8-K

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

Washington, D. C. 20549

Form 8-K

CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

Date of Report (Date of earliest event reported): February 28, 2008

SOLUTIA INC.

(Exact name of registrant as specified in its charter)

DELAWARE
(State or other jurisdiction
of incorporation) 001-13255
(Commission File Number) 43-1781797
(IRS Employer Identification No.)

575 Maryville Centre Drive, P.O. Box 66760, St. Louis, Missouri
(Address of principal executive offices) 63166-6760
(Zip Code)

(314) 674-1000
Registrant’s telephone number, including area code

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

o Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

o Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

o Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

o Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

TABLE OF CONTENTS

	ITEM 1.01 ENTRY INTO A MATERIAL DEFINITIVE AGREEMENT.
	ITEM 1.02 TERMINATION OF A MATERIAL DEFINITIVE AGREEMENT.
	ITEM 3.03 MATERIAL MODIFICATION TO RIGHTS OF SECURITY HOLDERS.
	ITEM 5.02 DEPARTURE OF DIRECTORS OR CERTAIN OFFICERS; ELECTION OF DIRECTORS; APPOINTMENT OF CERTAIN OFFICERS; COMPENSATORY ARRANGEMENTS OF CERTAIN OFFICERS.
	ITEM 9.01 FINANCIAL STATEMENTS AND EXHIBITS.
SIGNATURES
EXHIBIT INDEX
EX-4.1
EX-4.2
EX-10.1
EX-10.2
EX-10.3
EX-10.4
EX-10.5
EX-10.6

ITEM 1.01 ENTRY INTO A MATERIAL DEFINITIVE AGREEMENT.

     As disclosed previously, on February 28, 2008 (the “Effective Date”), Solutia Inc. (the “Company”, “Solutia” or “we”) and its fourteen U.S. subsidiaries (collectively, the “Debtors”) consummated its reorganization under chapter 11 of title 11 of the United States Code, 11 U.S.C. §§ 101-1532 (the “Bankruptcy Code”) through a series of transactions contemplated by the Debtors’ Fifth Amended Joint Plan of Reorganization (as modified), which was confirmed by the United States Bankruptcy Court for the Southern District of New York on November 29, 2007 (as modified by the confirmation order, the “Plan”), and the Plan became effective.

     On the Effective Date, the Company issued an aggregate of 60,943,360 shares of common stock, par value $0.01 per share. In accordance with the Plan, the Company entered into the following material agreements:

   1. Amended and Restated Monsanto Settlement Agreement

     In accordance with the Plan, Monsanto, the Company and SFC LLC, a Delaware limited liability company and a subsidiary of the Company (“Funding Co.”), entered into the an Amended and Restated Monsanto Settlement Agreement (the “Monsanto Settlement Agreement”), and the Company also entered into an indemnification agreement with Pharmacia Corporation (the “Pharmacia Indemnity Agreement”). Pursuant to the Plan, the Monsanto Settlement Agreement and the Pharmacia Indemnity Agreement, as between Monsanto and Solutia, Monsanto has agreed to fund post-emergence the environmental remediation obligations and related environmental liabilities at sites owned, operated or used by Pharmacia, but which Solutia never owned, operated or used, except that Solutia and Monsanto will share the environmental remediation obligations and related environmental liabilities for the Anniston, Alabama and Sauget, Illinois offsite remediation projects (excluding the Solutia Anniston and Sauget plants themselves for which Solutia will remain responsible). In addition, pursuant to the Monsanto Settlement Agreement, Monsanto has agreed, as between Solutia and itself, to assume financial responsibility for all litigation relating to property damage, personal injury, products liability or premises liability or other damages related to asbestos, PCB, dioxin, benzene, vinyl chloride and other chemicals manufactured before the Solutia Spin-off. Monsanto’s funding of the environmental remediation activities and the resulting claim against Solutia which Monsanto has asserted, inclusive of the non-qualified, unliquidated and contingent components of their claim, are being resolved through the Plan. Solutia will remain responsible for the environmental liabilities at sites that it owned or operated after its spin-off from Pharmacia on September 1, 1997.

     The foregoing description of the Monsanto Settlement Agreement and the Pharmacia Indemnity Agreement does not purport to be complete and is qualified in its entirety by reference to the full text of such agreements, copies of which are attached as Exhibits 10.1 and 10.2 to this report and incorporated herein by reference.

   2. Retiree Settlement Agreement and Retiree Welfare Benefit Plan

     In accordance with the Plan, the Company entered into the First Amended and Restated Retiree Settlement Agreement (the “Retiree Settlement Agreement”) with the Official Committee of Retirees. The terms of the 2008 Retiree Welfare Plan (“2008 Retiree Plan”) have been agreed upon as the result of the Retiree Settlement Agreement. The 2008 Retiree Plan provides post-retirement health and life insurance benefits to (i) those retirees, including their surviving spouses, dependent spouses and dependent children, and those employees receiving disability benefits, who worked for Pharmacia Corporation (f/k/a Monsanto) or one of its domestic subsidiaries (“Pharmacia”) and who retired, or became disabled, prior to the Company’s spin-off from Pharmacia in 1997, and whose post-employment benefit or disability liabilities were transferred to the Company as a result of such spin-off (collectively, the “Pre-Spin Retirees”); (ii) those retirees, including their surviving spouses, dependent spouses and dependent children, and those employees receiving disability benefits, who retired from the Company or became disabled after the Company’s spin-off from Pharmacia in 1997, including those retirees (and their surviving spouses, dependent spouses and dependent children) and disabled persons who worked for Pharmacia prior to the

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Company’s spin-off from Pharmacia in 1997, and, thereafter worked for the Company, other than those retirees covered by a collective bargaining agreement who retired on January 1, 2003, or later (collectively, the “Post-Spin Retirees”); and (iii) any other person having a claim against the Company for “retiree benefits” as such term is defined in Section 1114(a) of the Bankruptcy Code (collectively, and, together with the Pre-Spin Retirees and the Post-Spin Retirees, the “Retirees”).

     The terms of the Retiree Settlement Agreement provide that the Company will contribute $175 million in cash and an amount equivalent to the recovery on a $35 million general, unsecured claim with a specific distribution of new employer stock (the “Retiree Shares”) to the a voluntary employees’ beneficiary association (the “ Retiree Trust”). The Retiree Trust will be comprised of two sub accounts: (a) “Sub Account 1” and (b) “Sub Account 2”. Sub Account 1 will be funded by the Company with the $175 million of cash and will be used to reimburse the Company for costs associated with providing retiree welfare benefits to Pre-Spin Retirees. Sub Account 2 will be funded with the Retiree Shares and the proceeds of the sales thereof and any dividends, and will be used to reimburse the Company for costs associated with providing retiree welfare benefits to Pre-Spin Retirees and Post-Spin Retirees subject to and in accordance with the terms of the Retiree Settlement Agreement

     The foregoing description of the Retiree Settlement Agreement and 2008 Retiree Plan does not purport to be complete and is qualified in its entirety by reference to the full text of such documents, copies of which are attached as Exhibits 10.3 and 10.4 to this report and incorporated herein by reference.

   3. Limited Liability Company Agreement of Funding Co.

     Funding Co. is a special purpose, tax-efficient, bankruptcy remote limited liability company that was established for purposes of holding, investing and distributing certain proceeds from the Creditor Rights Offering in accordance with the Monsanto Settlement Agreement. The Company is the sole member of Funding Co. Pursuant to the limited liability company agreement of Funding Co. (the “Funding Co. LLC Agreement”), Funding Co. shall be managed by a board of managers consisting of one or more managers, including an independent manager. Subject to certain limitations set forth in the Monsanto Settlement Agreement, the board of mangers and any individual manager authorized by the board of managers will have the authority to bind Funding Co. in any manner expressly permitted by and in compliance with the Monsanto Settlement Agreement. Funding Co. will be dissolved upon the earlier to occur of (a) two years after the distribution of all of Funding Co.’s assets in accordance with the Monsanto Settlement Agreement (unless the Monsanto Settlement Agreement provides a different term) and (b) the entry of a decree of judicial dissolution under Section 18-802 of the Delaware Limited Liability Company Act.

     On the Effective Date, Funding Co. was funded with $45,679,000 (the “Funding Co. Amount”) in proceeds from the Creditor Rights Offering remaining after the creation and funding of the Retiree Trust, and $29,321,000.00 for payment of Monsanto’s administrative expense claim. In accordance with the terms of the Monsanto Settlement Agreement, the Funding Co. Amount will be made available to pay for post-emergence remediation and cleanup costs in connection with the Shared Sites.

     The foregoing description of the Funding Co. LLC Agreement does not purport to be complete and is qualified in its entirety by reference to the full text of such agreement, a copy of which is attached as Exhibit 10.5 to this report and incorporated herein by reference.

   4. Backstopper Registration Rights Agreement

     In connection with the purchase of 2,812,359 shares of New Common Stock by the backstop investors in the Creditors Rights Offering, Solutia has entered into a Registration Rights Agreement with the backstop investors (the “Backstopper Registration Rights Agreement”). Pursuant to the Backstopper Registration Rights Agreement, the Company is required to file a registration statement under the Securities Act of 1933, as amended (the “Securities Act”) to effect the registration of the resale of the shares of New Common Stock issued to the backstop investors. Once the registration statement has been declared effective by the Securities and Exchange Commission (the “SEC”), we must keep it effective for four years

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after the later of (i) the initial effective date of such registration statement and (ii) the Effective Date. In the event that the registration statement ceases to be effective, we are required to use commercially reasonable efforts to (i) cause a replacement registration statement to be filed with the SEC as promptly as practicable, (ii) have that replacement registration statement declared effective by the SEC as promptly as practicable after its filing, and (iii) cause that replacement registration statement to remain continually effective and properly supplemented and amended such that, in the aggregate, the shelf registration statement and any replacement registration statement(s) shall be kept effective for four years following the first day of effectiveness of the initial shelf registration statement.

     In addition, if the Company proposes to file certain types of registration statements under the Securities Act with respect to an offering of its equity securities at a time when the registration statement, or a replacement thereof, is not effective, then we are required to offer the backstop investors the opportunity to include all or part of their shares on such registration statement on the terms and conditions set forth in the registration rights agreement.

     The registration rights granted in the Backstopper Registration Rights Agreement are subject to customary restrictions such as minimums, blackout periods and, if a registration is for an underwritten offering, limitations on the number of shares to be included in the underwritten offering imposed by the managing underwriter.

     The Backstopper Registration Rights Agreement contains customary indemnification and contribution provisions, as well as representations and warranties by the Company and by the backstop investors. The Company will be responsible for expenses relating to the registrations contemplated by the Backstopper Registration Rights Agreement, subject to certain limitations.

     The foregoing description of the Backstopper Registration Rights Agreement does not purport to be complete and is qualified in its entirety by reference to the full text of such agreement, a copy of which is attached as Exhibit 4.1 to this report and incorporated herein by reference.

   5. Monsanto Registration Rights Agreement

     In connection with the issuance of 2,489,977 shares of New Common Stock to Monsanto, the Company entered into a Registration Rights Agreement with Monsanto (the “Monsanto Registration Rights Agreement”). Pursuant to the Monsanto Registration Rights Agreement, the Company is required to file a registration statement under the Securities Act to effect the registration of the resale of the shares of New Common Stock issued to Monsanto. The Company must use reasonable best efforts to cause such registration statement to become effective as expeditiously as possible, and to keep it effective for four years after the later of (i) the initial effective date of such registration statement and (ii) the Effective Date. In addition, if the Company proposes to file certain types of registration statements under the Securities Act with respect to an offering of its equity securities, then it will be required to offer Monsanto the opportunity to include all or part of its shares on such registration statement on the terms and conditions set forth in the registration rights agreement.

     The registration rights granted in the Monsanto Registration Rights Agreement are subject to customary restrictions such as minimums, blackout periods and, if a registration is for an underwritten offering, limitations on the number of shares to be included in the underwritten offering imposed by the managing underwriter. In addition, Monsanto’s registration rights are subject to a “most favored nation” clause, which provides, among other things, that the Company may not grant registration rights to any holder of the Company’s securities that are more favorable to such holders than the registration rights granted to Monsanto without the prior written consent of holders of a majority of the shares held by Monsanto on the Effective Date.

     The Monsanto Registration Rights Agreement contains customary indemnification and contribution provisions, as well as representations and warranties by the Company and by Monsanto. The Company will be responsible for expenses relating to the registrations contemplated by the Monsanto Registration Rights Agreement, subject to certain limitations.

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     The foregoing description of the Monsanto Registration Rights Agreement does not purport to be complete and is qualified in its entirety by reference to the full text of such agreement, a copy of which is attached as Exhibit 4.2 to this report and incorporated herein by reference.

     The information under “Item 5.02 Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers — Adoption of Incentive Plans” is incorporated herein by reference.

ITEM 1.02 TERMINATION OF A MATERIAL DEFINITIVE AGREEMENT.

   1. Termination of Certain Indentures

     In connection with the completion of the settlement of claims by holders of (a) the $300 million in principal amount of 7.375% Debentures due October 15, 2027 (the “2027 Notes”) and the $150 million in principal amount of 6.72% Debentures due October 15, 2037 (the “2037 Notes”), both of which were issued under that certain Indenture, dated as of October 1, 1997, by and between Solutia and The Chase Manhattan Bank, as Trustee (as amended and supplemented from time to time, the “Prepetition Indenture”), and (b) the 11.25% Senior Secured Notes due July 15, 2009 (the “Senior Secured Notes”), which were issued under that certain Indenture, dated as of July 9, 2002, by and between Solutia and The Bank of New York, as successor indenture trustee (as amended and supplemented from time to time, the “Senior Secured Notes Indenture”), the 2027 Notes, the 2037 Notes, the Senior Secured Notes, the Prepetition Indenture (including all supplemental indentures thereto) and the Senior Secured Notes Indenture (including all supplement indentures thereto) were terminated on the Effective Date.

   2. Termination of Certain Credit Facilities

     On January 16, 2004, pursuant to authorization from the Bankruptcy Court, the Company entered into a debtor-in-possession credit facility in accordance with that certain Financing Agreement, dated as of January 16, 2004, by and among the Company and Solutia Business Enterprises, Inc. as Borrowers, certain subsidiaries of the Company as Guarantors, the lenders from time to time party thereto, as Lenders, Citicorp USA, Inc., as Collateral Agent, Administrative Agent and Documentation Agent (as such agreement is amended from time to time, the “DIP Facility”). On the Effective Date, the obligations under the DIP Facility were repaid with proceeds from the new credit facilities entered into on the Effective Date (collectively, the “Exit Facility”). The DIP facility was, accordingly, terminated on the Effective Date.

     In addition, the Company also terminated the following two credit facilities on the Effective Date:

• The Euro 200 million credit facility contemplated by that certain Facility Agreement, dated July 26, 2006, between Solutia Europe S.A./N.V., Solutia Services International S.C.A./Comm. V.A., the guarantors listed therein, Citigroup Global Markets Limited, as mandated lead arranger, the financial institutions listed therein, as the original lenders, Citibank International plc as agent for the finance parties and Citibank N.A. as security agent for the secured parties, as amended and restated on September 15, 2006; and

• The USD 225,000,000 credit faculty contemplated by that that certain Flexsys Multicurrency Term and Revolving Facilities Agreement of 2007.

     All outstanding obligations under the foregoing credit facilities were repaid with proceeds from the Exit Facility.

   3. Termination of Benefit Plans

     In connection with the Company’s reorganization and emergence from bankruptcy, all shares of Old Common Stock were canceled pursuant to the Plan. Accordingly, upon the Effective Date, the Company’s stock incentive plans in effect prior to the Effective Date, and any and all awards granted under

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such plans, were terminated. Below is a list of stock incentive plans and other benefits plans that were terminated on the Effective Date:

(i)	Solutia Inc. Management Incentive Replacement Plan as amended in 1999;
(ii)	Solutia Inc. 1997 Stock-Based Incentive Plan as amended in 1999 and 2000;
(iii)	Solutia Inc. 2000 Stock-Based Incentive Plan;
(iv)	Solutia Inc. Non-Employee Director Compensation Plan, as amended in 1999, 2000, and 2001;
(v)	Solutia Inc. 2003 Non-Employee Director Compensation Plan;
(vi)	2002 Shared Success Replacement Plan; and
(vii)	2006 Solutia Annual Incentive Plan.

   4. Termination of Other Material Agreements

     In addition, pursuant to the Plan, the following agreements did not survive the Effective Date:

(i)	Distribution Agreement, dated as of September 1, 1997, by and between Monsanto and Solutia;
(ii)	Amendment to Distribution Agreement, dated as of July 1, 2002, by and among Pharmacia Corporation, Solutia and Monsanto;
(iii)	Employee Benefits Allocation Agreement, dated as of September 1, 1997, by and between Monsanto and Solutia; and
(iv)	Tax Sharing and Indemnification Agreement, dated as of September 1, 1997, by and between Monsanto and Solutia.

ITEM 3.03 MATERIAL MODIFICATION TO RIGHTS OF SECURITY HOLDERS.

     The information set forth under “Item 1.01. Entry into a Material Definitive Agreement — Backstopper Registration Rights Agreement” and “Item 1.01. Entry into a Material Definitive Agreement — Monsanto Registration Rights Agreement” is incorporated into this Item 3.03 by reference.

ITEM 5.02 DEPARTURE OF DIRECTORS OR CERTAIN OFFICERS; ELECTION OF DIRECTORS; APPOINTMENT OF CERTAIN OFFICERS; COMPENSATORY ARRANGEMENTS OF CERTAIN OFFICERS.

   1. Adoption of Incentive Plans

     On the Effective Date, the Company adopted the Annual Incentive Plan, the 2007 Management Long-Term Incentive Plan and the 2007 Non-Employee Director Stock Compensation Plan. Adoption of these plans allows the Company to provide compensation opportunities to management

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and directors which reflect several key objectives of the company’s overall compensation philosophy, including:

• Providing a level and mix of pay that is market competitive;

• Ensuring that a significant portion of total compensation is performance-based;

• Linking a large portion of incentive compensation to longer-term performance and to shareholder returns via stock-based awards; and

• Maximizing the tax deductibility of compensation whenever possible.

     Annual Incentive Plan

     The Company’s Annual Incentive Plan (the “AIP”) will be effective for the next five years, at which time the company’s shareholders will need to re-approve the plan or approve a new plan. The AIP provides annual incentive-based bonus opportunity that applies to almost all of the Company’s employees, including its executive officers. The AIP is administered by the Executive Compensation and Development Committee of the Company’s Board of Directors (the “ECDC”) and the ECDC will annually establish specific performance metrics and levels, along with individual incentive opportunities. Terms of the AIP are intentionally broad in order to provide the ECDC flexibility.

     The AIP is based upon a bonus pool concept. There are separate bonus pools for enterprise-level participants and business unit participants. Each participant in the AIP has a set target bonus. Target bonuses are based upon both external and internal considerations and payouts are set as a percentage of annual base salary and vary by participant level in the organization. For 2008, the ECDC established financial and operating performance metrics for the enterprise and for each business unit and a weighting for each metric, including EBITDAR (50%) and Free Cash Flow (50%). For each metric, a threshold (0.50x), target (1.0x), and maximum (3.0x) funding level is determined by the ECDC. These funding levels are referred to as funding factors. If the threshold performance level is not met with respect to any particular performance metric, there is no funding of the bonus pool with respect to that metric. The target level funding or a 1.0x funding factor is the aggregate of all target bonuses for participants in the AIP. At the end of the year, the performance of Solutia and its business units is measured against the pre-established metrics and the ECDC determines the funding factor for each bonus pool. Once the bonus pools are established, individual bonuses are determined as part of Solutia’s performance management process.

     Individual bonuses are comprised of an objective portion and a subjective portion. For 2008, forty-five percent (45%) of each bonus pool is paid out on a straight objective basis to participants in that pool based upon enterprise or business unit performance, depending on the pool. This is the objective portion of a participant’s bonus. Forty-five percent (45%) of each bonus pool is allocated to individual participants within the pool based upon individual performance versus set goals and individual performance versus peer performance. The remaining ten percent (10%) of each bonus pool is aggregated to constitute an enterprise discretionary pool which can be allocated to any participant in the AIP. Allocations from these discretionary funds constitute the discretionary portion of a participant’s bonus.

     Each participant’s target bonus is multiplied by the relevant funding factor (the same funding factor that was used to determine the size of the bonus pool from which the participant’s bonus is paid). The sum of all performance adjusted target bonuses for all participants in one of the bonus pools equals the total bonus pool. The discretionary portion of an individual’s bonus can range from zero upward, which is limited only by the total funding of the relevant bonus pool. The aggregate of all bonuses paid from each of the bonus pools can not exceed the amount of the pool, except any discretionary bonus paid to Mr. Quinn in excess of 50% of his performance adjusted target bonus will not, at the discretion of the ECDC, diminish the pool available for bonuses to other participants.

     Awards under the AIP will be paid within two and one-half months following the end of the year.

     The foregoing description of the AIP does not purport to be complete and is qualified in its entirety by reference to the full text of such plan, a copy of which is attached as Exhibit 10.6 to this report and incorporated herein by reference.

     2007 Management Long-Term Incentive Plan

     The Company’s 2007 Management Long-Term Incentive Plan (the “Management LTIP”) reserves 7,200,000 shares of New Common Stock for issuance under the various types of equity programs offered under such plan. The Management LTIP is administered by the ECDC. The Management LTIP provides that awards under the plan may be issued as stock options, incentive stock options, restricted stock, restricted stock units, stock appreciation rights, other stock awards (collectively the “Equity Awards”), and cash incentive awards. Both employees and independent contractors are eligible to receive awards under the Management LTIP.

     Awards under the Management LTIP are granted pursuant to an award agreement which is a written agreement setting forth the terms and conditions applicable to an award. The ECDC has the authority to grant awards that are contingent upon the achievement of performance goals, as specifically set forth in the Management LTIP. Awards may also be subject to other terms and conditions as the ECDC shall decide in its discretion, such as vesting conditions which may require the employee to remain employed by the Company for a certain minimum period of time before an award becomes exercisable or transferable. The maximum number of shares of Common Stock with respect to which Equity Awards may be granted during any year to any person is 1,500,000 shares. The maximum value of any cash inventive award that may be granted to any participant in any 12-month period will not exceed $7,500,000.

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     Awards generally may not be transferred except to members of the participant’s immediately family or a trust or partnership exclusively for the benefit of them, and incentive stock awards may only be transferred by will or the laws of descent. Unless otherwise provided in an award agreement, the Committee may provide that in the event of a change in control of the Company, the vesting or other forfeiture conditions on an award may be waived. In the event of a change in control of the Company, unexercised options may be cashed out for an amount equal to the difference between the option’s exercise price and the purchase price of the transaction constituting the change in control.

     Prior to the settlement of any award, the Company has the power and the right to deduct or require a participant to remit to the Company any amount sufficient to satisfy any of its withholding obligations. The Board of Directors of the Company generally has the power to amend the Management LTIP, provided that if such amendment materially adversely alters or impairs the rights or obligations of any particular award previously granted to a participant, the amendment will require that participant’s consent.

     The foregoing description of the Management LTIP does not purport to be complete and is qualified in its entirety by reference to the full text of such plan, a copy of which is attached as Exhibit 10.7 to this report and incorporated herein by reference.

     2007 Non-Employee Director Stock Compensation Plan

     The Company’s 2007 Non-Employee Director Stock Compensation Plan (the “Director Plan”) reserves 250,000 shares for issuance under the various types of equity programs offered under such plan. The Director Plan is administered by the Governance Committee of the Board of Directors of the Company (the “Governance Committee”). The Director Plan provides that awards under the Director Plan may be issued as stock options, restricted stock, restricted stock units, stock appreciation rights, and other stock awards. Members of the Board are eligible to receive awards under the Director Plan.

     Awards under the Director Plan are granted pursuant to an award agreement setting forth the terms and conditions applicable to an award. The Governance Committee has the authority to grant awards that are contingent upon the achievement of performance goals. Awards may also be subject to other terms and conditions as the Governance Committee shall decide in its discretion, such as vesting conditions which may require the director to remain on the Board for a certain minimum period of time before an award becomes exercisable or transferable.

     Awards generally may not be transferred except to members of the participant’s immediately family or a trust or partnership exclusively for the benefit of them. Unless otherwise provided in an award agreement, the Governance Committee may provide that in the event of a change in control of the Company, the vesting or other forfeiture conditions on an award may be waived. In the event of a change in control of the Company, unexercised options may be cashed out for an amount equal to the difference between the option’s exercise price and the purchase price of the transaction constituting the change in control.

     Prior to the settlement of any award, the Company has the power and the right to deduct or require a participant to remit to the Company any amount sufficient to satisfy any of its withholding obligations. The Board of the Directors of the Company generally has the power to amend the Director Plan, provided that if such amendment materially adversely alters or impairs the rights or obligations of any particular award previously granted to a participant, an amendment will require that participant’s consent.

     The foregoing description of the Director Plan does not purport to be complete and is qualified in its entirety by reference to the full text of such plan, a copy of which is attached as Exhibit 10.8 to this report and incorporated herein by reference.

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   2. New Compensation Arrangements

     Upon recommendation of the ECDC, the Board of Directors of Solutia has granted restricted shares, restricted stock units and stock options to approximately 225 executives, managers and directors, as follows:

• An aggregate of 1,016,560 restricted shares and 176,800 restricted stock units, equal to 2% of total shares of New Common Stock outstanding, were granted. These restricted shares and restricted stock units will vest 1/3rd annually over the three year period following the date of grant.

• An aggregate of 3,000,000 stock options, equal to 5% of total shares of New Common Stock outstanding, were granted. These options have an exercise price of $17.73. As with restricted stock, the options will vest 1/3rd annually over the three year period following the date of grant.

     The grants were effective upon the Effective Date.

     The equity awards for the Company’s Named Executive Officers and for all other participants are as follows:

		Management LTIP
		Restricted Stock		Stock Options
Name	Title	(shares)		(shares)
J. N. Quinn	Chairman, President &CEO		200,000		500,000
J. M. Sullivan	Senior VP & CFO		60,000		150,000
L. De Temmerman	Senior VP & President, PPD		40,000		100,000
J. R. Voss	Senior VP & President, Flexsys		40,000		100,000
J. P. Wright	Senior VP & President, Integrated Nylon		40,000		100,000
All Other Participants			820,000		2,050,000

ITEM 9.01 FINANCIAL STATEMENTS AND EXHIBITS.

Exhibit No.	Description
4.1	Registration Rights Agreement, dated as of November 19, 2007, by and among Solutia Inc. and the holders party thereto
4.2	Registration Rights Agreement, dated as of February 28, 2008, by and between Solutia Inc. and Monsanto Company
10.1	Amended and Restated Monsanto Settlement Agreement dated as of February 28, 2008 among Solutia Inc., Monsanto Company and SFC LLC
10.2	Pharmacia Indemnity Agreement, dated as of February 28, 2008, by and between Solutia Inc. and Pharmacia Corporation
10.3	First Amended and Restated Retiree Settlement Agreement dated as of July 10, 2007 among Solutia Inc. and the claimants set forth therein
10.4	2008 Retiree Welfare Plan
10.5	Limited Liability Company Agreement of SFC LLC, dated as of February 28, 2008, between SFC LLC and its sole member

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Exhibit No.	Description
10.6	Solutia Inc. Annual Incentive Plan
10.7	Solutia Inc. 2007 Management Long-Term Incentive Plan (incorporated by reference to Exhibit 4(c) to Solutia’s registration statement on Form S-8 filed February 28, 2008)
10.8	Solutia Inc. 2007 Non-Employee Director Stock Compensation Plan (incorporated by reference to Exhibit 4(d) to Solutia’s registration statement on Form S-8 filed February 28, 2008)

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

DATE: March 5, 2008

SOLUTIA INC.
By:	/s/Rosemary L. Klein
	Name:	Rosemary L. Klein
	Title:	Senior Vice President, General Counsel and Secretary

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EXHIBIT INDEX

4.1	Registration Rights Agreement, dated as of November 19, 2007, by and among Solutia Inc. and the holders party thereto
4.2	Registration Rights Agreement, dated as of February 28, 2008, by and between Solutia Inc. and Monsanto Company
10.1	Amended and Restated Monsanto Settlement Agreement dated as of February 28, 2008 among Solutia Inc., Monsanto Company and SFC LLC
10.2	Pharmacia Indemnity Agreement, dated as of February 28, 2008, by and between Solutia Inc. and Pharmacia Corporation
10.3	First Amended and Restated Retiree Settlement Agreement dated as of July 10, 2007 among Solutia Inc. and the claimants set forth therein
10.4	2008 Retiree Welfare Plan
10.5	Limited Liability Company Agreement of SFC LLC, dated as of February 28, 2008, between SFC LLC and its sole member
10.6	Solutia Inc. Annual Incentive Plan
10.7	Solutia Inc. 2007 Management Long-Term Incentive Plan (incorporated by reference to Exhibit 4(c) to Solutia’s registration statement on Form S-8 filed February 28, 2008)
10.8	Solutia Inc. 2007 Non-Employee Director Stock Compensation Plan (incorporated by reference to Exhibit 4(d) to Solutia’s registration statement on Form S-8 filed February 28, 2008)

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EX-4.1

Exhibit 4.1

REGISTRATION RIGHTS AGREEMENT

by and among

SOLUTIA, INC.

and

THE HOLDERS SET FORTH HEREIN

Dated as of November 19, 2007

TABLE OF CONTENTS

	Page
ARTICLE I. DEFINITIONS		1
ARTICLE II. REPRESENTATIONS AND WARRANTIES OF THE COMPANY		5
SECTION 2.1 Representations and Warranties of the Company		5
ARTICLE III. SHELF REGISTRATION		9
SECTION 3.1 Shelf Registration Statement		9
SECTION 3.2 Shelf Registration Procedures		9
ARTICLE IV. UNDERWRITTEN OFFERINGS		11
SECTION 4.1 Right to Underwritten Offerings		11
SECTION 4.2 Underwritten Offering Procedures		12
ARTICLE V. PIGGYBACK REGISTRATION		13
SECTION 5.1 Right to Piggyback		13
SECTION 5.2 Priority on Piggyback Registrations		14
SECTION 5.3 Withdrawal of Piggyback Registration		15
ARTICLE VI. BLACKOUT PERIOD		15
SECTION 6.1 Shelf Registration and Piggyback Registration Blackout		15
SECTION 6.2 Blackout Period Limits		16
ARTICLE VII. PROCEDURES AND EXPENSES		16
SECTION 7.1 Registration Procedures		16
SECTION 7.2 Information from Holders; Holders’ Obligations		21
SECTION 7.3 Suspension of Disposition		22
SECTION 7.4 Registration Expenses		23
ARTICLE VIII. INDEMNIFICATION		24
SECTION 8.1 Indemnification by the Company		24
SECTION 8.2 Indemnification by Holders		25
SECTION 8.3 Conduct of Indemnification Proceedings		25
SECTION 8.4 Contribution, etc		26
ARTICLE IX. FREE WRITING PROSPECTUSES		28
ARTICLE X. RULE 144		28
ARTICLE XI. PRIVATE PLACEMENT		28

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	Page
ARTICLE XII. MISCELLANEOUS		29
SECTION 12.1 Notices		29
SECTION 12.2 Severability		30
SECTION 12.3 Assignment; Certain Specified Third Party Beneficiaries		30
SECTION 12.4 Entire Agreement		30
SECTION 12.5 Waivers and Amendments		30
SECTION 12.6 Counterparts		31
SECTION 12.7 Governing Law; Venue		31
SECTION 12.8 Headings		31
SECTION 12.9 Specific Performance		31
SECTION 12.10 Termination		31
SECTION 12.11 No Conflicting Rights		31

EXHIBITS
Exhibit A	Form of Selling Securityholder Notice and Questionnaire
Exhibit B	Form of Joinder Agreement

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REGISTRATION RIGHTS AGREEMENT

          This Registration Rights Agreement (this “Agreement”), dated as of November 19, 2007, is made by and among (i) subject to the entry of the Agreement Order (as defined below), Solutia, Inc., a Delaware corporation (as debtor-in-possession and a reorganized debtor, as applicable, the “Company”), and (ii) the parties identified as “Backstop Investors” on the signature pages hereto and any parties identified on the signature pages of any Joinder Agreements (as defined below) executed and delivered pursuant to Section 12.3 hereto (each, including the Backstop Investors, a “Holder” and, collectively, the “Holders”).

RECITALS

          WHEREAS, in connection with the consummation of the transactions contemplated by that certain Commitment Agreement, dated as of October 15, 2007 (the “Commitment Agreement”), by and among the Company and each of the Backstop Investors has agreed to acquire shares of New Common Stock (as defined below) in accordance with the provisions of the Commitment Agreement; and

          WHEREAS, in consideration of the Backstop Investors’ commitment to purchase shares of the New Common Stock pursuant to and on the terms and conditions set forth in the Commitment Agreement, the Company has agreed to enter into a registration rights agreement with respect to all of the shares of New Common Stock held or acquired by the Holders.

AGREEMENTS

          NOW, THEREFORE, in consideration of the foregoing and the covenants and agreements contained herein and in the Commitment Agreement and Amended Plan (as defined below), and intending to be legally bound hereby, the parties hereto hereby agree as follows:

ARTICLE I.

DEFINITIONS

          For purposes of this Agreement, the following terms have the following meanings:

          “Affiliate” has the meaning given to that term pursuant to Rule 12b-2 under the Exchange Act.

          “Agreement” has the meaning given to that term in the introductory paragraph hereof.

          “Agreement Order” means the order of the Bankruptcy Court granting the motion to approve this Agreement and related relief.

          “Amended Plan” means the Debtors’ Fifth Amended Joint Plan of Reorganization attached as Exhibit A to the related Disclosure Statement, as approved by Order of the Bank-

ruptcy Court entered on October 19, 2007, as it may be amended or supplemented from time to time.

          “Bankruptcy Code” means Chapter 11, Title 11 of the United States Code, 11 U.S.C. 101 et seq.

          “Bankruptcy Court” means the United States Bankruptcy Court for the Southern District of New York administering the Company’s bankruptcy case under the Bankruptcy Code together with the applicable district court, to the extent district court approval of the Amended Plan, or any transactions contemplated therein, is sought or required.

          “Bankruptcy Rules” means the Federal Rules of Bankruptcy Procedure.

          “Blackout Period” means any period during which, in accordance with Article VI hereof, the Company is not required to effect the filing of a Registration Statement or is entitled to postpone the preparation, filing or effectiveness or suspend the effectiveness of a Registration Statement and/or the use of any resale Prospectus.

          “Business Day” means any day, other than a Saturday or Sunday, on which banking institutions in New York, New York, are open.

          “Code” means the Internal Revenue Code of 1986, as amended.

          “Company” has the meaning given to that term in the introductory paragraph hereof.

          “Company Indemnified Person” shall have the meaning given to that term in Section 8.2 of this Agreement.

          “control” has the meaning given to that term under Rule 405 under the Securities Act (and “controlled” and “controlling” shall have correlative meanings).

          “Effective Date” means each effective date or deemed effective date under the Securities Act of any Registration Statement or any post-effective amendment thereto.

          “Commitment Agreement” has the meaning given that term in the recitals hereof.

          “Exchange Act” means the Securities Exchange Act of 1934, as amended, and the rules and regulations promulgated by the SEC thereunder.

          “Free Writing Prospectus” means a free writing prospectus as defined in Rule 405 under the Securities Act relating to the Registrable Securities included in the applicable registration.

          “Holder” and “Holders” have the meanings given to those terms in the introductory paragraph hereof.

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          “Holder Indemnified Person” shall have the meaning given to that term in Section 8.1 of this Agreement.

          “Holder Shelf Offering” has the meaning given to that term in Section 3.2(a) of this Agreement.

          “Indemnified Person” has the meaning given to that term in Section 8.3 of this Agreement.

          “Indemnifying Person” has the meaning given to that term in Section 8.3 of this Agreement.

          “Issuer Free Writing Prospectus” means an issuer free writing prospectus as defined in Rule 433 under the Securities Act.

          “Joinder Agreement” has the meaning given to that term in Section 12.3 of this Agreement.

          “Lock-Up Period” has the meaning given to that term in Section 4.2(d) of this Agreement.

          “Material Adverse Effect” has the meaning given to that term in Section 2.1(a) of this Agreement.

          “Monsanto Registration Rights Agreement” means the registration rights agreement to be entered into between the Company and Monsanto Company as contemplated by the Shelf Registration Statement and the Amended Plan.

          “NASD” has the meaning given to that term in Section 7.1(m) of this Agreement.

          “NASDAQ” means the NASDAQ National Market.

          “New Common Stock” means the shares of new common stock of the Company issued on and after the effective date of the Amended Plan and any additional shares of common stock paid, issued or distributed in respect of any such shares by way of a stock dividend, stock split or distribution, or in connection with a combination of shares, recapitalization, reorganization, merger or consolidation, or otherwise.

          “NYSE” means the New York Stock Exchange.

          “Other Stockholders” means any Person (other than the Holders) having rights to participate in a registration of the New Common Stock.

          “Person” means any individual, corporation, general or limited partnership, limited liability company, joint venture, trust or other entity or association, including without limitation any governmental authority.

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          “Piggyback Notice” has the meaning given to that term in Section 5.1 of this Agreement.

          “Piggyback Registration” has the meaning given to that term in Section 5.1 of this Agreement.

          “Preliminary Prospectus” has the meaning given to that term in Section 2.1(l) of this Agreement.

          “Prospectus” means the prospectus relating to the Registrable Securities included in the applicable Registration Statement, and any such prospectus as supplemented by any and all prospectus supplements and as amended by any and all amendments (including post-effective amendments) and including all material incorporated by reference or deemed to be incorporated by reference in such Prospectus.

          “Questionnaire” has the meaning given to that term in Section 3.2(a) of this Agreement.

          “Registrable Securities” means at any time (i) any shares of New Common Stock owned beneficially or of record by a Holder, and (ii) any shares of New Common Stock or other securities issued or issuable in respect of the New Common Stock which additional shares were paid, issued or distributed in respect of any shares of New Common Stock by way of stock dividend, stock split or distribution, or in connection with a combination of shares, recapitalization, reorganization, merger or consolidation, or otherwise; provided, however, that as to any Registrable Securities, such securities shall cease to constitute Registrable Securities upon the earliest to occur of: (i) the date on which the securities are disposed of pursuant to an effective registration statement under the Securities Act; (ii) the date on which the securities are disposed of pursuant to Rule 144 (or any successor provision) under the Securities Act; (iii) the date that all of such securities held by a Holder are eligible to be disposed of pursuant to Rule 144 or any successor thereto in a single transaction by such Holder; and (iv) the date on which the securities cease to be outstanding.

          “Registration Expenses” has the meaning given to that term in Section 7.4(a) of this Agreement.

          “Registration Statement” means any registration statement of the Company under the Securities Act that covers any of the Registrable Securities pursuant to the provisions of this Agreement, including the related Prospectus, all amendments and supplements to such registration statement (including post-effective amendments), and all exhibits and all materials incorporated by reference or deemed to be incorporated by reference in such registration statement.

          “Required Period” means four years following the later of (i) the Effective Date of the Shelf Registration Statement and (ii) the effective date of Amended Plan, in each case as such period may be extended pursuant to Section 6.2 and Section 7.3.

          “Rule 144” means Rule 144 promulgated under the Securities Act, as such Rule may be amended from time to time, or any similar rule or regulation hereafter adopted by the SEC.

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          “SEC” means the United States Securities and Exchange Commission and any successor United States federal agency or governmental authority having similar powers.

          “Securities Act” means the Securities Act of 1933, as amended, and the rules and regulations promulgated by the SEC thereunder.

          “Selling Holder” means, with respect to a specified registration pursuant to this Agreement, Holders whose Registrable Securities are included in such registration.

          “Selling Holder Information” has the meaning given to that term in Section 3.2(a) of this Agreement.

          “Shelf Registration Statement” means the Registration Statement on Form S-3 filed by the Company pursuant to Rule 415 of the Securities Act relating to the Registrable Securities on October 26, 2007 and any new Registration Statement filed during the Required Period pursuant to Section 415(a)(5) of the Securities Act relating to the Registrable Securities.

          “Subsidiary” or “Subsidiaries” means the direct and indirect subsidiaries of the Company.

          “Syndication Agreement” has the meaning given to such term in the recitals hereof.

          “Underwritten Registration” or “Underwritten Offering” means a registration in which securities of the Company are sold to an underwriter for reoffering to the public.

ARTICLE II.

REPRESENTATIONS AND WARRANTIES OF THE COMPANY

          SECTION 2.1 Representations and Warranties of the Company. The Company represents and warrants to, and agrees with, each Holder as set forth below, (i) with respect to Sections 2.1(a), (b), (c), (f),(g), (l) and (m), as of the date hereof and (ii) with respect to all other representations and warranties not expressly limited as to their date, as of each Effective Date:

     (a) Incorporation and Qualification. The Company and each of its Subsidiaries is a legal entity duly organized, validly existing and in good standing under the laws of their respective jurisdictions of organization, with the requisite power and authority to own its properties and conduct its business as currently conducted, and is duly qualified as a foreign corporation for the transaction of business and is in good standing under the laws of each other jurisdiction in which it owns or leases properties or conducts any business so as to require such qualification, except to the extent the failure to be so organized, validly existing, qualified or in good standing has not had or would not reasonably be expected to have, a Material Adverse Effect. For purposes of this Agreement, a “Material Adverse Effect” shall mean any circumstance, change in or effect on the Company and the Company’s Subsidiaries, taken as a whole, that individually or in the aggregate with all other circumstances, changes in or effects on the Company and the Company’s Subsidiaries, taken as a whole, is or is reasonably likely to be materially adverse to the business

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operations, assets or liabilities (including without limitation contingent liabilities), results of operations or the conditions (financial or otherwise) of the Company and the Company’s Subsidiaries taken as a whole; provided, however, that none of the following shall be deemed, either alone or in combination, to constitute a Material Adverse Effect: (i) changes in any statute, rule or regulation after the date hereof, (ii) changes generally affecting the industries in which the Company and its Subsidiaries operate, (iii) changes in laws, GAAP or accounting principles, and (iv) changes after the date hereof resulting from the announcement or the existence of, or compliance with, this Agreement or the Settlement Term Sheet, or the announcement of the Rights Offering, the Amended Plan or any of the other transactions contemplated hereby or thereby; provided, further, that any circumstance, change or effect described in clauses (i), (ii), (iii) or (iv) shall not, either alone or in combination, constitute a “Material Adverse Effect” only if the impact of such circumstance, change or effect on the Company and its Subsidiaries, taken as a whole, is not materially disproportionate as compared to its impact on other participants in the industries in which the Company and its Subsidiaries operate.

     (b) Corporate Power and Authority. The Company has the requisite corporate power and authority to enter into, execute and deliver this Agreement and, subject to entry of the Agreement Order and the expiration, or waiver by the Bankruptcy Court, of any applicable waiting period set forth in the Bankruptcy Rules, respectively, to perform its obligations hereunder. The Company has taken all necessary corporate action required for the due authorization, execution, delivery and performance by it of this Agreement.

     (c) Execution and Delivery; Enforceability. This Agreement has been duly and validly executed and delivered by the Company, and, upon the entry of the Agreement Order and the expiration, or waiver by the Bankruptcy Court, of any applicable waiting period set forth in the Bankruptcy Rules, this Agreement will constitute the valid and binding obligation of the Company, enforceable against the Company in accordance with its terms.

     (d) Authorized Capital Stock. The authorized capital stock of the Company conforms in all material respects to the authorized capital stock set forth in the Registration Statement and Preliminary Prospectus and the issued and outstanding shares of capital stock of the Company conforms in all material respects to the description set forth in the Registration Statement and Preliminary Prospectus.

     (e) Issuance. All outstanding shares of New Common Stock have been duly and validly issued, are fully paid and non-assessable, and are free and clear of all taxes, liens, pre-emptive rights, rights of first refusal, subscription and similar rights.

     (f) No Conflict. Subject to the entry of the Agreement Order and the expiration, or waiver by the Bankruptcy Court, of any applicable waiting period set forth in the Bankruptcy Rules, the execution and delivery by the Company of this Agreement and compliance by the Company with all of the provisions hereof and the consummation of the transactions contemplated hereby (i) will not conflict with or result in a breach or violation of, any of the terms or provisions of, or constitute a default under (with or without notice or lapse of time, or both), or result in the acceleration of, or the creation of any lien

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under, any indenture, mortgage, deed of trust, loan agreement or other agreement or instrument to which the Company or any of its Subsidiaries is a party or by which the Company or any of its Subsidiaries is bound or to which any of the property or assets of the Company or any of its Subsidiaries is subject, (ii) will not result in any violation of the provisions of the certificate of incorporation or bylaws of the Company included in the Amended Plan and as applicable to the Company from and after the Effective Date and (iii) will not result in any material violation of, or any termination or material impairment of any rights under, any statute or any license, authorization, injunction, judgment, order, decree, rule or regulation of any court or governmental agency or body having jurisdiction over the Company or any of its Subsidiaries or any of their properties, except in any such case described in subclause (i) or (iii) as have been described in an effective Registration Statement or as will not have and are not reasonably expected to have, individually or in the aggregate, a Material Adverse Effect.

     (g) Consents and Approvals. No consent, approval, authorization, order, registration or qualification of or with any court or governmental agency or body having jurisdiction over the Company or any of its Subsidiaries or any of their properties is required for the execution and delivery by the Company of this Agreement and performance of and compliance by the Company with all of the provisions hereof and the consummation by the Company of the transactions contemplated hereby, except (i) the entry of the Agreement Order and the expiration, or waiver by the Bankruptcy Court, of any applicable waiting period set forth in the Bankruptcy Rules, (ii) the registration under the Securities Act of the Registrable Securities contemplated hereby and (iii) such consents, approvals, authorizations, registrations or qualifications (w) as may be required under NYSE or NASDAQ rules and regulations in order to consummate the transactions contemplated herein, (x) as may be required under state securities or Blue Sky laws in connection with the sale of the shares of New Common Stock by the Holders, (y) as have been described in an effective Registration Statement or (z) the absence of which will not have or are not reasonably expected to have, individually or in the aggregate, a Material Adverse Effect.

     (h) Exchange Act Documents. The documents incorporated by reference in the Registration Statement or the Preliminary Prospectus, when they became effective or were filed with the SEC, as the case may be, conformed in all material respects to the requirements of the Exchange Act and, when read together with the other information included or incorporated by reference in the Registration Statement, at the time the Registration Statement became effective or the date of such Preliminary Prospectus, none of such documents contained any untrue statement of a material fact or omitted to state a material fact required to be stated therein or necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading; and any further documents so filed and incorporated by reference in the Registration Statement or the Preliminary Prospectus, when such documents become effective or are filed with the SEC, as the case may be, will conform in all material respects to the requirements of the Securities Act or the Exchange Act, as applicable, and will not, when read together with the other information included or incorporated by reference in the Registration Statement and the Preliminary Prospectus, contain any untrue statement of a material fact or omit to

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state a material fact required to be stated therein or necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading.

     (i) Issuer Free Writing Prospectus. Each Issuer Free Writing Prospectus complies in all material respects with the Securities Act, has been filed in accordance with the Securities Act (to the extent required thereby) and, when taken together with the Preliminary Prospectus accompanying, or delivered prior to delivery of, such Issuer Free Writing Prospectus, did not, and at the Effective Date will not, contain any untrue statement of a material fact or omit to state a material fact necessary in order to make the statements therein, in the light of the circumstances under which they were made, not misleading; provided, that the Company makes no representation and warranty with respect to any statements or omissions made in each such Issuer Free Writing Prospectus in reliance upon and in conformity with information relating to any Holder furnished to the Company in writing by such Holder expressly for use in any Issuer Free Writing Prospectus.

     (j) Preliminary Prospectus. Each Preliminary Prospectus, at the time of filing thereof, will comply in all material respects with the Securities Act and will not contain any untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary in order to make the statements therein, in the light of the circumstances under which they were made, not misleading; provided that the Company makes no representation and warranty to an Holder with respect to any statements or omissions made in each such Preliminary Prospectus in reliance upon and in conformity with information relating to such Holder furnished to the Company in writing by such Holder expressly for use in any Preliminary Prospectus. As used herein, the term “Preliminary Prospectus” means each prospectus included in such registration statement (and any amendments thereto) before it becomes effective, any prospectus filed with the SEC pursuant to Rule 424(a) under the Securities Act and the prospectus included in the Registration Statement, at the time of their respective effectiveness.

     (k) Registration Statement and Prospectus. As of the Effective Date of a Registration Statement, such Registration Statement complies in all material respects with the Securities Act, and does not contain any untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary in order to make the statements therein not misleading; and as of the applicable filing date of the Prospectus and any amendment or supplement thereto, the Prospectus will not contain any untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary in order to make the statements therein, in the light of the circumstances under which they were made, not misleading; provided that the Company makes no representation and warranty to a Holder with respect to any statements or omissions made in such Registration Statement or Prospectus or amendment or supplement thereto in reliance upon and in conformity with information relating to such Holder furnished to the Company in writing by such Holder expressly for use in the Registration Statement and the Prospectus and any amendment or supplement thereto.

     (l) No Registration Rights. Except (i) to the extent covered by the Registration Statement and the Preliminary Prospectus and (ii) with respect to rights granted

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under this Agreement or the Monsanto Registration Rights Agreement, no Person has the right to require the Company or any of its Subsidiaries to register any securities for sale under the Securities Act or will have the right to require the Company or any of its Subsidiaries to register any securities for sale under the Securities Act by reason of the filing of the Registration Statement with the SEC.

     (m) The Company is not aware of any facts or circumstances that would prevent the Shelf Registration Statement from being declared effective on the effective date of the Amended Plan.

ARTICLE III.

SHELF REGISTRATION

          SECTION 3.1 Shelf Registration Statement. The Company has filed the Shelf Registration Statement with the SEC on October 26, 2007 and will use its reasonable best efforts to (i) file an amendment to the Shelf Registration Statement on or prior to two Business Days prior to the effective date of the Amended Plan and (ii) cause the Shelf Registration Statement to be declared effective by the SEC no later than the effective date of Amended Plan on an appropriate form under the Securities Act relating to the offer and sale of the Registrable Securities by the Holders thereof from time to time in accordance with the methods of distribution set forth in the Shelf Registration Statement and Rule 415 under the Securities Act. Once the Shelf Registration Statement is declared effective by the SEC, the Company shall use its reasonable best efforts to cause the Shelf Registration Statement to remain continually effective, supplemented and amended, and not subject to any stop order, injunction or similar order or requirement of the SEC, until the earlier of (a) the expiration of the Required Period or (b) the date on which all Registrable Securities shall cease to be Registrable Securities. The Company’s obligations under this Section 3.1 are subject to the provisions of Article VI.

          SECTION 3.2 Shelf Registration Procedures.

     (a) During the Required Period, any Holder shall be entitled, subject to the remainder of this Section 3.2, to register all or any part of its Registrable Securities for sale pursuant to the Shelf Registration Statement and to sell all or any part of the Registrable Securities registered on behalf of such Holder pursuant to the Shelf Registration Statement (“Holder Shelf Offering”). Notwithstanding any other provision of this Agreement, no Holder may include any of its Registrable Securities in a Holder Shelf Offering pursuant to this Agreement unless the Holder shall provide to the Company a fully completed notice and questionnaire in substantially the form set forth in Exhibit A hereto (the “Questionnaire”) and such other information in writing as may be reasonably requested by the Company pursuant to Section 7.2 (the “Selling Holder Information”). In order to be named as a selling securityholder in the Shelf Registration Statement or Prospectus at the time it initially becomes effective under the Securities Act, each Holder must no later than three Business Days prior to the Effective Date of the Shelf Registration Statement, which will be at least 15 days following notice by the Company of the expected initial Effective Date (the “Company Registration Notice”), furnish in writing the completed Questionnaire and such other Selling Holder Information that the

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Company may reasonably request in writing, if any, to the Company. The Company Registration Notice shall set forth (1) the expected Effective Date of the Shelf Registration Statement and (2) the date by which Holders must return a completed Questionnaire in order to be named as selling securityholders in the Shelf Registration Statement. In addition, if such Company Registration Notice is given prior to the effective date of the Amended Plan, then the Company shall provide the following information to the Holders on or prior to five (5) Business Days prior to the Effective Date of the Shelf Registration Statement: (a) for each class under the Amended Plan receiving shares of New Common Stock, the approximate number of shares of New Common Stock that a holder of $1,000 in Allowed Claims (as defined in the Amended Plan) of such class would receive on the effective date of the Amended Plan and (b) for each series of notes under the Prepetition Indenture (as defined in the Amended Plan), the approximate number of shares of New Common Stock that a holder of $1,000 in principal amount of such series would receive on the effective date of the Amended Plan.

     The Company shall include in the Shelf Registration Statement the information from the completed Questionnaire and such other Selling Holder Information, if any, received by the Company at least three Business Days prior to the initial Effective Date of the Shelf Registration Statement and the Prospectus, as necessary in a manner so that upon such effectiveness of the Shelf Registration Statement the Holder shall be named as a selling securityholder and be permitted to deliver (or be deemed to deliver) such Prospectus to purchasers of the Registrable Securities in accordance with applicable law. From and after the date that the Shelf Registration Statement initially becomes effective, upon receipt of a completed Questionnaire (including any updated Questionnaire) and such other Selling Holder Information (including any updated Selling Holder Information) that the Company may reasonably request in writing (including any amendments to any prior Questionnaire or Selling Holder Information), if any, but in any event within 10 Business Days after the Company receives the completed Questionnaire and such other Selling Holder Information, if any, the Company shall use its reasonable best efforts to file any amendments or supplements to the Shelf Registration Statement or Prospectus or the documents incorporated by reference therein necessary for such Holder to be named as a selling securityholder and permit such Holder to deliver (or be deemed to deliver) the Prospectus to purchasers of the Registrable Securities (subject to the Company’s rights during a Blackout Period). Holders that do not deliver a completed written Questionnaire and such other information, as provided for in this Section 3.2(a), shall not be named as selling securityholders in the Prospectus until such Holder delivers such information and the appropriate notice and other periods called for by this Agreement shall have elapsed. If the Company shall file a post-effective amendment to the Shelf Registration Statement, it shall use reasonable best efforts to cause such post-effective amendment to be declared effective under the Securities Act as promptly as is reasonably practicable and notify such Holder as promptly as practicable after the effectiveness under the Securities Act of any post-effective amendment filed pursuant to this Article III. If such Selling Holder Information is delivered during a Blackout Period, the Company shall so inform the Holder delivering such Selling Holder Information and shall take the actions set forth in this Section 3.2(a) upon expiration of the Blackout Period as though such Holder’s Selling Holder Information had been delivered on the expiration date of such Blackout Period.

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     (b) Any Holder may, by written notice to the Company, request that the Company take any commercially reasonable steps necessary to assist and cooperate with such Holder to facilitate a Holder Shelf Offering, including by amending the Shelf Registration Statement and/or supplementing the Prospectus, subject to the provisions of this Agreement. Such written notice shall specify the number of shares of Registrable Securities proposed to be sold and shall also specify the intended method of disposition thereof.

     (c) At any time and from time to time after the Shelf Registration Statement becomes effective, any Holder may request in writing that the Company file a supplement to the Prospectus, or to the extent that it may be required, a post-effective amendment to the Shelf Registration Statement, in order to update such Holder’s Selling Holder Information (which written request shall be addressed to the Company, shall state that the request is for a supplement or post-effective amendment pursuant to this Section 3.2(c) and shall specify the Holder’s updated Selling Holder Information). The Company shall file a supplement or post-effective amendment covering such requesting Holder’s or Holders’ Registrable Securities requested to be registered as promptly as practicable after receipt of such request.

     (d) No Person, other than the Holders as contemplated by this Agreement and Monsanto Company as contemplated by the Shelf Registration Statement and the Amended Plan, shall be entitled to be named as a selling securityholder in the Shelf Registration Statement or include any securities to be sold using the Shelf Registration Statement or the Prospectus.

ARTICLE IV.

UNDERWRITTEN OFFERINGS

          SECTION 4.1 Right to Underwritten Offerings. Following the Effective Date of the Shelf Registration Statement, any Holder or Holders (collectively, the “Demanding Holders”) shall have the right to request by delivery of a written notice to the Company (a “Shelf Underwritten Demand Notice”), that the Company effect an Underwritten Offering of all or a portion of the Registrable Securities included in the Shelf Registration Statement. Any such Shelf Underwritten Demand Notice must request an underwritten offering of Registrable Securities having an aggregate market value, based on the average per share closing price of the Registrable Securities as reported on the principal exchange or market on which the Common Stock is then traded over the 10 consecutive trading days prior to the date of the Shelf Underwritten Demand Notice, of not less than $25,000,000. Any prospectus supplement or other filing with the SEC including a plan or method of distribution of the securities subject to an Underwritten Offering pursuant to this Section 4.1 shall reflect the plan or method of distribution of such securities as shall be designated by the managing underwriter of the offering. The Company shall notify each other Holder of such request (by delivering a copy of such request to each such Holder) for registration and each other Holder may, by written notice to the Company given no later than 10 Business Days after the Company’s notice is given to such Holder (which notice shall specify (i) the then-current name and address of the Holder, (ii) the aggregate number of shares of Registrable Securities requested to be registered in such registration by such Holder or group of Holders, and (iii) the total number of shares of New Common Stock then held by such Holder), request

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that all or a part of such Holder’s Registrable Securities be included in such registration. The Company shall file with the SEC such amendments to the Shelf Registration Statement and such Prospectus supplements or other filings that are necessary in connection with the Underwritten Offering of the Registrable Securities subject to the Shelf Underwritten Demand Notice as promptly as practicable (and, in any event, by the applicable Filing Date) after receipt of such request, subject to Article VI.

          SECTION 4.2 Underwritten Offering Procedures.

     (a) No securities to be sold for the account of any Person (including the Company) other than a Holder shall be included in an Underwritten Offering pursuant to Section 4.1 if the managing underwriter of the Underwritten Offering relating thereto advises the Demanding Holders that the total amount of Registrable Securities requested to be registered, together with such other securities that the Company and any Other Stockholders propose to include in such offering is such as to adversely affect the successful marketing (including the pricing) of the securities included in such offering, in which case the Company shall include in such registration all Registrable Securities requested to be included therein, up to the full amount that, in the view of such managing underwriter can be sold without adversely affecting the success of such offering, before including any securities of any Person (including the Company) other than the Demanding Holders and the other Holders. If the number of shares to be included in any such offering is less than the aggregate number of Registrable Securities requested by Demanding Holders and the other Holders to be included therein, then the Registrable Securities to be included in such offering shall be allocated pro rata among such Demanding Holders and the other Holders on the basis of the number of Registrable Securities requested by Demanding Holders and the other Holders to be included therein.

     (b) Holders of a majority of Registrable Securities to be included in any Underwritten Offering shall in their reasonable discretion and with the consent of the Company (which consent shall not be unreasonably withheld) select an investment banking firm of national standing to be the managing underwriter for any Underwritten Offering.

     (c) If so requested (pursuant to a timely written notice) by the managing underwriter for the Underwritten Offering relating thereto, the Company shall not effect any underwritten public sale or distribution of any securities for its own account or the account of any Person not a party hereto that are the same as, or similar to, the Registrable Securities, or any securities convertible into, or exchangeable or exercisable for, any securities of the Company that are the same as, or similar to, the Registrable Securities, during the 15-day period prior to, and during the 90-day period after, the date a Registration Statement or amendments thereof for such Underwritten Offering becomes effective (or if later, the date of pricing of the Underwritten Offering), as specified by the managing underwriter.

     (d) If and to the extent requested by the managing underwriter for any Underwritten Offering, each Holder who “beneficially owns” (as such term is defined under and determined pursuant to Rule 13d-3 under the Exchange Act) 5% or more of the outstanding shares of New Common Stock that is a party to this Agreement shall agree with

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such managing underwriter (such agreement, a “Lock-Up”), for a period (the “Lock-Up Period”) beginning on a date not earlier than 5 Business Days prior to the date of pricing of such Underwritten Offering and ending not later than 90 days after the date of such pricing, to the effect that such Holder shall not directly or indirectly (i) offer, pledge, sell, contract to sell, grant any options for the sale of, seek the redemption of or otherwise transfer or dispose of (including pursuant to a registration statement) any shares of New Common Stock (or securities exchangeable or exercisable for any shares of New Common Stock) held by such Holder, (ii) enter into a transaction which would have the same effect, or enter into any swap, hedge or other arrangement that transfers, in whole or in part, any of the economic consequences of ownership of the shares of New Common Stock held by such Holder, whether any such aforementioned transaction is to be settled by delivery of shares of New Common Stock or such other securities, in cash or otherwise, or (iii) publicly disclose the intention to make any such offer, sale, pledge, transfer or disposition, or to enter into any such transaction, swap, hedge or other arrangement, so long as the directors and executive officers of the Company agree to such limits, except for any Holder that, not later than 5 days following receipt of written notice from the Company that the Company will be filing a Registration Statement within 15 days of such notice with respect to an Underwritten Offering, shall have irrevocably agreed by delivery of written notice to the Company to terminate all of its rights under this Agreement, including under any outstanding Shelf Registration Statement; provided, that neither this Section 4.2(d) nor any Lock-Up shall prohibit a Holder from exercising rights or complying with agreements entered into by such Holder prior to the commencement of such Lock-Up Period or prevent such Holder from selling pursuant to such Underwritten Offering; and provided further, that with respect to any Holder that is a broker-dealer or an affiliate of a broker-dealer, the provisions of any Lock-Up shall not apply to any transactions effected for or on behalf of any bona fide customer or client of such Holder (other than a customer or client who is a beneficial owner of the Registrable Securities held by such Holder).

     (e) Notwithstanding anything to the contrary herein, the Company shall have no obligation to effect more than three (3) Underwritten Offerings in any 12-month period; provided, that, if such Underwritten Offering is terminated by any stop order, injunction, or other order of the SEC or if the conditions to closing specified in any underwriting agreement or any other agreement entered into in connection with such Underwritten Offering are not satisfied, other than by reason of some act or omission by a Selling Holder, such Underwritten Offering will be deemed not to have been in effect and will not count as an Underwritten Offering for purposes of the limitations in this Section 4.2(e).

ARTICLE V.

