NOTICE & PROXY STATEMENT

SCHEDULE 14A INFORMATION

Proxy Statement Pursuant to Section 14(a) of the

Securities Exchange Act of 1934 (Amendment No.    )

Filed by the Registrant    x

Filed by a Party other than the Registrant    ¨

Check the appropriate box:

¨    Preliminary Proxy Statement ¨    CONFIDENTIAL, FOR USE OF THE COMMISSION ONLY     (AS PERMITTED BY RULE 14A-6(E)(2))

x    Definitive Proxy Statement

¨    Definitive Additional Materials

¨    Soliciting Material Pursuant to Section 240.14a-11(c) or Section 240.14a-12

SIGMA-ALDRICH CORPORATION

(Name of Registrant as Specified In Its Charter)

(Name of Person(s) Filing Proxy Statement, if other than the Registrant)

Payment of Filing Fee (Check the appropriate box):

x No fee required

¨ Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.

(1) Title of each class of securities to which transaction applies:

(2) Aggregate number of securities to which transaction applies:

(3) Per unit price or other underlying value of transaction computed pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the filing fee is calculated and state how it was determined):

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¨     Fee paid previously with preliminary materials.

¨ Check box if any part of the fee is offset as provided by Exchange Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid previously. Identify the previous filing by registration statement number, or the Form of Schedule and the date of its filing.

(1) Amount Previously Paid:

(2) Form, Schedule or Registration Statement No.:

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(4) Date Filed:

SIGMA-ALDRICH CORPORATION

3050 Spruce Street

St. Louis, Missouri 63103

NOTICE OF ANNUAL MEETING OF SHAREHOLDERS

To be held May 2, 2006

NOTICE IS HEREBY GIVEN that the Annual Meeting of Shareholders of Sigma-Aldrich Corporation will be held at the Sigma-Aldrich Life Science and High Technology Center, 2909 Laclede Avenue, St. Louis, Missouri 63103, on Tuesday, May 2, 2006 at 11:00 A.M., Central Daylight Time, for the following purposes:

1. To elect ten directors;

2. To ratify the appointment of KPMG LLP as the Company’s independent registered public accountant for 2006;

3. To consider and vote upon the approval of the Company’s amended and restated 2003 Long-Term Incentive Plan to increase the types of performance measures, extend the exercise period of options and stock appreciation rights for death, disability and retirement, and provide for the payment time and manner of performance shares for death and disability; and

4. To transact such other business as may properly come before the meeting and any adjournments thereof.

Only shareholders of record as of the close of business on March 3, 2006 are entitled to notice of, and to vote at, the meeting.

By Order of the Board of Directors,

Michael R. Hogan, Secretary

March 31, 2006

Your vote is important. You may vote in any one of the following ways:

• Use the toll-free telephone number shown on the proxy card.

• Use the internet web site shown on the proxy card.

• Mark, sign, date and promptly return the enclosed proxy card in the postage-paid envelope.

Shareholders who attend the meeting may revoke their proxies and vote in person if they desire.

SIGMA-ALDRICH CORPORATION

PROXY STATEMENT

Annual Meeting of Shareholders

May 2, 2006

The enclosed proxy is solicited by the Board of Directors (the “Board”) of Sigma-Aldrich Corporation (the “Company”) for use at the Annual Meeting of Shareholders (the “Meeting”) to be held at the Sigma-Aldrich Life Science and High Technology Center, 2909 Laclede Avenue, St. Louis, Missouri 63103, at 11:00 A.M. Central Daylight Time, on Tuesday, May 2, 2006, and any adjournments thereof. Any shareholder giving the proxy has the power to revoke it at any time before it is voted (i) by written notice mailed to and received by Sigma-Aldrich Corporation c/o ADP, 51 Mercedes Way, Edgewood, New York 11717, (ii) by submitting a later-dated proxy, or (iii) by attending the Meeting and casting a contrary vote. If the proxy is not so revoked or not revoked in person at the Meeting, such proxy will be voted either as designated or, if no designation is made, will be voted in favor of the nominees for directors, for the ratification of KPMG LLP as independent registered public accountant for 2006, and for the approval of the amended and restated 2003 Long-Term Incentive Plan.

Shareholders of record as of the close of business on March 3, 2006 are entitled to notice and will be entitled to vote at the Meeting and at any adjournments thereof. As of the close of business on March 3, 2006, there were a total of 66,873,062 shares of common stock outstanding and entitled to vote. Shareholders of record will be entitled to one vote for each share held on all matters, including the election of directors.

If you are a shareholder of record, you may vote your shares of common stock by telephone or through the Internet. You may also vote your shares by mail. Please see the proxy/voting instruction card accompanying this Proxy Statement for specific instructions on how to cast your vote by any of these methods.

Votes submitted via the Internet or by telephone must be received by 11:59 p.m., Eastern Time, on May 1, 2006. Submitting your vote via the Internet or by telephone will not affect your right to vote in person should you decide to attend the Annual Meeting. You may change your vote or revoke your proxy as described above or by submitting a valid, subsequent vote by telephone or through the Internet.

If you participate in the Sigma-Aldrich Stock Fund in the Sigma-Aldrich 401(k) Retirement Savings Plan, Fidelity Management Trust Company will vote any shares credited to your account as of the record date in accordance with your voting instructions, which can be provided by returning the proxy card by mail or voting by telephone or through the Internet as described above. If voting instructions are not received by April 27, 2006, the shares credited to your account will not be voted. Any unallocated shares will be voted in proportion to the responses received from participants.

The Internet and telephone voting procedures are designed to authenticate stockholders by use of a control number and to allow you to confirm that your instructions have been properly recorded. Shareholders voting via the Internet and by telephone should understand that there may be costs associated with voting in these manners, such as usage charges from Internet access providers and telephone companies, that must be borne by the shareholder.

The cost of solicitation of proxies will be borne by the Company. In addition to the use of the mails, proxies may be solicited personally or by telephone by employees of the Company without additional

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compensation. The Company has also retained MacKenzie Partners, Inc. to assist in soliciting proxies. The solicitor’s fee is estimated at $7,000 plus expenses, depending upon the extent of the solicitor’s activities. Brokers, dealers, banks and their nominees will be requested to forward proxy material to the beneficial owners of stock held by them of record, and the Company will reimburse them for their reasonable out-of-pocket and clerical expenses upon their request.

This Proxy Statement and accompanying form of proxy are first being sent to shareholders on or about March 31, 2006.

The mailing address of the Company’s principal executive office is 3050 Spruce Street, St. Louis, Missouri 63103.

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ELECTION OF DIRECTORS

Ten directors of the Company are to be elected to hold office until the next annual meeting or until their successors are elected and qualified. The persons named as proxies in the accompanying proxy card intend to vote for the election of the nominees named below. If for any reason any of the nominees are unable to serve or for good cause will not serve, the persons named as proxies may exercise discretionary authority to vote for substitutes proposed by the Board of Directors.

Nominees for Board of Directors

The following are the nominees for directors of the Company, their principal occupation, background, period of service as a director of the Company, other directorships and age. All of the nominees are presently directors of the Company and, except for Jai P. Nagarkatti and Avi M. Nash, were elected to their present terms as directors at the 2005 Annual Meeting of Shareholders. The Board of Directors of the Company has determined that each of the Company’s directors, other than Drs. David R. Harvey and Jai P. Nagarkatti, and each member of the Audit Committee, Compensation Committee and Corporate Governance Committee is an “independent director” under rules of the Nasdaq Stock Market. In addition, the Board of Directors has determined that, in its judgment, each member of the Audit Committee is independent within the meaning of Section 10A of the Securities and Exchange Act of 1934, as amended. There is no family relationship between any of the officers or directors.

Nina V. Fedoroff	Willaman Professor of Life Sciences and Evan Pugh Professor, Pennsylvania State University, University Park, Pennsylvania, for more than five years. Member of the National Science Board. She has been a director of the Company since 1996. Age 63.
David R. Harvey	Chairman of the Company for more than five years. He served as Chief Executive Officer for more than five years until December 31, 2005 and served as President for more than five years until August 2004. He has been a director of the Company since 1981. He is also a director of CF Industries. Age 66.
W. Lee McCollum	Executive Vice President and Chief Financial Officer of S.C. Johnson & Son, Inc., a manufacturer and marketer of consumer package goods, Racine, Wisconsin, for more than five years. He has been a director of the Company since 2001. He is also a director of Johnson Bank, Johnson Outdoors, Inc. and Cofresco Frischhalteprodukte GMBH. Age 56.
Jai P. Nagarkatti	President and Chief Executive Officer of the Company since January 1, 2006. He served as President and Chief Operating Officer from August 2004 to December 31, 2005. Previously he served as the President of the Company’s Scientific Research and Fine Chemicals business units from December 2002 to August 2004 and November 1999 to December 2002, respectively. He has been a director of the Company since November 2005. He was recommended for election as a director by the Board’s Corporate Governance Committee. Age 59.
Avi M. Nash	Managing Director of Avi Nash LLC, a management consulting firm in Greenwich, Connecticut, that works with global chemical industry leaders in mergers and acquisitions, capital market transactions and other strategic matters. Prior to launching his firm in 2003, he was a partner at Goldman Sachs, New York, New York, for more than five years. He has been a director of the Company since November 2005. He was recommended for election as a director by the Board’s Corporate Governance Committee. Age 53.

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William C. O’Neil, Jr.	Private Investor. He has been a director of the Company since 1987. He is also a director of Advocat, Inc., American Home Patient and Healthways, Inc. Age 71.
J. Pedro Reinhard	Former Executive Vice President and Chief Financial Officer of The Dow Chemical Company, a manufacturer of chemicals, plastic materials, agricultural and other specialized products, Midland, Michigan. He was Executive Vice President and Chief Financial Officer of the Dow Chemical Company for more than five years until December and October 2005, respectively. He has been a director of the Company since 2001. He is also a director of The Coca-Cola Company, Colgate Palmolive Co., The Dow Chemical Company and Royal Bank of Canada. Age 60.
Timothy R.G. Sear	Former Chairman of Alcon Laboratories, Inc., a manufacturer of ophthalmic pharmaceuticals, surgical instruments and accessories and consumer vision care products, Fort Worth, Texas. He was Chairman of Alcon Laboratories, Inc. for more than five years until April 2005. He also served as President and Chief Executive Officer of Alcon Laboratories, Inc. for more than five years until October 2004. He has been a director of the Company since May 2005. He is also a director of GTX. Age 69.
D. Dean Spatz	Private Investor. He was founder, Chairman and Chief Executive Officer of Osmonics, Inc., a manufacturer of water purification, fluid separation and fluid handling products and equipment, Minnetonka, Minnesota, for more than five years until February 2003 when Osmonics, Inc. was acquired by GE Infrastructure, a unit of General Electric Company. He has been a director of the Company since 1994. He also serves as a director of three privately held companies. Age 61.
Barrett A. Toan	Chairman of Express Scripts, Inc., a pharmacy benefits management company, St. Louis, Missouri, for more than five years. He also served as Chief Executive Officer at Express Scripts, Inc. for more than five years until March 2005 and as President of Express Scripts, Inc. for more than five years until April 2002. He has been a director of the Company since 2001. He is also a director of Express Scripts, Inc. Age 58.

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The Board of Directors recommends a vote FOR each of the nominees listed above.

Directors Meetings and Committees

The Board has standing Audit, Compensation and Corporate Governance committees. The following table provides information regarding the membership of and number of meetings during 2005 of the Company’s Board of Directors and its committees:

Name	Board of Directors		Audit Committee		Compensation Committee		Corporate Governance Committee
Nina V. Fedoroff	x						x
David R. Harvey	x	*
W. Lee McCollum	x		x	*
Jai P. Nagarkatti (1)	x
Avi M. Nash (1)	x		x
William C. O’Neil, Jr.	x				x	*	x
J. Pedro Reinhard	x				x		x	*
Jerome W. Sandweiss (2)	x		x
Timothy R.G. Sear	x				x
D. Dean Spatz	x		x
Barrett A. Toan (3)	x		x		x		x
Number of 2005 Meetings	8		5		4		4

 * indicates Chairman

(1) Both Jai P. Nagarkatti and Avi M. Nash were elected directors of the Company in November 2005 by the Board of Directors. Mr. Nash joined the Audit Committee on February 14, 2006.

(2) Jerome W. Sandweiss retired from the Board of Directors at the 2005 Annual Meeting of Shareholders.

(3) Barrett A. Toan began serving on the Audit Committee and ceased serving on the Compensation and Corporate Governance Committees following the 2005 Annual Meeting of Shareholders.

Each Director attended at least 75% of the total meetings of the Board and each of the Committees during their period of service in 2005. Excluding Avi M. Nash and Timothy R.G. Sear, each Director attended the Company’s 2005 Annual Meeting of Shareholders. Each existing Director is expected to attend the Company’s 2006 Annual Meeting of Shareholders.

Audit Committee

The Audit Committee assists the Board of Directors in fulfilling its oversight responsibilities with regard to (1) the integrity of the Company’s financial statements, (2) the Company’s compliance with legal and regulatory requirements, (3) the independent registered public accountant’s qualifications and independence, (4) the performance of the Company’s internal audit function and independent registered public accountant, and (5) the Company’s accounting and financial reporting processes and audits of the Company’s financial statements. The Committee is directly responsible and has sole authority for the appointment, compensation, retention and oversight of the Company’s independent registered public accountant and meets with Company management, the internal auditors and the independent registered public accountant to (1) review the Company’s financial statements contained in the Company’s public earnings reports and the Company’s Annual Report on Form 10-K and quarterly reports on Form 10-Q, (2) review major issues regarding significant financial reporting matters and judgments made in connection with the preparation of the Company’s financial statements, (3) review legal matters that are reasonably likely to have a material effect on the Company’s financial statements, (4) review disclosures made by the Company’s Chief Executive

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Officer and Chief Financial Officer during their certification process for the Form 10-K or Form 10-Q’s, (5) discuss the adequacy and effectiveness of the Company’s internal financial controls and disclosure controls and procedures, (6) approve the annual internal audit plan and (7) receive regular reports of major findings by internal audit and of how management is addressing the conditions reported. The Board of Directors has determined that committee members meet the Nasdaq Stock Market independence requirements and that Mr. W. Lee McCollum is an “audit committee financial expert”, as defined in Item 401(h) of Regulation S-K under the Exchange Act. The Committee operates pursuant to a written charter, which was included as Appendix A to the Company’s March 29, 2004 Proxy Statement.

Compensation Committee

The Compensation Committee approves the policies and oversees the practices of the Company with respect to the compensation made available to the Company’s management so as to enable the Company to attract and retain high quality leadership in a manner consistent with the stated compensation strategy of the Company, internal equity considerations, competitive practice and the requirements of appropriate regulatory bodies. The Committee also administers the Company’s 2003 Long-Term Incentive Plan. The Board of Directors has determined that each member of the Compensation Committee is independent under rules of the Nasdaq Stock Market.

Corporate Governance Committee

The Corporate Governance Committee makes recommendations to the Board of Directors concerning the selection, qualification and compensation of members of the Board and its committees, as well as the size and composition of the Board and its committees. The Committee will consider nominees recommended by shareholders for election to the Board of Directors provided the names of such nominees, accompanied by relevant biographical information, are submitted in writing to the Secretary of the Company consistent with the timing set forth in the Company’s amended By-laws as described on page 42 under SHAREHOLDER PROPOSALS. In February of each year, the Committee generally proposes to the Board nominees for directors to be elected at the Company’s Annual Meeting of Shareholders. Therefore, in order to be considered by the Committee, prospective nominee recommendations should be received by the Secretary no later than February 1st. The Committee also periodically reviews the Corporate Governance Guidelines and the Business Conduct Policy adopted by the Board and makes recommendations to the Board concerning any changes deemed appropriate in such Guidelines and Policy and the Board’s and the Company’s operations as provided therein. The Board of Directors has determined that committee members meet the Nasdaq Stock Market independence requirements. The Committee operates pursuant to a written charter, which was included as Appendix B to the Company’s March 29, 2004 Proxy Statement.

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Director Compensation and Transactions

Directors who are employed by the Company receive no compensation or fees for serving as a director or for attending board or committee meetings. Directors who are not employed by the Company receive cash and stock compensation, as described below.

Cash Compensation

Except for Avi M. Nash, Jerome W. Sandweiss (who retired as a director at the 2005 Annual Meeting of Shareholders) and Timothy R.G. Sear, each non-employee director received retainer fees of $35,000 in 2005 for being a member of the Board and its committees. Messrs. Nash, Sandweiss and Sear received reduced retainer fees in 2005 for being a member of the Board and its committees of $20,000, $15,000 and $20,000, respectively. In addition, each non-employee director also receives a fee for his or her participation in Board and committee meetings. The following table provides information related to the meeting fees paid to non-employee directors:

	Board of Directors		Audit Committee (1)		Compensation Committee (2)		Corporate Governance Committee (2)
Participation in person (3)	$	3,000	$	1,000	$	1,000	$	1,000
Participation via conference call	$	1,500	$	500	$	500	$	500

(1) During the first half of 2005, the Audit Committee Chairman received $3,000 for every meeting attended in person and $1,500 for every conference call in which he participated. During the second half of 2005, the Audit Committee Chairman received $4,000 for every meeting attended in person and $2,000 for every conference call in which he participated.

(2) During the first half of 2005, the Compensation and Corporate Governance Committee Chairmen each received the amounts indicated above for every meeting attended in person and for every conference call in which they participated. During the second half of 2005, the Compensation and Corporate Governance Committee Chairmen each received $2,000 for every meeting attended in person and $1,000 for every conference call in which they participated.

(3) Non-employee directors participating in person at meetings also received reimbursement of travel expenses.

The following table provides information relating to total cash amounts paid to non-employee directors in 2005:

2005 Non-Employee Director Cash Compensation

	Fedoroff		McCollum		Nash		O’Neil		Reinhard		Sandweiss (1)		Sear		Spatz		Toan
Board Meetings	$	19,000	$	19,000	$	3,000	$	22,000	$	17,500	$	8,500	$	10,500	$	19,000	$	18,000
Audit Committee Meetings		—		15,500		—		—		—		2,500		—		4,500		2,000
Compensation Committee Meetings		—		—		—		6,000		4,000		—		2,000		—		3,000
Corp. Governance Committee Meetings		4,000		—		—		4,000		6,000		—		—		—		2,000
Consulting Fees		15,250		—		—		—		—		1,500		—		—		—
Retainer Fees		35,000		35,000		20,000		35,000		35,000		15,000		20,000		35,000		35,000
Expenses paid in 2005		1,073		1,734		2,132		4,223		313		198		2,101		2,779		—
Total 2005 Payments	$	74,323	$	71,234	$	22,132	$	71,223	$	62,813	$	19,198	$	34,601	$	61,279	$	60,000

(1) Jerome W. Sandweiss retired from the Board of Directors subsequent to the 2005 Annual Meeting of Shareholders.

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Stock Compensation

Pursuant to the Company’s 2003 Long-Term Incentive Plan, the Company currently provides non-employee directors with stock compensation as follows:

• Newly elected directors will be granted options to acquire 10,000 shares of common stock upon the date of his or her initial election to the Board; and

• Eligible directors serving on the Board on the day after any annual shareholder meeting, who have served on the Board for at least six months prior to the annual meeting, will be granted options to acquire 5,000 shares of common stock on such date.

Six of the non-employee directors each received options to purchase 5,000 shares of common stock in 2005. Upon their elections to the Board in 2005, Messrs. Nash and Sear each received options to purchase 10,000 shares of common stock. If elected at the Meeting, seven of the eight continuing non-employee directors will receive options to purchase 5,000 shares of common stock the day after the Meeting. Since Mr. Nash will not have served on the board for at least six months prior to the Meeting, he will not receive options to purchase 5,000 shares of common stock the day after the Meeting. The option price per share is equal to the fair market value of the common stock on the date the option is granted. No option will vest or may be exercised to any extent until the holder has continually served as a director of the Company for at least three months from the date of grant, provided that such options shall vest and become exercisable upon termination of service by reason of death, disability or retirement, subject to the terms and conditions of the plan. The options expire ten years from date of grant.

On January 1, 2006 and in subsequent years, each non-employee director did receive and will receive 600 shares of Sigma-Aldrich Corporation Common Stock in lieu of an increase in cash compensation.

Shareholder Communication with the Board of Directors

Shareholders can communicate directly with the Board of Directors, any individual member of the Board of Directors or any of its committees by mailing correspondence to:

Board of Directors-Sigma-Aldrich Corporation

P. O. Box 775544

St. Louis, MO 63177

USA

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SECURITY OWNERSHIP OF DIRECTORS, EXECUTIVE OFFICERS

AND PRINCIPAL BENEFICIAL OWNERS

Directors and Executive Officers

The following table sets forth the amount of the Company’s common stock beneficially owned by each of the directors and executive officers of the Company shown in the summary compensation table below, and by all directors and executive officers of the Company as a group, all as of March 3, 2006, based upon information obtained from such persons:

Name	Company Position	Shares Beneficially Owned (1)(2)
Nina V. Fedoroff	Director	22,600	(4)
David R. Harvey	Director and Chairman	155,340	(4)
Michael R. Hogan	Chief Administrative Officer, Chief Financial Officer and Secretary	162,335	(3)
David W. Julien	President, Research Specialties	66,391	(3)
W. Lee McCollum	Director	24,600	(4)
Jai P. Nagarkatti	Director, President and Chief Executive Officer	124,005	(3)
Avi M. Nash	Director	10,600	(4)
William C. O’Neil, Jr.	Director	37,600	(4)
J. Pedro Reinhard	Director	23,600	(4)
Timothy R.G. Sear	Director	13,600	(4)
D. Dean Spatz	Director	42,800	(4)
Barrett A. Toan	Director	24,600	(4)
Franklin D. Wicks	President, SAFC	78,250	(3)
Directors and executive officers as a group		994,119	(3)

(1) Each nominee or executive officer has both sole voting power and sole investment power with respect to the shares set forth in the table opposite his or her name, except as follows: Mr. Hogan shares voting and investment power as to 33,735 shares held in joint tenancy with his spouse; Mr. Toan shares voting and investment power as to 1,600 shares held in joint tenancy with his spouse; and Mr. Wicks shares voting and investment power as to 10,400 shares held in joint tenancy with his spouse. Shares owned separately by spouses are not included.

