solutia Investments LLC and Monchem International, Inc; and 10 (xvi) investments by a Loan Party or any Subsidiary thereof in respect of the entity listed on Part II of Schedule 8.02(e), the aggregate amount of such investments not to exceed in the aggregate the amount specified on such schedule, provided, that (A) both immediately before and after the making of any such investment, no Default or Event of Default has occurred or is continuing, (B) immediately after the making of such investments Availability exceeds $50,000,000, (C) such investments shall be subject to approval of the Bankruptcy Court (as required), (D) no assets or property (including cash and cash equivalents) of any Loan Party shall be used, directly or indirectly (including by way of loans, advances, guarantees, or investments in Capital Stock of any Subsidiary), to acquire, hold, or maintain, or to provide the necessary funds to acquire, hold or maintain, any investment acquired, owned, held or maintained by any Subsidiary that is not a Loan Party, and (E) in the case of any investment by any Loan Party, any Capital Stock or other assets received in respect of such investment shall be pledged in accordance with the requirements of the Loan Documents." (f) Section 8.02(f) is hereby amended by (i) inserting the words "other than in connection with any of (x) the Maryville Centre headquarters located in St. Louis, Missouri, (y) the Westport facility located in St. Louis, Missouri, or (z) the European headquarters located in Louvain la Neuve, Belgium" immediately following the words "in connection with any sale and leaseback transaction" appearing in clause (i) thereof, and (ii) by inserting the words "(other than in connection with the assumption or extension of leases in effect as of the Facility Effective Date or the execution of leases in replacement thereof, provided such replacement leases relate to the same or substantially similar property as the leases being replaced)" following the words "Operating Lease Obligations with respect to leases entered into after the Facility Effective Date" appearing in clause (ii)(B) therein.

(xvi) investments by a Loan Party or any Subsidiary thereof in respect of the entity listed on Part II of Schedule 8.02(e), the aggregate amount of such investments not to exceed in the aggregate the amount specified on such schedule, provided, that (A) both immediately before and after the making of any such investment, no Default or Event of Default has occurred or is continuing, (B) immediately after the making of such investments Availability exceeds $50,000,000, (C) such investments shall be subject to approval of the Bankruptcy Court (as required), (D) no assets or property (including cash and cash equivalents) of any Loan Party shall be used, directly or indirectly (including by way of loans, advances, guarantees, or investments in Capital Stock of any Subsidiary), to acquire, hold, or maintain, or to provide the necessary funds to acquire, hold or maintain, any investment acquired, owned, held or maintained by any Subsidiary that is not a Loan Party, and (E) in the case of any investment by any Loan Party, any Capital Stock or other assets received in respect of such investment shall be pledged in accordance with the requirements of the Loan Documents." (f) Section 8.02(f) is hereby amended by (i) inserting the words "other than in connection with any of (x) the Maryville Centre headquarters located in St. Louis, Missouri, (y) the Westport facility located in St. Louis, Missouri, or (z) the European headquarters located in Louvain la Neuve, Belgium" immediately following the words "in connection with any sale and leaseback transaction" appearing in clause (i) thereof, and (ii) by inserting the words "(other than in connection with the assumption or extension of leases in effect as of the Facility Effective Date or the execution of leases in replacement thereof, provided such replacement leases relate to the same or substantially similar property as the leases being replaced)" following the words "Operating Lease Obligations with respect to leases entered into after the Facility Effective Date" appearing in clause (ii)(B) therein. (g) Section 8.02(h) is hereby further amended by deleting the proviso at the end thereof and inserting the following text in lieu thereof: "provided, however, (A) dividends or other distribution may be made by any Loan Party to another Loan Party, and by any Subsidiary of a Loan Party who is not a Loan Party to any Loan Party or any Subsidiary of any Loan Party, (B) the Parent may pay dividends in the form of common Capital Stock, (C) any Loan Party may pay service fees to Foreign Subsidiaries in connection with the sale of such Loan Party's Inventory to Foreign Subsidiaries or unrelated third parties, provided that, such payment would also be permitted under Section 8.02 (j), (D) any direct or indirect Subsidiary of Solutia Europe may pay dividends to Solutia Europe or any Subsidiary of Solutia Europe, and (E) Solutia Chemical Co. Ltd. Suzhou may pay dividends to Jiangsu Chemical Pesticide Group Company Ltd. in connection with the Solutia Therminol Investment." (h) Section 8.02(j) is hereby amended by (i) deleting the word "and" appearing at the end of Section 8.02(j)(iii), (ii) deleting the period appearing at the 11

end of Section 8.02(j)(iii) and inserting a semicolon in lieu thereof, and (iii) inserting the following Sections 8.02(j)(iv) and (v): "(iv) as necessary or desirable for the prudent operation of its business, for fair consideration and on terms no less favorable to it or its Subsidiaries than would be obtainable in a comparable arm's length transaction with a Person that is not an Affiliate thereof, assign, transfer, or exercise, directly or indirectly, the option held by Parent with respect to certain real property in Thailand to, or for the benefit of, Solutia (Thailand) Ltd., (v) the deferral, pursuant to a separate agreement reached prior to the Petition Date, of payments receivable by the Loan Parties from Astaris arising in the ordinary course of business under the Astaris Operating Agreement, and the execution, delivery and performance of the Astaris Deferral Agreement, and (vi) as necessary or desirable for the prudent operation of its business, for fair consideration and on terms no less favorable to it or its Subsidiaries than would be obtainable in a comparable arm's length transaction with a Person that is not an Affiliate thereof, assign or transfer any Specified Intellectual Property held in the name of the Parent or any Loan Party as of the Petition Date or Specified Service Contracts to any Subsidiaries in connection with the transaction described in item 3 of Part II of Schedule 8.02(c)(i), provided that to the extent reasonably necessary to effect such transaction, consideration for such assignment or transfer may consist of a Receivable, so long as such Receivable is payable within a reasonable time and is subject to the Lien of the Collateral Agent for the benefit of the Lenders." (i) Section 8.02(l) is hereby amended by deleting the period at the end thereof and inserting the words ", and other than common Capital Stock of Solutia Europe issued pursuant to a conversion pursuant to Section 6.01(n),