PIGGYBACK REGISTRATION

          SECTION 5.1 Right to Piggyback. If (i) the Shelf Registration Statement ceases to be effective at any time during the Required Period, (ii) there are Registrable Securities outstanding and (iii) the Company at any time proposes to file a registration statement under the Securities Act with respect to an offering (a “Piggyback Registration”) of any New Common Stock

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(other than a registration statement (a) on Form S-8 or any successor form thereto, (b) on Form S-4 or any successor form thereto or (c) relating solely to a transaction under Rule 145 under the Securities Act), whether or not for its own account, on a form that would permit registration of Registrable Securities for sale to the public under the Securities Act, then the Company shall give prompt written notice (the “Piggyback Notice”) of such proposed filing to the Holders at least 10 Business Days before the anticipated filing date. The Piggyback Notice shall include the number of shares of New Common Stock proposed to be registered, the proposed date of filing of such registration statement, any proposed means of distribution, any proposed managing underwriter and a good faith estimate by the Company of the proposed maximum offering price as such price is proposed to appear on the facing page of such registration statement. The Company shall, subject to Section 5.2, use its reasonable best efforts in order to provide the Holders with the opportunity to request to register such amount of Registrable Securities as each Holder may specify on the same terms and conditions as the registration of the Company’s or Other Stockholders’ securities, as the case may be (a “Piggyback Registration”). The Company shall use its reasonable best efforts to include in such Piggyback Registration all Registrable Securities for which the Company has received written requests for inclusion within 5 Business Days after delivery of the Piggyback Notice, subject to Section 5.2 and Section 7.2. The Company’s obligations under this Section 5.1 are subject to the provisions of Article VI.

          SECTION 5.2 Priority on Piggyback Registrations. If the Piggyback Registration is an Underwritten Offering, the Company shall use its reasonable best efforts to cause the managing underwriter of that proposed offering to permit the Holders that have requested Registrable Securities to be included in the Piggyback Registration to include all such Registrable Securities on the same terms and conditions as the registration of the Company’s securities. Notwithstanding the foregoing, if the managing underwriter of such Underwritten Offering advises the Company and the Selling Holders in writing that, in its view, the total amount of shares of New Common Stock that the Company, such Holders and any Other Stockholders propose to include in such offering is such as to adversely affect the successful marketing (including the pricing) of the securities included in such Underwritten Offering, then:

     (i) if such Piggyback Registration is a primary registration by the Company for its own account, the Company shall include in such Piggyback Registration: (A) first, up to the full amount of (1) Registrable Securities requested to be included in such Piggyback Registration by the Holders pursuant to Section 5.1 hereof and (2) Registrable Securities to be included in such registration by Holders (as the capitalized terms used in this clause (2) are defined in the Monsanto Registration Rights Agreement), allocated among such Holders (as defined herein and in the Monsanto Registration Rights Agreement) on a pro rata basis based on the amount of securities requested to be included in such Piggyback Registration or registration, as the case may be; (B) second, up to the full amount of securities to be offered by the Company, and (C) third, up to the full amount of securities requested to be included in such Piggyback Registration by any Other Stockholders in accordance with the priorities, if any, then existing among the Company and the Other Stockholders so that the total amount of securities to be included in such Underwritten Offering is the full amount that, in the view of such managing underwriter, can be sold without adversely affecting the successful marketing (including pricing) of the securities included in such Underwritten Offering; and

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     (ii) if such Piggyback Registration is an underwritten secondary registration for the account of holders of securities of the Company, the Company shall include in such registration: (A) first, up to the full amount of (1) Registrable Securities requested to be included in such Piggyback Registration by the Holders pursuant to Section 5.1 hereof and (2) Registrable Securities to be included in such registration by Holders (as the capitalized terms used in this clause (2) are defined in the Monsanto Registration Rights Agreement), allocated among such Holders (as defined herein and in the Monsanto Registration Rights Agreement) on a pro rata basis based on the amount of securities requested to be included in such Piggyback Registration or registration, as the case may be; (B) second, up to the full amount of securities of the Persons exercising “demand” registration rights requested to be included therein; (C) third, up to the full amount of securities proposed to be included in the registration by the Company; and (D) fourth, up to the full amount of securities requested to be included in such Piggyback Registration by the Other Stockholders in accordance with the priorities, if any, then existing among the Company and the Other Stockholders so that the total amount of securities to be included in such Underwritten Offering is the full amount that, in the view of such managing underwriter, can be sold without adversely affecting the success of such Underwritten Offering.

          SECTION 5.3 Withdrawal of Piggyback Registration.

     (a) If at any time after giving the Piggyback Notice and prior to the effective date of the Registration Statement filed in connection with the Piggyback Registration, the Company determines for any reason not to register or to delay the Piggyback Registration, the Company may, at its election, give notice of its determination to all Holders, and in the case of a determination not to register, shall be relieved of its obligation to register any Registrable Securities in connection with the abandoned Piggyback Registration, without prejudice.

     (b) Any Holder of Registrable Securities requesting to be included in a Piggyback Registration may withdraw its request for inclusion by giving written notice to the Company of its intention to withdraw from that registration, provided, however, that (i) the Holder’s request be made in writing and (ii) the withdrawal shall be irrevocable and, after making the withdrawal, a Holder shall no longer have any right to include its Registrable Securities in that Piggyback Registration.

     (c) An election by the Company to withdraw a Piggyback Registration under this Section 5.3 shall not be deemed to be a breach of the Company’s obligations with respect to such Piggyback Registration.

ARTICLE VI.

BLACKOUT PERIOD

          SECTION 6.1 Shelf Registration and Piggyback Registration Blackout. Notwithstanding any other provision of this Agreement to the contrary, if the President and Chief

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Executive Officer of the Company determine in good faith, as evidenced by a signed certificate attesting to same, that the registration and distribution of Registrable Securities (a) would materially impede, delay or interfere with, or require premature disclosure of, any material financing, offering, acquisition, corporate reorganization or other significant transaction, or any negotiations, discussions or pending proposals with respect thereto, involving the Company or any of its Subsidiaries or (b) would require disclosure of non-public material information, the disclosure of which would materially and adversely affect the Company, the Company shall (i) be entitled to postpone the preparation, filing or effectiveness or suspend the effectiveness of a Registration Statement and/or the use of any resale Prospectus for a reasonable period of time not to exceed 60 days and (ii) promptly give the Holders notice of such postponement or suspension (which notice need not specify the nature of the event giving rise to such suspension).

          SECTION 6.2 Blackout Period Limits. Notwithstanding anything contained in this Article VI to the contrary, the Company (i) shall not be entitled to more than four Blackout Periods during any consecutive 12-month period, and in no event shall the number of days included in all Blackout Periods during any consecutive 12-month period exceed an aggregate of 60 days and (ii) in no event shall the Company be entitled to postpone the preparation, filing or effectiveness or suspend the effectiveness of a Registration Statement and/or the use of any resale Prospectus included in a Registration Statement pursuant to this Article VI unless it postpones or suspends during the Blackout Period the effectiveness of any registration statements required pursuant to the registration rights of the Other Stockholders. In the event of the occurrence of any Blackout Period, during the Required Period, the Required Period shall be extended by the number of days during which such Blackout Period is in effect.

ARTICLE VII.

PROCEDURES AND EXPENSES

          SECTION 7.1 Registration Procedures. In connection with the Company’s registration obligations pursuant to Articles III, IV and V, the Company shall use its reasonable best efforts to effect such registrations to permit the sale of Registrable Securities by a Selling Holder in accordance with the intended method or methods of disposition thereof, and pursuant thereto the Company shall as promptly as reasonably practicable (to the extent such obligation has not already been fulfilled):

     (a) prepare and file with the SEC a Registration Statement on an appropriate form under the Securities Act available for the sale of the Registrable Securities by the Selling Holders in accordance with the intended method or methods of distribution thereof; provided, however, that the Company shall before filing, furnish to one firm of counsel for the Selling Holders (selected by the Holders of a majority of the Registrable Securities in accordance with Section 7.4) and the managing underwriter, if any, within a reasonable period of time prior to the filing thereof with the SEC to afford to such counsel, the Selling Holders, the managing underwriter and its counsel a reasonable opportunity for review, copies of the Registration Statement or Prospectus proposed to be filed, and reflect in each such document, when so filed with the SEC, such written comments as such counsel to the Selling Holders and the managing underwriter may reasonably propose;

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     (b) furnish, at its expense, to the Selling Holders such number of conformed copies of the Registration Statement and each amendment thereto, of the Prospectus and each supplement thereto, and of such other documents as the Selling Holders reasonably may request in writing from time to time;

     (c) subject to Article VI, prepare and file with the SEC any amendments and post-effective amendments to the Registration Statement as may be necessary and any supplements to the Prospectus as may be required or appropriate, in the view of the Company and its counsel, by the rules, regulations or instructions applicable to the registration form used by the Company or by the Securities Act to keep the Registration Statement effective until the earlier of (i) such time as all shares of New Common Stock covered by the Registration Statement cease to be Registrable Securities and (ii) the termination of the Required Period (giving effect to any extensions thereof pursuant to Section 6.2 or Section 7.3);

     (d) promptly following its actual knowledge thereof (but in any event within one Business Day), notify the Selling Holders and the managing underwriter, if any, in writing:

     (i) when a Registration Statement, Prospectus, Issuer Free Writing Prospectus or any supplement or amendment has been filed and, with respect to a Registration Statement (including but not limited to the Shelf Registration Statement) or any post-effective amendment, when the same has become effective;

     (ii) of any comments or inquiries by the SEC or any request by the SEC or any other governmental authority for amendments or supplements to a Registration Statement, Prospectus or Issuer Free Writing Prospectus or for additional information (and to furnish the Selling Holders with copies of any correspondence related thereto);

     (iii) of the issuance by the SEC or any other governmental authority of any stop order or order preventing or suspending the effectiveness of a Registration Statement or the use of any Prospectus or the initiation or threatening of any proceedings for that purpose;

     (iv) of the receipt by the Company of any written notification with respect to the suspension of the qualification or exemption from qualification of the Registrable Securities for sale in any jurisdiction or the initiation or threatening of any proceeding for such purpose;

     (v) of the occurrence of any event during the period a Registration Statement is effective which makes any statement made in the Registration Statement or the Prospectus or any Issuer Free Writing Prospectus untrue in any material respect or which requires the making of any changes in such Registration Statement, Prospectus or Issuer Free Writing Prospectus so that such Registration Statement, Prospectus or Issuer Free Writing Prospectus shall not contain any untrue statement of a material fact or omit to state any material fact required to be

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stated therein or necessary in order to make the statements therein, in light of the circumstances under which they were made, not misleading (provided, however, that no notice by the Company shall be required pursuant to this Section 7.1(d)(v) in the event that the Company either promptly files a Prospectus supplement to update the Prospectus or an appropriate Exchange Act report that is incorporated by reference into the Registration Statement, which, in either case, contains the requisite information that results in such Registration Statement no longer containing any untrue statement of a material fact or omitting to state a material fact necessary to make the statements therein or in light of the circumstances under which they were made, not misleading);

     (vi) of the Company’s reasonable determination that a post-effective amendment to a Registration Statement would be required by applicable law (in which case the Company shall file the same as soon as practicable after such determination and use its reasonable best efforts to cause the same to become effective as soon as practicable following filing);

     (e) use its reasonable best efforts to prevent the issuance of or obtain the withdrawal of any order suspending the effectiveness of a Registration Statement, or the lifting of any suspension of the qualification or exemption from qualification of any of the Registrable Securities for sale in any jurisdiction, at the earliest practicable date or, if any such order or suspension is made effective during any Blackout Period, at the earliest practicable date after the Blackout Period;

     (f) prior to any public offering of Registrable Securities, use reasonable best efforts to register or qualify, or cooperate with the Holders holding a majority of the Registrable Securities, or counsel retained by the Selling Holders’ in accordance with Section 7.4, the managing underwriter, if any, and its counsel in connection with the registration or qualification (or exemption from such registration or qualification) of such Registrable Securities for offer and sale under the securities or blue sky laws of such jurisdictions within the United States as such counsel for the Selling Holders covered by a shelf Registration Statement or the managing underwriter of an Underwritten Offering of Registrable Securities reasonably requests in writing and do such other acts and things as may be reasonably necessary to maintain each such registration or qualification (or exemption therefrom) effective during the Required Period for such Registration Statement; provided, however, that the Company shall not be required to qualify generally to do business or as a dealer in securities in any jurisdiction in which it is not then so qualified or take any action which would subject it to general service of process or taxation in any jurisdiction in which it is not then so subject;

     (g) subject to Article VI, as promptly as reasonably practicable after the occurrence of any event contemplated by Sections 7.1(d)(v) or 7.1(d)(vi) hereof, use its reasonable best efforts to prepare (and furnish at its expense, subject to any notice by the Company in accordance with Section 7.1(d), to the Selling Holders a reasonable number of copies of) a supplement or post-effective amendment to the applicable Registration Statement or a supplement to the related Prospectus (including by means of an Issuer Free Writing Prospectus), or file any other required document so that, as thereafter deliv-

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ered to the purchasers of the Registrable Securities being sold thereunder, such Prospectus or Issuer Free Writing Prospectus shall not contain an untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary to make the statements therein, in light of the circumstances under which they were made, not misleading;

     (h) enter into such agreements (including an underwriting agreement containing representations and warranties and indemnity and contribution provisions of the type made in customary underwriting agreements for an underwritten public offering), in usual and customary form, and take such other actions as may be reasonably requested by the Selling Holders or the managing underwriter, if any, to expedite the offer for sale or disposition of the Registrable Securities, and in connection therewith, upon such request and upon the date of closing of any sale of Registrable Securities in such Underwritten Registration:

     (i) use its reasonable best efforts to obtain opinions of counsel to the Company (such counsel being reasonably satisfactory to the managing underwriter, if any) and updates thereof covering matters customarily covered in opinions of counsel in connection with Underwritten Offerings, addressed to each Selling Holder and the managing underwriter, in each case which opinion and updates thereof shall each state that it is being delivered at the request of the Company and solely in order to assist the Selling Holders and the managing underwriter in establishing a “due diligence” defense;

     (ii) use its reasonable best efforts to obtain customary “comfort” letters from the independent registered public accountants of the Company (to the extent deliverable in accordance with their professional standards) addressed to the Selling Holder (to the extent consistent with Statement on Auditing Standards No. 100 of the American Institute of Certified Public Accountants) and the managing underwriter, if any, in customary form and covering matters of the type customarily covered in “comfort” letters in connection with Underwritten Offerings; and

     (iii) provide officers’ certificates and other customary closing documents customarily delivered in connection with Underwritten Offerings and any reasonably requested by the managing underwriter, if any;

provided that the Company shall only be required to comply with this clause (h) in connection with an Underwritten Offering and on the initial Effective Date of any Registration Statement.

     (i) upon reasonable notice and at reasonable times during normal business hours, make reasonably available for inspection by a representative of each Selling Holder, one firm of counsel for the Selling Holders retained in accordance with Section 7.4, the managing underwriter, if any, participating in any disposition of Registrable Securities and its counsel and any single accountant retained by the Selling Holders or any such underwriter, all financial and other records, pertinent corporate documents and properties of the Company, and cause the appropriate officers, directors and employees of the

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Company to make reasonably available for such inspection all such relevant information reasonably requested in writing by them in connection with the Registration Statement as is customary for “due diligence” investigations of the type, nature and extent appropriate for an offering of the type contemplated; provided that such Persons shall first agree in writing with the Company that any information that is reasonably designated by the Company as confidential at the time of delivery shall be kept confidential by such Persons and shall be used solely for the purposes of exercising rights under this Agreement and such Person shall not engage in trading any securities of the Company until such material non-public information becomes publicly available, except nothing in such writing shall restrict (i) disclosure of such information if it is required by court or administrative order or is necessary to respond to inquiries of regulatory authorities, (ii) disclosure of such information if it is required by law (including any disclosure requirements pursuant to federal or state securities laws in connection with any disposition of Registrable Securities), (iii) sharing information with other underwriters, agents or dealers participating in the disposition of any Registrable Securities, subject to the execution by such other underwriters, agents or dealers of reasonable non-disclosure agreements with the Company and (iv) using any such documents or other information in investigating or defending itself against claims made or threatened by purchasers, regulatory authorities or others in connection with the disposition of any Registrable Securities.

     (j) use its reasonable best efforts to comply with all applicable rules and regulations of the SEC relating to such registration and make generally available to its securityholders earning statements satisfying the provisions of Section 11(a) of the Securities Act, provided that the Company shall be deemed to have complied with this Section 7.1(j) if it has satisfied the provisions of Rule 158 under the Securities Act (or any similar rule promulgated under the Securities Act);

     (k) use its reasonable best efforts to cause all Registrable Securities covered by the applicable Registration Statement if the New Common Stock is then listed on the NYSE or quoted on the NASDAQ to continue to be so listed or quoted for a reasonable period of time after the offering;

     (l) use its reasonable best efforts to procure the cooperation of the Company’s transfer agent in settling any offering or sale of Registrable Securities;

     (m) use its reasonable best efforts to provide such information as may be reasonably required for any filings required to be made by the Selling Holders or managing underwriter, if any, with the National Association of Securities Dealers, Inc. (the “NASD”) in connection with the offering under any Registration Statement of the Registrable Securities (including, without limitation, such as may be required by NASD Rule 2710 or 2720), and, upon the written request of the Holders of a majority of the Registrable Securities, shall use its reasonable best efforts to cooperate in connection with any filings required to be made with the NASD in that regard on or prior to the filing of any Registration Statement; and

     (n) use its reasonable best efforts to assist Holders in the marketing of such Registrable Securities (including without limitation, having officers of the Company at-

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tend “road shows” for Underwritten Offerings and analyst or investor presentations and rating agency presentations and such other selling or informational activities requested by the Holders of a majority of the Registrable Securities or the managing underwriter for such Offerings upon reasonable prior notice and subject to reasonable scheduling flexibility; provided, however, that officers of the Company will not be required to attend more than one series of road shows in any 120 day period; provided, further, that to the extent that any Underwritten Offering is suspended or postponed for any reason not caused by the Holders and then subsequently re-instated, any previous attendance by officers of road shows relating to such Underwritten Offering shall not excuse the officers of the Company from attending subsequent road shows relating to such Underwritten Offering for purposes of this Section 7.1(n), regardless if such subsequent road shows are within 120 days of the previous road shows.

          SECTION 7.2 Information from Holders; Holders’ Obligations.

     (a) It shall be a condition precedent to the obligations of the Company to include the Registrable Securities of any Selling Holder in any Registration Statement or Prospectus, as the case may be, that such Selling Holder shall take the actions described in this Section 7.2.

     (b) Each Selling Holder that has requested inclusion of its Registrable Securities in any Registration Statement shall furnish to the Company (as a condition precedent to such Holder’s participation in such registration) a completed Questionnaire. Each Holder agrees promptly to furnish to the Company in writing all information required to be disclosed in order to make the information previously furnished to the Company by such Holder, in light of the circumstances under which it was made, not misleading, any other information regarding such Holder and the distribution of such Registrable Securities as may be required to be disclosed in the Prospectus or Registration Statement under applicable law or pursuant to SEC comments and any information otherwise reasonably required by the Company to comply with applicable law or regulations.

     (c) Each Selling Holder shall promptly (i) following its actual knowledge thereof, notify the Company of the occurrence of any event that makes any statement made in a Registration Statement, Prospectus, Issuer Free Writing Prospectus or other Free Writing Prospectus regarding such Selling Holder untrue in any material respect and that requires the making of any changes in a Registration Statement, Prospectus or Free Writing Prospectus so that, in such regard, it shall not contain any untrue statement of a material fact or omit any material fact required to be stated therein or necessary to make the statements regarding such Selling Holder, in light of the circumstances under which they were made, not misleading and (ii) provide the Company with such information as may be required to enable the Company to prepare a supplement or post-effective amendment to any such Registration Statement or a supplement to such Prospectus or Free Writing Prospectus.

     (d) With respect to any Registration Statement for an Underwritten Offering, the inclusion of a Holder’s Registrable Securities therein shall be conditioned, at the managing underwriter’s request, upon the execution and delivery by such Holder of an

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underwriting agreement; provided that the underwriting agreement is in customary form and reasonably acceptable to Company and the Holders of a majority of the Registrable Securities to be included in the Underwritten Offering.

     (e) Each Selling Holder shall use reasonable best efforts to cooperate with the Company in preparing the applicable registration.

     (f) Each Selling Holder agrees that no Holder of Registrable Securities shall be entitled to sell any of such Registrable Securities pursuant to a Registration Statement or to receive a Prospectus relating thereto unless such Holder has furnished the Company with the Questionnaire and Selling Holder Information relating to such Holder.

     (g) Certain legal consequences arise from being named as a selling securityholder in a registration statement and related prospectus. Accordingly, each Selling Holder acknowledges that it has been advised to consult its own independent securities law counsel regarding the consequences of demanding or requesting registration of Registrable Securities hereunder or being named or not being named as a selling securityholder in the Registration Statement and related Prospectus.

     (h) Each Selling Holder shall keep confidential that the Company has exercised its rights under Article VI and shall keep confidential any other information provided by the Company in connection with this Agreement that such Selling Holder reasonably believes is confidential or that is reasonably designated by the Company as confidential at the time of delivery, except nothing shall restrict (i) disclosure of such information if it is required by court or administrative order or is necessary to respond to inquiries of regulatory authorities, (ii) disclosure of such information if it is required by law (including any disclosure requirements pursuant to federal or state securities laws in connection with any disposition of Registrable Securities), (iii) sharing information with underwriters, agents or dealers participating in the disposition of any Registrable Securities, subject to the execution by such other underwriters, agents or dealers of reasonable non-disclosure agreements with the Company, (iv) using any such documents or other information in investigating or defending itself against claims made or threatened by purchasers, regulatory authorities or others in connection with the disposition of any Registrable Securities.

          SECTION 7.3 Suspension of Disposition.

     (a) Each Selling Holder agrees by acquisition of a Registrable Security that, upon receipt of any written notice from the Company of the occurrence of any event of the type described in Sections 7.1(d)(ii), 7.1(d)(iii), 7.1(d)(iv), 7.1(d)(v) or 7.1(d)(vi), such Holder shall discontinue disposition of Registrable Securities covered by a Registration Statement, Prospectus or Free Writing Prospectus and suspend use of such Prospectus or Free Writing Prospectus until such Holder’s receipt of the copies of the supplemented or amended Prospectus contemplated by Section 7.1(g) or until it is advised by the Company in writing that the use of the applicable Prospectus or Free Writing Prospectus may be resumed and have received copies of any additional or supplemental filings that are incorporated or deemed to be incorporated by reference in such Prospectus

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or Free Writing Prospectus. In the event the Company shall give any such notice, the Required Period shall be extended by the number of days during the time period from and including the date of the giving of such notice to and including the date when each Selling Holder of Registrable Securities covered by such Registration Statement has received (i) the copies of the supplemented or amended Prospectus or Issuer Free Writing Prospectus contemplated by Section 7.1(g) or (ii) the advice referenced in this Section 7.3(a).

     (b) Each Selling Holder shall be deemed to have agreed that, upon receipt of any notice from the Company contemplated by Section 6.1, such Selling Holder shall discontinue disposition of Registrable Securities covered by a Registration Statement, Prospectus or Free Writing Prospectus and suspend use of such Prospectus or Free Writing Prospectus until the earlier to occur of the Holder’s receipt of (i) copies of a supplemented or amended Prospectus or Issuer Free Writing Prospectus and (ii)(A) written notice from the Company that the use of the applicable Prospectus or Issuer Free Writing Prospectus may be resumed and (B) copies of any additional or supplemental filings that are incorporated or deemed to be incorporated by reference in such Prospectus or Issuer Free Writing Prospectus; provided, however, that in no event shall the number of days during which the offer and sale of Registrable Securities is discontinued pursuant to this Section 7.3(b) during any consecutive 12-month period, together with any other Blackout Periods in such consecutive 12-month period, exceed an aggregate of sixty (60) days. In the event the Company gives any such notice contemplated by Section 6.1, the period of time for which a Registration Statement must remain effective pursuant to this Agreement shall be extended by the number of days during the time period from and including the date of giving of such notice to and including the date when each Selling Holder of Registrable Securities covered by such Registration Statement receives (i) the supplemented or amended Prospectus or Issuer Free Writing Prospectus or (ii) written notice from the Company that use of the applicable Prospectus or Issuer Free Writing Prospectus may resume.

     (c) If so requested by the Company, each Holder shall deliver to the Company all copies in such Holder’s possession, other than permanent file copies then in such Holder’s possession or as may be required to be retained in accordance with applicable law, of the Prospectus covering such Registrable Securities that was current at the time of receipt of notice from the Company of any suspension contemplated by this Section 7.3.

          SECTION 7.4 Registration Expenses.

     (a) Without limiting any of the obligations in the Commitment Agreement or Article VIII hereof, all fees and expenses incurred by the Company in complying with Articles III, IV and V and Section 7.1 (“Registration Expenses”) shall be borne by the Company. These fees and expenses shall include without limitation (i) all registration, filing and qualification fees, including fees made with the NASD, (ii) printing, duplicating and delivery expenses, (iii) fees and disbursements of counsel for the Company, (iv) fees and expenses of complying with state securities or “blue sky” laws (including the reasonable, documented fees and expenses of the counsel specified in Section 7.4(b) in connection therewith), (v) fees and disbursements of all independent registered public accountants referred to in Section 7.1(h)(ii) (including the expenses of any special audit and

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“comfort” letters required by or incident to such performance) and (vi) fees and expenses in connection with listing the Registrable Securities on the NYSE or quoting the Registrable Securities on the NASDAQ or any other exchange or automated trading system in accordance with the other terms of this Agreement.

     (b) The Company shall also reimburse or pay, as the case may be, the reasonable fees and reasonable out-of-pocket expenses of one law firm (which shall be a nationally recognized law firm experienced in securities law matters) retained by the Holders within 30 days of presentation of an invoice by such Holders (which law firm shall be selected (i) by Highland Crusader Holding Corporation (“Crusader”), if Crusader holds any of the Registrable Securities included in any applicable registration and (ii) by the Holders holding at least a majority of the Registrable Securities included in the applicable registration, if Crusader does not hold any of the Registrable Securities included in any applicable registration). Notwithstanding the foregoing, the Company agrees that until the Effective Date of the Shelf Registration Statement, all Transaction Expenses (as defined in the Commitment Agreement), including any expenses incurred by any Holder or its advisors with respect to the Shelf Registration Statement, shall be paid by the Company in accordance with Section 2(d) of the Commitment Agreement.

     (c) Notwithstanding anything contained herein to the contrary, all underwriting fees, discounts, selling commissions and stock transfer taxes applicable to the sale of Registrable Securities shall be borne by the Holder owning such Registrable Securities.

ARTICLE VIII.

INDEMNIFICATION

          SECTION 8.1 Indemnification by the Company. The Company agrees to indemnify and hold harmless each Holder of Registrable Securities that are included in a Registration Statement pursuant to this Agreement, such Holder’s Affiliates, and their respective officers, directors, employees, partners and agents, and each Person, if any, who controls any such Holder within the meaning of either Section 15 of the Securities Act or Section 20 of the Exchange Act and any underwriter (as defined in the Securities Act), selling agent or other securities professional for such Holder that facilities the disposition of Registrable Securities for such Holder, and any Person who controls such underwriter, selling agent or other securities professional within the meaning of either Section 15 of the Securities Act or Section 20 of the Exchange Act (each, a “Holder Indemnified Person”), from and against, and agrees to reimburse each Holder Indemnified Person with respect to, any and all losses, claims, damages, liabilities and expenses (including without limitation, subject to Section 8.3, the reasonable legal fees and other reasonable out-of-pocket expenses incurred in investigating, responding to or defending against any claim, challenge, litigation, investigation or proceeding, including without limitation, all costs of appearing as a witness in any claim, challenge, litigation, investigation or proceeding) (collectively, “Damages”) based upon, arising out of or resulting from, (i) any untrue statement or alleged untrue statement of a material fact contained in any Registration Statement, Prospectus, Preliminary Prospectus or Issuer Free Writing Prospectus, relating to the Registrable Securities, or any amendment thereof or supplement thereto, or any omission or alleged omission to state therein a material fact required to be stated therein or necessary, in light of the circumstances un-

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der which they were made, to make the statements therein not misleading or (ii) any violation or alleged violation by the Company of the Securities Act, the Exchange Act, any federal or state securities law or any rule or regulation promulgated under the Securities, the Exchange Act or any federal or state securities law in connection with any Registration Statement, Prospectus, Preliminary Prospectus or Issuer Free Writing Prospectus, relating to the Registrable Securities, or any amendment thereof or supplement thereto; provided, however, that the Company shall not be liable in any such case to the extent that any such Damages arise out of or are based upon an untrue statement or omission or alleged untrue statement or alleged omission made in such Registration Statement, Prospectus, Preliminary Prospectus or Free Writing Prospectus, or any amendment thereof or supplement thereto, in strict conformity with information relating to any Holder furnished to the Company in writing by such Holder or Holder Indemnified Person expressly for use therein.

          SECTION 8.2 Indemnification by Holders. Each Holder agrees, severally and not jointly, to indemnify and hold harmless, the Company, the Company’s Affiliates, and their respective officers, directors, employees, partners and agents, and each Person, if any, who controls the Company within the meaning of Section 15 of the Securities Act or Section 20 of the Exchange Act (each, a “Company Indemnified Person”), from and against, and to reimburse each Company Indemnified Person with respect to, any and all Damages, based upon, arising out of or resulting from, (i) any untrue statement or alleged untrue statement of a material fact contained in any Registration Statement, Prospectus, Preliminary Prospectus or Issuer Free Writing Prospectus, relating to the offer and sale of Registrable Securities, or any amendment thereof or supplement thereto, or any omission or alleged omission to state therein a material fact required to be stated therein or necessary, in light of the circumstances under which they were made, to make the statements therein not misleading, in each case to the extent, but only to the extent, that any such untrue statement or omission or alleged untrue statement or alleged omission was made in such Registration Statement, Prospectus, Preliminary Prospectus or Free Writing Prospectus, or any amendment thereof or supplement thereto, in strict conformity with information relating to any Holder furnished to the Company in writing by such Holder or Holder Indemnified Person expressly for use therein and (ii) any violation or alleged violation by such Holder of the Securities Act, the Exchange Act, any federal or state securities law or any rule or regulation promulgated under the Securities, the Exchange Act or any federal or state securities law in connection with any Registration Statement, Prospectus, Preliminary Prospectus or Issuer Free Writing Prospectus, relating to the Registrable Securities, or any amendment thereof or supplement thereto; provided, however, the liability of each Holder will be in proportion to, and such liability will be limited to, the gross amount received by such Holder from the sale of Registrable Securities pursuant to such Registration Statement; provided, further, that a Holder shall not be liable in any case to the extent that prior to the filing of any such Registration Statement, Prospectus, Preliminary Prospectus or Free Writing Prospectus, or any amendment thereof or supplement thereto, such Holder has furnished in writing to the Company, information expressly for use in, and within a reasonable period of time prior to the effectiveness of, such Registration Statement, Prospectus, Preliminary Prospectus or Free Writing Prospectus, or any amendment thereof or supplement thereto which corrected or made not misleading information previously provided to the Company.

          SECTION 8.3 Conduct of Indemnification Proceedings. If any claim, challenge, litigation, investigation or proceeding (including any governmental or regulatory investigation)

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shall be brought or asserted against any Person in respect of which indemnity may be sought pursuant to either of Section 8.1 or Section 8.2, such Person (the “Indemnified Person”) shall promptly notify the Person against whom such indemnity may be sought (the “Indemnifying Person”) in writing; provided that (i) the omission to so notify the Indemnifying Person shall not relieve it from any liability that it may have hereunder except to the extent it has been materially prejudiced by such failure and (ii) the omission to so notify the Indemnifying Person shall not relieve it from any liability that it may have to an Indemnified Person otherwise than on account of this Article VIII. In case any such claim, challenge, litigation, investigation or proceeding is brought against any Indemnified Person and it notifies the Indemnifying Person of the commencement thereof, the Indemnifying Person shall be entitled to participate therein and, to the extent that it may elect by written notice delivered to such Indemnified Person, to assume the defense thereof and retain counsel reasonably satisfactory to the Indemnified Person to represent the Indemnified Person and any others the Indemnifying Person may designate in such proceeding and shall pay the reasonable fees and expenses of such counsel related to such proceeding. In any such proceeding, any Indemnified Person shall have the right to retain its own counsel, but the fees and expenses of such counsel shall be at the expense of such Indemnified Person unless (i) the Indemnifying Person and the Indemnified Person shall have mutually agreed in writing to the contrary, (ii) the Indemnifying Person shall have failed within a reasonable time to retain counsel reasonably satisfactory to the Indemnified Person as contemplated by the preceding sentence or (iii) the named parties in any such proceeding (including any impleaded parties) include both the Indemnifying Person and the Indemnified Person and representation of both parties by the same counsel would be inappropriate due to actual or potential conflicts of interests between them. It is understood that the Indemnifying Person shall not, in connection with any proceeding or related proceeding in the same jurisdiction, be liable for the fees and expenses of more than one separate firm (in addition to any local counsel) for all Indemnified Persons, and that all such fees and expenses shall be reimbursed as they are incurred. Any such separate firm for the Holders and such control Persons of the Holders shall be designated in writing by the Holders and any such separate firm for the Company, the directors and officers of the Company and such control Persons of the Company shall be designated in writing by the Company. The Indemnifying Person shall not be liable for any settlement of any pending or threatened proceeding effected without its prior written consent (which consent shall not be unreasonably withheld), but if settled with such consent or if there be a final judgment for the plaintiff, the Indemnifying Person agrees to indemnify in accordance with, and subject to the limitations of, Section 8.1 and Section 8.2 above, as the case may be, any Indemnified Person from and against any loss or liability by reason of such settlement or judgment. No Indemnifying Person shall, without the prior written consent of the Indemnified Persons (which consent shall not be unreasonably withheld), effect any settlement of any pending proceeding in respect of which any Indemnified Person is a party or of any threatened proceeding in respect of which any Indemnified Person could have been a party and indemnity could have been sought hereunder by such Indemnified Person, unless such settlement (i) includes an unconditional release of such Indemnified Person from all liability on claims that are the subject matter of such proceeding and (ii) does not include any statement as to or any admission of fault, culpability or a failure to act by or on behalf of any Indemnified Person.

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          SECTION 8.4 Contribution, etc.

     (a) If the indemnification provided for in this Article VIII is held by a court of competent jurisdiction to be unavailable to an Indemnified Person or insufficient in respect of any Damages referred to therein, then each Indemnifying Person under such paragraph, in lieu of indemnifying such Indemnified Person thereunder, shall contribute to the amount paid or payable by such Indemnified Person as a result of such Damages (i) in such proportion as is appropriate to reflect the relative benefits received by the Company on the one hand and the Holder on the other hand with respect to the sale by such Holder of Registrable Securities or (ii) if the allocation provided by clause (i) above is not permitted by applicable law, in such proportion as is appropriate to reflect not only the relative benefits referred to in clause (i) above but also the relative fault of the Company on the one hand and of such Holder on the other in connection with the statements or omissions that resulted in such Damages, as well as any other relevant equitable considerations. Benefits received by the Company shall be deemed to be equal to the total value received or proposed to be received (before deducting expenses) by the Company pursuant to the sale of New Common Stock contemplated by the Commitment Agreement. Benefits received by any Holder shall be deemed to be equal to the value to such Holder of having the offer and sale of the Registrable Securities registered under the Securities Act. The relative fault of the Company on the one hand and such Holder on the other shall be determined by reference to, among other things, whether any untrue or any alleged untrue statement of a material fact or the omission or alleged omission to state a material fact relates to information supplied by the Company or by such Holder and the parties’ relevant intent, knowledge, information and opportunity to correct or prevent such statement or omission.

     (b) The Company and the Holders agree that it would not be just and equitable if contribution pursuant to this Article VIII were determined by pro rata allocation (even if the Holders were treated as one entity for such purpose) or any other method of allocation that does not take account of the equitable considerations referred to in this Section 8.4. The amount paid or payable by an Indemnified Person as a result of Damages referred to in this Section 8.4 shall be deemed to include, subject to the limitations set forth in Sections 8.1, 8.2 and 8.3 above, any reasonable legal or other reasonable out-of-pocket expenses incurred by such Indemnified Person not otherwise reimbursed in connection with investigating or defending any such action or claim. Notwithstanding the provisions of this Article VIII, in no event shall any Holder be required to contribute any amount in excess of the amount by which the gross amount received by such Holder with respect to its sale of Registrable Securities pursuant to any Registration Statement exceeds the amount of any damages that such Holder has otherwise been required to pay by reason of such untrue or alleged untrue statement or omission or alleged omission. No Person guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of the Securities Act) shall be entitled to contribution from any Person who was not guilty of such fraudulent misrepresentation.

     (c) The remedies provided for in this Article VIII are not exclusive and shall not limit any rights or remedies which may otherwise be available to any Indemnified Person at law or in equity.

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     (d) The indemnity and contribution agreements contained in this Article VIII shall remain operative and in full force and effect regardless of (i) any termination of this Agreement, (ii) any investigation made by or on behalf of any Holder Indemnified Person or by or on behalf of any Company Indemnified Person and (iii) the sale by a Holder of Registrable Securities covered by any Registration Statement.

ARTICLE IX.

FREE WRITING PROSPECTUSES

          Except a Prospectus, an Issuer Free Writing Prospectus or other materials prepared by the Company, each Holder represents and agrees that it (i) shall not make any offer relating to the Registrable Securities that would constitute an Issuer Free Writing Prospectus or that would otherwise constitute a Free Writing Prospectus, and (ii) has not distributed and will not distribute any written materials in connection with the offer or sale of New Common Stock, in each case without the prior written consent of the Company and, in connection with any Underwritten Offering, the underwriters. The Company represents and agrees that it shall not make any offer relating to the Registrable Securities that would constitute an Issuer Free Writing Prospectus or that would otherwise constitute a Free Writing Prospectus in connection with the offer or sale of Registrable Securities without the prior written consent of the Holders of a majority of the Registrable Securities that are registered under the Registration Statement to be included in an Underwritten Offering and, in connection with any Underwritten Offering, the underwriters.

ARTICLE X.

RULE 144

          With a view to making available the benefits of certain rules and regulations of the SEC which may permit the sale of Registrable Securities to the public without registration, the Company agrees to (a) use its reasonable best efforts to file with the SEC in a timely manner all reports and other documents required of the Company under the Exchange Act; (b) upon written request of any Holder of Registrable Securities, furnish to such Holder promptly a written statement by the Company as to its compliance with the reporting requirements of Rule 144 and of the Exchange Act, and such other reports and documents as any Holder reasonably may request in availing itself of any rule or regulation of the SEC allowing such Holder to sell any Registrable Securities without registration; and (c) take such other actions as may be reasonably required by the Company’s transfer agent to consummate any distribution of Registrable Securities that may be permitted in accordance with the terms and conditions of Rule 144.

ARTICLE XI.

PRIVATE PLACEMENT

          Except for Section 4.2(d), the Company agrees that nothing in this Agreement shall prohibit the Holders, at any time and from time to time, from selling or otherwise transferring Registrable Securities pursuant to a private placement or other transaction which is not registered pursuant to the Securities Act. To the extent requested by a Holder, the Company shall

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take all reasonable steps necessary to assist and cooperate with such Holder to facilitate such sale or transfer, including providing due diligence access to potential purchasers, and entering into a private placement agreement containing customary representations and warranties, indemnifications, opinions and other typical closing conditions.

ARTICLE XII.

MISCELLANEOUS

          SECTION 12.1 Notices. All notices and other communications in connection with this Agreement shall be in writing and shall be deemed given by (and shall be deemed to have been duly given) as follows: (i) at the time delivered by hand, if delivered personally; (ii) when sent via facsimile (with confirmation); (iii) 5 Business Days after being deposited in the mail, if sent postage prepaid, by registered or certified mail (return receipt requested); or (iv) on the next Business Day, if timely delivered to an express courier guaranteeing overnight delivery (with confirmation). Notices shall be directed to the parties at the following addresses (or at such other address for a party as shall be specified by like notice):

          (a) If to the Company:

Solutia Inc.
575 Maryville Centre Drive
P.O. Box 66760
St Louis, Missouri
Attention: General Counsel
Fax: (314) 674-8703

with a copy to:

Kirkland & Ellis LLP
153 East 53rd Street
New York, New York 10022-4611
Attention: Thomas W. Christopher
                    Jonathan S. Henes
Fax: (212) 446-4900

     (b) If to any Holder to the address and facsimile number set forth on the signature pages hereto, or the signature page of any Joinder Agreement executed and delivered pursuant to Section 12.3:

with a copy to:

Haynes and Boone, LLP
901 Main St., Suite 3100
Dallas, TX 75202
Attention: Janice V. Sharry
Fax: (214) 200-0620

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          SECTION 12.2 Severability. If any provision of this Agreement shall be invalid or unenforceable, such invalidity or unenforceability shall not affect the validity and enforceability of the remaining provisions of this Agreement, unless the result thereof would be unreasonable in which case the parties hereto shall negotiate in good faith as to appropriate amendments hereto.

          SECTION 12.3 Assignment; Certain Specified Third Party Beneficiaries. This Agreement shall be binding upon, inure to the benefit of and be enforceable by each of the parties and their respective successors and assigns; provided, however, that neither this Agreement nor any of the rights, interests or obligations hereunder shall be assigned or delegated by a Holder to any third party who purchases or is otherwise a permitted transferee of such Registrable Securities from the Holder, unless (i) such transferee shall receive from the transferring Holder at least 100,000 shares of Common Stock, (ii) such transferee of the Registrable Securities that is not a party to this Agreement shall have executed and delivered to the Company a properly completed joinder agreement (“Joinder Agreement”) substantially in the form of Exhibit B, and (iii) the Holder selling the Registrable Securities shall have delivered to the Company written notice of such transfer setting forth the name of such Holder, the name and address of the transferee and the number of Registrable Securities that shall have been so transferred. Notwithstanding the foregoing sentence, this Agreement and the rights, interests and obligations hereunder may be assigned, transferred or delegated by an Holder to any Affiliate of such Holder, provided that any such transferee or assignee assumes the obligations of such Holder hereunder and agrees in writing to be bound by the terms of this Agreement in the same manner as the Holder pursuant to a properly completed Joinder Agreement. This Agreement (including the documents and instruments referred to in this Agreement) is not intended to and does not confer upon any Person any rights or remedies under this Agreement other than the parties hereto, their permitted successors and assigns and any Indemnified Person.

          SECTION 12.4 Entire Agreement. This Agreement (including the documents and instruments referred to in this Agreement) constitutes the entire agreement of the parties and supersedes all prior agreements and understandings, whether written or oral, between the parties with respect to the subject matter of this Agreement.

          SECTION 12.5 Waivers and Amendments. This Agreement may be amended, modified, superseded, cancelled, renewed or extended, and the terms and conditions of this Agreement may be waived, only by a written instrument, (A) if prior to the effective date of the Amended Plan, signed by (i) the Company, and (ii) holders of a 66 2/3% of commitments under the Commitment Agreement, (B) if after the effective date of the Amended Plan, signed by (i) the Company, and (ii) Holders of a majority of the Registrable Securities. No delay on the part of any party in exercising any right, power or privilege pursuant to this Agreement shall operate as a waiver thereof, nor shall any waiver on the part of any party of any right, power or privilege pursuant to this Agreement, nor shall any single or partial exercise of any right, power or privilege pursuant to this Agreement, preclude any other or further exercise thereof or the exercise of any other right, power or privilege pursuant to this Agreement. The rights and remedies provided pursuant to this Agreement are cumulative and are not exclusive of any rights or remedies which any party otherwise may have at law or in equity.

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          SECTION 12.6 Counterparts. This Agreement may be executed in any number of counterparts, all of which shall be considered one and the same agreement and shall become effective when counterparts have been signed by each of the parties and delivered to the other party (including via facsimile or other electronic transmission), it being understood that each party need not sign the same counterpart.

          SECTION 12.7 Governing Law; Venue. THIS AGREEMENT SHALL BE GOVERNED AND CONSTRUED IN ACCORDANCE WITH THE INTERNAL LAWS OF THE STATE OF NEW YORK WITHOUT REGARD TO CONFLICT OF LAW PRINCIPLES. EACH PARTY TO THIS AGREEMENT IRREVOCABLY SUBMITS TO THE JURISDICTION OF, AND VENUE IN, THE DISTRICT COURTS OF THE UNITED STATES SITTING IN THE SOUTHERN DISTRICT OF NEW YORK OR THE COURTS OF THE STATE OF NEW YORK SITTING IN THE COUNTY OF NEW YORK AND WAIVES ANY OBJECTION BASED ON FORUM NON CONVENIENS.

          SECTION 12.8 Headings. The headings in this Agreement are for reference purposes only and shall not in any way affect the meaning or interpretation of this Agreement.

          SECTION 12.9 Specific Performance. The parties acknowledge and agree that any breach of the terms of this Agreement would give rise to irreparable harm for which money damages would not be an adequate remedy, and, accordingly, the parties agree that, in addition to any other remedies, each will be entitled to enforce the terms of this Agreement by a decree of specific performance without the necessity of proving the inadequacy of money damages as a remedy and without the necessity of posting bond.

          SECTION 12.10 Termination. This Agreement may be terminated at any time by a written instrument signed by each of the parties hereto. Unless sooner terminated in accordance with the preceding sentence, this Agreement (other than Section 7.4 and Article VIII) shall terminate when there are no Registrable Securities outstanding.

          SECTION 12.11 No Conflicting Rights. The Company shall not, on or after the date hereof, grant any registration or similar rights to any Person which by their terms are not subordinate to or pari passu with the registration rights granted to the Holders in this Agreement or which conflict with or impair the rights granted hereby.

[Signature Page Follows]

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          IN WITNESS WHEREOF, each of the parties has executed this Agreement as of the date first written above.

SOLUTIA, INC.
By:	/s/ Jeffry N. Quinn
	Name:	Jeffry N. Quinn
	Title:	President and CEO

[Signature Page of Registration Rights Agreement]

BACKSTOP INVESTORS
HIGHLAND CRUSADER HOLDING CORPORATION
By:	/s/ Michael Colvin
	Name: Michael Colvin
	Title: Secretary
Address:
Two Galleria Tower 13455 Noel Road, Suite 800 Dallas, TX 75240-6620 Attention: Patrick Conner Fax: (972) 628-4147

[Signature Page of Registration Rights Agreement]

LONGACRE FUND MANAGEMENT,
L.L.C., as Investment Manager, on behalf
of Longacre Master Fund, Ltd and Longacre
Capital Partners (QP), L.P.
By:	/s/ Steven Weissman
	Name: Steven Weissman
	Title: Member
Address:
810 Seventh Avenue, 22nd Floor
New York, NY 10019
Attention: John Brecker
Fax: (212) 259-4304

[Signature Page of Registration Rights Agreement]

MERRILL LYNCH PIERCE, FENNER & SMITH INCORPORATED
By:	/s/ Ronald Torok
	Name: Ronald Torok
	Title: Director
Address:
4 World Financial Center 250 Vesey Street New York, NY 10080 Attention: Chris Moon/Ron Torok Fax: (212) 449-0769

S-1

GMAM INVESTMENT FUNDS TRUST II
By: Murray Capital Management, Inc., its agent
By:	/s/ Scott V. Beechert
	Name: Scott V. Beechert
	Title: General Counsel & Chief Compliance Officer
RECAP INTERNATIONAL (MASTER) LTD.
By: Murray Capital Management, Inc., its agent
By:	/s/ Scott V. Beechert
	Name: Scott V. Beechert
	Title: General Counsel & Chief Compliance Officer
INSTITUTIONAL BENCHMARK SERIES (MASTER FEEDER) LTD., a segregated accounts company, solely with respect to the Muscida series.
By: Murray Capital Management, Inc., its agent
By:	/s/ Scott V. Beechert
	Name: Scott V. Beechert
	Title: General Counsel & Chief Compliance Officer
Address (for the above three entities): c/o Murray Capital Management, Inc. 680 Fifth Avenue New York, NY 10019 Attention: General Counsel Fax: (212) 582-5525

S-2

SOUTHPAW ASSET MANAGEMENT LP, as Investment Manager, on behalf of Southpaw Credit Opportunity Master Fund LP and GPC 76, LLC
By:	/s/ Kevin Wyman
	Name: Kevin Wyman
	Title: Managing Member of General Partner —           Southpaw Holdings LLC
Address: Southpaw Asset Management LP 4 Greenwich Office Park, 1st Floor Greenwich, CT 06831 Attention: Arif Y. Gangat Fax: (203) 862-6201

S-3

UBS SECURITIES LLC
By:	/s/ Mark Lane
	Name: Mark Lane
	Title: Managing Director
By:	/s/ Thomas A. Tormey
	Name: Thomas A. Tormey
	Title: Director
Address: 677 Washington Boulevard Stamford, CT 06901 Attention: Thomas A. Tormey Fax: (203) 719-0207 W/ Copy To: Fixed Income Legal Fax: (203) 719-0680

S-4

EX-4.2

Exhibit 4.2

REGISTRATION RIGHTS AGREEMENT

     THIS REGISTRATION RIGHTS AGREEMENT is entered into as of February 28, 2008 by and between Solutia Inc., a Delaware corporation (the “Company”), and Monsanto Company, a Delaware corporation (“Monsanto”).

RECITALS

     The Company will issue to Monsanto shares of Common Stock (as defined below) pursuant to the Solutia Inc. Fifth Amended Joint Plan of Reorganization (which was confirmed by the by the United States Bankruptcy Court for the Southern District of New York on November 29, 2007 (as modified by the confirmation order, the “Plan”).

     NOW, THEREFORE, in consideration of the foregoing and of the mutual promises herein contained, the parties hereby agree as follows:

AGREEMENT

     1. Definitions. Unless the context otherwise requires, the terms defined in this Section 1 shall have the meanings herein specified for all purposes of this Agreement, applicable to both the singular and plural forms of any of the terms herein defined.

     “Agreement” means this Registration Rights Agreement.

     “Automatic Shelf Registration Statement” means an automatic shelf registration statement as defined under Rule 405 of the Securities Act.

     “Board” means the Board of Directors of the Company.

     “Commission” means the Securities and Exchange Commission.

     “Common Stock” means the common stock, par value $.01, of the Company.

     “Exchange Act” means the Securities Exchange Act of 1934, as amended.

     “Free Writing Prospectus” means a free writing prospectus, as defined in Rule 405 under the Securities Act.

     “Holder” means Monsanto or any record or beneficial owner of Registrable Securities who became a party to this Agreement in accordance with Section 12 hereof.

     “Holders of a Majority of Registrable Securities” means the Person or Persons who are the Holders of greater than 50% of the Registrable Securities then outstanding.

     “Initiating Holder” means any Holder of Registrable Securities requesting registration pursuant to and in accordance with this Agreement. .

     “NASD” means the National Association of Securities Dealers, Inc.

     “Person” means any natural person, corporation, trust, association, company, partnership, limited liability company, joint venture and other entity and any government, governmental agency, instrumentality or political subdivision.

     The terms “register,” “registered” and “registration” refer to a registration effected by preparing and filing a registration statement in compliance with the Securities Act, and the declaration or ordering of the effectiveness of such registration statement.

     “Registration Date” means the earlier of (i) the date upon which the Company first files on a Form 10-K or Form 10-Q as promulgated under the Exchange Act, or any amendment to such a Form 10-K or Form 10-Q, financial statements that include a balance sheet for a date and income statements for a period for which the Company has adopted fresh-start accounting in accordance with SOP 90-7 and (ii) the 135th day following the Effective Date (as defined in the Plan).

     “Registrable Securities” means (i) the shares of Common Stock issued or to be issued to Monsanto, and (ii) any shares of Common Stock or other securities issued or issuable in respect of the Common Stock or the other securities referred to in clause (i) above by way of a spin-off, split-off, dividend, stock split or other distribution or in connection with a combination of shares, reclassification, merger, consolidation, reorganization or similar transaction; provided, however, that such shares of Common Stock or other securities shall constitute Registrable Securities only so long as (x) they have not been sold by a Holder to or through a broker or dealer or underwriter in a public distribution or a public securities transaction pursuant to an effective registration statement under the Securities Act, (y) they have not been sold by a Holder in a transaction exempt from the registration and prospectus delivery requirements of the Securities Act under Section 4(1) thereof so that all transfer restrictions and restrictive legends with respect to such Common Stock or other securities are removed upon the consummation of such sale and the seller and purchaser of such Common Stock or other securities receive an opinion of counsel for the Company, which shall be in form and content reasonably satisfactory to the seller and purchaser and their respective counsel, to the effect that such Common Stock or other securities in the hands of the purchaser are freely transferable without restriction or registration under the Securities Act in any public or private transaction, or (z) they are not capable of being sold by the holder thereof under Rule 144 (without giving effect to subsection (k) of Rule 144) in a single transaction.

     “Rule 144” means Rule 144 as promulgated under the Securities Act.

     “Securities Act” means the Securities Act of 1933, as amended.

     “WKSI” means a well-known seasoned issuer as defined under Rule 405 of the Securities Act.

     2. Demand Registration.

          (a) Following the Registration Date, Holders of a Majority of Registrable Securities shall have the right to request, by delivery of a written notice to the Company (a “Demand Notice”), that the Company file a registration statement under the Securities Act (a “Demand Registration Statement”) covering all or a portion of the Registrable Securities for

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the purpose of effecting an offering of such Registrable Securities, whether underwritten or otherwise (a “Demand Registration”); provided, however, that no Initiating Holder shall be entitled to demand a Demand Registration Statement during the period when the Company is exercising its right to defer a Demand Registration pursuant to Section 2(b). Any such Demand Notice must request the registration of Registrable Securities having an aggregate market value, based on the average per share closing price of the Common Stock as reported on the principal exchange or market on which it is then traded over the ten (10) consecutive trading days prior to the date of the Demand Notice, of not less than twenty-five million dollars ($25,000,000), or, if the registration statement will be on Form S-3, not less than ten million dollars ($10,000,000). Subject to Section 6(b)(i), as soon as reasonably practicable, but in no event later than sixty (60) days (or thirty (30) days if the registration statement will be a shelf registration statement on Form S-3) after receiving a Demand Notice, the Company shall file with the Commission a registration statement covering the Registrable Securities subject to the Demand Notice. Subject to Sections 2(b) and 4, the Company shall use its reasonable best efforts to cause such registration statement to become effective as expeditiously as possible. Any registration under this Section 2 shall reflect such plan or method of distribution of the applicable securities as shall be designated by the Initiating Holder.

          (b) Notwithstanding the provisions of Section 2(a), if the Company shall furnish to the Initiating Holder a certificate signed by the President and Chief Executive Officer of the Company stating that such officer has made a good faith determination that a registration would (i) require the disclosure of material nonpublic information concerning the Company, its business or prospects and that such premature disclosure would be materially adverse to the Company, and/or (ii) materially interfere with a pending transaction involving the Company or a subsidiary or affiliate of the Company, then the Company shall have the right to defer such filing or the effectiveness hereunder for a period ending not more than ninety (90) days after the Company’s receipt of the applicable Demand Notice, provided, that the Company may not exercise its right under this Section 2(b) more than twice in any 24-month period; and provided further, that the Company may not exercise its rights under this Section 2(b) for two consecutive 90-day periods.

          (c) Notwithstanding the provisions of Section 2(a), the Company shall not be obligated to (i) file or effect a Demand Registration Statement for an underwritten offering of Registrable Securities (an “Underwritten Demand Registration Statement”) within a period of 90 days after the effective date of any other Underwritten Demand Registration Statement or an underwritten offering pursuant to a Shelf Demand Registration Statement (as defined below) or (ii) file or effect more than a total of two Underwritten Demand Registration Statements within any 12-month period; provided, however, that each Shelf Demand Registration Statement filed during the applicable 12-month period will reduce by one the number of Underwritten Demand Registration Statements the Company is obligated to file during such 12-month period.

          (d) The Company may elect to register in any underwritten Demand Registration (an “Underwritten Demand Registration”) any additional shares of Common Stock (including, without limitation, any shares of Common Stock to be distributed in a primary offering made by the Company) so long as the inclusion of such Common Stock by the Company would not (as determined in the Initiating Holder’s reasonable discretion), (i) be reasonably likely to delay in any material respect the Initiating Holder’s ability timely to sell the Registrable

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Securities pursuant to the Underwritten Demand Registration Statement or (ii) cause a reduction in the number of Registrable Securities included in the Underwritten Demand Registration as a result of the Company’s election to so register additional shares of Common Stock. Such election of the Company, if made, shall be made by the Company giving written notice to the Initiating Holder prior to the effectiveness of the Underwritten Demand Registration Statement stating (A) that the Company proposes to include additional shares of Common Stock in such Underwritten Demand Registration Statement, and (B) the number of shares of Common Stock proposed to be included.

     3. Shelf Registration.

          (a) Following the Registration Date, any Initiating Holder shall have the right to request, by delivery of a written notice to the Company (a “Shelf Demand Notice”), that (i) the Company file a shelf registration statement (a “Shelf Registration Statement”) pursuant to Rule 415 under the Securities Act covering all or a portion of the Registrable Securities to enable the resale on a delayed or continuous basis of such Registrable Securities (a “Shelf Demand Registration”) or (ii) if the Company is a WKSI and has an outstanding effective Form S-3 Registration Statement, the Company file a post-effective amendment to such Form S-3 Registration Statement covering all or a portion of the Registrable Securities; provided, however, that no Initiating Holder shall be entitled to demand a Shelf Registration Statement during the period when the Company is exercising its right to defer a Demand Registration pursuant to Section 2(b). Subject to Section 6(b)(i), as soon as reasonably practicable, but in no event later than forty-five (45) days after receiving a Shelf Demand Notice (or fifteen (15) days if the Company is a WKSI and then has an effective Form S-3 Registration Statement), the Company shall file with the Commission a Shelf Registration Statement on Form S-3 of the Commission or, if the Company is a WKSI and has an effective Form S-3 Registration Statement, a post-effective amendment thereto. Subject to Sections 3(b) and 3(c), the Company shall use its commercially reasonable best efforts to cause the Shelf Registration Statement to become effective as expeditiously as possible and to remain effective until the earlier of (x) the time all Registrable Securities subject thereto have been sold and (y) the fourth anniversary of the initial effective time, including by filing necessary post-effective amendments and prospectus supplements reasonably required by a Holder, subject to any blackout periods described in subparagraph (b) below. The Initiating Holder shall have the right to determine the plan and method of distribution for the Registrable Securities to be reflected in the Shelf Registration Statement in respect of which it is the Initiating Holder. Notwithstanding anything contained herein to the contrary, the Holders of Registrable Securities may not file, or request that the Company file, as required by Rule 424 of the Securities Act, more than three (3) prospectuses or prospectus supplements in connection with any Shelf Registration Statement in any thirty (30) day period.

          (b) Notwithstanding the provisions of Section 3(a), if the Company is required to effect a Shelf Registration Statement or make any filing with the Commission pursuant to this Section 3 or if the Company has a Shelf Registration Statement in effect pursuant to this Section 3, and the Company furnishes to the Initiating Holder requesting such registration or filing or to the Holders of Registrable Securities included in such Shelf Registration Statement, as applicable, a certificate signed by the President and Chief Executive Officer of the Company stating that such officer has made a good faith determination that a registration would (i) require

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the disclosure of material nonpublic information concerning the Company, its business or prospects and that such disclosure would be materially adverse to the Company, and/or (ii) materially interfere with a pending transaction involving the Company or a subsidiary or affiliate of the Company, then, the Company shall have the right to defer such filing or the effectiveness thereof for a period of not more than sixty (60) days after the Company’s receipt of the applicable Shelf Demand Notice or prevent Holders of Registrable Securities from selling Registrable Securities pursuant to an effective Shelf Registration Statement for a period of not more than sixty (60) days after the Company delivers such certificate to the applicable Holder and demands that such Holder cease sales of securities under the Shelf Registration Statement (and during such period the Company shall not be obligated to file another Shelf Registration Statement during the period such sales under an effective Shelf Registration Statement are not allowed); provided, that the Company may not exercise its rights under this Section 3(b) more than four times in any consecutive 12-month period; and provided further, that the Company may not defer such filing or the effectiveness thereof under this Section 3(b) for more than 60 days in aggregate during any consecutive 12-month period.

          (c) Notwithstanding the provisions of Section 3(a), the Company shall not be obligated to file a Shelf Registration Statement within a period of ninety (90) days after the effective date of any Underwritten Demand Registration Statement or an underwritten offering pursuant to a Shelf Registration Statement or (ii) file or effect more than a total of three (3) Shelf Registration Statements within any 12-month period; provided, however, that each filing of an Underwritten Demand Registration Statement during the 12-month period will reduce by one the number of Shelf Registration Statements that the Company is obligated to file during such 12-month period.

          (d) Upon the receipt by the Company of a Shelf Demand Notice given in accordance with and subject to Section 3(a) hereof, the Company shall give prompt written notice to all Holders of Registrable Securities (other than the Initiating Holder) that a Shelf Registration Statement pursuant to this Section 3 is being effected. In the event that any such Holder delivers to the Company a written request within fifteen (15) days after the delivery of such written notice to the Holder by the Company, to include in such Shelf Registration Statement Registrable Securities of the Holder the Company shall include such Registrable Securities in the Shelf Registration Statement, including by means of a pre-effective or post-effective amendment thereto; provided, however, that if the inclusion of the Registrable Securities of such Holders in such registration statement would, in the opinion of the Initiating Holders, be reasonably likely to delay in any material respect the Initiating Holder’s ability timely to sell the Registrable Securities pursuant to the Shelf Registration Statement, the Company shall not include such Holders’ Registrable Securities in the Shelf Registration Statement without the prior written consent of the Initiating Holder.

          (e) Following the Registration Date, any Initiating Holder shall have the right to request, by delivery of a written notice to the Company (a “Shelf Underwritten Demand Notice”), that the Company effect an underwritten offering of all or a portion of the Registrable Securities included in an existing Shelf Registration Statement. Any such Shelf Underwritten Demand Notice must request an underwritten offering of Registrable Securities having an aggregate market value, based on the average per share closing price of the Registrable Securities as reported on the principal exchange or market on which the Common Stock is then

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traded over the ten (10) consecutive trading days prior to the date of the Shelf Demand Notice, of not less than twenty-five million dollars ($25,000,000). Subject to Section 6(b)(i), as soon as reasonably practicable after receiving a Shelf Underwritten Demand Notice, but in no event later than twenty (20) days after receiving a Shelf Underwritten Demand Notice, the Company shall file with the Commission such amendments to the applicable Shelf Registration Statements and such prospectus supplements or other filings as are necessary in connection with the underwritten offering of the Registrable Securities subject to the Shelf Underwritten Demand Notice, subject to Sections 3(b) and Section 4. Any prospectus supplement or other filing with the Commission including a plan or method of distribution of the securities subject to an underwritten offering pursuant to this Section 3 shall reflect the plan or method of distribution of such securities as shall be designated by the managing underwriter of the offering.

          (f) The Company may elect to register in any Shelf Registration Statement any additional shares of Common Stock (including, without limitation, any shares of Common Stock to be distributed in a primary offering made by the Company) so long as the inclusion of such Common Stock by the Company would not (as determined in the Initiating Holder’s reasonable discretion), (i) be reasonably likely to delay in any material respect the Initiating Holder’s ability timely to sell the Registrable Securities pursuant to the Shelf Registration Statement or (ii) cause a reduction in the number of Registrable Securities included in the Shelf Demand Registration as a result of the Company’s election to so register additional shares of Common Stock . Such election of the Company, if made, shall be made by the Company giving written notice to the Initiating Holder stating (A) that the Company proposes to include additional shares of Common Stock in such Shelf Registration Statement, and (B) the number of shares of Common Stock proposed to be included.