(2) Represents less than one percent (1%) of the Company’s common stock outstanding as of March 3, 2006 for each of the named individuals and less than two percent (2%) for the group.

(3) Includes 128,600, 52,000, 88,750, 65,250 and 776,440 shares subject to stock options that are exercisable as of, or within 60 days of, March 3, 2006, for Messrs. Hogan and Julien and Drs. Nagarkatti and Wicks and for the directors and executive officers as a group, respectively.

(4) Includes 21,000, 117,375, 23,000, 10,000, 33,000, 23,000, 10,000, 33,000, and 23,000 shares subject to stock options that are exercisable as of, or within 60 days of, March 3, 2006, for Ms. Fedoroff, Dr. Harvey and Messrs. McCollum, Nash, O’Neil, Reinhard, Sear, Spatz and Toan, respectively.

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Principal Beneficial Owners and Transactions

The following table sets forth information for each entity that, to the knowledge of the Company, beneficially owned more than five percent (5%) of the Company’s common stock as of March 3, 2006:

Name and Address	Shares Beneficially Owned	Percent of Shares Outstanding
AMVESCAP PLC 11 Devonshire Square London, England EC2M 4YR	6,832,600 (1)	10.16	%
State Farm Mutual Automobile Insurance Company and related entities One State Farm Plaza Bloomington, IL 61710	7,043,703 (2)(3)	10.5	%

(1) As set forth in such company’s Schedule 13G, filed on February 13, 2006. AMVESCAP PLC reports (i) sole voting power over 6,832,600 shares, (ii) shared voting power over none of the shares, (iii) sole dispositive power over 6,832,600 shares and (iv) shared dispositive power over none of the shares.

(2) As set forth in such company’s Schedule 13G, filed on February 2, 2006. State Farm Mutual Automobile Insurance Company represents shares owned by entities affiliated with State Farm Mutual Automobile Insurance Company. The filing indicates that such entities may constitute a group but states that each person disclaims beneficial ownership as to all shares not specifically attributed to such entity in the filing and disclaims that it is part of a group. State Farm Mutual Automobile Insurance Company reports (i) sole voting power over 7,016,580 shares, (ii) shared voting power over 3,067 shares, (iii) sole dispositive power over 7,016,580 shares and (iv) shared dispositive power over 27,123 shares.

(3) As of December 31, 2005, State Farm Mutual Automobile Insurance Company held $100,000,000 of the Company’s 7.687% Senior Notes due September 12, 2010.

Section 16(a) Beneficial Ownership Reporting Compliance

Section 16(a) of the Securities Exchange Act of 1934 requires that the Company’s executive officers, directors and persons who own beneficially more than ten percent of the Company’s outstanding stock, file reports of ownership and changes in ownership with the Securities and Exchange Commission and any national securities exchange on which the Company’s securities are listed and furnish the Company with copies of all Section 16(a) reports so filed. Based solely on a review of these reports filed with the Commission and certain written representations furnished to the Company, the Company believes that its executive officers and directors complied with all applicable Section 16(a) filing requirements during 2005, except for Mr. Nash who filed the initial report late.

Management and Directors Share Ownership Policy

The Company has a shareholding policy for the following management positions:

Position	Shareholding Requirement (salary multiple)
Chairman & CEO	3X
Business Unit Presidents, CAO and CFO	2X
Other Corporate Officers and Key Unit Officers	1X
Vice Presidents, Key Country and Unit Managers	.5X

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The policy was implemented in 2000, with three years allowed for participants in the United States and five years allowed for participants outside of the United States, to achieve the required investment level. At December 31, 2005, all members of these groups met the shareholding requirement, with total holdings for the entire group of 288,065 shares.

Non-employee directors are required to hold shares equivalent to 2X the annual retainer. This policy was implemented in 2004, with three years allowed to achieve the required investment level.

Commencing in 2006, all members of Company’s management team of directors and managers will be required to hold shares equivalent to .25X of their salaries. All such employees will be allowed five years to achieve the required investment level.

INFORMATION CONCERNING EXECUTIVE COMPENSATION

The following table presents compensation information for the Chief Executive Officer and the four other most highly compensated executive officers based on salary and bonus in 2005 for the years ended December 31, 2005, 2004 and 2003:

Summary Compensation Table

		Annual Compensation						Long-Term Compensation
Name/Position	Year	Salary		Bonus (1)		Other Annual Comp. (2)(3)		Restricted Stock Award (4)		Securities Underlying Options (#)	LTIP Payouts (2)		All Other Comp. (8)
David R. Harvey (5)	2005	$	725,000	$	584,249		—		—	50,000		—	$	8,160
Chairman	2004		725,000		449,051		—	$	1,501,164	90,000		—		7,980
	2003		725,000		298,401	$	122,841		—	50,000	$	195,400		7,800
Michael R. Hogan	2005		430,000		260,150		—		—	10,000		—		41,460
Chief Administrative Officer,	2004		430,000		199,950		—		—	20,000		—		41,280
Chief Financial Officer &	2003		430,000		132,870		—		—	20,000		—		7,800
Secretary
David W. Julien (6)	2005		310,000		187,550		—		—	10,000		—		34,260
President, Research	2004		310,000		144,150		—		—	20,000		—		34,080
Specialties	2003		310,000		95,790		—		—	20,000		—		7,800
Jai. P. Nagarkatti (7)	2005		470,000		341,220		—		—	17,500		—		179,060
President & Chief Executive	2004		366,875		262,260		—		—	20,000		—		41,280
Officer	2003		305,000		94,245		33,781		—	20,000		53,735		7,800
Franklin D. Wicks	2005		320,000		193,600		—		—	10,000		—		34,860
President, SAFC	2004		320,000		148,800		—		—	20,000		—		34,680
	2003		320,000		98,880		33,781		—	20,000		53,735		7,800

(1) Amounts are earned and accrued during the fiscal years indicated and are paid subsequent to the end of each fiscal year pursuant to the Company’s Cash Bonus Plan, discussed on page 21.

(2) The value of shares issued under the Incentive Stock Bonus Plan in 2003 relates to performance in 1997 and are presented as long-term incentive plan (“LTIP”) payouts. Such values represent the aggregate market value of shares of common stock issued on the payout date. Cash payouts to cover Federal income taxes related to the issuance of such shares are presented as other annual compensation. No awards are outstanding under this plan and no future awards will be issued under this plan.

(3) Excludes the value of personal use of automobiles and club memberships provided by the Company, the amounts of which are immaterial for each executive officer.

(4) Represents the value of 25,900 shares of restricted stock issued on February 10, 2004 pursuant to Dr. Harvey’s Employment Agreement, as amended, discussed on page 17. These awards became fully vested on January 1, 2006. As of December 31, 2005, the 25,900 shares of restricted stock were valued at $1,639,211. Dividends were paid on restricted stock.

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(5) Effective January 1, 2006, David R. Harvey became the Chairman of the Board of Directors. Previously he served as both the Chairman of the Board of Directors and Chief Executive Officer of the Company.

(6) Effective July 11, 2005, David W. Julien became the President of Research Specialties. Previously, he served as President of Biotechnology.

(7) Effective January 1, 2006, Jai P. Nagarkatti became both President and Chief Executive Officer of the Company. Previously he served as both President and Chief Operating Officer.

(8) Represents amounts contributed for each executive officer under the Company’s 401(k) Retirement Savings Plan in 2005, 2004 and 2003, respectively, and under the Supplemental Retirement Plan in 2005 and 2004 discussed on page 14 and 15, respectively.

The components of All Other Compensation in the table on page 11 are presented in the following table:

		All Other Compensation
Name	Year	401(k) Retirement Savings Plan		Supplemental Retirement Plan		Total
David R. Harvey	2005	$	8,160	$	—	$	8,160
	2004		7,980		—		7,980
	2003		7,800		—		7,800
Michael R. Hogan	2005		8,160		33,300		41,460
	2004		7,980		33,300		41,280
	2003		7,800		—		7,800
David W. Julien	2005		8,160		26,100		34,260
	2004		7,980		26,100		34,080
	2003		7,800		—		7,800
Jai. P. Nagarkatti	2005		8,160		170,900		179,060
	2004		7,980		33,300		41,280
	2003		7,800		—		7,800
Franklin D. Wicks	2005		8,160		26,700		34,860
	2004		7,980		26,700		34,680
	2003		7,800		—		7,800

2003 Long-Term Incentive Plan (2003 LTIP)

The Company’s Long-Term Incentive Plan is administered by the Compensation Committee of the Board. See “Compensation Committee Report on Executive Compensation—Long-Term Incentive Compensation” beginning on page 21 of this Proxy Statement for information concerning the plan.

Stock Options

Stock options are awarded under the terms of the 2003 LTIP. The Compensation Committee grants options to employees as the Committee determines, taking into account the employees’ duties, their present and potential contributions to the success of the Company and such other factors, as the Committee deems relevant. The exercise price of the options is determined by the Committee; however, no option may have an exercise price less than 100% of the fair market value of the shares at the date of the grant. Full payment for stock being purchased must be made in (i) cash or (ii) at the Committee’s discretion, in Company common stock at the time an option is exercised or (iii) at the Committee’s discretion, a combination of (i) and (ii). Options are not transferable other than by will or by the laws of descent and distribution, unless otherwise determined by the Committee. Options expire

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ten years from the date of grant, although the Committee may grant non-qualified options with longer terms to participants outside of the United States. Options will generally terminate no later than twelve months after an optionee’s termination of employment without cause (as defined in the plan), retirement, death or disability.

The following table sets forth information related to stock options granted to the named executive officers during the year ended December 31, 2005:

Option Grants in 2005

Name of Executive	Number of Securities Underlying Options (1)	% of Total Options Granted to Employees in 2005	Exercise Price ($/Share) (2)		Expiration Date	Potential Realizable Value at Assumed Annual Rates of Stock Price Appreciation for Option Term (3)
						5%		10%
David R. Harvey	50,000	9.4	$	57.65	7/8/2015	$	1,812,789	$	4,593,963
Michael R. Hogan	10,000	1.9		57.65	7/8/2015		362,558		918,793
David W. Julien	10,000	1.9		57.65	7/8/2015		362,558		918,793
Jai P. Nagarkatti	17,500	3.3		57.65	7/8/2015		634,476		1,607,887
Franklin D. Wicks	10,000	1.9		57.65	7/8/2015		362,558		918,793

(1) Options vest at the rate of 33.3% per year beginning July 8, 2006, immediately upon a “Change in Control” or upon termination of employment by reason of death, disability or retirement. “Change in Control” is defined generally in the same manner as “Change in Control” in “Employment Agreements with Other Named Executive Officers” on page 19.

(2) Exercise price equals the fair market value per share on the grant date.

(3) Presentation is required by Securities and Exchange Commission rules and is not intended to forecast possible future price appreciation of the Company’s common stock.

Additionally, options to acquire 43,750 shares were granted to other executive officers at exercise prices ranging from $57.65 to $65.67 and options to acquire 390,900 shares were granted to members of the management group at the exercise price of $57.65 during the year ended December 31, 2005.

The following table presents (i) stock options exercised by the named executive officers during the year ended December 31, 2005 and (ii) the unexercised options held by each named executive officer and the value of all in-the-money options as of December 31, 2005, as if all such in-the-money options were vested and exercisable as of December 31, 2005:

Aggregated Option Exercises in 2005 and

Option Values at December 31, 2005

Name	Shares Acquired On Exercise	Value Realized (1)		Number of Shares Underlying Unexercised Options at December 31, 2005		Value of Unexercised In-the-Money Options at December 31, 2005 (2)
				Exercisable	Unexercisable	Exercisable		Unexercisable
David R. Harvey	40,000	$	1,090,400	77,375	180,000	$	1,170,611	$	1,334,300
Michael R. Hogan	—		—	128,600	48,000		3,547,304		417,360
David W. Julien	20,000		527,850	52,000	48,000		927,340		417,360
Jai P. Nagarkatti	—		—	97,000	55,500		2,384,140		459,660
Franklin D. Wicks	31,750		1,009,920	65,250	48,000		1,335,183		417,360

(1) Calculated as the aggregate market value per share of the Company’s common stock on the day prior to the exercise date net of the aggregate exercise price per share.

(2) Calculated as the aggregate closing market price per share of the Company’s common stock on December 31, 2005, for the total number of in-the-money shares under option, net of the aggregate value of all option exercise proceeds.

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Equity Compensation Plan Information

The 2003 LTIP authorizes issuance of the Company’s equity securities to employees or non-employees and was approved by the Company’s shareholders.

The following table shows the number of shares of common stock issuable upon exercise of outstanding options at December 31, 2005, the weighted average exercise price of those options and the number of shares of common stock remaining available for future issuance at December 31, 2005 under the 2003 LTIP, excluding shares issuable upon exercise of outstanding options:

Equity Compensation Plan Table—December 31, 2005

Plan Category	Number of Shares of Stock to be Issued Upon Exercise of Outstanding Options (2)		Weighted- average Exercise Price of Outstanding Options		Number of Shares of Stock Remaining and Available for Future Issuance Under Equity Compensation Plans (excluding shares to be issued upon exercise)
Equity Compensation Plans Approved by Security Holders:
Share Option Plans	2,030,125	(1)	$	40.96	—
2003 Long-Term Incentive Plan (3)	2,090,689			55.66	3,304,983
Total	4,120,814				3,304,983

(1) Includes 1,889,125 and 141,000 options outstanding under the Share Option Plans of 1987, 1995 and 2000, collectively, and the Directors’ Non-Qualified Share Option Plan of 1998, respectively. All plans were approved by the Company’s shareholders.

(2) Shares subject to adjustment for stock splits and stock dividends.

(3) During 2005, a total of 582,150 stock options were granted under the 2003 Long-Term Incentive Plan.

Retirement Security Value Plan (Pension Plan)

The Sigma-Aldrich Retirement Security Value Plan is a tax-qualified, noncontributory retirement plan that provides all eligible employees, including the named executive officers, with a retirement benefit based upon a formula. The plan provides an annual addition to each participant’s account, ranging from 2% to 5% of salary, depending on years of service. Each account is also credited with interest annually. In no event will the benefit provided by the Retirement Security Value Plan at retirement be less than the benefit provided by the previous pension plan formula for any employee who was a participant in the plan as of January 1, 1996. Pension credits have been and will continue to be restricted by the Internal Revenue Code limitations above certain levels of compensation. Taking into account these limitations and assuming that each executive officer continues employment with the Company until the normal retirement age of 65 at his current cash compensation level and that interest rates remain at December 31, 2005 levels, Drs. Nagarkatti and Wicks and Messrs. Hogan and Julien would receive upon retirement an annual pension benefit in the form of a single life annuity of $68,626, $79,804, $22,238 and $61,642, respectively, or at his election, a lump sum distribution based on the present value of such annual benefits. Dr. Harvey, who reached age 65 in 2004, was entitled to an annual pension benefit of $77,254 as of December 31, 2005 or at his election, a lump sum distribution based on the present value of such benefit.

Supplemental Retirement Plan

In 2004, the Compensation Committee recommended and the Board of Directors approved the implementation of a supplemental retirement plan that covers, among others, the named executive officers other than Dr. Harvey effective January 1, 2004. The Company maintains a bookkeeping

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account reflecting annual credits of 6%, or more at the discretion of Dr. Harvey with respect to some or all participants, other than Dr. Nagarkatti, of base salary. For Dr. Nagarkatti, the annual credit is determined by the Compensation Committee. After five years of participation in the plan, participants will vest in 50% of the credits, including investment earnings (or losses) and, thereafter, will vest at the rate of 10% annually until fully vested after 10 years. In the event of a participant’s termination by the Company (other than for cause) or by the participant for good reason within two years after a change of control that occurs while the participant is employed with the Company, or a termination on account of death, disability or retirement, the participant will fully vest immediately in any credits and earnings (or losses) as of the date of termination. For all other terminations, the participant will forfeit any unvested credits and earnings (or losses).

Employment and Other Agreements

Employment Agreement with Dr. Nagarkatti

On January 16, 2006, the Company entered into an employment agreement, effective January 1, 2006, (the “Nagarkatti Employment Agreement”) with Dr. Nagarkatti for an initial term extending through December 31, 2008, with automatic one-year renewal periods thereafter unless 180 days prior notice is provided. Under the Nagarkatti Employment Agreement, Dr. Nagarkatti will serve as the Company’s Chief Executive Officer or in any other capacity, as determined by the Board of Directors.

Dr. Nagarkatti will receive a minimum annual base salary of $600,000 and be eligible for annual performance bonuses under the Company’s annual cash bonus program (with an initial target of 67% of his annual base salary). In addition, Dr. Nagarkatti will be entitled to participate in all retirement, disability, pension, savings, health, medical and dental insurances and other fringe benefits or plans of the Company generally available to executive employees. The Compensation Committee will review Dr. Nagarkatti’s annual base salary and bonus opportunity each year but may not reduce Dr. Nagarkatti’s base salary below $600,000. During the two-year period commencing on a Change of Control (as defined in the Nagarkatti Employment Agreement), Dr. Nagarkatti’s base salary and bonus opportunity may not be reduced below the level established by the Compensation Committee immediately prior to the Change of Control.

If the Company terminates Dr. Nagarkatti’s employment for Cause (as defined in the Nagarkatti Employment Agreement) or Dr. Nagarkatti voluntarily terminates his employment without Good Reason (as defined in the Nagarkatti Employment Agreement) prior to the end of the employment period, Dr. Nagarkatti will receive his base salary through the date of termination but will not be entitled to any severance compensation or to any further base salary, bonus or benefits, unless otherwise provided by the applicable benefit plan or program. If the Company terminates Dr. Nagarkatti’s employment without Cause before or more than 24 months following a Change of Control (excluding any involuntary termination which is a direct result of a Change of Control and which occurs within 60 days before a Change of Control), Dr. Nagarkatti will receive all accrued and unpaid base salary as of the date of termination and severance pay equal to one year of base salary and paid in installments over one year. If, within 24 months after a Change of Control or within 60 days before a Change of Control in the event of an involuntary termination without Cause which is a direct result of the Change of Control, the Company terminates Dr. Nagarkatti’s employment without Cause or Dr. Nagarkatti terminates his employment with Good Reason, Dr. Nagarkatti will receive all accrued and unpaid base salary as of the date of termination and severance pay equal to three years of base salary paid in installments over three years. All payments will be subject to deductions for customary withholdings, including federal and state withholding taxes and social security taxes and, in the event that Dr. Nagarkatti is determined to be a specified employee in accordance with Section 409A of the Code, such payments shall begin on the first payroll date which is more than six months following the date of separation from service. The Company’s obligations will not be subject to offset to the extent Dr. Nagarkatti receives compensation from any subsequent employer.

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The Company’s obligations under the Nagarkatti Employment Agreement will terminate on the last day of the month in which Dr. Nagarkatti dies or on the date as of which he first becomes entitled to receive disability benefits under the Company’s long-term disability plan. The Company will pay to Dr. Nagarkatti or his estate all accrued and unpaid base salary as of such date.

If any payment or distribution by the Company to Dr. Nagarkatti would be subject to excise tax under Section 4999 of the Code, then the payments will be decreased to the greatest amount that could be paid to Dr. Nagarkatti such that receipt of the payments would not give rise to any such excise tax.

Dr. Nagarkatti is also subject to current and post-employment confidentiality restrictions and non-competition and non-solicitation covenants during and for two years following his employment. The Nagarkatti Employment Agreement provides that Dr. Nagarkatti will use his best efforts both during and after his employment with the Company to protect the confidential, trade secret and/or proprietary character of the Company’s confidential information. In addition, Dr. Nagarkatti may not compete with the Company, directly or indirectly, and may not solicit the Company’s customers or employees at any time during his employment or for two years following the termination of his employment. Pursuant to the Nagarkatti Employment Agreement, Dr. Nagarkatti will also disclose and assign his right in all of his work-related ideas, inventions and discoveries to the Company except for patents currently held by Dr. Nagarkatti developed outside of his employment with the Company.

In connection with the Nagarkatti Employment Agreement, Dr. Nagarkatti’s prior employment agreement with the Company was terminated effective December 31, 2005.

During 2005, any additional perquisites or personal benefits not already disclosed in the Summary Compensation Table were less than $50,000 or 10% of Dr. Nagarkatti’s salary and bonus.

Employment Agreements with Dr. Harvey

The Company had an employment agreement, effective January 1, 2003, with Dr. Harvey for an initial term extending through January 1, 2006, with automatic one-year renewal periods thereafter unless 180 days prior notice was provided. On February 10, 2004, the prior employment agreement was amended (the “Prior Employment Agreement”) and it was terminated effective January 1, 2006. Under the Prior Employment Agreement, Dr. Harvey served as the Company’s Chief Executive Officer or in any other capacity, as was determined by the Board of Directors.