end of Section 8.02(j)(iii) and inserting a semicolon in lieu thereof, and (iii) inserting the following Sections 8.02(j)(iv) and (v): "(iv) as necessary or desirable for the prudent operation of its business, for fair consideration and on terms no less favorable to it or its Subsidiaries than would be obtainable in a comparable arm's length transaction with a Person that is not an Affiliate thereof, assign, transfer, or exercise, directly or indirectly, the option held by Parent with respect to certain real property in Thailand to, or for the benefit of, Solutia (Thailand) Ltd., (v) the deferral, pursuant to a separate agreement reached prior to the Petition Date, of payments receivable by the Loan Parties from Astaris arising in the ordinary course of business under the Astaris Operating Agreement, and the execution, delivery and performance of the Astaris Deferral Agreement, and (vi) as necessary or desirable for the prudent operation of its business, for fair consideration and on terms no less favorable to it or its Subsidiaries than would be obtainable in a comparable arm's length transaction with a Person that is not an Affiliate thereof, assign or transfer any Specified Intellectual Property held in the name of the Parent or any Loan Party as of the Petition Date or Specified Service Contracts to any Subsidiaries in connection with the transaction described in item 3 of Part II of Schedule 8.02(c)(i), provided that to the extent reasonably necessary to effect such transaction, consideration for such assignment or transfer may consist of a Receivable, so long as such Receivable is payable within a reasonable time and is subject to the Lien of the Collateral Agent for the benefit of the Lenders." (i) Section 8.02(l) is hereby amended by deleting the period at the end thereof and inserting the words ", and other than common Capital Stock of Solutia Europe issued pursuant to a conversion pursuant to Section 6.01(n), whether direct or indirect, of the intercompany convertible bond made by Solutia Europe to Solutia Investments LLC and Monchem International, Inc." in lieu thereof. (j) Section 8.02(m)(iii) is hereby amended and restated to read in its entirety as follows: "(iii) amend, modify or otherwise change the Euro Indenture or any Euro Note, except for (A) amendments, modifications or other changes in connection with the sales listed as items 2 and 3 on Part II of Schedule 8.02(c) (i) as are necessary to effect such sales, or (B) such amendments, modifications or other changes in connection with the Euro Restructuring specifically set forth in Schedule 8.02(m) or as otherwise acceptable to the Required Lenders in their sole discretion; provided, that with respect to clauses (A) and (B) above, any such agreements, instruments and other documents related to any such sale or to the Euro Restructuring shall be delivered to the Administrative Agent and the Collateral Agent to provide them with a reasonable opportunity to review any such documents prior to the execution, entry or authorization thereof or consummation of any such sale or the Euro Restructuring, respectively; provided, further, that with respect to clause (A) above, no such amendment, modification 12

or change shall be permitted if it could reasonably be expected to have an adverse effect on the Agents or the Lenders, or" (k) Section 8.02(o) is hereby amended by deleting the period appearing at the end thereof and inserting the following proviso in lieu thereof: ", provided, further, however, that this Section 8.02(o) shall not prohibit, to the extent otherwise permitted hereunder, the deferral, pursuant to a separate agreement reached prior to the Petition Date, of payments receivable by the Loan Parties from Astaris arising in the ordinary course of business under the Astaris Operating Agreement in the manner and to the extent previously reported to the Administrative Agent, or the execution, delivery and performance of the Astaris Deferral Agreement pursuant to Section 8.01(r)(iv)." (l) Section 8.02(r) is hereby amended by deleting the period appearing at the end thereof and inserting the following text in lieu thereof: "in any material respect, provided, further, however, that this Section 8.02(r) shall not prohibit, to the extent otherwise permitted hereunder, the deferral, pursuant to a separate agreement reached prior to the Petition Date, of payments receivable by the Loan Parties from Astaris arising in the ordinary course of business under the Astaris Operating Agreement in the manner and to the extent previously reported to the Administrative Agent, or

or change shall be permitted if it could reasonably be expected to have an adverse effect on the Agents or the Lenders, or" (k) Section 8.02(o) is hereby amended by deleting the period appearing at the end thereof and inserting the following proviso in lieu thereof: ", provided, further, however, that this Section 8.02(o) shall not prohibit, to the extent otherwise permitted hereunder, the deferral, pursuant to a separate agreement reached prior to the Petition Date, of payments receivable by the Loan Parties from Astaris arising in the ordinary course of business under the Astaris Operating Agreement in the manner and to the extent previously reported to the Administrative Agent, or the execution, delivery and performance of the Astaris Deferral Agreement pursuant to Section 8.01(r)(iv)." (l) Section 8.02(r) is hereby amended by deleting the period appearing at the end thereof and inserting the following text in lieu thereof: "in any material respect, provided, further, however, that this Section 8.02(r) shall not prohibit, to the extent otherwise permitted hereunder, the deferral, pursuant to a separate agreement reached prior to the Petition Date, of payments receivable by the Loan Parties from Astaris arising in the ordinary course of business under the Astaris Operating Agreement in the manner and to the extent previously reported to the Administrative Agent, or the execution, delivery and performance of the Astaris Deferral Agreement pursuant to Section 8.01(r)(iv)." (m) Section 8.02(t) is hereby amended by (i) deleting the word "and" appearing at the end of Section 8.02(t)(xi), (ii) deleting the period appearing at the end of Section 8.02(t)(xii) and inserting a semicolon in lieu thereof, and (iii) inserting the following Sections 8.02(c)(xiii) through 8.02(c)(xv): "(xiii) in respect of other claims not otherwise prohibited hereunder in an aggregate amount not to exceed $250,000 for any claimant or $1,500,000 for all claimants, subject to approval of the Bankruptcy Court; (xiv) in respect of claims set forth on Schedule 8.02(t), so long as such claims are fully secured by cash collateral of the Loan Parties, or fully supported by letters of credit permitted hereunder, to the extent of the value of such cash collateral or such letters of credit; and (xv) in respect of that certain agreement, dated September 9, 2003, among Solutia, Pharmacia Corporation and Monsanto Company setting forth the respective settlement obligations among the parties thereto with respect to certain Litigation (as defined therein) in an amount not to exceed $5,000,000 in the aggregate in any year, plus reasonable fees and expenses related thereto." Section 2.07 Amendment to Section 9.01 of the Financing Agreement. Section 9.01 of the Financing Agreement is hereby amended in the manner set forth below: 13

(a) The second sentence of Section 9.01(a) is hereby amended and restated to read in its entirety as follows: "On or prior to the date specified in Section 8.01(r)(iii), the Loan Parties shall deliver to the Administrative Agent (x) a Cash Management Agreement with respect to each Cash Management Account and (y) a Concentration Account Agreement with respect to each Concentration Account; provided, however, that so long as account number 5015330 of Beamer Road Management Company at First Community Bank shall have less than $10,000 therein, the Loan Parties shall not be required to deliver a Cash Management Agreement with respect to such account unless requested by the Administrative Agent pursuant to the last sentence of this Section 9.01(a)." (b) Section 9.04(a) is hereby amended by inserting the following sentence at the end thereof: "Notwithstanding the foregoing, this Section 9.04(a) shall not prohibit, to the extent otherwise permitted hereunder, the deferral, pursuant to a separate agreement reached prior to the Petition Date, of payments receivable by the Loan Parties from Astaris arising in the ordinary course of business under the Astaris Operating Agreement in the manner and to the extent previously reported to the Administrative Agent, or the execution, delivery and performance of the Astaris Deferral Agreement pursuant to Section 8.01(r)(iv)."