     4. Underwritten Offerings.

          (a) The Initiating Holder shall have the right to select the book-running managers and the co-managers (collectively, the “managing underwriter”) in connection with any underwritten offering pursuant to Section 2 or Section 3, provided, that the selection of the managing underwriter by the Initiating Holder shall be subject to the reasonable approval of the Company. In connection with any underwritten offering, the Company and the Initiating Holder shall enter into an underwriting agreement with the underwriter or underwriters selected for such underwriting, provided, that such underwriting agreement is in customary form and provides for customary compensation, expense reimbursement and indemnification.

          (b) Upon the receipt by the Company of an Underwritten Demand Notice or a Shelf Underwritten Demand Notice given in accordance with this Agreement, the Company shall give prompt written notice to all Holders of Registrable Securities (other than the Initiating Holder) that an underwritten offering pursuant to Section 2 or Section 3, as applicable is being effected. In the event that any such Holder delivers to the Company, within fifteen (15) days after the delivery of such written notice to the Holder by the Company, a written request to include in such underwritten offering any Registrable Securities of the Holder, the Company shall include such Registrable Securities in the registration statement; provided that the Company need not include in an underwritten offering pursuant to Section 3 any Registrable Securities that are not then included in the applicable Shelf Registration Statement (unless the Company is then a WKSI). The right of any Holder to include Registrable Securities in any underwritten offering

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shall be conditioned upon such Holder’s willingness to enter into an underwriting agreement with the underwriter or underwriters selected for such offering (in each case, unless otherwise mutually agreed by such Holder, the Initiating Holders and the Company).

          (c) Notwithstanding the foregoing, if the managing underwriter of an underwritten offering in connection with any registration pursuant to Section 2 or Section 3 advises the Company and the Holders of Registrable Securities participating in such offering in writing that in its good faith judgment the number of Registrable Securities requested to be included in such offering exceeds the number of Registrable Securities which can be sold in such offering at a price acceptable to the applicable Initiating Holder, then (i) the number of Registrable Securities so requested to be included in such offering shall be reduced to that number of shares which in the good faith judgment of the managing underwriter can be sold in such offering at such price and (ii) this reduced number of Registrable Securities shall be allocated among all Holders of Registrable Securities in proportion, as nearly as practicable, to the respective number of shares of Registrable Securities then held by such Holders.

          (d) Those Registrable Securities which are excluded from an underwriting in connection with any registration pursuant to Section 2 or Section 3 hereof by reason of the managing underwriter’s marketing limitation and all other Registrable Securities not originally requested to be so included shall not be included in such offering and shall be withheld from the market by the Holders thereof for a period (not to exceed ninety (90) days) which the managing underwriter reasonably determines is necessary to effect the underwritten offering.

          (e) If the managing underwriter has not limited the number of Registrable Securities to be included in an underwritten offering pursuant to Section 2 or Section 3, the Company and, subject to the requirements of Section 8 hereof, the other holders of the Company’s securities may include securities for its (or their) own account in such registration if the managing underwriter so agrees and if the number of Registrable Securities which would otherwise have been included in such offering will not thereby be limited. The Company shall not grant registration rights to any holders of the Company’s securities that are more favorable to such holders without the prior written consent of Holders of a Majority of Registrable Securities. Without limiting the foregoing sentence, in the event that the Company grants or has previously granted registration rights to any holders of the Company’s securities that are more favorable to such holders (including, without limitation, in connection with the backstop of the rights offering to creditors contemplated under the Plan), the Company shall promptly amend this Agreement to provide such more favorable terms to the Holders of Registrable Securities.

     5. Piggyback Registration.

          (a) Each time the Company shall determine to file a registration statement under the Securities Act (other than on Form S-4 or Form S-8 or a registration statement on Form S-1 or Form S-3 covering solely an employee benefit plan) in connection with the proposed offer and sale of any of its securities of the same class as the Registrable Securities either for its own account or on behalf of any other security holder (other than a registration pursuant to Section 2 or Section 3), the Company agrees to give prompt written notice of its determination to all Holders of Registrable Securities. In the event that any such Holder delivers to the Company, within fifteen (15) days after the delivery of such written notice to the Holder by the Company, a

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written request to include in such registration statement any Registrable Securities of the Holder, the Company shall include such Registrable Securities in such registration statement, all to the extent required to permit the sale or other disposition by the prospective seller or sellers of the Registrable Securities to be so registered.

          (b) If the registration of which the Company gives written notice pursuant to Section 5(a) is for a public offering involving an underwriting, the Company shall so advise the Holders as a part of its written notice. In such event the right of any Holder to registration pursuant to this Section 5 shall be conditioned upon such Holder’s participation in such underwriting and the inclusion of such Holder’s Registrable Securities in the underwriting to the extent provided herein. Holders proposing to distribute their Registrable Securities through such underwriting agree to enter into (together with the Company and the other Holders distributing their securities through such underwriting) an underwriting agreement with the underwriter or underwriters selected for such underwriting by the Company.

          (c) Notwithstanding any other provision of this Section 5, if the managing underwriter of an underwritten offering in connection with the registration pursuant to this Section 5 advises the Company and the Holders of the Registrable Securities participating in such registration in writing that in its good faith judgment the number of Registrable Securities and the other securities requested to be registered (i) exceeds the number of Registrable Securities and other securities which can be sold in such offering at a price acceptable to the Company, or (ii) would jeopardize the success of the offering, then (A) the number of Registrable Securities and other securities proposed to be included in the offering shall be reduced to that number which in the good faith judgment of the managing underwriter can be sold in such offering at a price acceptable to the Company and (B) such reduced number shall be allocated:

A. If the registration is on behalf of the Company:

a.	First, to the Company, such that all securities proposed to be registered by or on behalf of the Company are included in the registration statement;
b.	Next, among all Holders of Registrable Securities in proportion, as nearly as practicable to the respective number of Registrable Securities held by such Holders at the time of the filing of the registration statement; and
c.	Last, among all other participating holders proposing to register securities other than Registrable Securities, in the manner determined by the Company.

B. If the registration is on behalf of holders of Common Stock other than any Holder of Registrable Securities:

a. First, among all participating holders other than any stockholder participants in the manner determined by the Company and among all Holders of Registrable Securities in proportion, as nearly as practicable to the respective number of Registrable Securities and other shares of Common Stock held by such persons at the time of the filing of the registration statement; and

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b. Last, to the Company, for such number of shares of Common Stock as may be included in the registration statement.

          (d) Those Registrable Securities which are excluded from the underwriting by reason of the managing underwriter’s marketing limitation and all other Registrable Securities not originally requested to be so included shall not be included in such registration.

     6. Registration Procedures.

          (a) If and whenever the Company is required by the provisions of Section 2 or 3 to effect the registration of Registrable Securities under the Securities Act, the Company, at its expense and as expeditiously as possible shall use its reasonable best efforts to effect such registration and so as to permit the sale of the applicable Registrable Securities in accordance with the intended method or methods of distribution thereof in conformity with any required time period set forth therein, and in connection therewith the Company agrees to:

          (i) in accordance with the Securities Act and all applicable rules and regulations promulgated thereunder, prepare and file with the Commission a registration statement with respect to such securities and use its reasonable best efforts to cause such registration statement to become and remain effective for a period of 120 consecutive days (unless the registration is a Shelf Registration Statement in which case such period shall extend until the earlier of (x) the time all Registrable Securities subject thereto have been sold and (y) the fourth anniversary of the initial effectiveness thereof, subject to the Company’s rights to cause Holders of Registrable Securities to cease sales under an effective Shelf Registration Statement pursuant to Section 3(b)), and prepare and file with the Commission such amendments and supplements to such registration statement and the prospectus contained therein as may be necessary to keep such registration statement effective and such registration statement and prospectus accurate and complete and to permit the Holders of Registrable Securities subject to such registration statement to sell such securities; provided, that the Company shall provide counsel selected by the Holders of a majority of the Registrable Securities being registered in such registration (“Holders’ Counsel”) with a reasonable opportunity to participate in the preparation of such registration statement and each prospectus included therein (and each amendment or supplement thereto) to be filed with the Commission.

          (ii) if an offering is to be underwritten in whole or in part, enter into a written underwriting agreement in form and substance reasonably satisfactory to the Company, the managing underwriter of the offering, the Initiating Holder (in the case of a underwritten offering pursuant to Section 2 or Section 3) and to Holders of a majority of the Registrable Securities participating in such offering (in the case of a registration pursuant to Section 3);

          (iii) furnish, at its expense, to the Holders of securities participating in such registration and to the underwriters of the securities being registered such number of copies of the registration statement and each amendment and supplement thereto, preliminary prospectus, final prospectus, prospectus supplement and such other documents as such underwriters and Holders may reasonably request;

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          (iv) use its reasonable best efforts to register and qualify the securities covered by such registration statement under such state securities or blue sky laws of such jurisdictions as such participating Holders of Registrable Securities and underwriters may reasonably request, except that the Company shall not for any purpose be required to execute a general consent to service of process or to qualify to do business as a foreign corporation in any jurisdiction where it is not so qualified;

          (v) notify the Holders of Registrable Securities participating in such registration, promptly after it shall receive notice thereof, of the date and time when (i) such registration statement and each post-effective amendment thereto has become effective or a prospectus or supplement to any prospectus relating to a registration statement has been filed and (ii) any registration or qualification has become effective under a state securities or blue sky law or any exemption thereunder has been obtained;

          (vi) notify such Holders of Registrable Securities promptly of any request by the Commission for the amending or supplementing of such registration statement or prospectus or for additional information;

          (vii) notify such Holders of Registrable Securities promptly upon learning of the occurrence of any event as the result of which any such prospectus or any other prospectus as then in effect would include an untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary to make the statements therein not misleading;

          (viii) prepare and file promptly with the Commission, and notify such Holders of Registrable Securities prior to the filing of, such amendments or supplements to such registration statement or prospectus as may be necessary to correct any statements or omissions if, at the time when a prospectus relating to such securities is required to be delivered under the Securities Act, when any event has occurred as the result of which any such prospectus or any other prospectus as then in effect would include an untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary to make the statements therein not misleading;

          (ix) in case any of such Holders of Registrable Securities or any underwriter for any such Holders is required to deliver a prospectus at a time when the prospectus then in circulation is not in compliance with the Securities Act or the rules and regulations promulgated thereunder, the Company shall use reasonable best efforts to prepare promptly upon request such amendments or supplements to such registration statement and such prospectus as may be necessary in order for such prospectus to comply with the requirements of the Securities Act and such rules and regulations;

          (x) advise such Holders of Registrable Securities and Holders’ Counsel (if any), promptly after it shall receive notice or obtain knowledge thereof, of the issuance of any stop order by the Commission suspending the effectiveness of such registration statement or the initiation or threatening of any proceeding for that purpose and promptly use its reasonable best efforts to prevent the issuance of any stop order or to obtain its withdrawal if such stop order should be issued;

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          (xi) at the request of any Holder of Registrable Securities covered by such registration statement, (i) furnish to such Holder on the effective date of the registration statement, upon the filing of a prospectus supplement with respect to such registration statement or, if such registration includes an underwritten offering, at the closing provided for in the underwriting agreement, an opinion dated such date of the counsel representing the Company for the purposes of such registration, addressed to the underwriters, if any, and to the Holder or Holders making such request, covering such matters with respect to the registration statement, the prospectus and each amendment or supplement thereto, proceedings under state, federal and other securities laws, other matters relating to the Company, the securities being registered and the offer and sale of such securities as are customarily the subject of opinions of issuer’s counsel provided to underwriters in underwritten public offerings, and such opinion of counsel shall additionally cover such legal matters with respect to the registration as such requesting Holder or Holders may reasonably request, and (ii) use its reasonable best efforts to furnish to such Holders letters dated each of such effective date, the date of the filing of a prospectus supplement and such closing date, from the independent certified public accountants of the Company, addressed to the underwriters, if any, and to the Holder or Holders making such request, stating that they are independent certified public accountants within the meaning of the Securities Act and dealing with such customary matters as the underwriters may request, or if the offering is not underwritten that in the opinion of such accountants the financial statements and other financial data of the Company included in the registration statement or the prospectus or any amendment or supplement thereto comply in all material respects with the applicable accounting requirements of the Securities Act, and additionally covering such other accounting and financial matters as such requesting Holder or Holders may reasonably request;

          (xii) list the Registrable Securities (and to maintain such listing during the pendency of the relevant registration period) on any exchange on which the securities of the Company of the same class with Registrable Securities are listed;

          (xiii) make available for inspection by any Holder of Registrable Securities covered by the registration statement, any managing underwriter participating in any disposition pursuant to such registration statement, Holders’ Counsel (if any) and any attorney, accountant or other agent retained by any such Holder or any managing underwriter (each, an “Inspector” and collectively, the “Inspectors”), during regular business hours and upon reasonable advance notice, all financial and other records, pertinent corporate documents and properties of the Company (collectively, the “Records”) as shall be reasonably necessary to enable them to exercise their due diligence responsibility, and cause the Company’s officers, directors and employees, and the independent public accountants of the Company, to supply all information reasonably requested by any such Inspector in connection with such registration statement, subject to obligations of confidentiality;

          (xiv) no more than once in any 120 day period, make senior executives of the Company available, upon reasonable prior notice and subject to reasonable scheduling flexibility, to assist the underwriters with respect to, and to accompany the underwriters on the so-called “road show” in connection with, marketing efforts for the

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distribution and sale of Registrable Securities pursuant to an underwritten offering so long as the fulfillment of this Section 6(a)(xiv) shall not materially impair such senior executives’ management of the Company and other activities on behalf of the Company and so long as any related expenses (including, without limitation, expenses of the Company and participating senior executives) not required to be paid by the Company pursuant to Section 7(b) are paid by the Holders requesting such “road show” participation and assistance; and

          (xv) prepare other offering materials in a form customarily used in similar transactions or on the request of any Holder of Registrable Securities or any managing underwriter.

          (b) Each Holder of Registrable Securities included for registration agrees to:

          (i) provide the Company with such information and assistance as reasonably requested by the Company to effect such registration under the Securities Act;

          (ii) keep confidential that the Company has exercised its rights under Sections 2(b), 3(b) and any other confidential information provided by the Company in connection with this Agreement; and

          (iii) comply, with the prospectus delivery requirements and other provisions of the Securities Act and the Exchange Act and the respective rules and regulations promulgated thereunder, particularly Regulation M thereunder (or any successor rules or regulations), in connection with any offering of Registrable Securities.

          (c) Certain legal consequences arise from being named as a selling securityholder in a registration statement and related prospectus. Accordingly, each Holder of Registrable Securities acknowledges that it has been advised to consult its own independent securities law counsel regarding the consequences of demanding or requesting registration of Registrable Securities hereunder or being named or not being named as a selling securityholder in the registration statement and related prospectus.

     7. Expenses.

          (a) With respect to each inclusion of shares of Registrable Securities in a registration statement pursuant to Section 2 or Section 3, the Company agrees to bear all fees, costs and expenses of such registration and any public offerings in connection therewith (including without limitation the documented fees and expenses of Holder’s Counsel, if any, fees and disbursements of all independent registered public accountants referred to in Section 6(a)(xi)(ii), including expenses of any special audit and “comfort” letters required by or incident to such performance, and all registration and qualification fees and printing expenses); provided, however, that Holders of Registrable Securities participating in any such registration agree to bear their pro rata share of the underwriting discount and commissions, and any expenses associated or incurred in connection with the “road show” or other marketing efforts, the expenses of which are not required to be paid by the Company pursuant to subparagraph (b) below shall be paid by the Holders of Registrable Securities requesting the same.

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          (b) The fees, costs and expenses of registration to be borne as provided in paragraph (a) above, shall consist of (i) all registration, filing and NASD fees, printing expenses, fees and disbursements of counsel and accountants for the Company, (ii) all legal fees and disbursements and other expenses of the Company complying with state securities or blue sky laws of any jurisdictions in which the securities to be offered are to be registered or qualified and (iii) the company’s expenses associated with the “road show” or other marketing efforts for the distribution and sale of Registrable Securities registered under two underwritten registration statements filed pursuant to either Section 2 or 3.

          (c) Notwithstanding the foregoing, the Company shall pay the expenses of a registration statement requested pursuant to Section 2 or Section 3 only with respect to the first five (5) registration statements so filed (and then only to the extent provided for in this Section 7) and all expenses related to any additional registration statements, including those fees and expenses set forth in Section 7(b), shall be paid by the Initiating Holder and/or the Holders of Registrable Securities on a pro rata basis; provided that, in the event that a registration pursuant to Section 2 or 3 is requested by an Initiating Holder and such request is withdrawn prior to the filing of a registration statement by the Company, or the Holders of Registrable Securities cause the Company to withdraw a registration statement prior to its effectiveness, then either (at the election of the Initiating Holder), (i) the Initiating Holder and other Holders of Registrable Securities requesting inclusion of their shares in such registration shall bear pro rata all fees, costs and expenses of the registration and preparation of the registration statement and such requested registration statement shall not be deemed to be one of the registration statements for which the Company is required to pay expenses pursuant to this Section 7, or (ii) such requested registration statement shall be deemed to be one of the registration statements for which the Company is required to pay the expenses pursuant to this Section 7; provided, further, that if at the time of such withdrawal, the Holders have learned of a material adverse change in the condition, business, or prospects of the Company as of the date of their request for such registration statement not known to the Initiating Holder or publicly available at the time of its request and have withdrawn their request solely on such basis and with reasonable promptness after learning of such material adverse change, then the Holders shall not be required to pay any of such expenses and such requested registration statement shall not be deemed to be one of the registration statements for which the Company is required to pay expenses pursuant to this Section 7.

     8. Indemnification.

          (a) The Company hereby agrees to indemnify and hold harmless each Holder of Registrable Securities which are included in a registration statement pursuant to the provisions of this Agreement and each of such Holder’s officers, directors, partners, members, legal counsel and accountants, and each Person who controls such Holder within the meaning of the Securities Act and any underwriter (as defined in the Securities Act) for such Holder, and any Person who controls such underwriter within the meaning of the Securities Act, from and against, and agrees to reimburse such Holder, its officers, directors, partners, members, legal counsel, accountants and controlling Persons and each such underwriter and controlling Person of such underwriter with respect to, any and all claims, actions (actual or threatened), demands, losses, damages, liabilities, costs and expenses to which such Holder, its officers, directors, partners, members, legal counsel, accountants or controlling Persons, or any such underwriter or controlling Person

13

of such underwriter who may become subject under the Securities Act or otherwise, insofar as such claims, actions, demands, losses, damages, liabilities, costs or expenses arise out of or are based upon (i) any untrue statement or alleged untrue statement of any material fact contained in such registration statement, any prospectus related thereto, or any amendment or supplement thereto, (ii) the omission or alleged omission to state therein a material fact necessary to make the statements therein, in light of the circumstances under which they were made, not misleading or (iii) any violation or alleged violation by the Company of the Securities Act, the Exchange Act, any federal or state securities law or any rule or regulation promulgated under the Securities Act, the Exchange Act or any federal or state securities law in connection with the offering covered by such registration statement; provided, however, that the Company will not be liable to any such Person to the extent that any such claim, action, demand, loss, damage, liability, cost or expense is caused by an untrue statement or alleged untrue statement or omission or alleged omission of material fact so made in strict conformity with written information furnished by such Holder, such underwriter or such controlling Person specifically for use in the preparation thereof.

          (b) Each Holder of shares of Registrable Securities which are included in a registration statement pursuant to the provisions of this Agreement hereby agrees (severally and not jointly) to indemnify and hold harmless the Company, its officers, directors, legal counsel and accountants and each Person who controls the Company within the meaning of the Securities Act, from and against, and agrees to reimburse the Company, its officers, directors, legal counsel, accountants and controlling Persons with respect to, any and all claims, actions, demands, losses, damages, liabilities, costs or expenses to which the Company, its officers, directors, legal counsel, accountants or such controlling Persons may become subject under the Securities Act or otherwise, insofar as such claims, actions, demands, losses, damages, liabilities, costs or expenses are caused by any untrue or alleged untrue statement of any material fact contained in such registration statement, any prospectus related thereto or any amendment or supplement thereto, or are caused by the omission or the alleged omission to state therein a material fact required to be stated therein or necessary to make the statements therein, in light of the circumstances in which they were made, not misleading, in each case to the extent, but only to the extent, that such untrue statement or alleged untrue statement or omission or alleged omission was so made in reliance upon and in strict conformity with written information furnished by such Holder specifically for use in the preparation thereof and such untrue statement or omission of material fact was not subsequently corrected in a subsequent writing from such Holder to the Company at least 36 hours prior to sale of Registrable Securities to the Person asserting the claim or loss; provided, however, that the indemnity agreement contained in this subsection 8(b) shall not apply to amounts paid in settlement of any such loss, claim, damage, liability or action if such settlement is effected without the consent of the Holder, which consent shall not be unreasonably withheld or delayed; provided, further, that the total amounts payable in indemnity by a Holder under this subsection 8(b) shall not exceed the net proceeds received by such Holder in the registered sale out of which such claim, action, demand, loss, damage, liability, cost, or expense arises.

          (c) Promptly after receipt by a party indemnified pursuant to the provisions of subsection (a) or (b) of this Section 8 of notice of the commencement of any action involving the subject matter of the foregoing indemnity provisions, such indemnified party will, if a claim therefore is to be made against the indemnifying party pursuant to the provisions of subsection

14

(a) or (b), notify the indemnifying party of the commencement thereof; but the omission so to notify the indemnifying party will not relieve it from any liability which it may have to an indemnified party otherwise than under this Section 8 and shall not relieve the indemnifying party from liability under this Section 8 unless such indemnifying party is actually and materially prejudiced by such omission. In case any such action is brought against any indemnified party, and it notifies the indemnifying party of the commencement thereof, the indemnifying party will be entitled to participate therein and, to the extent that it may wish, jointly with any other indemnifying parties similarly notified, to assume the defense thereof, with counsel reasonably satisfactory to such indemnified party; provided, however, that if the defendants in any such action include both the indemnified party and the indemnifying party and the indemnified party shall have reasonably concluded that there may be legal defenses available to it and/or other indemnified parties which are different from, conflict with or additional to those available to the indemnifying party, the indemnified party or parties shall have the right to select separate counsel (in which case the indemnifying party shall not have the right to direct the defense of such action on behalf of the indemnified party or parties). Upon the permitted assumption by the indemnifying party of the defense of such action, and approval by the indemnified party of counsel, the indemnifying party shall not be liable to such indemnified party under subsection (a) or (b) for any legal or other expenses subsequently incurred by such indemnified party in connection with the defense thereof (other than reasonable costs of investigation) unless (i) the indemnified party shall have employed separate counsel in connection with the assertion of legal defenses in accordance with the proviso to the next preceding sentence, (ii) the indemnifying party shall not have employed counsel reasonably satisfactory to the indemnified party to represent the indemnified party within a reasonable time, (iii) the indemnifying party and its counsel do not actively and vigorously pursue the defense of such action, or (iv) the indemnifying party has authorized the employment of counsel for the indemnified party at the expense of the indemnifying party. No indemnifying party shall be liable to an indemnified party for any settlement of any action or claim without the consent of the indemnifying party and no indemnifying party may unreasonably withhold its consent to any such settlement. No indemnifying party will consent to entry of any judgment or enter into any settlement that does not include as an unconditional term thereof the giving by the claimant or plaintiff to such indemnified party of a release from all liability with respect to such claim or litigation.

          (d) If the indemnification provided for in subsection (a) or (b) of this Section 8 is held by a court of competent jurisdiction to be unavailable to a party to be indemnified with respect to any claims, actions, demands, losses, damages, liabilities, costs or expenses referred to therein, then each indemnifying party under any such subsection, in lieu of indemnifying such indemnified party thereunder, hereby agrees to contribute to the amount paid or payable by such indemnified party as a result of such claims, actions, demands, losses, damages, liabilities, costs or expenses in such proportion as is appropriate to reflect the relative fault of the indemnifying party on the one hand and of the indemnified party on the other in connection with the statements or omissions which resulted in such claims, actions, demands, losses, damages, liabilities, costs or expenses, as well as any other relevant equitable considerations. The relative fault of the indemnifying party and of the indemnified party shall be determined by reference to, among other things, whether the untrue or alleged untrue statement of a material fact or the omission or alleged omission to state a material fact relates to information supplied by the indemnifying party or by the indemnified party and the parties’ relative intent, knowledge, access to information and opportunity to correct or prevent such statement or omission. Notwithstanding the foregoing, the

15

amount any Holder of Registrable Securities shall be obligated to contribute pursuant to this subsection (d) shall be limited to an amount equal to the per share sale price (less any underwriting discount and commissions) multiplied by the number of shares of Registrable Securities sold by such Holder pursuant to the registration statement which gives rise to such obligation to contribute (less the aggregate amount of any damages which such Holder has otherwise been required to pay in respect of such claim, action, demand, loss, damage, liability, cost or expense or any substantially similar claim, action, demand, loss, damage, liability, cost or expense arising from the sale of such Registrable Securities).

          (e) No person guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of the Securities Act) shall be entitled to contribution hereunder from any person who was not guilty of such fraudulent misrepresentation.

          (f) The obligations of the Company and Holders under this Section 8 shall survive the completion of any offering of Registrable Securities in a registration statement and termination of this Agreement.

     9. Stockholder Information.

     The Company may request each Holder of Registrable Securities as to which any registration is to be effected pursuant to this Agreement to furnish the Company with such information with respect to such Holder and the distribution of such Registrable Securities as the Company may from time to time reasonably request in writing and as shall be required by law or by the Commission in connection therewith, and each Holder of Registrable Securities as to which any registration is to be effected pursuant to this Agreement agrees to promptly furnish the Company with such information.

     10. Forms.

     All references in this Agreement to particular forms of registration statements are intended to include, and shall be deemed to include, references to all successor forms which are intended to replace, or to apply to similar transactions as, the forms herein referenced.

     11. Agreements of the Holders of Registrable Securities.

          (a) Each Holder of Registrable Securities agrees in connection with any registration of the Company’s securities that, upon the request of the managing underwriter of any underwritten offering of the Company’s securities, it or he or she shall not sell, make any short sale of, loan, grant any option for the purchase of, or otherwise dispose of any capital stock of the Company (other than the securities included in such registration) without the prior written consent of such managing underwriter for a period not to exceed ninety (90) days ) (the “Lock-Up Period”), provided, however, that each Holder of Registrable Securities also agrees that such Lock-Up Period may be automatically extended by an additional eighteen (18) days pursuant to the terms of the agreement entered into with such managing underwriter. The Company may impose stop transfer instructions with respect to the Registrable Securities subject to the foregoing restriction until the end of the Lock-Up Period.

16

          (b) Each Investor represents that it has not prepared or had prepared on its behalf or used or referred to, and agrees that it will not prepare or have prepared on it behalf or use or refer to, any Free Writing Prospectus, and has not distributed and will not distribute any written materials in connection with the offer or sale of the Common Stock without the prior express written consent of the Company and, in connection with any underwritten offering, the underwriters.

     12. Transfer of Registration Rights.

     The rights to cause the Company to register securities granted to the Holders of Registrable Securities pursuant to this Agreement may be transferred or assigned only to (i) an affiliate or immediate family member of a Holder of Registrable Securities or (ii) an immediate or remote transferee of the Holder of Registrable Securities who, after such transfer, is the Holder of not less than 5% of the number of shares of Registrable Securities outstanding as of the date of this Agreement; provided that the transferee first agrees in writing to be bound by the terms of this Agreement.

     13. Miscellaneous.

          13.1. Waivers and Amendments.

          (a) With the written consent of the Holders of a Majority of the Registrable Securities, the obligations of the Company and the rights of the Holders of Registrable Securities under this Agreement may be waived (either generally or in a particular instance, either retroactively or prospectively and either for a specified period of time or indefinitely), and with such consent the Company may enter into a supplementary agreement for the purpose of adding any provisions to or changing in any manner or eliminating any of the provisions of this Agreement or of any supplemental agreement or modifying in any manner the rights and obligations hereunder of the Holders of Registrable Securities and the Company; provided, however, that no such waiver or supplemental agreement shall reduce the aforesaid proportion of Registrable Securities, the Holders of which are required to consent to any waiver or supplemental agreement, without the consent of the Holders of all of the Registrable Securities.

          (b) Upon the effectuation of each such waiver, consent or agreement of amendment or modification, the Company agrees to give prompt written notice thereof to the Holders of the Registrable Securities who have not previously consented thereto in writing.

          (c) Neither this Agreement nor any provision hereof may be changed, waived, discharged or terminated orally or by course of dealing, but only by a statement in writing signed by the party against which enforcement of the change, waiver, discharge or termination is sought. Specifically, but without limiting the generality of the foregoing, the failure of any party hereunder at any time or times to require performance of any provision hereof by the Company shall in no manner affect the right of such party at a later time to enforce the same. No waiver by any party of the breach of any term or provision contained in this Agreement, in any one or more instances, shall be deemed to be, or construed as, a further or continuing waiver of any such breach, or a waiver of the breach of any other term or covenant contained in this Agreement.

17

          13.2. Effect of Waiver or Amendment.

          (a) Each Holder of Registrable Securities acknowledges that by operation of Section 13.1 hereof the Holders of a Majority of the Registrable Securities will, subject to the limitations contained in Section 13.1, have the right and power to diminish or eliminate certain rights of such Holder under this Agreement.

          13.3. Rights of Holders of Registrable Securities.

          (a) Each Holder of Registrable Securities shall have the absolute right to exercise or refrain from exercising any right or rights which such Holder may have by reason of this Agreement or any Registrable Security, including, without limitation, the right to consent to the waiver of any obligation of the Company under this Agreement and to enter into an agreement with the Company for the purpose of modifying this Agreement or any agreement effecting any such modification, and such Holder shall not incur any liability to any other Holder with respect to exercising or refraining from exercising any such right or rights.

          13.4. Notices.

          (a) All notices, requests or consents required or permitted under this Agreement shall be made in writing and shall be given to the other parties by personal delivery, registered or certified mail (with return receipt), overnight air courier (with receipt signature) or facsimile transmission (with “answerback” confirmation of transmission), sent to such party’s addresses or telecopy numbers as follows:

          If to the Company:

Solutia Inc.
575 Maryville Centre Dr.
St. Louis, MO 63141
Attn: General Counsel

          with a copy to:

Kirkland & Ellis LLP
Citicorp Center
153 East 53^rd Street
New York, NY 10022
Fax: (212) 446-4900
Attn: Thomas W. Christopher
          Christian O. Nagler

          If to Monsanto:

David Snively, Esq. (General Counsel)
Monsanto Company
800 North Lindbergh Boulevard

18

          St. Louis, MO 63167

          with a copy to:

John C. Longmire, Esq.
Willkie Farr & Gallagher LLP
787 Seventh Avenue
New York, NY 10019
Fax: (212) 728-8111

Each such notice, request or consent shall be deemed effective upon the date of actual receipt, receipt signature or confirmation of transmission, as applicable (or if given by registered or certified mail, upon the earlier of (i) actual receipt or (ii) three days after deposit thereof in the United States mail (with respect to addresses within the United States) or ten (10) days after deposit thereof in the United States mail (with respect to addresses outside of the United States).

          13.5. Severability.

          (a) Should any one or more of the provisions of this Agreement or of any agreement entered into pursuant to this Agreement be determined to be illegal or unenforceable, all other provisions of this Agreement and of each other agreement entered into pursuant to this Agreement, shall be given effect separately from the provision or provisions determined to be illegal or unenforceable and shall not be affected thereby.

          13.6. No Third Parties.

          (a) Subject to Section 8 hereof, this Agreement shall not run to the benefit of or be enforceable by any Person other than a party to this Agreement or, with respect to the Company, any successor thereto.

          13.7. Headings.

          (a) The headings of the sections, subsections and paragraphs of this Agreement have been inserted for convenience of reference only and do not constitute a part of this Agreement.

          13.8. Choice of Law.

          (a) It is the intention of the parties that the internal substantive laws, and not the laws of conflicts, of the State of New York should govern the enforceability and validity of this Agreement, the construction of its terms and the interpretation of the rights and duties of the parties.

          13.9. Counterparts. This Agreement may be executed in any number of counterparts and by different parties hereto in separate counterparts, with the same effect as if all parties had signed the same document. All such counterparts shall be deemed an original, shall be construed together and shall constitute one and the same instrument.

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          13.10. Reports Under the Exchange Act. In order to provide the Holders the use of Sections 2 and 3 hereof, and so long as there are Registrable Securities outstanding, the Company will (i) file in a timely manner (giving effect to any delay permitted by the Securities Act and the Exchange Act and the rules and regulations promulgated thereunder) the reports required to be filed by it pursuant to the Securities Act and the Exchange Act and the rules and regulations promulgated thereunder; (ii) make and keep public information available, as those terms are understood and defined in the General Instructions to Form S-3, or any successor or substitute form, and in Rule 144 under the Securities Act, or (iii) will take such further action as any holder of Registrable Securities may reasonably request, all to the extent required from time to time to enable such Holder to sell Registrable Securities on Form S-3 (or any successor or substitute form) or without registration under the Securities Act within the limitation of the exemptions provided by Rule 144 or Rule 144A under the Securities Act, as such Rule may be amended from time to time, or any similar rule or regulation hereafter adopted by the Commission. Upon the request of any holder of Registrable Securities, the Company will deliver to such holder a written statement as to whether it has complied with such information and requirements and, to the extent available, with a copy of the most recent annual or quarterly report of the Company, and such other reports and documents of the Company as a Holder may reasonably request in availing itself of any rule or regulation of the Commission allowing a Holder to sell securities without registration only if such report is not available at www.sec.gov or on the Company’s website.

          13.11. Entire Agreement/Effectiveness.

     This Agreement contains the entire understanding of the parties hereto in respect of its subject matter and supersedes all prior and contemporaneous agreements and understandings, oral and written, between the parties with respect to such subject matter.

[signature page follows]

20

[REGISTRATION RIGHTS AGREEMENT SIGNATURE PAGE]

     IN WITNESS WHEREOF, the parties hereto, intending to be bound by the terms of this agreement, have caused this Registration Rights Agreement to be executed by its duly authorized officer as of the date first above written.

Solutia Inc.
By:	/s/ Rosemary L. Klein
	Name:	Rosemary L. Klein
	Title:  Senior vice President, General Counsel and Secretary
Monsanto Company
By:	/s/ David F. Snively
	Name:	David F. Snively
	Title:	Sr. V.P., Secretary & General Counsel

S-1

EX-10.1

Exhibit 10.1

AMENDED AND RESTATED
SETTLEMENT AGREEMENT

February 28, 2008

by and among

Solutia Inc.,

Monsanto Company,

and

SFC LLC

TABLE OF CONTENTS

Article I Definitions	2
Section 1.01 General	2
Section 1.02 Interpretation	12
Article II Funding Co	13
Section 2.01 Funding Co	13
Section 2.02 Establishment of Accounts	13
Section 2.03 Deposit of Funds	14
Section 2.04 Investment of the Funds	14
Article III Environmental Remediation	14
Section 3.01 Retained Sites	14
Section 3.02 Legacy Sites	15
Section 3.03 Certain Waste Sites	15
Section 3.04 Shared Sites	15
Section 3.05 Third Party Recoveries	21
Section 3.06 No Admission of Liability to Other Persons	22
Section 3.07 Cooperation	23
Article IV Disbursements	23
Section 4.01 Disbursements	23
Article V Indemnification	24
Section 5.01 Indemnification Obligations of Solutia	24
Section 5.02 Indemnification Obligations of Monsanto	25
Section 5.03 Manner of Payment	25
Section 5.04 Indemnification Claims	26
Section 5.05 Third Party Claims	26
Section 5.06 Subrogation	27
Section 5.07 Subsidiary Guarantees	27
Article VI Certain Tax Matters	28
Section 6.01 Net Operating Loss Carryforwards	28
Section 6.02 Treatment of Funding Co	28
Section 6.03 Treatment of Earnings of Funding Co	28
Section 6.04 Distributions by Funding Co	28
Section 6.05 Contribution to the Retiree Trust	28
Section 6.06 Treatment of Environmental Remediation	28
Section 6.07 Effect of the Agreement	29
Section 6.08 Cooperation	29
Article VII Covenants	29
Section 7.01 Further Assurances	29
Section 7.02 Business Combinations; Transfers of Covered Sites	29
Section 7.03 Cooperation and Access	30

i

Section 7.04 Confidentiality	30
Section 7.05 Power of Attorney	31
Section 7.06 Insurance	31
Section 7.07 Funding Co As Party Hereto	32
Article VIII Representations and Warranties	32
Section 8.01 Representations and Warranties of Monsanto	32
Section 8.02 Representations and Warranties of Solutia	32
Section 8.03 Representations and Warranties of Funding Co	33
Section 8.04 No Additional Representations or Warranties	33
Article IX Dispute Resolution	34
Section 9.01 Agreement to Arbitrate	34
Section 9.02 Bankruptcy Court Jurisdiction	34
Section 9.03 Procedures	34
Article X Miscellaneous	35
Section 10.01 Effectiveness	35
Section 10.02 Expenses	35
Section 10.03 Governing Law	35
Section 10.04 Notices	36
Section 10.05 Amendment and Modification	37
Section 10.06 Successors and Assigns; No Third Party Beneficiaries	37
Section 10.07 Counterparts	37
Section 10.08 Legal Enforceability	37
Section 10.09 Complete Agreement	37

ii

Appendices:

Appendix A — Retained Sites
Appendix B — Legacy Sites
Appendix C — Shared Sites

iii

Schedules:

Schedule 8.01(d)

iv

Exhibits:

Exhibit A	-	Not Used
Exhibit B	-	Anniston Consent Decree
Exhibit C	-	Anniston Settlement Agreement
Exhibit D	-	Anniston Side Letter
Exhibit E	-	Plan
Exhibit F	-	Form of Services Agreement
Exhibit G1	-	Form of Solutia Deferred Payment Note
Exhibit G2	-	Form of Solutia Deferred NRD Note
Exhibit H	-	Not Used
Exhibit I	-	Environmental Committee Charter
Exhibit J	-	Form of Solutia Subsidiary Guaranties
Exhibit K	-	Krummrich Restricted Properties
Exhibit L	-	Not Used
Exhibit M	-	Form of Power of Attorney
Exhibit N	-	Form of Pharmacia Indemnity Agreement
Exhibit O1	-	Form of SFC LLC Charter
Exhibit O2	-	Form of SFC LLC Operating Agreement
Exhibit P	-	Form of Retiree Trust Agreement
Exhibit Q1	-	Anniston Plant
Exhibit Q2	-	Krummrich Plant
Exhibit R	-	Form of Registration Rights Agreement
Exhibit S	-	Distribution Agreement
Exhibit T	-	Form of Transition Services Agreement

v

SETTLEMENT AGREEMENT

     This SETTLEMENT AGREEMENT (this “Agreement”) is made as of February 28, 2008 by and among Solutia Inc., a Delaware corporation (“Solutia”) Monsanto Company (“Monsanto”) and SFC LLC, a Delaware limited liability company directly and wholly owned by Solutia (“Funding Co”).

RECITALS

     WHEREAS, Solutia was created as a subsidiary of Pharmacia Corporation, formerly known as Monsanto Company (“Pharmacia”), to operate Pharmacia’s chemicals business and was spun off to shareholders (the “Solutia Spinoff”) effective as of September 1, 1997 (the “Solutia Spinoff Date”).

     WHEREAS, in connection with the Solutia Spinoff, Solutia and Pharmacia entered into the Distribution Agreement, setting forth the allocation of the liabilities between Solutia and Pharmacia relating to Pharmacia’s historical chemicals business.

     WHEREAS, Monsanto was created as a subsidiary of Pharmacia to operate Pharmacia’s agricultural business and was spun off to shareholders (the “Monsanto Spinoff”) on September 1, 2000 (the “Monsanto Spinoff Date”).

     WHEREAS, in connection with the Monsanto Spinoff, Monsanto agreed to indemnify Pharmacia in the event and to the extent that Solutia failed to perform or discharge certain of its liabilities under the Distribution Agreement.

     WHEREAS, on July 1, 2002, Pharmacia, Monsanto and Solutia entered into an amendment to the Distribution Agreement, whereby Solutia agreed to indemnify Monsanto for losses suffered by Monsanto as a result of Solutia’s failure or inability to fulfill its obligations to Pharmacia under the Distribution Agreement.

     WHEREAS, on December 17, 2003 (the “Petition Date”), Solutia commenced a case (“Solutia Chapter 11 Case”) with the Bankruptcy Court under chapter 11 of the Bankruptcy Code.

     WHEREAS, on February 14, 2006, Solutia originally filed a plan of reorganization with the Bankruptcy Court.

     WHEREAS, on May 16, 2007, Solutia filed its First Amended Joint Plan of Reorganization with the Bankruptcy Court.

     WHEREAS, on July 9, 2007, Solutia filed its Second Amended Joint Plan of Reorganization with the Bankruptcy Court.

     WHEREAS, on July 25, 2007, submitted its Third Amended Joint Plan of Reorganization to the Bankruptcy Court.

     WHEREAS, on August 10, 2007, Solutia submitted its Fourth Amended Joint Plan of Reorganization to the Bankruptcy Court.

     WHEREAS, on October 22, 2007, Solutia filed its Fifth Amended Joint Plan of Reorganization, dated October 19, 2007, with the Bankruptcy Court.

     WHEREAS, on November 29, 2007, the Bankruptcy Court entered an order confirming the Fifth Amended Joint Plan of Reorganization (as such plan was modified by such order).

     WHEREAS, Monsanto has paid in excess of $50 million in Environmental Liability Costs with respect to the Shared Sites (as defined herein) since the Petition Date (such $50 million amount, the “Monsanto Payment”).

     WHEREAS, this Agreement, the Plan and the Retiree Settlement Agreement constitute a single integrated settlement agreement, and together set forth the terms of a settlement (the “Settlement”) between and among Solutia, Monsanto, Pharmacia, the Retirees’ Committee, the Creditors’ Committee and the Ad Hoc Trade Committee.

     WHEREAS, in connection with the Settlement, Monsanto will receive, as set forth in the Plan, up to one hundred seventy five million dollars ($175 million) in cash and/or up to seventeen percent (17%) of Solutia’s New Common Stock in exchange for, among other things, Monsanto’s agreement to be financially responsible for (i) the Legacy Tort Claims (as defined herein), (ii) all Environmental Liabilities related to the Legacy Sites (as defined herein), and (iii) Monsanto’s share of the Shared Payments (as defined herein).

     WHEREAS, in accordance with the Plan and the terms of this Agreement, the Distribution Agreement constitutes a prepetition, non-executory contract and, subject to the Parties’ obligations under the Plan, this Agreement and the Plan Documents, is superseded and, on the Effective Date, of no further force and effect.

     WHEREAS, this Agreement, the Plan and the Plan Documents supersede the Distribution Agreement and the Settlement Agreement dated August 10, 2007 and the Settlement Agreement dated October 15, 2007 and set out the relationship among the parties hereto.

     WHEREAS, on the Effective Date, Solutia and Monsanto will enter into a registration rights agreement (the “Registration Rights Agreement”) substantially in the form annexed hereto as Exhibit R.

     NOW, THEREFORE, in consideration of the promises and mutual covenants contained herein and other good and valuable consideration, the receipt and sufficiency whereof are hereby acknowledged, the parties agree as follows:

ARTICLE I
DEFINITIONS

     Section 1.01 General. As used in this Agreement, the following terms shall have the following meanings (such meanings to be equally applicable to both the singular and plural forms of the terms defined):

2

     “AAA” has the meaning set forth in Section 9.03.

     “Action” means any demand, action, suit, countersuit, arbitration, inquiry, proceeding or investigation by or before any Governmental Authority, court or any arbitration or mediation tribunal.

     “Ad Hoc Trade Committee” has the meaning assigned to it in the Plan.

     “Affiliate” of any particular Person means any other Person controlling, controlled by or under common control with such particular Person, where “control” means the possession, directly or indirectly, of the power to direct the management and policies of a Person whether through the ownership of voting securities, contract or otherwise; provided, that in no event shall Monsanto, Pharmacia or Solutia be considered Affiliates of one another.

     “Agreement” has the meaning set forth in the preamble.

     “Agricultural Liabilities” means all liabilities retained by Pharmacia in the Solutia Spinoff that (i) were transferred to (or assumed by) Monsanto in the Monsanto Spinoff and (ii) are defined as “Monsanto Liabilities,” as such term is defined and set forth in the Distribution Agreement (as in effect immediately prior to the Effective Date), including any and all liabilities related to a product consisting of a mix of herbicides 2,4 dichlorophenoxyacetic acid and 2,4,5 trichlorophenoxyacetic acid.

     “Anniston Consent Decree” means the Revised Partial Consent Decree, dated August 4, 2003, entered by the U.S. District Court for the Northern District of Alabama in Civil Action No. 1:02-CV-0749-UWC, a copy of which is attached hereto as Exhibit B, and any subsequent modifications to that Decree entered by the Court.

     “Anniston Restricted Properties” means all properties situated in Calhoun County, Alabama and owned by Solutia as of the date hereof.

     “Anniston Settlement Agreement” means the agreement among Solutia, Monsanto and Pharmacia, dated September 9, 2003, a copy of which is attached hereto as Exhibit C.

     “Anniston Side Letter” means the letter from Pfizer, Inc., the parent company of Pharmacia, to Solutia, dated August 20, 2003, a copy of which is attached hereto as Exhibit D.

     “Approval Notice” has the meaning set forth in Section 3.04(d)(v).

     “Approved ELC Amount” has the meaning set forth in Section 3.04(d)(v).

     “Approved Unallocated Amount” has the meaning set forth in Section 4.01(a).

     “Arbitration Act” means the United States Arbitration Act, 9 U.S.C. 1-14, as amended.

     “Bankruptcy Code” means title 11 of the United States Code as applicable to the Solutia Chapter 11 Case.

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     “Bankruptcy Court” means the United States Bankruptcy Court for the Southern District of New York, having jurisdiction over the Solutia Chapter 11 Case and, to the extent of the withdrawal of any reference under section 157 of title 28 of the United States Code, the United States District Court for the Southern District of New York.

     “Bankruptcy Rules” means, collectively, the Federal Rules of Bankruptcy Procedure and the local rules of the Bankruptcy Court, as applicable to the Solutia Chapter 11 Case.

     “Board” means the Board of Directors of Solutia.

     “Budget” has the meaning set forth in Section 3.04(b).

     “Business Day” means any day other than a Saturday, Sunday or a legal holiday on which the commercial banks are closed in St. Louis, MO.

     “CEO” has the meaning set forth in Section 9.03.

     “CERCLA” means the Comprehensive Environmental Response, Compensation, and Liability Act of 1980, as amended.

     “Charter” has the meaning set forth in Section 3.04(b).

     “Chemicals Liabilities” has the meaning set forth in the Distribution Agreement.

     “Commercial and Operating Agreements” has the meaning assigned to it in the Plan.

     “Confidential Information” of any party (a “Confidential Party”) means any and all information and data (whether written or oral and whatever the form or storage medium) (a) that a Confidential Party or its Representatives furnishes to another party or such other party’s Representatives pursuant to this Agreement; and/or (b) concerning the business or affairs of such Confidential Party or any of its Affiliates (i) that is nonpublic information, (ii) which is proprietary to such Confidential Party or any of its Affiliates, (iii) the disclosure of which could reasonably be expected to cause the Confidential Party or any of its Affiliates or customers injury or loss of reputation or goodwill, (iv) that gives, or may give, such Confidential Party or its Affiliates an advantage over its competitors or (v) is marked by the Confidential Party prior to its disclosure as “confidential”. Because of the sensitive nature of this information, the intent of the parties is that the term “Confidential Information” shall be interpreted as broadly as possible and shall include any and all data, reports, analyses, compilations, studies, projections, forecasts, records, technology, methods of doing business, inventions, know-how, designs, supplier and customer information and all other financial, technical, commercial or other information concerning the business and affairs of such Confidential Party, in each case regardless of whether such information or item is marked as “confidential”. Notwithstanding the foregoing, Confidential Information shall not include information which (x) is or becomes generally available to the public other than as a result of a disclosure by any other party or its Representatives in breach of Section 7.04 hereof, (y) was or becomes available to any other party on a non-confidential basis from a source other than such Confidential Party or its Representatives; provided that, to such other party’s actual knowledge, such source is not prohibited from disclosing such information to such other party by a contractual, legal or

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fiduciary obligation to such Confidential Party or its Affiliates, or (z) is independently developed by any other party without violating such other party’s obligations under this Agreement.

     “Cost Recovery Cases” has the meaning set forth in Section 3.05(a).

     “Covered Site” means any Retained Site, Legacy Site or Shared Site.

     “Creditors’ Committee” has the meaning assigned to it in the Plan.

     “Debtors” has the meaning assigned to it in the Plan.

     “Deferral Notice” has the meaning set forth in Section 3.04(e).

     “Deferred NRD Payment Obligations” has the meaning set forth in Section 3.04(e).

     “Deferred Payment Obligations” has the meaning set forth in Section 3.04(e).

     “Deposit Account” has the meaning set forth in Section 2.02.

     “Dispute Notice” has the meaning set forth in Section 9.03.

     “Disputed ELC Amount” has the meaning set forth in Section 3.04(d)(v).

     “Disputed Unallocated Amount” has the meaning set forth in Section 4.01(a).

     “Distribution Agreement” means that certain Distribution Agreement, dated as of September 1, 1997, between Pharmacia and Solutia, as amended through the date hereof, including by the Amendment dated as of July 1, 2002 by and among Pharmacia, Monsanto and Solutia, a copy of which is annexed hereto as Exhibit S.

     “Effective Date” has the meaning assigned to it in the Plan.

     “ELC Objection Notice” has the meaning set forth in Section 3.04(d)(v).

     “Environmental Account” has the meaning set forth in Section 2.02.

     “Environmental Committee” has the meaning set forth in Section 3.04(b).

     “Environmental Laws” means all applicable federal, state, local and foreign statutes, regulations and similar requirements of Governmental Authorities having the force and effect of law, all judicial and administrative orders and determinations, and all common law concerning public health or safety, workplace health and safety, or pollution or protection of the environment, including all those pertaining to the presence, use, production, generation, handling, transportation, treatment, storage, disposal, distribution, labeling, testing, processing, discharge, release, threatened release, control, or cleanup of any hazardous materials, substances or wastes, chemical substances or mixtures, pesticides, pollutants, contaminants, toxic chemicals, petroleum products or byproducts, asbestos, polychlorinated biphenyls, noise or radiation.

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     “Environmental Liability” means any liability (contingent or otherwise, arising under statute or common law, at law or in equity, and including liability for response costs or natural resource damages, fines or penalties) or any investigatory, corrective or remedial obligation arising under Environmental Law, whether or not discharged by the Solutia Chapter 11 Case, including all Environmental Liability Costs, any common law liability for Environmental Remediation and any liability for any NRD Claim.

     “Environmental Liability Costs” means all out-of-pocket costs and expenses actually incurred (1) to address any Environmental Liability, (2) to perform (a) Environmental Remediation at any Covered Site mandated by a Governmental Authority or court and (b) work deemed commercially reasonable by (i) Solutia with respect to the Retained Sites, (ii) Monsanto with respect to the Legacy Sites and (iii) the Environmental Committee with respect to the Shared Sites, (3) in connection with the retention of, or otherwise paid to, (a) consultants, attorneys, public relations personnel and all other Persons retained to provide products or services in connection with Environmental Liabilities (including all Recovery Costs) or (b) contractors performing Environmental Remediation, (4) for or in connection with land acquisition or easements for Environmental Remediation, (5) for materials and equipment procured for Environmental Remediation and (6) for or in connection with providing financial assurance required under Environmental Law for these sites; provided that “Environmental Liability Costs” shall not include salaries and overhead of (x) Solutia employees providing Environmental Remediation services for Retained Sites and Shared Sites and (y) Monsanto employees providing Environmental Remediation services for Legacy Sites and Shared Sites.

     “Environmental Reimbursement Statement” has the meaning set forth in Section 3.04(d).

     “Environmental Remediation” means any environmental investigatory, corrective, removal, remedial or response action to the extent such action is required or directed by, or conducted in response to orders, directives, citations, notices or findings lawfully issued by, any Governmental Authority or court or otherwise deemed commercially reasonable by (a) Solutia with respect to the Retained Sites, (b) Monsanto with respect to the Legacy Sites and (c) the Environmental Committee with respect to the Shared Sites.

     “Escalation Notice” has the meaning set forth in Section 9.03.

     “Financing Agreement” means the Financing Agreement, dated as of January 16, 2004, by and among Solutia, as a debtor and debtor-in-possession, and Solutia Business Enterprises, Inc., as a debtor and debtor-in-possession, a New York corporation, each subsidiary of Solutia listed as a “Guarantor” on the signature pages thereto, each as a debtor and debtor-in-possession, the lenders from time to time party thereto (each a “Lender” and collectively, the “Lenders”), Citicorp USA, Inc. (“CUSA”), as collateral agent for the Lenders, CUSA, as administrative agent for the Lenders, and CUSA, as documentation agent for the Lenders, as amended or modified from time to time.

     “Final Order” has the meaning assigned to it in the Plan.

     “Funding Co” has the meaning set forth in the preamble.

     “Funding Co Accounts” has the meaning set forth in Section 2.02.

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     “Funding Co Payment” has the meaning set forth in Section 3.04(d).

     “Funds” has the meaning set forth in Section 2.02.

     “Governmental Authority” means the United States of America or any other nation, any state or other political subdivision thereof, or any entity exercising executive, legislative, judicial, regulatory or administrative functions of government.

     “Indemnitee” has the meaning set forth in Section 5.05.

     “Indemnitor” has the meaning set forth in Section 5.05.

     “Insurance Recovery” has the meaning set forth in Section 7.06(a).

     “Investment Grade” means, with respect to debt, debt rated in one of the four highest debt rating categories of Moody’s Investor Services, Inc. and Standard & Poor’s Corporation (without regard to gradation).

     “Joint Prosecution/Defense Agreement” means the Joint Prosecution/Defense Agreement among Solutia, Pharmacia and Monsanto, dated July 9, 2004.

     “Krummrich Restricted Properties” means the properties described in Exhibit K hereto.

     “Legacy Offsite” means any property for which Solutia or Pharmacia is or may become subject to Environmental Liability due to the migration onto such property of contamination that originated on a Legacy Site described in clauses (i) or (ii) of Section 3.02.

     “Legacy Sites” has the meaning set forth in Section 3.02.

     “Legacy Tort Claims” means all legal, equitable or other claims, demands, costs, causes of action and/or other liabilities arising under tort law (including demands for indemnification or contribution relating to or arising out of any such liability, whether arising under contract, tort law or otherwise), whether currently asserted or asserted in the future, whether known or unknown:

          (a) which constitute Chemicals Liabilities assumed by Solutia under the Distribution Agreement;

          (b) for which Solutia was required to indemnify Monsanto and Pharmacia under the Distribution Agreement; and

     (c) which are for property damage, personal injury, products liability or premises liability or other damages arising out of or related to exposure to asbestos, PCB, dioxin, benzene, vinyl chloride, silica, butadiene, pentachlorophenol, styrene tars, other chemical exposure or environmental contamination,

          regardless of whether:

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i.	any of the Debtors is, was or will be named as a defendant in any action commenced by or on behalf of the holder of such Legacy Tort Claim,
ii.	such holder has filed a proof of claim in the Solutia Chapter 11 Case, or
iii.	the alleged exposure occurred before or after the Solutia Spinoff.

     “Legacy Tort Claims” also includes legal, equitable or other claims, demands, costs, causes of action and/or other liabilities arising against Solutia under tort law (including demands for indemnification or contribution relating to or arising out of any such liability, whether arising under contract, tort law or otherwise), whether currently asserted or asserted in the future, whether known or unknown, in circumstances where:

     (u) the claims in question reflect the description contained in clause (c) of the first sentence of this definition;

     (v) the property from which such chemical exposure or environmental contamination arose was previously owned by Pharmacia and transferred to Solutia in connection with the Spinoff;

     (w) the claims arise from Solutia’s conduct after the Solutia Spinoff;

     (x) such conduct constituted the remediation, or non-remediation, of conditions which existed as of the Spinoff and were subject to Solutia’s assumption of remediation obligations under the Distribution Agreement; and

     (y) such conduct by Solutia was in accordance with federal or state environmental law or orders or was a continuation of activities conducted, or inactivity, by Pharmacia at the time of the Spinoff, provided, however, that in the case of non-remediation, such non-remediation must not have been in violation of federal or state environmental laws or orders,

     regardless of whether:

i.	any of the Debtors is, was or will be named as a defendant in any action commenced by or on behalf of the holder of such Legacy Tort Claim, or
ii.	such holder has filed a proof of claim in the Solutia Chapter 11 Case.

     “Legacy Tort Claims” shall not include, among other things: NRD Claims; claims for medical or retiree benefits, including retiree medical, disability and life insurance benefits; monitoring obligations with respect to PAB-exposed former employees; workers compensation claims brought solely pursuant to worker compensations statutes and not constituting or arising out of a claim, demand, cost, cause of action and/or other liability that would otherwise be defined as a “Legacy Tort Claim” herein; antitrust claims; commercial, business or contract claims; Environmental Liability Costs; any other remediation obligations covered by the terms of this Agreement; Legacy Claims for “response” as defined under Section 101(25) of CERCLA; claims asserted in connection with any pension or similar obligations of Solutia, including (x)

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claims asserted in the actions entitled Walker v. Monsanto Company Pension Plan, No. 04-cv-436-DRH, Scharringhausen v. Solutia Inc. Employees’ Pension Plan, No. 3:06CV00099, and the administrative charge entitled Larry Probst v. Monsanto Company and Solutia, Inc., EEOC Charge Nos. 280 A 00618 through 280 A 00652, and any similar litigation and (y) claims asserted in the action entitled Miller v. Pharmacia Corporation, No. 4:04CV981, or any similar litigation; or (other than as may be provided in the second sentence of this definition) any claims, including claims for exposure to chemicals or other substances, arising from Solutia’s conduct after the Spinoff.

     “Loss” has the meaning set forth in Section 5.01.

     “Master Operating Agreement” means the Master Operating Agreement, dated September 1, 1997, between Monsanto (as party thereto pursuant to the Amendment to the Distribution Agreement, dated July 1, 2002) and Solutia, as amended from time to time.

     “Monsanto” has the meaning set forth in the preamble.

     “Monsanto Claim” has the meaning assigned to it in the Plan.

     “Monsanto Credit Limit” has the meaning set forth in Section 3.04(e).

     “Monsanto ELC Review Period” has the meaning set forth in Section 3.04(d)(v).

     “Monsanto Indemnified Party” has the meaning set forth in Section 5.01.

     “Monsanto Payment” has the meaning set forth in the recitals.

     “Monsanto Spinoff” has the meaning set forth in the recitals.

     “Monsanto Spinoff Date” has the meaning set forth in the recitals.

     “Monsanto Unallocated Review Period” has the meaning set forth in Section 4.01(a).

     “New Common Stock” has the meaning assigned to it in the Plan.

     “NRD Claims” means all claims under Section 107(a)(4)(c) of CERCLA, 42 U.S.C. § 9607(a)(4)(c), or other provision of law, for damages for injury to, destruction of or loss of natural resources with respect to Covered Sites, including the reasonable cost of assessing such damages, regardless of whether such claims were filed in the Solutia Chapter 11 Case.

     “Parties” means Solutia and Monsanto.

     “Payable Amount” has the meaning set forth in Section 3.04(d)(v).

     “PCB” means polychlorinated biphenyls.

     “PENNDOT Case” means the action originally filed against United States Mineral Products Company in 1990 by the Commonwealth of Pennsylvania, seeking damages caused by

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the presence of asbestos fireproofing in the Transportation and Safety Building in Harrisburg, Pennsylvania, to which Pharmacia was added as a defendant on February 7, 1997.

     “Person” means an individual, a partnership, a corporation, a limited liability company, an association, a joint stock company, a trust, a joint venture, an unincorporated organization and a governmental entity or any department, agency or political subdivision thereof.

     “Petition Date” has the meaning set forth in the recitals.

     “Pharmacia” has the meaning set forth in the recitals.

     “Pharmacia Indemnified Party” has the meaning set forth in Section 5.01.

     “Pharmacia Indemnity Exhibit” means the Indemnification Agreement between Pharmacia and Solutia, dated as of the date hereof, attached hereto as Exhibit N.

     “Plan” means the Debtors’ Fifth Amended Joint Plan of Reorganization, dated October 19, 2007, that was filed with the Bankruptcy Court on October 22, 2007, as such plan was modified pursuant to an order from the Bankruptcy Court on November 29, 2007, attached hereto as Exhibit E.

     “Plan Documents” has the meaning assigned to it in the Plan.

     “Proceeding” has the meaning set forth in Section 5.05.

     “PRP” means a “potentially responsible party” as defined under applicable Environmental Laws.

     “Qualified Financial Institution” has the meaning set forth in Section 2.02.

     “Recovery Costs” means all out-of-pocket costs incurred by Solutia or Monsanto following the commencement of the Solutia Chapter 11 Case in connection with the pursuit of any Third Party Recoveries, whether or not Solutia or Monsanto is successful in such pursuit.

     “Registration Rights Agreement” has the meaning set forth in the recitals.

     “Remediation Plan” has the meaning set forth in Section 3.04(b).

     “Representative” has the meaning set forth in Section 8.04.

     “Retained Offsite” means any property for which Pharmacia is or may become subject to Environmental Liability due to contamination that originated on a Retained Site described in clauses (i) or (ii) of Section 3.01 prior to the Solutia Spinoff, which property is either (i) contiguous to a Retained Site; or (ii) a waste disposal site on property proximate to a Retained Site that was formerly owned or operated by Pharmacia prior to the Solutia Spinoff. If additional property is contaminated as a result of migration of such contamination from the properties identified in clauses (i) or (ii) above, such property, to the extent of such contamination, shall be considered part of the Retained Offsite.

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     “Retained Sites” has the meaning set forth in Section 3.01.

     “Retirees’ Committee” has the meaning assigned to it in the Plan.

     “Retiree Settlement Agreement” means that certain First Amended and Restated Retiree Settlement Agreement, dated as of July 10, 2007, by and among Solutia, the Retirees’ Committee, the Creditors’ Committee and Monsanto.

     “Retiree Trust” has the meaning set forth in Section 2.02.

     “Retiree Trust Agreement” means the trust agreement that is attached hereto as Exhibit P.

     “Rights Offering” has the meaning assigned to it in the Plan.

     “Sale” means any transaction, including a series of related transactions involving any Party pursuant to which any Person or Persons acquire (i) equity securities of such Party constituting a majority of the voting securities entitled to vote generally in the election of the board of directors of such Party (whether by tender offer, exchange offer, merger, consolidation, or other sale or transfer of such Party’s outstanding voting securities) or (ii) all or substantially all of such Party’s assets (any Sale described in this subclause (ii), an “Asset Sale”).

     “Services Agreement” has the meaning set forth in Section 2.01.