Pursuant to the Prior Employment Agreement, Dr. Harvey received a minimum annual base salary of $725,000, was eligible to participate in the Company’s annual cash bonus program and was eligible for annual performance bonuses (with an initial target bonus of 66.6% of his annual base salary). In addition, Dr. Harvey was entitled to participate in all retirement, disability, pension, savings, medical and dental insurances and other fringe benefits or plans of the Company generally available to executive employees. The Compensation Committee reviewed Dr. Harvey’s annual base salary and bonus opportunity each year but could not reduce Dr. Harvey’s base salary below $725,000. During the two-year period commencing on a Change of Control (as defined in the Prior Employment Agreement), Dr. Harvey’s base salary and bonus opportunity could not be reduced below the level established by the Compensation Committee immediately prior to the Change of Control.

Pursuant to the Prior Employment Agreement, the Compensation Committee granted to Dr. Harvey options to purchase 40,000 shares of Common Stock at an exercise price of $57.96 equal to the fair market value of the Common Stock on February 10, 2004 and 25,900 shares of restricted Common Stock on February 10, 2004. Dr. Harvey also had a performance bonus award under which he may earn up to $1,000,000 cash as of January 1, 2006. These awards vested on January 1, 2006. The performance goals were based upon the Company’s performance equal to or better than the average performance of its peers with respect to one or more of a combination of revenue growth, earnings per share growth and growth in operating cash flow.

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If the Company achieved the targeted level of performance in calendar years 2003, 2004, and/or 2005, 16 ²/3% of the package would vest for each year such performance is achieved provided Dr. Harvey was employed on January 1, 2006. Even if the Company did not achieve the targeted level of performance in each of 2003, 2004, and 2005, the other half of the package would nonetheless vest in full if Dr. Harvey was employed on January 1, 2006 and the Company achieves the targeted level of performance for the three-year period beginning January 1, 2003 and ending January 1, 2006.

The vesting of the awards would be accelerated if within 24 months after a Change of Control Dr. Harvey’s employment was involuntarily terminated by the Company or if Dr. Harvey terminated his employment for Good Reason (as defined in the Prior Employment Agreement). A pro rata portion of the awards would vest in the event of the termination of Dr. Harvey’s employment as a result of his death or disability prior to January 1, 2006. A pro rata portion of 50% of the awards would vest in the event of Dr. Harvey’s involuntary termination with Cause (as defined in the Prior Employment Agreement) prior to January 1, 2006.

If the Company terminated Dr. Harvey’s employment for Cause or Dr. Harvey voluntarily terminated his employment without Good Reason (as defined in the Prior Employment Agreement) prior to the end of the employment period, Dr. Harvey would have received his base salary through the date of termination but would not be entitled to any severance compensation or to any further base salary, bonus or benefits, unless otherwise provided by the applicable benefit plan or program. If the Company terminated Dr. Harvey’s employment without Cause before or more than 24 months following a Change of Control (excluding any involuntary termination which was a direct result of a Change of Control and which occurs within 60 days before a Change of Control), Dr. Harvey would receive all accrued and unpaid base salary as of the date of termination and severance pay equal to one year of base salary and paid in installments over one year. If, within 24 months after a Change of Control or within 60 days before a Change of Control in the event of an involuntary termination without Cause which is a direct result of the Change of Control, the Company terminated Dr. Harvey’s employment without Cause or Dr. Harvey terminated his employment with Good Reason, Dr. Harvey would have received all accrued and unpaid base salary as of the date of termination and severance pay equal to three years of base salary paid in installments over three years. All payments would be subject to deductions for customary withholdings, including federal and state withholding taxes and social security taxes.

The Company’s obligations would not be subject to offset to the extent Dr. Harvey received compensation from any subsequent employer.

The Company’s obligations under the Prior Employment Agreement would terminate on the last day of the month in which Dr. Harvey died or on the date as of which he first became entitled to receive disability benefits under the Company’s long-term disability plan. The Company would have paid to Dr. Harvey or his estate all accrued and unpaid base salary as of such date.

If any payment or distribution by the Company to Dr. Harvey would be subject to excise tax under Section 4999 of the Internal Revenue Code of 1986, as amended, then the payments would be decreased to the greatest amount that could be paid to Dr. Harvey such that receipt of the payments would not give rise to any such excise tax.

Dr. Harvey was also subject to current and post-employment confidentiality restrictions and non-competition and non-solicitation covenants during and for two years following his employment. The Prior Employment Agreement provides that Dr. Harvey will use his best efforts both during and after his employment with the Company to protect the confidential, trade secret and/or proprietary character of the Company’s confidential information. In addition, Dr. Harvey may not compete with the Company, directly or indirectly, and may not solicit the Company’s customers or employees at any time during his

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employment or for two years following the termination of his employment. Pursuant to the Prior Employment Agreement, Dr. Harvey will also disclose and assign his right in all of his work-related ideas, inventions and discoveries to the Company except for patents currently held by Dr. Harvey developed outside of his employment with the Company.

On January 16, 2006, the Company entered into an employment agreement, effective January 1, 2006, (the “Harvey Employment Agreement”) with Dr. Harvey for an initial term extending through the annual general meeting of the stockholders of the Company in May 2006. The Harvey Employment Agreement may be extended by written agreement for successive additional one-year periods. Under the Harvey Employment Agreement, Dr. Harvey will serve as the Company’s Chairman or in any other capacity, as determined by the Board of Directors.

Pursuant to the Harvey Employment Agreement, Dr. Harvey will receive a minimum annual base salary of $250,000. In addition, Dr. Harvey will be entitled to participate in all retirement, disability, pension, savings, health, medical and dental insurances and other fringe benefits or plans of the Company generally available to executive employees. Dr. Harvey will not be granted a bonus under the Company’s annual cash bonus program, but may be granted stock options when the Company considers granting stock options to management employees generally, provided, however, that any such option award granted to Dr. Harvey will be granted with an exercise price equal to the fair market value on the date of grant and will provide that Dr. Harvey will have the right to exercise the unexercised portion of any such option at any time during the period equal to the lesser of five years from the date of Dr. Harvey’s retirement from the Company or the remaining term of the award.

If the Company terminates Dr. Harvey’s employment for Cause (as defined in the Harvey Employment Agreement) or Dr. Harvey voluntarily terminates his employment prior to the end of the employment period, Dr. Harvey will receive his base salary through the date of termination but will not be entitled to any severance compensation or to any further base salary or benefits, unless otherwise provided by the applicable benefit plan or program. If the Company terminates Dr. Harvey’s employment without Cause, Dr. Harvey will receive all accrued and unpaid base salary as of the date of termination but will not be entitled to any severance compensation or to any further base salary or benefits, unless otherwise provided by the applicable benefit plan or program. The Company’s obligations will not be subject to offset to the extent Dr. Harvey receives compensation from any subsequent employer.

The Company’s obligations under the Harvey Employment Agreement will terminate on the last day of the month in which Dr. Harvey dies or on the date as of which he first becomes entitled to receive disability benefits under the Company’s long-term disability plan. The Company will pay to Dr. Harvey or his estate all accrued and unpaid base salary as of such date.

If any payment or distribution by the Company to Dr. Harvey would be subject to excise tax under Section 4999 of the Internal Revenue Code of 1986, as amended (the “Code”), then the payments will be decreased to the greatest amount that could be paid to Dr. Harvey such that receipt of the payments would not give rise to any such excise tax.

Dr. Harvey is also subject to current and post-employment confidentiality restrictions and non-competition and non-solicitation covenants during and for two years following his employment. The Harvey Employment Agreement provides that Dr. Harvey will use his best efforts both during and after his employment with the Company to protect the confidential, trade secret and/or proprietary character of the Company’s confidential information. In addition, Dr. Harvey may not compete with the Company, directly or indirectly, and may not solicit the Company’s customers or employees at any time during his employment or for two years following the termination of his employment. Pursuant to the Harvey Employment Agreement, Dr. Harvey will also disclose and assign his right in all of his work-related ideas, inventions and discoveries to the Company except for patents currently held by Dr. Harvey developed outside of his employment with the Company.

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In connection with the Harvey Employment Agreement, Dr. Harvey’s prior employment agreement with the Company was terminated effective December 31, 2005. Dr. Harvey is not entitled to any severance or other further payments or benefits thereunder, other than accrued but unpaid salary and the options, restricted stock and performance bonus previously granted pursuant to the prior employment agreement, which continue in accordance with the terms of the applicable grant, provided that any performance bonus which may be vested will be paid during 2006 unless the Company reasonably anticipates that the Company’s deduction with respect to such payment would be limited by Section 162(m) of the Code, in which case, the portion of the performance bonus which is nondeductible will be deferred until the earliest date the Company reasonably anticipates that the Company’s deduction will not be limited by Section 162(m) of the Code.

During 2005, any additional perquisites or personal benefits not already disclosed in the Summary Compensation Table were less than $50,000 or 10% of Dr. Harvey’s salary and bonus.

Employment Agreements with Other Named Executive Officers

The Company has Employment Agreements with Dr. Wicks and Messrs. Hogan and Julien that provide severance compensation (with an offset for monies earned elsewhere under certain defined situations) to each of these executives in the event of his cessation of employment with the Company or any of its subsidiaries after the occurrence of a Change in Control of the Company. “Change in Control” is defined as (a) a change in the composition of a majority of the Board of Directors, (b) an acquisition of more than 25% of the Company’s Common Stock or voting power, except certain acquisitions by specified types of affiliates, (c) a reorganization, merger, share exchange, or consolidation, unless (i) the Company’s shareholders possess more than 50% of the surviving company’s outstanding common stock and the combined voting power of the outstanding voting stock entitled to vote in the election of directors, (ii) no person or group who did not own 25% or more of the Company’s Common Stock or the outstanding voting stock entitled to vote in the election of directors before the change in control owns 25% or more of the common stock or the outstanding voting stock entitled to vote in the election of directors of the surviving company, and (iii) at least a majority of the Board of Directors of the surviving company were incumbent directors of the Company before the change in control, (d) the sale or disposition of all or substantially all of the Company’s assets, or (e) a shareholder-approved liquidation or dissolution of the Company.

These Employment Agreements may be terminated upon 60 days notice given by either the executive or the Company, provided that this 60-day termination right will no longer be available to the Company after a Change in Control of the Company. Unless notice is given to the contrary, the three-year term of the Employment Agreements is automatically extended for an additional year at the end of each agreement year. Compensation covered by the Employment Agreements is set annually by either the Compensation Committee or the Board of Directors. After a Change in Control of the Company, the executive’s total cash compensation (salary plus bonus) may not be reduced below the level in effect immediately prior to the Change in Control. After a Change in Control, if the executive’s employment terminates, the executive shall continue to receive the same compensation through the remaining term of the employment agreement as severance. The amount of severance shall be reduced by any compensation received by the executive for personal services from employment other than with the Company during the term of the employment agreement. No payments are made under the Employment Agreements if the cessation of employment is due to death. If a Change in Control of the Company had occurred as of March 3, 2006, and the employment of the named executive officers of the Company had been terminated, Dr. Wicks and Messrs. Hogan and Julien would have collectively received $3,700,795.

During 2005, any additional perquisites or personal benefits not already disclosed in the Summary Compensation Table were less than $50,000 or 10% of Dr. Wicks and Messrs. Hogan and Julien respective salaries and bonuses.

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COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION

The Committee

The Committee is composed of the three members named below, none of whom is an employee of or is involved in any interlocking relationship with the Company.

Compensation Policy

The Committee believes that increasing share value on a long-term basis is the goal of shareholders. The Company’s compensation policy is designed to motivate employees to improve productivity and performance, resulting in increased profitability and, thus, improvement in shareholder value. Compensation for the Company’s executive officers includes three components: (1) salary, (2) an annual cash bonus and (3) long-term incentive compensation. The Company has no long-term employment contracts with any of its executive officers other than the Employment Agreements described beginning on page 15 of this Proxy Statement. The Company’s policy is to structure compensation such that any executive compensation in excess of $1 million is tax deductible for the Company. At the same time, the Committee considers its primary goal to structure compensation in a manner that furthers the best interests of the Company and its shareholders. In certain cases, the Committee may determine that the amount of tax deductions lost is insignificant when compared to the potential opportunity for creating and improving shareholder value. The Committee therefore retains the ability to evaluate the performance of the Company’s executive officers and to pay appropriate compensation, even if it may result in the non-deductibility of certain compensation.

The Committee uses an independent national consulting firm (the Firm) to review the compensation of its executive officers compared to competitors and companies comparable in size with similar growth goals. The consultant compares the compensation of the executive officers, including the Chief Executive Officer (CEO), to total compensation received by executives in similar positions at competitor and peer companies selected by the Firm. The Committee targets executive compensation for salary, annual cash bonus and long-term incentives at the 50^th percentile of competitor and peer companies. The competitor and peer companies used in the 2005 analysis were Affymetrix Inc., Albemarle Corp., Amgen Inc., Applera Corp., Arch Chemicals, Inc., Beckman Coulter Inc., Becton Dickinson & Co., Bio-Rad Laboratories, Inc., Cambrex Corporation, Charles River Labs, Chemtura Corp., Diagnostic Products, Dionex Corp., Fisher Scientific International Inc., Genzyme Corporation, H.B. Fuller Company, Invitrogen Corporation, Millipore Corp., PerkinElmer Inc., Thermo Electron Corp., Varian Medical Systems and Waters Corp. The Committee evaluates the annual performance of the Company and the individual performance, level of responsibility and experience of executive officers. Based on these reviews, the Committee made recommendations on the CEO’s and other executive officers’ compensation for 2005.

Components of Executive Compensation

Salary

The Committee reviews with the CEO an annual salary plan for the Company’s executive officers and then approves such plan with any modifications it deems appropriate. The Committee approves the salary plan after assessing the Company’s overall performance, including a general review of the operating results of the Company, its competitors and its peers, the executive officers’ responsibilities and performance and compensation received by executives in similar positions. The review of operating results is general in nature. In reviewing the individual executive officers’ responsibilities and performance, the Committee also considers their non-financial contributions to the Company, such as the quality and progress of research, marketing, production and process improvement activities. The Committee performs its review in a general, subjective manner with consideration given to all factors.

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Based upon the business knowledge and experience of the Committee members, they believe that the executive officers’ salaries are appropriate in view of the level of responsibilities and contributions by each executive officer.

Cash Bonus Plan

The Company has a Cash Bonus Plan for all management employees to further align the interests of management with its shareholders. The bonus for eligible employees is based on the Company achieving certain predetermined financial goals in relation to its current year budget.

For 2005, the performance goals were sales growth, operating income growth and return on assets and had no subjective components. The target cash payment for eligible employees was set at 100% or between 10.0% and 66.6% of their annual salary. Based on 2005 currency adjusted sales growth of 17.6%, operating income growth of 12.3% and return on assets of 13.3%, 2006 cash bonus payments ranged between 12.1% and 80.6% of eligible employees’ annual salaries. 2006 cash bonus payments for executive officers ranged between 60.5% and 80.6% of the eligible employees’ annual salaries.

Long-Term Incentive Compensation

Long-term incentive compensation is provided through the 2003 LTIP that permits the issuance of stock options, stock appreciation rights, restricted stock, performance shares and other stock-based awards.

The Committee believes that granting stock based awards is desirable because it directly correlates long-term compensation of key employees with share price appreciation. In determining grants, the Committee generally considers the same factors as those discussed under Salary above. The Committee does not consider the amounts or terms of prior stock grants in determining current grants. Stock options for 97,500 shares of the Company’s common stock were granted to the named executive officers in 2005. See “2003 Long-Term Incentive Plan” on page 12 of this Proxy Statement for additional information concerning this plan.

2005 Chief Executive Officer’s Compensation

The Committee’s approach is to have a large amount of Dr. Harvey’s compensation dependent on Company performance. In measuring performance, consideration is given to the various measures described in the Components of Executive Compensation – Salary within this Proxy Statement.

In setting Dr. Harvey’s salary for 2005, the Committee recognized Dr. Harvey’s leadership, as well as considered compensation levels for CEO’s of competitors and companies of similar size and with similar performance. Pursuant to Dr. Harvey’s Prior Employment Agreement, during 2005 Dr. Harvey would receive a minimum annual base salary of $725,000. Based on this review, the Committee maintained his salary at the 2004 level.

Dr. Harvey received a cash bonus of $584,249 for 2005 and received options for 50,000 shares of stock in 2005. The cash bonus is pursuant to the Company’s Cash Bonus Plan (described above) and reflects currency adjusted growth in sales of 17.6%, growth in operating income of 12.3% and a return on assets of 13.3%. The grant of options for 50,000 shares of the Company’s common stock to Dr. Harvey reflect his level of responsibilities and the Committee’s target to have total compensation for the CEO in-line with that received by CEO’s at competitor and peer companies (described on page 20 of this Proxy Statement). Dr. Harvey also received a $1,000,000 performance bonus award on January 1, 2006, pursuant to the Prior Employment Agreement (described on page 16 of this Proxy Statement).

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The Compensation Committee met separately without the presence of Dr. Harvey to evaluate his performance. Subsequently, the full Board met without the presence of Dr. Harvey to review his performance. The Board then met with Dr. Harvey to review his 2005 performance.

Other Executive Officer’s Compensation

For the other executive officers, the Committee determined that 2005 compensation should reflect the Company’s performance, the level of the officers’ responsibilities and any changes thereto during the year, and the officers’ contribution to strategic initiatives that will drive future growth. The Committee believes that the compensation policies and programs it has implemented have committed the executive officers of the Company to achieve long-term improvement in operating results.

COMPENSATION COMMITTEE

William C. O’Neil, Jr. (Chairman)

J. Pedro Reinhard

Timothy R.G. Sear

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PERFORMANCE GRAPH

The following performance graph compares the Company’s cumulative shareholder return (stock price appreciation plus reinvestment of dividends) for a five year period ended December 31, 2005, with that of the Standard & Poor’s 500 Composite Stock Price Index and an index of the companies included in the Value Line Chemical Specialty Industry Group, assuming that $100 was invested in each on December 31, 2000, and that all dividends were reinvested. These indices are only included for comparative purposes as required by Securities and Exchange Commission rules and do not necessarily reflect management’s opinion that such indices are an appropriate measure of the relative performance of the Company’s common stock, and are not intended to forecast or be indicative of possible future performance of the common stock.

	2000		2001		2002		2003		2004		2005
Sigma-Aldrich Corporation	$	100.00	$	101.01	$	125.72	$	149.04	$	159.46	$	168.96
Standard & Poors 500		100.00		86.96		66.64		84.22		91.79		94.55
Value Line: Chemical Specialty		100.00		120.20		130.03		168.35		203.58		220.17

In this Proxy Statement, the Company used as a performance graph comparison index those companies comprising the Value Line Chemical Specialty Industry Group (the “2005 Group”). The 2005 Group includes the following companies: A. Schulman Inc., ADM Tronics Unlimited Inc., Advanced Materials Group Inc., AEP Industries Inc., Agrium Inc., Airgas Inc., American Biltrite Inc., American Pacific Corp., American Vanguard Corp., Apollo Resources International Inc., Arch Chemicals, Atlantis Plastics Inc., Avery Dennison Corp., Balchem Corp., Blue Phoenix Solutions, Cabot Microelectronics Corp., Ceradyne Inc., CF Industries Holdings Inc., CFC International Inc., Chemtura Corp., CPAC Inc., Delta-Omega Technologies, Donlar Biosyntrex Corp., Dyna Group International, Inc., Ecolab Inc., Eden Bioscience Corp., Enerchem International Inc., Engelhard Corp., Epolin Inc., Ferro Corp., Flamemaster Corp., Flexible Solutions International Inc., Foamex International Inc., Glassmaster Co., Great West Gold, Inc., H.B. Fuller Co., Hercules Inc., HiEnergy Technologies Inc., Human Pheromone Sciences Inc., Humatech Inc., Ikonics Corp., International Flavors & Fragrances Inc., Ionatron Inc., Isonics Corp., KMG Chemicals Inc., Kyzen Corp., LaPolla Industries Inc., Lesco Inc., Lubrizol Corp., Luna Technologies International Inc., Lydall Inc., MacDermid Inc., Mace Security International Inc., Material Sciences Corp., Millennium Cell Inc., Minerals Technologies Inc., Nanophase Technologies Corp., Nevada Chemicals Inc., NewMarket Group, NL Industries Inc.,

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Octel Corp., Oil-Dri Corp. of America, OM Group Inc., Omnova Solutions Inc., Park Electrochemical Corp., Penford Corp., Planet Technologies Inc., Polymer Group Inc., PolyOne Corp., Praxair Inc., Prolong International Corp., PW Eagle Inc., Quaker Chemical Corp., Rhodia S.A., Rohm & Haas Co., RPM International Inc., Sherwin-Williams Co., Sico Inc., Sigma-Aldrich Corp., Southwall Technologies Inc., Stepan Co., Summit Environmental Corp. Inc., SurModics Inc., Symyx Technologies Inc., Technical Ventures Inc., Terra Nitrogen Co. L.P., TOR Minerals International Inc., Tredegar Corp., Tronox Inc., UAP Holding Corp., UFP Technologies Inc., United Energy Corp., Valspar Corp. and Wellman Inc.

Compared to 2004, the 2005 Group added Apollo Resources International Inc., Ceradyne Inc., CF Industries Holdings Inc., Chemtura Corp., LaPolla Industries Inc., Polymer Group Inc. and Tronox Inc. The 2005 Group deleted Crompton Corp., ESCAgenetics Corp., Great Lakes Chemical Corp., Hexcel Corp., IFT Corp., Jilin Chemical Industrial Co. Ltd. and Powerball International Inc. With these exceptions, which resulted solely from the independent action of Value Line, the 2005 and 2004 Groups are identical.