(a) The second sentence of Section 9.01(a) is hereby amended and restated to read in its entirety as follows: "On or prior to the date specified in Section 8.01(r)(iii), the Loan Parties shall deliver to the Administrative Agent (x) a Cash Management Agreement with respect to each Cash Management Account and (y) a Concentration Account Agreement with respect to each Concentration Account; provided, however, that so long as account number 5015330 of Beamer Road Management Company at First Community Bank shall have less than $10,000 therein, the Loan Parties shall not be required to deliver a Cash Management Agreement with respect to such account unless requested by the Administrative Agent pursuant to the last sentence of this Section 9.01(a)." (b) Section 9.04(a) is hereby amended by inserting the following sentence at the end thereof: "Notwithstanding the foregoing, this Section 9.04(a) shall not prohibit, to the extent otherwise permitted hereunder, the deferral, pursuant to a separate agreement reached prior to the Petition Date, of payments receivable by the Loan Parties from Astaris arising in the ordinary course of business under the Astaris Operating Agreement in the manner and to the extent previously reported to the Administrative Agent, or the execution, delivery and performance of the Astaris Deferral Agreement pursuant to Section 8.01(r)(iv)." (c) Section 9.04(b) is hereby amended by inserting the following sentence at the end thereof: "Notwithstanding the foregoing, this Section 9.04(b) shall not prohibit, to the extent otherwise permitted hereunder, the deferral, pursuant to a separate agreement reached prior to the Petition Date, of payments receivable by the Loan Parties from Astaris arising in the ordinary course of business under the Astaris Operating Agreement in the manner and to the extent previously reported to the Administrative Agent, or the execution, delivery and performance of the Astaris Deferral Agreement pursuant to Section 8.01(r)(iv)." Section 2.08 Amendment to Section 9.05 of the Financing Agreement. Section 9.05 of the Financing Agreement is hereby amended in the manner set forth below: (a) Section 9.05(h) is hereby amended and restated to read in its entirety as follows: "(h) except as otherwise expressly permitted under clauses (c)(iii) and (c)(iv) above, and except for sales of inventory made subject to return in the ordinary course consistent with past practices in an amount not to exceed in the aggregate $100,000 at any time outstanding for any customer or $1,000,000 at any time outstanding for all customers (it being understood that any Accounts in respect of such inventory shall not be included among Eligible Accounts to the 14

extent of such return or approval rights), the Loan Parties shall not sell Inventory to any customer on approval, or any other basis which entitles the customer to return or may obligate any Loan Party to repurchase such Inventory; and" (b) Section 9.05 is hereby amended by (i) deleting the text "; and" appearing at the end of Section 9.05(i) and inserting a period in lieu thereof, and (ii) deleting Section 9.05(j). Section 2.09 Amendment to Section 10.01 of the Financing Agreement. Section 10.01 of the Financing Agreement is hereby amended in the manner set forth below: (a) Section 10.01(k) is hereby amended by deleting the semicolon appearing at the end thereof and inserting the words "other than orders agreed to by any Loan Party stipulating relief with respect to claims that are permitted to be paid pursuant to Section 8.02(t), constituting (A) claims that are fully secured by cash collateral of the Loan Parties, or fully supported by letters of credit permitted hereunder, or (B) prepetition claims effected by a setoff of obligations as permitted by section 553 of the Bankruptcy Code, in each case the payment of which is not otherwise prohibited hereunder;" in lieu thereof.

extent of such return or approval rights), the Loan Parties shall not sell Inventory to any customer on approval, or any other basis which entitles the customer to return or may obligate any Loan Party to repurchase such Inventory; and" (b) Section 9.05 is hereby amended by (i) deleting the text "; and" appearing at the end of Section 9.05(i) and inserting a period in lieu thereof, and (ii) deleting Section 9.05(j). Section 2.09 Amendment to Section 10.01 of the Financing Agreement. Section 10.01 of the Financing Agreement is hereby amended in the manner set forth below: (a) Section 10.01(k) is hereby amended by deleting the semicolon appearing at the end thereof and inserting the words "other than orders agreed to by any Loan Party stipulating relief with respect to claims that are permitted to be paid pursuant to Section 8.02(t), constituting (A) claims that are fully secured by cash collateral of the Loan Parties, or fully supported by letters of credit permitted hereunder, or (B) prepetition claims effected by a setoff of obligations as permitted by section 553 of the Bankruptcy Code, in each case the payment of which is not otherwise prohibited hereunder;" in lieu thereof. (b) Section 10.01(m) is hereby amended by adding the words "other than the Significant Subsidiary described in item 3 on Part II of Schedule 8.02(c)(i) in connection with the disposition of the business described in such item" after the words "seeking authority to do any of the foregoing". Section 2.10 Amendment to Schedule 8.02(c)(i) to the Financing Agreement. Schedule 8.02(c)(i) of the Financing Agreement is hereby amended and restated to read in its entirety as set forth in Exhibit A hereto. Section 2.11 Schedule 8.02(e) to the Financing Agreement. A new Part II to Schedule 8.02(e) is hereby added to the Financing Agreement, which schedule shall read in its entirety as set forth in Exhibit B hereto. Section 2.12 Schedule 8.02(t) to the Financing Agreement. A new Schedule 8.02(t) is hereby added to the Financing Agreement, which schedule shall read in its entirety as set forth in Exhibit C hereto. Section 2.13 Amendment to Schedule 9.01 to the Financing Agreement. Schedule 9.01 of the Financing Agreement is hereby amended and restated to read in its entirety as set forth in Exhibit D hereto. Section 2.14 Amendment to Exhibit C to the Financing Agreement. Exhibit C to the Financing Agreement (Form of Borrowing Base Certificate) is hereby amended and restated in its entirety as set forth in Exhibit E hereto. Section 2.15 Limited Waiver of Sections 6.01(n), 8.02(e) and 8.02(l) of the Financing Agreement. For avoidance of doubt, the Lenders hereby waive compliance 15 by the Loan Parties with the provisions of Sections 6.01(n), 8.02(e) and 8.02(l) of the Financing Agreement on a retroactive basis to the extent that such sections would prohibit the contribution of principal and interest due under the intercompany convertible bond made by Solutia Europe to Solutia Investments LLC and Monchem International, Inc. (the "Convertible Bond") to Solutia Europe in exchange for the issuance of shares of common stock of Solutia Europe. Such waiver does not constitute a waiver of Sections 6.01(n), 8.02(e) or 8.02(l) of the Financing Agreement as amended herein, any other provision of the Financing Agreement or any other Loan Document or any waiver of any other Default or Event of Default that may exist under the Financing Agreement or arise after the date hereof or an acquiescence therein. Section 2.16 Limited Waiver of Section 8.02(c) of the Financing Agreement. For avoidance of doubt, the Lenders hereby waive compliance by the Loan Parties with the provisions of Section 8.02(c) of the Financing Agreement on a retroactive basis to the extent that such section would prohibit the wind-down of the Chlorobenzene Business. Such waiver does not constitute a waiver of Section 8.02(c) of the Financing Agreement as amended herein, any other provision of the Financing Agreement or any other Loan Document or any waiver of any other Default or Event of Default that may exist under the Financing Agreement or an acquiescence therein.