     “Shared Payment Period” has the meaning set forth in Section 3.04(d).

     “Shared Payments” has the meaning set forth in Section 3.04(d).

     “Shared Sites” has the meaning set forth in Section 3.04.

     “Solutia” has the meaning set forth in the preamble.

     “Solutia Cap” has the meaning set forth in Section 3.04(e).

     “Solutia Chapter 11 Case” has the meaning set forth in the recitals.

     “Solutia Deferred NRD Note” has the meaning set forth in Section 3.04(e).

     “Solutia Deferred Payment Note” has the meaning set forth in Section 3.04(e).

     “Solutia Indemnified Party” has the meaning set forth in Section 5.02.

     “Solutia Legacy Liabilities” means all liabilities of Solutia with respect to (a) retiree medical, retiree life insurance and disability benefits obligations with respect to those retirees, including their surviving spouses, dependent spouses and dependent children, and those employees receiving disability benefits, who worked for Pharmacia or one of its domestic subsidiaries and who retired, or became disabled, prior to the Solutia Spinoff, and whose post- employment benefit or disability liabilities were transferred to Solutia as a result of the Solutia Spinoff, (b) Environmental Liabilities and/or (c) any other liabilities that were assumed by Solutia under the Distribution Agreement.

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     “Solutia Payment Period” has the meaning set forth in Section 3.04(d).

     “Solutia Payment” has the meaning set forth in Section 3.04(d).

     “Solutia Specified Environmental Receipts Account” means the specified environmental receipts account established pursuant to the Financing Agreement.

     “Solutia Spinoff” has the meaning set forth in the recitals.

     “Solutia Spinoff Date” has the meaning set forth in the recitals.

     “Solutia Tort Claims” means claims, other than Legacy Tort Claims, arising in tort law from exposure to chemicals or other substances arising from Solutia’s conduct after the Solutia Spinoff.

     “Third Party Claim” has the meaning set forth in Section 5.05.

     “Third Party Recoveries” has the meaning set forth in Section 3.05(b).

     “Transition Services Agreement” means the transition services agreement, a form of which is attached hereto as Exhibit T.

     “Unallocated Account” has the meaning set forth in Section 2.02.

     “Unallocated Approval Notice” has the meaning set forth in Section 4.01(a).

     “Unallocated Expenses” has the meaning set forth in Section 4.01(a).

     “Unallocated Objection Notice” has the meaning set forth in Section 4.01(a).

     “Unallocated Payable Amount” has the meaning set forth in Section 4.01(a).

     “Unallocated Reimbursement Statement” has the meaning set forth in Section 4.01(a).

     Section 1.02 Interpretation.

          (a) References. References to any “Appendix,” “Article,” “Exhibit,” “Schedule” or “Section,” without more, are to Appendices, Articles, Exhibits, Schedules and Sections to or of this Agreement.

          (b) Headings. The section headings contained in this Agreement are for reference only and shall not affect the meaning or interpretation of this Agreement.

          (c) Authorship. The parties hereto have participated jointly in the negotiation and drafting of this Agreement. In the event an ambiguity or question of intent or interpretation arises, this Agreement shall be construed as if drafted jointly by the parties hereto, and no presumption or burden of proof shall arise favoring or disfavoring any party hereto by virtue of the authorship of any of the provisions of this Agreement.

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          (d) Word Usage. Except where the context clearly requires to the contrary, (i) instances of gender or entity-specific usage (e.g., “his,” “her,” “its,” “person” or “individual”) shall not be interpreted to preclude the application of any provision of this Agreement to any individual or entity, (ii) words in the singular shall include the plural and words in the plural shall include the singular, (iii) the word “or” shall not be applied in its exclusive sense; (iv) “including” shall mean “including, without limitation,” and “including, but not limited to” and (v) accounting terms not defined shall have the meaning assigned to them in accordance with United States generally accepted accounting principles.

          (e) Laws. Unless otherwise provided herein, references to laws, regulations and other governmental rules means such laws, regulations and rules and any orders, instruments or official government interpretations made under the relevant laws, regulations or rules as in effect at the time of determination (taking into account any amendments, extensions or supplements thereto effective at such time without regard to whether the amendments, extensions or supplements were enacted or adopted after the effective date of this Agreement) and includes all successor laws, regulations and rules thereto.

          (f) Currency. References to “$” or “dollars” means the lawful currency of the United States.

          (g) Jurisdiction. The word “federal” refers to laws, agencies or other attributes of the United States (and not to any State or locality thereof). The meaning of the terms “domestic” and “foreign” shall be determined by reference to the United States.

          (h) Dates and Time. References to “days” means calendar days. All dates and times specified in this Agreement are of the essence and shall be strictly enforced.

ARTICLE II
FUNDING CO

     Section 2.01 Funding Co. Solutia and, to the extent necessary, Monsanto shall take all actions and do all things necessary, proper and advisable to maintain Funding Co as a bankruptcy-remote subsidiary of Solutia. Solutia shall provide certain services to Funding Co pursuant to the Services Agreement, dated as of the date hereof, between Funding Co and Solutia, a copy of which is attached hereto as Exhibit F. Monsanto and Solutia shall not, prior to the date that is two years and one day after the final distribution of funds from the Funding Co Accounts, acquiesce, petition or otherwise invoke, or cause Funding Co to invoke, the process of any Governmental Authority or court for the purpose of commencing or sustaining a case against Funding Co under any federal or state bankruptcy, insolvency or similar law or appointing a receiver, liquidator, assignee, trustee, custodian, sequestrator or other similar official of Funding Co or any substantial part of its property, or ordering the winding up or liquidation of the affairs of Funding Co.

     Section 2.02 Establishment of Accounts. Any cash delivered to Funding Co pursuant to this Agreement, together with all income accrued thereon, are referred to as the “Funds.” Funding Co shall establish a deposit account (the “Deposit Account”) with a commercial bank having at least $10 billion in assets (a “Qualified Financial Institution”) to hold any Funds not

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invested pursuant to Section 2.04 and from which disbursements shall be made pursuant to this Agreement. Funding Co shall maintain the following two segregated subaccounts of the Deposit Account: (a) an environmental liabilities account (the “Environmental Account”) and (b) an unallocated account (the “Unallocated Account”, and together with the Environmental Account, the “Funding Co Accounts”). Funding Co shall keep each Funding Co Account segregated on its books from all other accounts and shall not deposit funds into or withdraw funds from the Deposit Account or allocate Funds with respect to any Funding Co Account, except in accordance with the terms of this Agreement. Whenever this Agreement requires funds to be deposited into or disbursed from either Funding Co Account, Funding Co shall deposit such funds into or disburse such funds from, as applicable, the Deposit Account and concurrently allocate such funds to or from, as applicable, such Funding Co Account. Funding Co shall not invest, distribute or release the Funds, except in accordance with the terms of this Agreement. Any income that accrues on Funds in any of the Funding Co Accounts shall be allocated to the Funding Co Account containing the Funds on which such income accrued.

     Section 2.03 Deposit of Funds. On the later of the Effective Date or the first Business Day of calendar year 2008, Solutia shall deliver cash proceeds from the Rights Offering to Funding Co in a total aggregate amount equal to $75,000,000, upon the terms and subject to the conditions of the Plan and this Agreement. Funding Co shall allocate (i) $50,000,000 of such Funds to the Environmental Account and (ii) $25,000,000 of such Funds to the Unallocated Account. In addition, on the later of the Effective Date or the first Business Day of the calendar year 2008, Solutia shall deliver to a voluntary employees’ beneficiary association trust account established pursuant to the Retiree Settlement Agreement and the Retiree Trust Agreement (the “Retiree Trust”), $175,000,000 of the cash proceeds of the Rights Offering.

     Section 2.04 Investment of the Funds. Funding Co shall invest any Funds in short-term, well-diversified, high quality investment instruments, with a primary objective of capital preservation, that are reasonably acceptable to both Monsanto and Solutia, including, but not limited to, one or more of: (a) interest bearing accounts with Qualified Financial Institutions, (b) direct obligations of the United States, (c) obligations for which the full faith and credit of the United States is pledged to provide for the payment of principal and interest, (d) Investment Grade commercial paper, (e) certificates of deposit issued by Qualified Financial Institutions, (f) bankers’ acceptances issued by Qualified Financial Institutions, (g) repurchase agreements with Qualified Financial Institutions, (h) floating rate notes rated at least AA or the equivalent, (h) tax exempt municipal bonds and notes rated at least AA or the equivalent, and (i) money market funds.

ARTICLE III
ENVIRONMENTAL REMEDIATION

     Section 3.01 Retained Sites. Solutia and Monsanto agree that, solely as between themselves and regardless of any discharge, injunction, or other protection of Solutia and/or Monsanto under the Plan or otherwise, Solutia shall be liable for all Environmental Liabilities related to, and shall have the responsibility for the Environmental Remediation projects with respect to, (i) all sites listed on Appendix A attached hereto, (ii) any other site owned and/or

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operated by Solutia, or to which Solutia (but not Monsanto or Pharmacia) sent waste at any time after the Solutia Spinoff Date, and (iii) any Retained Offsite, unless any site referred to in clause (ii) or (iii) above is specifically listed on Appendix B or Appendix C attached hereto (sites described in clauses (i), (ii) and (iii) above, collectively, the “Retained Sites”).

     Section 3.02 Legacy Sites. Solutia and Monsanto agree that, solely as between themselves and regardless of any discharge, injunction, or other protection of Solutia and/or Monsanto under the Plan or otherwise, Monsanto shall be liable for all Environmental Liabilities related to, and shall have the responsibility for the Environmental Remediation projects with respect to, (i) all sites listed on Appendix B attached hereto, (ii) any other site (a) for which Solutia assumed Environmental Liability under the Distribution Agreement, (b) that Solutia has never owned, operated or (subject to Section 3.03) to which it never sent waste, and (c) for which there is Environmental Liability due to Pharmacia’s or a predecessor’s operations (including the offsite disposal of waste) at such sites prior to the Solutia Spinoff Date, and (iii) any Legacy Offsites, unless any site referred to in clauses (ii) or (iii) above is specifically listed on Appendix A or Appendix C attached hereto (sites described in clauses (i), (ii) and (iii) above, collectively, the “Legacy Sites”).

     Section 3.03 Certain Waste Sites. Solutia and Monsanto agree that, solely as between themselves and regardless of any discharge, injunction, or other protection of Solutia and/or Monsanto under the Plan or otherwise, any site that is not listed in Appendix A, B or C and was never owned or operated by either Pharmacia or Solutia but to which both (a) Solutia and (b) Pharmacia (during the period prior to the Solutia Spinoff Date) sent waste giving rise to CERCLA (or any state law equivalent) liability (“Certain Waste Sites”) shall be treated as both a Retained Site and, solely to the extent Solutia assumed liability with respect to such site under the Distribution Agreement, a Legacy Site. The responsibility for Environmental Liabilities at such site will be allocated, as between Solutia and Monsanto, according to the volume and toxicity of waste sent by Solutia and Pharmacia, respectively, to such site or by such other reasonable measure as the Parties may agree upon consistent with customary allocation principles; provided, that Monsanto shall have no liability under this Section 3.03 with respect to Certain Waste Sites to which Pharmacia sent waste if Solutia did not assume liability with respect to such site under the Distribution Agreement. Solely as between the parties hereto, such allocation shall not be affected by any discharge, injunction, or other protection of Solutia and/or Monsanto from Environmental Liability under the Plan or otherwise.

     Section 3.04 Shared Sites. Solutia and Monsanto agree that, solely as between themselves and regardless of any discharge, injunction, or other protection of Solutia and/or Monsanto under the Plan, the Distribution Agreement or the Separation Agreement, Environmental Liabilities with respect to all sites listed on Appendix C attached hereto (the “Shared Sites”) will be shared by Solutia and Monsanto as set forth in clause (d) below. The Environmental Remediation with respect to the Shared Sites shall be administered as set forth in clauses (a) through (c) below.

          (a) Administration. Except as expressly provided below with respect to the authority of the Environmental Committee and the payments required to be made by Monsanto pursuant to clause (d) below, Solutia shall have the responsibility for the day to day implementation of the Environmental Remediation with respect to the Shared Sites consistent

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with the Budget and Remediation Plan for the Shared Sites approved by the Environmental Committee and the procedures set forth in the Charter or established by the Environmental Committee.

          (b) Environmental Committee. As of the Effective Date, Solutia and Monsanto shall have established a committee (the “Environmental Committee”) to oversee Solutia’s Environmental Remediation with respect to the Shared Sites in accordance with the charter, attached hereto as Exhibit I (the “Charter”), which may be amended by the agreement of the Parties from time to time. The initial Charter shall include the following provisions:

     (i) The Environmental Committee shall at all times consist of five (5) members.

     (ii) Solutia shall appoint two (2) members of the Environmental Committee and Monsanto shall appoint three (3) members of the Environmental Committee.

     (iii) The Environmental Committee shall approve (A) the annual budget for Environmental Remediation with respect to the Shared Sites (the “Budget”) and (B) a strategic plan for Environmental Remediation with respect to all Shared Sites (the “Remediation Plan”).

          (c) Cooperation.

     (i) Subject to the Budget and Remediation Plan approved by the Environmental Committee pursuant to clause (b) above, Solutia and Monsanto shall cooperate to perform Environmental Remediation with respect to the Shared Sites in a cost effective and efficient manner that complies with applicable Environmental Laws, including (A) the reasonable use of Solutia property and Monsanto property for management of materials generated by such Environmental Remediation, (B) the application, where legally permitted, of risk-based remediation standards, deed restrictions and other institutional controls and (C) reasonable communication between remediation managers and other relevant personnel of Solutia and Monsanto and the exchange of documents related to such Environmental Remediation; provided, however, that, in case of clauses (A) and (B) above, such measures shall be employed only to the extent that they are technologically feasible, reasonably cost-effective and can be accomplished in a manner that will not have a material adverse impact on Solutia and/or Monsanto as the case may be. Solutia and Monsanto may individually or jointly investigate and consider in good faith obtaining the use of risk transfer products, cost cap policies or other insurance-related solutions to manage and address the Environmental Liabilities related to the Shared Sites on a basis that is mutually beneficial to Solutia and Monsanto.

          (d) Sharing Mechanism.

     (i) The parties acknowledge that Monsanto has paid Environmental Liabilities with respect to the Shared Sites since the Petition Date and may continue

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to do so until the Effective Date. For all documented out of pocket Shared Site Environmental Liabilities paid by Monsanto during the Solutia Chapter 11 Case in excess of the Monsanto Payment amount, Monsanto will receive an Allowed Administrative Expense Claim (as defined in the Plan) in the Solutia Chapter 11 Case.

     (ii) Funding Co shall make payments (the “Funding Co Payment”) to Solutia for all Environmental Liabilities related to the Shared Sites from the Environmental Account in accordance with clause (v) below until the funds in the Environmental Account (including any interest thereon) are reduced to zero.

     (iii) Solutia shall pay the next $325 million of Environmental Liabilities (the “Solutia Payment”) related to the Shared Sites (the period of time during which the $325 million is being spent, the “Solutia Payment Period”). During the Solutia Payment Period, the Environmental Committee shall be entitled to review the books and records of Solutia at reasonable times and upon prior written notice to ensure the proper allocation of costs between Retained Sites and Shared Sites.

     (iv) Commencing upon the expiration of the Solutia Payment Period (the “Shared Payment Period”), Solutia and Monsanto shall each pay 50% of any Environmental Liabilities related to the Shared Sites (the “Shared Payments”) in accordance with clause (v) below.

     (v) Funding Co and Monsanto Payments. Solely for the purposes of the Funding Co Payment and Monsanto’s portion of the Shared Payments, the following procedures shall apply:

     (A) Solutia shall have the right, at any time and from time to time (and as often as it desires but in any event not more than once in any given two week period), to deliver to Monsanto and, prior to the Solutia Payment Period, Funding Co (I) a written statement (an “Environmental Reimbursement Statement”) setting forth in reasonable detail the amount and nature of unreimbursed Environmental Liability Costs with respect to the Shared Sites which Solutia has paid, (II) a copy of all such invoices and/or other supporting documentation related thereto, signed by Solutia project managers responsible for such Environmental Liability Costs, and (III) a written statement setting forth the portion, if any, of such Environmental Liability Costs that exceeds the amount of the Funds then on deposit in the Environmental Account. As promptly as practicable, but in any event within ten (10) Business Days after Monsanto’s receipt thereof (such ten (10)-Business Day period, the “Monsanto ELC Review Period”), Monsanto shall either (x) approve such Environmental Reimbursement Statement in its entirety by delivering to Solutia a written notice thereof (an “Approval Notice”) and/or (y) based on its reasonable, good faith judgment, object, in whole or in part, thereto by delivering to Solutia a written notice (an “ELC Objection Notice”) setting forth the items and amount in dispute (such amount, the “Disputed ELC Amount”) and the reasonable good faith

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basis for such objection. If Monsanto timely delivers to Solutia an ELC Objection Notice to only a part of an Environmental Reimbursement Statement, such Environmental Reimbursement Statement shall become final and binding on all the parties hereto with respect to any and all items of Environmental Liability Costs not specifically identified in such ELC Objection Notice. If Monsanto shall fail to timely deliver to Solutia an ELC Objection Notice, Monsanto shall be deemed to have approved all Environmental Liability Costs contained in the relevant Environmental Reimbursement Statement and such Environmental Reimbursement Statement and Monsanto’s approval with respect to the Environmental Liability Costs set forth therein shall become final and binding on all parties hereto.

     (B) If Monsanto shall timely submit an ELC Objection Notice, the parties shall, during the fifteen (15) day period following Solutia’s receipt of such ELC Objection Notice, negotiate in good faith to reach agreement as to the portion, if any, of the Disputed ELC Amount which is properly payable (the “Payable Amount”). If the Parties are unable to resolve Monsanto’s objection to the Environmental Reimbursement Statement within such fifteen (15) day period, the Payable Amount shall be determined in accordance with Article IX hereof.

     (C) Any and all Environmental Liability Costs set forth in an Environmental Reimbursement Statement in respect of which Monsanto (x) timely delivers an Approval Notice, (y) timely delivers an ELC Objection Notice and which Environmental Liability Costs are not specifically identified in such ELC Objection Notice or (z) fails to timely deliver an ELC Objection Notice shall, in each case, be an “Approved ELC Amount.” Prior to the Solutia Payment Period, Funding Co shall make or cause to be made a payment from the Environmental Account to Solutia in the amount of any Approved ELC Amount as promptly as practicable but in any event within one (1) Business Day following the expiration of the Monsanto ELC Review Period. During the Shared Payment Period, Monsanto shall, subject to the sharing mechanism described in paragraphs (i) through (iv) of this Section 3.04(d), pay to Solutia Monsanto’s portion (if any) of the amount of such Approved ELC Amount in immediately available funds in accordance with wire transfer instructions either contained or confirmed in the relevant Environmental Reimbursement Statement as promptly as practicable, but in any event prior to the expiration of the Monsanto ELC Review Period. Any payment by Monsanto pursuant to this Section 3.04(d)(v) shall be made with interest accrued thereon from the date that is ten (10) Business Days after Monsanto’s receipt of the Environmental Reimbursement Statement until the date of payment at the same rate as interest accrues on funds drawn on Solutia’s then-existing secured revolving credit facility. Prior to the Solutia Payment Period, Funding Co shall make or cause to be made a payment from the Environmental Account to Solutia in the amount of any Payable

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Amount as promptly as practicable, but in no event more than five (5) Business Days after the later of the dates that such amount becomes a Payable Amount. During the Shared Payment Period, Monsanto shall, subject to the sharing mechanism described in paragraphs (i) through (iv) of this Section 3.04(d), pay to Solutia Monsanto’s portion (if any) of the amount of any Payable Amount in immediately available funds in accordance with wire transfer instructions either contained or confirmed in the relevant Environmental Reimbursement Statement as promptly as practicable, but in no event more than five (5) Business Days after such amount becomes a Payable Amount.

     (e) Solutia Cap; Monsanto Payment Obligations.

     (i) Notwithstanding the provisions of Section 3.04 to the contrary, so long as Monsanto has the power to appoint and remove a majority of the members of the Environmental Committee, if Solutia is required to make any Solutia Payments or Shared Payments in any given fiscal year of Solutia in excess of $30 million (such $30 million, the “Solutia Cap” and such excess of $30 million, an “Excess Payment Obligation”), Solutia shall have the right, in its sole discretion, to pay the entire amount of the Excess Payment Obligation or defer the payment of all or a portion of any such Excess Payment Obligation in accordance with this Section 3.04(e) (all such deferred payment obligations in the aggregate outstanding at any given time, “Deferred Payment Obligations”). As promptly as practicable after making a decision to defer all or any portion of any Excess Payment Obligation pursuant to this Section 3.04(e) and in any event not later than five (5) Business Days prior to the date upon which any Deferred Payment Obligation shall become due and payable, Solutia shall notify Monsanto in writing (a “Deferral Notice”) of the amount, nature and payment terms of any such Deferred Payment Obligation. Monsanto shall be obligated to provide funds under the Solutia Deferred Payment Note in an amount sufficient to pay any Deferred Payment Obligations, but only to the extent that the total aggregate amount (including accrued and unpaid interest) outstanding under the Solutia Deferred Payment Note and the Solutia Deferred NRD Note does not exceed $25 million (the “Monsanto Credit Limit”). Upon request from Solutia, Monsanto may elect to provide funds under the Solutia Deferred Payment Note to pay Deferred Payment Obligations in excess of the Monsanto Credit Limit, but in no event shall Monsanto be obligated to do so. If Monsanto does not elect to do so, then notwithstanding the first sentence of this Section 3.04(e)(i), Solutia shall be obligated to pay any amount of Deferred Payment Obligations in excess of the Monsanto Credit Limit. Payments in any given fiscal year of Solutia made by Solutia under the Solutia Deferred Payment Note shall be taken into account in calculating (A) the Solutia Cap for the fiscal year in which such payments are made, (B) the Solutia Payment and/or (C) with respect to payments of principal only, the Solutia share of the Shared Payment for the fiscal year in which amounts being repaid were borrowed.

     (ii) Solutia’s obligation to repay the Deferred Payment Obligations pursuant to this Section 3.04(e) shall be evidenced by a promissory note in the form

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of Exhibit G1 attached hereto (the “Solutia Deferred Payment Note”), which shall contain the following provisions:

     (A) Solutia shall repay the principal amount of each Deferred Payment Obligation funded under the Solutia Deferred Payment Note in four (4) equal installments on the last Business Day of each fiscal quarter of Solutia commencing in the fiscal quarter in the following fiscal year corresponding to the fiscal quarter in which such Deferred Payment Obligation originally arose; provided, that Solutia shall have the right to prepay all or any portion of the Deferred Payment Obligations at any time.

     (B) Interest shall accrue on the Solutia Deferred Payment Note at the same rate as interest accrues on funds drawn on Solutia’s then-existing secured revolving credit facility, plus 150 basis points.

     (C) Interest shall be payable on the last Business Day of each of Solutia’s fiscal quarters. Interest payments on borrowed funds shall commence at the end of the first fiscal quarter following the date of borrowing.

     (iii) Notwithstanding the provisions of Section 3.04 to the contrary, in the event that Monsanto does not have the power to appoint and remove a majority of the members of the Environmental Committee, if Solutia is required to pay any Excess Payment Obligation in any given fiscal year of Solutia and such payment includes costs associated with NRD Claims, Solutia shall have the right, in its sole discretion, to pay the entire amount of such Excess Payment Obligation in such fiscal year or defer the payment of all or a portion of the amount equal to the lesser of (x) the amount of such NRD Claims and (y) the Excess Payment Obligations for such fiscal year (all such deferred payment obligations in the aggregate outstanding at any given time, “Deferred NRD Payment Obligations”). As promptly as practicable after making a decision to defer payment pursuant to this Section 3.04(e)(iii) and in any event not later than five (5) Business Days prior to the date upon which any Deferred NRD Payment Obligation shall become due and payable, Solutia shall notify Monsanto in a Deferral Notice of the amount and payment terms of any such Deferred NRD Payment Obligation. Monsanto shall be obligated to provide funds under the Solutia Deferred NRD Note to pay the amount of the Deferred NRD Payment Obligation, as and when due from its own funds, but such obligation shall be subject to the Monsanto Credit Limit. Upon request from Solutia, Monsanto may elect to provide funds under the Solutia Deferred NRD Note to pay Deferred NRD Payment Obligations in excess of the Monsanto Credit Limit, but in no event shall Monsanto be obligated to do so. If Monsanto does not elect to do so then, notwithstanding the first sentence of Section 3.04(e)(iii), Solutia shall be obligated to pay any amount of the Deferred NRD Payment Obligations in excess of the Monsanto Credit Limit. Payments in any given fiscal year of Solutia made by Solutia under the Solutia Deferred NRD Note shall be taken into account in calculating (A) the Solutia Cap for the fiscal year in which such payments are made, (B) the Solutia Payment and/or (C) with respect to payments of principal

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only, the Solutia share of the Shared Payment for the fiscal year in which amounts being repaid were borrowed.

     (iv) Solutia’s obligation to repay the Deferred NRD Payment Obligations pursuant to this Section 3.04(e) shall be evidenced by a promissory note in the form of Exhibit G2 attached hereto (the “Solutia Deferred NRD Note”), which shall contain the following provisions:

     (A) Solutia shall repay the principal amount of each borrowing under the Solutia Deferred NRD Note on December 31 of the year following the year in which such funds are borrowed; provided, that if such repayments, when combined with the Solutia Payment or Solutia’s portion of the Shared Payment for the fiscal year in which repayment is due, would exceed the Solutia Cap, Solutia may defer such repayment to December 31 of the following year; provided, further, that in no event shall any borrowing under the Solutia Deferred NRD Note not be repaid within five (5) years. Notwithstanding the foregoing, Solutia shall have the right to prepay all or any portion of the Deferred NRD Payment Obligations at any time.

     (B) Interest shall accrue on the Solutia Deferred NRD Note at the same rate as interest accrues on funds drawn on Solutia’s then-existing secured revolving credit facility, plus 150 basis points.

     (C) Interest payments shall be payable at the end of each of Solutia’s fiscal quarters. Interest payments on borrowed funds shall commence at the end of the first fiscal quarter following the date of borrowing.

     (v) The payment of the Solutia Deferred Payment Note and the Solutia Deferred NRD Note shall be guaranteed by certain domestic subsidiaries of Solutia, pursuant to the agreements set forth on Exhibit J.

     Section 3.05 Third Party Recoveries.

          (a) On the Effective Date, (i) any and all monies received after the Petition Date and prior to the Effective Date by Solutia or Monsanto from any Person other than Solutia or Monsanto or their respective insurers, including any PRPs, with respect to Shared Sites, (ii) any and all amounts then on deposit in the Solutia Specified Environmental Receipts Account and (iii) any and all amounts on deposit in the escrow account established pursuant to the Joint Prosecution/Defense Agreement shall be split between the Parties such that Monsanto shall receive one third (1/3) of all such monies and Solutia shall receive two thirds (2/3) of all such monies.

          (b) Following the Effective Date, any litigation for contribution or cost recovery pursuant to CERCLA or similar state law or allocation proceedings (whether by mediation or arbitration) to establish the respective liability and allocation of costs of third parties (“Cost Recovery Cases”) with respect to the Shared Sites shall, subject to Section 3.05(c),

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be managed by the Environmental Committee in accordance with the Joint Prosecution/Defense Agreement as amended or replaced from time to time by mutual agreement of the Parties. Any and all monies received after the Effective Date by Solutia or Monsanto from any Person other than Monsanto or Solutia or their respective insurers, including any PRPs (as to any Cost Recovery Cases for Covered Sites, collectively the “Third Party Recoveries”), with respect to the Shared Sites shall be split between the Parties such that Monsanto shall receive one third (1/3) of each such Third Party Recovery and Solutia shall receive two thirds (2/3) of each such Third Party Recovery. A Party receiving a Third Party Recovery with respect to a Shared Site shall (i) notify the other Party in writing of the receipt and amount of such Third Party Recovery and (ii) pay to the other Party such other Party’s portion of the Third Party Recovery in immediately available funds, in each case within five (5) Business Days of receipt of such Third Party Recovery.

          (c) Notwithstanding Section 3.05(b), Solutia shall, with respect to any Cost Recovery Case with respect to any Shared Site, be entitled, at its own expense, to select counsel to represent it with respect to any issues relating to any liability or potential liability of Solutia which is independent of its liability arising from activities that occurred prior to the Solutia Spinoff.

          (d) Third Party Recoveries with respect to the Retained Sites received by Monsanto after the Effective Date shall be transferred promptly to Solutia and Third Party Recoveries with respect to the Retained Sites received by Solutia shall be Solutia’s property.

          (e) Third Party Recoveries with respect to the Legacy Sites received by Solutia after the Effective Date shall be transferred promptly to Monsanto and Third Party Recoveries with respect to the Legacy Sites received by Monsanto shall be Monsanto’s property.

          (f) Solutia shall be entitled, at its own expense, to select counsel to represent it with respect to any issues relating to its liability or potential liability, with respect to a Retained Site.

          (g) Monsanto shall be entitled, at its own expense, to select counsel to represent it with respect to any issue relating to its or Pharmacia’s liability or potential liability, with respect to a Legacy Site.

          (h) Solutia and Monsanto will consult and cooperate with one another to obtain Third Party Recoveries, and, in furtherance thereof, shall provide one another with reasonable access to the books and records and personnel in their respective possession or control as are reasonably necessary to pursue and obtain Third Party Recoveries. Notwithstanding the foregoing, neither Solutia nor Monsanto shall be required to take any action pursuant to this Section 3.05(h) if doing so would cause such Party undue hardship, unreasonably interfere with the business or operations of such Party or require such Party to spend more than an immaterial amount of money or incur any liability other than an immaterial liability.

     Section 3.06 No Admission of Liability to Other Persons. Nothing in this Agreement shall constitute or be deemed to constitute an admission of liability on the part of Monsanto,

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Solutia or any of their Affiliates in respect of any Environmental Liability other than as between Monsanto and Solutia as expressly set forth in this Article III.

     Section 3.07 Cooperation. In connection with Environmental Remediation at the Retained Sites and Legacy Sites, Solutia shall provide Monsanto with the reasonable use of Solutia property and Monsanto shall provide Solutia with the reasonable use of Monsanto property, for management of material generated by such Environmental Remediation; provided, that such use of property will not have a material adverse impact on Solutia and/or Monsanto, as the case may be.

ARTICLE IV
DISBURSEMENTS

     Section 4.01 Disbursements.

          (a) Distributions from the Unallocated Account. Except as provided in Section 3.04(d)(v) with respect to the Environmental Account, Funding Co shall disburse the Funds, or any portion thereof, only in accordance with this Section 4.01. So long as there are Funds remaining in the Unallocated Account, Solutia shall have the right, at any time and from time to time (and as often as it desires but in any event not more than once in any given two week period), to deliver to Funding Co and Monsanto a written statement (an “Unallocated Reimbursement Statement”) setting forth any Solutia Legacy Liabilities (including the Solutia Payments and Solutia’s portion of the Shared Payments) paid by Solutia but unreimbursed as to which Solutia has decided to seek reimbursement from the Funds on deposit in the Unallocated Account (the “Unallocated Expenses”) and the portion, if any, of such Unallocated Expenses that exceeds the amount of the Funds then on deposit in the Unallocated Account. As promptly as practicable, but in any event within ten (10) Business Days of Monsanto’s receipt thereof (such ten (10) Business Day period, the “Monsanto Unallocated Review Period”), Monsanto shall either (x) approve such Unallocated Reimbursement Statement in its entirety by delivering to Solutia a written notice thereof and/or (y) based on its reasonable, good faith judgment, object, in whole or in part, thereto by delivering to Solutia a written notice (an “Unallocated Objection Notice”) setting forth the items and amount in dispute (such amount, the “Disputed Unallocated Amount”) and the reasonable good faith basis for such objection. If Monsanto timely delivers to Solutia an Unallocated Objection Notice to only a part of an Unallocated Reimbursement Statement, such Unallocated Reimbursement Statement shall become final and binding on all the parties hereto with respect to any and all items of Unallocated Expenses not specifically identified in such Unallocated Objection Notice. If Monsanto shall fail to timely deliver to Solutia an Unallocated Objection Notice, Monsanto shall be deemed to have approved all Unallocated Expenses contained in the relevant Unallocated Reimbursement Statement and such Unallocated Reimbursement Statement and Monsanto’s approval with respect to the Unallocated Expenses set forth therein shall become final and binding on all parties hereto. If Monsanto shall timely submit an Unallocated Objection Notice, the parties shall, during the fifteen (15) day period following Solutia’s receipt of such Unallocated Objection Notice, negotiate in good faith to reach agreement as to the portion, if any, of the Disputed Unallocated Amount which is properly payable (the “Unallocated Payable Amount”). If the Parties are unable to resolve Monsanto’s objection to the Unallocated Reimbursement Statement within such fifteen (15) day

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period, the Unallocated Payable Amount shall be determined in accordance with Article IX hereof.

          (b) Payment Procedures. Any and all Unallocated Expenses set forth in an Unallocated Reimbursement Statement in respect of which Monsanto (x) timely delivers an Unallocated Approval Notice (y) timely delivers an Unallocated Objection Notice and which Unallocated Expenses are not specifically identified in such Unallocated Objection Notice or (z) fails to timely deliver an Unallocated Objection Notice shall, in each case, be an “Approved Unallocated Amount.” Any and all Approved Unallocated Amounts and Unallocated Payment Amounts shall be paid as set forth in this Section 4.01(b). Funding Co shall make or cause to be made payment from the Unallocated Account to Solutia in the amount of any Approved Unallocated Amount, as promptly as practicable but in any event within one (1) Business Day following the expiration of the Monsanto ELC Review Period, in accordance with wire transfer and account instructions either contained or confirmed in the relevant Unallocated Reimbursement Statement. Funding Co shall make or cause to be made payment from the Unallocated Account to Solutia in the amount of any Unallocated Payment Amount as soon as practicable, but in any event within five (5) Business Days after the date upon which such amount becomes an Unallocated Payment Amount, in accordance with wire transfer and account instructions either contained or confirmed in the relevant Unallocated Reimbursement Statement.

ARTICLE V
INDEMNIFICATION

     Section 5.01 Indemnification Obligations of Solutia. After the Effective Date, Solutia shall indemnify Monsanto and its Affiliates, directors, officers, employees, employee benefit plans, successors and assigns (collectively, “Monsanto Indemnified Parties”) and shall indemnify Pharmacia and its Affiliates, directors, officers, employees, successors and assigns (collectively, “Pharmacia Indemnified Parties”) pursuant to the Pharmacia Indemnity Exhibit and save and hold each of them harmless against, and pay on behalf of or reimburse Monsanto Indemnified Parties and Pharmacia Indemnified Parties as and when incurred for any loss, liability, action, cause of action, cost, damage or expense, whether or not arising out of third party claims (including interest, penalties, reasonable attorneys’, consultants’ and experts’ fees and expenses) (collectively, “Losses”, and each a “Loss”), which any Monsanto Indemnified Party or Pharmacia Indemnified Party suffers, sustains or becomes subject to, as a result of or arising out of:

          (a) any Environmental Liability in connection with the Retained Sites;

          (b) any Environmental Liability in connection with the Shared Sites for which Solutia is liable pursuant to Section 3.04 above;

          (c) Solutia Tort Claims;

          (d) failure of Solutia to pay any amounts required to be paid by Solutia (i) pursuant to the Anniston Settlement Agreement as specified in the Anniston Side Letter or (ii) to the education trust fund pursuant to Section VI of the Anniston Consent Decree, or failure of Solutia to honor any other obligation of Solutia under the Anniston Settlement Agreement;

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          (e) the PENNDOT Case; provided, that in no event shall Solutia be required to indemnify Monsanto Indemnified Parties or Pharmacia Indemnified Parties in respect of any Losses suffered by Monsanto Indemnified Parties or Pharmacia Indemnified Parties described in this clause (e) to the extent the aggregate amount of all such Losses exceeds $20 million; and

          (f) the Chemicals Liabilities; provided, that in no event shall Solutia be required to indemnify Monsanto Indemnified Parties or Pharmacia Indemnified Parties in respect of any Losses suffered by Monsanto Indemnified Parties or Pharmacia Indemnified Parties described in this clause (f) to the extent that (i) Monsanto agreed to indemnify Solutia Indemnified Parties for such Losses pursuant to Section 5.02 or (ii) such Losses relate to “claims” (as defined in section 101(5) of the Bankruptcy Code) that are not satisfied in full under the Plan arising in connection with or related to Pharmacia’s or Solutia’s non-qualified plans or arrangements at issue in Miller v. Pharmacia Corporation, Case No. 4:04CV981.

     If and to the extent any provision of this Section 5.01 is unenforceable for any reason, Solutia hereby agrees to make the maximum contribution to the payment and satisfaction of the Loss for which indemnification is provided for in this Section 5.01 that is permissible under applicable laws.

     Section 5.02 Indemnification Obligations of Monsanto. After the Effective Date, Monsanto shall indemnify Solutia and its Affiliates, directors, officers, employees, employee benefit plans, successors and assigns (collectively, “Solutia Indemnified Parties”) and save and hold each of them harmless against, and pay on behalf of or reimburse Solutia Indemnified Parties as and when incurred for any Losses which any Solutia Indemnified Party suffers, sustains or becomes subject to, as a result of or arising out of:

(a)	any Environmental Liability in connection with the Legacy Sites;
(b)	any Environmental Liability in connection with the Shared Sites for which Monsanto is liable pursuant to Section 3.04 above;
(c)	any Legacy Tort Claims; and
(d)	the Agricultural Liabilities.

     If and to the extent any provision of this Section 5.02 is unenforceable for any reason, Monsanto hereby agrees to make the maximum contribution to the payment and satisfaction of the Loss for which indemnification is provided for in this Section 5.02 that is permissible under applicable laws.

     Section 5.03 Manner of Payment. Any indemnification owing pursuant to this Article V shall be effected by wire transfer of immediately available funds from the Indemnitor to an account designated in writing by the Indemnitee within fifteen (15) days after the final determination of the amount thereof pursuant to this Article V. The amount of any Losses for which indemnification is provided under this Article V shall be computed net of any third-party insurance proceeds and recoveries in respect of third party indemnification obligations actually received by the Indemnitee in connection with such Losses. The Indemnitee shall use its commercially reasonable efforts to obtain recovery in respect of any Losses from any insurer or

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other third party indemnity which is available in respect of such Losses. If an Indemnitee receives such insurance proceeds or indemnification recoveries in connection with Losses for which it has received indemnification, such party shall refund to the Indemnitor the amount of such insurance proceeds or recovery when received, up to the amount of indemnification received.

     Section 5.04 Indemnification Claims. Any indemnification claim which is not a result of a third party claim shall be asserted by written notice given by the Indemnitee to the Indemnitor. The Indemnitor shall have a period of thirty (30) days after the receipt of such notice within which to respond thereto. If the Indemnitor does not respond within such 30-day period, it shall be deemed to have rejected such claim in whole. If the Indemnitor does not respond within such 30-day period or rejects such claim in whole or in part, the Indemnitee shall be free to pursue such remedies as may be available to such party under Article IX.

     Section 5.05 Third Party Claims

          (a) If there occurs an event which a party asserts is an indemnifiable event pursuant to this Article V, the party or parties seeking indemnification (the “Indemnitee”) shall notify the other party or parties obligated to provide indemnification (the “Indemnitor”) promptly in writing specifying the facts constituting the basis for such claim and the amount, to the extent known, of the claim asserted. If such event involves (i) any third party claim or (ii) the commencement of any suit, action, proceeding, investigation or other claim (a “Proceeding”) by a third Person (such third party claim and Proceeding hereinafter referred to collectively as a “Third Party Claim”), the Indemnitee will give such Indemnitor prompt written notice of such Third Party Claim or the commencement of such Proceeding; provided, that the failure to provide prompt notice as provided herein (whether with respect to a Third Party Claim or otherwise) will relieve the Indemnitor of its obligations hereunder only to the extent that such failure prejudices the Indemnitor hereunder. In case any such Third Party Claim shall be brought against any Indemnitee, it shall notify the Indemnitor of the commencement thereof promptly in writing specifying the facts constituting the basis for such claim and the amount, to the extent known, of the claim asserted.

          (b) The Indemnitor shall be entitled to participate in the defense of any Third Party Claim and to assume the defense thereof, with counsel selected by the Indemnitor; provided, that the Indemnitor notifies the Indemnitee in writing of its election to assume such defense within twenty (20) Business Days of receipt of notice from the Indemnitee of such Third Party Claim. After notice from the Indemnitor to the Indemnitee of such election so to assume the defense thereof, the Indemnitor shall not, except as provided in the next sentence, be liable to the Indemnitee for any legal expenses of other counsel or any other expenses subsequently incurred by such party or parties in connection with the defense thereof. Notwithstanding the Indemnitor’s election to so assume the defense of any such Third Party Claim, the Indemnitee shall have the right to employ separate counsel (including local counsel) and participate in (but not control) such defense; provided, that the Indemnitor shall bear the reasonable fees and expenses of such separate counsel only if (x) the defendants in any such Proceeding include both the Indemnitee and the Indemnitor and the Indemnitee has legal defenses available to it which are different from or additional to those available to the Indemnitor; provided further, that, in each case, with respect to each Indemnitee in such circumstance, the Indemnitor shall not be

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required to bear the fees and expenses of more than one firm of attorneys in addition to one firm of local counsel in each jurisdiction where the primary counsel is not admitted to practice and where local counsel is necessary, or (y) counsel for the Indemnitor shall authorize in writing the Indemnitee to employ separate counsel at the expense of the Indemnitor.

          (c) The Indemnitor and the Indemnitee agree to cooperate fully with each other and their respective counsel in connection with the defense, negotiation of settlement or settlement of any such Third Party Claim, including providing access to any relevant books and records, properties, employees, representatives and advisors (regardless of whether the Indemnitor has assumed the defense thereof). If the Indemnitor assumes the defense of a Third Party Claim, no settlement or compromise thereof may be effected (x) by the Indemnitor without the written consent of the Indemnitee (which consent shall not be unreasonably withheld or delayed) unless (1) there is no finding or admission of any violation of law or any violation of the rights of any Person by any Indemnitee and no adverse effect on any other third party claims that may be made against any Indemnitee and (2) it involves solely the payment of monetary damages and all relief provided is paid or satisfied in full by the Indemnitor or (y) by the Indemnitee without the consent of the Indemnitor, except to the extent it involves only equitable or other non-monetary relief not binding on any party other than the Indemnitee and ten (10) Business Days prior written notice is given to the Indemnitor. If the Indemnitor elects not to assume the defense of a Third Party Claim, the Indemnitee may assume the defense of any such Third Party Claim with counsel selected by the Indemnitee, and the Indemnitor shall bear reasonable fees and expenses of such counsel. In no event shall an Indemnitor be liable for any settlement effected without its written consent (which consent shall not be unreasonably withheld or delayed).

     Section 5.06 Subrogation. In the event of payment by an Indemnitor to an Indemnitee in connection with any Third Party Claim, the Indemnitor shall be subrogated to and shall stand in the place of the Indemnitee as to any events or circumstances in respect of which the Indemnitee may have any right or claim relating to such claim against any claimant or plaintiff asserting such claim. The Indemnitee shall cooperate with the Indemnitor in a reasonable manner, and at the cost and expense of the Indemnitor, in prosecuting any subrogated right or claim, including permitting the Indemnitor to bring suit against such third party in the name of the Indemnitee.

     Section 5.07 Subsidiary Guarantees. The indemnification obligations of Solutia pursuant to this Article V shall be guaranteed by certain domestic subsidiaries of Solutia pursuant to the agreement set forth on Exhibit J; provided, that, notwithstanding anything to the contrary in this Section 5.07, such guarantee shall in no event limit in any way whatsoever Solutia’s ability to (a) obtain any financing or refinancing (and such guarantee shall be subordinated on customary terms to, but not terminated by, any guarantee required in connection with any financing or refinancing) or (b) acquire or sell any assets or businesses of Solutia (including the stock of any direct or indirect Subsidiary of Solutia), in each case in bona fide arm’s length third party transactions. Upon any sale by Solutia of the stock of a direct or indirect subsidiary that has executed such a guarantee in a bona fide arm’s length third party transaction, the guarantee provided by such subsidiary pursuant to this Section 5.07 shall automatically terminate and be of no further force or effect.

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ARTICLE VI
CERTAIN TAX MATTERS

     Section 6.01 Net Operating Loss Carryforwards. Prior to transferring any common stock of Solutia received by Monsanto on the Effective Date in connection with the consummation of the Plan, Monsanto shall consider the potential impact, if any, of such transfer on the net operating loss carryforwards of Solutia. Monsanto shall take commercially reasonable steps, consistent with its business judgment, to structure any such transfer in a manner that is designed to mitigate or eliminate any such potential tax impact. Solutia shall not apply the provisions of Section 382(l)(5) of the Internal Revenue Code of 1986, as amended (“Code”), to the ownership change resulting from the Plan in accordance with Section 382(l)(5)(H) of the Code and Treasury Regulation Section 1.382-9(i) without the prior written consent of Monsanto.

     Section 6.02 Treatment of Funding Co. Each of the parties hereto acknowledges that on the date hereof for federal (and, where applicable, state and local) income tax purposes, Funding Co is a “disregarded entity,” as described in Treasury Regulation section 301.7701-3, wholly-owned by Solutia. Neither Solutia nor Monsanto shall take any action or any position on any tax return, financial statement, regulatory filing or other statement inconsistent with the treatment of Funding Co as a disregarded entity for federal (and, where applicable, state and local) income tax purposes.

     Section 6.03 Treatment of Earnings of Funding Co. Solutia and Monsanto agree that Solutia will report all interest, dividend and other taxable income of any type of Funding Co as taxable income of Solutia for federal (and, where applicable, state and local) income tax purposes.

     Section 6.04 Distributions by Funding Co. Solutia and Monsanto agree that for federal (and, where applicable, state and local) income tax purposes distributions by Funding Co (whether pursuant to Section 4.01 or otherwise):

          (a) if made to Solutia, shall be disregarded, and

          (b) if made to any Person other than Solutia, shall be treated as if made by Solutia.

     Section 6.05 Contribution to the Retiree Trust. Solutia and Monsanto agree that for federal (and, where applicable, state and local) income tax purposes, the contribution to the Retiree Trust shall be deducted by Solutia.

     Section 6.06 Treatment of Environmental Remediation. Solutia and Monsanto agree that for federal (and, where applicable, state and local) income tax purposes all amounts paid for Environmental Liabilities and Environmental Liability Costs to be paid following the Effective Date, as provided in Article III, shall (subject to the applicability of Section 6.04 with respect to amounts paid by Funding Co) be deducted (or capitalized, as appropriate) by Solutia and that any amounts paid by Monsanto or as provided in Article III shall be treated as a capital contribution by Monsanto to Solutia on account of the shares of Solutia received by Monsanto on account of the Monsanto Claim; provided, that any payments of Deferred Payment Obligations and Deferred NRD Payment Obligations by Monsanto shall be treated as a loan by Monsanto to

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Solutia in an amount equal to such payment and a payment by Solutia of the underlying Environmental Liability or Environmental Liability Cost.

     Section 6.07 Effect of the Agreement. For the avoidance of doubt, this Agreement shall have no effect on the tax treatment or characterization of (i) any payments made, or to be made, pursuant to the Anniston Settlement Agreement or the Anniston Side Letter or (ii) any payments made in respect of Environmental Liabilities and/or Environmental Liability Costs prior to the Effective Date.

     Section 6.08 Cooperation. Subject to Section 6.02 through Section 6.07, Solutia and Monsanto agree to cooperate with each other in the preparation of tax returns and similar filings, the defense of audits and similar inquiries and the provision of requested tax related information. Such cooperation shall include the provision of copies of records (at the expense of the Party requesting such records) and making personnel of Solutia or Monsanto, as applicable, available to the other Party. Solutia and Monsanto agree to retain the appropriate records which may affect the determination of the liability for taxes of either Solutia or Monsanto (or any of their respective Affiliates) until such time as there has been a “determination” (as such term is defined in section 1313 of the Internal Revenue Code but applied to state, local, foreign and other taxes as well) with respect to such liability.

ARTICLE VII
COVENANTS

     Section 7.01 Further Assurances. Subject to the terms of this Agreement, each party hereto shall use its commercially reasonable efforts to take all actions and do all things necessary, proper or advisable in order to consummate and make effective the transactions contemplated by this Agreement.

     Section 7.02 Business Combinations; Transfers of Covered Sites.

          (a) Notwithstanding anything herein to the contrary, in the event of a Sale of a Party, such Party shall assign all of its rights, interests, duties, obligations and/or liabilities under this Agreement to the acquirer of or successor to such Party in such Sale and shall cause such acquirer or successor to accept the assignment of the rights and interests, and to assume the duties, obligations and liabilities, under this Agreement.

          (b) Notwithstanding anything herein to the contrary and subject to the proviso at the end of this sentence, (i) Solutia shall have the right to sell, transfer or otherwise dispose of all or any portion of any property Solutia owns (other than the Anniston Restricted Properties or the Krummrich Restricted Properties), in each case without the consent of Monsanto and without assigning its rights and/or obligations with respect to such site under this Agreement to the buyer of such site, (ii) any such sale, transfer or other disposition shall not terminate and shall have no effect on the rights and obligations of Solutia, Monsanto and/or Funding Co under this Agreement with respect to such site and (iii) any such site that is a Retained Site shall remain a Retained Site and any such site that is a Shared Site shall remain Shared Site, in each case, regardless of such sale, transfer or other disposition; provided that Solutia shall obtain the prior written consent (which consent shall not be unreasonably withheld or delayed) of Monsanto for

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any sale, transfer or other disposition (excluding the execution of any operating lease) of either the Anniston Restricted Properties or the Krummrich Restricted Properties or any part or portion thereof.

     Section 7.03 Cooperation and Access.

          (a) Subject to Section 7.04, each of Monsanto and Solutia will permit representatives (including legal counsel, accountants and financing sources) of Solutia and Monsanto, respectively, to have reasonable access and duplication rights during normal business hours to records and documents (i) reasonably related to the Solutia Legacy Liabilities and Covered Sites or (ii) reasonably requested for any audit, accounting, intellectual property protection, litigation, disclosure, reporting or tax purposes. The Parties also agree to provide each other with timely and reasonable access during normal business hours upon prior written notice to each others personnel, counsel and consultants with knowledge regarding Covered Sites or Solutia Legacy Liabilities in responding to any claims or inquiries by third parties or any Governmental Authority or court regarding same. Furthermore, each Party shall use reasonable efforts to provide assistance to the other Party with respect to any litigation and shall make available to the other Party, upon written request and reasonable notice and to the extent practicable taking into consideration business demands, its officers, directors, agents and employees for the purpose of consultation and/or as a witness, to the extent that the requesting Party believes any such Person may reasonably be useful or required in connection with such litigation; provided, however, the provisions of this sentence shall not apply to litigation between the Parties.

          (b) A Party providing records, documents or services of its directors, officers, agents or employees to the other Party hereunder shall be entitled to receive from such other Party, upon presentation of invoices therefor, reimbursement of any out-of-pocket expenses reasonably incurred in providing such records, documents or services.

          (c) With regard to Legacy Sites, Solutia shall transfer to Monsanto all documents related to such sites and shall include any database management technology, indexes or other materials associated with such documents whether in Solutia’s possession or the possession of Solutia’s outside consultants and/or counsel. With regard to Retained Sites, Monsanto shall transfer to Solutia all documents related to such sites and shall include any database management technology, indexes or other materials associated with such documents whether in Monsanto’s possession or the possession of Monsanto’s outside consultants and/or counsel. On the date hereof Solutia and Monsanto shall enter into the Transition Services Agreement that will provide for the cooperation of Monsanto and Solutia in the orderly transfer described in the two preceding sentences and may mutually agree to any other arrangement regarding access and cooperation with respect to the Covered Sites.

     Section 7.04 Confidentiality.

          (a) From and after the Effective Date, each party hereto and the members of the Environmental Committee shall hold, and shall cause such party’s employees, Affiliates, directors, officers, agents, attorneys, accountants, financial and other advisors (collectively, each such party’s “Representatives”) to hold in strict confidence any Confidential Information of any

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other party and, in each case, shall not disclose such Confidential Information to any other Person; provided, however, that such Confidential Information may be disclosed (i) to such party’s Representatives who need to know such information for the purpose of performing such party’s obligations under this Agreement, (ii) pursuant to subpoena or court process subject to the provisions set forth in subsection (b) below; and (iii) to the extent such party’s attorneys advise such party that disclosure is required by law or legal process (including applicable securities laws and regulations and exchange rules and regulations), in each case subject to the provisions set forth in subsection (b) below.

          (b) In the event that any party or such party’s Representatives receive a request (by deposition, interrogatory, request for documents, subpoena, civil investigative demand or similar process) or reasonably believes based on the advice of such party’s attorneys that such party is legally required to disclose all or any part of the Confidential Information to a third party (such party, a “Disclosing Party”), the Disclosing Party agrees to (i) immediately notify the Confidential Party of the existence, terms and circumstances surrounding such request and provide the Confidential Party with a copy thereof, (ii) consult with the Confidential Party on the advisability of taking legally available steps to resist or narrow such request and (iii) assist the Confidential Party in seeking a protective order or other appropriate remedy. In the event that such protective order or other remedy is not obtained or the Confidential Party, in its sole discretion, waives compliance with the provisions hereof, the Disclosing Party and/or the Disclosing Party’s Representatives, as the case may be, may, at the latest time practicable, disclose to any tribunal or requesting party only that portion of the Confidential Information which the Disclosing Party is advised by counsel is legally required by law, rule, regulation or binding order to be disclosed, and shall exercise commercially reasonable efforts to obtain reliable assurance that confidential treatment will be accorded such Confidential Information. At least two Business Days prior to making such disclosure, the Disclosing Party shall first disclose such information to the Confidential Party in the form in which it is proposed to be disclosed.

     Section 7.05 Power of Attorney. Effective as of the date hereof, Pharmacia has provided Solutia and Monsanto new powers of attorney in the form of Exhibit M attached hereto to replace and supercede any power of attorney provided under the Distribution Agreement.

     Section 7.06 Insurance.

          (a) Any and all amounts paid by any insurer, including KWELM and/or Equitas (net of any commission payable to The Claro Group (formerly LECG)), to either Monsanto or Solutia (an “Insurance Recovery”), shall be paid and payable (i) to Solutia if and to the extent that such Insurance Recovery is paid or payable in respect of Losses incurred by Solutia in defending or settling Chemicals Liabilities prior to the Petition Date (and Monsanto shall promptly pay over to Solutia any such Insurance Recovery received by Monsanto) and (ii) to Monsanto in all other cases (and Solutia shall promptly pay over to Monsanto any such Insurance Recovery received by Solutia). In addition, Monsanto shall receive and be entitled to all Insurance Recoveries related to Legacy Tort Claims and Solutia shall receive and be entitled to all Insurance Recoveries related to Solutia Tort Claims. Notwithstanding anything to the contrary in this Section 7.06(a), Monsanto shall pay to Solutia any and all Insurance Recoveries to the extent such amounts relate to Solutia’s out-of-pocket expenses or liabilities retained by Solutia pursuant to the Plan, the Plan Documents and this Agreement. Monsanto and Solutia

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shall cooperate with one another and take commercially reasonable efforts to ensure that Solutia shall have the right to have direct access to and claim reimbursement directly against any insurance policy that provides coverage for any Loss incurred by Solutia in defending or settling Chemicals Liabilities prior to the Petition Date, any Solutia’s out-of-pocket expense or any liability retained by Solutia pursuant to the Plan, the Plan Documents and this Agreement, but not waive or terminate any such coverage.

     Section 7.07 Funding Co As Party Hereto. On the Effective Date Funding Co shall execute this Agreement and shall become a party hereto for all purposes.

ARTICLE VIII
REPRESENTATIONS AND WARRANTIES

     Section 8.01 Representations and Warranties of Monsanto.

          (a) Monsanto is duly organized, validly existing and in good standing under the laws of its jurisdiction of formation. Monsanto possesses all requisite power and authority necessary to carry out the transactions contemplated by this Agreement.

          (b) The execution, delivery and performance of this Agreement have been duly authorized by Monsanto. Subject to Section 10.01 hereof, this Agreement, when executed and delivered by Monsanto in accordance with the terms hereof, shall constitute a valid and binding obligation of Monsanto, enforceable in accordance with its terms, except as may be limited by applicable bankruptcy, insolvency or similar laws affecting creditors rights generally or by general principles of equity.

          (c) The execution, delivery and performance by Monsanto of this Agreement, and the fulfillment of and compliance with the respective terms hereof by Monsanto, do not and shall not (i) conflict with or result in a breach of the terms, conditions or provisions of, (ii) constitute a default under (whether with or without the passage of time, the giving of notice or both), (iii) give any third party the right to modify, terminate or accelerate any obligation under, (iv) result in a violation of, or (v) require any authorization, consent, approval, exemption or other action by or notice or declaration to, or filing with, any Governmental Authority or court pursuant to, (A) the organizational documents of Monsanto, (B) any law to which Monsanto is subject, or (C) any material agreement, instrument, order, judgment or decree to which Monsanto is subject.

          (d) Other than presence of dioxin, including all congeners of dioxin and furans, and except as provided in Schedule 8.01(d), Monsanto has no knowledge of any fact or circumstance at the Kanawha River site with respect to which Environmental Remediation may be necessary.

     Section 8.02 Representations and Warranties of Solutia.

          (a) Solutia is duly organized, validly existing and in good standing under the laws of its jurisdiction of formation. Subject to Bankruptcy Court approval of the terms hereof, Solutia possesses all requisite power and authority necessary to carry out the transactions contemplated by this Agreement.

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          (b) The execution, delivery and performance of this Agreement have been duly authorized by Solutia. Subject to Section 10.01 hereof, this Agreement, when executed and delivered by Solutia in accordance with the terms hereof, shall constitute a valid and binding obligation of Solutia, enforceable in accordance with its terms, except as may be limited by applicable bankruptcy, insolvency or similar laws affecting creditors rights generally or by general principles of equity.

          (c) The execution, delivery and performance by Solutia of this Agreement, and the fulfillment of and compliance with the respective terms hereof by Solutia, do not and shall not (i) conflict with or result in a breach of the terms, conditions or provisions of, (ii) constitute a default under (whether with or without the passage of time, the giving of notice or both), (iii) give any third party the right to modify, terminate or accelerate any obligation under, (iv) result in a violation of, or (v) subject to approval of the terms hereof by the Bankruptcy Court, require any authorization, consent, approval, exemption or other action by or notice or declaration to, or filing with, any Governmental Authority or court pursuant to, (A) the organizational documents of Solutia, (B) any law to which Solutia is subject, or (C) any material agreement, instrument, order, judgment or decree to which Solutia is subject.

     Section 8.03 Representations and Warranties of Funding Co.

          (a) Funding Co is duly organized, validly existing and in good standing under the laws of its jurisdiction of formation. Funding Co possesses all requisite power and authority necessary to carry out the transactions contemplated by this Agreement.

          (b) The execution, delivery and performance of this Agreement have been duly authorized by Funding Co. This Agreement, when executed and delivered by Funding Co in accordance with the terms hereof, shall constitute a valid and binding obligation of Funding Co, enforceable in accordance with its terms, except as may be limited by applicable bankruptcy, insolvency or similar laws affecting creditors rights generally or by general principles of equity.

          (c) The execution, delivery and performance by Funding Co of this Agreement, and the fulfillment of and compliance with the respective terms hereof by Funding Co, do not and shall not (i) conflict with or result in a breach of the terms, conditions or provisions of, (ii) constitute a default under (whether with or without the passage of time, the giving of notice or both), (iii) give any third party the right to modify, terminate or accelerate any obligation under, (iv) result in a violation of, or (v) require any authorization, consent, approval, exemption or other action by or notice or declaration to, or filing with, any Governmental Authority or court pursuant to, (A) the organizational documents of Funding Co, (B) any law to which Funding Co is subject, or (C) any material agreement, instrument, order, judgment or decree to which Funding Co is subject.

     Section 8.04 No Additional Representations or Warranties. Except as expressly provided in this Article VIII, each party acknowledges and agrees that no party has made any representations or warranties in connection with the transactions contemplated hereby or by the Plan.

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ARTICLE IX
DISPUTE RESOLUTION

     Section 9.01 Agreement to Arbitrate. Except as otherwise specifically provided in Article V and in Section 9.02 below, the procedures for discussion, negotiation and arbitration set forth in this Article IX shall apply to all disputes, controversies or claims (whether sounding in contract, tort or otherwise) that may arise out of or relate to, or arise under or in connection with, this Agreement, or the transactions or the commercial or economic relationship contemplated hereby (including all actions in furtherance of the transactions contemplated hereby on or prior to the date hereof). Each party agrees that this Article IX shall provide the sole and exclusive remedy in connection with any dispute, controversy or claim relating to any of the foregoing matters and irrevocably waives any right to commence any action or proceeding in or before any Governmental Authority or court, except as expressly provided in Section 9.02 and except to the extent provided under the Arbitration Act in the case of judicial review of arbitration results or awards.

     Section 9.02 Bankruptcy Court Jurisdiction. Notwithstanding anything to the contrary contained in this Agreement, for so long as the Solutia Chapter 11 Case remains open, the Bankruptcy Court shall have exclusive jurisdiction of all matters arising out of, and related to disputes arising in connection with the interpretation, implementation or enforcement of this Agreement as provided for in the Plan.

     Section 9.03 Procedures.

          (a) Any party hereto alleging that there exists a dispute or disagreement regarding the matters covered hereby shall notify in writing the other parties hereto of such alleged dispute or disagreement (the “Dispute Notice”). The parties shall attempt to resolve such alleged dispute or disagreement through good faith negotiations among the members of management of each party designated by each party promptly following the sending or the receipt, as applicable, of a Dispute Notice. If the parties hereto shall fail to resolve such alleged dispute or disagreement within sixty (60) days from the date of the Dispute Notice, then any party involved in such a dispute or disagreement shall have the right to deliver to the other parties involved in such dispute or disagreement a notice (an “Escalation Notice”) requiring a meeting (which may be in person or telephonic) of the Chief Executive Officer (each, a “CEO”) of each such party, who shall meet (either in person or telephonically) within twenty (20) days of the delivery of the Escalation Notice to such other parties to seek to resolve such dispute or disagreement. If such dispute or disagreement has not been resolved within twenty (20) days of the date of such meeting between the CEOs, then any party involved in such dispute or disagreement shall have the right to commence an arbitration in accordance with the provisions of this Section 9.03.

          (b) The arbitration shall be held in St. Louis, MO or such other place as the parties to the arbitration proceeding shall otherwise agree in writing.

          (c) The arbitration proceeding shall be conducted in accordance with the Commercial Arbitration Rules of the American Arbitration Association (“AAA”) in effect on the date of the commencement of the arbitration. Each Party shall nominate one arbitrator and the

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two arbitrators so appointed shall attempt to agree on the appointment of a third arbitrator. If they are unable to so agree within thirty (30) days after the second arbitrator is appointed, the third arbitrator shall be appointed by AAA.