RATIFICATION OF APPOINTMENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTANT

The Audit Committee of the Board of Directors has appointed KPMG LLP as independent registered public accountant to conduct the annual audit of the Company’s accounts for the fiscal year ending December 31, 2006 and the Board of Directors has further directed that management submit the appointment of the Company’s independent registered public accountant for ratification by the shareholders. Although action by the shareholders in this matter is not required by the Company’s By-laws or otherwise, the Board of Directors believes that it is appropriate to seek shareholder ratification of this appointment in light of the important role played by the independent registered public accountant in maintaining the integrity of the Company’s financial controls and reporting. If the stockholders fail to ratify the selection, the Audit Committee will investigate the reasons for shareholder rejection and consider whether or not to retain that firm.

Representatives of KPMG LLP are expected to be present at the Meeting and will have the opportunity to make a statement if they wish to do so, and are expected to be available to respond to appropriate questions.

The Board of Directors recommends a vote FOR the ratification of the appointment of KPMG LLP as independent registered public accountant for 2006.

PROPOSAL TO APPROVE THE AMENDED AND RESTATED 2003 LONG-TERM INCENTIVE PLAN

On March 7, 2003, the Board of Directors adopted the Sigma-Aldrich Corporation 2003 Long-Term Incentive Plan and on May 6, 2003, shareholders of the Company approved and ratified the Sigma-Aldrich Corporation 2003 Long-Term Incentive Plan at the Company’s Annual Meeting of Shareholders. On February 14, 2006, the Board of Directors amended and restated the Sigma-Aldrich Corporation 2003 Long-Term Incentive Plan (as amended and restated, the “2003 LTIP”), subject to shareholder approval, effective for awards granted on or after January 1, 2006 in order to:

1. increase the types of measures used as performance targets;

2. extend the exercise period of options and stock appreciation rights upon termination from service on death, disability and retirement; and

3. provide for the time and manner of payment of performance shares upon termination from service on death and disability.

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If the shareholders of the Company have not approved the 2003 LTIP by January 1, 2007, all awards under the 2003 LTIP granted on or after January 1, 2006 which are subject to shareholder approval will be voided and the 2003 LTIP will continue under its current terms. Awards granted before January 1, 2006 will continue under the current terms of the 2003 LTIP.

The purpose of the 2003 LTIP is to motivate key personnel to produce a superior return to the shareholders of the Company by offering these individuals an opportunity to benefit from stock appreciation through stock ownership. The 2003 LTIP is intended to make it easier for these individuals to own stock in the Company and to reward them for achieving a high level of corporate performance as well as help the Company recruit and retain key personnel of outstanding ability.

Principal Features of the 2003 LTIP, as Proposed to be Amended

The full text of the 2003 LTIP is set forth in Appendix A hereto, and shareholders are urged to refer to it for a complete description of the 2003 LTIP. The summary of the principal features of the 2003 LTIP that follows is qualified entirely by reference to the full text of the 2003 LTIP set forth in Appendix A hereto.

The Compensation Committee (the “Committee”) will administer the 2003 LTIP and grant awards under the 2003 LTIP, except with respect to awards for non-employee directors, in which case the Board of Directors will administer the 2003 LTIP. The Committee has the power to interpret the 2003 LTIP, to determine the terms of the agreements or certificates, and to make all other determinations necessary or advisable for the administration of the 2003 LTIP, including to accelerate the vesting and permit the immediate exercisability of awards under circumstances it deems appropriate. If the Committee determines that the restrictions imposed by the plan preclude the achievement of the 2003 LTIP’s material purpose in jurisdictions outside the U.S., the Committee may modify the restrictions for the 2003 LTIP as necessary or appropriate. In addition, the Committee may delegate all or any part of its authority under the 2003 LTIP to the Chief Executive Officer for purposes of determining awards of options solely to participants who are not subject to the reporting requirements of Section 16 of the Securities Exchange Act of 1934, subject to certain limitations.

Under the 2003 LTIP, 3,315,500 shares of common stock were available as of March 3, 2006. This number of shares will be increased by any shares forfeited under the Sigma-Aldrich Corporation Share Option Plans of 1987, 1995 and 2000, the Sigma-Aldrich Corporation Directors’ Non-Qualified Share Option Plan of 1998 and the Incentive Stock Bonus Plan (collectively, the “Other Plans”). Shares issued under the 2003 LTIP may be authorized and unissued shares or treasury shares. Any shares subject to an award under the 2003 LTIP which are not used because the award expires, the conditions of the award are not met, or the award is forfeited may be used again for an award under the 2003 LTIP. Any shares covered by a stock appreciation right in excess of the number of shares issued, used to pay a purchase or exercise price, or used to satisfy tax withholdings may also be used again under the 2003 LTIP. Any unexercised or undistributed portion of any terminated, expired, exchanged, or forfeited award or any award settled in cash in lieu of shares will be available for further awards. Each performance share may be equal to one or more, or a fraction of a, share of common stock, as specified in the applicable award. For outstanding awards under the 2003 LTIP, each performance share is equivalent to one half of a share of common stock. The closing price of the common stock as reported on the Nasdaq National Market on March 3, 2006 was $64.41 per share.

All full-time and part-time employees (including officers and directors who are employees), non-employee directors (except with respect to grants of incentive stock options) and consultants and advisors (except with respect to grants of incentive stock options) of the Company and its affiliates will be eligible to participate in the 2003 LTIP at the discretion of the Committee. As defined in the 2003 LTIP, an “affiliate” is any corporation that is a subsidiary of the Company and, for purposes other than

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the grant of incentive stock options, any limited liability company, partnership, corporation, joint venture, or any other entity in which the Company or any subsidiary owns a significant equity interest, as determined by the Committee. An award may be granted to an employee in connection with hiring, retention or otherwise prior to the date the employee first performs services for the Company or an affiliate, but these awards will not become vested prior to the date the employee first performs services. Approximately 700 individuals are currently eligible to participate in the 2003 LTIP.

Each award will be evidenced by an agreement or certificate setting forth the terms and conditions of the award, which will not be greater than ten years, except that the Committee may award non-qualified stock options with a term not exceeding seventeen years to participants who are located outside the United States. All awards are non-transferable unless the agreement or certificate or the Committee permits the participant to transfer an award, except that non-employee directors are permitted to transfer awards to certain family members or affiliated entities.

Types of Awards

General. The Committee has the discretion to award options, stock appreciation rights, restricted stock, performance shares and other stock-based awards.

Options. Options will be either incentive stock options or non-qualified stock options. Incentive stock options may not be granted to non-employee directors, consultants or advisors. The purchase price of the option will be set forth in the agreement or certificate but may not be less than 100% of the fair market value of a share on the grant date. “Fair market value,” as defined, generally means the closing sales price of the common stock. Options, once issued, may not be repriced without first obtaining the approval of the shareholders. The purchase price will be payable in full at the time of exercise, but, to the extent permitted by law and by the Committee and in accordance with rules adopted by the Committee, participants may simultaneously exercise options and sell the shares thereby acquired pursuant to a brokerage or similar relationship and use the proceeds from the sale to pay the purchase price of the shares. The purchase price may be paid (a) in cash, (b) if the Committee so permits, through delivery or tender to the Company of shares held, either actually or by attestation, by the participant for at least six months or (c) if the Committee so permits, a combination of (a) and (b), unless otherwise provided in the agreement or certificate. However, no shares may be tendered in exercise of an incentive stock option if the shares were acquired by the participant through the exercise of an incentive stock option unless (a) the shares have been held by the participant for at least one year and (b) at least two years have elapsed since the grant date. Further, the Committee, in its discretion, may approve other methods or forms of payment of the purchase price and establish rules and procedures therefore.

Incentive Stock Options. A participant may not hold incentive stock options with a fair market value (determined as of the date of grant) in excess of $100,000 in the year in which they are first exercisable if this limitation is necessary to qualify the option as an incentive stock option. If, when an incentive stock option is granted, the participant possesses more that 10% of the total voting power of all of the stock of the Company and its subsidiaries, the option price for the incentive stock option will be at least 110% of the fair market value of the shares subject to the option on the grant date, and the option will expire five years after the grant date. Incentive stock options may only be granted to employees of the Company or its subsidiaries.

Non-Qualified Options Granted to Non-Employee Directors. The Board of Directors may from time to time determine that each individual who is elected or appointed as a non-employee director receive an award as compensation, in whole or in part, for the individual’s services as a director. In determining the level of awards for non-employee directors, the Board of Directors may consider such factors as compensation practices of comparable companies with respect to directors, consultants’ recommendations and any other information the Board of Directors deems appropriate. In the absence

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of action by the Board of Directors, each individual who is first elected or appointed to the office of director as a non-employee director after adoption of the 2003 LTIP will receive:

(i) an option to acquire 10,000 shares on the date of his or her initial election or appointment as a director; and

(ii) if the non-employee director has served on the Board of Directors for at least six months, an option to acquire 5,000 shares on the date after any annual shareholder meeting thereafter, including the 2006 annual meeting.

A “non-employee director” is any director who is not an employee of the Company, a parent (as defined) or a subsidiary. These options will have a purchase price of 100% of the fair market value of the shares on the grant date and a ten-year term.

No option will vest or may be exercised to any extent until the participant has served as a director of the Company continuously for at least three months from the date of grant. Except as provided in the next two paragraphs, an option may not be exercised by the participant unless he or she is then, and continuously after the grant of the option has been, a director of the Company.

An option granted to a non-employee director will be transferable or assignable only (a) by will, (b) by the laws of descent and distribution, (c) pursuant to a qualified domestic relations order, (d) to immediate family members, (e) to a trust or trusts for the exclusive benefit of the non-employee director or immediate family members, or (f) to a partnership in which the non-employee director or immediate family members are the only partners, except that there may be no consideration for any transfer (except as expressly permitted by the Board of Directors) and subsequent transfers of these options are prohibited except in accordance with clauses (a), (b) and (c). Following the transfer, these options will continue to be subject to the same terms and conditions as were applicable immediately prior to the transfer; however, the director service requirement, the events of death, disability or termination or removal and, if applicable, the tax withholding obligations will continue to be applied with respect to the non-employee director, following which the options will be exercisable by the transferee only to the extent, and for the periods, specified in the terms of the award.

Except as provided below, if a participant ceases to serve as a director of the Company for any reason prior to the lapse of the three month vesting period described above, the participant’s right to exercise the related portion of the option will terminate. Pursuant to the proposed amendments, if a participant ceases to serve as a director of the Company:

• for any reason other than termination for cause, he or she will have the right to exercise an unexpired option at any time within twelve months after his or her termination to the extent his or her right to exercise the option has vested and has not previously been exercised at the date of termination, except if the participant is terminated as a result of his or her death, disability or retirement, the participant or his or her successor may exercise all of his or her unexpired options at any time within five (5) years after his or her termination from service (instead of twelve months as currently provided) to the extent his or her options have not previously been exercised at the date of termination, whether or not the three month vesting period has elapsed;

• for cause, any and all options of the participant will automatically expire upon termination.

In all of the cases cited above, the exercise period of one or more options may be extended by a vote of a majority of the directors whose options are not being extended, except that no option may be exercised more than ten years after the date on which the option was granted. For purposes of the above paragraph,

• “cause” means habitual drug use or drunkenness, embezzlement of Company funds, conduct which is injurious to the Company, or conviction of a felony, all as determined in good faith by the Board of Directors;

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• “disability” means that the participant has suffered physical or mental incapacity of a nature that prevents him or her from engaging in or performing the principal duties of his or her customary employment or occupation on a continuing or sustained basis; all determinations as to the date and extent of disability of any participant will be made by the Committee upon the basis of such evidence as it deems necessary or desirable; and

• “retirement” means the termination of service after either attainment of age 65 or the retirement age specified in the provisions of a retirement plan maintained by the Company for its employees generally.

Stock Appreciation Rights. Stock appreciation rights entitle the participant, subject to their terms and conditions, to all or a portion of the excess of the fair market value of a specified number of shares on the exercise date over a specified price, which will not be less than 100% of the fair market value of the shares on the grant date. A stock appreciation right may be granted in connection with a previously or contemporaneously granted option, or independent of any option. If issued in connection with an option, the Committee may impose a condition that its exercise cancels the connected option and/or that exercise of the connected options cancels the stock appreciation right. Each stock appreciation right may be exercisable in whole or in part according to the agreement or certificate. Except as otherwise provided in the agreement or certificate, upon exercise of a stock appreciation right, the participant will receive cash, stock or a combination of cash and stock (as determined by the Committee if not otherwise specified in the award) as promptly as practicable after exercise. The agreement or certificate may limit the amount or percentage of the total appreciation on which payment may be made in the event of the exercise of a stock appreciation right.

Performance Shares. Performance shares will entitle the participant to future payments based upon the achievement of performance targets (as described below) established in writing by the Committee. The agreement or certificate may establish that a portion of the maximum amount of an award will be paid for performance that exceeds the minimum target but falls below the maximum target and will provide for the timing of payment. The agreement or certificate may permit an acceleration of the performance period and an adjustment of performance targets and payments with respect to some or all of the performance shares awarded to a participant, upon the terms and conditions as will be set forth in the agreement or certificate, upon the occurrence of certain events, which may include a fundamental change, the participant’s death or disability, a change in accounting practices of the Company or its affiliates, or, with respect to payments in stock for performance share awards, a reclassification, stock dividend, stock split or stock combination as provided in the 2003 LTIP.

A “fundamental change” generally means a dissolution or liquidation of the Company, a sale of substantially all of the Company’s assets (in one or a series of transactions), a merger or consolidation of the Company, regardless of whether the Company is the surviving entity, or a statutory share exchange.

To the extent cash is distributed, a performance share paid after the conclusion of the performance period will have a value equal to the fair market value of a share of common stock on the last day of the performance period. Following the conclusion or acceleration of each performance period, the Committee will determine the extent to which performance targets have been attained, any other terms and conditions have been satisfied and payment is due.

Restricted Stock. Restricted stock may be granted in the form of shares registered in the name of the participant but held by the Company until the restrictions have lapsed. Restricted stock may, in the discretion of the Committee, provide dividends and voting rights prior to vesting. The Committee in its discretion may establish any employment conditions, performance conditions (as described below), or restrictions on transferability. The term of the award will be established by the Committee in its discretion and included in the applicable agreement or certificate, provided that the minimum term will not be less than one year, subject to the terms and conditions of the 2003 LTIP.

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Other Stock-Based Awards. The Committee may also grant other stock-based awards in its sole discretion, including, without limitation, those awards pursuant to which shares may be acquired in the future, such as awards denominated in stock, stock units, securities convertible into stock and phantom securities. The Committee may, in its sole discretion, direct the Company to issue shares subject to restrictive legends and/or stop transfer instructions which are consistent with the terms and conditions of the award to which the shares relate.

Performance Targets and Conditions. Pursuant to the proposed amendments, any performance targets related to performance share awards, and any performance conditions related to the lapse of restrictions on restricted stock awards, will be determined by the Committee and will be based on performance targets that consist of one or any combination of two or more of the following:

• revenue growth;

• return on equity;

• diversity;

• earnings;

• earnings before interest, taxes, depreciation and amortization;

• economic value added;

• index comparisons;

• net income;

• operating margin;

• peer company comparisons;

• productivity;

• profit margin;

• return on invested capital;

• return on revenue;

• total shareholder return;

• sales growth;

• operating income;

• return on assets;

• stock price;

• earnings per share;

• cash flow;

• market share;

• costs; or

• debt to equity ratio.

Currently, the plan only provides for the following performance targets:

• sales growth;

• operating income;

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• return on assets;

• stock price;

• earnings per share;

• cash flow;

• market share;

• costs; or

• debt to equity ratio.

Termination of Employment

Except as otherwise determined by the Committee or provided in the applicable agreement or certificate (which may provide for an extension of the exercisability of options or stock appreciation rights), the following describes the treatment of awards upon termination of employment of a participant.

Options and Stock Appreciation Rights. With respect to options and stock appreciation rights held by employees, except as otherwise provided in the applicable agreement or certificate or below, if, prior to the expiration of twelve (12) months from the date of grant (the “Non-Exercise Period”), the participant’s employment with the Company and every affiliate terminates for any reason, the participant’s right to exercise the option or stock appreciation right will terminate. Unless otherwise specified in the agreement or certificate, the following provisions will apply upon termination of employment after the lapse of the Non-Exercise Period:

• Without cause or retirement. Pursuant to the proposed amendments, if the participant’s employment is terminated with the Company and every affiliate (a) by the Company and every affiliate without cause or (b) because of retirement, the participant may exercise the unexercised portion of the option or stock appreciation right at any time for twelve months after the date of termination in the case of termination of the participant’s employment by the Company without cause, or at any time for five years after the date of termination in the case of termination because of retirement (instead of twelve months as currently provided), in whole or in part, (a) in the case of termination without cause, to the extent he or she could have exercised the option or stock appreciation right if the participant had remained employed during the twelve month period, or (b) in the case of retirement, to the extent of any or all of the options or stock appreciation rights held by the participant, whether or not the Non-Exercise Period has elapsed.

“Cause” means the failure by a participant to perform his or her duties with the Company or a subsidiary as a result of incompetence or willful neglect or the willful engaging in conduct which is injurious to the Company or an affiliate, monetarily or otherwise, as determined by the Committee in its sole discretion, including, without limitation, the existence of a conflict of interest or the commission of a crime, all as determined in good faith by the Board of Directors.

“Retirement” means the termination of employment after either attainment of age 65 or a retirement age specified in the provisions of a retirement plan maintained by the Company for its employees generally.

Pursuant to the proposed amendments, if the participant dies within this twelve month period in the case of termination of the participant’s employment by the Company without cause, or within this five year period in the case of termination because of retirement of the participant (instead of twelve months as currently provided), the option or stock appreciation right may be exercised at any time during the twelve months after the date of the death of the participant by his or her successor, (a) in the case of termination without cause, to the extent he or she could have exercised the option or stock appreciation right if the participant had remained employed during

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the twelve month period, without regard to the requirement of exercise within twelve months after termination of employment, or (b) in the case of retirement, to the extent of any or all of the options or stock appreciation rights held by the participant, whether or not the Non-Exercise Period has elapsed with respect to the options or stock appreciation rights, without regard to the requirement of exercise within five years after termination of employment.

Any unexercised portion will terminate immediately if and when the participant becomes an employee, agent or principal of a competitor of the Company, or of any affiliate, without the consent of the Company.

• Death or disability. Pursuant to the proposed amendments, if the participant’s employment is terminated with the Company and every affiliate because of death or disability while in the employ of the Company or any affiliate, the option or stock appreciation right may be exercised by the participant or by his or her personal representative at any time during the five year period after the date of death or disability (instead of twelve months as currently provided) for the total number of shares subject to the participant’s options or stock appreciation rights, whether or not the Non-Exercise Period has elapsed.

“Disability” means that the participant is permanently and totally disabled within the meaning of Section 422(c)(6) of the Internal Revenue Code of 1986, as amended, which, as of the date hereof, will mean that he or she is unable to engage in any substantial gainful activity by reason of any medically determinable physical or mental impairment which can be expected to result in death or which has lasted or can be expected to last for a continuous period of not less than twelve months. All determinations as to the date and extent of disability of any participant will be made by the Committee upon the basis of such evidence as it deems necessary or desirable.

Pursuant to the proposed amendments, if a participant dies within such five year period following disability (instead of twelve months as currently provided), the option or stock appreciation right may be exercised at any time during the period of twelve months after the date of the death of the participant by a legal representative for the number of shares subject to any or all the options or stock appreciation rights held by the deceased participant, whether or not the Non-Exercise Period has elapsed with respect to the options or stock appreciation rights, without regard to the requirement of exercise within five years after termination of employment.

• For cause or voluntary termination. If the participant’s employment is terminated with the Company and every affiliate by the Company and every affiliate for cause or voluntarily by the participant with the Company and every affiliate for any reason other than retirement, any unexercised portion of any option or stock appreciation right granted to the participant will terminate with his or her termination of employment.

No transfer of an option or stock appreciation right by a participant by will or by the laws of descent and distribution will be effective unless the Company is furnished with written notice and a copy of the will and/or any other evidence as the Committee may deem necessary to establish the validity of the transfer and the acceptance by the designee(s) of the terms and conditions of the option or stock appreciation right. In the event of disability, the Committee may demand medical records and/or any other evidence that it deems necessary to establish the total and permanent disability of the participant and, in the absence of this evidence, may refuse to permit the exercise of any option or stock appreciation right later than three months after the date of termination of employment. Under no circumstances will the right of any designee to exercise any option or stock appreciation right extend beyond the twelve month period from date of death. Notwithstanding the foregoing, in no event may a participant exercise an option or a stock appreciation right beyond the specified term of the award.

Options or stock appreciation rights granted under the 2003 LTIP will not be affected by any change in employment responsibilities so long as the participant continues to be an employee of the Company or an affiliate thereof. If an affiliate of the Company ceases to be an affiliate of the Company, a participant

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who is employed by a former affiliate and is no longer employed by either the Company or any current affiliate of the Company will be deemed to have terminated employment with the Company and every affiliate of the Company, and the termination will be deemed to have been made by the Company without cause, except if a participant’s employment is terminated or deemed terminated with the Company and every subsidiary of the Company solely as a result of:

• the sale of an affiliate of the Company,

• the sale of the assets of a portion of the business of the Company or an affiliate of the Company, or

• a corporate reorganization or restructuring,

then at any time during the twelve month period after the date of such termination, the participant may exercise the options or stock appreciation rights for which the Non-Exercise Period has elapsed for the total number of shares subject to such options or stock appreciation rights, and the Committee may, in its sole and absolute discretion, allow the participant to exercise the options or stock appreciation rights for which the Non-Exercise Period has not elapsed for the total number of shares subject to such options or stock appreciation rights, provided that if the award is an incentive stock option and is exercised more than three months after the termination, the award will be treated as a non-qualified stock option. Any unexpired portion will terminate immediately if and when the participant becomes an employee, agent or principal of a competitor of the Company, or of any affiliate of the Company, without the consent of the Company.