by the Loan Parties with the provisions of Sections 6.01(n), 8.02(e) and 8.02(l) of the Financing Agreement on a retroactive basis to the extent that such sections would prohibit the contribution of principal and interest due under the intercompany convertible bond made by Solutia Europe to Solutia Investments LLC and Monchem International, Inc. (the "Convertible Bond") to Solutia Europe in exchange for the issuance of shares of common stock of Solutia Europe. Such waiver does not constitute a waiver of Sections 6.01(n), 8.02(e) or 8.02(l) of the Financing Agreement as amended herein, any other provision of the Financing Agreement or any other Loan Document or any waiver of any other Default or Event of Default that may exist under the Financing Agreement or arise after the date hereof or an acquiescence therein. Section 2.16 Limited Waiver of Section 8.02(c) of the Financing Agreement. For avoidance of doubt, the Lenders hereby waive compliance by the Loan Parties with the provisions of Section 8.02(c) of the Financing Agreement on a retroactive basis to the extent that such section would prohibit the wind-down of the Chlorobenzene Business. Such waiver does not constitute a waiver of Section 8.02(c) of the Financing Agreement as amended herein, any other provision of the Financing Agreement or any other Loan Document or any waiver of any other Default or Event of Default that may exist under the Financing Agreement or an acquiescence therein. Section 2.17 Limited Waiver of Section 8.02(e) of the Financing Agreement. For avoidance of doubt, the Lenders hereby waive compliance by the Loan Parties with the provisions of Section 8.02(e) of the Financing Agreement on a retroactive basis to the extent that such section would prohibit execution of a sale agreement containing earnout provisions. Such waiver does not constitute a waiver of Section 8.02(e) of the Financing Agreement as amended herein, any other provision of the Financing Agreement or any other Loan Document or any waiver of any other Default or Event of Default that may exist under the Financing Agreement or arise after the date hereof or an acquiescence therein. Section 2.18 Limited Waiver of Sections 8.02(j), 8.02(o), 8.02(r), and 9.04 of the Financing Agreement. For avoidance of doubt, the Lenders hereby waive compliance by the Loan Parties with the provisions of Sections 8.02(j), 8.02(o), 8.02(r), and 9.04 of the Financing Agreement on a retroactive basis to the extent that such sections would prohibit the deferral of payments arising in the ordinary course of business under the Astaris Operating Agreement. Such waiver does not constitute a waiver of Sections 8.02(j), 8.02(o), 8.02(r), and 9.04 of the Financing Agreement as amended herein, any other provision of the Financing Agreement or any other Loan Document or any waiver of any other Default or Event of Default that may exist under the Financing Agreement or an acquiescence therein. Section 2.19 Limited Waiver of Section 8.02(t) of the Financing Agreement. For avoidance of doubt, the Lenders hereby waive compliance by the Loan Parties with the provisions of Section 8.02(t) of the Financing Agreement on a retroactive basis to the extent that such section would prohibit payments in respect of prepetition obligations owed to each of Wells Fargo, N.A., The Business Bank of St. Louis, JPMorgan Chase Bank, and HSBC Bank USA that are fully secured or supported by cash 16

collateral or letter of credit obligations of the Loan Parties. Such waiver does not constitute a waiver of Section 8.02(t) of the Financing Agreement as amended herein, any other provision of the Financing Agreement or any other Loan Document or any waiver of any other Default or Event of Default that may exist under the Financing Agreement or arise after the date hereof or an acquiescence therein. Section 2.20 Limited Waiver of Section 9.01(a) of the Financing Agreement. For avoidance of doubt, the Lenders hereby waive compliance by the Loan Parties with the provisions of Section 9.01(a) of the Financing Agreement on a retroactive basis to the extent that such section would require delivery of Cash Management Agreements and Concentration Account Agreements on or prior to the Facility Effective Date. Such waiver does not constitute a waiver of Section 9.01(a) of the Financing Agreement as amended herein, any other provision of the Financing Agreement or any other Loan Document or any waiver of any other Default or Event of Default that may exist under the Financing Agreement or arise after the date hereof or an acquiescence therein. Section 2.21 Limited Waiver of Section 9.01(c) of the Financing Agreement. For avoidance of doubt, the Lenders hereby waive compliance by the Loan Parties with the provisions of Section 9.01(c) of the Financing Agreement on a retroactive basis to the extent that such section would require (A) amendment of Schedule 9.01

collateral or letter of credit obligations of the Loan Parties. Such waiver does not constitute a waiver of Section 8.02(t) of the Financing Agreement as amended herein, any other provision of the Financing Agreement or any other Loan Document or any waiver of any other Default or Event of Default that may exist under the Financing Agreement or arise after the date hereof or an acquiescence therein. Section 2.20 Limited Waiver of Section 9.01(a) of the Financing Agreement. For avoidance of doubt, the Lenders hereby waive compliance by the Loan Parties with the provisions of Section 9.01(a) of the Financing Agreement on a retroactive basis to the extent that such section would require delivery of Cash Management Agreements and Concentration Account Agreements on or prior to the Facility Effective Date. Such waiver does not constitute a waiver of Section 9.01(a) of the Financing Agreement as amended herein, any other provision of the Financing Agreement or any other Loan Document or any waiver of any other Default or Event of Default that may exist under the Financing Agreement or arise after the date hereof or an acquiescence therein. Section 2.21 Limited Waiver of Section 9.01(c) of the Financing Agreement. For avoidance of doubt, the Lenders hereby waive compliance by the Loan Parties with the provisions of Section 9.01(c) of the Financing Agreement on a retroactive basis to the extent that such section would require (A) amendment of Schedule 9.01 to add those accounts not already reflected on such schedule and (B) prior to the time of opening of such accounts, execution and delivery of a Cash Management Agreement. Such waiver does not constitute a waiver of Section 9.01(c) of the Financing Agreement as amended herein (including amendments to Schedule 9.01), any other provision of the Financing Agreement or any other Loan Document or any waiver of any other Default or Event of Default that may exist under the Financing Agreement or arise after the date hereof or an acquiescence therein. ARTICLE III CONDITIONS PRECEDENT Section 3.01 Conditions to Effectiveness of this Amendment. This Amendment shall be effective as of the date hereof, upon the satisfaction of the conditions precedent that: (a) Amendment. The Administrative Agent shall have received executed counterparts of this Amendment, duly executed by Lenders constituting at least Supermajority Consent, the Borrowers, each Guarantor, the Documentation Agent, the Administrative Agent, the Collateral Agent and the Issuer. (b) Representations and Warranties. As of the date hereof, both before and after giving effect to this Amendment, all of the representations and warranties contained in the Financing Agreement and in each other Loan Document shall be true and correct in all material respects as though made on the date hereof (and by its execution hereof, the Borrowers shall be deemed to have represented and warranted such). 17 (c) Fees. The Borrowers shall have paid the fees referred to in Section 4.05. (d) No Default. As of the date hereof, both before and after giving effect to this Amendment, no Default (other than with respect to the provisions of Sections 6.01(n), 8.02(c), 8.02(e), 8.02(j), 8.02(l), 8.02(o), 8.02(r), 8.02 (t), 9.01(a), 9.01(c), and 9.04 of the Financing Agreement that would, upon effectiveness of this Amendment, be waived pursuant to Sections 2.15 through 2.21 above) shall have occurred and be continuing (and by its execution hereof, the Borrowers shall be deemed to have represented and warranted such). (e) Bankruptcy Court Order. An order of the Bankruptcy Court approving this Amendment and the terms and conditions hereof, such order to be in form and substance satisfactory to the Administrative Agent in its sole discretion, shall have been entered by the Bankruptcy Court, the Administrative Agent shall have received a true and complete copy of such order, and such order shall be in full force and effect and shall not have been reversed, modified, amended, stayed or vacated absent prior written consent of the Administrative Agent. ARTICLE IV