          (d) The decision of the panel of arbitrators shall be final, binding and incontestable and may be used as a basis for judgment thereon in any jurisdiction. Such decision shall include a determination as to which of the parties shall bear the costs of the arbitration proceeding.

          (e) The parties hereby expressly agree to waive the right to appeal from the decision of the arbitrators. Accordingly, there shall be no appeal to any court or other authority (government or private) from the decision of the arbitrators, and the parties shall not dispute nor question the validity of such award before any regulatory or other authority in any jurisdiction where enforcement action is taken by the party or parties in whose favor the award was rendered.

          (f) Notwithstanding the foregoing, any party may at any time without regard to any notice periods required by the provisions hereof (whether before, during or after arbitration), and as often as is necessary or appropriate, seek provisional or interim relief (including, without limitation, to the extent available under applicable law, a temporary restraining order, preliminary injunction and/or pre-judgment attachment) in a court of law.

          (g) The commencement and pendency of an arbitration under this Section 9.03 shall not relieve any of the parties of their respective obligations under this Agreement.

          (h) The provisions of this Article IX shall survive the termination and/or expiration of this Agreement.

ARTICLE X
MISCELLANEOUS

     Section 10.01 Effectiveness. This Agreement shall not be effective or binding upon the parties hereto until (a) the Exhibits hereto are in form and substance acceptable to Solutia and Monsanto, (b) the Agreement and its terms have been approved by Final Order of the Bankruptcy Court, (c) the Retiree Settlement and its terms have been approved by Final Order of the Bankruptcy Court, (d) the Plan has been confirmed by Final Order of the Bankruptcy Court, (e) the conditions precedent to the Effective Date set forth in the Plan shall have been satisfied or duly waived pursuant to the terms of the Plan and (f) Solutia’s counsel has issued an opinion, in form and substance reasonably acceptable to Monsanto, regarding Funding Co.

     Section 10.02 Expenses. Except as specifically provided in this Agreement, all costs and expenses of any party hereto whether incurred prior to or after the Effective Date in connection with the negotiation, preparation, execution and delivery of this Agreement and with the consummation of the transactions contemplated by this Agreement, including legal fees, shall be paid by such party.

     Section 10.03 Governing Law. This Agreement shall be governed by and construed in accordance with the laws of the State of Delaware (other than the laws regarding choice of laws

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and conflicts of laws) as to all matters, including matters of validity, construction, effect performance and remedies.

     Section 10.04 Notices. All notices, requests, claims demands and other communications hereunder shall be in writing and shall be given (and shall be deemed to have been duly given upon receipt) by delivery in person or by facsimile (provided confirmation is delivered to the recipient the next day in the case of facsimile), by nationally recognized overnight courier, or by registered or certified mail, postage prepaid, return receipt requested, addressed as follows:

If to Solutia:	General Counsel
	Solutia, Inc.
	575 Maryville Centre
	St. Louis, MO 63141
	Telephone: (314) 674-1000
	Facsimile: (314) 674-8703
with a copy (which shall not constitute notice) to:
	Jonathan S. Henes
	Thomas W. Christopher
	Kirkland & Ellis LLP
	153 East 53rd Street
	New York, NY 10022
	Telephone: 212-446-4800
	Facsimile: 212-446-4900
If to Monsanto:	David Snively, Esq. (General Counsel)
	Monsanto Company
	800 North Lindbergh Boulevard
	St. Louis, MO 63167
with a copy (which shall not constitute notice) to:
	John C. Longmire, Esq.
	Willkie Farr & Gallagher LLP
	787 Seventh Avenue
	New York, NY 10019
	Fax: (212) 728-8111
	George T. Frampton, Jr., Esq.
	Boies, Schiller & Flexner LLP
	570 Lexington Avenue, 16th Floor
	New York, NY 10022
	Fax: 212-446-2350
	Lloyd A. Palans, Esq.
	Bryan Cave LLP
	One Metropolitan Square

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211 N. Broadway

St. Louis, MO 63102-2750

Fax: 314-259-2020

(Counsel to Monsanto)

or to such other address as any party hereto may have furnished to the other parties by a notice in writing in accordance with this Section 10.04.

     Section 10.05 Amendment and Modification. This Agreement may be amended, modified or supplemented only by a written agreement signed by all of the parties hereto.

     Section 10.06 Successors and Assigns; No Third Party Beneficiaries. This Agreement and all of the provisions hereof shall be binding upon and inure to the benefit of the parties hereto and their successors and permitted assigns, but, except as provided in Section 7.02, neither this Agreement nor any of the rights, interests and obligations hereunder shall be assigned by any party hereto without the prior written consent of the other parties. Except for the provisions of Article V relating to Indemnitees, which are also for the benefit of the Indemnitees, this Agreement is solely for the benefit of the parties hereto and is not intended to confer upon any other Persons any rights or remedies hereunder.

     Section 10.07 Counterparts. This Agreement may be executed in two or more counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument.

     Section 10.08 Legal Enforceability. Any provision of this Agreement 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 provisions hereof. Any such prohibition or unenforceability in any jurisdiction shall not invalidate or render unenforceable such provision in any other jurisdiction. Each party acknowledges that money damages would be an inadequate remedy for any breach of the provisions of this Agreement and agrees that the obligations of the parties hereunder shall be specifically enforceable.

     Section 10.09 Complete Agreement. This Agreement, the Commercial and Operating Agreements, the Plan and the Retiree Settlement Agreement shall constitute the entire agreement between the parties hereto with respect to the subject matter hereof and shall supercede all previous negotiations, commitments and writings with respect to such subject matter. Solutia and Monsanto hereby waive any claims, rights or arguments they may be able to assert on the basis that this Agreement, the Commercial and Operating Agreements, the Plan and the Retiree Settlement Agreement were not executed simultaneously or as part of the same transaction. For all purposes, the Commercial and Operating Agreements shall be integrated into this Agreement in the same way and on the same terms, if at all, that they were integrated with the Distribution Agreement. The Plan and its terms and the Retiree Settlement Agreement and its terms are incorporated herein by reference. For all purposes, this Agreement the Plan and the Retiree Settlement Agreement are an integrated and unitary contract not subject to severability.

*       *       *       *

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          IN WITNESS WHEREOF, the parties hereto have executed this Settlement Agreement on the day and year first above written.

SOLUTIA INC.
By:	/s/ Jeffry N. Quinn
	Name:	Jeffry N. Quinn
	Title:	Chairman, President and CEO

MONSANTO COMPANY
By:	/s/ David F. Snively
	Name:	David F. Snively
	Title:	Sr. V.P., Secretary & General Counsel

SFC LLC
By:	/s/ James A. Tichenor
	Name:	James A. Tichenor
	Title:	Authorized Manager

All notices to be provided to SFC LLC in accordance with Section 10.04 of this
Agreement shall be addressed as follows:

          575 Maryville Centre
          St. Louis, MO 63141
 

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EX-10.2

Exhibit 10.2

PHARMACIA INDEMNITY AGREEMENT

     This INDEMNIFICATION AGREEMENT (this “Agreement”) is made as of February 28, 2008 (the “Effective Date”) by and among Solutia Inc., a Delaware corporation (“Solutia”), and Pharmacia Corporation, a Delaware corporation (“Pharmacia”). Unless otherwise defined herein, or the context otherwise requires, capitalized terms used herein and defined in the Settlement Agreement, dated February 28, 2008, by and among Solutia, Monsanto Company, a Delaware corporation, and SFC LLC, a Delaware limited liability corporation (the “Settlement Agreement”) shall be used herein as therein defined. For purposes of this Agreement only, the term “Indemnitee” shall mean the Pharmacia Indemnified Parties.

RECITALS

     WHEREAS, in connection with the Settlement Agreement and in exchange for the Pharmacia Contribution and the Monsanto Contribution (as each is defined in the Plan), Solutia desires to indemnify the Pharmacia Indemnified Parties for certain Losses.

     NOW, THEREFORE, in consideration of the promises and mutual covenants contained herein and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties agree as follows:

1. Indemnification by Solutia. After the Effective Date, Solutia shall indemnify Pharmacia Indemnified Parties and save and hold each of them harmless against, and pay on behalf of or reimburse Pharmacia Indemnified Parties as and when incurred for any Loss which any Pharmacia Indemnified Party suffers, sustains or becomes subject to, as a result of or arising out of:

(a)	any Environmental Liability in connection with the Retained Sites;
(b)	any Environmental Liability in connection with the Shared Sites for which Solutia is liable pursuant to Section 3.04 of the Settlement Agreement;
(c)	Solutia Tort Claims;
(d)	failure of Solutia to pay any amounts required to be paid by Solutia (i) pursuant to the Anniston Settlement Agreement as specified in the Anniston Side Letter or (ii) to the education trust fund pursuant to Section VI of the Anniston Consent Decree, or failure of Solutia to honor any other obligation of Solutia under the Anniston Settlement Agreement;
(e)	the PENNDOT Case; provided, that in no event shall Solutia be required to indemnify Monsanto Indemnified Parties or Pharmacia Indemnified Parties in respect of any Losses suffered by Monsanto Indemnified Parties or Pharmacia Indemnified Parties described in this clause (e) to the extent the aggregate amount of all such Losses exceeds $20 million; and
(f)	the Chemicals Liabilities; provided, that in no event shall Solutia be required to indemnify Pharmacia Indemnified Parties in respect of any Losses suffered by

Pharmacia Indemnified Parties described in this clause (f) to the extent that (i) Monsanto agreed to indemnify Solutia Indemnified Parties for such Losses pursuant to Section 5.02 of the Settlement Agreement or (ii) such Losses relate to “claims” (as defined in section 101(5) of the Bankruptcy Code) that are not satisfied in full under the Plan arising in connection with or related to Pharmacia’s or Solutia’s non-qualified plans or arrangements at issue in Miller v. Pharmacia Corporation, Case No. 4:04CV981.

If and to the extent any provision of this Section 1 is unenforceable for any reason, Solutia hereby agrees to make the maximum contribution to the payment and satisfaction of the Loss for which indemnification is provided for in this Section 1 that is permissible under applicable laws.

2.	Manner of Payment. Any indemnification owing pursuant to this Agreement shall be effected by wire transfer of immediately available funds from Solutia to an account designated in writing by the Indemnitee within fifteen (15) days after the final determination of the amount thereof pursuant to this Agreement. The amount of any Losses for which indemnification is provided under this Agreement shall be computed net of any third-party insurance proceeds and recoveries in respect of third party indemnification obligations actually received by the Indemnitee in connection with such Losses. The Indemnitee shall use its commercially reasonable efforts to obtain recovery in respect of any Losses from any insurer or other third party indemnity which is available in respect of such Losses. If an Indemnitee receives such insurance proceeds or indemnification recoveries in connection with Losses for which it has received indemnification, such party shall refund to Solutia the amount of such insurance proceeds or recovery when received, up to the amount of indemnification received.
3.	Indemnification Claims. Any indemnification claim which is not a result of a third party claim shall be asserted by written notice given by the Indemnitee to Solutia. Solutia shall have a period of thirty (30) days after the receipt of such notice within which to respond thereto. If Solutia does not respond within such 30-day period, it shall be deemed to have rejected such claim in whole. If Solutia does not respond within such 30-day period or rejects such claim in whole or in part, the Indemnitee shall be free to pursue such remedies as may be available to such party under Section 6.
4.	Third Party Claims.

(a) If there occurs an event which an Indemnitee asserts is an indemnifiable event pursuant to this Agreement, the Indemnitee shall notify Solutia promptly in writing specifying the facts constituting the basis for such claim and the amount, to the extent known, of the claim asserted. If such event involves (i) any claim by a Person other than the Indemnitee or (ii) the commencement of any Proceeding by a Person other the Indemnitee (such claim or Proceeding hereinafter referred to as a “Third Party Claim”), the Indemnitee shall give Solutia prompt written notice of such Third Party Claim or the commencement of such Proceeding; provided that the failure to provide prompt notice as provided herein (whether with respect to a Third Party Claim or otherwise) will relieve Solutia of its obligations hereunder only to the extent that such failure prejudices Solutia hereunder. In

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	case any such Third Party Claim shall be brought against any Indemnitee, it shall notify Solutia of the commencement thereof promptly in writing specifying the facts constituting the basis for such claim and the amount, to the extent known, of the claim asserted.
(b)	Solutia shall be entitled to participate in the defense of any Third Party Claim and to assume the defense thereof, with counsel selected by Solutia; provided that Solutia notifies the Indemnitee in writing of its election to assume such defense within twenty (20) Business Days of receipt of notice from the Indemnitee of such Third Party Claim. After notice from Solutia to the Indemnitee of such election so to assume the defense thereof, Solutia shall not, except as provided in the next sentence, be liable to the Indemnitee for any legal expenses of other counsel or any other expenses subsequently incurred by such party or parties in connection with the defense thereof. Notwithstanding Solutia’s election to so assume the defense of any such Third Party Claim, the Indemnitee shall have the right to employ separate counsel (including local counsel) and participate in (but not control) such defense; provided that Solutia shall bear the reasonable fees and expenses of such separate counsel only if (x) the defendants in any such Proceeding include both the Indemnitee and Solutia and the Indemnitee has legal defenses available to it which are different from or additional to those available to Solutia; provided further that, in each case, with respect to each Indemnitee in such circumstance, Solutia shall not be required to bear the fees and expenses of more than one firm of attorneys plus one firm of local counsel in each jurisdiction where the primary counsel is not admitted to practice and where local counsel is necessary, or (y) counsel for Solutia shall authorize in writing the Indemnitee to employ separate counsel at the expense of Solutia.
(c)	Solutia and the Indemnitee agree to cooperate fully with each other and their respective counsel in connection with the defense, negotiation of settlement or settlement of any such Third Party Claim, including providing access to any relevant books and records, properties, employees, representatives and advisors (regardless of whether Solutia has assumed the defense thereof). If Solutia assumes the defense of a Third Party Claim, no settlement or compromise thereof may be effected (x) by Solutia without the written consent of the Indemnitee (which consent shall not be unreasonably withheld or delayed) unless (1) there is no finding or admission of any violation of law or any violation of the rights of any Person by any Indemnitee and no adverse effect on any other third party claims that may be made against any Indemnitee and (2) it involves solely the payment of monetary damages and all relief provided is paid or satisfied in full by Solutia or (y) by the Indemnitee without the consent of Solutia, except to the extent it involves only equitable or other non-monetary relief not binding on any party other than the Indemnitee and ten (10) Business Days prior written notice is given to Solutia. If Solutia elects not to assume the defense of a Third Party Claim, the Indemnitee shall defend such Third Party Claim with counsel selected by the Indemnitee, and Solutia shall bear reasonable fees and expenses of such counsel. In no event shall Solutia be liable for any settlement effected without its written consent (which consent shall not be unreasonably withheld or delayed).

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5.

Subrogation. In the event of payment by Solutia to an Indemnitee in connection with any Third Party Claim, Solutia shall be subrogated to and shall stand in the place of the Indemnitee as to any events or circumstances in respect of which the Indemnitee may have any right or claim relating to such claim against any claimant or plaintiff asserting such claim. The Indemnitee shall cooperate with Solutia in a reasonable manner, and at the cost and expense of Solutia, in prosecuting any subrogated right or claim, including permitting Solutia to bring suit against such third party in the name of the Indemnitee.

6.

Dispute Resolution.

(a)	Agreement to Arbitrate. Except as otherwise specifically provided in this Agreement, the procedures for discussion, negotiation and arbitration set forth in this Section 6 shall apply to all disputes, controversies or claims (whether in contract, tort or otherwise) that may arise out of or relate to, or arise under or in connection with, this Agreement, the interpretation hereof and/or the rights, interests, duties, obligations and liabilities of Pharmacia, Solutia or any Indemnitee hereunder. Each party agrees that this Section 6 shall provide the sole and exclusive remedy in connection with any dispute, controversy or claim relating to any of the foregoing matters and irrevocably waives any right to commence any action or proceeding in or before any Governmental Authority or court, except as expressly provided in Section 6(b) and except to the extent provided under the Arbitration Act in the case of judicial review of arbitration results or awards.
(b)	Bankruptcy Court Jurisdiction. Notwithstanding anything to the contrary contained in this Agreement, for so long as the Solutia Chapter 11 Case remains open, the Bankruptcy Court shall have exclusive jurisdiction of all matters arising out of, and related to disputes arising in connection with the interpretation, implementation or enforcement of this Agreement as provided for in the Plan.
(c)	Procedures.

(i) Any party hereto alleging that there exists a dispute or disagreement regarding the matters covered hereby shall notify in writing the other parties hereto of such alleged dispute or disagreement (the “Dispute Notice”). The parties shall attempt to resolve such alleged dispute or disagreement through good faith negotiations among the members of management of each party designated by each party promptly following the sending or the receipt, as applicable, of a Dispute Notice. If the parties hereto shall fail to resolve such alleged dispute or disagreement within sixty (60) days from the date of the Dispute Notice, then any party involved in such a dispute or disagreement shall have the right to deliver to the other parties involved in such dispute or disagreement an Escalation Notice requiring a meeting (which may be in person or telephonic) of the CEOs of each such party, who shall meet (either in person or telephonically) within twenty (20) days of the delivery of the Escalation Notice to such other parties to seek to resolve such dispute or

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	disagreement. If such dispute or disagreement has not been resolved within twenty (20) days of the date of such meeting between the CEOs, then any party involved in such dispute or disagreement shall have the right to commence an arbitration in accordance with the provisions of this Section 6(c).
(ii)	The arbitration shall be held in St. Louis, MO or such other place as the parties to the arbitration proceeding shall otherwise agree in writing.
(iii)	The arbitration proceeding shall be conducted in accordance with the Commercial Arbitration Rules of the AAA in effect on the date of the commencement of the arbitration. Each Party shall nominate one arbitrator and the two arbitrators so appointed shall attempt to agree on the appointment of a third arbitrator. If they are unable to so agree within thirty (30) days after the second arbitrator is appointed, the third arbitrator shall be appointed by AAA.
(iv)	The decision of the panel of arbitrators shall be final, binding and incontestable and may be used as a basis for judgment thereon in any jurisdiction. Such decision shall include a determination as to which of the parties shall bear the costs of the arbitration proceeding.
(v)	The parties hereby expressly agree to waive the right to appeal from the decision of the arbitrators. Accordingly, there shall be no appeal to any court or other authority (government or private) from the decision of the arbitrators, and the parties shall not dispute nor question the validity of such award before any regulatory or other authority in any jurisdiction where enforcement action is taken by the party or parties in whose favor the award was rendered.
(vi)	Notwithstanding the foregoing, any party may at any time without regard to any notice periods required by the provisions hereof (whether before, during or after arbitration), and as often as is necessary or appropriate, seek provisional or interim relief (including, without limitation, to the extent available under applicable law, a temporary restraining order, preliminary injunction and/or pre-judgment attachment) in a court of law.
(vii)	The commencement and pendency of an arbitration under this Section 6(c) shall not relieve any of the parties of their respective obligations under this Agreement.
(viii)	The provisions of this Section 6 shall survive the termination of this Agreement.

7. Miscellaneous.

(a) Governing Law. This Agreement shall be governed by and construed in accordance with the laws of the State of Delaware (other than the laws regarding

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choice of laws and conflicts of laws) as to all matters, including matters of validity, construction, effect, performance and remedies.

(b)

Notices. All notices, requests, claims, demands and other communications hereunder shall be in writing and shall be given (and shall be deemed to have been duly given upon receipt) by delivery in person or by facsimile (provided confirmation is delivered to the recipient the next day in the case of facsimile), by nationally recognized overnight courier, or by registered or certified mail, postage prepaid, return receipt requested, addressed as follows:

If to Solutia: General Counsel
Solutia Inc.
575 Maryville Centre
St. Louis, MO 63141
Telephone:                     
Facsimile: (314) 674-8703

with a copy (which shall not constitute notice) to:

Jonathan S. Henes/Thomas W. Christopher
Kirkland & Ellis LLP
153 East 53^rd Street
New York, NY 10022
Telephone: 212-446-4800
Facsimile: 212-446-4900

If to Pharmacia: General Counsel
Pharmacia Corporation
1751 Lake Cook Road
Arbor Lake Center
Suite 300
Deerfield, IL 60015
Telephone: 847-945-5870
Facsimile:                     

with a copy (which shall not constitute notice) to:

John H. Bae
Cadwalader, Wickersham & Taft LLP
One World Financial Center
New York, NY 10281
Telephone: 212-504-6000
Facsimile: 212-504-6666

          or to such other address as any party hereto may have furnished to the other parties by a notice in writing in accordance with this Section 7(b).

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(c)	Amendment and Modification. This Agreement may be amended, modified or supplemented only by a written agreement signed by all of the parties hereto.
(d)	Successors and Assigns; No Third Party Beneficiaries. This Agreement and all of the provisions hereof shall be binding upon and inure to the benefit of the parties hereto and their successors and permitted assigns, but, neither this Agreement nor any of the rights, interests and obligations hereunder shall be assigned by any party hereto without the prior written consent of the other parties; provided, that in the event of a Sale of any party hereto, such party shall assign all of its rights, interests, duties, obligations and/or liabilities under this Agreement to the acquirer of or successor to such party in such Sale and shall cause such acquirer or successor to accept the assignment of the rights and interests, and to assume the duties, obligations and liabilities, under this Agreement.. Except for the provisions of this Agreement relating to Indemnitees, which are also for the benefit of the Indemnitees, this Agreement is solely for the benefit of the parties hereto and is not intended to confer upon any other Persons any rights or remedies hereunder.
(e)	Counterparts. This Agreement may be executed in two or more counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument.
(f)	Legal Enforceability. Any provision of this Agreement 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 provisions hereof. Any such prohibition or unenforceability in any jurisdiction shall not invalidate or render unenforceable such provision in any other jurisdiction. Each party acknowledges that money damages would be an inadequate remedy for any breach of the provisions of this Agreement and agrees that the obligations of the parties hereunder shall be specifically enforceable.
(g)	Complete Agreement. This Agreement shall constitute the entire agreement between the parties hereto with respect to the subject matter hereof and shall supercede all previous negotiations, commitments and writings with respect to such subject matter.
(h)	Subsidiary Guarantees. The indemnification obligations of Solutia pursuant to this Agreement shall be guaranteed by certain domestic subsidiaries of Solutia pursuant to the agreement set forth on Exhibit ___; provided, that, notwithstanding anything to the contrary in this Section 7(h), such guarantee shall in no event limit in any way whatsoever Solutia’s ability to (a) obtain any financing or refinancing (and such guarantee shall be subordinated on customary terms to, but not terminated by, any guarantee required in connection with any financing or refinancing) or (b) acquire or sell any assets or businesses of Solutia (including the stock of any direct or indirect subsidiary of Solutia), in each case in bona fide arm’s length third party transactions. Upon any sale by Solutia of the stock of a direct or indirect subsidiary that has executed such a guarantee in a bona fide

7

arm’s length third party transaction, the guarantee provided by such subsidiary pursuant to this Section 7(h) shall automatically terminate and be of no further force or effect.

* * * *

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     IN WITNESS WHEREOF, the parties hereto have executed this Indemnification Agreement on the day and year first above written.

SOLUTIA INC.
By:	/s/ Rosemary L. Klein
	Name:	Rosemary L. Klein
	Title:	Senior Vice President, General Counsel and Secretary

PHARMACIA CORPORATION
By:	/s/ Stephen D. O’Sullivan
	Name:	Stephen D. O’Sullivan
	Title:	General Counsel, Pharmacia Corp.

EX-10.3

Exhibit 10.3

FIRST AMENDED & RESTATED RETIREE SETTLEMENT AGREEMENT

This first amended and restated retiree settlement agreement (this “Agreement”) presents the material terms of a settlement (the “Retiree Settlement”) among: (a) Solutia Inc. (“Solutia”) and its domestic subsidiaries (collectively with Solutia, the “Company”); (b) those retirees, including their surviving spouses, dependent spouses and dependent children, and those employees receiving disability benefits, who worked for Pharmacia Corporation (f/k/a Monsanto) or one of its domestic subsidiaries (“Pharmacia”) and who retired, or became disabled, prior to Solutia’s spin-off from Pharmacia in 1997, and whose post-employment benefit or disability liabilities were transferred to Solutia as a result of such spin-off (collectively, the “Pre-Spin Retirees”); (c) those retirees, including their surviving spouses, dependent spouses and dependent children, and those employees receiving disability benefits, who retired from Solutia or became disabled after Solutia’s spin-off from Pharmacia in 1997, including those retirees (and their surviving spouses, dependent spouses and dependent children) and disabled persons who worked for Pharmacia prior to Solutia’s spin-off from Pharmacia in 1997, and, thereafter worked for Solutia, other than those retirees covered by a collective bargaining agreement who retired on January 1, 2003, or later (collectively, the “Post-Spin Retirees”); (d) any other person having a claim against Solutia for “retiree benefits” as such term is defined in section 1114(a) of the Bankruptcy Code (collectively, the “Retiree Claimants” and, together with the Pre-Spin Retirees and the Post-Spin Retirees, the “Retirees”);¹ (e) Monsanto Company (“Monsanto”)²; (f) the official committee of unsecured creditors (the “Creditors’ Committee”) appointed on January 6, 2004, in the Company’s chapter 11 cases currently pending before the Honorable Prudence C. Beatty in the United States Bankruptcy Court for the Southern District of New York (the “Bankruptcy Court”); and (e) the official committee of retirees (the “Retirees’ Committee”) appointed on February 20, 2004, in the Company’s chapter 11 cases. The terms of the Retiree Settlement described herein are intended to amend and supersede any previous offer made during the Company’s chapter 11 cases, constitute an integrated offer, are indivisible except as described herein, are subject to the terms and conditions hereof, and are not intended to be binding unless executed in writing.

1	To “retire” from the Company means to incur a termination of employment from Pharmacia prior to September 1, 1997, or from the Company thereafter, in either case having met the eligibility requirements of a retiree medical plan sponsored by Pharmacia or Solutia, as the case may be.
2	Monsanto was created on February 9, 2000, under the name “Monsanto Ag”, as a wholly-owned subsidiary of Pharmacia, and changed its name to Monsanto Company on March 31, 2000. The Separation Agreement between Monsanto and Pharmacia was entered into as of September 1, 2000.

Settlement Overview
Retiree Trust & Funding Co. Contributions	On the effective date (the “Effective Date”) of the Company’s plan of reorganization (the “Plan”), and subject to the terms of the Plan and the Relationship Agreement (as defined below), through the offering of rights (the “Rights Offering”) to acquire shares of new common stock (the “New Common Stock”) in the reorganized successor to Solutia (“Reorganized Solutia”), Solutia will raise $250 million, which will be distributed as follows: (a) $175 million in cash will be contributed to a trust (the “Retiree Trust”) intended to qualify as a “voluntary employees’ beneficiary association” under Section 501(c)(9) of the Internal Revenue Code of 1986 and all of the rules and regulations promulgated thereunder, as amended (the “Internal Revenue Code”); and (b) $75 million in cash will be contributed to fund a new entity (“Funding Co.”), which will be a special purpose, tax-efficient, bankruptcy-remote affiliate of Reorganized Solutia.3
	Funding Co. shall create two separate accounts for its funds: (a) an environmental liabilities account containing $50 million (the “Environmental Account”); and (b) an account containing $25 million of unallocated funds (the “Unallocated Account”).
Retiree Trust Sub Accounts	The Retiree Trust shall be comprised of two sub
	accounts: (a) “Sub Account 1”; and (b) “Sub Account 2”. Sub Account 1 shall be funded by the Company with the $175 million of cash contributed by the participants in the Rights Offering, and shall be used to reimburse Reorganized Solutia for costs associated with providing Other Post-Employment Benefits (as defined below) to Pre-Spin Retirees in accordance with the terms of this Agreement. Sub Account 2 shall be funded with the Retiree Shares (as defined below) and the proceeds of the sales thereof, and shall be used to reimburse Reorganized Solutia for costs associated with providing Other Post-Employment Benefits to Pre- and Post-Spin Retirees subject to and in accordance with the terms of this Agreement.

³ It is a condition precedent to the Effective Date that from the proceeds of the Rights Offering, $175 million shall fund the Retiree Trust and $75 million shall fund Funding Co.

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The Relationship Agreement	The mechanism by which Funding Co. will make contributions to Reorganized Solutia from the Environmental Account and the Unallocated Account shall be governed by an agreement (the “Relationship Agreement”), which will be executed by Reorganized Solutia, Funding Co., and Monsanto, and which will be reasonably acceptable to the Creditors’ Committee.
Investment of Retiree Trust Funds	Cash held by the Retiree Trust shall, subject to the requirements of the Employee Retirement Income Security Act of 1974 and all of the rules and regulations promulgated thereunder, as amended (“ERISA”) and the Internal Revenue Code, be invested by the Trustee (as defined below) in short-term, well-diversified, high quality investment instruments, with a primary objective of capital preservation, that are reasonably acceptable to Reorganized Solutia, including one or more of: (a) interest bearing accounts with a commercial bank having at least $10 billion in assets (a “Qualified Financial Institution”); (b) direct obligations of the United States; (c) obligations for which the full faith and credit of the United States is pledged to provide for the payment of principal and interest; (d) commercial paper rated in one of the four highest debt rating categories of Moody’s Investor Services, Inc. and Standard & Poor’s Corporation (without regard to gradation); (e) certificates of deposit issued by Qualified Financial Institutions; (f) bankers’ acceptances issued by Qualified Financial Institutions; (g) repurchase agreements with Qualified Financial Institutions; (h) floating rate notes rated at least AA; (i) tax exempt municipal bonds and notes rated at least AA; and (j) money market funds (collectively, the “Permitted Investments”).
Reimbursement of Other Post-Employment Benefits	Following the Effective Date and subject to the terms of the Retiree Trust Agreement (as defined below), every two weeks, the Retiree Trust shall reimburse Reorganized Solutia or its successors in cash from Sub Account 1 for its actual out-of-pocket costs, including all administrative costs, net of, among other things, Medicare reimbursements and Pre-Spin Retirees’ medical expense contributions (“Net Costs”), for providing retiree medical, retiree life insurance and disability benefits (collectively, “Other Post-Employment Benefits” or “OPEB”) to Pre-Spin Retirees following the Effective Date. The reimbursement shall be for 100% of such Net Costs for the first twelve (12) months after the Effective Date, and for 90% of such Net Costs thereafter until the funds in Sub Account 1 have been exhausted.
	In addition, following the Effective Date and subject to the terms of the Retiree

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	Trust Agreement, every two weeks, the Retiree Trust shall reimburse Reorganized Solutia from Sub Account 2 for 100% of its actual out-of-pocket costs, including all administrative costs, net of, among other things, Medicare reimbursements and Pre and Post-Spin Retirees’ medical expense contributions, for providing Other Post-Employment Benefits to Pre- and Post-Spin Retirees following the Effective Date until the funds in Sub Account 2 are exhausted; provided, however, that Reorganized Solutia may only seek the reimbursements described above when cash or other securities or investments constituting Permitted Investments are available in Sub Account 2 and; provided further that, to the extent that Reorganized Solutia has not been reimbursed from Sub Account 1 for the same cost or expense, the funds in Sub Account 2 shall be used to reimburse Reorganized Solutia for such current costs and expenses and shall be reserved in the following proportion: (a) 58% of all amounts deposited in Sub Account 2 during the term of the Retiree Trust Agreement, for Pre-Spin Retirees; and (b) 42% of all amounts deposited in Sub Account 2 during the term of the Retiree Trust Agreement, for Post-Spin Retirees.
Modification of Other Post-Employment Benefits4	In consideration for the reduction in credit risk for Retirees in connection with OPEB benefits, as a result of (a) the formation, structure and pre-funding of the Retiree Trust and the Unallocated Account and (b) Reorganized Solutia’s improved creditworthiness (as compared to that of Solutia), Reorganized Solutia shall retain the rights and benefits reflected in the Company’s 2005 budget and long range plan, including its rights and benefits under the “Forsberg Settlement”.5
	All rights and benefits provided to the Retirees and the Company under the Forsberg Settlement and the Post-Settlement Plan (as defined herein) shall be preserved and not changed, unless specifically modified or eliminated by the terms of this Agreement, or as otherwise permitted to be modified or eliminated under the terms of the Forsberg Settlement or the Post-Settlement Plan. The Retirees’ continuing post-employment rights and benefits shall be incorporated into a comprehensive post-employment medical and other benefits plan (the “2007 Retiree Welfare Plan”).
	In accordance with the foregoing, Reorganized Solutia shall be

4	Capitalized terms, used but not defined in this section, shall have t he meanings ascribed to them in the Forsberg Plan (as defined below) or the 2007 Retiree Welfare Plan.
5	On November 1, 2001, Solutia, Monsanto, Pharmacia and representatives of the Retirees agreed to settle litigation related to medical benefits provided to Retirees (the “Forsberg Settlement”). Under the terms of the Forsberg Settlement, Solutia adopted and implemented the Solutia Inc. Medical Benefits Plan For Retirees (2002) (the “Forsberg Plan”).

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	permitted to implement the following changes to medical benefits for Medicare Eligible Retirees due to age:
Deductible Amount	50% of Medicare Part A Deductible.
Covered Proportion	Plan pays 80%.
Retail Prescription Drugs (up to 30 day supply) Co-Payment Amount	Participant pays 20% up to a $50 maximum per prescription or refill.
Mail Order Prescription Drugs (up to 90 day supply) Co-Payment Amount	Participant pays 20% per prescription or refill.
Individual Maximum Aggregate Benefit for Expenses Incurred After Age 65	$65,000.
Participant Medical Expense Contribution6	For all Forsberg Groups and Post-Settlement Retirees (Group VI in the 2007 Retiree Welfare Plan)7, the greater of 20% of the Annual Cost Per Covered Group or the Defined Dollar Limit Amount8 as specified in Exhibit A hereto.
	Subject to its rights under the terms of the Forsberg Settlement and the Post-Settlement Plan, Reorganized Solutia will not reduce the “Solutia Defined Dollar Limit” set forth on Exhibit A hereto.
Forsberg Plan9	The Company’s right to modify its Other Post-Employment Benefits as permitted by the terms of the Forsberg Settlement shall be retained by Reorganized Solutia and shall be implemented on the Effective Date or any date thereafter. Specifically, Reorganized Solutia intends to exercise its absolute right to amend or terminate the Forsberg Plan as it applies on and after January 1, 2007, to any member of Groups IIB or V except as to a Participant or covered Dependent Spouse who is

6	Capitalized terms, used but not defined in this section, shall have the meanings ascribed to them in the Forsberg Plan.
7	Solutia is not waiving any of its rights pursuant to the Solutia Inc. Medical Benefits Plan for Retirees (Post-Settlement) (the “Post-Settlement Plan”) to make changes to the Participant Medical Expense Contribution or other provisions therein.
8	The Defined Dollar Limit Amount shall be the difference between the Annual Cost Per Covered Group and the Solutia Defined Dollar Limit applicable to a Covered Group as delineated in Exhibit A.
9	Capitalized terms, used but not defined in this section, shall have the meanings ascribed to them in the Forsberg Plan or the 2007 Retiree Welfare Plan.

5

not then a Medicare Eligible Participant. Reorganized Solutia intends to exercise its right to amend or terminate the Forsberg Plan as it applies to any Participant or covered Dependent Spouse who is a member of Groups IIB or V on the earlier of (a) the date such Participant or covered Dependent Spouse becomes a Medicare Eligible Participant if such date is after January 1, 2007, or (b) the fifteenth anniversary of the Settlement Date (October 19, 2016). Reorganized Solutia intends to exercise its right to amend or terminate the Forsberg Plan as to any covered Dependent Child of a Retired Employee on or after the later of (a) the date Reorganized Solutia could amend or terminate the Forsberg Plan as to such Retired Employee, or (b) the date Reorganized Solutia could amend or terminate the Forsberg Plan as to such Retired Employee’s covered Dependent Spouse.¹⁰

In addition, for Participants who are not Medicare Eligible Participants, any Deductible Amount, any Covered Proportion until a Maximum Out-of-Pocket Amount is reached, any Covered Proportion after a Maximum Out-of-Pocket Amount is reached, and any Maximum Out-of-Pocket Amounts for a Plan Year shall be determined under the Solutia Inc. Salaried and Non-Union Hourly Employees’ Medical Benefits Plan, and its successors (the “Active Plan”) and Medical Plan Choice elected by the Covered Group. Covered Medical Expenses with respect to a Participant or Covered Dependent who is not a Medicare Eligible Participant shall be determined under the Active Plan. Participants who are not Medicare Eligible Participants and whose benefits were subject to a collective bargaining agreement and the Covered Dependents of such Participants shall receive prescription drug benefits on the same terms and conditions as under the Active Plan.

The terms of the OPEB benefits provided under the Forsberg Plan that are not otherwise modified by the terms hereof shall be included in the 2007 Retiree Welfare Plan, subject to the terms and conditions set forth in the Forsberg Plan.

¹⁰ Pursuant to the terms of that certain Stipulation And Order Between Solutia Inc. And the Official Committee Of Retirees of Solutia Inc. Pursuant to Section 1114 of the Bankruptcy Code, dated November 28, 2006 (Docket No. 3541) (the “Stipulation”), the Company was authorized, effective January 1, 2007, to terminate medical benefits for Retirees or participants in groups IIB and V of the Forsberg Plan and all Post-Settlement Plan participants who were Medicare Eligible. For such persons who were not Medicare Eligible as of this date, the Stipulation authorized the Company to terminate medical benefits on the earlier of (a) the date such Retirees or participants become Medicare Eligible if such date is on or after January 1, 2007, or (b) October 19, 2016. The treatment of these classes of Retirees was pursuant to Solutia’s prepetition rights under the Forsberg Plan.

6

Post-Settlement Plan	The Company’s right to make modifications permitted by the terms of the Post-Settlement Plan for Retirees who were not part of the Forsberg Settlement shall be retained by Reorganized Solutia and shall be implemented on the Effective Date or on any date thereafter.
Medicare Part D	Reorganized Solutia shall retain 100% of any subsidy related to Medicare prescription drug coverage (“Medicare Part D”). Any reimbursement received by Reorganized Solutia will not be applied to determine the Medical Expense Contribution required of Retirees for participation in the 2007 Retiree Welfare Plan.
Notification of Maximum Aggregate Benefit	Medicare Eligible Retirees who exceed 60 percent and 85 percent of the Maximum Aggregate Benefit will receive a notification of the medical and pharmacy benefits applied toward the Maximum Aggregate Benefit. Upon reaching the Maximum Aggregate Benefit, Retirees will receive a notice of coverage termination. Such notices shall include a summary of medical and pharmacy benefits applied toward the Maximum Aggregate Benefit through December 31, 2001, and annual amounts applied thereafter. Such Retirees shall retain their rights under ERISA to appeal any such calculation, although the calculations shall bind any Retiree who fails to timely appeal such calculation. Amounts paid by the Company for each Retiree shall be included in the calculation of the Maximum Aggregate Benefit, even if such amounts are later reimbursed by government subsidies under Medicare.
2007 Retiree Welfare Plan	The 2007 Retiree Welfare Plan will modify, amend and supersede the terms of the Forsberg and Post-Settlement Plans as provided in this Agreement.
	The 2007 Retiree Welfare Plan will be filed with the Bankruptcy Court at least 10 days prior to the hearing on confirmation of the Plan (the “Confirmation Hearing”), and the terms thereof shall be reasonably acceptable to the Retirees’ Committee.
Plan Sponsorship	The Company and the Retirees each reserve all of their rights, if any, with respect to Reorganized Solutia’s sponsorship of OPEB benefits.

7

Life Insurance	The 2007 Retiree Welfare Plan shall provide life insurance benefits to former employees covered under Solutia’s retiree life insurance plan on the Effective Date consistent with the following:
	a)    for each former employee covered on the Effective Date who retired prior to January 1, 1986, such former employee’s current life insurance coverage, up to a maximum coverage limit of $12,500;
	b)    for each former employee covered on the Effective Date who retired from January 1, 1986 through December 31, 2001, such former employee’s current life insurance coverage, up to a maximum coverage limit of $10,000; and
	c)    for each former employee covered on the Effective Date who retired after December 31, 2001, the life insurance benefit will be eliminated.
	These life insurance benefits shall not be subject to change. These life insurance benefits shall continue in the event that any recipient is not covered for medical benefits under the 2007 Retiree Welfare Plan or any subsequent retiree medical benefit plans.
Retiree Trust	The Retiree Trust shall be established on the Effective Date. To the extent permitted under ERISA and the Internal Revenue Code, the Retiree Trust shall hold in trust all assets contributed thereto.
	The trustee for the Retiree Trust (the “Trustee”) shall be a qualified institutional trustee selected by the Company and reasonably acceptable to the Retirees’ Committee and the Creditors’ Committee.
	At least 10-days prior to the Confirmation Hearing, the Retirees’ Committee shall appoint a 3-person liaison committee (the “Retiree Liaison Committee”). The duties of the Retiree Liaison Committee shall be set forth in the 2007 Retiree Welfare Plan. Subject to the requirements of, and solely to the extent permitted by, ERISA and the Internal Revenue Code, the Trustee shall have the authority to reimburse all reasonable, actual, out-of-pocket expenses incurred by the members of the Retiree Liaison Committee in the performance of their duties; provided, however, that such reimbursements shall not exceed $3,000 in the aggregate in any calendar year.
	The duties and powers of the Trustee shall be enumerated in a

8

	trust instrument (the “Retiree Trust Agreement”) subject to the requirements of ERISA and the Internal Revenue Code and reasonably acceptable to the Company, Monsanto, the Creditors’ Committee and the Retirees’ Committee. The Retiree Trust Agreement shall provide for:
	1.    Payment (within 10 days from the submission of detailed invoices to the Trustee) of Reorganized Solutia’s requests for reimbursement from the Retiree Trust in compliance with the terms of this Agreement and the 2007 Retiree Welfare Plan.
	2.    The Trustee’s ability to sell the Retiree Shares (defined below) and use the proceeds of such sales to reimburse Reorganized Solutia in accordance with the terms of this Agreement and the 2007 Retiree Welfare Plan. Neither Reorganized Solutia, Monsanto, Funding Co., nor any of their respective agents, directors, officers or employees, shall have or assume any liability with respect to any decision by the Trustee to sell or not sell the Retiree Shares held in the Retiree Trust at any given time.
	3.    In the event that no Pre-Spin Retirees are participating in the 2007 Retiree Welfare Plan, any amounts remaining in the Retiree Trust shall be used to reimburse Reorganized Solutia for costs incurred in connection with providing Other Post-Employment Benefits to Post-Spin Retirees. In the event that no Pre-Spin Retirees and fewer than 100 Post-Spin Retirees are participating in the 2007 Retiree Welfare Plan, the amounts remaining in the Retiree Trust shall be used to reimburse Reorganized Solutia for costs incurred in providing Other Post-Employment Benefits to Post-Spin Retirees and medical and other welfare benefits to Reorganized Solutia’s active employees.
Retiree Claim	The Retirees, as a class, shall be entitled to an Allowed11 non-priority unsecured claim in the aggregate amount of $35 million (the “Retiree Claim”), based on reductions in OPEB that the Company could not have unilaterally imposed on Retirees pursuant to the terms of the Forsberg Settlement and its other rights.
	In full and complete satisfaction of the Retiree Claim, and for the benefit of all Retirees, Reorganized Solutia shall contribute to the Retiree Trust, subject to any consents or approvals required under ERISA and the Internal Revenue Code (including, for the

¹¹ “Allowed” shall mean any claim that is determined to be a valid claim in the Company’s chapter 11 cases based on the Company’s schedules or through settlement, litigation or otherwise.

9

avoidance of doubt, the obtaining of an exemption from any “prohibited transactions”, as defined in Section 4975 of the Internal Revenue Code or Section 406 of ERISA), the number of shares of New Common Stock necessary to provide a recovery on account of the Retiree Claim that is equal to the implied recovery for all General Unsecured Creditors (as defined in the Plan) who do not participate in the Rights Offering. The recovery on account of the Retiree Claim (the “Retiree Recovery”) shall be computed based on (i) the aggregate equity value in Reorganized Solutia distributable to General Unsecured Creditors approved by the Bankruptcy Court (or the mid-point of the range of values established by the Bankruptcy Court), and (ii) the mid-point of the range of projected final aggregate amounts of General Unsecured Claims, as set forth in the disclosure statement filed in connection with the Plan and approved by the Bankruptcy Court, after accounting for the discount in the Rights Offering and prior to any dilution in General Unsecured Creditor recoveries resulting from the resolution of Disputed General Unsecured Claims (as defined in the Plan), provided, however, that the number of shares of New Common Stock distributed to the Retiree Trust in satisfaction of the Retiree Claim (collectively, the “Retiree Shares”) shall be subject to pro-rata dilution on account of the Incentive Plan (as defined in the Plan).

Notwithstanding anything contained in the preceding paragraph to the contrary, in the event that the consents and approvals described above have not been obtained within 30 days from the Effective Date (which period may be extended upon the mutual written consent of Reorganized Solutia and the Retiree Liaison Committee), in full and complete satisfaction of the Retiree Claim, Reorganized Solutia shall deposit Retiree Shares in the Retiree Trust equal to 10% of the value of the Retiree Trust on such date and all proceeds (net of sales commissions and other transaction fees) from the sale of the balance of the Retiree Shares that would have been deposited on account of the Retiree Claim had the consents and approvals been received; provided that the total number of shares of New Common Stock deposited in the Retiree Trust or sold in accordance with the foregoing shall not exceed the number of Retiree Shares distributed on account of the Retiree Recovery; and provided further that if the contribution of Retiree Shares to the Retiree Trust in accordance with the foregoing and/or the holding of the Retiree Shares by the Retiree Trust would constitute or result in a “prohibited transaction”, as defined in Section 4975 of the Internal Revenue Code or Section 406 of ERISA, the Retiree Shares shall be sold and the proceeds (net of sales commissions and other transaction

10

	fees) of such sale shall be contributed to the Retiree Trust in lieu of the Retiree Shares under circumstances reasonably agreed to between the Retirees’ Committee and the Company.
	The Retiree Shares and the proceeds from sales thereof shall be held in Sub Account 2 and shall be used to reimburse Reorganized Solutia in accordance with the terms of this Agreement and the 2007 Retiree Welfare Plan.
	The Company and the Retirees’ Committee agree to use their reasonable efforts to assist in seeking any exemption of the application of the “prohibited transactions” rules described in this section with respect to the number of Retiree Shares to be distributed to the Retiree Trust.
	The Retiree Claim and all rights and obligations associated therewith shall be held and managed by the Retirees’ Committee as the authorized representative for the Retirees. The Retirees’ Committee may authorize its counsel to act as the agent for the Retirees’ Committee with respect to the Retiree Claim.
	Any and all claims filed by individual Retirees on account of reductions in their OPEB benefits as a result of the Company’s chapter 11 cases, shall be disallowed and expunged from the Company’s claims register on the Effective Date as duplicative of the Retiree Claim.
Release	In consideration of Monsanto’s agreement to, among other things, enter into the Monsanto Settlement (as defined in the Plan) and Pharmacia’s agreement to waive certain indemnity claims against the Company, which will collectively enable Reorganized Solutia to satisfy its OPEB obligations to Retirees as modified by the Retiree Settlement, and improve Reorganized Solutia’s creditworthiness, which consideration is integral to the effectuation of the Plan, the consummation of any transactions contemplated thereby and Reorganized Solutia’s ability to perform its prospective obligations, upon the Effective Date, the Retirees’ Committee, its members and professionals, the Retirees and each of their respective officers, directors, employees, heirs, executors, administrators, successors and assigns (collectively, the “Retiree Parties”) shall hereby be deemed to have released and discharged the Company, Monsanto, Pharmacia, any employee benefit plans of Monsanto or Pharmacia and their respective officers, directors, employees, affiliates, successors, assigns, representatives, agents, advisors and professionals (collectively, the “Released Parties”) from, and the order confirming the Plan (the “Confirmation Order”) and the order approving the terms of this Agreement (the “Retiree Approval

11

Order”) shall operate as an injunction against, the commencement or continuation of any action, the employment of process, or any act to collect, recover or offset, any “claim” (as defined in section 101(5) of the Bankruptcy Code) and any “debt” (as that term is defined in section 101(12) of the Bankruptcy Code), related to “retiree benefits” (as defined in section 1114(a) of the Bankruptcy Code), including the partial reservation of claims in the class action settlement approved by the U.S. District Court for the Northern District of Florida, Pensacola Division, in Solutia Inc. v. Forsberg, et al., No. 3:98CV237, whether such claim is reduced to judgment or not, liquidated or unliquidated, contingent or noncontingent, asserted or unasserted, fixed or not, matured or unmatured, disputed or undisputed, legal or equitable, known or unknown that the Retiree Parties had, have or may have against the Released Parties. This Agreement, the Plan and any order approving the Retiree Settlement shall provide for and effectuate a discharge of the Released Parties to the fullest extent permitted by applicable law with respect to any and all claims of the Retiree Parties related to “retiree benefits” (as defined in section 1114(a) of the Bankruptcy Code); provided, however, that the foregoing shall not release and discharge (a) Reorganized Solutia from the performance of its obligations under this Agreement, or (b) Monsanto from the performance of its obligations under this Agreement.

Exculpation and Limitation of Liability

The Plan and Confirmation Order shall provide that the Retirees’ Committee and each of its current and former members, agents, advisors and professionals, in each case in their capacity as such, shall not have or incur any liability to, or be subject to any right of action by, any Holder of a Claim (as defined in the Plan), or any other party in interest, or any of their respective agents, direct or indirect shareholders, employees, representatives, financial advisors, attorneys or affiliates, or any of their respective successors or assigns, for any act or omission in connection with, relating to, or arising out of, the Chapter 11 Cases, the pursuit of confirmation of the Plan, the consummation of the Plan, or the administration of the Plan or the property to be distributed under the Plan, except for their willful misconduct, criminal conduct, misuse of confidential information that causes damages, fraud, ultra vires acts or gross negligence, and in all respects shall be entitled to rely reasonably upon the advice of counsel with respect to their duties and responsibilities under the Plan.

12

Stay of Appeal	On or about February 16, 2006, the Company and the Retirees’ Committee jointly sought to stay the appeal, captioned Solutia Inc. et al. v. Official Committee of Retirees (Civil no. 04-CIV-9587 (KMK)), pending before the United States District Court for the Southern District of New York, pending approval of the Retiree Settlement. On the Effective Date, this appeal shall be deemed withdrawn with prejudice.
Withdrawal of Adversary Proceedings	On the Effective Date, that certain adversary proceeding, captioned, The Official Committee of Retirees v. Solutia, Inc., Pharmacia Corporation and Monsanto Company (Adv. Proc. no. 04-03057 (PCB)) shall be deemed withdrawn with prejudice.
Retiree Approval Order	The Retiree Approval Order shall (i) approve the terms of this Agreement, including all releases, injunctions, exculpations and limitations of liability contained herein, pursuant to section 1114 of the Bankruptcy Code, Bankruptcy Rule 9019 and any other applicable provisions of the Bankruptcy Code and Bankruptcy Rules; (ii) direct the Company and the Retirees’ Committee to file a copy of this Agreement and the Retiree Approval Order with the U.S. District Court for the Northern District of Florida, Pensacola Division, in Solutia Inc. v. Forsberg, et al., No. 3:98CV237; (iii) specify that the prior order approving the Forsberg Settlement and the Forsberg Plan has been superseded in all respects by the terms of this Agreement; (iv) provide that the Retirees’ Committee is authorized and empowered to execute and deliver this Agreement on behalf of the Retirees pursuant to section 1114(e)(1)(B) of the Bankruptcy Code; and (v) expressly reserve exclusive jurisdiction for the enforcement of the terms of this Agreement and the Retiree Settlement in the United States Bankruptcy Court for the Southern District of New York.

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Support	The Retirees’ Committee agrees to support confirmation of the Plan filed by Solutia with the Bankruptcy Court.
	The Company, the Retirees’ Committee, Monsanto and the Creditors’ Committee agree to support the Retiree Settlement consistent with the terms set forth herein, including by, among other things, seeking Bankruptcy Court approval of the Retiree Settlement, pursuant to Bankruptcy Rule 9019. In addition, the Retirees’ Committee will assist the Company and Monsanto in ensuring proper service of such motion and the terms of this Agreement is made on all Retirees.
Changed Circumstances	Notwithstanding anything contained herein to the contrary, this Agreement shall terminate and be of no further force or effect if, and only if, prior to the Effective Date: (i) that certain adversary proceeding, captioned Official Committee of Equity Security Holders of Solutia, Inc., v. Monsanto Company, and Pharmacia Corporation (Case Nos. 03-17949 (PCB)) results in a final, binding and non-appealable determination by a court of competent jurisdiction that Monsanto and/or Pharmacia are solely responsible for liabilities in connection with Pre-Spin OPEB benefits, and the Company is fully and unconditionally discharged from any and all direct or indirect obligations with respect to the OPEB benefits or the Pre-Spin Retirees; (ii) Solutia’s chapter 11 cases currently pending before the Bankruptcy Court are converted to a case under chapter 7 of the Bankruptcy Code; or (iii) the Plan is modified such that the holders of General Unsecured Claims against the Company, other than the holders of Convenience Claims (as defined in the Plan), are to receive cash from Reorganized Solutia totaling more than 2% of the aggregate Allowed amount of General Unsecured Claims on account of such claims and the Retirees do not.

14

     IN WITNESS WHEREOF, the undersigned, intending to be bound by the terms of this Agreement, have caused this Agreement to be executed by its duly authorized officer, in each case as of this 10^th day of July, 2007.

SOLUTIA INC.
 

/s/ Jeffry N. Quinn  

By: Jeffry N. Quinn 

Its: President & Chief Executive Officer 

[Signatures Continue on the Next Page]

15

THE OFFICIAL COMMITTEE OF RETIREES OF SOLUTIA INC.
 

/s/ Daniel D. Doyle  

By: Spencer Fane Britt Browne LLP 

Its: Co-counsel 

/s/ R. Scott Williams  

By: Haskell Slaughter Young & Rediker 

Its: Co-counsel 

[Signatures Continue on the Next Page]

16

THE OFFICIAL COMMITTEE OF RETIREES
OF SOLUTIA INC.
 

/s/ Kenneth M. Kettler  

By: Kenneth M. Kettler 

Its: Chairman 

[Signatures Continue on the Next Page]

17

MONSANTO COMPANY
 

/s/ David F. Snively  

By: David F. Snively 

Its: Senior Vice President, Secretary and General       Counsel 

18

THE OFFICIAL COMMITTEE OF UNSECURED CREDITORS OF SOLUTIA INC.
 

/s/James R. Savin  

By: Akin Gump Strauss Hauer & Feld LLP 

Its: Counsel 

19

Exhibit A

For each Plan Year, each Participant of Groups IA and IIIA shall pay an annual Medical Expense Contribution equal to the greater of 20% of the Annual Cost Per Covered Group, or the applicable Defined Dollar Limit Amount¹² as determined by the following table:

	SOLUTIA DEFINED DOLLAR LIMIT
	RETIREE (OR SURVIVING		RETIREE (OR SURVIVING
COVERED GROUP	SPOUSE) BEFORE AGE 65		SPOUSE) AFTER AGE 65
Retiree Only	$	6,600	$	2,000
Surviving Spouse Only	$	5,100	$	1,650
Retiree and Spouse (under 65)	$	11,700	$	7,100
Retiree and Spouse (over 65)	$	7,950	$	3,650
Retiree and Child(ren)	$	9,000	$	4,400
Retiree, Spouse (under 65) and Child(ren)	$	14,100	$	9,500
Retiree, Spouse (over 65) and Child(ren)	$	10,350	$	6,050

For each Plan Year, each Participant of Groups IB and IIIB shall pay an annual Medical Expense Contribution equal to the greater of 20% of the Annual Cost Per Covered Group, or the applicable Defined Dollar Limit Amount as determined by the following table:

	SOLUTIA DEFINED DOLLAR LIMIT
	RETIREE (OR SURVIVING		RETIREE (OR SURVIVING
COVERED GROUP	SPOUSE) BEFORE AGE 65		SPOUSE) AFTER AGE 65
Retiree Only	$	6,600	$	1,800
Surviving Spouse Only	$	5,100	$	1,475
Retiree and Spouse (under 65)	$	11,700	$	6,900
Retiree and Spouse (over 65)	$	7,950	$	3,275
Retiree and Child(ren)	$	9,000	$	4,200
Retiree, Spouse (under 65) and Child(ren)	$	14,100	$	9,300
Retiree, Spouse (over 65) and Child(ren)	$	10,350	$	5,675

¹² The Defined Dollar Limit Amount shall be the difference between the Annual Cost Per Covered Group and the Solutia Defined Dollar Limit applicable to a Covered Group as delineated in this Exhibit A.

- 1 -

For each Plan Year, each Participant of Groups IIA, IIB, IV and V and Post-Settlement Participants shall pay an annual Medical Expense Contribution equal to the greater of 20% of the Annual Cost Per Covered Group, or the applicable Defined Dollar Limit Amount¹³ as determined by the following table:

	SOLUTIA DEFINED DOLLAR LIMIT
	RETIREE (OR SURVIVING		RETIREE (OR SURVIVING
COVERED GROUP	SPOUSE) BEFORE AGE 65		SPOUSE) AFTER AGE 65
Retiree Only	$	6,600	$	1,650
Surviving Spouse Only	$	5,100	$	1,350
Retiree and Spouse (under 65)	$	11,700	$	6,750
Retiree and Spouse (over 65)	$	7,950	$	3,000
Retiree and Child(ren)	$	9,000	$	4,050
Retiree, Spouse (under 65) and Child(ren)	$	14,100	$	9,150
Retiree, Spouse (over 65) and Child(ren)	$	10,350	$	5,400

¹³ Solutia is not waiving any of its rights pursuant to the Post-Settlement Plan to make changes to the Participant Medical Expense Contribution or other provisions therein.

2

EX-10.4

Exhibit 10.4

SOLUTIA 2008 RETIREE WELFARE
PLAN

Amended and Restated as of February 28, 2008

TABLE OF CONTENTS

SECTION 1 DEFINITIONS	3
1.1 Active Plan	3
1.2 Administrative Services Provider	3
1.3 Brand Name Drug	4
1.4 Code	4
1.5 Contracted Amount	4
1.6 Co-Payment Amount	4
1.7 Coverage Category	4
1.8 Covered Drug	4
1.9 Covered Group	5
1.10 Covered Proportion	5
1.11 Custodial Care	5
1.12 Deductible Amount	6
1.13 Dependent	6
1.14 Disabled	7
1.15 Employee	7
1.16 Employer	8
1.17 ERISA	8
1.18 Former Pharmacia Participant	8
1.19 Forsberg Settlement	8
1.20 Generic Drug	8
1.21 Group IA	8
1.22 Group IB	8
1.23 Group IIA	8
1.24 Group IIB	9
1.25 Group IIIA	9
1.26 Group IIIB	9
1.27 Group IV	10
1.28 Group V	10
1.29 Group VI	10
1.30 Home Health Care Agency	11
1.31 Home Health Care Plan	11
1.32 Hospice Care Facility	11
1.33 Hospice Care Program	12
1.34 Legend Drug	12
1.35 Maintenance Drug	12
1.36 Maximum Aggregate Benefit	12
1.37 Medical Expense Contributions	12
1.38 Medical Plan Choice	12
1.39 Medically Necessary	13

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1.40 Medicare	13
1.41 Medicare Eligible Participant	14
1.42 Monsanto Company	14
1.43 Nonparticipating Provider	14
1.44 Open Enrollment Period	14
1.45 Participant	14
1.46 Participating Provider	14
1.47 Pension Plan	14
1.48 Pharmacia Corporation	14
1.49 Pharmacy	15
1.50 Physician	15
1.51 Plan	15
1.52 Plan Year	15
1.53 Prescription Order	15
1.54 Prior Plan	15
1.55 Provider	15
1.56 Psychologist	15
1.57 Reasonable and Customary	16
1.58 Retired Employee	16
1.59 Retiree Liaison Committee	20
1.60 Service	20
1.61 Spell of Illness	20
1.62 Spouse	20
1.63 Subsidiary	20
1.64 Surviving Spouse	20
1.65 Terminated for Misconduct	21
SECTION 2 ELIGIBILITY AND EFFECTIVE DATES OF COVERAGE	22
2.1 Eligibility	22
2.2 Effective Date of Coverage for Retired Employees and Surviving Spouses	22
2.3 Effective Date of Coverage for Dependents	22
2.4 Initial Election by a Retired Employee	23
2.5 Election by Surviving Spouse	23
2.6 Election by Dependent Spouse	23
2.7 Change in Election	24
2.8 Cessation of Participation	24
2.9 Dependent Elections	24
SECTION 3 MEDICAL EXPENSE CONTRIBUTIONS	25
3.1 Medical Expense Contribution	25
3.2 Annual Cost	25
3.3 Defined Dollar Limit Amount	27
3.4 Medical Expense Contributions Equal to Cost	28
3.5 No Adjustments	28
3.6 Payments	28
3.7 Resolution Of Disputes Regarding Application of Methodology	28

- iii -

SECTION 4 SCHEDULE OF MEDICAL AND DRUG BENEFITS	30
4.1 Schedule of Benefits for Participants Who Are Not Medicare Eligible	30
4.2 Schedule of Benefits for Medicare Eligible Participants	30
4.3 Benefits for Mental Health or Substance Abuse	31
4.4 Sterilization Reversal Benefits	32
4.5 Maximum Aggregate Benefit	32
4.6 Requirements of Minimum Hospital Stays Following Childbirth	33
SECTION 5 MEDICAL AND DRUG BENEFITS	34
5.1 Benefit Provisions for Participants Who Are Not Medicare Eligible	34
5.2 Benefit Provisions for Medicare Eligible Participants	34
SECTION 6 COVERED MEDICAL AND DRUG EXPENSES AND EXCLUSIONS	36
6.1 Covered Medical Expenses	36
6.2 Exclusions	37
6.3 Covered Drug Expenses	38
6.4 Exclusions	39
6.5 Mail Order Prescription Drug Program	41
6.6 Coordination with Medicare Part D	41
SECTION 7 PRE-ADMISSION CERTIFICATION AND CONCURRENT REVIEW	42
SECTION 8 HOSPICE CARE BENEFITS	43
8.1 Hospice Care Benefits	43
8.2 Services Or Supplies Which Are Covered Hospice Care Benefits	43
8.3 Exclusions	44
SECTION 9 HOME HEALTH CARE BENEFITS	46
9.1 Home Health Care Benefits	46
9.2 Expenses Which Are Covered Home Health Care Benefits	46
9.3 Exclusions	46
SECTION 10 MEDICAL CASE MANAGEMENT PROGRAM	48
10.1 Definitions	48
10.2 Medical Case Management Program	50
10.3 Payment of Alternate Medical Treatment Benefits	52
10.4 Amount of Alternate Medical Treatment Benefits	52
10.5 Maximum Benefit	52
10.6 Covered Alternate Medical Treatment Expenses	53
SECTION 11 CLAIMS	54
11.1 Filing and Payment of Medical Claims	54
11.2 Payment of Prescription Drug Claims	54
11.3 Overpayment or Other Reimbursement	55
11.4 Additional Procedures	55
11.5 Claims and Review Procedures	55

- iv -

SECTION 12 PROVISIONS APPLICABLE AT THE DEATH OF A RETIRED EMPLOYEE	64
SECTION 13 CESSATION OF COVERAGE	65
13.1 Termination of Coverage	65
13.2 Loss of Dependent Status	65
13.3 Failure to Make Required Payments	65
13.4 Maximum Aggregate Benefit	66
13.5 Cancellation of Coverage	66
13.6 Benefits After Cessation of Coverage	66
SECTION 14 COBRA CONTINUATION COVERAGE	68
SECTION 15 COORDINATION OF BENEFITS	69
15.1 Definitions	69
15.2 Coordination of Benefits	70
15.3 Order of Benefit Determination	71
15.4 Right to Receive and Release Necessary Information	74
15.5 Underpayments and Overpayments	74
15.6 Subrogation	74
SECTION 16 AMENDMENT AND TERMINATION	78
16.1 Limit on Right to Amend	78
16.2 Permitted Amendments	79
16.3 Resolution of Disputes With Retiree Liaison Committee	80
16.4 Right to Amend or Terminate the Plan	80
16.5 No Informal Amendments	81
16.6 Active Plan Amendments	81
SECTION 17 PLAN ADMINISTRATOR	82
17.1 Administrator	82
17.2 Duties and Powers	82
17.3 Standard of Review	83
17.4 Limitation of Liability	83
17.5 Information Required by Administrative Services Provider	84
SECTION 18 HEALTH MAINTENANCE ORGANIZATIONS	85
SECTION 19 MISCELLANEOUS	86
19.1 Gender and Number	86
19.2 Headings	86
19.3 Governing Law	86
19.4 Conflicts	86
19.5 Waiver	87
19.6 Service of Legal Process	87
19.7 Supplements	87
19.8 Qualified Medical Child Support Orders	87

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19.9 VEBA and Other Trusts	87
SECTION 20 HIPAA PRIVACY	88
20.1 HIPAA Privacy	88
20.2 PHI Nondisclosure	90
20.3 Permitted Disclosures	90
20.4 Disclosure Requirements	91
20.5 Adequate Separation	92
APPENDIX A LIFE INSURANCE CERTIFICATE	92

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SOLUTIA 2008 RETIREE WELFARE PLAN

Solutia Inc. (herein called the “Company”) hereby, amends and restates the Solutia Inc. Medical Benefits Plan for Retirees (2002) (the “2002 Plan”), the Solutia Inc. Medical Benefits Plan for Retirees (Post-Settlement) (the “Post-Settlement Plan”), and the Solutia Inc. Retiree Life Insurance Plan, and consolidates them into this 2008 Retiree Welfare Plan (the “Plan”), effective as of February 28, 2008 (except as otherwise stated herein). The 2002 Plan, originally effective as of January 1, 2002, was first applicable as of such date to specified Retired Employees who retired prior to January 1, 2002, and who were members of the classes certified by the court in Solutia Inc. v. George Forsberg, et al., Case No. 3:98 CV237/RV/SMN and to specified Retired Employees who retired after January 1, 2002 and through December 31, 2002 who were participants in a collective bargaining agreement ending December 31, 2002. The Post-Settlement Plan, originally effective as of January 1, 2002, was first applicable as of such date to specified Retired Employees who retired after October 19, 2001, and who were not members of the classes certified by the court in Solutia Inc. v. George Forsberg, et al., Case No. 3:98 CV237/RV/SMN.