Performance Shares. Pursuant to the proposed amendments, unless otherwise provided in the agreement or certificate, if a participant’s employment with the Company or any of its affiliates terminates during a performance period because of retirement (instead of death, disability or retirement as currently provided), or under other circumstances provided by the Committee in its discretion in the applicable agreement or certificate or otherwise, the participant will be entitled to receive a number of performance shares (or payment therefore) at the end of the performance period based upon the extent to which achievement of performance targets was satisfied at the end of the period (as determined at the end of the performance period) and prorated for the portion of the performance period during which the participant was employed by the Company or any affiliate. Pursuant to the proposed amendments, unless otherwise provided in the agreement or a certificate, if a participant’s employment with the Company or any affiliate terminates during a performance period because of death or disability, the participant will be entitled to receive a number of performance shares (or payment therefore) in the month following such separation from service as though achievement of one hundred percent of performance targets was satisfied at the end of such period and prorated for the portion of the performance period during which the participant was employed by the Company or any affiliate. Except as provided above or in the applicable agreement or certificate, if a participant’s employment terminates with the Company or any of its affiliates during a performance period, then the participant will not be entitled to any payment with respect to that performance period.

Restricted Stock. Except as provided in the applicable agreement or certificate, in case of a participant’s death, disability or retirement, the participant will be entitled to receive a number of shares of restricted stock under outstanding awards that has been pro-rated for the portion of the term of the awards during which the participant was employed by the Company or any affiliate, and with respect to the shares, all restrictions will lapse. Any shares of restricted stock as to which restrictions do not lapse under the preceding sentence will terminate at the date of the participant’s termination of employment for any other reason and the shares of restricted stock will be forfeited to the Company.

Awards to Consultants or Advisors. The termination provisions described above apply with equal force to awards granted to participants who are consultants and advisors of the Company or its affiliates, except that references to “employment” and its termination should be interpreted as references to “service” and its termination.

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Change in Control

Certain provisions of the 2003 LTIP apply upon a change in control (as defined in the 2003 LTIP), which generally includes:

(i) A change in a majority of the incumbent Board of Directors, defined as the directors who were serving as of the effective date of the 2003 LTIP and any individual who becomes a director subsequent to such date whose election or nomination for election was approved by a majority of such directors other than in connection with a proxy contest.

(ii) The acquisition by any individual, entity or group of beneficial ownership of more than 25% of either the outstanding voting securities entitled to vote in the election of directors or the outstanding shares of common stock, provided that a change of control will not be deemed to have occurred as a result of any acquisition by the Company or a subsidiary or an employee benefit plan sponsored or maintained by the Company or a subsidiary.

(iii) The consummation by the Company of a reorganization, merger, share exchange or consolidation, unless following such event (i) all or substantially all of the individuals and entities who were beneficial owners, respectively, of the outstanding common stock and outstanding voting securities immediately prior to such event own more than 50% of the then-outstanding shares of common stock and the combined voting power of the then-outstanding voting securities of the corporation resulting from such event (including a corporation that owns the Company through one or more subsidiaries as a result of such transaction), (ii) no individual, entity or group (excluding any employee benefit plan, or related trust, of the Company or any corporation resulting from the transaction) beneficially owns more than 25% of the then-outstanding shares of common stock or combined voting power entitled to vote generally in the election of directors or other governing body of the Company or the resulting corporation, except to the extent that such ownership existed prior to the transaction, and (iii) at least a majority of the members of the board of directors of the corporation resulting from the transaction were members of the incumbent board at the time of the execution of the initial agreement or of the action of the board approving such event or transaction.

(iv) The Company sells or otherwise disposes of all or substantially all of its assets (in one or a series of transactions).

(v) The shareholders of the Company approve a plan to liquidate or dissolve the Company, and the Company commences such liquidation or dissolution.

Except as may be otherwise specified in the terms of any award, including, without limitation, those held by non-employee directors, consultants and advisors, upon the occurrence of a change in control, outstanding awards will be treated as follows:

Options and Stock Appreciation Rights. Each outstanding option and stock appreciation right will become immediately and fully exercisable for a one year period following the change in control date but in no event beyond the specified term of the awards; provided that, after the one year period, the normal exercise provisions of the plan and the award will govern; and provided further, that in the event a participant’s employment with the Company and all affiliates is terminated within two years of a change in control date, all outstanding options and stock appreciation rights of the participant at the date of termination will be exercisable for a period of six months beginning on the date of termination but in no event beyond the specified term of the award.

Restricted Stock. Each outstanding share of restricted stock will immediately and fully vest, and any restrictions will lapse.

Performance Shares. Each outstanding performance share will immediately and fully vest, and any restrictions will lapse.

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Other Stock-Based Awards. Each outstanding other stock-based award will immediately and fully vest, and any restrictions will lapse.

In addition, the Committee will have the authority to accelerate the vesting and permit the immediate exercisability of outstanding awards under any other circumstances as it deems appropriate.

Miscellaneous Provisions

No participant may receive any combination of awards relating to more than 200,000 shares in the aggregate in any fiscal year of the Company under the 2003 LTIP.

Appropriate adjustments in the aggregate number and type of securities available for awards, in the limitations on the number and type of securities that may be issued to an individual participant, in the number and type of securities and amount of cash subject to awards then outstanding, in the number of options to be awarded a non-employee director, in the option purchase price as to any outstanding options, in the purchase price as to any outstanding stock appreciation rights, and in outstanding performance shares and payments with respect to outstanding performance shares, and comparable adjustments, if applicable, to any outstanding other stock-based award, will be made by the Committee to give effect to adjustments made in the number or type of shares through a fundamental change, reorganization, recapitalization, reclassification, stock dividend, stock split, reverse stock split, stock combination, rights offering, spin-off or other relevant change, provided that fractional shares will be rounded to the nearest whole share, for which purpose one-half share will be rounded down to the nearest whole share.

The 2003 LTIP is effective as of January 1, 2006, provided that the shareholders approve and ratify the 2003 LTIP at the Annual Meeting of Shareholders. In the event the shareholders of the Company do not approve the amendments to the plan by January 1, 2007, all awards under the 2003 LTIP granted on or after January 1, 2006 which are subject to shareholder approval will be voided and the 2003 LTIP will continue under its current terms. The 2003 LTIP will remain in effect until the termination of the 2003 LTIP or the later of the distribution of all shares reserved under the 2003 LTIP or the expiration or lapse of all awards. No award of an incentive stock option will be made more than ten years after the effective date (or any other limit as may be required by the Internal Revenue Code of 1986, as amended) if this limitation is necessary to qualify the option as an incentive stock option. The Company may withhold from any payment under the 2003 LTIP any required withholding taxes. The Board of Directors may amend, modify, terminate, or suspend the 2003 LTIP, and the Committee may amend any agreement or certificate without approval, unless required by applicable law, provided that no participant’s rights are adversely affected unless otherwise permitted by an agreement or a certificate or the law. The Committee may make appropriate adjustments to take into account changes in capitalization. The 2003 LTIP will be unfunded and will not require the segregation of any assets.

Certain U.S. Federal Income Tax Consequences

The following is a summary of the United States federal income tax consequences that generally will arise with respect to awards granted under the 2003 LTIP and with respect to the sale of common stock acquired under the 2003 LTIP. This summary is based upon the provisions of the Internal Revenue Code of 1986, as amended (the “Code”), and regulations promulgated thereunder, as in effect on the date of this proxy statement. Changes in the law may modify this discussion, and in some cases, the changes may be retroactive. Further, this summary is not intended to be a complete discussion of all the federal income tax consequences associated with the 2003 LTIP. Accordingly, for precise advice as to any specific transaction or set of circumstances, participants should consult with their own tax and legal advisors. Participants should also consult with their own tax and legal advisors regarding the application of any state, local, and foreign taxes and any federal gift, estate and inheritance taxes.

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Incentive Stock Options. Some options may constitute “incentive stock options” within the meaning of Section 422 of the Code. If the Company grants an incentive stock option, the participant will not be required to recognize income upon the grant of the incentive stock option, and the Company will not be allowed to take a deduction.

Similarly, when the participant exercises any incentive stock options, provided the participant has not ceased to be an employee for more than three months before the date of exercise, the participant will not be required to recognize income, and the Company will not be allowed to take a deduction. For purposes of the alternative minimum tax, however, the amount by which the aggregate fair market value of common stock acquired on exercise of an incentive stock option exceeds the exercise price of that option generally will be an adjustment included in the participant’s alternative minimum taxable income for the year in which the incentive stock option is exercised. The Code imposes an alternative minimum tax on a taxpayer whose alternative minimum taxable income, as defined in Section 55(b)(2) of the Code, exceeds the taxpayer’s adjusted gross income.

Additional tax consequences will depend upon how long participants hold the shares of common stock received after exercising the incentive stock options. If a participant holds the shares for more than two years from the date of grant and one year from the date of exercise of the option, upon disposition of the shares, the participant will not recognize any ordinary income, and the Company will not be allowed to take a deduction. However, the difference between the amount the participant realizes upon disposition of the shares and the basis (i.e., the amount the participant paid upon exercise of the incentive stock option) in those shares will be taxed as a long-term capital gain or loss.

If the participant disposes of shares acquired upon exercise of an incentive stock option which he or she has held for less than two years from the date of grant or one year from the date of exercise (“Disqualifying Disposition”), the participant generally will recognize ordinary income in the year of the disposition. To calculate the amount of ordinary income that must be recognized upon a Disqualifying Disposition, make the following determinations and calculations:

• determine which is smaller: the amount realized on disposition of the shares or the fair market value of the shares on the date of exercise;

• next, subtract the basis in those shares from the smaller amount. This is the amount of ordinary income that the participant must recognize.

To the extent that the participant recognizes ordinary income, the Company is allowed to take a deduction. In addition, the participant must recognize as short-term or long-term capital gain, depending on whether the holding period for the shares exceeds one year, any amount that the participant realizes upon disposition of those shares which exceeds the fair market value of those shares on the date the participant exercised the option. The participant will recognize a short-term or long-term capital loss, depending on whether the holding period for the shares exceeds one year, to the extent the basis in the shares exceeds the amount realized upon disposition of those shares.

As noted above, the excess of the fair market value of the shares at the time the participant exercises his or her incentive stock option over the exercise price for the shares is a tax adjustment item for the purposes of the alternative minimum tax.

Non-Qualified Stock Options. If the participant receives a non-qualified stock option, the participant will not recognize income at the time of the grant of the stock option; however, the participant will recognize ordinary income upon the exercise of the non-qualified stock option. The amount of ordinary income recognized equals the difference between (a) the fair market value of the stock on the date of exercise and (b) the amount of cash paid for the stock. The Company will be entitled to a deduction in the same amount. The ordinary income the participant recognizes will be subject to applicable tax

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withholding by the Company. When the participant sells these shares, any difference between the sales price and the basis (i.e., the amount paid for the stock plus the ordinary income recognized by the participant) will be treated as a capital gain or loss.

Restricted Stock. Unless a timely Section 83(b) election is made, as described in the following paragraph, a participant generally will not recognize taxable income upon the grant of restricted stock because the restricted stock generally will be nontransferable and subject to a substantial risk of forfeiture. A participant will recognize ordinary income when the restrictions that impose a substantial risk of forfeiture of the shares of common stock or the transfer restrictions (collectively, the “Restrictions”) lapse. The amount recognized will be equal to the difference between the fair market value of the shares at this time and the original purchase price paid for the shares, if any. The ordinary income recognized by a participant with respect to restricted stock awarded under the 2003 LTIP will be subject to applicable tax withholding by the Company. If a timely Section 83(b) election has not been made, any dividends received with respect to common stock subject to the Restrictions will be treated as additional compensation income and not as dividend income.

A participant may elect, pursuant to Section 83(b) of the Code, to recognize as ordinary income the fair market value of the restricted stock upon grant, notwithstanding that the restricted stock would otherwise not be includable in gross income at that time. If the election is made within 30 days of the date of grant, then the participant would include in gross income an amount equal to the difference between the fair market value of the restricted stock on the date of grant and the purchase price paid for the restricted stock, if any. Any change in the value of the shares after the date of grant will be taxed as a capital gain or capital loss only if and when the shares are disposed of by the participant. If the Section 83(b) election is made, the participant’s capital gains holding period begins on the date of grant.

The Section 83(b) election is irrevocable. If a Section 83(b) election is made and the participant then forfeits the restricted stock, the participant may not deduct as a loss the amount previously included in gross income.

A participant’s tax basis in shares of restricted stock received pursuant to the 2003 LTIP will be equal to the sum of the amount (if any) the participant paid for the common stock and the amount of ordinary income recognized by the participant as a result of making a Section 83(b) election or upon the lapse of the Restrictions. Unless a Section 83(b) election is made, the participant’s holding period for the shares for purposes of determining gain or loss on a subsequent sale will begin on the date the Restrictions on the shares lapse.

In general, the Company will be entitled to a deduction at the same time, and in an amount equal to, the ordinary income recognized by a participant with respect to shares of restricted stock awarded pursuant to the 2003 LTIP.

If, subsequent to the lapse of the Restrictions on the shares, the participant sells the shares, the difference, if any, between the amount realized from the sale and the tax basis of the shares to the participant will be taxed as a capital gain or capital loss.

Stock Appreciation Rights/Performance Shares. A participant generally will not recognize taxable income upon the grant of stock appreciation rights or performance shares. Instead, a participant will recognize as ordinary income, and the Company will have as a corresponding deduction, any cash delivered and the fair market value of any common stock delivered in payment of an amount due under the stock appreciation right or performance share award. The ordinary income the participant recognizes will be subject to applicable tax withholding by the Company.

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Upon selling any common stock received by a participant in payment of an amount due under a stock appreciation right or performance share award, the participant generally will recognize a capital gain or loss in an amount equal to the difference between the sale price of the common stock and the participant’s tax basis in the common stock (i.e. the ordinary income recognized by the participant).

Other Stock-Based Awards. The tax consequences associated with any other stock-based award granted under the 2003 LTIP will vary depending on the specific terms of the award, including whether the award has a readily ascertainable fair market value, whether or not the award is subject to forfeiture provisions or restrictions on transfer, the nature of the property to be received by the participant under the award, the applicable holding period and the participant’s tax basis.

Income Tax Rates on Capital Gain and Ordinary Income. Under current tax law, short-term capital gain and ordinary income will be taxable at a maximum federal rate of 35%. Phaseouts of personal exemptions and reductions of allowable itemized deductions at higher levels of income may result in slightly higher marginal tax rates. Ordinary compensation income generally will also be subject to the Medicare tax and, under certain circumstances, a social security tax. On the other hand, long-term capital gain will be taxable at a maximum federal rate of 15%.

Section 162(m) of the Code. Pursuant to Section 162(m) of the Code, the Company may not deduct compensation of more than $1,000,000 that is paid in a taxable year to an individual who, on the last day of the taxable year, is our chief executive officer or among one of our four other highest compensated officers for that year. The deduction limit, however, does not apply to certain types of compensation, including qualified performance-based compensation. The Committee may structure certain performance-based awards utilizing the performance criteria set forth in the plan so that payments under such awards may be treated as qualified performance-based compensation.

Section 409A of the Code. Pursuant to Section 409A of the Code, significant restrictions have been imposed on the ability to defer the taxation of compensation, including without limitation, the deferral of income pursuant to some of the arrangements described herein (e.g., performance shares). Violation of Section 409A of the Code triggers immediate inclusion in income and application of income and additional taxes.

Section 280G of the Code and Section 4999 of the Code. Under Section 280G of the Code and Section 4999 of the Code, the Company is prohibited from deducting any “excess parachute payment” to an individual, and the individual must pay a 20% excise tax on any “excess parachute payment.” An individual’s “parachute payments” which exceed his or her average annual compensation will generally be treated as “excess parachute payments” if the present value of such payments equals or exceeds three times the individual’s average annual compensation. A payment generally may be considered a “parachute payment” if it is contingent on a change in control of the Company.

Non-United States Taxpayers. If the participant is subject to the tax laws of any country other than the United States, the participant should consult his or her own tax and legal advisors to determine the tax and legal consequences of any award received under the 2003 LTIP.

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2003 LTIP Benefits

The 2003 LTIP will provide the directors, officers, and employees of the Company with certain benefits, as described above and in the chart below. Therefore, the current directors and executive officers of the Company have a direct personal interest in the approval of the 2003 LTIP. If the 2003 LTIP is approved by the shareholders, the following persons will receive the following benefits:

New Plan Benefits

Sigma-Aldrich Corporation 2003 Long-Term Incentive Plan as Amended and Restated

Name and Position	Target (1)	Maximum (1)	Number of Shares Underlying Options (2)
Jai P. Nagarkatti, President & Chief Executive Officer	5,500	8,250	17,500
Michael R. Hogan Chief Administrative Officer, Chief Financial Officer & Secretary	2,200	3,300	10,000
David W. Julien President, Research Specialties	2,200	3,300	10,000
Franklin D. Wicks President, SAFC	2,200	3,300	10,000
Gilles A. Cottier President, Research Essentials	2,200	3,300	10,000
Executive Group	27,400	41,100	33,750
Non-Executive Director Group (3)		—	35,000
Non-Executive Officer Employee Group	45,460	68,190	390,900

(1) Reflects the target and maximum number of Performance Shares granted at the beginning of the performance period for the awards (January 1, 2006 through December 31, 2008). The actual amounts will be determined at the end of the performance period with possible payouts ranging from 0% to 150% of the target amount based upon the achievement of specified performance criteria. One-half of the award will be based upon the Company’s three-year average return on equity and one-half of the award will be based upon the Company’s three-year average revenue growth (adjusted for currency but including acquisitions). Each Performance Unit will be paid out in shares of Company’s common stock and cash as follows: one-half a share of the Company’s common stock and the cash equivalent of one-half a share of the Company’s common stock, subject to deduction for tax withholding.

(2) Options to be granted in 2006 have not been determined at this time. The 2006 shares to be issued are estimated based upon 2005 stock option grants. These awards are not necessarily indicative of awards that we may make in the future.

(3) During 2006, seven of the non-employee directors will receive 5,000 stock option grants subsequent to the 2006 Annual Shareholders Meeting if elected at that meeting.

On January 1, 2006, each non-employee director received 600 shares of Sigma-Aldrich Corporation Common Stock in lieu of an increase in cash compensation.

Any other future benefits that will be received by other participants under the 2003 LTIP are not determinable at this time. Such awards will be granted at the discretion of the Committee.

A favorable vote of the majority of the outstanding shares represented in person or by proxy at the Meeting and entitled to vote will be required for approval of the adoption of the 2003 LTIP.

The Board of Directors recommends a vote FOR the approval of the 2003 LTIP.

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AUDIT FIRM FEE SUMMARY

During 2005 and 2004, the Company retained its independent registered public accountant, KPMG LLP, to provide services in the following categories and amounts:

	2005		2004
Audit Fees	$	2,144,000	$	1,684,000
Audit-related Fees (1)		74,000		66,000
Tax-related Fees (2)		15,000		—
All Other Fees (3)		28,000		77,000

(1) Relates to fees for audits of the Company’s employee benefit plans and other audit-related services.

(2) Relates to fees for miscellaneous tax services in Germany.

(3) Relates to fees for services necessary to comply with statutory requirements of foreign governments.

The Audit Committee pre-approves all fees paid to KPMG LLP prior to the commencement of services. The Audit Committee has considered whether the provision of non-audit services by the Company’s independent registered public accountant is compatible with maintaining auditor independence.

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REPORT OF AUDIT COMMITTEE

To the Board of Directors of Sigma-Aldrich Corporation:

We have reviewed and discussed with management the Company’s audited financial statements as of and for the year ended December 31, 2005.

Management is responsible for the Company’s financial reporting process including its system of internal control over financial reporting, and for the preparation of consolidated financial statements in accordance with generally accepted accounting principles. The Company’s independent registered public accountant is responsible for auditing those financial statements. Our responsibility is to monitor and review these processes. It is not our duty or our responsibility to conduct auditing or accounting reviews or procedures. We are not employees of the Company and some of us may not be, and do not represent ourselves to be or to serve as, registered accountants or auditors by profession or experts in the fields of accounting or auditing. Therefore, we have relied, without independent verification, on management’s representation that the financial statements have been prepared with integrity and objectivity and in conformity with accounting principles generally accepted in the United States of America and on the representations of the independent registered public accountant included in their report on the Company’s financial statements. Our oversight does not provide us with an independent basis to determine that management has maintained appropriate accounting and financial reporting principles or policies, or appropriate internal controls and procedures designed to assure compliance with accounting standards and applicable laws and regulations. Furthermore, our considerations and discussions with management and the independent registered public accountant do not assure that the Company’s financial statements are presented in accordance with generally accepted accounting principles, that the audit of the Company’s financial statements has been carried out in accordance with generally accepted auditing standards or that our Company’s independent registered public accountant is in fact “independent”.

Management completed the documentation, testing and evaluation of the Company’s system of internal control over financial reporting in response to the requirements set forth in Section 404 of the Sarbanes-Oxley Act of 2002 and related regulations. We received periodic reports on the progress of the evaluation and provided oversight and advice to management during the process. In connection with this oversight, we received periodic updates provided by management and KPMG LLP at each regularly scheduled Committee meeting. At the conclusion of the process, management provided the Committee with and the Committee reviewed a report on the effectiveness of the Company’s internal control over financial reporting. We will continue to oversee the Company’s efforts related to its internal control over financial reporting and management’s preparations for the evaluation in 2006.

We have discussed with the independent registered public accountant the matters required to be discussed by Statement on Auditing Standards No. 61, Communication with Audit Committees, as amended, by the Auditing Standards Board of the American Institute of Certified Public Accountants.