(c) Fees. The Borrowers shall have paid the fees referred to in Section 4.05. (d) No Default. As of the date hereof, both before and after giving effect to this Amendment, no Default (other than with respect to the provisions of Sections 6.01(n), 8.02(c), 8.02(e), 8.02(j), 8.02(l), 8.02(o), 8.02(r), 8.02 (t), 9.01(a), 9.01(c), and 9.04 of the Financing Agreement that would, upon effectiveness of this Amendment, be waived pursuant to Sections 2.15 through 2.21 above) shall have occurred and be continuing (and by its execution hereof, the Borrowers shall be deemed to have represented and warranted such). (e) Bankruptcy Court Order. An order of the Bankruptcy Court approving this Amendment and the terms and conditions hereof, such order to be in form and substance satisfactory to the Administrative Agent in its sole discretion, shall have been entered by the Bankruptcy Court, the Administrative Agent shall have received a true and complete copy of such order, and such order shall be in full force and effect and shall not have been reversed, modified, amended, stayed or vacated absent prior written consent of the Administrative Agent. ARTICLE IV MISCELLANEOUS Section 4.01 Effect; Ratification. The amendments and waivers set forth herein are effective solely for the purposes set forth herein and shall be limited precisely as written, and shall not be deemed to (i) be a consent to, or acknowledgment of, any amendment, waiver or modification of any other term or condition of the Financing Agreement or of any other instrument or agreement referred to therein or (ii) prejudice any right or remedy which the Agents or any other party may now have or may have in the future under or in connection with the Financing Agreement as amended hereby or any other instrument or agreement referred to therein. This Amendment shall be construed in connection with and as part of the Financing Agreement, and all terms, conditions, representations, warranties, covenants and agreements set forth in the Financing Agreement and each other instrument or agreement referred to therein, except as herein amended, are hereby ratified and confirmed and shall remain in full force and effect. Section 4.02 Due Authorization; Authority; No Conflicts; Enforceability. The execution, delivery and performance by each Loan Party of this Amendment (i) have been duly authorized by all necessary action, (ii) do not and will not contravene its charter or by-laws, its limited liability company or operating agreement or its certificate of partnership or partnership agreement, as applicable, or any applicable law or any contractual restriction binding on or otherwise affecting it or any of its properties (other than conflicts, breaches and defaults, the enforcement of which will be stayed by virtue of the filing of the Chapter 11 Cases), or any order or decree of any court or Governmental Authority (including, without limitation, any order entered in the Chapter 11 Cases), (iii) do not and will not result in or require the creation of any Lien 18

upon or with respect to any of its material properties, and (iv) do not and will not result in any material default, noncompliance, suspension, revocation, impairment, forfeiture or nonrenewal of any material permit, license, authorization or approval applicable to its operations or any of its properties. Other than the order referred to in Section 3.01(e) hereof, no authorization or approval or other action by, and no notice to or filing with, any Governmental Authority, including the Bankruptcy Court, is required in connection with the due execution, delivery and performance by any Loan Party of this Amendment. This Amendment, when delivered hereunder, is or will be, duly and validly executed and delivered by each of the Loan Parties which is a party hereto and each of this Amendment and the Financing Agreement as amended hereby constitutes the legal, valid and binding obligation of each of the Loan Parties which is a party hereto or thereto, enforceable in accordance with the terms hereof or thereof. Section 4.03 No Novation. Neither this Amendment nor the replacement of the terms of the Financing Agreement by the terms of this Amendment shall extinguish the obligations for the payment of money outstanding under the Financing Agreement or discharge or release the Lien or priority of any security agreement, any pledge agreement or any other security therefor. Nothing herein contained shall be construed as a substitution or novation of the Obligations outstanding under the Financing Agreement or instruments securing the same, which

upon or with respect to any of its material properties, and (iv) do not and will not result in any material default, noncompliance, suspension, revocation, impairment, forfeiture or nonrenewal of any material permit, license, authorization or approval applicable to its operations or any of its properties. Other than the order referred to in Section 3.01(e) hereof, no authorization or approval or other action by, and no notice to or filing with, any Governmental Authority, including the Bankruptcy Court, is required in connection with the due execution, delivery and performance by any Loan Party of this Amendment. This Amendment, when delivered hereunder, is or will be, duly and validly executed and delivered by each of the Loan Parties which is a party hereto and each of this Amendment and the Financing Agreement as amended hereby constitutes the legal, valid and binding obligation of each of the Loan Parties which is a party hereto or thereto, enforceable in accordance with the terms hereof or thereof. Section 4.03 No Novation. Neither this Amendment nor the replacement of the terms of the Financing Agreement by the terms of this Amendment shall extinguish the obligations for the payment of money outstanding under the Financing Agreement or discharge or release the Lien or priority of any security agreement, any pledge agreement or any other security therefor. Nothing herein contained shall be construed as a substitution or novation of the Obligations outstanding under the Financing Agreement or instruments securing the same, which shall remain in full force and effect, except as modified hereby. Nothing expressed or implied in this Amendment or any other document contemplated hereby or thereby shall be construed as a release or other discharge of the Borrowers or any other Loan Party under any Loan Document from any of its obligations and liabilities thereunder. Each of the Financing Agreement and the other Loan Documents shall remain in full force and effect, until and except as modified hereby or in connection herewith. This Amendment is a Loan Document executed pursuant to the Financing Agreement and shall be construed, administered and applied in accordance with the terms and provisions thereof. Section 4.04 Costs, Fees and Expenses. The Borrowers jointly and severally agree to reimburse the Agents and the Lenders upon demand for all costs, fees and expenses (including the reasonable fees and expenses of counsel to the Agents and the Lenders) incurred in connection with the preparation, execution and delivery of this Amendment. Section 4.05 Amendment Fees. The Borrowers jointly and severally agree to pay to the Administrative Agent (a) for the pro rata benefit of each Lender who approves this Amendment an amendment fee of 12.5 basis points, and (b) such other fees as are agreed to separately by the Borrowers and the Administrative Agent with respect to this Amendment, which amendment fee and other fees shall be fully earned upon the effectiveness hereof and nonrefundable when paid, and are in addition to any and all other fees required to be paid from time to time by the Borrowers under the Financing Agreement. Section 4.06 Counterparts. This Amendment may be executed in any number of counterparts and by different parties hereto in separate counterparts, each of which shall be deemed to be an original, but all of which taken together shall constitute 19

one and the same agreement. Delivery of an executed counterpart of this Amendment by telecopier shall be equally as effective as delivery of an original executed counterpart of this Amendment. Any party delivering an executed counterpart of this Amendment by telecopier also shall deliver an original executed counterpart of this Amendment but the failure to deliver an original executed counterpart shall not affect the validity, enforceability, and binding effect of this Amendment. Section 4.07 Severability. Any provision of this Amendment which is prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective to the extent of such prohibition or unenforceability without invalidating the remaining portions hereof or affecting the validity or enforceability of such provision in any other jurisdiction. Section 4.08 CHOICE OF LAW. THIS AMENDMENT SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK APPLICABLE TO CONTRACTS MADE AND TO BE PERFORMED IN THE STATE OF NEW YORK EXCEPT AS GOVERNED BY THE BANKRUPTCY CODE.