This Plan was created in connection with a settlement (the “Retiree Settlement”) between (a) the Company, (b) those Retired Employees, including their Surviving Spouses and Dependents, who worked for Pharmacia Corporation (f/k/a Monsanto and referred to as Pharmacia or Pharmacia Corporation herein), and retired, prior to the Company’s spin-off from Pharmacia in 1997, (c) those Retired Employees, including their Surviving Spouses and Dependents, who retired from the Company after the Company’s spin-off from Pharmacia in 1997 (including those Retired Employees and their Surviving Spouses and Dependents who worked for Pharmacia prior to Company’s spin-off from Pharmacia in 1997 and thereafter for the Company), (d) any other person having a claim against the Company for “retiree benefits” as such term is defined in section 1114(a) of the Bankruptcy Code and (e) the official committee of retirees appointed on February 20, 2004, in the Company’s chapter 11 cases currently pending before the United States Bankruptcy Court for the Southern District of New York (the “Retirees’ Committee”).

This Plan makes the following changes to the Post-Settlement Plan, effective as of September 1, 2004: (i) it raises the eligibility thresholds certain Employees must meet in order to become

eligible for benefits under the Plan, (ii) it “grandfathers” the eligibility of certain Employees who attain age 55 with at least 10 years of Service prior to January 1, 2007, and (iii) it grandfathers the eligibility of certain Employees whose sum of age and years of Service is equal to or greater than 75 prior to January 1, 2007. Any Employee who is not covered by a collective bargaining agreement and who is hired on or after January 1, 1999 shall be ineligible to participate in the Plan. In addition, this consolidation, amendment and restatement provides that the benefits of certain eligible individuals end no later than the earlier of (i) Medicare eligibility (age 65), or (ii) October 31, 2016. Also, effective January 1, 2005, the Company amended its Separation Pay Plan to provide that an employee who attains age 53 as of January 1, 2005 with 10 years of service at his separation date and who is involuntarily separated from service would be eligible to participate in the Plan immediately following his or her Separation Date. In addition, an employee who attains age 50 and whose sum of age plus years of Service as of his Separation Date equals or exceeds 75 (“Combo 75”) would be eligible to participate in the Plan upon attaining age 55.

This Plan also implements certain legally required changes as well as various clarifications to the benefits provided under the 2002 Plan and the Post-Settlement Plan. This Plan is not a contract of insurance. The terms of the retiree life insurance benefits will be governed by the applicable insurance policy, and will provide benefits to Retired Employees who were covered under the Solutia, Inc. Retiree Life Insurance Plan on the day before the effective date of this Plan, consistent with the following:

a)	for each Retired Employee covered under the Solutia, Inc. Retiree Life Insurance Plan on the day before the effective date of this Plan who retired prior to January 1, 1986, such Retired Employee’s life insurance coverage amount in effect on the day immediately preceding the effective date of this Plan, up to a maximum coverage limit of $12,500;
b)	for each Retired Employee covered under the Solutia, Inc. Retiree Life Insurance Plan on the day before the effective date of this Plan who retired from January 1, 1986 through December 31, 2001, such Retired Employee’s life insurance coverage amount in effect on the day immediately preceding the effective date of this Plan, up to a maximum coverage limit of $10,000; and

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c) for each Retired Employee covered under the Solutia, Inc. Retiree Life Insurance Plan on the day before the effective date of this Plan who retired after December 31, 2001, such Retired Employee will receive no life insurance benefits under this Plan.

These life insurance benefits shall not be subject to change and shall continue even in the event that any Retired Employee is not covered for medical and drug benefits under this Plan or any subsequent retiree medical benefit plan.

Appendix A sets forth the certificate of insurance covering retiree life insurance benefits. The Company will distribute to covered Retired Employees a new life insurance certificate describing the life insurance benefits and will notify affected Retired Employees in the event of any change in insurance carriers.

SECTION 1
DEFINITIONS

1.1

Active Plan. “Active Plan” means the Solutia Inc. Medical Benefits Plan effective September 1, 1997 and its successors, as such plan or any successors may be amended or restated from time to time.

1.2

Administrative Services Provider. “Administrative Services Provider” means an insurance company or other entity with which the Company has contracted for the provision of administrative services necessary or desirable under the Plan, or the duly authorized designee of such insurance company or other entity. If the Company has contracted with more than one insurance company or entity, the term Administrative Services Provider shall refer to the entities or entity with which the Company has contracted for the provision of the particular service at issue. If the Company has not contracted with an Administrative Services Provider for the provision of a particular service, all references to Administrative Services Provider with respect to that service shall be deemed to be references to the Plan Administrator or the person or group designated by the Plan Administrator to carry out the tasks of the Administrative Services Provider with respect to that service.

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1.3	Brand Name Drug. “Brand Name Drug” means a Legend Drug that is available from a single manufacturer and that is labeled as such in the National Drug Data File (NDDF) or other nationally recognized reporting service.
1.4	Code. “Code” means the Internal Revenue Code of 1986, as amended.
1.5	Contracted Amount. “Contracted Amount” means the amount that is the discounted fee negotiated by the prescription drug Administrative Services Provider who administers the prescription drug program under the Plan.
1.6	Co-Payment Amount. “Co-Payment Amount” means, with respect to Covered Drugs purchased at participating retail pharmacies, 20% of the Contracted Amount of the Covered Drug, not to exceed $50. “Co-Payment Amount” means, with respect to Covered Drugs purchased at the mail order pharmacy, 20% of the Contracted Amount of the Covered Drug. Syringes, needles and insulin Prescription Orders filled on the same day shall require the payment of only one Co-Payment Amount with respect to those Prescription Orders by the covered Participant or covered Dependent. “Co-Payment Amount” means, with respect to Covered Medical Expenses, the portion of the Contracted Amount payable by a Participant and specified in this Plan or the Active Plan for such Covered Medical Expenses.
1.7	Coverage Category. “Coverage Category” shall mean the category of medical and drug coverage under this Plan elected by the Retired Employee or Dependent Spouse or Surviving Spouse and shall be limited to one of the following: (a) coverage for the Retired Employee, Dependent Spouse (for Groups IIB, V and VI) or Surviving Spouse alone; (b) coverage for the Retired Employee and Spouse; (c) coverage for the Retired Employee or Dependent Spouse (for Groups IIB, V and VI) or Surviving Spouse and child(ren) who qualify as Dependents; or (d) coverage for the Retired Employee, Spouse and child(ren) who qualify as Dependents.
1.8	Covered Drug. “Covered Drug,” except as herein otherwise limited or excluded, means any of the following drugs and medicines, or any refill thereof, unless such drugs or medicines were acquired without cost to the Participant:

(a)	a Legend Drug,
(b)	insulin,

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(c)	a compounded Prescription Order in which at least one ingredient is a Legend Drug,
(d)	oral contraceptives,
(e)	any other drugs or medicines which, under the applicable state law, may be dispensed only upon a Prescription Order,
(f)	disposable needles and syringes when prescribed with insulin, allergy serum, or other injectable drugs, and
(g)	diabetic testing agents, including, but not limited to, tablets, strips and tape.

	A “Covered Drug” must be Medically Necessary and the cost thereof must not be included or includable in the cost of other services or supplies provided to or prescribed for the covered Participant or covered Dependent.
1.9	Covered Group. “Covered Group” shall mean the Retired Employee and the Dependents he or she has elected to cover for medical and drug benefits under the Plan, or the Dependent Spouse (for Groups IIB, V and VI) or Surviving Spouse of a Retired Employee and the Dependents he or she has elected to cover under the Plan.
1.10	Covered Proportion. “Covered Proportion” means the portion of a Covered Medical Expense which the Employer is obligated to pay pursuant to the terms hereof.
1.11	Custodial Care. “Custodial Care” shall mean that type of care (including room and board needed to provide that care) which:

(a)	is given mainly to help a person with personal hygiene or to perform the activities of daily living; and
(b)	can, in the terms of generally accepted medical standards, be safely and adequately given by people who are not trained or licensed medical or nursing personnel.

Services are Custodial Care regardless of who recommends, provides or directs the care or where the care is given.

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1.12	Deductible Amount. “Deductible Amount” means with respect to any Plan Year the amount, as shown in the Schedules of Benefits set forth in Section 4, of Covered Medical Expenses which a Participant is obligated to pay before benefits are payable under the Plan.
	If a Participant incurs Covered Medical Expenses on his or her own account and on account of one or more of his or her covered Dependents, or on account of two or more of his or her covered Dependents, due to injuries sustained in the same accident, the Deductible Amount shall be limited to the amount specified in the applicable Schedule of Benefits set forth in Section 4 with respect to all Covered Medical Expenses incurred on account of such accident for all such persons and which are incurred prior to the end of the calendar year in which the accident occurred.
1.13	Dependent. “Dependent” means (a) a Retired Employee’s Spouse, (b) any unmarried child under twenty-five years of age of a Retired Employee, excluding in any case, (i) any person who is eligible for coverage as an Employee, (ii) any person who was not eligible for coverage as a Dependent under a medical plan maintained by Pharmacia Corporation or the Company for active employees on the day preceding the date such Retired Employee retired, (iii) any child nineteen years of age or over who is not a full-time student, (iv) any child who is employed on a full-time basis and who is not principally dependent upon the Retired Employee for maintenance and support, and (v) any child who is in the military or similar forces of any country or subdivision thereof. The term “child” includes any natural child, any child legally placed for adoption, any stepchild who permanently resides in the Retired Employee’s household and any child under the court-appointed legal guardianship of the Retired Employee or the Retired Employee’s Spouse and who resides in the Retired Employee’s household. The term “child” also includes any other child who, prior to August 31, 1997, was on the Administrative Services Provider’s approved list of “grandfathered” children under a Prior Plan.
	A child who is covered as a Dependent on the day immediately preceding the date he or she otherwise would have ceased to be a Dependent and who is then totally and

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	permanently disabled and fully dependent on the Retired Employee for maintenance and support shall not be excluded as a covered Dependent; provided due proof is submitted to the Administrative Services Provider of such total and permanent disability thirty-one days before the date the child would otherwise cease to be a Dependent and proof of continuance of such disability is made when requested. For purposes of the foregoing sentence, a person is totally and permanently disabled if (a) the person is totally disabled by reason of bodily injury or disease or birth defect so as to be prevented thereby from engaging in any occupation or employment for remuneration for which the person is or can be equipped by reason of training, education or ability, and (b) the condition of total disability is expected to be permanent during the remainder of the person’s life.
1.14	Disabled. “Disabled” means Totally and Permanently Disabled or Disabled For Any Occupation under the terms of the applicable disability income plan maintained by an Employer that covers the Employee.
1.15	Employee. “Employee” means any individual who is classified by an Employer as a regular full-time or regular part-time, active, common law employee and who immediately prior to becoming a Retired Employee was eligible to participate in the Active Plan or any other medical plan maintained by Pharmacia or the Company for active employees. Notwithstanding anything to the contrary, “Employee” shall not include:

(a)	any leased employee within the meaning of Code Section 414(n);
(b)	any individual employed as a temporary, cooperative, summer or seasonal, or per diem employee;
(c)	any individual who resides in Hawaii;
(d)	any individual who is on international assignment from a foreign operation of an Employer or a Subsidiary to the domestic operations of an Employer;
(e)	any individual who is treated by an Employer as an independent contractor or a leased employee, regardless of whether such individual is later declared a common law employee by a court or government agency.

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1.16	Employer. “Employer” means the Company and each employer or Subsidiary which has adopted the Plan with the approval of the Company.
1.17	ERISA. “ERISA” means the Employee Retirement Income Security Act of 1974, as amended.
1.18	Former Pharmacia Participant. “Former Pharmacia Participant” shall mean an individual for whom the responsibility to provide retiree medical benefits under a Prior Plan was transferred to the Company in connection with the distribution by Pharmacia Corporation (f/k/a Monsanto Company) of all of the outstanding shares of the Company effective September 1, 1997, provided that the term “Former Pharmacia Participant” shall not include an individual for whom the responsibility to provide retiree medical benefits was transferred to Monsanto Company in connection with the transfer to Monsanto Company of the Company’s interest in the P4 joint venture.
1.19	Forsberg Settlement. “Forsberg Settlement” means the Order and Final Judgment dated November 1, 2001, filed in the United States District Court for the Northern District of Florida, Pensacola Division, approving the settlement agreement and 2002 Plan in settlement of the litigation related to medical benefits for Retired Employees in Solutia Inc. v. George Forsberg, et al., Case No. 3:98 CV237/RV/SMN, and related documents.
1.20	Generic Drug. “Generic Drug” means a Legend Drug that is labeled as such in the NDDF or other then current nationally recognized reporting service.
1.21	Group IA. “Group IA” means the group composed of (a) Former Pharmacia Participant members of a class certified in the Forsberg Settlement who were covered by a collective bargaining agreement between Pharmacia Corporation and a union and who retired under a Prior Plan that became effective prior to January 1, 1981; and (b) Surviving Spouses and covered Dependents of such class members.
1.22	Group IB. “Group IB” means the group composed of (a) Former Pharmacia Participant members of a class certified in the Forsberg Settlement who were covered by a collective bargaining agreement between Pharmacia Corporation and a union and who retired under a Prior Plan that became effective on January 1, 1981; and (b) Surviving Spouses and covered Dependents of such class members.
1.23	Group IIA. “Group IIA” means the group composed of (a) Former Pharmacia Participant members of a class certified in the Forsberg Settlement who were covered by a collective

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	bargaining agreement between Pharmacia Corporation and a union and who retired under a Prior Plan that became effective on or after January 1, 1986 and before December 1, 1994, and (b) Surviving Spouses and covered Dependents of such class members.
1.24	Group IIB. “Group IIB” means the group composed of members of a class certified in the Forsberg Settlement of (a) Former Pharmacia Participants who were covered by a collective bargaining agreement between Pharmacia Corporation and a union and who retired under a Prior Plan that became effective on or after December 1, 1994; (b) persons hired prior to February 1, 2002 who retired from the Company prior to January 1, 2003 and who at the time of their retirement were covered by a collective bargaining agreement between the Company and a union; (c) persons who were transferred to Flexsys America LP(“Flexsys”)at the time of the formation of Flexsys (April 30, 1995) and who were covered under a collective bargaining agreement between Pharmacia Corporation and a union and who had attained age 50 at the time of transfer from Pharmacia Corporation to Flexsys and who had attained age 50 and five years of Service prior to separating from service with Flexsys and who separated from service with Flexsys prior to enrolling for coverage under the Plan (years of service are not required for retiree life insurance coverage only); (d) persons who were transferred to Astaris LLC at the time of the formation of Astaris LLC (April 1, 2000) and who were members of a collective bargaining unit recognized by the Company and who had attained age 45 at the time of transfer from the Company to Astaris LLC and who attained age 55 and ten years of Service while employed with Astaris LLC; and (e) Surviving Spouses and covered Dependents of class members described in (a),(b), (c) or (d).
1.25	Group IIIA. “Group IIIA” means the group composed of (a) Former Pharmacia Participant members of a class certified in the Forsberg Settlement who were not covered by a collective bargaining agreement between Pharmacia Corporation and a union and who retired under a Prior Plan that became effective prior to January 1, 1981, and (b) Surviving Spouses and covered Dependents of such class members.
1.26	Group IIIB. “Group IIIB” means the group composed of (a) Former Pharmacia Participant members of a class certified in the Forsberg Settlement who were not covered by a collective bargaining agreement between Pharmacia Corporation and a union and

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	who retired under a Prior Plan that became effective on January 1, 1981; and (b) Surviving Spouses and covered Dependents of such class members.
1.27	Group IV. “Group IV” means the group composed of (a) Former Pharmacia Participant members of a class certified in the Forsberg Settlement who were not covered by a collective bargaining agreement and who (i) retired under a Prior Plan that became effective on or after January 1, 1986 and before December 1, 1990 or (ii) retired prior to June 25, 1992 under a Prior Plan that became effective January 1, 1991; and (b) Surviving Spouses and covered Dependents of such class members.
1.28	Group V. “Group V” means the group composed of (a) members of a class certified in the Forsberg Settlement who were not covered by a collective bargaining agreement and who retired on or after June 25, 1992 under a Prior Plan that became effective on or after December 1, 1990; (b) members of a class certified in the Forsberg Settlement who were not covered by a collective bargaining agreement and who retired on or after June 25, 1992 under a Prior Plan that became effective on or after December 1, 1990 and who were transferred to Flexsys at the time of the formation of Flexsys (April 30, 1995) and who had attained age 50 at the time of transfer from Pharmacia Corporation to Flexsys and who had attained age 50 and five years of Service prior to separating from service with Flexsys and who separated from service with Flexsys LLC prior to enrolling for coverage under the Plan; and (c) members of a class certified in the Forsberg Settlement who were not covered by a collective bargaining agreement and who retired on or after June 25, 1992 under a Prior Plan that became effective on or after December 1, 1990 and who were transferred to Astaris LLC at the time of the formation of Astaris LLC (April 1, 2000) and who were at least 45 years of age at the time of transfer and who had attained age 55 and ten years of Service while employed with Astaris LLC; and (d)  Surviving Spouses and covered Dependents of such persons described in (a), (b) and (c).
1.29	Group VI. “Group VI” means the group composed of persons who were not covered by a collective bargaining agreement and (a) who retired from the Company on or after January 1, 2002; (b) who retired on or after January 1, 2002 and who were transferred to Flexsys at the time of the formation of Flexsys (April 30, 1995) and who had attained age 50 at the time of transfer from Pharmacia Corporation to Flexsys and who had attained age 50 and five years of Service prior to separating from service with Flexsys

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and who separated from service with Flexsys prior to enrolling for coverage under the Plan; (c) who retired on or after January 1, 2002 and who were transferred to Astaris LLC at the time of the formation of Astaris LLC (April 1, 2000) and who were at least 45 years of age at the time of transfer and who had attained age 55 and ten years of Service while employed with Astaris LLC; and (d) Surviving Spouses and covered Dependents of such Retired Employees described in (a), (b) and (c).

1.30

Home Health Care Agency. “Home Health Care Agency” means a hospital or other organization approved by the Administrative Services Provider:

(a)	which is licensed or certified under a public health law or a similar law to provide home health care services; or
(b)	which is recognized as a home health care agency by Medicare.

1.31

Home Health Care Plan. “Home Health Care Plan” means a program prescribed by a Physician, approved in advance in writing by the Administrative Services Provider, and periodically reviewed by a Physician, together with such Physician’s certification that the medical condition of the Participant or covered Dependent and the proper treatment of the specific condition would require confinement in a hospital or skilled nursing facility in the absence of the services and supplies provided as part of the Home Health Care Plan. The Home Health Care Plan shall further certify that the Participant or covered Dependent requires, on an intermittent basis, skilled nursing or skilled physical, occupational, or speech therapy.

1.32

Hospice Care Facility. “Hospice Care Facility” means a facility approved by the Administrative Services Provider which is:

(a)	a free-standing facility fully staffed and equipped to provide for the needs of the terminally ill, or
(b)	a program organized for the purpose of providing referral service for patients and/or relatives of the patient in a home setting, or

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(c) an in-hospital facility which is part of a licensed hospital but designated by the hospital as a Hospice Unit or is an adjacent facility, administered by the hospital and designated as a Hospice Unit.

1.33 Hospice Care Program. “Hospice Care Program” means a plan for hospice care which is a centrally coordinated program of Medically Necessary home health, outpatient and/or inpatient services provided by an interdisciplinary team and directed by a Physician. Such program must be:

(a)	prescribed by the attending Physician and approved in advance by the Administrative Services Provider, and
(b)	based on a statement by the Physician documenting the patient’s diagnosis and indicating the life expectancy of the patient is six months or less, and
(c)	treatment which consists of palliative care only.

1.34	Legend Drug. “Legend Drug” means a prescription drug (any medical substance, the label of which under the Federal Food, Drug and Cosmetic Act, is required to bear the legend: “Caution: Federal Law prohibits dispensing without prescription”).
1.35	Maintenance Drug. “Maintenance Drug” means a Legend Drug that is prescribed for an ongoing period of time.
1.36	Maximum Aggregate Benefit. “Maximum Aggregate Benefit” means the maximum amount the Company shall be obligated to pay with respect to Covered Medical Expenses and Covered Drugs incurred on account of an individual under this Plan or a Prior Plan, including any payments made from a voluntary employees’ beneficiary association (“VEBA”) or other trust, if applicable.
1.37	Medical Expense Contributions. “Medical Expense Contributions” shall mean with respect to a Retired Employee, Dependent Spouse (for Groups IIB, V and VI) and a Surviving Spouse the contributions which shall be required for coverage as set forth in Section 3.
1.38	Medical Plan Choice. “Medical Plan Choice” means a Medical Plan Choice made available to participants under the Active Plan.

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1.39 Medically Necessary. A “Medically Necessary” service or supply is one prescribed by a Physician for the diagnosis or treatment of a sickness or injury and is generally accepted, and in use by, the medical community in the United States as appropriate and effective for the condition being treated or diagnosed. Whether a service or supply is Medically Necessary will be determined based on, and consistent with, standards established by the Administrative Services Provider. Such standards shall be developed by the Administrative Services Provider, in part, with consideration as to whether the service or supply meets all of the following criteria:

(a)	it is medically appropriate and necessary to meet the basic health needs of the patient;
(b)	it is rendered in the most cost-efficient manner and type of setting appropriate for the delivery of the health service;
(c)	it is consistent in type, frequency and duration of treatment with scientifically based guidelines of national medical, research or health care coverage organizations or governmental agencies;
(d)	it is consistent with the diagnosed condition;
(e)	it is required by the Physician for reasons other than the comfort or convenience of the patient; and
(f)	it is of demonstrated medical value.

	A procedure or treatment shall not be Medically Necessary solely because (i) a Physician has performed or prescribed it, or (ii) it is the only treatment for a particular injury or illness. A determination by the Administrative Services Provider that a service or supply is not Medically Necessary may apply to the entire service or supply, or any portion of it.
1.40	Medicare. “Medicare” shall mean the Health Insurance for the Aged Act of the United States, Title XVIII of the Social Security Act, or any successor statute, as amended from time to time.

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1.41	Medicare Eligible Participant. “Medicare Eligible Participant” shall mean any Retired Employee, Dependent Spouse, or Surviving Spouse who is eligible for benefits under Medicare, but excluding any such individual who is eligible for benefits under Medicare solely as a result of disability.
1.42	Monsanto Company. “Monsanto Company” shall mean the company that was created on February 9, 2000, under the name “Monsanto Ag”, as a wholly-owned subsidiary of Pharmacia Corporation, and changed its name to Monsanto Company on March 31, 2000.
1.43	Nonparticipating Provider. “Nonparticipating Provider” means a Provider who has not entered into an agreement with the prescription drug Administrative Services Provider to provide Covered Drugs.
1.44	Open Enrollment Period. “Open Enrollment Period” shall mean the Open Enrollment Period established by the Plan Administrator.
1.45	Participant. “Participant” shall mean for any Plan Year, a Retired Employee or a Dependent Spouse (for Groups IIB, V and VI) or Surviving Spouse who has elected to be covered under the Plan and who has paid the required Medical Expense Contribution in the time and manner specified in the Plan. The term Participant shall also include any Retired Employee who remains covered by the life insurance benefits provided under the Plan, regardless of whether such Retired Employee has elected to be covered under the Plan’s medical and drug benefits.
1.46	Participating Provider. “Participating Provider” means a Provider who has entered into an agreement with the prescription drug Administrative Services Provider to provide Covered Drugs and to be reimbursed therefore pursuant to the terms of such agreement.
1.47	Pension Plan. “Pension Plan” shall mean the Solutia Inc. Employees’ Pension Plan and any successors thereto.
1.48	Pharmacia Corporation. “Pharmacia Corporation” shall mean the Delaware corporation formerly known as Monsanto Company which effective September 1, 1997 distributed all of the outstanding shares of the Company as a dividend to its stockholders, which subsequently changed its name to Pharmacia Corporation and which subsequently was acquired by and merged into Pfizer Inc.

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1.49	Pharmacy. “Pharmacy” means a licensed establishment where prescription drugs are dispensed by a pharmacist licensed under the laws of the state wherein the pharmacist practices.
1.50	Physician. “Physician” means any doctor of medicine or doctor of osteopathy who is legally qualified and licensed to practice medicine or surgery or osteopathic medicine or surgery at the time and place services are rendered.
1.51	Plan. “Plan” shall mean this 2008 Retiree Welfare Plan, as amended from time to time to the extent permitted under Section 16.
1.52	Plan Year. “Plan Year” shall mean the calendar year.
1.53	Prescription Order. “Prescription Order” means a prescriber’s lawful written, electronic, or verbal order for a Legend Drug.
1.54	Prior Plan. “Prior Plan” shall mean any plan maintained by the Company or the Pharmacia Corporation or any Employer on or before February 28, 2008 which provided medical benefits to retirees of any Employer.
1.55	Provider. “Provider” means any duly licensed Pharmacy, Physician, or any other person or organization legally licensed to dispense drugs.
1.56	Psychologist. “Psychologist” means any person who meets one of the following qualifications:

(a)	If practicing in a state where statutory licensure or certification of psychologists exists, the person holds a valid credential (as legally specified) for such practice,
(b)	If practicing in a state where statutory licensure or certification of psychologists does not exist, but where valid non-statutory (professional) certification is established by the jurisdiction’s recognized psychologist association, the person holds such certification,
(c)	If practicing in a state where neither statutory nor non-statutory licensure exists, the person holds a statement of qualification by a committee established for the purpose by the jurisdiction’s recognized psychological association or, in the absence of such a committee, the person holds a diploma in the appropriate specialty awarded by the American Board of Examiners in Professional Psychology.

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1.57

Reasonable and Customary. A charge or expense is “Reasonable and Customary” if the Administrative Services Provider determines that the charge or expense is no greater than the lowest of: (a) the usual charge by the health care provider for the same or similar item or service, (b) the usual charge of most other health care providers with similar training and experience in the same geographic area for the same or a similar item, or (c) the actual charge for the item.

1.58

Retired Employee. “Retired Employee” means an individual who:

(a) is a member of Groups IA, IB, IIA, IIB, IIIA, IIIB, IV, or V, and who;

(i)	retired from employment with an Employer and who at the time of retirement has attained at least age 55 years of age and had accrued at least 10 years of Service while eligible to participate in the Active Plan or a Prior Plan and who was eligible to participate in the Active Plan or a Prior Plan on the day before retirement;
(ii)	at the time of retirement had attained at least 50 years of age, who had accrued at least 10 years of Service, whose age and years of Service equal or exceed 65, who elected to retire under the 1997/98 Special Program, the 1998 Special Program or the 1999 Special Program and who was eligible to participate in the Active Plan or a Prior Plan on the day before retirement;
(iii)	at the time of retirement had attained at least 50 years of age, who had accrued at least 10 years of Service and who is eligible to participate in this Plan under the applicable terms of the Solutia Inc. Separation Pay Plan;
(iv)	was Disabled and who satisfied the requirements of paragraph (i), (ii) or (iii) on the earlier of the date he was no longer eligible to receive disability benefits under the applicable disability income plan or the date he began receiving distributions from the applicable Pension Plan;
(v)	retired from employment with an Employer, who at retirement was at least 50 year of age and had 10 or more years of Service and who was eligible to participate in the Active Plan or a Prior Plan on the date before retirement and who did not meet the requirements of (i), (ii), (iii), or (iv) above.

(b) effective January 1, 2002, is a member of Group VI and who separated or retired from employment with an Employer and who:

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(i)	was hired prior to January 1, 1999 and at the time of retirement had attained at least age 55 and had accrued at least 10 years of Service while eligible to participate in the Active Plan or a Prior Plan and who was eligible to participate in the Active Plan or the Prior Plan on the day before retirement;
(ii)	was hired prior to January 1, 1999 and at the time of separation from service had attained at least age 50 and had accrued at least 10 years of Service while eligible to participate in the Active Plan or a Prior Plan and who was separated from service under the applicable terms of the Company Separation Pay Plan;
(iii)	was hired prior to January 1, 1999 and who was Disabled and who satisfied the requirements of paragraphs (i) or (ii) on the earlier of the date he was no longer eligible to receive disability benefits under the applicable disability income plan or the date he began receiving distributions from the applicable Pension Plan;
(iv)	prior to September 1, 2004, at separation from service is at least 50 years of age and has accrued at least 10 years of Service and who was eligible to participate in the Active Plan or a Prior Plan on the day before separation and who did not meet the requirements of (i), (ii), or (iii) above, whereby the individual must pay the full cost of coverage hereunder until he attains age 65, at which time his coverage under the Plan will end;
(v)	retires from employment with Flexsys LLC and who had attained at least 50 years of age and accrued at least 10 years of Service with Flexsys LLC and Pharmacia Corporation at the date of retirement and who was eligible to participate in an Active Plan at the time such person was transferred to Flexsys LLC on April 30, 1995 and who was at least 50 years of age at the time of the transfer;

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(vi) enrolls in the Plan and had attained at least 55 years of age and 10 or more years of Service with Astaris LLC and the Company and who was eligible to participate in an Active Plan at the time such person was transferred to Astaris LLC on April 1, 2000 and who was at least 45 years of age at the time of the transfer;

or

(c) effective September 1, 2004, is a member of Group VI and was hired prior to January 1, 1999 and who prior to October 31, 2016:

(i)	retires from employment with an Employer no later than age 65 and who at the time of retirement has attained at least age 60 and has accrued at least 15 years of Service while eligible to participate in the Active Plan or a Prior Plan and who was eligible to participate in the Active Plan or a Prior Plan on the day before retirement;
(ii)	both attains at least 55 years of age and has accrued at least 10 years of Service on or before December 31, 2006, and retires from employment with an Employer no later than age 65 while eligible to participate in the Active Plan or a Prior Plan and who was eligible to participate in the Active Plan or a Prior Plan on the day before retirement;
(iii)	both attains at least 55 years of age and has accrued at least 10 years of Service on or before retiring from employment and whose age plus years of Service as of December 31, 2006 are equal to or greater than 75, and who retires from employment with an Employer no later than age 65 while eligible to participate in the Active Plan or a Prior Plan and who was eligible to participate in the Active Plan or a Prior Plan on the day before retirement;
(iv)	was Disabled and who satisfied the requirements of paragraph (i), (ii), or (iii) on the earlier of the date he was no longer eligible to receive

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	disability benefits under the applicable disability income plan or the date he began receiving distributions from the applicable Pension Plan;
(v)	on or before December 31, 2006, retires from employment with Flexsys and who at retirement is at least 50 years of age and has accrued at least 10 years of Service with Flexsys and Pharmacia Corporation and who was eligible to participate in an Active Plan at the time such person was transferred to Flexsys on April 30, 1995 and who was at least 50 years of age at the time of the transfer;
(vi)	effective January 1, 2007, retires from employment with Flexsys no later than age 65 and who at the time of retirement has attained at least age 60 and has accrued at least 15 years of Service with Flexsys and Pharmacia Corporation and who was eligible to participate in an Active Plan at the time such person was transferred to Flexsys on April 30, 1995 and who was at least 50 years of age at the time of the transfer;
(vii)	enrolls in the Plan and who had attained as of November 4, 2005 at least 55 years of age and 10 or more years of Service with Astaris LLC and the Company and who was eligible to participate in an Active Plan at the time such person was transferred to Astaris LLC on April 1, 2000 and who was at least 45 years of age at the time of the transfer;
(viii)	effective January 1, 2005, an Employee who attains age 53 as of January 1, 2005 and who thereafter is involuntarily separated from service under the applicable terms of the Company Separation Pay Plan having attained 10 years of Service as of his separation date; or
(ix)	effective January 1, 2005, upon attainment of age 55, an Employee whose sum of age plus years of Service as of January 1, 2007 equals or exceeds 75 (“Combo 75”) and who was involuntarily separated from service under the applicable terms of the Company Separation Pay Plan having attained age 50 as of his separation date.

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	Notwithstanding any other provision of this Plan, an Employee who is not covered by a collective bargaining agreement and hired or rehired on or after January 1, 1999 shall not be a Retired Employee. For this purpose, an Employee who became an Employee as a result of a corporate transaction that was effected on or after January 1, 1999, and/or who was never offered or eligible for retiree welfare benefits from the Company, shall be deemed to have been hired after January 1, 1999.
1.59	Retiree Liaison Committee. “Retiree Liaison Committee” means the three person liaison committee appointed pursuant to the Retiree Settlement.
1.60	Service. “Service” shall include all vesting service as such term is defined in the Pension Plan. Service shall exclude all service as a leased employee (as defined in Code Section 414(n)) and all service in a position designated by the Company or an Employer as an independent contractor position regardless of whether such designation is subsequently determined by a court or agency to have been erroneous or improper. With respect to an Employee who transferred from the Company to Astaris LLC at the time of the formation of Astaris LLC and who was at least 45 years old at the time of the transfer, Service shall include years of service with Astaris LLC but not beyond the closing of the sale of Astaris LLC to Israel Chemicals Limited on November 4, 2005.
1.61	Spell of Illness. “Spell of Illness” shall have the same meaning as such term has under Medicare.
1.62	Spouse. “Spouse” shall mean a Retired Employee’s lawful opposite sex spouse.
1.63	Subsidiary. “Subsidiary” shall mean any subsidiary or affiliate of the Company, at least 80 percent of the stock of which is controlled by the Company by application of Code Sections 414(b) and 1563(a) or any subsidiary or affiliate of the Company under “common control” with the Company by application of Code Section 414(c).
1.64	Surviving Spouse. “Surviving Spouse” means (a) the Dependent Spouse at the date of death of a Retired Employee or (b) the Spouse at the date of death of an active Employee provided that the active Employee had attained at least age 60 and had completed 15 years of Service while eligible to participate in the Active Plan or a Prior Plan, or (c) the Spouse at the date of

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death of a Disabled Employee who satisfied the requirements of Section 1.58 (a) on his or her date of death, or (d) the Dependent Spouse at the date of death of an active Employee who satisfied the requirements of Section 1.58(b) or (c) on his or her date of death. Notwithstanding the foregoing, Surviving Spouse shall not include a Spouse who is eligible for coverage under the Active Plan as an Employee or under this Plan as an Employee or a Retired Employee.

1.65

Terminated for Misconduct. “Terminated for Misconduct” shall mean an Employee has been involuntarily separated from employment after January 1, 2006 due to his or her Misconduct. Misconduct includes but is not limited to acts of embezzlement, or felonious violence against another person on Company property or while representing the Company.

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SECTION 2
ELIGIBILITY AND EFFECTIVE DATES OF COVERAGE

2.1	Eligibility. Each Retired Employee shall be eligible for coverage under this Plan on the first day he or she becomes a Retired Employee.
	A Surviving Spouse as defined in Section 1.64(b), (c) or (d) shall be eligible for medical and drug coverage under this Plan on the date after coverage of such Surviving Spouse under the Active Plan ends. If a Surviving Spouse was not covered under the Active Plan, a Prior Plan or the Plan as of the date of the death of the Retired Employee, such Surviving Spouse can elect coverage under the Plan at any time, provided the Plan’s eligibility requirements are met.
	Each eligible Dependent of a Retired Employee shall be eligible for medical and drug coverage under this Plan on the date the Retired Employee becomes eligible for coverage under the Plan and elects coverage for such individual.
	Notwithstanding the foregoing, an individual who has incurred Covered Medical Expenses and Covered Drug expenses that would result in benefits in excess of the Maximum Aggregate Benefit or whose coverage under a Prior Plan has ended under the terms of such Prior Plan will not be eligible for coverage.
2.2	Effective Date of Coverage for Retired Employees and Surviving Spouses. The medical and drug coverage under the Plan for an eligible Retired Employee or Surviving Spouse shall commence on the effective date of an election to be covered, made by the Retired Employee or Surviving Spouse in accordance with this Plan and in the manner specified by the Plan Administrator and upon the payment of any required Medical Expense Contribution in the time and manner specified by the Plan Administrator.
2.3	Effective Date of Coverage for Dependents. The medical and drug coverage under the Plan for an eligible Dependent of a Retired Employee shall commence on the effective date of an election of a Coverage Category which includes such Dependent made by the Retired Employee in accordance with this Plan.

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2.4	Initial Election by a Retired Employee. A Retired Employee’s initial election to be covered for medical and drug benefits under this Plan may be made prior to the date he or she retires. If such election is made in the manner specified by the Plan Administrator prior to the date of retirement, the election shall be effective immediately upon retirement. If a Retired Employee fails to make an election prior to retirement, such Retired Employee may elect to be covered under the Plan only (i) during the Open Enrollment Period; or (ii) in such other circumstances as the Plan Administrator shall specify. Any election made during an Open Enrollment Period shall become effective as of the first day of the next Plan Year. Any other election made shall become effective on the date specified by the Plan Administrator.
2.5	Election by Surviving Spouse. The initial election by a Surviving Spouse as defined in Section 1.64(b), (c) or (d) to be covered under this Plan may be made (i) prior to the date coverage under the Active Plan or a Prior Plan ends, or (ii) if the Surviving Spouse was not covered under such Active Plan or a Prior Plan on the date of the Retired Employee’s death, within 60 days from the date of death, or (iii) during an Open Enrollment Period, or (iv) in such other circumstances as the Plan Administrator shall specify. If such election is made before coverage ends under the Active Plan or a Prior Plan, the election shall be effective on the date such coverage ends. If the Surviving Spouse was not covered under the Active Plan or a Prior Plan on the date of the Retired Employee’s death and elects to be covered under the Plan within 60 days from the date of death, such election shall be effective as of the day immediately following the date of death. Any election made during an Open Enrollment Period shall become effective as of the first day of the next Plan Year. Any other election made shall become effective on the date specified by the Plan Administrator.
2.6	Election by Dependent Spouse. Dependent Spouses of Retired Employees in Groups IIB, V and VI may change elections during the Open Enrollment Period for themselves and any Dependent child(ren), provided they otherwise meet eligibility requirements. Any

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	election made during an Open Enrollment Period shall become effective as of the first day of the next Plan Year.
2.7	Change in Election. A Participant may elect to cease to be a Participant or may change the Coverage Category or, in the case of a Participant who is not a Medicare Eligible participant, the Medical Plan Choice elected, only (a) during an Open Enrollment Period; or (b) in such other circumstances as the Plan Administrator determines in its discretion to be appropriate. A Surviving Spouse may elect to cover any Dependent child(ren) under the Plan who were covered Dependents at the date of the Retired Employee’s death.
2.8	Cessation of Participation in Medical Plan Benefits. A Participant who elects to cease to be a Participant in the Plan’s medical and drug benefits, who ceases to be a Participant in the Plan’s medical and drug benefits due to attainment of the Maximum Aggregate Benefit or who ceases to be a Participant in the Plan’s medical and drug benefits because of the failure to pay the required Medical Expense Contribution shall not be eligible thereafter to elect to become a Participant in the Plan’s medical and drug benefits again. The preceding sentence shall not apply to a Participant who has ceased to be a Participant in the Plan’s medical and drug benefits in order to participate in an HMO offered by the Employer.
2.9	Dependent Elections. A Retired Employee who elects not to cover an eligible Dependent at his initial election to participate in the Plan shall thereafter be eligible to elect a Coverage Category which includes such Dependent on a one-time only basis. Once a Retired Employee covers an eligible Dependent under this Plan, the Dependent may not again become eligible to participate if such coverage is subsequently terminated. However, a Surviving Spouse may elect to participate in the Plan in accordance with the terms of this Section even if the Retired Employee had not previously elected to cover such Surviving Spouse.

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SECTION 3
MEDICAL EXPENSE CONTRIBUTIONS

3.1 Medical Expense Contribution. For each Plan Year, a Participant shall pay an annual Medical Expense Contribution equal to the greater of either (i) or (ii) below:

(i)	20% of the Annual Cost Per Covered Group, or
(ii)	the applicable Defined Dollar Limit Amount determined under Section 3.3.

3.2 Annual Cost. The Annual Cost Per Participant and Annual Cost Per Covered Group shall be determined as set forth in this Section 3.2.

(a)	The Annual Cost Per Covered Group for a Plan Year (the “Determination Year”) shall be determined by adding together the Annual Cost Per Participant for each covered person in the group. Multiple Dependent children covered by a single Participant shall be considered one covered person for this purpose.
(b)	The Annual Cost Per Participant for a Determination Year will be based upon a projection of the Claims Costs for that year. The Annual Cost Per Participant will be determined separately for Medicare Eligible Participants and those Participants who are not Medicare Eligible Participants, both as determined using the process set forth below in this Section 3.2.
(c)	The benefits for Covered Medical Expenses and expenses for Covered Drugs (other than those paid for Dependent child(ren)) (jointly referred to as “Claims Costs”) for the group for up to three years preceding the year in which the projection is being made (“Experience Years”) will be established by the Plan actuary. Where, in the judgment of the Plan actuary, the experience of the group for which the Annual Cost Per Participant is being determined does not provide a credible basis for projecting Determination Year Claims Costs, the experience of Retired Employees of the Company and the Employers who participate in another medical benefits plan maintained by the Company may be included in the group.

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(d)	The Claims Cost for each Experience Year will be projected to the Determination Year using trend and Plan adjustment factors that the Plan actuary determines are appropriate.
(e)	The average Claims Cost for each Experience Year will be determined by dividing the projected amount determined pursuant to the immediately preceding paragraph by the average number of Participants and Dependent Spouses in the Experience Year. The average Claims Cost for the Determination Year will be determined as the weighted average of these average Claims Costs for each Experience Year. The weighting will be at the judgment of the Plan actuary, but in no event will a year have a weighting of less than 20%.
(f)	The Annual Cost Per Participant for the Determination Year will be determined by augmenting the average Claims Cost for the Determination Year by the reasonably estimated expenses expected to be incurred in the administration of the Plan for the Determination Year. These expenses shall include, but are not limited to, the following items, whether performed internally or outsourced to others:

• systems necessary to administer the Plan;

• retiree service center costs;

• adjudication and payment of claims;

• pricing and other financial analysis necessary for the management of the Plan; and

• expenses paid directly by Solutia associated with the VEBA trust established to partially fund this Plan.

(g)	The Annual Cost per Participant for a Dependent child or group of Dependent children shall be equal to 40% of the Annual Cost Per Participant of a Participant who is not a Medicare Eligible Participant.
(h)	The Annual Cost Per Participant for a Dependent Spouse shall equal the Annual Cost Per Participant.

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(i) The EBPC may modify this Section 3.2 with respect to Group VI to account for changes in standard actuarial practices.

3.3	Defined Dollar Limit Amount. The Defined Dollar Limit Amount shall be the difference between the Annual Cost Per Covered Group and the Defined Dollar Limit applicable to a Covered Group.
	The Defined Dollar Limit applicable to a Covered Group with respect to a Retired Employee or Dependent Spouse (for Groups IIB, V and VI) or Surviving Spouse who is not Medicare Eligible shall be determined by the following table:

	GROUPS IA, IB, IIA,
	IIB, IIIA, IIIB, IV, V,
COVERED GROUP	and VI
Retiree Only	$	6,600
Dependent Spouse or Surviving Spouse Only	$	5,100
Retiree & Spouse (under 65)	$	11,700
Retiree & Spouse (over 65)	$	7,950
Retiree & Child(ren)	$	9,000
Retiree, Spouse (under 65) & Child(ren)	$	14,100
Retiree, Spouse (over 65) & Children	$	10,350

The Defined Dollar Limit applicable to a Covered Group with respect to a Retired Employee or Surviving Spouse who is Medicare Eligible shall be determined by the following table:

					GROUPS
					IIA, IIB, IV,
COVERED GROUP	GROUPS IA and IIIA		GROUPS IB and IIIB		V, and VI
Retiree Only	$	2,000	$	1,800	$	1,650
Surviving Spouse Only	$	1,650	$	1,475	$	1,350
Retiree & Spouse (under 65)	$	7,100	$	6,900	$	6,750
Retiree & Spouse (over 65)	$	3,650	$	3,275	$	3,000
Retiree & Child(ren)	$	4,400	$	4,200	$	4,050
Retiree, Spouse (under 65) & Child(ren)	$	9,500	$	9,300	$	9,150
Retiree, Spouse (over 65) & Children	$	6,050	$	5,675	$	5,400

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	For an Employee who is not covered by a collective bargaining agreement and who becomes a Retired Employee after December 31, 2002 or the Dependent Spouse (for Groups IIB, V and VI) or Surviving Spouse of such a Retired Employee, the applicable Defined Dollar Limit shall be the amount determined under the above charts multiplied by a fraction, the numerator of which is the Retired Employee’s complete years of Service (but no more than 25) and the denominator of which is 25.
3.4	Medical Expense Contributions Equal to Cost. Notwithstanding any other provision of the Plan to the contrary, a Retired Employee described in Sections 1.58(a)(v) and 1.58(b)(iv) or the Dependent Spouse (for Groups IIB, V and VI) or Surviving Spouse of such a Retired Employee shall pay an annual Medical Expense Contribution equal to the Annual Cost Per Participant for the Participant and any covered Dependents.
3.5	No Adjustments. The Medical Expense Contribution will not be adjusted for Medicare Eligible Participants who elect to participate in a Medicare Part D Plan (PDP) in lieu of the coverage offered under this Plan.
3.6	Payments. The Company shall require that the annual Medical Expense Contribution be paid in equal monthly installments and may permit such payments to be made through (a) a pension deduction, for those Participants who receive pension benefits from the Company, or (b) payments to the Company, for those Participants who do not receive pension benefits from the Company. The Participant may elect that any such non-pension payments be made by automatic debit of the Participant’s bank account.
3.7	Resolution Of Disputes Regarding Application of Methodology. If a Retiree Liaison Committee has been appointed and is in existence, the Plan Administrator shall give the Retiree Liaison Committee its final calculation of a Participant’s required Medical Expense Contribution under Section 3 of this Plan. If the Retiree Liaison Committee believes the calculation has not been made correctly, it may object to a calculation. The Plan Administrator and the Retiree Liaison Committee shall use their best efforts to negotiate in good faith to resolve any objection to the calculation.

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Members of the Retiree Liaison Committee are not ERISA fiduciaries. The Retiree Liaison Committee shall have no obligation to any Participants or beneficiaries to challenge the Plan Administrator’s calculation of a Participant’s required Medical Expense Contribution under Section 3 of this Plan, and the right of a Participant to challenge, through the claims procedures of the Plan and, if applicable, litigation, the validity of any such calculation shall not be in any way impaired or diminished by any failure of the Retiree Liaison Committee to challenge such calculation. Any litigation by a Participant challenging such a calculation can be brought only in the United States District Court for the Eastern District of Missouri.

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SECTION 4
SCHEDULE OF MEDICAL AND DRUG BENEFITS

4.1 Schedule of Benefits for Participants Who Are Not Medicare Eligible.

(a)	For Participants who are not Medicare Eligible Participants, Plan medical and drug benefits shall be determined under the Active Plan and the Medical Plan Choice elected by the Participant.
(b)	The Maximum Aggregate Benefit for a Participant or a covered Dependent who is not a Medicare Eligible Participant shall be the amount specified in the Active Plan, not to exceed $1,500,000, less benefits paid for Covered Medical Expenses and Covered Drug expenses under any plan maintained by Pharmacia Corporation, the Active Plan and any Prior Plan, but only to the extent such expenses were counted toward the maximum aggregate benefit under the terms of any such plan and in the administration of any such plan. Provisions under the Active Plan or a Prior Plan relating to reinstatement of the Maximum Aggregate Benefit shall also apply to such Participant or Dependent. With respect to any member of a Class covered by the Forsberg Settlement, the Maximum Aggregate Benefit for a Participant or a covered Dependent who is not a Medicare Eligible Participant shall be $1,500,000.
(c)	If coverage on account of a Participant or covered Dependent who is not a Medicare Eligible Participant ceases because covered expenses in excess of the Maximum Aggregate Benefit have been incurred under the Active Plan or a Prior Plan and such person later becomes a Medicare Eligible Participant, coverage shall be reinstated when the person becomes a Medicare Eligible Participant.

4.2 Schedule of Benefits for Medicare Eligible Participants.

(a) For Medicare Eligible Participants, the following medical and drug Schedule of Benefits shall apply:

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SCHEDULE OF BENEFITS

Individual Deductible Amount per Plan Year	50% of Medicare Part A Deductible
Covered Proportion (except where otherwise specifically stated in this Plan)		80	%
Retail Prescription Drugs Co-Payment Amount (up to 30 day supply)	Participant pays 20% up to a $50 maximum per prescription or refill
Mail Order Prescription Drugs Co-Payment Amount (up to 90 day supply)	Participant pays 20% per prescription or refill
Individual Maximum Aggregate Benefit	$	65,000

(b)

The Individual Maximum Aggregate Benefit shall apply only with respect to medical or drug expenses incurred after a Participant or covered Dependent becomes a Medicare Eligible Participant. Covered expenses incurred under a Prior Plan shall count, but only to the extent such expenses were counted toward a maximum aggregate benefit as a Medicare Eligible Participant under the terms of such Prior Plan and in the administration of such Prior Plan. Any expenses for mental health or substance abuse treatment incurred after January 1, 1995 and before January 1, 1998, under a Prior Plan shall not count.

(c)

The Company shall notify Medicare Eligible Participants when the medical and prescription drug expenses applied toward the Individual Maximum Aggregate Benefit exceed 60 percent and 85 percent of the total Individual Maximum Aggregate Benefit. Such notices shall include a summary of medical and prescription drug expenses applied toward the Individual Maximum Aggregate Benefit through December 31, 2001, and annual amounts applied thereafter.

4.3 Benefits for Mental Health or Substance Abuse.

(a) If any services are rendered for psychiatric or psychological treatment, consultation because of a mental or nervous condition, or treatment of substance abuse for a Medicare Eligible Participant, benefits shall be determined under the following Schedule of Benefits below:

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Covered Proportion for Office Visit	50% of first $80 per visit
Covered Proportion for Hospital Visit	50% of first $500 per day less a $250 per stay co-pay
Individual Annual Benefit (Inpatient)	30 days
Individual Maximum Annual Benefit (Outpatient)	20 office visits
Individual Maximum Lifetime Substance Abuse Treatments	2 courses of treatment (including treatments under the Active Plan or a Prior Plan)

(b) A second course of substance abuse treatment is covered only if there are at least 30 treatment-free days between the first and second course of treatment. If this coverage is exhausted, further substance abuse coverage is limited to acute hospital care for detoxification and 30 additional outpatient visits. If the Participant or covered Dependent has not incurred Covered Medical Expenses for treatment of substance abuse as provided in this Section for a period of at least five years, full substance abuse coverage as described in this Section shall be reinstated.

4.4 Sterilization Reversal Benefits. For any medical expenses incurred in connection with any reversal of a sterilization procedure, not deemed to be Medically Necessary by the Administrative Services Provider, a Covered Proportion of 50% shall be used with respect to such expenses. Reversal of a sterilization procedure, not deemed to be Medically Necessary by the Administrative Services Provider, shall be limited to one per lifetime. For purposes of determining whether a Medicare Eligible Participant has reached the limit described in the preceding sentence, reversal of a sterilization procedure under a Prior Plan or a medical plan maintained by Pharmacia Corporation or the Active Plan not deemed to be “medically necessary,” and performed after December 31, 1995 shall count.

4.5 Maximum Aggregate Benefit. A Participant’s or covered Dependent’s coverage shall automatically cease when Covered Medical Expenses and expenses for Covered Drugs

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are incurred on account of the Participant or covered Dependent in an aggregate amount such that the Maximum Aggregate Benefit will be payable under the Plan.

4.6 Requirements of Minimum Hospital Stays Following Childbirth. Notwithstanding any provision of the Plan or Supplement hereto to the contrary, the following provisions shall apply:

(a) The length of any hospital stay in connection with childbirth for the mother or newborn child with respect to which eligible expenses are covered under the Plan shall be at least 48 hours following a normal vaginal delivery, or at least 96 hours following a caesarean section; provided, however, that any such hospital stay may be of a shorter duration than the foregoing 48 or 96 hours in any case in which the decision to discharge the mother or newborn child prior to the expiration of the minimum length of stay otherwise required is made by an attending health care provider in consultation with the mother.

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SECTION 5
MEDICAL AND DRUG BENEFITS

5.1	Benefit Provisions for Participants Who Are Not Medicare Eligible. If a Participant incurs on account of himself or herself, or on account of a Dependent while such Dependent is covered under the Plan, Covered Medical Expenses and/or Covered Drug expenses during any Plan Year, the Company shall pay benefits subject to the terms and limitations of the Active Plan and the Medical Plan Choice elected by the Participant. Notwithstanding the preceding, this Section shall not apply to any Participant or covered Dependent who is a Medicare Eligible Participant.
	The amount of benefits paid by the Company shall be subject to the Maximum Aggregate Benefit applicable to a Participant who is not Medicare Eligible as specified in the Active Plan.
	Notwithstanding any other provision of this Plan, effective January 1, 2007 for Retired Employees, Dependent Spouses and Surviving Spouses in Groups IIB, V, and VI, coverage hereunder for such individual shall cease upon the earlier of (a) the individual becoming a Medicare Eligible Participant, or (b) October 31, 2016. Thus, no such individual who becomes covered hereunder shall in any event be eligible for coverage after January 1, 2007 after attaining age 65 (or, if earlier, October 31, 2016). Dependent children’s coverage shall end the later of (a) the earlier of the date the Retired Employee attains age 65 or dies or (b) the earlier of the date the Dependent Spouse or Surviving Spouse attains age 65 or dies. In no event will coverage for Dependent children continue after October 31, 2016.
5.2	Benefit Provisions for Medicare Eligible Participants. If a Medicare Eligible Participant incurs on account of himself or herself Covered Medical Expenses during any one Plan Year which are in excess of the Deductible Amount for such Plan Year, the Company shall pay benefits subject to the terms and limitations of the Plan in an amount determined under the following formula:

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CP x (CME- DA)
CP = Covered Proportion
CME = Covered Medical Expenses
DA = Deductible Amount

The Covered Proportion shall be the percentage specified in the Schedule of Benefits in Section 4.2 or other applicable provision of this Plan or any Supplement to this Plan. Notwithstanding the foregoing, the amount of benefits paid by the Company shall be subject to the Maximum Aggregate Benefit applicable to a Medicare Eligible Participant as specified in the Schedule of Benefits in Section 4.2.

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SECTION 6
COVERED MEDICAL AND DRUG EXPENSES AND EXCLUSIONS

6.1 Covered Medical Expenses. “Covered Medical Expenses” with respect to a Participant or covered Dependent who is not a Medicare Eligible Participant shall be determined under the Active Plan. “Covered Medical Expenses” with respect to a Participant or covered Dependent who is a Medicare Eligible Participant shall mean Reasonable and Customary charges incurred for the types of Medically Necessary services specified below, other than those listed in Section 6.2, rendered to the Medicare Eligible Participant or covered Dependent, as the case may be, and which are performed or prescribed by a Physician.

• Hospital room and board and other hospital services required for medical or surgical care or treatment excluding any charges for such services in excess of the inpatient hospital deductible amount, as promulgated in accordance with Medicare, in any Spell of Illness with respect to each person, except as provided below in this Section 6.1.

• Hospital room and board, excluding (i) charges for the first 60 days of any Spell of Illness, except as provided in the preceding item, (ii) charges in excess of one-half of the inpatient hospital deductible amount, as promulgated in accordance with Medicare, per day during the 61st day through the 90th day of any Spell of Illness, and (iii) charges for room accommodations in excess of the hospital’s most common semi-private room rate per day.

• Other hospital services required for medical or surgical care or treatment and received subsequent to the 90th day of any Spell of Illness and during the period for which benefits on account of room and board are payable under the Plan.

• Cost of the first three pints of whole blood during any Spell of Illness.

• Services of registered graduate nurses including services of a licensed practical nurse (L.P.N.) when the services of a registered nurse (R.N.) are not available and

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the Physician in charge of the case certifies that such services are Medically Necessary.

• Services of psychiatrists in connection with treatment of mental illness, disorder or disease.

• Hospice and home health care services described in Sections 8 and 9, and skilled nursing facility services of the type covered by Medicare.

• Services for which benefits are provided under Part B of Medicare, excluding 80% of the charges for such services in excess of the deductible amount under Part B with respect to each person.

6.2 Exclusions. Except as may be provided in Section 6.1 above or any applicable Supplement to this Plan, expenses incurred by a Medicare Eligible Participant for any of the following shall in no event be considered Covered Medical Expenses:

• Medical examinations or laboratory tests for checkup purposes where not incident and necessary to treatment of injury or illness.

• Any services received by the Medicare Eligible Participant because of any injury arising out of or in the course of any employment for wage or profit or any sickness entitling him to benefits under any workers’ compensation or occupational disease law.

• Any hospital, surgical, mental health, and medical services, and any related services and institutional confinement, to the extent that such services or confinement are available under any plan or program established pursuant to the laws or regulations of any government or under any plan or program in which any government participates other than as an employer. In the case of any person who is not enrolled for all coverage for which he or she has become eligible under any such plan or program, services, confinement and payments available will nevertheless include all benefits to which he or she would be entitled if he or she were enrolled for all such coverage. The term “plan or program” includes, in the

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case of Medicare, Parts A and B. The term “any government” includes the federal, state, provincial, or local government or any political subdivision thereof of the United States or any other country. For purposes of this Plan, a person residing outside of the United States shall be deemed to be eligible for Medicare, Parts A and B, if such person would be eligible for such coverage if he or she was residing in the United States. This provision is subject to any provision or regulation of such plan or program which requires that covered benefits be utilized before benefits are available thereunder.

• Any services received as a result of injury or sickness due to any act of war, declared or undeclared, invasion or armed aggression, which act shall have occurred after the effective date of coverage.

• Any services for which there is no cost to the Medicare Eligible Participant or which are provided by any medical, surgical, or hospital plan which the Company (or any company subsidiary to or affiliated with the Company) contributes to or otherwise sponsors.

• Any service or supply which is experimental or investigational in terms of generally accepted medical standards. An experimental service or supply is one that has been applied primarily in a laboratory setting. An investigational service or supply is one that has been applied to human subjects because it has a theoretically rational basis or it has shown promise in preliminary study. In either case, no final conclusion has been reached concerning the efficiency and/or effectiveness of the service or supply, nor has a specific role in clinical evaluation, management or treatment been defined for the service or supply.

• Any service or supply which is not Medically Necessary.

For the purposes of the coverage evidenced herein, an expense is incurred on the date the service or supply for which the charge is made was received or rendered.

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6.3

Covered Drug Expenses. “Covered Drug Expenses” with respect to a Participant or covered Dependent who is not a Medicare Eligible Participant shall be determined under the Active Plan. “Covered Drug Expenses” means, with respect to a Medicare Eligible Participant, Contracted Amounts or Reasonable and Customary charges incurred for the types of Medically Necessary services specified below, other than those listed under Section 6.4, rendered to the Medicare Eligible Participant, as the case may be, and which are prescribed by a Physician.

If, as a result of a non-occupational illness or a non-occupational injury, any Covered Drug is furnished to a Medicare Eligible Participant subject to the terms, limitations and exclusions of this Section 6.3:

(a)	if the Covered Drug is furnished by a Participating Provider, the Plan will pay to the Participating Provider the cost of the Covered Drug as established by the agreement between the Participating Provider and the prescription drug Administrative Services Provider in excess of the Co-Payment Amount and the Participating Provider will not charge the Participant or covered Dependent any amount that exceeds the Co-Payment Amount subject to Subsection (c) of this Section 6.3.
(b)	if the Covered Drug is furnished by a Nonparticipating Provider, the Plan will pay to the Participant the amount by which the Participating Provider Contracted Amount of the Covered Drug exceeds the Co-Payment Amount, subject to Subsection (c) of this Section 6.3.
(c)	if the Medicare Eligible Participant obtains a Brand Name Drug when a Generic Drug is available, the Participant or covered Dependent will pay both the Co-Payment Amount applicable to the Generic Drug and the difference between the cost of the Brand Name Drug and the Generic Drug.