We have received and reviewed the written disclosures and the letter from the independent registered public accountant required by Independence Standard No. 1, Independence Discussions with Audit Committees, as amended, by the Independence Standards Board, and have discussed with the independent registered public accountant their independence.

Based upon the reports and discussions described in this report, and subject to the limitations on the role and responsibilities of the Committee referred to above and in its Charter, the Committee recommended to the Board that the audited financial statements be included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2005 to be filed with the Securities and Exchange Commission.

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We have also considered whether the provision of services by KPMG LLP not related to the audit of the financial statements referred to above and to the reviews of the interim financial statements included in the Company Forms 10-Q in 2005 is compatible with maintaining the independence of KPMG LLP.

AUDIT COMMITTEE

W. Lee McCollum (Chairman)

Avi M. Nash

D. Dean Spatz

Barrett A. Toan

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VOTE REQUIRED; OTHER MATTERS

The affirmative vote of the holders of a majority of the shares that are represented in person or by proxy at the Meeting and are entitled to vote on the subject matter is required to elect directors, to ratify the appointment of KPMG as the Company’s independent registered public accountant, to approve the amended and restated 2003 Long-Term Incentive Plan and to approve any other matters properly brought before the Meeting. Shares represented by proxies which are marked “withhold authority” with respect to the election of any one or more nominees as directors and proxies which are marked to abstain or vote against the ratification of the independent registered public accountant or the amended and restated 2003 Long-Term Incentive Plan or to deny discretionary authority on other matters will be counted for the purpose of determining the number of shares represented by proxy at the Meeting. Such proxies will thus have the same effect as if the shares represented thereby were voted against such nominee or nominees, against ratification of the independent registered public accountant, against approval of the amended and restated 2003 Long-Term Incentive Plan and against such other matters, respectively. Shares not voted on one or more but less than all such matters on proxies returned by brokers will be treated as not represented at the Meeting as to such matter or matters and will thus have no effect.

The Company knows of no other matters to be presented for consideration at the Meeting. If any other matters are properly brought before the Meeting, the persons named in the accompanying proxy intend to vote or act with respect to items in accordance with their best judgment. The affirmative vote of the holders of the majority of shares represented at the meeting and entitled to vote on the subject matter is required for approval of any such other matters which are properly brought before the meeting.

HOUSEHOLDING OF ANNUAL MEETING MATERIALS

The Securities and Exchange Commission permits registrants to send a mailing containing a single annual report and proxy statement to any household at which two or more shareholders reside if the registrant believes they are members of the same family. The procedure, referred to as householding, reduces the volume of duplicate information shareholders receive and reduces the expense to the Company. The Company has not implemented this householding rule with respect to its record holders; however, a number of brokerage firms have instituted householding, which may impact certain beneficial owners of Common Stock. If your family has multiple accounts by which you hold Common Stock, you may have previously received a householding information notification from your broker. Please contact your broker directly if you have any questions, require additional copies of the Proxy Statement or annual report, or wish to revoke your decision to household, and thereby receive multiple reports.

SHAREHOLDER PROPOSALS

Written proposals of shareholders to be included in the Proxy Statement and Proxy for the next Annual Meeting of Shareholders must be received at the Company’s principal executive office, 3050 Spruce Street, St. Louis, Missouri 63103, no later than December 1, 2006. Upon receipt of any such proposal, the Company will determine whether or not to include such proposal in the Proxy Statement and Proxy in accordance with regulations governing the solicitation of proxies.

Under the Company’s amended By-laws, in order for a shareholder to nominate a candidate for director, or to bring other business before a shareholders’ meeting, timely notice must be given to and received by the Company in advance of the meeting. In the case of an annual meeting, ordinarily, such notice must be given and received not less than 90 nor more than 120 days before the first anniversary

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of the preceding year’s annual meeting (or between January 2, 2007 and February 1, 2007 in the case of the 2007 annual meeting of shareholders); provided, however, that in the event that the date of the annual meeting is advanced by more than 30 days or delayed by more than 60 days from such anniversary date, then such notice must be given by the shareholder and received by the Company not earlier than the opening of business on the 120th day prior to such annual meeting and not later than the close of business on the later of the 90th day prior to such annual meeting or the 10th day following the day on which public announcement of such meeting is first made. In certain cases, notice may be delivered and received later if the number of directors to be elected to the Board of Directors is increased. In the case of a nomination, the shareholder submitting the notice must describe various matters as specified in the Company’s amended By-laws, including the name and address of each proposed nominee, his or her occupation and number of shares held, and certain other information. In the case of a proposal of other business, the notice must include a description of the proposed business (which must otherwise be a proper subject for action by the shareholders), the reasons therefor and other matters specified in the Company’s amended By-laws.

In the case of special meetings of shareholders, only such business will be conducted, and only such proposals will be acted upon, as are brought pursuant to the notice of the meeting. In the event the Company calls a special meeting of shareholders to elect one or more directors, any shareholder may nominate a candidate, if such shareholder complies with the timing and notice requirements contained in the amended By-laws. Proposals of other business may be considered at a special meeting requested in accordance with the amended By-laws only if the requesting shareholders give and the Company receives a notice containing the same information as required for an annual meeting at least 30 days prior to the earlier of the time the person so designated calls the meeting pursuant to Section 2.02 of the amended By-laws or the day on which public announcement of the date of the meeting is first made.

In the case of an annual or special meeting, the shareholder proponent must be a shareholder of the Company who was a shareholder of record both at the time of giving of notice and at the time of the meeting and who is entitled to vote at the meeting. Any such notice must be given to the Secretary of the Company, whose address is 3050 Spruce Street, St. Louis, Missouri 63103. Any shareholder desiring a copy of the Company’s Certificate of Incorporation, as amended, or amended By-laws will be furnished a copy without charge upon written request to the Secretary.

The time limits described above also apply in determining whether notice is timely for purposes of Rule 14a-4(c) under the Securities Exchange Act of 1934 relating to exercise of discretionary voting authority, and are separate from and in addition to the Securities and Exchange Commission’s requirements that a shareholder must meet to have a proposal included in the Company’s proxy statement for an annual meeting.

In each case, the proposals or notices described above must be submitted in writing to Michael R. Hogan, Secretary, Sigma-Aldrich Corporation, 3050 Spruce Street, St. Louis, Missouri 63103.

By Order of the Board of Directors,

Michael R. Hogan, Secretary

March 31, 2006

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APPENDIX A

SIGMA-ALDRICH CORPORATION

2003 LONG-TERM INCENTIVE PLAN

1. Purpose

The purpose of this 2003 Long-Term Incentive Plan is to motivate key personnel to produce a superior return to the shareholders of the Company by offering such individuals an opportunity to realize stock appreciation, by facilitating stock ownership and by rewarding them for achieving a high level of corporate performance. This Plan is also intended to facilitate recruiting and retaining key personnel of outstanding ability. The Plan is amended and restated effective for Awards granted on or after January 1, 2006. Awards granted prior to January 1, 2006 shall be governed by the terms of the Plan as in effect prior to this restatement.

2. Definitions

The capitalized terms used in this Plan have the meanings set forth below.

(a) “Affiliate” means any corporation that is a Subsidiary of the Company and, for purposes other than the grant of Incentive Stock Options, any limited liability company, partnership, corporation, joint venture, or any other entity in which the Company or any such Subsidiary owns a significant equity interest, as determined in the discretion of the Committee.

(b) “Agreement” means a written contract entered into between the Company or an Affiliate and a Participant or, in the discretion of the Committee, a written certificate issued by the Company or an Affiliate to a Participant, in either case, containing or incorporating the terms and conditions of an Award in such form (not inconsistent with this Plan) as the Committee approves from time to time, together with all amendments thereof, which amendments may be made unilaterally by the Company (with the approval of the Committee) unless such amendments are deemed by the Committee to be materially adverse to the Participant and are not required as a matter of law. A written contract or certificate may include an electronic communication not directly involving the physical transfer of paper that is suitable for the retention, retrieval and reproduction of information by the Participant.

(c) “Associate” means any full-time or part-time employee (including an officer or director who is also an employee) of the Company or an Affiliate. Except with respect to grants of Incentive Stock Options, “Associate” shall also include any Non-Employee Director serving on the Board or any consultant or advisor to the Company or an Affiliate. An Award may be granted to an employee in connection with hiring, retention or otherwise prior to the date the employee first performs services for the Company or an Affiliate, provided that such Awards shall not become vested prior to the date the employee first performs services. References in this Plan to “employment” and related terms (except for references to “employee” in this definition of “Associate,” in Section 7(a)(i) and in Section 6(f)(i) (except as provided in Section 6(f)(iv)) shall include the providing of services as a Non-Employee Director, consultant or advisor.

(d) “Award” means a grant made under this Plan in the form of Options, Stock Appreciation Rights, Restricted Stock, Performance Shares or any Other Stock-Based Award, whether singly, in combination or in tandem.

(e) “Board” means the Board of Directors of the Company.

(f) “Cause” shall mean:

(i) the failure by a Participant to perform his or her duties with the Company or an Affiliate as a result of incompetence or willful neglect or the willful engaging in conduct which is injurious to the

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Company or an Affiliate, monetarily or otherwise, as determined by the Committee in its sole discretion, including, without limitation, the existence of a conflict of interest or the commission of a crime or

(ii) in the case of a Non-Employee Director, habitual drug use or drunkenness, embezzlement of Company funds, conduct which is injurious to the Company, or conviction of a felony, all as determined in good faith by the Board.

(g) “Change in Control” shall mean any of the following:

(i) Individuals who constitute the Incumbent Board cease for any reason to constitute at least a majority of the Board.

(ii) More than 25% of (x) the combined voting power of the then outstanding voting securities of the Company entitled to vote generally in the election of directors (“Outstanding Company Voting Securities”) or (y) the then outstanding Shares of Stock (“Outstanding Company Common Stock”) is directly or indirectly acquired or beneficially owned (as defined in Rule 13d-3 under the Exchange Act, or any successor rule thereto) by any individual, entity or group (within the meaning of Section 13(d)(3) or 14(d)(2) of the Exchange Act), provided, however, that the following acquisitions and beneficial ownership shall not constitute Changes in Control pursuant to this clause (ii):

(A) any acquisition or beneficial ownership by the Company or a Subsidiary, or

(B) any acquisition or beneficial ownership by any employee benefit plan (or related trust) sponsored or maintained by the Company or one of more of its Subsidiaries.

(iii) Consummation of a reorganization, merger, share exchange or consolidation (a “Business Combination”), unless in each case following such Business Combination:

(A) all or substantially all of the individuals and entities who were the beneficial owners, respectively, of the Outstanding Company Common Stock and Outstanding Company Voting Securities immediately prior to such Business Combination beneficially own, directly or indirectly, more than 50% of, respectively, the then outstanding shares of common stock and the combined voting power of the then outstanding voting securities entitled to vote generally in the election of directors or other governing body, as the case may be, of the entity resulting from such Business Combination (including, without limitation, an entity that as a result of such transaction owns the Company through one or more subsidiaries);

(B) no individual, entity or group (excluding any employee benefit plan (or related trust) of the Company or such corporation resulting from such Business Combination) beneficially owns, directly or indirectly, more than 25% of, respectively, the then outstanding shares of common stock of the corporation resulting from such Business Combination or the combined voting power of the then outstanding voting securities of such corporation entitled to vote generally in the election of directors or other governing body of the entity resulting from such Business Combination, except to the extent that such individual, entity or group owned more than 25% of the Outstanding Company Common Stock or Outstanding Company Voting Securities prior to the Business Combination; and

(C) at least a majority of the members of the board of directors or other governing body of the entity resulting from such Business Combination were members of the Incumbent Board at the time of the execution of the initial agreement, or of the action of the Board, approving such Business Combination.

(iv) The Company shall sell or otherwise dispose of all or substantially all of the assets of the Company (in one transaction or a series of transactions).

(v) The shareholders of the Company shall approve a plan liquidate or dissolve the Company, and the Company shall commence such liquidation or dissolution.

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(h) “Change in Control Date” shall mean, in the case of a Change in Control defined in clauses (i) through (iv) of the definition thereof, the date on which the event occurs and, in the case of a Change in Control defined in clause (v) of the definition thereof, the date on which the Company shall commence such liquidation or dissolution.

(i) “Code” means the Internal Revenue Code of 1986, as amended and in effect from time to time, or any successor statute.

(j) “Committee” means the committee of directors appointed by the Board to administer this Plan. In the absence of a specific appointment, “Committee” shall mean the Compensation Committee of the Board. In the absence of any such committee, “Committee” shall mean the Board.

(k) “Company” means Sigma-Aldrich Corporation, a Delaware corporation, or any successor to all or substantially all of its businesses by merger, consolidation, purchase of assets or otherwise.

(l) “Competitor” means any business that is engaged in any work or activity that involves a product, process, service or development which is then competitive with and the same as or similar to a product, process, service or development on which the Participant worked or with respect to which the Participant had access to Confidential Information while with, employed by or providing services to the Company or any Affiliate. “Confidential Information” means:

(A) all technical and business information of the Company and its Affiliates, or

(B) which is learned or acquired by the Company or any Affiliate from others with whom the Company or any Affiliate has a business relationship in which, and as a result of which, similar information is revealed to the Company or an Affiliate, whether patentable or not, which is of a confidential, trade secret and/or proprietary character and which is either developed by the Participant (alone or with others) or to which the Participant had access during his or her employment or other arrangement, including all data, designs, plans, notes, memoranda, work sheets, formulas, processes, patents, and customer and supplier lists.

(m) “Disability” means that the Participant is permanently and totally disabled within the meaning of Section 422(c)(6) of the Code, which, as of the date hereof, shall mean that he or she is unable to engage in any substantial gainful activity by reason of any medically determinable physical or mental impairment which can be expected to result in death or which has lasted or can be expected to last for a continuous period of not less than twelve (12) months; provided, that in the case of a Non-Employee Director, Disability means that the individual has suffered physical or mental incapacity of such a nature as to prevent him or her from engaging in or performing the principal duties of his or her customary employment or occupation on a continuing or sustained basis. All determinations as to the date and extent of Disability of any Participant shall be made by the Committee upon the basis of such evidence as it deems necessary or desirable.

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

(o) “Fair Market Value” as of any date means, unless otherwise expressly provided in this Plan:

(i) (A) the closing sales price of a Share on the composite tape for New York Stock Exchange (“NYSE”) listed shares, or if Shares are not quoted on the composite tape for NYSE listed shares, on the Nasdaq National Market or any similar system then in use or,

(B) if clause (i)(A) is not applicable, the mean between the closing “bid” and the closing “asked” quotation of a Share on the Nasdaq National Market or any similar system then in use, or

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(C) if the Shares are not quoted on the NYSE composite tape or the Nasdaq National Market or any similar system then in use, the closing sale price of a Share on the principal United States securities exchange registered under the Exchange Act on which the Shares are listed, in any case on the specified date, for other purposes, or, if no sale of Shares shall have occurred on that date, on the next preceding day on which a sale of Shares occurred, or

(ii) if clause (i) is not applicable, what the Committee determines in good faith to be 100% of the fair market value of a Share on that date.

However, if the applicable securities exchange or system has closed for the day at the time of the event that triggers a determination of Fair Market Value, all references in this subsection (o) to the “date immediately preceding that date” shall be deemed to be references to “that date.” In the case of an Incentive Stock Option, if such determination of Fair Market Value is not consistent with the then current regulations of the Secretary of the Treasury, Fair Market Value shall be determined in accordance with said regulations. The determination of Fair Market Value shall be subject to adjustment as provided in Section 12(f) hereof.

(p) “Fundamental Change” means a dissolution or liquidation of the Company, a sale of substantially all of the assets of the Company (in one or a series of transactions), a merger or consolidation of the Company with or into any other corporation, regardless of whether the Company is the surviving corporation, or a statutory share exchange involving capital stock of the Company.

(q) “Incentive Stock Option” means any Option designated as such and granted in accordance with the requirements of Section 422 of the Code or any successor to such section.

(r) “Incumbent Board” means the group of directors consisting of (i) those individuals who, as of the effective date of the Plan, constituted the Board and (ii) any individuals who become directors subsequent to such effective date whose appointment, election or nomination for election by the shareholders of the Company was approved by a vote of at least a majority of the directors then comprising the Incumbent Board, excluding, however, members of the Incumbent Board who are no longer serving as directors. The Incumbent Board shall exclude any individual whose initial assumption of office occurred (i) as a result of an actual or threatened election contest with respect to the election or removal of directors or other actual or threatened solicitation of proxies or consents by or on behalf of a person (other than a solicitation of proxies by the Incumbent Board) or (ii) with the approval of the Incumbent Board but by reason of any agreement intended to avoid or settle a proxy contest.

(s) “Non-Employee Director” means a director of the Company who is not an employee of the Company, a Parent or a Subsidiary.

(t) “Non-Qualified Stock Option” means an Option other than an Incentive Stock Option.

(u) “Option” means a right to purchase Stock (or, if the Committee so provides in an applicable Agreement, Restricted Stock), including both Non-Qualified Stock Options and Incentive Stock Options.

(v) “Other Stock-Based Award” means an Award of Stock or an Award based on Stock other than Options, Stock Appreciation Rights, Restricted Stock or Performance Shares.

(w) “Parent” means a “parent corporation,” as that term is defined in Section 424(e) of the Code, or any successor provision.

(x) “Participant” means an Associate to whom an Award is made.

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(y) “Performance Period” means the period of time as specified in an Agreement over which Performance Shares are to be earned.

(z) “Performance Shares” means a contingent award of a specified number of Performance Shares, with each Performance Share equivalent to one or more Shares or a fractional Share or a Unit expressed in terms of one or more Shares or a fractional Share, as specified in the applicable Agreement, a variable percentage of which may vest depending upon the extent of achievement of specified performance objectives during the applicable Performance Period.

(aa) “Plan” means this 2003 Long-Term Incentive Plan, as amended and in effect from time to time.

(bb) “Restricted Stock” means Stock granted under Section 10 hereof so long as such Stock remains subject to one or more restrictions.

(cc) “Retirement” shall, except as otherwise provided in an Agreement, mean the termination of employment after either (i) attainment of age 65, or (ii) a retirement age specified in the provisions of a retirement plan maintained by the Company for its employees generally.

(dd) “Share” means a share of Stock.

(ee) “Stock” means the Company’s common stock, $1.00 par value per share (as such par value may be adjusted from time to time), or any securities issued in respect thereof by the Company or any successor to the Company as a result of an event described in Section 12(f).

(ff) “Stock Appreciation Right” means a right, the value of which is determined relative to appreciation in value of Shares pursuant to an Award granted under Section 8 hereof.

(gg) “Subsidiary” means a “subsidiary corporation,” as that term is defined in Section 424(f) of the Code, or any successor provision.

(hh) “Successor” with respect to a Participant means the legal representative of an incompetent Participant and, if the Participant is deceased, the legal representative of the estate of the Participant or the person or persons who may, by bequest or inheritance, or under the terms of an Award or of forms submitted by the Participant to the Committee under Section 12(h) hereof, acquire the right to exercise an Option or Stock Appreciation Right or receive cash and/or Shares issuable in satisfaction of an Award in the event of a Participant’s death.

(ii) “Term” means the period during which an Option or Stock Appreciation Right may be exercised or the period during which the restrictions placed on Restricted Stock or any other Award are in effect.

(jj) “Unit” means a bookkeeping entry that may be used by the Company to record and account for the grant of Stock, Stock Appreciation Rights and Performance Shares expressed in terms of Units of Stock until such time as the Award is paid, canceled, forfeited or terminated.

Except when otherwise indicated by the context, reference to the masculine gender shall include, when used, the feminine gender and any term used in the singular shall also include the plural.

3. Administration

(a) Authority Of Committee. The Committee shall administer this Plan or delegate its authority to do so as provided in Section 3(b) hereof. The Committee shall have exclusive power (acting alone or, to the extent the Committee deems appropriate, in conjunction with the full Board), subject to the

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limitations contained in this Plan, to make Awards and to determine when and to whom Awards will be granted and the form, amount and other terms and conditions of each Award, subject to the provisions of this Plan. The Committee, subject to the limitations contained in this Plan, may determine whether, to what extent and under what circumstances Awards may be settled, paid or exercised in cash, Shares or other Awards or other property, or canceled, forfeited or suspended, and shall have the authority, in its discretion, to accelerate the vesting and permit the immediate exercisability of outstanding Awards under such circumstances as it may deem appropriate. The Committee shall have the authority to interpret this Plan and any Award or Agreement made under this Plan, to establish, amend, waive and rescind any rules and regulations relating to the administration of this Plan, to determine the terms and provisions of any Agreement entered into hereunder (not inconsistent with this Plan) and to make all other determinations necessary or advisable for the administration of this Plan; provided, that to the extent the Committee determines that the restrictions imposed by this Plan preclude the achievement of material purposes of the Awards in jurisdictions outside the United States, the Committee will have the authority and discretion to modify those restrictions as the Committee determines to be necessary or appropriate to conform to applicable requirements or practices of jurisdictions outside the United States. The Committee may correct any defect, supply any omission or reconcile any inconsistency in this Plan or in any Award in the manner and to the extent it shall deem desirable. All determinations of the Committee in the administration of this Plan, as described herein, shall be final, binding and conclusive, including, without limitation, any adjustments pursuant to Section 12(f). A majority of the members of the Committee shall constitute a quorum for any meeting of the Committee. Notwithstanding the foregoing, in administering this Plan with respect to Awards for Non-Employee Directors, the Board shall exercise the powers of the Committee.