one and the same agreement. Delivery of an executed counterpart of this Amendment by telecopier shall be equally as effective as delivery of an original executed counterpart of this Amendment. Any party delivering an executed counterpart of this Amendment by telecopier also shall deliver an original executed counterpart of this Amendment but the failure to deliver an original executed counterpart shall not affect the validity, enforceability, and binding effect of this Amendment. Section 4.07 Severability. Any provision of this Amendment which is prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective to the extent of such prohibition or unenforceability without invalidating the remaining portions hereof or affecting the validity or enforceability of such provision in any other jurisdiction. Section 4.08 CHOICE OF LAW. THIS AMENDMENT SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK APPLICABLE TO CONTRACTS MADE AND TO BE PERFORMED IN THE STATE OF NEW YORK EXCEPT AS GOVERNED BY THE BANKRUPTCY CODE. Section 4.09 No Party Deemed Drafter. Each of the parties hereto agrees that no party hereto shall be deemed to be the drafter of this Amendment. Section 4.10 Ratification of Guaranty. Each Guarantor hereby consents to this Amendment and hereby confirms and agrees that (a) notwithstanding the effectiveness of this Amendment, the Guaranty is, and shall continue to be, in full force and effect and is hereby ratified and confirmed in all respects, except that, on and after the effectiveness of this Amendment, each reference in the Guaranty to the "Agreement", "thereunder", "thereof" or words of like import referring to the Financing Agreement shall mean and be a reference to the Financing Agreement as amended by this Amendment, and (b) the Loan Documents to which it is a party and all of the Collateral described therein do, and shall continue to, secure the payment of all of the Obligations secured thereby. (Signature Page Follows) 20

IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be executed by their respective officers thereunto duly authorized, as of the date first above written. BORROWERS: SOLUTIA INC., as a debtor and a debtor-in-possession
/s/ James A. Tichenor --------------------Name: James A. Tichenor Title: Assistant Treasurer By:

SOLUTIA BUSINESS ENTERPRISES, INC., as a debtor and a debtor-in-possession
By: /s/ James A. Tichenor --------------------Name: James A. Tichenor Title: Vice President & Treasurer

GUARANTORS: AXIO RESEARCH CORPORATION, as a debtor and a debtor-in-possession

IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be executed by their respective officers thereunto duly authorized, as of the date first above written. BORROWERS: SOLUTIA INC., as a debtor and a debtor-in-possession
By: /s/ James A. Tichenor --------------------Name: James A. Tichenor Title: Assistant Treasurer

SOLUTIA BUSINESS ENTERPRISES, INC., as a debtor and a debtor-in-possession
By: /s/ James A. Tichenor --------------------Name: James A. Tichenor Title: Vice President & Treasurer

GUARANTORS: AXIO RESEARCH CORPORATION, as a debtor and a debtor-in-possession
By: /s/ James A. Tichenor --------------------Name: James A. Tichenor Title: Vice President & Treasurer

BEAMER ROAD MANAGEMENT COMPANY, as a debtor and a debtor-in-possession
/s/ James A. Tichenor --------------------Name: James A. Tichenor Title: Vice President & Treasurer By:

CPFILMS INC., as a debtor and a debtor-in-possession
By: /s/ James A. Tichenor --------------------Name: James A. Tichenor Title: Vice President & Assistant Treasurer

MONCHEM, INC., as a debtor and a debtor-in-possession
/s/ James A. Tichenor --------------------Name: James A. Tichenor Title: Vice President & Treasurer By:

CPFILMS INC., as a debtor and a debtor-in-possession
By: /s/ James A. Tichenor --------------------Name: James A. Tichenor Title: Vice President & Assistant Treasurer

MONCHEM, INC., as a debtor and a debtor-in-possession
By: /s/ James A. Tichenor --------------------Name: James A. Tichenor Title: Vice President & Treasurer

MONCHEM INTERNATIONAL, INC., as a debtor and a debtor-in-possession
/s/ James A. Tichenor --------------------Name: James A. Tichenor Title: Vice President & Treasurer By:

SOLUTIA GREATER CHINA, INC., as a debtor and a debtor-in-possession
By: /s/ James A. Tichenor --------------------Name: James A. Tichenor Title: Vice President & Treasurer

SOLUTIA INTER-AMERICA, INC., as a debtor and a debtor-in-possession
/s/ James A. Tichenor --------------------Name: James A. Tichenor Title: Vice President & Treasurer By:

SOLUTIA INTERNATIONAL HOLDING, LLC, as a debtor and a debtor-in-possession
/s/ James A. Tichenor --------------------Name: James A. Tichenor Title: Vice President & Treasurer By:

SOLUTIA INVESTMENTS, LLC, as a debtor and a debtor-in-possession
By: /s/ James A. Tichenor ---------------------

SOLUTIA INTERNATIONAL HOLDING, LLC, as a debtor and a debtor-in-possession
By: /s/ James A. Tichenor --------------------Name: James A. Tichenor Title: Vice President & Treasurer

SOLUTIA INVESTMENTS, LLC, as a debtor and a debtor-in-possession
/s/ James A. Tichenor --------------------Name: James A. Tichenor Title: Vice President & Treasurer By:

SOLUTIA MANAGEMENT COMPANY, INC., as a debtor and a debtor-in-possession
/s/ James A. Tichenor --------------------Name: James A. Tichenor Title: Vice President & Treasurer By:

SOLUTIA OVERSEAS, INC., as a debtor and a debtor-in-possession
/s/ James A. Tichenor --------------------Name: James A. Tichenor Title: Vice President & Treasurer By:

SOLUTIA SYSTEMS, INC., as a debtor and a debtor-in-possession
/s/ James A. Tichenor --------------------Name: James A. Tichenor Title: Vice President & Treasurer By:

SOLUTIA TAIWAN, INC., as a debtor and a debtor-in-possession
By: /s/ James A. Tichenor --------------------Name: James A. Tichenor Title: Vice President & Treasurer

ADMINISTRATIVE AGENT, COLLATERAL AGENT, CO-DOCUMENTATION AGENT AND A LENDER: CITICORP USA, INC., for itself as the Administrative Agent, the Collateral Agent, a Co-Documentation Agent and a Lender
By: /s/ David Jaffe -------------------------------------