6.4 Exclusions. No benefits shall be payable under this Plan for the following:

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(a)	the charge for any Covered Drug furnished to a Medicare Eligible Participant prior to the date such person becomes covered under the Plan.
(b)	any charge for contraceptive devices, therapeutic devices or appliances, support garments, drugs sold over the counter (regardless of whether or not furnished pursuant to a Prescription Order) and other non-medicinal substances (except diabetic testing agents) regardless of their intended use.
(c)	any charges for drugs other than Covered Drugs or for administration of a Covered Drug or injection of insulin, and any charges not directly related and necessary to the dispensing of a Covered Drug.
(d)	the charge for a quantity of a Covered Drug in excess of the amount normally prescribed by Physicians. In no event will payment be made at the retail Pharmacy level for greater than a 30-day supply of a Covered Drug or at the Mail Order Pharmacy level for greater than a 90-day supply of a Covered Drug.
(e)	any Covered Drug furnished pursuant to a Prescription Order filled in excess of the number specified by the Physician in such order, or any such refill dispensed after one year from the date of the Prescription Order.
(f)	any charge for a Covered Drug for treatment of a condition not within the scope of the Physician’s license.
(g)	any charge for drugs or medicine labeled: “Caution — limited by Federal Law to investigational use”, or experimental drugs.
(h)	any Covered Drug that is not Medically Necessary.
(i)	any Covered Drug received as a result of any illness or injury due to an act of war or a warlike action in time of peace.
(j)	the charge for any Covered Drug which is consumed at the time and place the Prescription Order is filled.

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(k) drugs covered by another plan that would have primary responsibility for coverage as determined under the Plan’s coordination of benefits rules, including any Medicare Part D Plan.

6.5	Mail Order Prescription Drug Program. Claims for covered Maintenance Drugs shall be paid only if the Prescription Order is filled through the Mail Order Prescription Drug Program by following the procedures established by the Plan Administrator. Notwithstanding anything to the contrary in this Section, the provisions of this Section 6.5 shall apply to any Prescription Order filled through the Mail Order Prescription Drug Program.
	Up to a 90-day supply of the covered Maintenance Drug shall be eligible for coverage if filled within one year of the original date of the Prescription Order. Claims for the initial supply and one 30-day refill shall be eligible for coverage if filled by a retail pharmacy.
	Notwithstanding anything to the contrary in this Plan, the Company may discontinue the Mail Order Prescription Drug Program at any time.
6.6	Coordination with Medicare Part D. This Plan is not a “secondary” Plan with respect to prescription drugs provided under a Medicare Part D Plan. A Participant or Dependent Spouse who elects to enroll in a Medicare Part D Plan will not be eligible for reimbursement of Covered Drug expenses under this Plan.

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SECTION 7
PRE-ADMISSION CERTIFICATION AND CONCURRENT REVIEW

A Participant or covered Dependent who is not a Medicare Eligible Participant shall be subject to the Pre-Admission Certification and Concurrent Review Requirements (and other similar requirements) applicable to a Participant in the Active Plan who is covered under the same Medical Plan Choice. This paragraph shall not apply to a Medicare Eligible Participant.

Prior to any scheduled hospital admission (other than for mental health and substance abuse treatment) of any Medicare Eligible Participant or covered Dependent (in the case of an emergency admission, within one working day or as soon as practicable after hospital admission), the Administrative Services Provider must certify that the admission is Medically Necessary. Confinement beyond the period originally certified must also be reviewed in advance with the Administrative Services Provider to confirm that continued confinement is Medically Necessary.

All room and board and attending Physician charges resulting from days of hospital confinement which are not pre-certified as Medically Necessary by the applicable Administrative Services Provider: (a) for a hospital confinement that is not for mental health or substance abuse, Covered Medical Expenses shall only be covered at 50%, and (b) for a hospital confinement that is for the treatment of mental health or substance abuse, shall be excluded from Covered Medical Expenses under this Plan. In the event of a disagreement between the attending Physician and the Administrative Services provider, an appeal mechanism shall be provided by the Administrative Services Provider. If the disagreement remains unresolved, the Medicare Eligible Participant may request independent review, which shall be provided by a state Professional Review Organization or by a panel provided by the local medical society.

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SECTION 8
HOSPICE CARE BENEFITS

8.1	Hospice Care Benefits. When prescribed by a Physician and approved by the Administrative Services Provider, and subject to the terms and conditions listed below, Covered Hospice Care Benefits on behalf of a Medicare Eligible Participant shall be Covered Medical Expenses under the Plan.
	The Plan will pay Covered Hospice Care Benefits for services or supplies incurred:

(a)	on account of a Participant or covered Dependent who is enrolled in a recognized and approved Hospice Care Program; and
(b)	for counseling of covered Dependents;

provided, the services are approved by the attending Physician and are part of, as well as billed through, the approved Hospice Care Program.

8.2 Services Or Supplies Which Are Covered Hospice Care Benefits. The following types of Hospice services and supplies are Covered Hospice Care Benefits:

(a)	room and board in a Hospice Care Facility approved by the Administrative Services Provider, but not any charge per day over the Hospice’s most common semi-private room rate;
(b)	other Hospice services or supplies required for palliative care;
(c)	supplies including, but not limited to, medicines, medical supplies, drugs and rental (or purchase, if more cost effective) of durable equipment;
(d)	intermittent skilled nursing care provided by either a Registered Nurse or a Licensed Practical Nurse;
(e)	health care provided by a home health aide;

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(f)	counseling for the patient after enrollment in the Hospice Care Program if the attending Physician determines such counseling is necessary, and counseling for the Participant and/or covered Dependents during the same period and up to a six-month period after the death of the patient, if the terminal illness is the direct cause of the need for counseling, which counseling must be provided by a Psychologist, a licensed psychiatrist or a member of a state-licensed social service organization;
(g)	homemaker services when the patient’s family is unable to attend to the needs of the patient, which homemaker services must be approved by the Hospice Care Program and by the Administrative Services Provider and shall not be for more than a total of seven days during the course of the Hospice Care Program;
(h)	physical, respiratory and speech therapy if approved by the attending Physician and the Hospice Care Program;
(i)	dietary and nutritional assistance when provided by a licensed nutritionist or dietician;
(j)	local ambulance or special transport services between the patient’s home and the Hospice Care Facility if Medically Necessary; and
(k)	all other services provided through the Hospice Care Program if the services are Medically Necessary.

8.3 Exclusions. Expenses for the following types of services or supplies are not Covered Hospice Care Benefits:

(a)	purchase of durable medical equipment if rental is less costly;
(b)	any volunteer services or supplies or counseling by clergy which would normally be provided free of charge;
(c)	private duty nursing;

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(d)	services for legal or financial advice, preparation and execution of wills, estate planning and financial investment;
(e)	services of a person who ordinarily resides in the home of the terminally ill patient or a member of his or her family;
(f)	charges in excess of Reasonable and Customary charges;
(g)	any services not provided and billed through the Hospice Care Program unless approved in advance by the Administrative Services Provider and by the patient’s attending Physician.

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SECTION 9
HOME HEALTH CARE BENEFITS

9.1	Home Health Care Benefits. When prescribed by a Physician and approved by the Administrative Services Provider, and subject to the terms and conditions specified below, Home Health Care Benefits for a Medicare Eligible Participant as an alternative to otherwise necessary in-patient confinement in a hospital or skilled nursing facility shall be Covered Medical Expenses under the Plan.
9.2	Expenses Which Are Covered Home Health Care Benefits. Covered Home Health Care Benefits shall include the following Reasonable and Customary charges for Medically Necessary services approved by the Administrative Services Provider:

(a)	intermittent nursing care by or under the supervision of a professional Registered Nurse (R.N.),
(b)	intermittent home health-aide services during the period skilled professional services are required,
(c)	physical therapy, occupational therapy and speech therapy provided by a Home Health Care Agency,
(d)	medical supplies, drugs and medications prescribed by a Physician, and laboratory services, to the extent such items would have been Covered Medical Expenses under Section 6.1 if the Medicare Eligible Participant had been confined in a hospital,
(e)	rental (or purchase if more cost effective) of durable medical equipment for therapeutic use, and
(f)	any other medical services, supplies or equipment included in the Home Health Care Plan which are prescribed by a Physician.

9.3 Exclusions. The following types of expenses are not Covered Home Health Care Benefits:

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(a)	expenses for services or supplies not included in the Home Health Care Plan,
(b)	expenses for services of a person who ordinarily resides in the home of the Medicare Eligible Participant or is a member of the Participant’s family,
(c)	expenses for services and supplies that are not Medically Necessary,
(d)	expenses for services rendered in any period during which the Medicare Eligible Participant is not under the continuing care of a Physician,
(e)	expenses for Custodial Care services,
(f)	expenses for services and supplies not approved by the Administrative Services Provider, and
(g)	expenses for services or supplies incurred in excess of 90 Visits per calendar year.

A “Visit” is a personal contact in the home of the Participant or covered Dependent by a representative of the Home Health Care Agency for the purpose of providing skilled nursing services; skilled physical, occupational, or speech therapy; or home health-aide services while skilled services are required. Benefits for services beyond 90 Visits per calendar year shall be Covered Medical Expenses only if approved by the Administrative Services Provider.

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SECTION 10
MEDICAL CASE MANAGEMENT PROGRAM

10.1 Definitions. For purposes of this Section, the following terms shall be defined as set forth below:

(a)	“Alternate Medical Treatment Benefits” means benefits for expenses that the Administrative Services Provider has approved before they are incurred, in connection with a Specific Plan of Alternate Medical Treatment, regardless of whether such expenses would otherwise be covered as Covered Medical Expenses under the other provisions of the Plan.
(b)	“Consultant” means a Physician and/or a Nurse who is designated by the Administrative Services Provider to coordinate the Medical Case Management Program.
(c)	“Covered Person” means a Participant or a covered Dependent.
(d)	“Medical Case Management Program” means the program provided by the Administrative Services Provider wherein a Consultant reviews the plan of medical treatment for a Covered Person who is not Medicare Eligible, whose medical condition is caused by a Severe Personal Injury or Sickness, in order to determine whether the Covered Person does or does not qualify for Alternate Medical Treatment Benefits.
(e)	“Nurse” means a registered nurse (R. N.).
(f)	“Proposed Plan of Alternate Medical Treatment” means a treatment plan developed by a Consultant for a Covered Person for the Administrative Services Provider’s review to determine if it can be approved as the Specific Plan of Alternate Medical Treatment.
(g)	“Severe Personal Injury or Sickness” means a catastrophic injury or sickness for which inpatient hospitalization or a large amount of Covered Medical Expenses

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are expected to continue over a long period of time. The injuries or sicknesses include, but are not limited to, the types listed below:

o Acquired Immune Deficiency Syndrome (AIDS)

o Amputations

o Amyotrophic Lateral Sclerosis (ALS)

o Anorexia Nervosa

o Bulimia

o Cerebral Vascular Accident

o Chronic Obstructive Lung Disease

o Chronic Obstructive Pulmonary Disease (COPD)

o Crohn’s Disease

o High Risk Newborn

o Major Head Trauma

o Multiple Fractures

o Multiple Sclerosis

o Neonatal High Risk Infants

o Neonatal, Medical or Post Surgical Complications

o Organ Transplants

o Osteomyelitis

o Selected Blood Dyscrasias

o Selected Psychiatric Conditions

o Selected Osteoarthritis

o Severe Burns

o Severe Rheumatoid Arthritis

o Severe Stroke

o Spinal Cord Injury

(h) “Specific Plan of Alternate Medical Treatment” means a Proposed Plan of Alternate Medical Treatment approved by the Administrative Services Provider as the treatment plan it will suggest for a Covered Person who has a Severe Personal Injury or Sickness.

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10.2 Medical Case Management Program.

(a) Identification and Notice. A Consultant must be notified in order for a Covered Person who is not Medicare Eligible and who has a Severe Personal Injury or Sickness to be considered for Alternate Medical Treatment Benefits under the Medical Case Management Program. The notice may be given either:

(i)	directly by telephone or written notice from the Company, Participant or Covered Person’s Physician to the Administrative Services Provider; or
(ii)	indirectly by the Administrative Service Provider’s utilization review of the Covered Person’s medical claim forms.

(b)	Evaluation. When notified, the Consultant will confer with the Covered Person’s Physician in order to evaluate the Covered Person’s current and projected plan of medical treatment and discuss whether the Covered Person is a candidate for the Medical Case Management Program.
(c)	Development. The Consultant will develop for the Covered Person a Proposed Plan of Alternate Medical Treatment which meets the guidelines of the program.
(d)	Review and Approval. The Administrative Services Provider will review the Proposed Plan of Alternate Medical Treatment for the Covered Person. Such proposed plan will be approved as the Specific Plan of Alternate Medical Treatment, if the Administrative Services Provider determines that:

(i)	in its estimation, the Proposed Plan of Alternate Medical Treatment would be more cost effective than the current and/or projected plan of medical treatment for that Covered Person; and
(ii)	the Proposed Plan of Alternate Medical Treatment would be in the best interest of the Covered Person.

(e) Acceptance or Denial. The Specific Plan of Alternate Medical Treatment is voluntary. The Covered Person and his or her attending Physician may either

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agree to, or decline, the Specific Plan of Alternate Medical Treatment. If the Specific Plan of Alternate Medical Treatment is agreed to, the Covered Person will be eligible to receive Alternate Medical Treatment Benefits in addition to the benefits under the other provisions of the Plan.

If the Specific Plan of Alternate Medical Treatment is declined, expenses for the Covered Person will be considered for payment in accordance with the other provisions of the Plan and the Covered Person will not be eligible to receive Alternate Medical Treatment Benefits.

(f)	Review of Specific Plan of Alternate Medical Treatment. While a Specific Plan of Alternate Medical Treatment is in progress, the Consultant will continue to review such plan and the Covered Person’s progress. If in the Administrative Services Provider’s judgment it is deemed appropriate, the Consultant, with the consent of the attending Physician and Covered Person, will modify such plan.
	The Administrative Services Provider has the right to terminate the Covered Person’s participation in the Medical Case Management Program upon notice to the Covered Person and the attending Physician in certain circumstances, including, but not limited to:

(i)	The Administrative Services Provider determines that the Specific Plan of Alternate Medical Treatment will not satisfy one or more of the criteria set forth in Sections 10.2(d) or 10.3;
(ii)	The Administrative Services Provider determines, in its discretion, that there is lack of Covered Person or family cooperation in implementing the Specific Plan of Alternate Medical Treatment; or
(iii)	The Covered Person’s medical condition is stabilized with maximum return to independent living.

(g) Voluntary Withdrawal. A Covered Person may voluntarily withdraw from the Medical Case Management Program at any time by notifying the Administrative

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Services Provider. No Alternate Medical Treatment Benefits shall be paid under this Section for expenses incurred after the date of withdrawal.

10.3 Payment of Alternate Medical Treatment Benefits. The Company will pay Alternate Medical Treatment Benefits for expenses incurred by a Covered Person as set forth in Section 10.6 below, only if:

(a) The Administrative Services Provider determines that:

(i)	the expenses will be incurred for a medical condition;
(ii)	instead of the expenses for Alternate Medical Treatment Benefits, the Covered Person would incur other expenses which are covered by the other provisions of the Plan for the medical condition involved; and
(iii)	it is estimated by the Administrative Services Provider that total anticipated expenses for Alternate Medical Treatment Benefits would be less than the total anticipated expenses covered by the other provisions of the Plan.

10.4	Amount of Alternate Medical Treatment Benefits . The Administrative Services Provider will pay up to 100% of the amount of the actual charges incurred for the services and supplies set forth in Section 10.6 received by a Covered Person; provided such charges are approved by the Administrative Services Provider before they are incurred by a Covered Person.
10.5	Maximum Benefit. The maximum benefit payable for expenses incurred for Alternate Medical Treatment Benefits and the expenses incurred under the other provisions of the Plan or any Prior Plan combined shall not, in the aggregate, exceed the Covered Person’s Maximum Aggregate Benefit set forth in the applicable Schedule of Benefits in Section 4.

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10.6 Covered Alternate Medical Treatment Expenses. The following services and supplies may, in the sole discretion of the Administrative Services Provider, be considered as covered Alternate Medical Treatment Expenses:

(a) Medical services or supplies, such as:

(i)	Home health care services, including but not limited to, total parenteral nutrition (TPN), antibiotic administration, cardiac rehabilitation, respiratory therapy, drugs and durable medical equipment;
(ii)	Extended care facility services; and
(iii)	Rehabilitation services.

(b) Non-medical services or supplies, which may:

(i)	improve a Covered Person’s medical condition;
(ii)	aid in rehabilitating the Covered Person; or
(iii)	facilitate independent living.

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SECTION 11
CLAIMS

11.1	Filing and Payment of Medical Claims. Except as provided in any applicable Supplement to this Plan, any benefits referred to herein shall be paid to the Participant as they accrue upon receipt of written proof acceptable to the Plan Administrator that the medical or drug expenses for which claim is made were actually incurred on the dates specified and that the services were found to be Medically Necessary and recommended and approved by a Physician or surgeon. Notwithstanding the preceding, the Participant may assign the benefits payable hereunder to the Physician or other provider of medical services, in which case benefits will be paid directly to the Physician or other provider of medical services. As a condition of claim payment, the Participant or covered Dependent (or parent if the covered Dependent is a minor child) shall authorize the Administrative Services Provider to audit records to assure that charges are proper. A report of audit results shall be furnished to the Participant upon request. If a hospital bill audit conducted by the Administrative Services Provider results in a request for a corrected bill or refund, a copy of such corrected bill shall be provided to the Participant upon his request.
	A Medicare Eligible Participant or a Participant or covered Dependent who becomes eligible after retirement but before age 65 for benefits under Medicare solely as a result of disability must submit a claim to Medicare first and must submit the Medicare Explanation of Benefits with any claim filed under this Plan.
	Notwithstanding the foregoing, no benefit shall be payable hereunder for which a claim is filed more than two years from the date the medical or drug expenses for which claim is made were actually incurred.
11.2	Payment of Prescription Drug Claims. If Covered Drugs are furnished by a Participating Provider pursuant to an agreement between the Participating Provider and the prescription drug Administrative Services Provider, the Contracted Amount of such Covered Drugs over the Co-payment Amount shall be paid directly to the Participating Provider.

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	If Covered Drugs are furnished by a Nonparticipating Provider, the Plan will pay to the Participant the amount by which the Participating Provider Contracted Amount of the Covered Drug exceeds the Co-Payment Amount.
11.3	Overpayment or Other Reimbursement. If benefits are paid under the Plan and it is later established that the person to whom the benefits were paid was not entitled to the benefits or that the person was otherwise reimbursed for such benefits, the Company shall be entitled to a refund from such person in the amount of such benefits. Further, the Company shall be subrogated to the extent of benefits paid to any claim or right of recovery of the Participant or person to whom benefits were paid arising out of or relating to expenses for which benefits were paid, including without limitation, a claim arising because of the application of Section 15.5.
11.4	Additional Procedures. Either the Administrative Services Provider or the Plan Administrator may in its discretion institute other reasonable procedures for making claims under the Plan.
11.5	Claims and Review Procedures.

(a)

Claims Procedure. Any claim for specific benefits under the Plan shall be made in accordance with this Plan and any applicable insurance policy or health maintenance organization (“HMO”) agreement directly to the Administrative Services Provider, insurer or HMO, as applicable, providing coverage or services under the Plan in accordance with the applicable insurance policy or service contract between the Company and such Administrative Services Provider, insurer or HMO. The person or entity designated in such documents or otherwise appointed by the EBPC (but not the EBPC) to receive and process claims shall herein be referred to as a “Claims Administrator.”

(b)

Authorized Representative. Nothing in this Section 11.5 shall preclude an authorized representative of a claimant from acting on behalf of such claimant in pursuing a benefit claim or appeal of an adverse benefit determination under the

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Plan. The Claims Administrator shall establish reasonable procedures for determining whether an individual has been authorized to act on behalf of such claimant, provided that, in the case of a claim involving urgent care, a health care professional with knowledge of the claimant’s medical condition shall be permitted to act as the authorized representative of the claimant.

(c)

Review of Claim. The Claims Administrator shall review all claims for benefits under the Plan and make claim determinations in accordance with the terms of the Plan and shall apply such Plan provisions consistently with respect to similarly situated claimants.

(d)

Notification of Benefit Determinations. For purposes of these procedures, a claimant will be deemed to receive a written notice: (i) the date the notice is delivered in person, (ii) the date delivery is confirmed by the United States Postal Service or other commercial delivery service, (iii) or 3 days after the date the notice is mailed to the claimant’s last known address on file with the Plan, unless it can be shown to the Plan Administrator’s satisfaction that the notice was in fact received at a later time. The Claims Administrator or its designated agent shall provide notice to the claimant in the manner and at the times as described below.

(i) Initial Claim.

(A) Categories of Claims. All claims will be classified into one of the following three categories.

(I)	Pre-Service Claims. “Pre-Service Claims” are claims for benefits the receipt of which are conditioned on obtaining approval prior to obtaining medical care.
(II)	Urgent Care Claims. “Urgent Care Claims” are Pre-Service Claims where any delay in treatment could endanger the claimant’s health or life or the ability of the claimant to regain maximum function, or in the opinion of

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a physician with knowledge of the claimant’s medical condition, subject him to severe pain that cannot be adequately managed without the care or treatment that is the subject of the claim. The determination of whether a claim is an “Urgent Care Claim” shall be made by the Claims Administrator or its designated agent applying the judgment of a prudent layperson who possesses an average knowledge of health and medicine.

(III)	Post-Service Claims. “Post-Service Claims” are all claims for benefits that are not Pre-Service Claims or Urgent Care Claims.
(IV)	Disability Claims. “Disability Claims” are all claims for benefits based on a determination of Disability with respect to a Participant.

(B)

Notice of Improperly Filed Pre-Service and Urgent Care Claims. If the claimant fails to file a Pre-Service Claim or an Urgent Care Claim properly, he will be notified within 5 days for Pre-Service Claims, or within 24 hours for Urgent Care Claims, that his claim was not filed properly. This notification may be given orally, unless the claimant asks for it in writing. This notice will not be sent unless, at a minimum, (i) the claim is received by a person or organizational unit that is customarily responsible for handling benefit matters, and (ii) the claim contains the claimant’s name, a specific medical condition or symptom, and a specific treatment, service, or product for which approval is requested.

(C)

Notice of Incomplete Claims.

(I) Urgent Care Claims. If a claimant properly files an Urgent Care Claim, but the Plan Administrator needs more

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information to process the claim, the claimant will be notified within 24 hours of receipt of his claim of the additional information that is needed. The claimant will then have at least 48 hours to provide the additional information. The claimant will be notified of the decision on his Urgent Care Claim within 48 hours after he submits the additional information. If the claimant does not submit the additional required information, he will be notified of the decision on his claim within 48 hours after the end of the deadline to provide such information.

(II) Pre-Service and Post-Service Claims. For Pre-Service Claims and Post-Service Claims, the claimant may be notified in writing that there is not enough information to process his claim. This notice, if given, will be provided within 15 days for Pre-Service Claims or within 30 days for Post-Service Claims after the claim is received. If this notice is sent, it will specifically describe the missing information, and the claimant will be given at least 45 days within which to provide such information.

(D) Time for Initial Decision. A determination on a claim will be made and the claimant will be notified of that decision within the following time periods after the claim is received: (i) 72 hours for Urgent Care Claims; (ii) 15 days for Pre-Service Claims; and (iii) 30 days for Post-Service Claims and (iv) 45 days for Disability Claims. If, due to matters beyond the control of the Plan, additional time is needed to process a Pre-Service Claim or a Post-Service Claim, the claimant will be notified in writing of up to a 15-day extension for a Pre-Service Claim or up to a 30-day extension for a Post-Service Claim or Disability Claim within the time period for making the initial benefits decision. The notice

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will explain the circumstances requiring the extension and the date by which the Plan Administrator, or its designee expects to make a decision on the claim, which shall be no later than 30 days after a Pre-Service Claim is received, or 45 days after a Post-Service Claim is received or 75 days after a Disability Claim is received. If the extension is necessary due to missing or incomplete information needed to process the claim, the extension notice shall describe this information and the claimant will be afforded at least 45 days to provide such information. During this time, the time periods for making a claims determination described above will be suspended until the earlier of the date the claimant provides the necessary information or the expiration of the time period in which he has to provide it.

(E)

Notice of Initial Decision. If a claim is denied in whole or in part, the claimant will be notified in writing of the specific reasons for the decision. For Urgent Care Claims, the initial denial notice may be given orally. If so, it shall be followed up in writing within 3 days.

The denial notice will also include the following information: (i) references to the specific Plan provisions(s) upon which the decision was based; (ii) a description of any additional material or information necessary for the claimant to perfect his claim and an explanation of why such material or information is necessary; (iii) a description of the Plan’s review procedures and the applicable time limits; and (iv) a statement of the claimant’s right to bring a civil action under ERISA Section 502(a) following an adverse benefits determination on appeal. If an internal rule, guideline, protocol or other similar criterion was relied upon in making the determination, the notice will include a statement that a description of such rule will be provided free of charge upon request. If the

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denial was based on medical necessity, experimental treatment or similar exclusion, the notice will include a statement that an explanation of the scientific or clinical judgment that formed the basis for the decision, applying the terms of the Plan to the claimant’s medical condition will be provided free of charge upon request.

(ii)	Special Rules for Concurrent Claims. If a pre-approved hospital stay or course of treatment to be provided over a period of time or number of treatments is limited or reduced, the affected individual will be given advance written notice of this decision (which shall contain the information described in Section 11.5(d)(i)(E) above) in sufficient time to permit the individual to appeal the decision and obtain a decision before the date on which the care or treatment is no longer approved.
	If the claim to extend the course of treatments beyond the period of time or number of treatments is an Urgent Care Claim, a decision on the claim will be made as soon as possible, but no later than 24 hours after receipt of the claim, provided that the claim is received at least 24 hours prior to the expiration of the prescribed period of time or number of treatments. If the claim is not received at least 24 hours prior to the expiration of the prescribed period of time or number of treatments, the claim will be handled as an initial claim for benefits in accordance with the procedures described in Section 11.5(d)(i) above. If the claim is denied, the claimant may be notified orally or in writing. An oral notice will be followed up in writing within 3 days after the oral notice is given.
(iii)	Appealing an Adverse Decision

(A) Time Limits to Appeal. If a claim is denied in whole or in part, the claimant or his authorized representative has up to 180 days after the claimant receives notice of the

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decision to request that the decision be reviewed. Appeals must be submitted in writing or, in the case of an Urgent Care Claim, may be orally given to the Plan Administrator or its designated agent for such appeals which shall not be the Claims Administrator.

(B)

Rights on Appeal. In connection with an appeal, the claimant or his authorized representative may submit written comments, documents, records, and other information with respect to his claim, regardless of whether or not such information was considered in connection with the initial benefits determination. Upon request and free of charge, the claimant will be provided reasonable access to and copies of all documents, records and other information relevant to his claim for benefits. A document, record or other information shall be considered relevant to the claim if it (i) was relied on in making the benefit determination, (ii) was submitted, considered or generated in the course of making the benefit determination without regard to whether it was relied on in making the benefit determination, (iii) demonstrates compliance with the claims procedures of this Section 11.5 or (iv) constitutes a statement of policy or guidance with respect to the Plan concerning claimant’s diagnosis without regard to whether it was relied on in making the benefit determination. If a medical expert was consulted in connection with the initial benefits determination, the claimant will be given the identity of such individual upon request. In addition, for Urgent Care Claim appeals, all necessary information, including the notice of the final benefits determination, may be transmitted by telephone, facsimile, or other available similarly expeditious methods.

The Plan Administrator will fully and fairly review each appeal, taking into account any additional information submitted in connection with the appeal. Deference will not be afforded to any

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prior benefits determination. If the appeal is based in whole or part on medical judgment, a health care professional who has the appropriate training and experience in the field of medicine involved in the medical judgment, and who is not the same individual (or his or her subordinate) who was consulted in connection with the initial benefits determination, will be consulted with.

(C)

Time for Decision on Appeal. The claimant will be notified of the decision on appeal within the following time periods after receipt of the appeal: (1) 72 hours for Urgent Care Claim appeals, (2) 30 days for Pre-Service Claim appeals, and (3) 45 days for Disability Claim appeals and (4) 60 days for Post-Service Claim appeals.

(D)

Notice of Decision on Appeal. If an appeal is denied in whole or in part, the claimant will be notified in writing of the specific reasons for the decision. The denial notice will also include the following information: (i) references to the specific Plan provision(s) upon which the decision was based; (ii) a statement that, upon request and free of charge, the claimant will be provided reasonable access to and copies of all documents, records and other information relevant to his claim for benefits; and (iii) a statement of the claimant right to bring a civil action under section 502(a) of ERISA. If an internal rule, guideline, protocol or other similar criterion was relied upon in making the determination, the notice will include a statement that a description of such rule will be provided free of charge upon request. If the denial was based on medical necessity, experimental treatment or similar exclusion, the notice will include a statement that an explanation of the scientific or clinical judgment that formed the basis for the decision, applying the terms of the Plan to the claimant’s medical condition will be provided to the claimant free of charge upon request.

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SECTION 12
PROVISIONS APPLICABLE AT THE DEATH OF A RETIRED EMPLOYEE

The coverage provided under the Plan to a covered Dependent Spouse is further continued on and after the death of the Retired Employee subject to all the conditions and limitations of the Plan. Such covered Dependent Spouse shall become a Surviving Spouse eligible to make elections for coverage as provided in Section 2. The coverage provided under the Plan to any Dependent who is not a Spouse of a Retired Employee in Groups IA, IB, IIA, IIIA, IIIB, and IV shall automatically cease on the date of the Retired Employee’s death, except to the extent such Dependent is eligible for continuation coverage under COBRA as described in Section 14. For the Dependent children of each Retired Employee in Groups IIB, V and VI, coverage will cease hereunder at the earlier of (a) the Dependent child ceasing to meet the criteria for Dependent, (b) the later of the cessation of coverage of the Retired Employee or the Dependent Spouse or Surviving Spouse due to death or attaining age 65, or (c) October 31, 2016.

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SECTION 13

CESSATION OF MEDICAL AND DRUG COVERAGE

13.1	Termination of Medical and Drug Coverage. Notwithstanding any other provision of the Plan, and subject to Sections 13.2 through 13.6 below, beginning January 1, 2007 with respect to Groups IIB, V, and VI, coverage for medical and drug benefits of a Retired Employee, Surviving Spouse and Dependent Spouse shall end no later than the earlier of (i) when such Retired Employee or Spouse becomes a Medicare Eligible Participant and (ii) October 31, 2016. With respect to Dependent children of such Retired Employee or Surviving Spouse, coverage will end the earliest of the date (a) the Dependent child ceases to meet the criteria for Dependent, (b) the later of the cessation of coverage of the Retired Employee or the Dependent Spouse or Surviving Spouse due to death or attaining age 65, or (c) October 31, 2016, subject to the requirements of COBRA. Notwithstanding any other provision of the Plan to the contrary, no benefits will be paid under the Plan with respect to any claim incurred after the applicable date described in the preceding sentences.
13.2	Loss of Dependent Status. All coverage for any covered Dependent shall automatically cease on (a) in the case of divorce, the date immediately preceding the date such person ceases to be a Dependent Spouse of such Participant or (b) in any other situation where a Dependent child ceases to be a Dependent, the last day of the month in which such child ceases to be a Dependent.
13.3	Failure to Make Required Payments. Coverage for a Participant and any covered Dependents of the Participant shall cease if the Participant fails to make Medical Expense Contributions as required by this Plan. If the Company terminates coverage under this provision, it shall give at least 30 days prior notice of the termination and shall permit the Participant to avoid termination by paying any required Medical Expense Contributions within 30 days of the date of the notice. The failure of the Company to terminate a Participant’s or Dependent’s coverage under this provision shall not constitute a waiver of its right to terminate coverage under this provision in the future with respect to that Participant or Dependent or any other Participant or Dependent.

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13.4	Maximum Aggregate Benefit. Coverage on account of a Participant or covered Dependent shall automatically cease when Covered Medical Expenses and Covered Drug Expenses are incurred on account of the Participant or covered Dependent in an aggregate amount in excess of the Maximum Aggregate Benefit.
13.5	Cancellation of Medical and Drug Coverage. If a Retired Employee or Surviving Spouse cancels medical and drug coverage on behalf of himself and/or his covered Dependents, such Participant and/or Dependents shall not be eligible to rejoin the Plan’s medical and drug benefits at a later time.
13.6	Medical and Drug Benefits After Cessation of Coverage. If coverage ceases for a Participant or covered Dependent, and the Participant or covered Dependent is then under the care of a Physician or surgeon for treatment of an injury or a sickness, the Administrative Services Provider shall continue to pay benefits for such injury or sickness as if the Participant’s or covered Dependent’s coverage continued in force; provided that:

(a)

no benefits shall be payable on account of any Covered Medical Expenses incurred after the date three months following the first to occur of: (i) the date of cessation of coverage or (ii) the date of recovery from the injury or sickness for which the Participant or covered Dependent was being treated when coverage ceased unless the Participant or covered Dependent is totally disabled continuously from the date of such cessation during the period such expenses are incurred, and

(b)

if the Participant or covered Dependent is totally disabled continuously from the date coverage ceased, benefits will continue to be provided during such disability under the same conditions as if the coverage continued in force, but in no case shall any benefits be payable on account of any Covered Medical Expenses incurred more than two years after the date coverage ceased.

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Notwithstanding the preceding, coverage shall automatically cease for an individual when the aggregate Covered Medical Expenses and Covered Drug Expenses incurred on account of the Participant or covered Dependent equal the Maximum Aggregate Benefit.

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SECTION 14
COBRA CONTINUATION COVERAGE

Each covered Dependent or Surviving Spouse who would cease to be covered under the Plan because of a qualifying event as defined in Code Section 4980B(f)(3) (or any successor to such Section) and who is a qualified beneficiary within the meaning of Code Section 4980B(g)(1) (or any successor to such Section) and the regulations thereunder will be permitted to make an election to continue such coverage but only to the extent required by, and in accordance with Code Section 4980B (or any successor to such Section). If a covered Dependent makes such election, coverage shall continue until the earliest of the events to occur under Code Section 4980B(f)(2)(B) and the regulations thereunder. Notwithstanding any other provision of this Plan, coverage hereunder shall constitute “alternative coverage” to the maximum extent permitted pursuant to Treasury Regulation Section 54.4980B-7.

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SECTION 15
COORDINATION OF BENEFITS

15.1 Definitions. For purposes of this Section, the following definitions apply:

(a)

Plan. “Plan” means any plan (other than this Plan) providing benefits or services for or by reason of medical or dental or prescription drug care or treatment, which benefits or services are provided by (i) any group insurance plan, group-type coverage, or any other plan covering individuals or members as a group, whether insured or uninsured; (ii) any group hospital service prepayment plan, group medical service prepayment plan, group practice, individual practice, group or individual automobile no-fault insurance, medical benefits written on group or group-type automobile fault insurance, other group prepayment coverage, or health maintenance organization; (iii) any coverage under governmental programs, or any coverage required or provided by law. This does not include a state plan under Medicaid (Title XIX, Grants to States for Medical Assistance Programs, of the United States Social Security Act, as amended from time to time). Each contract or other arrangement for coverage under (i) or (ii) is a separate plan. Also, if an arrangement has two parts and Coordination of Benefits rules apply only to one of the two, each of the parts is a separate plan.

(b)

Primary Plan/Secondary Plan. The order of benefit determination rules in Section 15.3 determine whether this Plan is a Primary Plan or Secondary Plan as to another plan covering a Participant or Dependent.

(i)	“Primary Plan” means a plan the benefits of which are determined before those of the other plan and without considering the other plan’s benefits.
(ii)	“Secondary Plan” means a plan the benefits of which are determined after those of the other plan and may be reduced because of the other plan’s benefits. When there are more than two plans covering the Participant or Dependent covered under this Plan, this Plan may be a Primary Plan as to one or more other plans, and may be a Secondary Plan as to a different plan or plans.

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(c)

Allowable Expense. “Allowable Expense” means any necessary, reasonable and customary charge or Covered Medical Expense or Covered Drug Expense which the Participant or Dependent is legally required to pay for an item of necessary medical or dental or prescription drug expense at least a portion of which is covered under at least one of the plans covering the person for whom claim is made. If benefits are provided in the form of services rather than cash payments, the reasonable cash value of each service rendered shall be considered both an allowable expense and a benefit paid. In no event, however, will “Allowable Expense” include expenses for services received because of any injury arising out of or in the course of any employment for wage or profit or any sickness entitling the person for whom claim is made to benefits under any workers’ compensation or occupational disease law. The difference between the cost of a private hospital room and the cost of a semi-private hospital room is not considered an allowable expense under the above definition unless the patient’s stay in a private hospital room is medically necessary either in terms of generally accepted medical practice, or as specifically defined in the Plan. When benefits are reduced under a Primary Plan because a covered person does not comply with the plan provisions, the amount of such reduction will not be considered an allowable expense. Examples of such provisions are those related to second surgical opinions, pre-certification of admissions or services.

(d)

Claim Determination Period. “Claim determination period” means a period beginning with any January 1 and ending with the next following December 31. In no event will a claim determination period for any person include any part of a year during which such person is not covered under this Plan.

15.2 Coordination of Benefits. This Section applies when, in accordance with 15.3, this Plan is a Secondary Plan as to one or more other plans. This Plan is not a Secondary Plan to Medicare Part D.

(a) As to any claim determination period with respect to which this Section is applicable, the benefits that would be payable under this Plan in the absence of this provision for the Allowable Expenses incurred as to a Participant or covered

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	Dependent during such claim determination period shall be reduced to the extent necessary so that the sum of such reduced benefits and all the benefits payable for such Allowable Expenses under all other plans, except as provided in subparagraph (b) below, shall not exceed the total of such Allowable Expenses. Allowable Expenses under another plan include the benefits that would have been payable had a claim been duly made therefore. Any person claiming benefits under the Plan shall furnish the Administrative Services Provider with such information as may be necessary for purposes of this provision.
(b)	When there is a basis for a claim under this Plan and another plan, this Plan is a Secondary Plan which has its benefits determined after those of the other plan, unless the other plan contains a provision coordinating its benefits with those of this Plan, and both the rules of that plan and the rules set forth in Section 15.3 would require this Plan to determine its benefits before such other plan. In that case, the benefits of such other plan will be ignored for the purposes of determining the benefits under this Plan.
(c)	When the benefits of this Plan are reduced as described above, each benefit is reduced in proportion. It is then charged against any applicable benefit limit of this Plan.

15.3 Order of Benefit Determination. For the purposes of this Section 15, the rules establishing the order of benefit determination are:

(a) Non-Dependent/Dependent. The benefits of a plan which covers the person on whose expense a claim is based other than as a dependent shall be determined before the benefits of a plan which covers such person as a dependent; except that:

(i)	if the person is also a Medicare beneficiary, and
(ii)	if the rule established by the Social Security Act of 1965 as amended makes Medicare secondary to the plan covering the person as a dependent of an active employee, then

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(iii) the order of benefit determination shall be:

(A)	Benefits of the plan of an active worker covering the person as a dependent;
(B)	Medicare;
(C)	Benefits of plan covering the person other than as a dependent.

(b) Dependent Child/Parents not Separated or Divorced. Except as stated in Section 15.3(c) below, when this Plan and another plan cover the same child as a dependent of different persons, called “parents”:

(i)	The benefits of the plan of the parent whose birthday falls earlier in a year are determined before those of the plan of the parent whose birthday falls later in that year; but
(ii)	If both parents have the same birthday, the benefits of the plan which covered one parent longer are determined before those of the plan which covered the other parent for a shorter period of time.
(iii)	However, if the other plan does not have the rule described in (i) immediately above, but instead has a rule based upon the gender of the parent, and if, as a result, the plans do not agree on the order of benefit determination, the rule in the other plan will determine the order of benefit determination.

(c) Dependent Child/Separated or Divorced. If two or more plans cover a person as a dependent child of divorced or separated parents, benefits for the child are determined in this order:

(i)	First, the plan of the parent with custody of the child;
(ii)	Then, the plan of the spouse of the parent with custody of the child; and

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(iii)	Finally, the plan of the parent not having custody of the child.
(iv)	However, if the specific terms of a court decree state that one of the parents is responsible for the health care expense of the child, and the entity obligated to pay or provide the benefits of the plan of that parent has actual knowledge of those terms, the benefits of that plan are determined first. The plan of the other parent shall be the Secondary Plan. This paragraph does not apply with respect to any Claim Determination Period or Plan Year during which any benefits are actually paid or provided before the entity has actual knowledge of the court decree.
(v)	Joint Custody. If the specific terms of a court decree state that the parents shall share joint custody, without stating that one of the parents is responsible for the health care expenses of the child, the plans covering the child shall follow the order of benefit determination rules outlined in Section 15.3(b).

(d)	Active/Inactive Employee. The benefits of a plan which covers a person as an employee or as a dependent of an employee who is neither laid off nor retired are determined before those of a plan which covers that person as a laid off or retired employee or as a dependent of a laid off or retired employee, unless the other plan does not have this rule and as a result the plans do not agree on the order of benefits, in which case this rule is ignored.
(e)	Length of Coverage. When paragraphs (a), (b), (c) and (d) of this Section do not establish an order of benefit determination, the benefits of a plan which has covered the person on whose expenses claim is based for the longer period of time shall be determined before the benefits of a plan which has covered such person the shorter period of time.
(f)	Medicare. Notwithstanding anything to the contrary, Medicare benefits shall be determined before those of this Plan to the extent permitted by law for (i) Medicare Eligible Participants and (ii) Participants or covered Dependents who become eligible after Retirement but before age 65 for benefits under Medicare solely as a result of disability.

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If a Participant or covered Dependent has enrolled in a Medicare Part D Plan, this Plan will not provide benefits as either a Primary Plan or a Secondary Plan with respect to prescription drug benefits.

15.4

Right to Receive and Release Necessary Information. For the purpose of this provision the Administrative Services Provider may, without the consent of or notice to any person, release or obtain information regarding coverage, expenses, and benefits which the Administrative Services Provider considers necessary, subject to the requirements of HIPAA. Each person claiming benefits under this Plan must provide to the Administrative Services Provider any facts it needs to pay the claim.

15.5

Underpayments and Overpayments. If payments which should have been made under the Plan have been made under any other plans, the Administrative Services Provider shall have the right, exercisable alone and in its sole discretion, to pay over to any organization making such other payments any amounts it shall determine to be warranted in order to satisfy the intent of this provision, and amounts so paid shall be deemed to be benefits paid under the Plan and, to the extent of such payments, the Administrative Services Provider and the Employer shall be fully discharged from liability under the Plan. If the amount of the payments made under this Plan is more than it should have been, the Administrative Services Provider may recover the excess from one or more of:

(a)	The persons it has paid or for whom it has paid, as provided in Section 11.3;
(b)	Insurance companies; or
(c)	Other organizations.

The “amount of payments made” includes the reasonable cash value of any benefits provided in the form of services.

15.6 Subrogation.

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(a)

In the event and to the extent of any payment under this Plan, the Plan shall (1) be subrogated to all the rights of recovery of a Participant or Dependent against any person or entity, and (2) in the case of awards, settlements, judgments, or other payments by a third party to a Participant or Dependent, be entitled to “first dollar” priority reimbursement in full from such Participant or Dependent (without reduction for the Participant’s or Dependent’s attorneys’ fees or costs, and without regard for whether the Participant or Dependent is made whole), and the Participant or Dependent shall execute and deliver instruments and papers and do whatsoever else is necessary to secure such rights. Neither the Participant nor the Dependent shall do anything after a loss to prejudice such rights. Receipt of benefits hereunder shall be deemed a Participant’s or Dependent’s assignment of his rights to the Plan (to the extent of such payment) and consent to the Plan’s subrogation and reimbursement rights, and no further written consent by a Participant or Dependent shall be required. Any payments received by a Participant, Dependent, his attorney, or his assigns, legal representatives, or beneficiaries shall be held in constructive trust for the benefit of the Plan, to the extent of the Plan’s payments. The Plan may also offset any future payments that would otherwise be payable to or on behalf of the Participant or any of his or her Dependents (whether or not related to the injury or illness in question) against any such reimbursement rights.

The Plan’s subrogation and reimbursement rights apply against all Participants and Dependents, as well as against the beneficiaries, heirs, guardians, legal representatives, assignees, and estates of such persons. It applies to minor children or other minor or disabled Dependents, and to the family members or any other beneficiary under any wrongful death or survivorship statute. The Plan’s rights of recovery are valid against any legally responsible third party, including the negligent or wrongful person or entity, his, hers or its insurance company, and the Participant’s or Dependent’s insurance company. The Plan shall have an automatic first priority lien against any such third party to the extent of his, hers

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	or its payments or obligations for the same, and may file any writing describing the Plan’s rights with any such third party as a notice of such lien.
(b)	The Plan has the absolute right to condition any payment on the Participant, Dependent or other relevant party signing a legally enforceable subrogation/reimbursement agreement containing language acceptable to the Plan. Absent such a signed reimbursement agreement, no benefits are payable hereunder. Moreover, if requested in writing by the Plan Administrator, the Participant or Dependent shall take, through any representative designated by the Plan Administrator, such further action as may be necessary or appropriate to recover any Plan payments as damages or otherwise from any person or entity, said action to be taken in the name of the Participant or Dependent. In the event of a recovery or settlement, the Plan shall also be reimbursed out of such recovery or settlement for expenses, costs and attorneys’ fees incurred by it in connection therewith.
(c)	The Plan shall be entitled, to the extent of any payments made to a Participant or Dependent, to the proceeds of any settlement or judgment or other payment that may result from the exercise of any rights of recovery of a Participant or Dependent against any person or entity legally responsible for the injury, sickness or condition for which such payment was made, or against any other person or entity, including the Participant’s or Dependent’s own insurance company. The right is hereby given the Plan to receive from any third party(ies), attorney(s), or insurance company(ies) an amount equal to the amount paid to or on behalf of the Participant or Dependent by the Plan, up to 100% of such third party recovery.
(d)	As part of the Plan’s subrogation and reimbursement rights, any recovery from a third party will be applied first to reimburse the Plan (or discharge its obligation for future payments), even if the Participant or Dependent is not paid for all of his claims for damages against the third party, and even if the payment received is for, or is described as being for, damages other than the benefits paid or covered by the Plan. Thus, any award, settlement, judgment, or other payment will be

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automatically deemed to first cover health care expenses previously paid (or otherwise covered) by the Plan, and will not be allocated to or designated as reimbursement for any other costs or damages the Participant or Dependent may have incurred (including attorneys’ fees incurred in obtaining such recovery), until the Plan is reimbursed in full or otherwise made whole. There shall be no offset for the Participant’s or Dependent’s legal fees unless expressly agreed to in writing by the Plan Administrator.

(e)

In the event a Participant or Dependent fails to reimburse the Plan as provided by this Section 15.6, the Plan Administrator may offset future benefits (whether or not payable with respect to the injury or illness giving rise to the third party recovery) to the extent of such Participant’s or Dependent’s failure to reimburse the Plan.

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SECTION 16
AMENDMENT AND TERMINATION

16.1 Limit on Right to Amend.

(a)	Except as expressly provided below in Section 16.2, this Plan may not be terminated or amended in any way that would materially and adversely affect the benefits or costs of any Retired Employee in Groups IA, IB, IIA, IIIA, IIIB, or IV or the Surviving Spouse or covered Dependent of such Retired Employee;
(b)	Except as expressly provided below in Section 16.2, this Plan may not be terminated or amended prior to January 1, 2007 in any way that would materially and adversely affect the benefits or costs of any Participants who are members of Groups IIB or V; and
(c)	Except as expressly provided below in Section 16.2, the Plan may not be terminated or amended in any way that would materially and adversely affect the benefits or costs of any Retired Employees who are members of Groups IIB or V prior to the earlier of the (i) time the Retired Employee becomes a Medicare Eligible Participant or (ii) October 31, 2016.
(d)	The purpose of this Section 16.1 is to preserve, for the particular Retired Employees, Surviving Spouses and Dependents and time periods set forth in subparagraph (a) and (b) hereof, the substance of the benefit and cost structure established in the Forsberg Settlement. Thus in determining whether an amendment “materially and adversely” affects the benefits or costs of any such Participant or Dependent referred to in Section 16.1, such amendment shall be considered together with all previous amendments adopted after the effective date of this Plan; if the cumulative effect of all such amendments is material and adverse, then the amendment being considered materially and adversely affects the benefits of such Participant or Dependent. Conversely, if after the effective date of this Plan it is amended to add additional benefits or to reduce the costs of the Participant or Dependent, such additional benefits or cost reductions may be

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	eliminated or reduced by subsequent amendments without materially and adversely affecting the benefits or costs of the Participant or Dependent.
(e)	The Company maintains the right without limitation to amend the Plan with respect to any Retired Employee in Group VI or the Surviving Spouse or covered Dependent of such Retired Employee.

16.2 Permitted Amendments. The Company reserves the right to adopt and implement any amendment to this Plan not prohibited by Section 16.1. Notwithstanding Section 16.1, the Company also reserves the right to adopt and implement any amendment to this Plan that is expressly permitted by subparagraphs (a) through (e) of this Section 16.2; provided, however, that no such amendment may be adopted and implemented if such amendment is unfair to the Participants, except as discussed in Section 16.6.

(a)	The Company may amend the Plan to provide for changes regarding the delivery of benefits, including without limitations the adoption of Supplements to the Plan which provide for the addition of managed care features (whether through a Preferred Provider Organization, a Point of Service network of providers or otherwise) provided such changes either (i) apply to a Participant only upon the voluntary election or action of the Participant, or (ii) provide for a higher level of benefits than the Plan would otherwise provide.
(b)	The Company may amend the Plan to avoid an increase in benefits or costs, which could or would, in the Company’s reasonable determination, be otherwise required by applicable law.
(c)	The Company may amend the Plan as regards administrative or procedural matters (e.g., Firestone language, appeals procedures).
(d)	The Company may amend the Plan in response to legislative changes that affect the legality of the Plan, the cost of providing any benefit under the Plan, or the deductibility of those costs, or require any additional benefit to be provided under the Plan.

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(e) The Company may modify prescription drug coverage for Medicare Eligible Participants at any time in its discretion in order to coordinate with or avoid duplication of any Medicare or other government provided coverage.

16.3	Resolution of Disputes With Retiree Liaison Committee. If a Retiree Liaison Committee has been appointed and is in existence, the Company shall give the Retiree Liaison Committee reasonable notice of any proposed amendment with respect to Groups IA, IB, IIA, IIB, IIIA, IIIB, IV and V. If the Retiree Liaison Committee objects to a proposed amendment on the ground that it is not permitted by the terms of this Plan, it shall notify the Company of its objections. The Company and the Retiree Liaison Committee shall use their best efforts to negotiate in good faith to resolve any objections to a proposed amendment.
	The Retiree Liaison Committee shall have no obligation to any Participants to challenge the validity of any proposed amendment, and the right of a Participant to challenge, through the claims procedures of the Plan and, if applicable, litigation, the validity of any amendment shall not be in any way impaired or diminished by any failure of the Retiree Liaison Committee to challenge any such amendment. Any such litigation by a Participant raising the issue of whether an amendment to this Plan is permitted by this Plan can be brought only in the United States District Court for the Eastern District of Missouri.
	The Company need not defer or delay the adoption or implementation of any amendment because of the pendency of a dispute with the Retiree Liaison Committee or litigation with a Participant. If the Company adopts and implements an amendment that is subsequently determined to be invalid, the Company will take whatever action may be reasonably required to eliminate the effects of having implemented the amendment.
16.4	Right to Amend or Terminate the Plan. The Company has the absolute right to amend or terminate this Plan at any time as to any Retired Employee in Group VI, as to any Surviving Spouse of such a Retired Employee and as to any covered Dependent of such a Retired Employee. The Company has the absolute right to amend or terminate this Plan as it applies on or after January 1, 2007 to any member of Groups IIB and V except as to a Participant or covered Dependent Spouse who is not then a Medicare Eligible Participant. The Company also has the absolute right to amend or terminate this Plan

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	as it applies to any member of Groups IIB and V after January 1, 2007 on or after the earlier of (i) the date a Participant or covered Dependent Spouse becomes a Medicare Eligible Participant or (ii) October 31, 2016. The Company also has the absolute right to amend or terminate this Plan as to any Dependent child of a Retired Employee on or after the later of (i) the date the Company could amend or terminate this Plan as to such Retired Employee, or (ii) the date the Company could amend or terminate the Plan as to such Retired Employee’s covered Dependent Spouse. Oral or written statements shall not change the terms of this Plan.
16.5	No Informal Amendments. Absent an express delegation of authority from the Board of Directors or the Employee Benefits Plans Committee of the Company, no one has the authority to commit the Company or any Employer to any benefit or benefit provision not provided for under the Plan or to change the eligibility criteria or other provisions of the Plan.
16.6	Active Plan Amendments. Nothing in Section 16.1 shall limit in any way the Company’s ability to amend any Active Plan, provided that such change affects the benefits of a Retired Employee, Surviving Spouse or covered Dependent under this Plan and similarly situated participants in the Active Plan to substantially the same extent, regardless of whether such amendment may materially and adversely affect the benefits of a Retired Employee, Surviving Spouse or covered Dependent referred to in Section 16.1.

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SECTION 17
PLAN ADMINISTRATOR

17.1	Administrator. The Plan Administrator shall be the Employee Benefits Plans Committee of the Company (the “EBPC”). The EBPC shall be a “Named Fiduciary” for purposes of Section 402(a)(1) of ERISA.
17.2	Duties and Powers. The Plan Administrator shall have the duty and power to determine whether a Retired Employee, Surviving Spouse or Dependent is entitled to any benefit under the Plan and to administer the Plan in all its details. The Plan Administrator’s duties and powers shall include the following:

(a)	to determine all questions arising under the Plan, including the power to determine the rights or eligibility of Retired Employees or Participants and any other persons, and the amounts of their contributions or benefits under the Plan, to interpret the Plan, and to remedy ambiguities, inconsistencies or omissions;
(b)	to adopt such rules of procedure and regulations, including the establishment of any claims procedure that may be required by law, as in its opinion may be necessary for the proper and efficient administration of the Plan and as are consistent with the Plan;
(c)	to adopt such forms and prepare such summaries and employee communications as are necessary for the proper administration of the Plan;
(d)	to enforce the Plan in accordance with its terms and in accordance with the rules and regulations adopted by the Plan Administrator as above;
(e)	to direct payments or distributions from the Plan in accordance with the provisions of the Plan;
(f)	to select and employ the Administrative Services Provider and such agents, attorneys, accountants or other persons (who also may be employed by the Company), and allocate or delegate to them such powers, rights and duties as the Plan Administrator may consider necessary or advisable to properly carry out the

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	administration of the Plan, including any powers, rights and duties granted to the Plan Administrator herein and specifically including without limitation the duty and power to determine entitlement to benefits and to decide claims and appeals (and, in the case of any such allocation or designation, any reference herein to the EBPC shall be deemed to refer to such delegate); and
(g)	to file such reports and returns as may be required by law.

17.3

Standard of Review. The Plan Administrator (or such other party to whom duties of administration have been delegated, including without limitation, an Administrative Services Provider) shall have the sole and absolute discretion to construe, interpret and apply the Plan, to make all factual determinations, and to the extent permitted by law, make any and all determinations of law. Benefits under this Plan will be paid only if the Plan Administrator decides in its discretion that the claimant is entitled to them. Any review of a final decision or action of the Plan Administrator (or other party referred to above) shall be based only on such evidence presented to or considered by the Plan Administrator (or other party referred to above) at the time it made the decision that is the subject of the review.

17.4

Limitation of Liability. If permissible by law, the Plan Administrator and each EBPC member serves without bond. If the law requires bond, the Plan Administrator must secure the minimum required and obtain necessary payments from the Company. The Plan Administrator or a member of the EBPC is not liable for another EBPC member’s act or omission. To the extent allowed by law and except as otherwise provided in the Plan, the Plan Administrator and each EBPC member is not liable for any action or omission that is not the Plan Administrator’s or member’s own gross negligence or willful misconduct. As permitted by law and as limited by any agreement in writing between the Company and the Plan Administrator, the Company must indemnify and save the Plan Administrator and each member of the EBPC harmless against expenses, claims, and liabilities arising out of being the Plan Administrator or a member of the EBPC, except expenses, claims and liability arising out of the Plan Administrator’s or member’s own gross negligence or willful misconduct. The Company may obtain

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insurance against acts or omissions of the Plan Administrator or EBPC members or, if the Company does not do so, the Plan Administrator or a EBPC member may obtain insurance and must be reimbursed as permitted by law. At its own expense, the Company may employ its own legal counsel to defend or maintain, either in its own name or in the name of the Plan Administrator or any EBPC member, any suit or litigation arising under this Plan concerning the Plan Administrator or any EBPC member.

17.5

Information Required by Administrative Services Provider. Each Employer shall furnish the Administrative Services Provider with such data and information as the Administrative Services Provider may deem necessary or desirable in order to administer the Plan. The records of an Employer as to a Retired Employee’s or Participant’s period or periods of employment, termination of employment and the reason therefore, leave of absence, and reemployment will be conclusive on all persons unless determined by the Administrative Services Provider’s satisfaction to be incorrect. Participants and covered Dependents also shall furnish the Administrative Services Provider with such evidence, data or information as the Administrative Services Provider considers necessary or desirable to administer the Plan.

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SECTION 18
HEALTH MAINTENANCE ORGANIZATIONS

Each Retired Employee who is a member of a Health Maintenance Organization at retirement and who elects to continue to participate in a Health Maintenance Organization to which the Employer contributes or otherwise makes available to Retired Employees shall be excluded from eligibility for medical coverage hereunder on account of the Retired Employee and his or her covered Dependents.

Each Surviving Spouse who is a member of a Health Maintenance Organization at the date of death of the spouse of such Surviving Spouse and who elects to continue to participate in a Health Maintenance Organization to which the Employer contributes or otherwise makes available to Surviving Spouses shall be excluded from eligibility for medical coverage hereunder.

A Participant who elected under a Prior Plan to participate in a Health Maintenance Organization to which the Employer contributes or otherwise makes available to Retired Employees shall also be excluded from eligibility for medical coverage hereunder on account of the Participant and his or her covered Dependents.

Each Retired Employee or Surviving Spouse who is participating in a Health Maintenance Organization to which the Employer contributes or otherwise makes available to Retired Employees and Surviving Spouses who ceases such participation because of relocation out of the Health Maintenance Organization’s service area or because the Retired Employee or Surviving Spouse elects to become covered hereunder during an Open Enrollment Period (as reported to the Administrative Services Provider by the Employer) shall be eligible for medical coverage hereunder on the Retired Employee’s own account, or the Surviving Spouse’s own account and on account of the Retired Employee’s covered Dependents on the day immediately following the date the Retired Employee, the Surviving Spouse and the Retired Employee’s covered Dependents cease to be eligible to receive services under the Health Maintenance Organization.

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SECTION 19
MISCELLANEOUS

19.1	Gender and Number. Where the context admits, words denoting the masculine gender shall include the feminine and neuter genders, the singular shall include the plural, and the plural shall include the singular.
19.2	Headings. The headings and sub-headings in the Plan are inserted for convenience and reference only and are not to be used in construing this Plan or any provision hereof.
19.3	Governing Law. This Plan shall be governed by, construed, and interpreted in accordance with the laws of the State of Missouri, determined without regard to its conflict of law rules, to the extent such laws are not preempted by the laws of the United States. Nothing in this Plan shall be construed to supersede any provision of state law that regulates insurance, except to the extent that such law prevents the application of a requirement of Section 11.5 of the Plan. A state law regulating insurance shall not be considered to prevent the application of a requirement of Section 11.5 of the Plan merely because such state law establishes a review procedure to evaluate and resolve disputes involving adverse benefit determinations under group health plans so long as the review procedure is conducted by a person or entity other than the insurer, the Plan, Plan fiduciaries, the employer or any employee or agent of any of the foregoing. Any such state law procedures are not part of the full and fair review required under Section 503 of ERISA. Claimants therefore need not exhaust such state law procedures prior to bringing suit under Section 502 of ERISA.
19.4	Conflicts. If any provision of this Plan is, becomes or is deemed invalid, or unenforceable in any jurisdiction, such provision shall be deemed amended to conform to applicable law so as to be valid, legal and enforceable in such jurisdiction so deeming. The validity, legality and enforceability of such provision shall not in any way be affected or impaired thereby in any other jurisdiction; if such provision cannot be so amended without materially altering the intention of the parties, it shall be stricken and the remainder of this Plan shall remain in full force and effect.

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19.5	Waiver. Any waiver by any Employer of any provision of the Plan setting forth a requirement for eligibility, continued coverage, or payment of benefits in any particular case shall not be construed to be a waiver of the provision for any other case or a modification or nullification of the provision.
19.6	Service of Legal Process. The General Counsel of the Company shall be the agent for service of legal process.
19.7	Supplements. To the extent expressly authorized in the provisions of this Plan, the Plan may be modified by Supplements. Each such Supplement will specify a group of Retired Employees or other persons to which it applies and will supersede the provisions of this Plan to the extent necessary to eliminate any inconsistencies between this Plan and such Supplement.
19.8	Qualified Medical Child Support Orders. Notwithstanding anything contained in this Plan to the contrary, benefits shall be provided under the Plan in accordance with the applicable requirements of any “qualified medical child support order” as defined in ERISA Section 609. The Plan Administrator shall determine the qualified status of medical child support orders and administer coverage under such qualified orders in accordance with the Qualified Medical Child Support Order Procedures established by the Plan Administrator. Further, to the extent provided under a “qualified medical child support order,” the child shall be treated as a Dependent for all purposes under the Plan.

19.9 VEBA and Other Trusts. To the extent applicable, any benefits paid from a VEBA, other trust sponsored by the Company, or any other Employer shall be treated as payments made under this Plan and shall be credited against the Maximum Aggregate Benefit and all other limits under the Plan and the Prior Plan.