(b) Delegation Of Authority. The Committee may delegate all or any part of its authority under this Plan to the Chief Executive Officer of the Company for purposes of determining Awards of Options solely to Associates who are employees who are not then subject to the reporting requirements of Section 16 of the Exchange Act. In delegating such authority, the Committee shall specify the maximum number of Shares that may be awarded to any single employee and shall otherwise comply with applicable law. The authority so delegated to the Chief Executive Officer may not be subdelegated.

4. Shares Available; Maximum Payouts

(a) Shares Available. The number of Shares initially available for distribution under this Plan shall be 5,500,000 Shares. Such number of Shares shall also be increased by the number of Shares made available as a result of forfeitures, after the effective date of this Plan, under the Share Option Plan of 1987, as amended, the Share Option Plan of 1995, as amended, the Share Option Plan of 2000, as amended, the Directors’ Nonqualified Share Option Plan of 1998, as amended, and the Incentive Stock Bonus Plan, as amended (the “Other Plans”). The number of available Shares shall be subject to adjustment under Section 12(f) hereof. On and after the effective date of this Plan, no further awards may be made under the Other Plans. Shares issued under this Plan may be authorized and unissued Shares or issued Shares held as treasury shares.

(b) Shares Again Available. Any Shares subject to an Award under this Plan which are not used because the Award expires without all Shares subject to such Award having been issued or because the terms and conditions of the Award are not met may again be used for an Award under this Plan. Any Shares that are the subject of Awards which are subsequently forfeited to the Company pursuant to the restrictions applicable to such Award may again be used for an Award under this Plan. If a Participant exercises a Stock Appreciation Right, any Shares covered by the Stock Appreciation Right in excess of the number of Shares issued (or, in the case of a settlement in cash or any other form of property, in excess of the number of Shares equal in value to the amount of such settlement, based on the Fair Market Value of such Shares on the date of such exercise) may again be used for an Award

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under this Plan. If, in accordance with the Plan, a Participant uses Shares to (i) pay a purchase or exercise price, including an Option exercise price, or (ii) satisfy tax withholdings, such Shares may again be used for an Award under this Plan.

(c) Unexercised Awards. Any unexercised or undistributed portion of any terminated, expired, exchanged, or forfeited Award or any Award settled in cash in lieu of Shares (except as provided in Section 4(b) hereof) shall be available for further Awards.

(d) No Fractional Shares. No fractional Shares may be issued under this Plan; fractional Shares will be rounded down to the nearest whole Share.

5. Eligibility

Awards may be granted under this Plan to any Associate at the discretion of the Committee.

6. General Terms Of Awards

(a) Awards. Awards under this Plan may consist of Options (either Incentive Stock Options or Non-Qualified Stock Options), Stock Appreciation Rights, Performance Shares, Restricted Stock or Other Stock-Based Awards. Awards of Restricted Stock may, in the discretion of the Committee, provide the Participant with dividends or dividends and voting rights prior to vesting (whether vesting is based on a period of time, the attainment of specified performance conditions or otherwise).

(b) Amount Of Awards. Each Agreement shall set forth the number of Shares of Restricted Stock, Stock or Performance Shares subject to such Agreement, or the number of Shares to which the Option applies or with respect to which payment upon the exercise of the Stock Appreciation Right is to be determined, as the case may be, together with such other terms and conditions applicable to the Award (not inconsistent with this Plan) as determined by the Committee in its sole discretion.

(c) Term. Each Agreement, other than those relating solely to Awards of Stock without restrictions, shall set forth the Term of the Award and any applicable Performance Period for Performance Shares, as the case may be, but in no event shall the Term of an Award or the Performance Period be longer than ten (10) years after the date of grant; provided, that the Committee may, in its discretion, award Non-Qualified Stock Options with a Term not exceeding seventeen (17) years to Participants who are located outside the United States. An Agreement with a Participant may permit acceleration of vesting requirements and of the expiration of the applicable Term upon such terms and conditions as shall be set forth in the Agreement, which may, but, unless otherwise specifically required in this Plan, need not, include, without limitation, acceleration resulting from the occurrence of the Participant’s death, Disability or Retirement. Acceleration of the Performance Period of Performance Shares shall be subject to Section 9(b) hereof.

(d) Agreements. Each Award under this Plan shall be evidenced by an Agreement setting forth the terms and conditions, as determined by the Committee, that shall apply to such Award, in addition to the terms and conditions specified in this Plan.

(e) Transferability. Except as otherwise permitted by the Committee or provided in this Plan, during the lifetime of a Participant to whom an Award is granted, only such Participant (or such Participant’s Successor) may exercise an Option or Stock Appreciation Right or receive payment with respect to Performance Shares or any other Award. Except as otherwise permitted by the Committee, no Award of Restricted Stock (prior to the expiration of the restrictions), Options, Stock Appreciation Rights, Performance Shares or other Award (other than an award of Stock without restrictions) may be sold, assigned, transferred, exchanged, or otherwise encumbered, and any attempt to do so (including pursuant to a decree of divorce or any judicial declaration of property division) shall be of no effect. Notwithstanding the immediately preceding sentence, an Agreement may provide that an Award shall be transferable to a Successor in the event of a Participant’s death.

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(f) Termination Of Employment Generally. Except as otherwise determined by the Committee or provided in this Plan or by the Committee in an applicable Agreement (which may, without limitation, in the sole discretion of the Committee, provide for an extension of the exercisability of Options and Stock Appreciation Rights beyond the periods set forth in clauses (i)(A) through (F) below, subject in all events to clauses (i)(G) through (I) below), in the case of a Participant’s termination of employment, the following provisions shall apply:

(i) Employee Options and Stock Appreciation Rights. The provisions of this clause (i) shall apply to Participants who receive Awards while serving as an employee of the Company or an Affiliate:

(A) Non-Exercise Period. Except as otherwise provided in the applicable Agreement or in Section 6(g) or this Section 6(f)(i), if, prior to the expiration of twelve (12) months from the date of grant (the “Non-Exercise Period”), the Participant’s employment with the Company and every Affiliate shall terminate for any reason, the Participant’s right to exercise the Option or Stock Appreciation Right shall terminate and all rights thereunder shall cease.

(B) Termination Due to Retirement or Without Cause. If the Non-Exercise Period shall have elapsed and the Participant’s employment with the Company and every Affiliate shall have been terminated by the Company and every Affiliate thereafter without Cause or shall terminate because of the Retirement of a Participant from the Company and all Affiliates, the Participant shall have the right to exercise the unexercised portion of the Option or Stock Appreciation Right at any time during a period of twelve (12) months after the date of termination, in the case of termination of the Participant’s employment by the Company without Cause, or at any time during a period of five (5) years after the date of termination in the case of termination because of Retirement, in whole or in part, (x) in the case of termination of the Participant’s employment by the Company without Cause, to the extent the Participant could have exercised such Option or Stock Appreciation Right had the Participant remained in the employ of the Company during the twelve (12) month period, or (y) in the case of termination because of Retirement of a Participant, to the extent of any or all of the Options or Stock Appreciation Rights held by the Participant, whether or not the Non-Exercise Period shall have elapsed with respect to such Options or Stock Appreciation Rights. The unexercised portion of the Option or Stock Appreciation Right shall terminate no later than twelve (12) months after a Participant ceases to be an employee in the case of termination of the Participant’s employment by the Company without Cause, and no later than five (5) years after a Participant ceases to be an employee in the case of termination because of Retirement, and any unexercised portion shall terminate immediately if and when the Participant becomes an employee, agent or principal of a Competitor without the consent of the Company. If a Participant dies within such twelve (12) month period in the case of termination of the Participant’s employment by the Company without Cause, or within such five (5) year period in the case of termination because of Retirement of the Participant, at a time when the Participant is not an employee, agent or principal of a Competitor (or when the Company has consented to such relationship with a Competitor), the Option or Stock Appreciation Right may be exercised at any time during the period of twelve (12) months after the date of the death of the Participant by a Successor, (x) in the case of termination of the Participant’s employment by the Company without Cause, for the number of Shares which the deceased Participant could have acquired by the exercise of such Option or Stock Appreciation Right had the deceased Participant survived for the twelve (12) month period, without regard to the requirement of exercise within twelve (12) months after termination of employment, or (y) in the case of termination because of Retirement of a Participant, for the number of Shares subject to any or all the Options or Stock Appreciation Rights held by the deceased Participant, whether or not the Non-Exercise Period shall have elapsed with respect to such Options or Stock Appreciation Rights, without regard to the requirement of exercise within five (5) years after termination of employment.

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(C) Termination Due to Death or Disability. If the Non-Exercise Period shall have elapsed and a Participant dies or suffers a Disability while in the employ of the Company or any Affiliate, the Option or Stock Appreciation Right may be exercised by the Participant or by his or her Successor at any time during the five (5) year period after the date of such death or Disability for the total number of Shares subject to such Participant’s Options or Stock Appreciation Rights, whether or not the Non-Exercise Period shall have elapsed with respect to such Awards. If a Participant dies within such five (5) year period following Disability, the Option or Stock Appreciation Right may be exercised at any time during the period of twelve (12) months after the date of the death of the Participant by a Successor for the number of Shares subject to any or all the Options or Stock Appreciation Rights held by the deceased Participant, whether or not the Non-Exercise Period shall have elapsed with respect to such Options or Stock Appreciation Rights, without regard to the requirement of exercise within five (5) years after termination of employment.

(D) Termination For Cause. If the Non-Exercise Period shall have elapsed and a Participant’s employment is terminated by the Company and every Affiliate for Cause, any unexercised portion of any Option or Stock Appreciation Right granted to the Participant shall terminate with his or her termination of employment.

(E) Voluntary Termination Other Than Due to Retirement. If the Non-Exercise Period shall have elapsed and a Participant voluntarily terminates employment with the Company and every Affiliate for any reason other than the Retirement of a Participant, any unexercised portion of an outstanding Option or Stock Appreciation Right shall terminate with the termination of employment.

(F) Transferability. No transfer of an Option or a Stock Appreciation Right by a Participant pursuant to clauses (i) (B) and (C) above by will or by the laws of descent and distribution shall be effective unless the Company shall have been furnished with written notice thereof and a copy of the will and/or such other evidence as the Committee may deem necessary to establish the validity of the transfer and the acceptance by the Successor or Successors of the terms and conditions of the Option or Stock Appreciation Right. Under no circumstances shall the right of any such Successor to exercise any such Option or Stock Appreciation Right extend beyond the twelve (12) month period from date of death. In the event of Disability, the Committee may demand medical records and/or such other evidence as it deems necessary to establish the Disability of the Participant and, in the absence of such evidence, may refuse to permit the exercise of any Option or Stock Appreciation Right later than three (3) months after the date of termination of employment.

(G) Exercise Only During Term. Nothing in this Section 6(f)(i) shall be construed to permit the exercise of an Option or Stock Appreciation Right beyond the specified Term of such Award.

(H) Change of Employment. Options or Stock Appreciation Rights granted under the Plan shall not be affected by any change in employment responsibilities so long as the Participant continues to be an employee of the Company or an Affiliate thereof. If an Affiliate of the Company ceases to be an Affiliate of the Company, a Participant who is employed by such former Affiliate and is no longer employed by either the Company or any current Affiliate of the Company shall be deemed to have terminated employment with the Company and every Affiliate of the Company and such termination shall be deemed to have been made by the Company without Cause, except as follows: If a Participant’s employment is terminated or deemed terminated with the Company and every subsidiary of the Company solely as a result of:

(i) the sale of an Affiliate of the Company,

(ii) the sale of the assets of a portion of the business of the Company or an Affiliate of the Company, or

(iii) a corporate reorganization or restructuring,

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then at any time during the twelve (12) month period after the date of such termination, the Participant may exercise the Options or Stock Appreciation Rights for which the Non-Exercise Period has elapsed for the total number of shares subject to such Options or Stock Appreciation Rights and the Committee may, in its sole and absolute discretion, allow the Participant to exercise the Options or Stock Appreciation Rights for which the Non-Exercise Period has not elapsed for the total number of Shares subject to such Options or Stock Appreciation Rights; provided that if the Award is an Incentive Stock Option and is exercised more than three (3) months after such termination, the Award will be treated as a Non-Qualified Stock Option. Any unexpired portion shall terminate immediately if and when the Participant becomes an employee, agent or principal of a Competitor without the consent of the Company.

(I) Notwithstanding the foregoing clauses (i) (A) through (H) of this Section 6(f)(i), an Agreement may contain such other or different provisions as the Committee, in its discretion, may approve in addition to, or in lieu of, the forgoing clauses of this Section 6(f)(i) and may contain such provisions as the Committee, in its discretion, shall approve with reference to the effect of approved leaves of absence. Whether military or government service shall constitute termination of employment for the purposes of this Plan or any Option or Stock Appreciation Right granted hereunder shall be determined in each case by the Committee in its sole discretion, subject to then current applicable law and regulation.

(ii) Performance Shares. If a Participant’s employment with the Company or any of its Affiliates terminates during a Performance Period because of Retirement, or under other circumstances provided by the Committee in its discretion in the applicable Agreement or otherwise, the Participant, unless the Committee shall otherwise provide in the applicable Agreement, shall be entitled to receive a number of Performance Shares (or payment therefore) at the end of the Performance Period based upon the extent to which achievement of performance targets was satisfied at the end of such period (as determined at the end of the Performance Period) and prorated for the portion of the Performance Period during which the Participant was employed by the Company or any Affiliate. If a Participant’s employment with the Company or any of its Affiliates terminates during a Performance Period because of death or Disability, the Participant shall be entitled to receive a number of Performance Shares (or payment therefore) in the month following such separation from service as though achievement of 100% of performance targets was satisfied at the end of such period and prorated for the portion of the Performance Period during which the Participant was employed by the Company or any Affiliate. Except as otherwise provided in this Section 6(f)(ii) or in the applicable Agreement, if a Participant’s employment terminates with the Company or any of its Affiliates during a Performance Period, then such Participant shall not be entitled to any payment with respect to that Performance Period.

(iii) Restricted Stock. Unless otherwise provided in the applicable Agreement, in case of a Participant’s death, Disability or Retirement, the Participant shall be entitled to receive a number of shares of Restricted Stock under outstanding Awards that has been pro-rated for the portion of the Term of the Awards during which the Participant was employed by the Company or any Affiliate, and with respect to such Shares all restrictions shall lapse. Any shares of Restricted Stock as to which restrictions do not lapse under the preceding sentence shall terminate at the date of the Participant’s termination of employment for any other reason and such shares of Restricted Stock shall be forfeited to the Company.

(iv) Awards to Consultants or Advisors. Unless otherwise provided in the applicable Agreement, the provisions of clauses (i), (ii) and (iii) of this subsection (f) shall apply with equal force to Awards granted to Participants who are consultants and advisors of the Company or any of its Affiliates, provided, that references to “employment” and the termination thereof shall be interpreted as “service” and the termination thereof.

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(g) Acceleration Of Vesting Upon Other Change In Control and Other Transactions. Except as may be otherwise specified in the terms of any Award, including, without limitation, those held by Non-Employee Directors, consultants and advisors, upon the occurrence of a Change in Control, outstanding Awards shall be treated as follows:

(i) Options and Stock Appreciation Rights. Each outstanding Option and Stock Appreciation Right shall become immediately and fully exercisable for a one (1) year period following the Change in Control Date but in no event beyond the specified term of such Awards; provided that, after such one (1) year period, the normal exercise provisions of the Plan and such Award shall govern; and provided further, that in the event a Participant’s employment with the Company and all Affiliates is terminated within two (2) years of a Change in Control Date, all outstanding Options and Stock Appreciation Rights of such Participant at the date of termination shall be exercisable for a period of six (6) months beginning on the date of termination but in no event beyond the specified Term of such Award.

(ii) Restricted Stock. Each outstanding share of Restricted Stock shall immediately and fully vest, and any restrictions shall lapse.

(iii) Performance Shares. Each outstanding Performance Share shall immediately and fully vest, and any restrictions shall lapse.

(iv) Other Stock Based Awards. Each outstanding Other Stock-Based Award shall immediately and fully vest, and any restrictions shall lapse.

In addition, the Committee shall have the authority, in its discretion, to accelerate the vesting and permit the immediate exercisability of outstanding Awards under such other circumstances as it may deem appropriate.

(h) Rights As Shareholder. A Participant shall have no right as a shareholder with respect to any securities covered by an Award until the date the Participant becomes the holder of record.

(i) Maximum Annual Awards Per Participant. No Participant may receive any combination of Awards relating to more than 200,000 Shares in the aggregate in any fiscal year of the Company under this Plan (subject to adjustment under Section 12(f) hereof).

7. Stock Options

(a) Terms Of All Options

(i) Grants. Each Option shall be granted pursuant to an Agreement as either an Incentive Stock Option or a Non-Qualified Stock Option. Only Non-Qualified Stock Options may be granted to Associates who are not employees of the Company or an Affiliate.

(ii) Purchase Price. The purchase price of each Share subject to an Option shall be determined by the Committee and set forth in the applicable Agreement but shall not be less than 100% of the Fair Market Value of a Share as of the date the Option is granted. The purchase price of the Shares with respect to which an Option is exercised shall be payable in full at the time of exercise; provided that, to the extent permitted by law and by the Committee and in accordance with rules adopted by the Committee, Participants may simultaneously exercise Options and sell the Shares thereby acquired pursuant to a brokerage or similar relationship and use the proceeds from such sale to pay the purchase price of such Shares. The purchase price may be paid in cash or, if the Committee so permits, through delivery or tender to the Company of Shares held, either actually or by attestation, by such Participant for at least six (6) months (in each case, such Shares having a Fair Market Value as of the date the Option is exercised equal to the purchase price of the Shares being purchased pursuant to the Option), or, if the Committee so permits, a combination

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thereof, unless otherwise provided in the Agreement; provided that, no Shares may be tendered in exercise of an Incentive Stock Option if such Shares were acquired by the Participant through the exercise of an Incentive Stock Option unless (i) such Shares have been held by the Participant for at least one (1) year and (ii) at least two (2) years have elapsed since such Incentive Stock Option was granted. Further, the Committee, in its discretion, may approve other methods or forms of payment of the purchase price and establish rules and procedures therefor.

(iii) No Repricing Of Options Without Shareholder Approval. Options, once issued, may not be repriced without first obtaining the approval of the shareholders of the Company.

(iv) Exercisability. Each Option shall be exercisable in whole or in part on the terms provided in the Agreement. In no event shall any Option be exercisable at any time after its Term. When an Option is no longer exercisable, it shall be deemed to have lapsed or terminated.

(b) Incentive Stock Options. In addition to the other terms and conditions applicable to all Options:

(i) the aggregate Fair Market Value (determined as of the date the Option is granted) of the Shares with respect to which Incentive Stock Options held by an individual first become exercisable in any calendar year (under this Plan and all other incentive stock options plans of the Company and its Affiliates) shall not exceed $100,000 (or such other limit as may be required by the Code), if such limitation is necessary to qualify the Option as an Incentive Stock Option, and to the extent an Option or Options granted to a Participant exceed such limit such Option or Options shall be treated as Non-Qualified Stock Options;

(ii) an Incentive Stock Option shall not be exercisable, and the Term of the Award shall not be, more than ten (10) years after the date of grant (or such other limit as may be required by the Code) if such limitation is necessary to qualify the Option as an Incentive Stock Option;

(iii) the Agreement covering an Incentive Stock Option shall contain such other terms and provisions which the Committee determines necessary to qualify such Option as an Incentive Stock Option; and

(iv) notwithstanding any other provision of this Plan if, at the time an Incentive Stock Option is granted, the Participant owns (after application of the rules contained in Section 424(d) of the Code, or its successor provision) Shares possessing more than ten percent of the total combined voting power of all classes of stock of the Company or its Subsidiaries, (A) the option price for such Incentive Stock Option shall be at least 110% of the Fair Market Value of the Shares subject to such Incentive Stock Option on the date of grant and (B) such Option shall not be exercisable after the date five (5) years from the date such Incentive Stock Option is granted.

(c) Option Grant For Non-Employee Directors. The Board (which may delegate the determination to a committee of the Board) may from time to time determine that each individual who is elected or appointed to the office of director as a Non-Employee Director receive an Award as compensation, in whole or in part, for such individual’s services as a director. In determining the level of Awards for Non-Employee Directors, the Board may consider such factors as compensation practices of comparable companies with respect to directors, consultants’ recommendations and such other information as the Board may deem appropriate. In the absence of action by the Board each individual who is first elected or appointed to the office of director as a Non-Employee Director after adoption of this Plan shall receive (i) an Option to acquire ten thousand (10,000) Shares on the date of his or her initial election or appointment as a director and (ii) if the Non-Employee Director shall have served on the Board for at least six (6) months, an Option to acquire five thousand (5,000) Shares on the date after any annual shareholder meeting thereafter, including the meeting at which this Plan is approved. Except as otherwise determined by the Board, these Options shall have the following terms and conditions:

(i) Price. The purchase price for each Share subject to such Option shall be one hundred percent (100%) of the Fair Market Value of a Share as of the date the Option is granted.

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(ii) Term. The term of such Option shall be ten (10) years from the date that it is granted.

(iii) Conditions to Exercise of an Option. No Option will vest or may be exercised to any extent until the Participant has served as a director of the Company continuously for at least three (3) months from the date of grant. Except as provided in clauses (iv) and (v) below, an Option may not be exercised by the Participant unless he or she is then, and continuously after the grant of the Option has been, a director of the Company. No Option may be exercised by a Participant with respect to fractional shares. If the Participant’s service as a Director is terminated for Cause, any unexercised portion of any Option granted to the Participant will also terminate with such termination.