ADMINISTRATIVE AGENT, COLLATERAL AGENT, CO-DOCUMENTATION AGENT AND A LENDER: CITICORP USA, INC., for itself as the Administrative Agent, the Collateral Agent, a Co-Documentation Agent and a Lender
By: /s/ David Jaffe ------------------------------------Name: David Jaffe Title: Vice President

CO-DOCUMENTATION AGENT AND A LENDER: WELLS FARGO FOOTHILL, LLC, for itself as a Co-Documentation Agent and a Lender
By: /s/ Lan Wong ------------------------------------Name: Lan Wong Title: Vice President

ISSUER: CITIBANK, N.A., as an Issuer and a Lender
By: /s/ David Jaffe ------------------------------------Name: David Jaffe Title: Vice President

LENDER: CITIGROUP GLOBAL MARKETS INC., as a Lender
By: /s/ David Jaffe ------------------------------------Name: David Jaffe Title: Authorized Signer

LENDER: CITIGROUP FINANCIAL PRODUCTS INC., as a Lender

LENDER: CITIGROUP FINANCIAL PRODUCTS INC., as a Lender
By: /s/ Tom Lee ------------------------------------Name: Tom Lee Title: Authorized Signatory

LENDER: PAM CAPITAL FUNDING L.P. By: Highland Capital Management, L.P. As Collateral Manager, as a Lender
By: /s/ Todd Travers ------------------------------------Name: Todd Travers Title: Senior Portfolio Manager Highland Capital Management, L.P.

LENDER: BANK OF AMERICA, N.A., as a Lender
By: /s/ Sid Bridges ------------------------------------Name: Sid Bridges Title: AVP

LENDER: HIGHLAND LEGACY LIMITED By: Highland Capital Management, L.P. As Collateral Manager, as a Lender
By: /s/ Todd Travers ------------------------------------Name: Todd Travers Title: Senior Portfolio Manager Highland Capital Management, L.P.

LENDER: HIGHLAND LOAN FUNDING V LTD. By: Highland Capital Management, L.P. As Collateral Manager, as a Lender
By: /s/ Todd Travers ------------------------------------Name: Todd Travers Title: Senior Portfolio Manager Highland Capital Management, L.P.

LENDER: HIGHLAND LEGACY LIMITED By: Highland Capital Management, L.P. As Collateral Manager, as a Lender
By: /s/ Todd Travers ------------------------------------Name: Todd Travers Title: Senior Portfolio Manager Highland Capital Management, L.P.

LENDER: HIGHLAND LOAN FUNDING V LTD. By: Highland Capital Management, L.P. As Collateral Manager, as a Lender
By: /s/ Todd Travers ------------------------------------Name: Todd Travers Title: Senior Portfolio Manager Highland Capital Management, L.P.

LENDER: RESTORATION FUNDING CLO, LTD. By: Highland Capital Management, L.P. As Collateral Manager, as a Lender
By: /s/ Todd Travers ------------------------------------Name: Todd Travers Title: Senior Portfolio Manager Highland Capital Management, L.P.

LENDER: CALIFORNIA PUBLIC EMPLOYEES RETIREMENT SYSTEM By: Highland Capital Management, L.P. As Authorized Representatives of the Board, as a Lender
By: /s/ Todd Travers ------------------------------------Name: Todd Travers Title: Senior Portfolio Manager Highland Capital Management, L.P.

LENDER:

LENDER: AMARANTH LLC, as a Lender By: Name:

Title: LENDER: SATELLITE SENIOR INCOME FUND, LLC, as a Lender
By: /s/ Gabe Nechamkin ------------------------------------Name: Gabe Nechamkin Title: Principal

LENDER: SATELLITE SENIOR INCOME FUND II, LLC, as a Lender
By: /s/ Stephen T. Shapiro ------------------------------------Name: Stephen T. Shapiro Title: Principal, Satellite Asset Management

LENDER: OZ SPECIAL MASTER FUND, LTD., as a Lender By: OZ Management, LLC As Investment Manager
By: /s/ Daniel S. Och ------------------------------------Name: Daniel S. Och Title: Senior Managing Member

LENDER: PERRY PRINCIPALS INVESTMENTS, LLC, as a Lender
By: /s/ Rick Page ------------------------------------Name: Rick Page Title:

LENDER:

LENDER: OZ SPECIAL MASTER FUND, LTD., as a Lender By: OZ Management, LLC As Investment Manager
By: /s/ Daniel S. Och ------------------------------------Name: Daniel S. Och Title: Senior Managing Member

LENDER: PERRY PRINCIPALS INVESTMENTS, LLC, as a Lender
By: /s/ Rick Page ------------------------------------Name: Rick Page Title:

LENDER: WINGATE CAPITAL LTD., as a Lender By: Citadel Limited Partnership, its Portfolio Manager By: GLB Partners, L.P., its General Partner By: Citadel Investment Group, L.L.C., its General Partner
By: /s/ James E. Bolin ------------------------------------Name: James E. Bolin Title: Managing Director

LENDER: BAYERISCHE HYPO-UND VEREINSBANK AG, NEW YORK BRANCH, as a Lender
By: /s/ Miriam Trautmann ------------------------------------Name: Miriam Trautmann Title: Associate Director

By: /s/ Salvatore Esposito ------------------------------------Name: Salvatore Esposito Title: Managing Director

LENDER: SHEPHERD INVESTMENTS INTERNATIONAL, LTD., as a Lender

LENDER: SHEPHERD INVESTMENTS INTERNATIONAL, LTD., as a Lender
By: /s/ Colin M. Lancaster ------------------------------------Name: Colin M. Lancaster Title: General Counsel

LENDER: TCW SELECT LOAN FUND, LIMITED By: TCW Advisors, Inc, as its Collateral Manager
By: /s/ G. Steven Kalin ------------------------------------Name: G. Steven Kalin Title: Senior Vice President

By: /s/ Jonathan R. Insull ------------------------------------Name: Jonathan R. Insull Title: Managing Director

LENDER: C-SQUARED CDO LTD. By: TCW Advisors, Inc, as its Portfolio Manager
By: /s/ Jonathan R. Insull ------------------------------------Name: Jonathan R. Insull Title: Managing Director

By: /s/ G. Steven Kalin ------------------------------------Name: G. Steven Kalin Title: Senior Vice President

LENDER: LOAN FUNDING I LLC, a wholly owned subsidiary of Citibank, N.A. By: TCW Advisors, Inc, as Portfolio Manager of Loan Funding ILLC
By: /s/ Jonathan R. Insull ------------------------------------Name: Jonathan R. Insull Title: Managing Director

By: /s/ G. Steven Kalin ------------------------------------Name: G. Steven Kalin Title: Senior Vice President

LENDER: UBS AG STAMFORD BRANCH, as a Lender
By: /s/ Thomas R. Salzano ------------------------------------Name: Thomas R. Salzano Title: Executive Director Banking Products Services, US

By: /s/ Wilifred V. Saint ------------------------------------Name: Wilifred V. Saint Title: Director Banking Products Services, US