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SECTION 20
HIPAA PRIVACY

20.1 HIPAA Privacy. As required by the regulations promulgated by the U.S. Department of Heath and Human Services (“HHS”) pursuant to the Health Insurance Portability and Accountability Act of 1996 (“HIPAA”), this Section 20 shall govern the Plan’s use of “protected health information” (as such term is defined in 45 C.F.R. §160.103 (“PHI”)). To the extent not outsourced to Administrative Service Providers, the Plan will use and disclose PHI for purposes related to health care treatment, payment for health care and health care operations. The Plan reserves the right to access PHI for all other legally permitted purposes, including the following:

(a)	Determination of eligibility, coverage and cost sharing amounts (for example, cost of a benefit, Plan maximums and co-payments as determined for an individual’s claim);
(b)	Coordination of benefits;
(c)	Adjudication of health benefit claims (including appeals and other payment disputes);
(d)	Subrogation of health benefit claims;
(e)	Establishing employee contributions;
(f)	Risk adjusting amounts due based on enrollee health status and demographic characteristics;
(g)	Billing, collection activities and related health care data processing;
(h)	Claims management and related health care data processing, including auditing payments, investigating and resolving payment disputes and responding to participant inquiries about payments;
(i)	Obtaining payment under a contract for reinsurance (including stop-loss and excess of loss insurance);

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(j)	Medical necessity reviews or reviews of appropriateness of care or justification of charges;
(k)	Utilization review, including pre-certification, preauthorization, concurrent review and retrospective review;
(l)	Disclosure to consumer reporting agencies related to the collection of premiums or reimbursements (the following PHI may be disclosed for payment purposes: name and address, date of birth, Social Security number, payment history, account number and name and address of the provider and/or health plan);
(m)	Reimbursement to the Plan;
(n)	Quality assessment;
(o)	Population-based activities relating to improving health or reducing health care costs, protocol development, case management and care coordination, disease management, contacting health care providers and patients with information about treatment alternatives and related functions;
(p)	Rating provider and Plan performance, including accreditation, certification, licensing or credentialing activities;
(q)	Underwriting, premium rating and other activities relating to the creation, renewal or replacement of a contract health insurance or health benefits, and ceding securing or placing a contract for reinsurance of risk relating to health care claims (including stop-loss insurance and excess loss insurance);
(r)	Conducting or arranging for medical review, legal services and auditing functions, including fraud and abuse detection and compliance programs;
(s)	Business planning and development, such as conducting cost-management and planning-related analyses related to managing and operating the Plan, including formulary development and administration, development or improvement of payment methods or coverage policies;

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(t) Business management and general administrative activities of the Plan, including, but not limited to:

(i)	Management activities relating to the implementation of and compliance with HIPAA’s administrative simplification requirements; or
(ii)	Customer service, including the provision of data analyses for policyholders, plan sponsors or other customers;

(A)	Resolution of internal grievances; and
(B)	Due diligence in connection with the sale or transfer of assets to a potential successor in interest, if the potential successor in interest is a “covered entity” under HIPAA or, following completion of the sale or transfer, will become a covered entity.

20.2

PHI Nondisclosure. The Plan or a Health Maintenance Organization with respect to the Plan (collectively referred to for purposes of this Section 20 as the “Plan”) may not disclose PHI to the Employer or provide for or permit the disclosure of PHI to the Employer, except as set forth below or as permitted or required by applicable law. This prohibition shall include the prohibition on disclosing PHI to the Employer for the purpose of employment-related actions or decisions or in connection with any other benefit or employee benefit plan of the Employer.

20.3

Permitted Disclosures. Notwithstanding Paragraph 20.1 above, the Plan may disclose PHI to the Employer in connection with its plan administration duties when the Plan would otherwise be permitted or required to disclose or use PHI pursuant to HIPAA, the regulations set forth in 45 C.F.R. Parts 160 and 164 (the “Privacy Rules”) and/or other applicable law. In addition, the following disclosures of PHI may be made:

(a) The Plan may disclose summary health information (as such term is defined in 45 C.F.R. Section 164.504(a)) to the Employer upon its request for the purpose of:

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(i)	obtaining premium bids from health plans for providing health insurance coverage for the Plan, or
(ii)	modifying, amending, or terminating the Plan, subject to Section 16.

(b) The Plan may disclose protected health information on whether an individual is participating in the Plan, or is enrolled in or has disenrolled from a provider network offered under the Plan.

20.4 Disclosure Requirements. The Plan may disclose PHI to the Employer if and only if such disclosures are consistent with this Section 20 and the Employer certifies to the Plan that the Employer agrees to the following:

(a)	To implement administrative, physical, and technical safeguards that reasonably and appropriately protect the confidentiality, integrity, and availability of the electronic PHI that the Employer creates, receives, maintains, or transmits on behalf of the Plan;
(b)	Not to use or further disclose the information other than as permitted or required by law and as permitted by authorization of the Participant;
(c)	Ensure that any agents, including a subcontractor, to whom it provides PHI received from the Plan agree to the same restrictions and conditions that apply to the Employer with respect to such information, including implementation of reasonable and appropriate security measures to protect electronic PHI;
(d)	Not to use or disclose the information for employment-related actions and decisions or in connection with any other benefit or employee benefit plan of the Employer unless authorized by the Participant;
(e)	Report to the Plan any use or disclosure of the information that is inconsistent with the uses or disclosures provided for herein of which it becomes aware, and any security incident of which it becomes aware;

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(f)	Make available PHI in accordance with individuals’ right of access as described in 45 C.F.R. section 164.524;
(g)	Make available PHI for amendment and incorporate any amendments to PHI in accordance with 45 C.F.R. section 164.526;
(h)	Make available the information required to provide an accounting of disclosures in accordance with 45 C.F.R. section 164.528;
(i)	Make the Employer’s internal practices, books, and records relating to the use and disclosure of PHI received from the Plan available to the HHS Secretary for purposes of determining compliance by the Plan with this Article;
(j)	If feasible, return or destroy all PHI received from the Plan that the Employer still maintains in any form and retain no copies of such information when no longer needed for the purpose for which disclosure was made, except that, if such return or destruction is not feasible, limit further uses and disclosures to those purposes that make the return or destruction of the information infeasible; and
(k)	Ensure that the adequate separation required pursuant to Paragraph 20.5 below is established and that such separation is supported by reasonable and appropriate security measures with respect to electronic PHI.

20.5 Adequate Separation. Access to PHI shall be limited to those employees of the Employer who may be assigned from time to time to coordinate the administration of the Plan, including, but not limited to, the members of the EBPC, the Human Resources Vice President, the Privacy Officer, the Benefits and HRIS Manager, the Benefits Analyst, the Human Resources Manager/Lead/Director, and the Human Resources Generalist/Specialist, and each of their counsels, consultants, accountants, and actuaries. The access to and use of PHI by such individuals shall be limited to the plan administration function performed by the Employer and its agents. The Employer shall resolve any issues of non-compliance with this Article consistent with the Privacy Rules,

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including subjecting the offending party to disciplinary action and/or sanctions (including, without limitation, termination of employment).

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EX-10.5

Exhibit 10.5

LIMITED LIABILITY COMPANY AGREEMENT

OF

SFC LLC

DATED AS OF February 28, 2008

TABLE OF CONTENTS

	Page
ARTICLE I
GENERAL PROVISIONS; CAPITAL CONTRIBUTIONS; DEFINITIONS		1
Section 1.1 Formation		1
Section 1.2 Name		1
Section 1.3 Purpose		1
Section 1.4 Powers		1
Section 1.5 Limitations on the Company’s Powers		2
Section 1.6 Material Actions		3
Section 1.7 Members		4
Section 1.8 Registered Office; Registered Agent; Place of Business		4
Section 1.9 Capital Contributions		4
Section 1.10 Term		5
Section 1.11 Limited Liability		5
Section 1.12 No State-law Partnership		5
Section 1.13 Execution, Delivery and Filing of Certificates		5
Section 1.14 Existence of the Company		5
Section 1.15 No Petition		5
ARTICLE II
CAPITAL ACCOUNTS		6
Section 2.1 Capital Accounts		6
Section 2.2 Computation of Amounts		6
Section 2.3 Distribution in Kind		6
ARTICLE III .
DISTRIBUTIONS AND ALLOCATIONS		7
Section 3.1 Distributions		7
Section 3.2 Allocation of Profits and Losses		7
ARTICLE IV
MANAGEMENT AND MEMBER RIGHTS		7
Section 4.1 Management Authority		7
Section 4.2 Indemnification		9
ARTICLE V
MEMBERS		11
Section 5.1 Transfer of the Company Interest		11
Section 5.2 Member Rights; Meetings		12
Section 5.3 Additional Members		13

i

TABLE OF CONTENTS
(Continued)

	Page
Section 5.4 Resignation of a Member		13
Section 5.5 Termination of a Member		13
ARTICLE VI
DURATION		13
Section 6.1 Duration		13
Section 6.2 Winding Up		14
Section 6.3 Termination		14
ARTICLE VII
VALUATION		14
Section 7.1 Valuation		14
ARTICLE VIII
CERTIFICATION OF MEMBERSHIP INTERESTS		15
Section 8.1 Membership Interest		15
ARTICLE IX
BOOKS OF ACCOUNT; MEETINGS		15
Section 9.1 Books		15
Section 9.2 Fiscal Year		15
Section 9.3 Tax Allocation and Reports		15
ARTICLE X
MISCELLANEOUS		16
Section 10.1 Amendments		16
Section 10.2 Successors		16
Section 10.3 Governing Law; Severability		16
Section 10.4 Notices		16
Section 10.5 Complete Agreement; Headings, Counterparts		16
Section 10.6 Partition		16
Section 10.7 Benefits of Agreement; No Third-Party Rights; Monsanto as a Party		17
Section 10.8 Binding Agreement		17
Section 10.9 No Strict Construction		17
Section 10.10 Attorneys’ Fees and Disbursements		17
Section 10.11 Effectiveness		17
APPENDIX A. DEFINITIONS

ii

TABLE OF CONTENTS
(Continued)

	Page
SCHEDULE 1. MEMBER AND MANAGER INFORMATION
SCHEDULE 2. FORM OF MANAGER AGREEMENT
EXHIBIT A. SETTLEMENT AGREEMENT

iii

          THIS LIMITED LIABILITY COMPANY AGREEMENT dated as of February 28, 2008, (this “Agreement”), is adopted, executed and agreed to, for good and valuable consideration, by SFC LLC (the “Company”) and the undersigned Member. Certain terms used herein are defined in Appendix A attached hereto.

ARTICLE I
GENERAL PROVISIONS; CAPITAL CONTRIBUTIONS; DEFINITIONS

          Section 1.1 Formation. The formation of the Company pursuant to and in accordance with the Delaware Limited Liability Company Act, 6 Del. C. §18-101, et seq., as amended from time to time (the “Act”), occurred on September 11, 2007. An authorized person, within the meaning of the Act, has executed, delivered and filed the certificate of formation of the Company (which certificate of formation as amended from time to time is referred to as the “Certificate”). Upon the undersigned Member’s (i) execution of this Agreement or a counterpart hereof and (ii) making of the capital contributions required by Section 1.9, such Member shall be admitted to the Company as its sole initial member (the “Sole Member”).

          Section 1.2 Name. The name of the Company will be “SFC LLC” or such other name as the Board of Managers may from time to time designate.

          Section 1.3 Purpose. (a) The sole purposes of the Company are:

          (i) to acquire, own, hold, invest, safekeep and distribute the Deposited Property, as expressly permitted by and in accordance with the terms of the Settlement Agreement;

          (ii) to execute, deliver and perform its obligations under the Settlement Agreement and the Services Agreement; and

          (iii) to engage in any lawful act or activity and to exercise any powers permitted to limited liability companies organized under the laws of the State of Delaware that are necessary for the accomplishment of the purposes set forth in clauses (i) and (ii) of this Section 1.3(a).

               (b) The Company, by or through any of its Managers acting on behalf of the Company, may enter into and perform its obligations expressly permitted by the Settlement Agreement and all documents, agreements or certificates contemplated thereby or related thereto, all without any further act, vote or approval of any Member or any of its Managers or officers.

          Section 1.4 Powers. Subject to Section 1.5, the Company, and the Board of Managers on behalf of the Company shall have and exercise all powers and rights conferred upon or permitted of limited liability companies formed pursuant to the Act that are necessary to the accomplishment of its purposes as set forth in Section 1.3.

          Section 1.5 Limitations on the Company’s Powers.

               (a) Except for Permitted Obligations, the Company shall not incur, assume, guarantee or suffer to exist any indebtedness or other liability or obligation until there are no longer outstanding any Permitted Obligations and all Permitted Obligations have been fully and finally satisfied.

               (b) Until there are no longer outstanding any Permitted Obligations and all Permitted Obligations have been fully and finally satisfied, the Company shall not, and the Members and Managers shall not take any action to, amend, alter, change or repeal this Agreement, any of the definitions set forth in Appendix A hereto or Schedule 1 of this Agreement without the unanimous written consent of the Board of Managers (including the affirmative vote of the Independent Manager) and Monsanto and any purported amendment without such consent shall be null and void.

               (c) Notwithstanding any other provision of this Agreement and any provision of law that otherwise so empowers the Company, the Members or the Board of Managers, until there are no longer outstanding any Permitted Obligations and all Permitted Obligations have been fully and finally satisfied, the Company shall not be authorized or empowered, nor shall the Members or the Board of Managers permit the Company to take any action in violation or contravention of the Settlement Agreement or fail to take any action expressly required by the Settlement Agreement.

               (d) Until there are no longer outstanding any Permitted Obligations and all Permitted Obligations have been fully and finally satisfied, the Company shall do or cause to be done all things necessary to preserve and keep in full force and effect its existence, rights (charter and statutory) and franchises and comply with applicable law. The Company shall also:

          (1) maintain its own separate books and records and bank accounts;

          (2) at all times hold itself out to the public and all other Persons as a legal entity separate from any other Person;

          (3) have its own Board of Managers;

          (4) not commingle its assets with assets of any other Person and maintain separate financial statements, showing its assets and liabilities separate and apart from those of any other Person, and not have its assets listed on any financial statements of any other Person; provided, however, that the Company’s assets may be included in a consolidated financial statement of any of its Affiliates (as required under US GAAP) provided that appropriate notation is made on such consolidated financial statements to indicate the separateness of the Company from such Affiliate and to indicate that the Company’s assets and credit are not available to satisfy debts and other obligations of such Affiliate or any other Person;

2

          (5) conduct its business in its own name and strictly comply with all organizational formalities to maintain its separate existence;

          (6) pay its own liabilities, obligations and indebtedness only out of its own funds;

          (7) maintain an arm’s length relationship with its Affiliates and members;

          (8) not hold out its credit or assets as being available to satisfy the liabilities, obligations or indebtedness of others;

          (9) allocate fairly and reasonably any overhead for shared operating expenses;

          (10) not pledge its assets for the benefit of any other Person;

          (11) correct any known misunderstanding regarding its separate identity;

          (12) cause its Board of Managers to meet or act pursuant to written consent as necessary to carry out the purposes for which the Company was formed and observe all other Delaware limited liability company formalities;

          (13) not consolidate or merge the Company with or into any Person, or sell any of the material assets of the Company, and

          (14) not acquire any securities of any of its Members.

               (e) Notwithstanding any other provision of this Agreement and any provision of law that otherwise so empowers it, until there are no longer outstanding any Permitted Obligations and all Permitted Obligations have been fully and finally satisfied, no Member shall sell, transfer, pledge or otherwise permit the imposition of a lien on its ownership interest in the Company without the prior unanimous consent of the Board of Managers and Monsanto.

          Section 1.6 Material Actions. Until there are no longer outstanding any Permitted Obligations and all Permitted Obligations have been fully and finally satisfied, no Person or Persons (including the Board of Managers), acting alone or together, shall be authorized or empowered, nor shall any of them permit the Company to, without the prior unanimous written consent of all the Managers (including the Independent Manager), take any Material Action, it being understood that any Material Action taken without obtaining such unanimous written consent shall, to the fullest extent permitted by law, be null and void ab initio.

3

          Section 1.7 Members. The name and the mailing address of the Sole Member is set forth on Schedule 1 attached hereto. The Board of Managers shall amend from time to time Schedule 1 to reflect any addition, resignation, withdrawal or termination of the Members. Subject to Section 1.5, Members may act by written consent.

          Section 1.8 Registered Office; Registered Agent; Place of Business. The registered office of the Company required by the Act to be maintained in the State of Delaware shall be the office of the initial Registered Agent named in the Certificate (the “Registered Agent”) or such other office (which need not be a place of business of the Company) as the Board of Managers may designate from time to time in the manner provided by law. The Registered Agent of the Company in the State of Delaware shall be the initial Registered Agent named in the Certificate or such other person or persons as the Board of Managers may designate from time to time in the manner provided by law. The Company may maintain a chief executive office and principal place of business at such place or places inside or outside the State of Delaware as the Board of Managers may designate from time to time.

          Section 1.9 Capital Contributions.

               (a) Promptly following the execution of this Agreement, Solutia shall contribute to the Company the amount set forth on Schedule 1, in exchange for which Solutia shall receive the sole Member interest in the Company. The Sole Member is not required to make any additional capital contribution to the Company and may only make or be deemed to have made, as additional capital contributions, those amounts that are permitted to be made to the Company as contributions pursuant to the terms of the Settlement Agreement. Any Person hereafter admitted as a Member of the Company shall make such contributions of cash to the Company as shall be determined by the Board of Managers at the time of each such admission. The Persons hereafter admitted as Members of the Company shall not be required to make any additional capital contribution to the Company and may only make additional capital contributions to the Company upon the written consent of each of the other Members an the Board of Managers. All such additional contributions shall take the form of a cash transfer. The Board of Managers shall amend Schedule 1 from time to time to reflect any capital contribution made by any Member. The provisions of this Agreement, including this Section 1.9, are intended solely to benefit the Members, and, to the fullest extent permitted by law, shall not be construed as conferring any benefit upon any creditor of the Company (and no such creditor of the Company shall be a third-party beneficiary of this Agreement) and no Member shall have any duty or obligation to any creditor of the Company to make any contribution to the Company or to issue any call for capital pursuant to this Agreement.

               (b) No Member shall have any responsibility to restore any negative balance in such Member’s Capital Account or to contribute to or in respect of liabilities or obligations of the Company, whether arising in tort, contract or otherwise, or return distributions made by the Company except as required by the Act or other applicable law. The failure of the Company to observe any formalities or requirements relating to the exercise of its powers or management of its business or affairs under this Agreement or the Act shall not be grounds for imposing personal liability on the Members for liabilities of the Company.

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               (c) No interest shall be paid by the Company on capital contributions or on balances in Capital Accounts.

               (d) A Member shall not be entitled to withdraw any part of its Capital Account or to receive any distributions from the Company except as provided in Articles III and VI; nor shall a Member be entitled to make any capital contribution to the Company other than as expressly provided herein.

          Section 1.10 Term. The Company shall continue in existence until dissolved and terminated in accordance with the Settlement Agreement and Article VI of this Agreement.

          Section 1.11 Limited Liability. Except as otherwise expressly provided by the Act, the debts, obligations and liabilities of the Company, whether arising in contract, tort or otherwise, shall be the debts, obligations and liabilities solely of the Company, and neither any Member nor any Manager of the Company shall be obligated personally for any such debt, obligation or liability of the Company solely by reason of being a Member or Manager of the Company.

          Section 1.12 No State-law Partnership. The Member(s) intend that the Company be treated as a disregarded entity for tax purposes and that the Company not be a partnership (including a limited partnership) or joint venture, and that no Member be a partner or joint venturer of any other Member, for any purposes other than U.S. federal and, if applicable, state tax purposes, and neither this Agreement nor any other document entered into by the Company or any Member shall be construed to suggest otherwise. The Member(s) intend that each Member and the Company shall file all tax returns and shall otherwise take all tax and financial reporting positions in a manner consistent with such treatment.

          Section 1.13 Execution, Delivery and Filing of Certificates. Christopher Valeri is hereby designated as an “authorized person” within the meaning of the Act, and has executed, delivered and filed the Certificate of Formation with the Delaware Secretary of State. Upon the execution of this Agreement by the Sole Member, such Person’s powers as an “authorized person” ceased, and each Manager named herein shall become a designated “authorized person” and shall continue as the designated “authorized person” within the meaning of the Act.

          Section 1.14 Existence of the Company. The existence of the Company as a separate legal entity shall continue in accordance with the Settlement Agreement and Article VI hereof until cancellation of the Certificate of Formation as provided in the Act.

          Section 1.15 No Petition. Neither Solutia nor Monsanto shall, or shall permit any of their respective subsidiaries (other than, in the case if Solutia, SFC LLC itself) to, prior to the date that is two years and one day after the full and final satisfaction by SFC LLC of all of the Permitted Obligations, acquiesce, petition or otherwise invoke the process of any Governmental Authority for the purpose of commencing or sustaining a case against SFC LLC under any Insolvency Law or appointing a receiver, liquidator, assignee, trustee, custodian, sequestrator or other similar official of SFC LLC or any substantial part of its property, or ordering the winding up or liquidation of the affairs of SFC LLC.

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ARTICLE II
CAPITAL ACCOUNTS

          Section 2.1 Capital Accounts. A “Capital Account” will be established for each Member on the books of the Company and will be adjusted as follows:

               (a) Such Member’s contributions to the capital of the Company will be credited to such Member’s Capital Account when received by the Company from or on behalf of such Member.

               (b) At the end of each fiscal year of the Company and upon dissolution and winding up of the Company pursuant to Article VI, Profits for such period allocated to such Member pursuant to Section 3.2 shall be credited and Losses for such period allocated to such Member pursuant to Section 3.2 shall be debited, as the case may be, to such Member’s Capital Account.

               (c) Any amounts distributed to such Member will be debited against such Member’s Capital Account.

               (d) Such Member’s Capital Account will otherwise be adjusted in accordance with Treas. Reg. 1. 704-1(b)(2)(iv).

          Section 2.2 Computation of Amounts. For purposes of computing the amount of any item of income, gain, loss, deduction or expense to be reflected in Capital Accounts, the determination, recognition and classification of each such item shall be the same as its determination, recognition and classification for federal income tax purposes; provided that

               (a) any income that is exempt from Federal income tax shall be added to such taxable income or losses and any expenditures of the Company described in Section 705(a)(2)(B) of the Code or treated as Section 705(a)(2)(B) of the Code expenditures pursuant to Treasury Regulation Section 1.704-1(b)(2)(iv)(i), shall be subtracted from such taxable income or losses;

               (b) if the Book Value of any Company property is adjusted pursuant to Treasury Regulation Section 1.704-1(b)(2)(iv)(e) (in connection with a distribution of such property) or (f) (in connection with a revaluation of Capital Accounts), the amount of such adjustment shall be taken into account as gain or loss from the disposition of such property; and

               (c) if property that is reflected on the books of the Company has a Book Value that differs from the adjusted tax basis of such property, depreciation, amortization and gain or loss with respect to such property shall be determined by reference to such Book Value.

          Section 2.3 Distribution in Kind. If property is to be distributed in kind to the Member(s) pursuant to this Agreement, (i) the value of such property shall first be adjusted pursuant to Section 2.2(b) to its value (as determined pursuant to Article VII as of the date of such distribution), (ii) the Capital Accounts of the Member(s) shall be adjusted immediately prior to the distribution as if such property were sold at its value (as so determined) and (iii) the value

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of such property (as so determined) received by each Member shall be debited against such Member’s respective Capital Account at the time of distribution.

ARTICLE III .
DISTRIBUTIONS AND ALLOCATIONS

          Section 3.1 Distributions. Distributions of cash or other assets of the Company shall be made only at such times, only in such amounts and only in such manner as expressly permitted by the Settlement Agreement. Unless otherwise expressly required by the Settlement Agreement, distributions to Members shall be made pro rata based on the Percentage Interests held by each of the Members. Notwithstanding any provision to the contrary contained in this Agreement, the Company shall not make a distribution to any Member on account of such Member’s interest in the Company (i) if such distribution would violate Section 18-607 of the Act or other applicable law or (ii) except as expressly permitted by the Settlement Agreement, until all Permitted Obligations have been fully and finally satisfied.

          Section 3.2 Allocation of Profits and Losses. Except as may be required by the Code, each item of income, gain, loss, deduction or expense to the Company shall be allocated among the Member(s) in proportion to the Percentage Interests held by each Member.

ARTICLE IV
MANAGEMENT AND MEMBER RIGHTS

          Section 4.1 Management Authority. (a) Subject to Sections 1.5 and 1.6 of this Agreement, the business and affairs of the Company shall be managed by or under the direction of a board of managers (each a “Manager” and collectively the “Board of Managers”) consisting of one (1) or more Managers. The Managers shall be appointed by the Sole Member. Until the date that is two years and one day from the date upon which the Permitted Obligations have been fully and finally satisfied, the Board of Managers shall include an Independent Manager appointed pursuant to Section 4.1(d). Each Manager elected, designated or appointed shall hold office until a successor is elected and qualified or until such Manager’s earlier death, incompetence, resignation or removal. Managers need not be Members.

               (b) Subject to Sections 1.3, 1.5 and 1.6 of this Agreement, the Board of Managers shall have the power to do any and all acts necessary to or for the furtherance of the purposes set forth in Section 1.3, including all powers, statutory or otherwise. Subject to Sections 1.5 and 1.6 and the Settlement Agreement, the Board of Managers and any individual Manager authorized by the Board of Managers shall have the authority to bind the Company in any manner expressly permitted by the Settlement Agreement and in compliance with the terms thereof. No Member, unless such Member is also a Manager and acts in its capacity as Manager, shall have any authority to act for or bind the Company but shall have only the right to vote on or approve the actions herein specified to be voted on or approved by the Members or as otherwise specified in the Act.

               (c) Subject to Section 1.5 of this Agreement, so long as the Permitted Obligations are outstanding, the Company shall not be authorized or empowered, nor shall the Members or the Board of Managers permit the Company, to take the following actions:

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               (i) the lease, exchange, mortgage, pledge, or other transfer or disposition of any of the assets of the Company except as expressly permitted by the Settlement Agreement;

               (ii) to the fullest extent permitted by law, engage in any dissolution, liquidation, consolidation, merger or transfer of ownership interests other than such activities as are expressly required by the Settlement Agreement;

               (iii) any amendment to the Certificate or this Agreement;

               (iv) the incurrence of indebtedness by the Company (or the guarantee of indebtedness of any other Person) except as expressly required by the Settlement Agreement;

               (v) any transaction involving an actual or potential conflict of interest between a Manager and the Company; or

               (vi) a change in the nature of the business of the Company.

               (d) Until the date that is two years and one day from the date upon which the Permitted Obligations have been satisfied in full, the Company shall at all times have at least one Independent Manager who shall be appointed by the Members. Notwithstanding anything to the contrary in this Agreement, to the fullest extent permitted by law, including Section 18-1101(c) of the Act, the approval of the Independent Manager shall be required for any Material Action and the Independent Manager shall consider the interests of the Company and its creditors in acting or otherwise voting for any Material Action. No appointment of an Independent Manager shall be effective unless and until such Independent Manager shall (i) have accepted his or her appointment as an Independent Manager by a written instrument (which may be a counterpart signature page to the Independent Manager Agreement attached hereto as Schedule 2), and (ii) have executed such other documents and instruments, including a counterpart to this Agreement, as shall be required by the Sole Member in its sole discretion, and no resignation or removal of an Independent Manager and no appointment of a successor Independent Manager shall be effective until such successor shall have satisfied the requirements of such clauses (i) and (ii). In the event of a vacancy in the position of Independent Manager, the Member shall, as soon as practicable, appoint a successor Independent Manager. All right, power and authority of the Independent Managers shall be limited to the extent necessary to exercise those rights and perform those duties specifically set forth in this Agreement. Except as provided in the second sentence of this Section 4.1(d), in exercising their rights and performing their duties under this Agreement, any Independent Manager shall have a fiduciary duty of loyalty and care similar to that of a director of a business corporation organized under the General Corporation Law of the State of Delaware. No Independent Manager shall at any time serve as trustee in bankruptcy for any Affiliate of the Company.

               (e) The Board of Managers may hold meetings, both regular and special, within or outside the State of Delaware. Regular meetings of the Board of Managers may be held at such time and at such place as shall from time to time be determined by the Board of Managers. Special meetings of the Board of Managers may be called by any one or more of

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the Managers on not less than one (1) day’s notice to each Manager by telephone, facsimile, mail, telegram or any other means of communication.

               (f) At all meetings of the Board of Managers, a majority of the Managers shall constitute a quorum for the transaction of business and, except as otherwise provided in any other provision of this Agreement, the act of a majority of the Managers present at any meeting at which there is a quorum shall be the act of the Board of Managers. If a quorum shall not be present at any meeting of the Board of Managers, the Managers present at such meeting may adjourn the meeting from time to time, without notice other than announcement at the meeting, until a quorum shall be present. Any action required or permitted to be taken at any meeting of the Board of Managers may be taken without a meeting if all members of the Board of Managers, as the case may be, consent thereto in writing, and the writing or writings are filed with the minutes of proceedings of the Board of Managers.

               (g) Managers may participate in meetings of the Board of Managers, by means of telephone conference or similar communications equipment that allows all persons participating in the meeting to hear each other, and such participation in a meeting shall constitute presence in person at the meeting and shall be counted for purposes of determining whether a quorum exists. If all the participants are participating by telephone conference or similar communications equipment, the meeting shall be deemed to be held at the principal place of business of the Company.

               (h) The Managers may be paid their expenses, if any, of attendance at meetings of the Board of Managers.

               (i) Unless otherwise restricted by law, any Manager or the entire Board of Managers, may be removed, with or without cause, at any time by the unanimous action of the Members, and any vacancy caused by any such removal may be filled by unanimous action of the Members.

               (j) Subject, in the case of the Independent Manager, to Section 4.1(d) of this Agreement, in exercising the rights and performing the duties of Managers under this Agreement, each Manager shall have a fiduciary duty of loyalty and care similar to that of a director of a business corporation organized under the General Corporation Law of the State of Delaware.

          Section 4.2 Indemnification.

               (a) Neither a Member, a Manager nor any Affiliate of a Member or Manager shall be liable, responsible or accountable in damages or otherwise to the Company or the Members for any act or omission by any such Person performed in good faith pursuant to the authority granted to such Person by this Agreement or in accordance with its provisions, and in a manner reasonably believed by such Person to be within the scope of the authority granted to such Person and in, or not opposed to, the best interest of the Company; provided that such act or omission did not constitute fraud, willful misconduct, gross negligence or bad faith.

               (b) The Company shall indemnify and hold harmless the Company’s employees, Members, Managers and each director, officer, partner and employee thereof, against

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any liability, loss, damage, cost or expense incurred by any of them on behalf of the Company or in furtherance of the Company’s interests, to the fullest extent permitted by applicable law, without relieving any such Person of liability for fraud, willful misconduct, gross negligence or bad faith. Notwithstanding the foregoing, any indemnity under this Section by the Company shall be provided for to the extent of Company assets only and no Member or Manager shall have any personal liability with respect to the satisfaction of any required indemnification of the above-mentioned Persons.

               (i) Any indemnification required to be made by the Company shall be made promptly following the fixing of the liability, loss, damage, cost or expense incurred or suffered by a final judgment of any court, settlement, contract or otherwise. In addition, the Company may advance funds to a Person claiming indemnification for legal expenses and other costs incurred as a result of a legal action brought against such Person only if (i) the legal action relates to the performance of duties or services by the Person on behalf of the Company, (ii) the legal action is initiated by a party other than a Member, and (iii) such Person undertakes to repay the advanced funds to the Company if it is determined that such Person is not entitled to indemnification pursuant to the terms of this Agreement.

               (ii) The termination of any action or proceeding by judgment, order, settlement, conviction or upon a plea of nolo contendere or its equivalent shall not, of itself, create a presumption that (A) the Person being indemnified hereunder did not act in good faith and in a manner which the Person reasonably believed, in the case of conduct in the Person’s official capacity, to be in the Company’s best interests and in all other cases, to be at least not opposed to the Company’s best interests, or (B) with respect to any criminal proceeding, that the Person had reasonable cause to believe that the conduct was lawful.

               (iii) Without the necessity of entering into an express contract, all rights to indemnification and advances under this Agreement shall be deemed to be contractual rights and be effective to the same extent as if provided for in a contract between the Company and the Person seeking indemnification. Any right to indemnification or advances granted by this Agreement shall be enforceable by or on behalf of the Person holding such right in any court of competent jurisdiction, if (A) the claim for indemnification or advances is denied, in whole or in part, or (B) no disposition of such claim is made within ninety (90) days of request therefor. The claimant in such enforcement action, if successful in whole or in part, shall be also be entitled to be paid the expense of prosecuting a claim for indemnification. It shall be a defense to any such action (other than an action brought to enforce a claim for expenses incurred in connection with any action or proceeding in advance of its final disposition when the required affirmation and undertaking have been tendered to the Company) that the claimant has not met the standards of conduct which make it permissible for the Company to indemnify the claimant for the amount claimed, but the burden of proving such defense shall be on the Company. Neither the failure of the Company to have made a determination prior to the commencement of such action that indemnification of the claimant is proper in the circumstances because the claimant has met the applicable standard of conduct, nor an actual determination by the Company that the claimant has

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not met such applicable standard of conduct, shall be a defense to the action or create a presumption that the claimant has not met the applicable standard of conduct.

               (iv) The rights conferred on any Person by this Agreement shall not be exclusive of any other right which such Person may have or hereafter acquire under any statute, agreements or otherwise, both as to action in the Person’s official capacity and as to action in any other capacity.

               (v) The rights conferred on any Person by this Section shall continue to inure to the benefit of any person who has ceased to be a Member, Manager or employee of the Company.

               (vi) Any repeal of this Section or of the Agreement shall only be prospective, and no repeal or modification hereof shall adversely affect the rights under this Agreement in effect at the time of the alleged occurrence of any conduct.

               (vii) If this Agreement or any portion hereof shall be invalidated on any ground by any court of competent jurisdiction, the Company shall indemnify each Person to whom indemnification is available to the fullest extent permitted by any applicable portion of this Agreement that shall not have been invalidated, or by any other applicable law.

               (c) Each Member agrees to defend, indemnify and hold the other Members and the Company harmless from and against any claim, expense or liability arising out of or relating to any breach of the Member’s obligations under this Agreement or the Act, or the Member’s fiduciary obligations to the other Members and the Company.

ARTICLE V
MEMBERS

          Section 5.1 Transfer of the Company Interest.

               (a) Subject to Section 5.3, no Member shall sell, assign, transfer or otherwise dispose of (directly or indirectly), whether voluntarily or involuntarily or by operation of law (a “Transfer”), all or any portion of such Member’s interest in the Company without the prior written consent of the Board of Managers and Monsanto, which consent may be given or withheld in its sole discretion. No Member shall pledge or otherwise encumber all or any portion of such Member’s interest in the Company, without the prior written consent of the Board of Managers and Monsanto, which consent may be given or withheld in its sole and absolute discretion.

               (b) Notwithstanding any other provision of this Agreement, any Transfer by the Members in contravention of any of the provisions of this Section 5.1 shall be void and ineffective, and shall not bind, or be recognized by, the Company.

               (c) If and to the extent any Transfer of an interest in the Company is made pursuant to and in accordance with the terms of this Agreement, this Agreement (including the Appendix, Schedule and Exhibits hereto) shall be amended by the Board of Managers to

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reflect the Transfer of the Company interest to the transferee, to admit the transferee as a Member and to reflect the elimination of the transferring Member (or the reduction of such transferring Member’s interest in the Company) and (if and to the extent then required by the Act) a certificate of amendment to the Certificate reflecting such admission and elimination (or reduction) shall be filed in accordance with the Act. The effectiveness of the Transfer of an interest in the Company permitted hereunder and the admission of any substitute Member pursuant to Section 5.3 shall be deemed effective upon the later to occur of the time of Transfer of an interest in the Company to such transferee or the first date that the Board of Managers receives evidence of such Transfer, including the terms thereof. If the transferring Member has transferred all or any of its interest in the Company pursuant to this Section 5.1, then, upon the later to occur of the time of such Transfer or the first date that the Board of Managers receives evidence of such Transfer, including the terms thereof, the transferring Member shall cease to be a Member with respect to such interest. Notwithstanding anything in this Agreement to the contrary, any successor to a Member by merger or consolidation shall, without further act, be a Member hereunder, and such merger or consolidation shall not constitute an assignment for purposes of this Agreement and the Company shall continue without dissolution.

               (d) Any person or entity who acquires in any manner whatsoever any interest in the Company, irrespective of whether such person or entity has accepted and adopted in writing the terms and provisions of this Agreement, shall be deemed by the acceptance of the benefits of the acquisition thereof to have (i) made all of the capital contributions, (ii) received all of the distributions, and (iii) agreed to be subject to and bound by all of the terms and conditions of this Agreement, that any predecessor in such interest in the Company made, received and was subject to or bound.

          Section 5.2 Member Rights; Meetings. No Member, unless such Member is also a Manager and acts in its capacity as Manager, shall have any right, power or duty, including the right to approve or vote on any matter, except as expressly required by the Act or other applicable law or as expressly provided for hereunder.

               (a) Unless a greater vote is required by the Act or as expressly provided for hereunder, the affirmative vote of a Majority in Interest of the Members entitled to vote shall be required to approve any proposed action.

               (b) Meetings of the Members for the transaction of such business as may properly come before such Members shall be held at such place, on such date and at such time as a Member or Members holding a Majority in Interest shall determine. Special meetings of Members for any proper purpose or purposes may be called at any time by the Board of Managers or the Member or Members holding a Majority in Interest. The Company shall deliver oral or written notice (written notice may be delivered by mail) stating the date, time, place and purposes of any meeting to each Member entitled to vote at the meeting. Such notice shall be given not less than four (4) and not more than sixty (60) days before the date of the meeting.

               (c) Any action required or permitted to be taken at an annual or special meeting of the Members may be taken without a meeting, without prior notice, and without a vote, provided that written consents, setting forth all proposed actions to be taken at such meeting, are signed by the Members holding at least the minimum Percentage Interest that would

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be necessary to authorize or take such action at a meeting at which all Members entitled to vote on such action were present and voted. Every written consent shall bear the date and signature of each Member who signs such consent. Prompt notice of the taking of action without a meeting by less than unanimous written consent shall be given to all Members who have not consented in writing to such action.

          Section 5.3 Additional Members. The Board of Managers shall have the sole right to admit additional Members upon such terms and conditions and at such time or times as the Board of Managers shall in its sole discretion determine; provided that, notwithstanding the foregoing, so long as any Permitted Obligation remains outstanding, no additional Members may be admitted to the Company without the prior unanimous consent of the Board of Managers and Monsanto. In connection with any such admission, the Board of Managers shall amend Schedule 1 to reflect the name, address and capital contribution of the additional Member and the new Percentage Interests of all Members.

          Section 5.4 Resignation of a Member. So long as any Permitted Obligations are outstanding, the Sole Member may not resign without prior unanimous consent of the Board of Managers and Monsanto. A Member (other than the Sole Member) may resign from the Company with the written consent of the Board of Managers. The Sole Member shall not be permitted to resign pursuant to this Section 5.4 unless an additional member of the Company is admitted to the Company in accordance with Section 5.3. Such admission shall be deemed effective immediately prior to the resignation, and, immediately following such admission, the resigning Member shall cease to be a member of the Company.

          Section 5.5 Termination of a Member. Notwithstanding the provisions of Section 5.4, a person or entity will no longer be a Member for purposes of this Agreement upon an Event of Withdrawal, provided, however, that a Terminated Member shall continue to be deemed a Member for all purposes under Section 4.2. The Terminated Member shall only be entitled to continue to receive allocation of Profits and Losses and distributions of the Company, including distributions pursuant to Article VI hereof, as and when paid by the Company, to the same extent such Terminated Member was entitled to such distributions as a Member. Such Terminated Member’s successors and assigns will not be entitled to participate in any Company decision or determination, and such Terminated Member’s successors and assigns will acquire only such Terminated Member’s right to receive allocation of Profits and Losses and to share in the Company distributions.

ARTICLE VI
DURATION

          Section 6.1 Duration. (a) Subject to the provisions of Section 6.2 of this Agreement, the Company shall be dissolved and its affairs wound up and terminated upon the first to occur of the following:

               (i) Two years after the distribution of all assets of the Company in accordance with the Settlement Agreement (unless the Settlement Agreement provides at any time for a different term); or

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               (ii) The entry of a decree of judicial dissolution under Section 18-802 of the Act;

provided, however, that the Sole Member shall have the right, in its sole discretion, to extend the existence of the Company beyond the date otherwise provided for in this Section 6.1(a).

               (b) Except as otherwise set forth in this Article VI, the Members intend for the Company to have perpetual existence. The bankruptcy (as defined in Section 18-101(1) of the Act) of any Member shall not cause such Member to cease to be a member of the Company and upon the occurrence of such an event, the business of the Company shall continue without dissolution. Each Member waives any right it may have to agree in writing to dissolve the Company upon the Bankruptcy (as defined in Section 18-101(1) of the Act) of any other Member or the occurrence of any other event that causes such other Member to cease to be a Member of the Company.

          Section 6.2 Winding Up. Upon dissolution of the Company, the Company shall be liquidated in an orderly manner. The Board of Managers shall be the liquidator pursuant to this Agreement and shall proceed diligently to wind up the affairs of the Company and make final distributions as provided herein and in the Act. The costs of liquidation shall be borne at the Company’s expense. The steps to be accomplished by the liquidator are as follows:

               (a) First, the liquidator shall satisfy all of the Company’s known or reasonably anticipated debts and liabilities to creditors other than Members (whether by payment or the reasonable provision for payment thereof) including, without limitation, any outstanding Permitted Obligations;

               (b) Second, the liquidator shall satisfy all of the Company’s debts and liabilities to Members (whether by payment or the reasonable provision for payment thereof); and

               (c) Third, all remaining assets, if any, shall be distributed to the Members in accordance with Section 3.1.

          Section 6.3 Termination. The Company shall terminate when all of the assets of the Company, after payment of or due provision for all debts, liabilities and obligations of the Company, shall have been distributed in the manner provided for in this Article VI, and the Certificate of the Company shall have been canceled in the manner required by the Act.

ARTICLE VII
VALUATION

          Section 7.1 Valuation. For purposes of this Agreement, the value of any property contributed by or distributed to any Member shall be valued as specified in the Settlement Agreement, or, if not so specified, as determined by the Board of Managers.

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ARTICLE VIII
CERTIFICATION OF MEMBERSHIP INTERESTS

          Section 8.1 Membership Interest. The membership interests in the Company shall not be certificated; provided that the Board of Managers may approve a form of certificate and issue the same in its discretion.

ARTICLE IX
BOOKS OF ACCOUNT; MEETINGS

          Section 9.1 Books. Subject to the Services Agreement, the Board of Managers will maintain on behalf of the Company complete and accurate books of account of the Company’s affairs at the Company’s principal office, which books will be open to inspection by any Member (or such Member’s authorized representative) or Monsanto at any time during ordinary business hours and shall be maintained in accordance with the Act.

          Section 9.2 Fiscal Year. The fiscal year of the Company shall end on December 31 of each year.

          Section 9.3 Tax Allocation and Reports. (a) The income, gains, losses, deductions and credits of the Company will be allocated, for federal, state and local income tax purposes, among the Members in accordance with the allocation of such income, gains, losses, deductions and credits among the Members for computing their Capital Accounts, except as otherwise provided in the Code or other applicable law.

               (b) In accordance with Section 704(c) of the Code and the Treasury Regulations thereunder, income, gain, loss, deduction and expense with respect to any property contributed to the capital of the Company shall, solely for tax purposes, be allocated among the Members so as to take account of any variation between the adjusted basis of such property to the Company for federal income tax purposes and its fair market value at the time of contribution.

               (c) Within 120 days after the end of each fiscal year, the Tax Matters Partner (as defined below) shall cause the Company to furnish each Member and Monsanto with a copy of the Company’s tax return and form K-1 for such fiscal year, unless Company files as part of a consolidated return.

               (d) The Company hereby designates the Sole Member to act as the “Tax Matters Partner” (as defined in Section 6231(a)(7) of the Code) in accordance with Sections 6221 through 6233 of the Code.

               (e) If and for so long as the Company has only one Member, the Company shall make an election on IRS Form 8832 to be treated as a domestic entity with a single owner electing to be disregarded as a separate entity.

               (f) Within 75 days after the end of each fiscal year, the Company shall deliver, or cause to be delivered, to Monsanto unaudited financial statements of the Company which shall include a balance sheet, an income statement and a statement of cash flows.

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ARTICLE X
MISCELLANEOUS

          Section 10.1 Amendments. Subject to Section 1.5 of this Agreement, this Agreement may be amended or modified and any provision hereof may be waived by the affirmative vote of Members holding a majority of the Percentage Interests; provided, however, that any amendment or modification reducing disproportionately a Member’s Percentage Interest or other interest in the profits or losses or in distributions or increasing such Member’s capital contribution shall be effective only with such Member’s consent.

          Section 10.2 Successors. Except as otherwise provided herein, this Agreement will inure to the benefit of and be binding upon the Members and their respective legal representatives, heirs, successors and permitted assigns.

          Section 10.3 Governing Law; Severability. The Agreement will be construed in accordance with the laws of the State of Delaware, and, to the maximum extent possible, in such manner as to comply with the terms and conditions of the Act. If it is determined by a court of competent jurisdiction that any provision of this Agreement is invalid under applicable law, such provision will be ineffective only to the extent of such prohibition or invalidity, without invalidating the remainder of this Agreement.

          Section 10.4 Notices. All notices, demands and other communications to be given and delivered under or by reason of provisions under this Agreement shall be in writing and shall be deemed to have been given when personally delivered, mailed by first class mail (postage prepaid and return receipt requested), sent by telecopy or sent by reputable overnight courier service (charges prepaid) to the addresses or telecopy numbers set forth in Schedule 1 hereto or to such other addresses or telecopy numbers as have been supplied in writing to the Company.

          Section 10.5 Complete Agreement; Headings, Counterparts. This Agreement terminates and supersedes all other agreements concerning the subject matter hereof previously entered into among any of the parties. Descriptive headings are for convenience only and will not control or affect the meaning or construction of any provision of this Agreement. Wherever from the context it appears appropriate, each term stated in either the singular or the plural shall include the singular and the plural, and pronouns stated in either the masculine, feminine or the neuter gender shall include the masculine, the feminine and the neuter. This Agreement may be executed in any number of counterparts, any one of which need not contain the signatures of more than one party, but all such counterparts together will constitute one agreement.

          Section 10.6 Partition. Except as otherwise expressly provided in this Agreement, to the fullest extent permitted by law, each Member hereby irrevocably waives any right or power that such Member might have to cause the Company or any of its assets to be partitioned, to cause the appointment of a receiver for all or any portion of the assets of the Company as a result of the actual or potential insolvency of the Company, to compel any sale of all or any portion of the assets of the Company pursuant to any applicable law or to file a complaint or to institute any proceeding at law or in equity to cause the dissolution, liquidation, winding up or termination of the Company. No Member shall have any interest in any specific

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assets of the Company, and no Member shall have the status of a creditor with respect to any distribution pursuant to Section 3.1 hereof. The interest of the Members in the Company is personal property.

          Section 10.7 Benefits of Agreement; No Third-Party Rights; Monsanto as a Party. None of the provisions of this Agreement shall be for the benefit of or enforceable by any creditor of the Company or by any creditor of any Member. Nothing in this Agreement shall be deemed to create any right in any Person (except as otherwise provided in Section 4.2) not a party hereto, and this Agreement shall not be construed in any respect to be a contract in whole or in part for the benefit of any third Person. Monsanto shall be a party to this Agreement solely for purposes of Sections 1.5, 4.1(d), 5.1(a), 5.3, 5.4, 9.1, 9.3(c) and 10.1 of this Agreement.

          Section 10.8 Binding Agreement. Notwithstanding any other provision of this Agreement, each Member agrees that this Agreement constitutes a legal, valid and binding agreement of the Member.

          Section 10.9 No Strict Construction. In the event an ambiguity or question of intent or interpretation arises, this Agreement shall be construed as if drafted jointly by the Persons (if more than one) then parties hereto, and no presumption or burden of proof shall arise favoring or disfavoring any party by virtue of the authorship of any of the provisions of this Agreement.

          Section 10.10 Attorneys’ Fees and Disbursements. If the Company or any Member engages an attorney in connection with any action or proceeding (including arbitration) to enforce or construe this Agreement or their rights or obligations under limited liability company law, the prevailing party in such action or proceeding shall be entitled to recover its reasonable attorneys’ fees and disbursements. In the event different parties are the prevailing parties on different issues, the attorneys’ fees and disbursements shall be apportioned in proportion to the value of the issues decided for and against the parties.

          Section 10.11 Effectiveness. Pursuant to Section 18-201(d) of the Act, this Agreement shall be effective as of 12:01 a.m., New York time, on the Effective Date of the Plan, as defined in the Settlement Agreement.

* * * * * * * * *

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          IN WITNESS WHEREOF, the parties below caused this Agreement to be signed as of the date first above written.

Solutia Inc.
By:	/s/ Rosemary L. Klein
	Name:	Rosemary L. Klein
	Its: Senior Vice President, General Counsel and Secretary
SFC LLC
By:	: /s/ James A. Tichenor
	Name:	James A. Tichenor
	Its: Authorized Manager

APPENDIX A

DEFINITIONS

     When used in this Agreement, the following terms not otherwise defined herein have the following meanings:

          “Act” has the meaning set forth in Section 1.1.

          “Affiliate” means, with respect to any Person, any other Person directly or indirectly Controlling or Controlled by or under direct or indirect common Control with such Person.

          “Agreement” has the meaning set forth in the preamble to this Agreement.

          “Assignee” means person or entity to whom a Company interest has been transferred in a Transfer, unless and until such person or entity becomes a Member with respect to such Company interest.

          “Book Value” means, with respect to any Company property, the Company’s adjusted basis for federal income tax purposes, except that the initial Book Value of any property contributed by a Member to the Company shall be the value of such property on the date of such contribution, as agreed by the Board of Managers and the Member contributing the property, and the Book Value of any Company property shall be adjusted pursuant to Treasury Regulation Section 1.704-1(b)(2)(iv)(e) (in connection with a distribution of such property) or (f) (in connection with a revaluation of Capital Accounts).

          “Board of Managers” has the meaning set forth in Section 4.1(a).

          “Capital Account” has the meaning set forth in Section 2.1.

          “Certificate” has the meaning set forth in Section 1.1.

          “Code” means the Internal Revenue Code of 1986, as amended from time to time, and the regulations promulgated thereunder.

          “Company” has the meaning set forth in Section 1.1.

          “Control” means the possession, directly or indirectly, or the power to direct or cause the direction of the management or policies of a Person, whether through the ownership of voting securities or general partnership or managing member interests, by contract or otherwise. “Controlling” and “Controlled” shall have correlative meanings. Without limiting the generality of the foregoing, a Person shall be deemed to Control any other Person in which it owns, directly or indirectly, a majority of the ownership interests.

          “Deposited Property” means the contribution, in the form of cash and/or interest bearing demand promissory notes and any other property transferred to the Company pursuant to

the terms and conditions of the Settlement Agreement, and all Profits and other proceeds thereof (if any).

          “Event of Withdrawal” means the death or dissolution of a Member.

          “Governmental Authority” means the government of the United States of America, any other nation or any political subdivision thereof, whether state or local, and any agency, authority, instrumentality, regulatory body, court, central bank or other entity exercising executive, legislative, judicial, taxing, regulatory or administrative powers or functions of or pertaining to government.

          “Independent Manager” means a natural person who is not at the time of initial appointment as a manager or at any time while serving as a manager of the Company and has not been at any time during the five (5) years preceding such initial appointment:

(a)	a stockholder, officer, trustee, employee, partner, member, attorney or counsel of the Company, any Member or any Affiliate of either of them;
(b)	a creditor, customer, supplier, or other person who derives any of its purchases or revenues from its activities with the Member, the Company or any Affiliate of either of them;
(c)	a Person Controlling or under common Control with any Person excluded from serving as Independent Director under clause (a) or (b) above; or
(d)	a member of the immediate family by blood or marriage of any Person excluded from serving as Independent Manager under clause (a) or (b) above.

A natural person who satisfies the foregoing definition other than subparagraph (b) shall not be disqualified from serving as an Independent Manager of the Company if such individual is an Independent Manager provided by a nationally-recognized company that provides professional independent managers (a “Professional Independent Manager”) and other corporate services in the ordinary course of its business. A natural person who otherwise satisfies the foregoing definition other than subparagraph (a) by reason of being an independent manager of a “special purpose entity” affiliated with the Company shall not be disqualified from serving as an Independent Manager of the Company if either (i) such individual is a Professional Independent Manager or (ii) the fees that such individual earns from serving as independent manager of Affiliates of the Company in any given year constitute in the aggregate less than five percent (5%) of such individual’s annual income for that year. Notwithstanding the immediately preceding sentence, an Independent Manager may not simultaneously serve as an Independent Manager of the Company and an independent manager of a special purpose entity that owns a direct or indirect equity interest in the Company or a direct or indirect interest in any co-borrower with the Company. For purposes of this paragraph, a “special purpose entity” is an entity, whose organizational documents contain restrictions on its activities and impose requirements intended to preserve such entity’s separateness that are substantially similar to the Special Purpose Provisions of this Agreement.

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          “Independent Manager Agreement” means the Independent Manager Agreement attached hereto as Schedule 2.

          “Insolvency Law” means any federal or state bankruptcy, insolvency or similar law.

          “Losses” for any period means all items of Company loss, deduction and expense for such period determined according to Section 2.2 of this Agreement.

          “Majority in Interest” means a majority of Percentage Interests of all Members.

          “Material Action” means to institute proceedings to have the Company be adjudicated bankrupt or insolvent, or consent to the institution of bankruptcy or insolvency proceedings against the Company or file a petition seeking, or consent to, reorganization or relief with respect to the Company under any applicable federal or state Law relating to bankruptcy, or consent to the appointment of a receiver, liquidator, assignee, trustee, sequestrator (or other similar official) of the Company or a substantial part of its property, or make any assignment for the benefit of creditors of the Company, or admit in writing the Company’s inability to pay its debts generally as they become due, or, to the fullest extent permitted by Law, take action in furtherance of any such action, or dissolve or liquidate the Company, or create any partnership, joint venture or subsidiary, or convey, sell, lease, transfer, encumber or otherwise dispose of the Deposited Property (except as expressly permitted by the Settlement Agreement), or enter into any transaction not expressly permitted by the Settlement Agreement.

          “Member” means a Member, an Assignee and, solely for the purposes of Section 4.2, a Terminated Member.

          “Monsanto” means the Monsanto Company, a Delaware corporation.

          “Officer’s Certificate” means a certificate signed by any officer of the Company who is authorized to act for the Company in matters relating to the Company.

          “Percentage Interest” means, in respect of each Member, such Member’s interest in the income, gains, losses, deductions and expenses of the Company as set forth on Schedule 1.

          “Permitted Obligations” means any and all obligations expressly permitted to be undertaken by the Company pursuant to the Settlement Agreement.

          “Person” means any individual, corporation, partnership, joint venture, limited liability company, limited liability partnership, association, joint-stock company, trust, unincorporated organization, or other organization, whether or not a legal entity, and any governmental authority.

          “Profits” for any period means all items of Company income and gain for such period determined according to Section 2.2.

          “Registered Agent” has the meaning given to it in Section 1.7 of this Agreement.

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          “Services Agreement” means the Services Agreement dated as of February 28, 2008 between Solutia Inc. and the Company.

          “Settlement Agreement” means the Amended and Restated Settlement Agreement, dated as of February 28, 2008, by and among Solutia Inc., Monsanto Company and the Company, a copy of which is attached hereto as Exhibit A, as the same may be amended from time to time.

          “Sole Member” means Solutia.

          “Solutia” means Solutia Inc., a Delaware corporation.

          “Terminated Member” means a person who has ceased to be a Member pursuant to Section 5.5.

          “Transfer” has the meaning set forth in Section 5.1.

          B. Rules of Construction. Definitions in this Agreement apply equally to both the singular and plural forms of the defined terms. The words “include” and “including” shall be deemed to be followed by the phrase “without limitation”, except when used in the computation of time periods. The terms “herein,” “hereof” and “hereunder” and other words of similar import refer to this Agreement as a whole and not to any particular Section, paragraph or subdivision. The Section titles appear as a matter of convenience only and shall not affect the interpretation of this Agreement. All Article, Section, paragraph, clause, Exhibit or Schedule references not attributed to a particular document or the Act shall be references to such parts of this Agreement. Capitalized terms used but not defined herein shall have the meaning ascribed thereto in the Settlement Agreement.

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EX-10.6

Exhibit 10.6

SOLUTIA INC.

ANNUAL INCENTIVE PLAN

Purpose

     This annual incentive plan (the “Plan”) is applicable to those employees of Solutia Inc. (the “Company”) and its subsidiaries who are executive officers of the Company (“Covered Employees”), including members of the Board of Directors who are such employees.

     The Plan is designed to reward, through additional cash compensation, Covered Employees for their significant contribution toward improved profitability and growth of the Company.

Eligibility

     All Covered Employees shall be eligible to be selected to participate in this Plan. The Committee shall select the Covered Employees who shall participate in this Plan in any year no later than 90 days after the commencement of the fiscal year of the Company (or no later than such earlier or later date as may be the applicable deadline (the “Determination Date”) for the establishment of performance goals permitting the compensation payable to such Covered Employee for such year hereunder to qualify as “qualified performance-based compensation” under Treasury Regulation 1.162-27(e).

Administration

     The Plan shall be administered by the Executive Compensation and Development Committee of the Board of Directors (the “Board”), or by another committee appointed by the Board (the Executive Compensation and Development Committee of the Board or such other committee, the “Committee”). The Committee shall be comprised exclusively of members of the Board who are “outside directors” within the meaning of Section 162(m)(4)(C) of the Internal Revenue Code of 1986, as amended (the “Code”) and Treasury Regulation 1.162-27(e)(3). The Committee shall have the authority, subject to the provisions herein, (a) to select employees to participate in the Plan; (b) to establish and administer the performance goals and the award opportunities applicable to each participant and certify whether the goals have been attained; (c) to construe and interpret the Plan and any agreement or instrument entered into under the Plan; (d) to establish, amend, and waive rules and regulations for the Plan’s administration; and (e) to make all other determinations which may be necessary or advisable for the administration of the Plan. Any determination by the Committee pursuant to the Plan shall be final, binding and conclusive on all employees and participants and anyone claiming under or through any of them.

Establishment Of Performance Goals And Award Opportunities

     No later than the Determination Date for each year, the Committee shall establish, in writing, the method for computing the amount of compensation which will be payable under the Plan to each participant in the Plan for such year if the performance goals established by the

Committee for such year are attained in whole or in part and if the participant’s employment by the Company or a subsidiary continues without interruption during that year. Such method shall be stated in terms of an objective formula or standard that precludes discretion to increase the amount of the award that would otherwise be due upon attainment of the goals and may be different for each participant. No provision of this Plan shall preclude the Committee from exercising negative discretion with respect to any award hereunder, within the meaning of Treasury Regulation 1.162-27(e)(2)(iii)(A).

     No later than the Determination Date for each year, the Committee shall establish in writing the performance goals for such year. Such Performance Goals may be based on such factors including, but not limited to: (a) revenue, (b) earnings per Share, (c) net income per Share, (d) Share price, (e) pre-tax profits, (f) net earnings, (g) net income, (h) operating income, (i) cash flow, (j) earnings before interest, taxes, depreciation and amortization, (k) sales, (l) total stockholder return relative to assets, (m) total stockholder return relative to peers, (n) financial returns (including, without limitation, return on assets, return on equity and return on investment), (o) cost reduction targets, (p) customer satisfaction, (q) customer growth, (r) employee satisfaction, (s) gross margin, (t) revenue growth, or (u) any combination of the foregoing, or such other criteria as the Committee may determine. Performance Goals may be in respect of the performance of the Company, any of its Subsidiaries or Affiliates or any combination thereof on either a consolidated, business unit or divisional level. Performance Goals may be absolute or relative (to prior performance of the Company or to the performance of one or more other entities or external indices) and may be expressed in terms of a progression within a specified range.

Maximum Award

     The maximum amount of compensation that may be paid under the Plan to any participant for any year is $7,500,000.

Attainment Of Performance Goals Required

     Awards shall be paid under this Plan for any year solely on account of the attainment of the performance goals established by the Committee with respect to such year. Awards shall also be contingent upon the participant remaining employed by the Company or a subsidiary of the Company on the date specified by the Committee for such year, provided that if no such date is specified, the payment date of such award. In the event of termination of employment by reason of death during the Plan year or in the event a participant is on a short term leave of absence for such year, an award may be payable under this Plan to the participant or the participant’s estate reflecting the employee’s actual service for such year provided that the applicable performance goals were otherwise satisfied, which shall be paid at the same time as the award the participant would have received for such year had no termination of employment occurred and which shall be equal to the amount of such award multiplied by a fraction the numerator of which is the number of full or partial calendar months elapsed in such year prior to termination of employment and the denominator of which is the number twelve. A participant whose employment terminates prior to the end of a Plan year for any reason not excepted above shall not be entitled to any award under the Plan for that year. The foregoing criteria shall have any reasonable definitions that the Committee may specify, which may include or exclude any or all of the following items, as the Committee may specify: extraordinary, unusual or non-recurring items; effects of accounting

changes; effects of currency fluctuations; effects of financing activities (e.g., effect on earnings per share of issuing convertible debt securities); expenses for restructuring, productivity initiatives or new business initiatives; non-operating items; acquisition expenses; and effects of divestitures. Any such performance criterion or combination of such criteria may apply to the participant’s award opportunity in its entirety or to any designated portion or portions of the award opportunity, as the Committee may specify.

Committee Certification Contingencies: Payment Of Awards

     Subject to the provisions above relating to death and short term leave of absence, payment of any award under this Plan shall also be contingent upon the Committee’s certifying in writing that the performance goals and any other material terms applicable to such award were in fact satisfied, in accordance with applicable treasury regulations under Code Section 162(m). Unless and until the Committee so certifies, such award shall not be paid. Unless the Committee provides otherwise or a Covered Employee elects otherwise in accordance with procedures adopted by the Company, (a) earned awards shall be paid promptly following such certification, and (b) such payment shall be made in cash (subject to any payroll tax withholding the Company may determine applies).

     To the extent necessary for purposes of Code Section 162(m), this Plan shall be resubmitted to shareholders for their reapproval with respect to awards payable for the taxable years of the Company commencing on and after 5th anniversary of initial shareholder approval.

Amendment. Termination And Term Of Plan

     The Board of Directors may amend, modify or terminate this Plan at any time. The Plan will remain in effect until terminated by the Board.

Interpretation And Construction

     Any provision of this Plan to the contrary notwithstanding, (a) awards under this Plan are intended to qualify as “qualified performance-based compensation” under Treasury Regulation 1.162-27(e) and (b) any provision of the Plan that would prevent an award under the Plan from so qualifying shall be administered, interpreted and construed to carry out such intention and any provision that cannot be so administered, interpreted and construed shall to that extent be disregarded. No provision of the Plan, nor the selection of any eligible employee to participate in the Plan, shall constitute an employment agreement or affect the duration of any participant’s employment, which shall remain “employment at will” unless an employment agreement between the Company and the participant provides otherwise. Both the participant and the Company shall remain free to terminate employment at any time to the same extent as if the Plan had not been adopted.

Governing Law

     The terms of this Plan shall be governed by the laws of the State of Delaware, without reference to the conflicts of laws principles thereof.