(iv) Transferability of Option. An Option granted pursuant to this Section 7(c) will be transferable or assignable only (A) by will, (B) by the laws of descent and distribution, (C) pursuant to a qualified domestic relations order as defined by the Code, Title I of the Employee Retirement Income Security Act or the rules thereunder, (D) to the spouse, children or grandchildren of the original Participant (“Immediate Family Members”), (E) to a trust or trusts for the exclusive benefit of such Immediate Family Members and/or the Participant, or (F) to a partnership in which such Immediate Family Members and/or the Participant are the only partners; provided, that (x) there may be no consideration for any such transfer, except to the extent expressly permitted by the Board, and (y) subsequent transfers of transferred Options shall be prohibited except those in accordance with clauses (A), (B) and (C) hereof. Following such transfer, any such Options shall continue to be subject to the same terms and conditions as were applicable immediately prior to such transfer; provided that the director service requirement contained in clause (iii) hereof, the events of death, Disability or termination or removal contained in clause (v) hereof and, if applicable, the tax withholding obligations contained in Section 12(d) hereof, shall continue to be applied with respect to the original Participant, following which the Options shall be exercisable by the transferee only to the extent, and for the periods, specified therein.

(v) Termination of Service as Director. Except as provided in this clause (v), if, the Participant ceases to serve as a director of the Company for any reason prior to the lapse of the three (3) month vesting period described in clause (iii), the Participant’s right to exercise the related portion of the Option shall terminate and all rights thereunder shall cease. In the event that a Participant ceases to serve as a director of the Company for any reason other than his or her termination for Cause, such Participant or, if applicable, his or her Successor, will have the right to exercise an unexpired Option at any time within twelve (12) months after his or her termination of service to the extent his or her right to exercise the Option has vested and has not previously been exercised at the date of termination; provided, however, in the event of termination of service of the Participant by reason of Retirement, Disability or death, the Participant or his or her Successor, as the case may be, may exercise all of his or her unexpired Option at any time within five (5) years after his or her termination of service to the extent his or her Option has not previously been exercised at the date of termination, whether or not the three (3) month vesting period pursuant to clause (iii) shall have elapsed. In the event of termination of service of the Participant for Cause, any and all Options of the Participant shall automatically expire upon such termination. In all of the cases cited above, the exercise period of one or more Options may be extended by a vote of a majority of the directors whose Options are not being extended; provided, however, that notwithstanding anything in this clause (v), no Option may be exercised more than ten (10) years after the date on which such Option was granted. For purposes of this clause (v), service as a director will not be deemed terminated so long as the Participant is a director of the Company or another entity which has assumed this Option in a transaction to which Section 424(a) of the Code is applicable.

The Board, in its discretion, may make other Awards from time to time to Non-Employee Directors, upon such terms and conditions, consistent with the provisions of this Plan, as the Board may determine.

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8. Stock Appreciation Rights

An Award of a Stock Appreciation Right shall entitle the Participant, subject to terms and conditions determined by the Committee and set forth in the Agreement, to receive upon exercise of the Stock Appreciation Right all or a portion of the excess of (i) the Fair Market Value of a specified number of Shares as of the date of exercise of the Stock Appreciation Right over (ii) a specified price which shall not be less than 100% of the Fair Market Value of such Shares as of the date of grant of the Stock Appreciation Right (referred to in Section 12(f) as the “purchase price”).

A Stock Appreciation Right may be granted in connection with a previously or contemporaneously granted Option, or independent of any Option. If issued in connection with an Option, the Committee may impose a condition that exercise of a Stock Appreciation Right cancels the Option with which it is connected and/or exercise of the connected Option cancels the Stock Appreciation Right. Each Stock Appreciation Right may be exercisable in whole or in part on the terms provided in the applicable Agreement. No Stock Appreciation Right shall be exercisable at any time after its Term. When a Stock Appreciation Right is no longer exercisable, it shall be deemed to have lapsed or terminated. Except as otherwise provided in the applicable Agreement, upon exercise of a Stock Appreciation Right, payment to the Participant (or to his or her Successor) shall be made in the form of cash, Stock or a combination of cash and Stock (as determined by the Committee if not otherwise specified in the Award) as promptly as practicable after such exercise. The Agreement may provide for a limitation upon the amount or percentage of the total appreciation on which payment (whether in cash and/or Stock) may be made in the event of the exercise of a Stock Appreciation Right.

9. Performance Shares

(a) Initial Award. An Award of Performance Shares shall entitle a Participant (or a Successor) to future payments based upon the achievement of performance targets established in writing by the Committee. Payment shall be made in Stock, or a combination of cash and Stock, as determined by the Committee. Such performance targets shall be determined by the Committee in its sole discretion and shall consist of one or any combination of two or more of revenue growth, return on equity, diversity, earnings, earnings before interest, taxes, depreciation and amortization, economic value added, index comparisons, net income, operating margin, peer company comparisons, productivity, profit margin, return on invested capital, return on revenue, total shareholder return, sales growth, operating income, return on assets, stock price, earnings per share, cash flow, market share, costs, or debt to equity ratio. The Agreement may establish that a portion of the maximum amount of a Participant’s Award will be paid for performance which exceeds the minimum target but falls below the maximum target applicable to such Award. The Agreement shall also provide for the timing of such payment. Following the conclusion or acceleration of each Performance Period, the Committee shall determine the extent to which (i) performance targets have been attained, (ii) any other terms and conditions with respect to an Award relating to such Performance Period have been satisfied and (iii) payment is due with respect to a Performance Share Award.

(b) Acceleration And Adjustment. The applicable Agreement may permit an acceleration of the Performance Period and an adjustment of performance targets and payments with respect to some or all of the Performance Shares awarded to a Participant, upon such terms and conditions as shall be set forth in the Agreement, upon the occurrence of certain events, which may, but need not, include without limitation a Fundamental Change, the Participant’s death or Disability, a change in accounting practices of the Company or its Affiliates, or, with respect to payments in Stock for Performance Share Awards, a reclassification, stock dividend, stock split or stock combination as provided in Section 12(f) hereof.

(c) Valuation. To the extent that payment of a Performance Share is made in cash, a Performance Share earned after conclusion of a Performance Period shall have a value equal to the Fair Market Value of a Share on the last day of such Performance Period.

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10. Restricted Stock

Restricted Stock may be granted in the form of Shares registered in the name of the Participant but held by the Company until the restrictions on the Restricted Stock Award lapse, subject to forfeiture, as provided in the applicable Agreement. Any employment conditions, performance conditions, restrictions on transferability and the Term of the Award shall be established by the Committee in its discretion and included in the applicable Agreement, provided, that minimum Term will not be less than one year, subject to the terms and conditions of this Plan. The Committee may provide in the applicable Agreement for the lapse or waiver of any such restriction or condition based on such factors or criteria as the Committee, in its sole discretion, may determine, which may, but need not, include without limitation the Participant’s death or Disability. The Committee, in the applicable Agreement, may, in its sole discretion, award all or any of the rights of a shareholder with respect to the Shares of Restricted Stock during the period that they remain subject to restrictions, including, without limitation, the right to vote the Shares and receive dividends. Any performance conditions to the lapse of restrictions on Restricted Stock shall be determined by the Committee in its sole discretion and shall be based on performance targets that consist of one or any combination of two or more of sales growth, operating income, return on assets, stock price, earnings per share, cash flow, market share, costs, or debt to equity ratio.

11. Other Stock-Based Awards

The Committee may from time to time grant Other Stock-Based Awards, including without limitation those Awards pursuant to which Shares may be acquired in the future, such as Awards denominated in Stock, Stock Units, securities convertible into Stock and phantom securities. The Committee, in its sole discretion, shall determine, and provide in the applicable Agreement for, the terms and conditions of such Awards provided that such Awards shall not be inconsistent with the terms and purposes of this Plan. The Committee may, in its sole discretion, direct the Company to issue Shares subject to restrictive legends and/or stop transfer instructions which are consistent with the terms and conditions of the Award to which such Shares relate.

12. General Provisions

(a) Effective Date Of This Plan. This Plan, as amended and restated, shall become effective as of January 1, 2006, provided that this Plan is approved and ratified by the holders of the Company’s Stock in accordance with the Company’s Certificate of Incorporation and By-Laws at a meeting of the shareholders of the Company held no later than January 1, 2007. If this Plan is not so approved, any Award granted on or after January 1, 2006, under this Plan, as amended and restated, subject to such approval shall be cancelled and be null and void.

(b) Duration Of This Plan; Date Of Grant. This Plan shall remain in effect until all Stock subject to it shall be distributed or all Awards have expired or lapsed, whichever is latest to occur, or this Plan is terminated pursuant to Section 12(e) hereof. No Award of an Incentive Stock Option shall be made more than ten (10) years after the effective date provided in Section 12(a) hereof (or such other limit as may be required by the Code) if such limitation is necessary to qualify the Option as an Incentive Stock Option. The date and time of approval by the Committee of the granting of an Award shall be considered the date and time at which such Award is made or granted, notwithstanding the date of any Agreement with respect to such Award; provided, however, that the Committee may grant Awards other than Incentive Stock Options to Associates, to be effective and deemed to be granted on the occurrence of certain specified contingencies.

(c) Right To Terminate Employment or Service. Nothing in this Plan or in any Agreement shall confer upon any Participant who is an employee of the Company the right to continue in the

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employment of the Company or any Affiliate or continue to provide services to the Company or any Affiliate or affect any right which the Company or any Affiliate may have to terminate or modify the employment of or other arrangement with the Participant with or without Cause.

(d) Tax Withholding. The Company shall withhold from any payment of cash or Stock to a Participant or other person under this Plan an amount sufficient to cover any required withholding taxes, including the Participant’s social security and Medicare taxes (FICA) and federal, state and local income tax with respect to income arising from payment of the Award. The Company shall have the right to require the payment of any such taxes before issuing any Stock pursuant to the Award. In lieu of all or any part of a cash payment from a person receiving Stock under this Plan, the Committee may, in the applicable Agreement or otherwise, permit a person to cover all or any part of the required withholdings, and to cover any additional withholdings up to the amount needed to cover the person’s full FICA and federal, state and local income tax with respect to income arising from payment of the Award, through a reduction of the numbers of Shares delivered to such person or a delivery or tender to the Company of Shares held by such person, in each case valued in the same manner as used in computing the withholding taxes under applicable laws.

(e) Amendment, Modification And Termination Of This Plan. Except as provided in this Section 12(e), the Board may at any time amend, modify, terminate or suspend this Plan. Except as provided in this Section 12(e), the Committee may at any time alter or amend any or all Agreements under this Plan to the extent permitted by law and subject to the requirements of Section 2(b), in which event, as provided in Section 2(b), the term “Agreement” shall mean the Agreement as so amended. Amendments are subject to approval of the shareholders of the Company only as required by applicable law or regulation. No termination, suspension or modification of this Plan may materially and adversely affect any right acquired by any Participant or any Successor or permitted transferee under an Award granted before the date of termination, suspension or modification, unless otherwise provided in an Agreement or required as a matter of law. It is conclusively presumed that any adjustment for changes in capitalization provided for in Section 9(b) or 12(f) hereof does not adversely affect any right of a Participant or other person under an Award.

(f) Adjustment For Changes In Capitalization. Appropriate adjustments in the aggregate number and type of securities available for Awards under this Plan, in the limitations on the number and type of securities that may be issued to an individual Participant, in the number and type of securities and amount of cash subject to Awards then outstanding, in the number of Options to be awarded to a Non-Employee Director pursuant to Section 7(c), in the Option purchase price as to any outstanding Options, in the purchase price as to any outstanding Stock Appreciation Rights and, subject to Section 9(b) hereof, in outstanding Performance Shares and payments with respect to outstanding Performance Shares and comparable adjustments, if applicable, to any outstanding Other Stock-Based Award, shall be made by the Committee to give effect to adjustments made in the number or type of Shares through a Fundamental Change, reorganization, recapitalization, reclassification, stock dividend, stock split, reverse stock split, stock combination, rights offering, spin-off or other relevant change, provided that fractional Shares shall be rounded down to the nearest whole Share.

(g) Other Benefit And Compensation Programs. Payments and other benefits received by a Participant under an Award shall not be deemed a part of a Participant’s regular, recurring compensation for purposes of any termination, indemnity or severance pay laws and shall not be included in, nor have any effect on, the determination of benefits under any other employee benefit plan, contract or similar arrangement provided by the Company or an Affiliate, unless expressly so provided by such other plan, contract or arrangement or the Committee determines that an Award or portion of an Award should be included to reflect competitive compensation practices or to recognize that an Award has been made in lieu of a portion of competitive cash compensation.

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(h) Beneficiary Upon Participant’s Death. To the extent that the transfer of a participant’s Award at death is permitted by this Plan or under an Agreement, (i) a Participant’s Award shall be transferable to the beneficiary, if any, designated on forms prescribed by and filed with the Committee and (ii) upon the death of the Participant, such beneficiary shall succeed to the rights of the Participant to the extent permitted by law and this Plan. If no such designation of a beneficiary has been made, the Participant’s Successor shall succeed to the Awards, which shall be transferable by will or pursuant to laws of descent and distribution to the extent permitted by this Plan or under an Agreement.

(i) Unfunded Plan. This Plan shall be unfunded, and the Company shall not be required to segregate any assets that may at any time be represented by Awards under this Plan. Neither the Company, its Affiliates, the Committee, nor the Board shall be deemed to be a trustee of any amounts to be paid under this Plan nor shall anything contained in this Plan or any action taken pursuant to its provisions create or be construed to create a fiduciary relationship between the Company and/or its Affiliates, and a Participant or Successor. To the extent any person acquires a right to receive an Award under this Plan, such right shall be no greater than the right of an unsecured general creditor of the Company.

(j) Limits Of Liability

(i) Any liability of the Company to any Participant with respect to an Award shall be based solely upon contractual obligations created by this Plan and the Agreement.

(ii) Except as may be required by law, neither the Company nor any member or former member of the Board or the Committee, nor any other person participating (including participation pursuant to a delegation of authority under Section 3(b) hereof) in any determination of any question under this Plan, or in the interpretation, administration or application of this Plan, shall have any liability to any party for any action taken, or not taken, in good faith under this Plan.

(iii) To the full extent permitted by law, each member and former member of the Committee and each person to whom the Committee delegates or has delegated authority under this Plan shall be entitled to indemnification by the Company against any loss, liability, judgment, damage, cost and reasonable expense incurred by such member, former member or other person by reason of any action taken, failure to act or determination made in good faith under or with respect to this Plan.

(k) Compliance With Applicable Legal Requirements. The Company shall not be required to issue or deliver a certificate for Shares distributable pursuant to this Plan unless the issuance of such certificate complies with all applicable legal requirements including, without limitation, compliance with the provisions of applicable state securities laws, the Securities Act of 1933, as amended and in effect from time to time or any successor statute, the Exchange Act and the requirements of the exchanges, if any, on which the Company’s Shares may, at the time, be listed.

(l) Deferrals And Settlements. The Committee may require or permit Participants to elect to defer the issuance of Shares or the settlement of Awards in cash under such rules and procedures as it may establish under this Plan. It may also provide that deferred settlements include the payment or crediting of interest on the deferral amounts.

13. Substitute Awards

Awards may be granted under this Plan from time to time in substitution for Awards held by employees of other corporations who are about to become Associates, or whose employer is about to become a Subsidiary of the Company, as the result of a merger or consolidation of the Company or a Subsidiary of the Company with another corporation, the acquisition by the Company or a Subsidiary of the Company of all or substantially all the assets of another corporation or the acquisition by the Company or a Subsidiary of the Company of at least 50% of the issued and outstanding stock of another

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corporation. The terms and conditions of the substitute Awards so granted may vary from the terms and conditions set forth in this Plan to such extent as the Board at the time of the grant may deem appropriate to conform, in whole or in part, to the provisions of the Awards in substitution for which they are granted, but with respect to Awards which are Incentive Stock Options, no such variation shall be permitted which affects the status of any such substitute option as an Incentive Stock Option.

14. Governing Law

To the extent that federal laws do not otherwise control, this Plan and all determinations made and actions taken pursuant to this Plan shall be governed by the laws of Missouri, without giving effect to principles of conflicts of laws, and construed accordingly, except for those matters subject to the General Corporation Law of Delaware, which shall be governed by such Law, without giving effect to principles of conflicts of laws, and construed accordingly.

15. Severability

In the event any provision of this Plan shall be held illegal or invalid for any reason, the illegality or invalidity shall not affect the remaining parts of this Plan, and this Plan shall be construed and enforced as if the illegal or invalid provision had not been included.

16. Prior Plans

Notwithstanding the adoption of this Plan by the Board and approval of this Plan by the Company’s shareholders as provided by Section 12(a) hereof, the Company’s Other Plans, as the same may have been amended from time to time, shall remain in effect, but grants of stock options and other awards pursuant to the Other Plans shall not be made after the effective date of this Plan. All grants and awards heretofore made under the Other Plans shall be governed by the terms of the Other Plans, respectively.

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THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS

PLEASE MARK, DATE AND SIGN THIS PROXY AND RETURN IT IN THE ENCLOSED ENVELOPE

(To be signed on reverse side)

By signing on the reverse, the shareholder(s) hereby appoint(s) WILLIAM C. O’NEIL, JR. and J. PEDRO REINHARD, or either of them, the true and lawful attorneys-in-fact, agents and proxies, with the power of substitution and revocation, as their representatives at the Annual Meeting of Shareholders of SIGMA-ALDRICH CORPORATION to be held at the Company’s Life Science and High Technology Center, 2909 Laclede Avenue, St. Louis, Missouri 63103 on May 2, 2006, at 11:00 A.M., Central Daylight Time (including all adjournments thereof), and there to vote all shares of stock which the shareholder is entitled to vote, with all powers which the shareholder would possess if personally present.

This proxy also provides voting instructions for shares held by Fidelity Management Trust Company, the trustee for the Sigma-Aldrich 401(k) Retirement Savings Plan, and directs such trustee to vote, as indicated on the reverse side of this card, any shares allocated to this account in this plan. The trustee will vote these shares as you direct. If a valid card is not received by May 1, 2006, the shares credited to this account will not be voted.

Signer(s) hereby acknowledges receipt of the Notice of Annual Meeting and accompanying Proxy Statement, each dated March 31, 2006, and hereby revokes all proxies heretofore given by the undersigned for said meeting. This proxy may be revoked prior to its exercise.

You are encouraged to specify your choices by marking the appropriate boxes on the reverse side. Shares represented by this proxy, when properly executed, will be voted as directed or, if directions are not indicated, will be voted in accordance with the Board of Directors’ recommendations. The Proxies cannot vote these shares unless you sign and return this card.
	(change of address and/or comments)

(If you have given a change of address and/or comments, please mark the corresponding box on the reverse side of this card.)

	FOR VOTING BY PHONE, INTERNET OR MAIL, PLEASE READ THE INSTRUCTIONS BELOW
	VOTE BY PHONE - 1-800-690-6903
	Use any touch-tone telephone to transmit your voting instructions up until 11:59 P.M. Eastern Time the day before the meeting date.
3050 SPRUCE STREET ST. LOUIS, MO 63103	Have your proxy card in hand when you call and then follow the instructions.
	VOTE BY INTERNET - www.proxyvote.com
	Use the Internet to transmit your voting instructions and for electronic delivery of information up until 11:59 P.M. Eastern Time the day before the meeting date. Have your proxy card in hand when you access the web site and follow the instructions to obtain your records and to create an electronic voting instruction form.
	VOTE BY MAIL
	Mark, sign and date your proxy card and return it in the postage-paid envelope we have provided or return it to SIGMA-ALDRICH, c/o ADP, 51 Mercedes Way, Edgewood, NY 11717.
March 31, 2006	If you vote by phone or vote using the Internet, please do not mail your proxy.
	THANK YOU FOR VOTING.
Dear Shareholder:

The annual meeting of Shareholders of Sigma-Aldrich Corporation will be held at the Company’s Life Science and High Technology Center, 2909 Laclede Avenue, St. Louis, Missouri 63103 at 11:00 A.M. Central Daylight Time, on Tuesday, May 2, 2006.

It is important that these shares are represented at this meeting. Whether or not you plan to attend the meeting, please review the enclosed proxy materials. You may sign, date and return this proxy card or you may vote by telephone or Internet.

TO VOTE, MARK BLOCKS BELOW IN BLUE OR BLACK INK AS FOLLOWS:                     SIALD1	KEEP THIS PORTION FOR YOUR RECORDS
	DETACH AND RETURN THIS PORTION ONLY
THIS PROXY CARD IS VALID ONLY WHEN SIGNED AND DATED.

SIGMA-ALDRICH CORPORATION

This proxy will be voted FOR items 1, 2 and 3 unless otherwise directed, and in the discretion of the proxies, on whatever other business may properly come before the meeting.

For All

Withhold All

For All Except

To withhold authority to vote, mark "For All Except" and write the nominee's number on the line below.

The Board of Directors recommends a vote FOR the following:

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Vote On Directors

1.        ELECTION OF DIRECTORS: 01) Nina V. Fedoroff, 02) David R. Harvey, 03) W. Lee McCollum, 04) Jai P. Nagarkatti, 05) Avi M. Nash, 06) William C. O’Neil, Jr., 07) J. Pedro Reinhard, 08) Timothy R.G. Sear , 09) D. Dean Spatz and 10) Barrett A. Toan.

Vote On Proposals

For

Against

Abstain

For

Against

Abstain

2.        Ratification of the appointment of KPMG LLP as the Company’s independent registered public accountant for 2006.

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3.        Approval of the Company’s amended and restated 2003 Long-Term Incentive Plan

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For address changes and/or comments, please check this box and write them on the back where indicated.

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If stock is owned in joint names, all owners must sign. If signing for estates, trusts or corporations, please indicate title or capacity.

Signature [PLEASE SIGN WITHIN BOX]        Date

Signature (Joint Owners)                                    Date