EXHIBIT 31(a) CERTIFICATION OF CHIEF EXECUTIVE OFFICER PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002 I, Jeffry N. Quinn, certify that: 1. I have reviewed this quarterly report on Form 10-Q of Solutia Inc.; 2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; 3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; 4. The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the registrant and have: a)Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; b)Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and c)Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and

EXHIBIT 31(a) CERTIFICATION OF CHIEF EXECUTIVE OFFICER PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002 I, Jeffry N. Quinn, certify that: 1. I have reviewed this quarterly report on Form 10-Q of Solutia Inc.; 2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; 3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; 4. The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the registrant and have: a)Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; b)Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and c)Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and 5. The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of registrant's board of directors (or persons performing the equivalent functions): a)All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and b)Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.
Dated: August 5, 2004 /s/ JEFFRY N. QUINN ------------------------------------Jeffry N. Quinn President and Chief Executive Officer

EXHIBIT 31(b) CERTIFICATION OF CHIEF FINANCIAL OFFICER

EXHIBIT 31(b) CERTIFICATION OF CHIEF FINANCIAL OFFICER PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002 I, James M. Sullivan, certify that: 1. I have reviewed this quarterly report on Form 10-Q of Solutia Inc.; 2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; 3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; 4. The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the registrant and have: a)Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; b)Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and c)Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and 5. The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of registrant's board of directors (or persons performing the equivalent functions): a)All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and b)Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.
Dated: August 5, 2004 /s/ JAMES M. SULLIVAN ---------------------------James M. Sullivan Senior Vice President and Chief Financial Officer

EXHIBIT 32(a)

EXHIBIT 32(a) CERTIFICATION OF CHIEF EXECUTIVE OFFICER PURSUANT TO 18 U.S.C. SECTION 1350 AS ADOPTED PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002 I, Jeffry N. Quinn, Chief Executive Officer of Solutia Inc. (the "Company"), certify, pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, 18 U.S.C. Section 1350, that to the best of my knowledge: (1) the Quarterly Report on Form 10-Q of the Company for the quarterly period ended June 30, 2004 (the "Report") fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and (2) the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
Dated: August 5, 2004

/s/ JEFFRY N. QUINN ---------------------------Jeffry N. Quinn Chief Executive Officer

A signed original of this written statement required by Section 906, or other document authenticating, acknowledging, or otherwise adopting the signature that appears in typed form within the electronic version of this written statement required by Section 906, has been provided to Solutia Inc. and will be retained by Solutia Inc. and furnished to the Securities and Exchange Commission or its staff upon request.

EXHIBIT 32(b) CERTIFICATION OF CHIEF FINANCIAL OFFICER PURSUANT TO 18 U.S.C. SECTION 1350 AS ADOPTED PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002 I, James M. Sullivan, Chief Financial Officer of Solutia Inc. (the "Company"), certify, pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, 18 U.S.C. Section 1350, that to the best of my knowledge: (1) the quarterly report on Form 10-Q of the Company for the quarterly period ended June 30, 2004 (the "Report") fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and (2) the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
Dated: August 5, 2004

/s/ JAMES M. SULLIVAN --------------------------------James M. Sullivan Chief Financial Officer

A signed original of this written statement required by Section 906, or other document authenticating, acknowledging, or otherwise adopting the signature that appears in typed form within the electronic version of this written statement required by Section 906, has been provided to Solutia Inc. and will be retained by Solutia Inc.

EXHIBIT 32(b) CERTIFICATION OF CHIEF FINANCIAL OFFICER PURSUANT TO 18 U.S.C. SECTION 1350 AS ADOPTED PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002 I, James M. Sullivan, Chief Financial Officer of Solutia Inc. (the "Company"), certify, pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, 18 U.S.C. Section 1350, that to the best of my knowledge: (1) the quarterly report on Form 10-Q of the Company for the quarterly period ended June 30, 2004 (the "Report") fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and (2) the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
Dated: August 5, 2004

/s/ JAMES M. SULLIVAN --------------------------------James M. Sullivan Chief Financial Officer

A signed original of this written statement required by Section 906, or other document authenticating, acknowledging, or otherwise adopting the signature that appears in typed form within the electronic version of this written statement required by Section 906, has been provided to Solutia Inc. and will be retained by Solutia Inc. and furnished to the Securities and Exchange Commission or its staff upon request.

EX

SOLUTIA INC. COMPUTATION OF THE RATIO OF EARNINGS TO FIXED CHARGES (DOLLARS IN MILLIONS)

1999 ----Income (loss) from continuing operations, before income taxes and equity earnings (loss) from affiliates(1).................. Add: Fixed charges................ Amortization of capitalized interest................... Dividends from affiliated companies.................. Less: Interest capitalized......... Income as adjusted....... 62 7 60

2000 -----

2001 -----

2002 -----

2003 -----

SIX MO END JUNE 30 ----------

$ 262

$

(5)

$(111)

$ (32)

$ (482)

$ (1

85 7 45

83 7 30

98 7 25

131 6 -

(13) ----$ 378 =====

(17) ----$ 115 =====

(2) ----$ 7 =====

(1) ----$ 97 =====

(1) -----$ (346) ======

---$ (1 ====

Fixed charges: Interest expensed and capitalized................ Estimate of interest within rental expense.............

53 9 -----

73 12 -----

72 11 -----

85 13 -----

121 10 ------

----

EX

SOLUTIA INC. COMPUTATION OF THE RATIO OF EARNINGS TO FIXED CHARGES (DOLLARS IN MILLIONS)

1999 ----Income (loss) from continuing operations, before income taxes and equity earnings (loss) from affiliates(1).................. Add: Fixed charges................ Amortization of capitalized interest................... Dividends from affiliated companies.................. Less: Interest capitalized......... Income as adjusted....... 62 7 60

2000 -----

2001 -----

2002 -----

2003 -----

SIX MO END JUNE 30 ----------

$ 262

$

(5)

$(111)

$ (32)

$ (482)

$ (1

85 7 45

83 7 30

98 7 25

131 6 -

(13) ----$ 378 =====

(17) ----$ 115 =====

(2) ----$ 7 =====

(1) ----$ 97 =====

(1) -----$ (346) ======

---$ (1 ====

Fixed charges: Interest expensed and capitalized................ Estimate of interest within rental expense............. Fixed charges............

53 9 ----$ 62 =====

73 12 ----$ 85 =====

72 11 ----$ 83 =====

85 13 ----$ 98 =====

121 10 -----$ 131 ======

---$ ====

Ratio of Earnings to Fixed Charges(2).....................

6.10

1.35

0.08

0.99

(2.64)

(1.

(1) Includes restructuring and other items of $120 for the six months ended June 30, 2004; $343 for the year ended December 31, 2003, $17 for the year ended December 31, 2002; $86 for the year ended December 31, 2001; $107 for the year ended December 31, 2000; and $61 for the year ended December 31, 1999. (2) Earnings for the six months ended June 30, 2004 and the years ended December 31, 2003, 2002, and 2001, would have to be $178, $477, $1 and $76 higher, respectively, in order to achieve a one-to-one ratio.


								
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