EX-10.5



 





Exhibit 10.5




LIMITED LIABILITY COMPANY AGREEMENT




OF




SFC LLC




DATED AS OF February 28, 2008




 









 





TABLE OF CONTENTS




	 	 	 	 	 
	 	 	Page	 
	ARTICLE I
	 	 	 	 
	GENERAL PROVISIONS; CAPITAL CONTRIBUTIONS; DEFINITIONS
	 	 	1	 
	 
	 	 	 	 
	Section 1.1 Formation
	 	 	1	 
	Section 1.2 Name
	 	 	1	 
	Section 1.3 Purpose
	 	 	1	 
	Section 1.4 Powers
	 	 	1	 
	Section 1.5 Limitations on the Company’s Powers
	 	 	2	 
	Section 1.6 Material Actions
	 	 	3	 
	Section 1.7 Members
	 	 	4	 
	Section 1.8 Registered Office; Registered Agent; Place of Business
	 	 	4	 
	Section 1.9 Capital Contributions
	 	 	4	 
	Section 1.10 Term
	 	 	5	 
	Section 1.11 Limited Liability
	 	 	5	 
	Section 1.12 No State-law Partnership
	 	 	5	 
	Section 1.13 Execution, Delivery and Filing of Certificates
	 	 	5	 
	Section 1.14 Existence of the Company
	 	 	5	 
	Section 1.15 No Petition
	 	 	5	 
	 
	 	 	 	 
	ARTICLE II
	 	 	 	 
	CAPITAL ACCOUNTS
	 	 	6	 
	 
	 	 	 	 
	Section 2.1 Capital Accounts
	 	 	6	 
	Section 2.2 Computation of Amounts
	 	 	6	 
	Section 2.3 Distribution in Kind
	 	 	6	 
	 
	 	 	 	 
	ARTICLE III .
	 	 	 	 
	DISTRIBUTIONS AND ALLOCATIONS
	 	 	7	 
	 
	 	 	 	 
	Section 3.1 Distributions
	 	 	7	 
	Section 3.2 Allocation of Profits and Losses
	 	 	7	 
	 
	 	 	 	 
	ARTICLE IV
	 	 	 	 
	MANAGEMENT AND MEMBER RIGHTS
	 	 	7	 
	 
	 	 	 	 
	Section 4.1 Management Authority
	 	 	7	 
	Section 4.2 Indemnification
	 	 	9	 
	 
	 	 	 	 
	ARTICLE V
	 	 	 	 
	MEMBERS
	 	 	11	 
	 
	 	 	 	 
	Section 5.1 Transfer of the Company Interest
	 	 	11	 
	Section 5.2 Member Rights; Meetings
	 	 	12	 
	Section 5.3 Additional Members
	 	 	13	 






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TABLE OF CONTENTS
(Continued)





	 	 	 	 	 
	 	 	Page	 
	Section 5.4 Resignation of a Member
	 	 	13	 
	Section 5.5 Termination of a Member
	 	 	13	 
	 
	 	 	 	 
	ARTICLE VI
	 	 	 	 
	DURATION
	 	 	13	 
	 
	 	 	 	 
	Section 6.1 Duration
	 	 	13	 
	Section 6.2 Winding Up
	 	 	14	 
	Section 6.3 Termination
	 	 	14	 
	 
	 	 	 	 
	ARTICLE VII
	 	 	 	 
	VALUATION
	 	 	14	 
	 
	 	 	 	 
	Section 7.1 Valuation
	 	 	14	 
	 
	 	 	 	 
	ARTICLE VIII
	 	 	 	 
	CERTIFICATION OF MEMBERSHIP INTERESTS
	 	 	15	 
	 
	 	 	 	 
	Section 8.1 Membership Interest
	 	 	15	 
	 
	 	 	 	 
	ARTICLE IX
	 	 	 	 
	BOOKS OF ACCOUNT; MEETINGS
	 	 	15	 
	 
	 	 	 	 
	Section 9.1 Books
	 	 	15	 
	Section 9.2 Fiscal Year
	 	 	15	 
	Section 9.3 Tax Allocation and Reports
	 	 	15	 
	 
	 	 	 	 
	ARTICLE X
	 	 	 	 
	MISCELLANEOUS
	 	 	16	 
	 
	 	 	 	 
	Section 10.1 Amendments
	 	 	16	 
	Section 10.2 Successors
	 	 	16	 
	Section 10.3 Governing Law; Severability
	 	 	16	 
	Section 10.4 Notices
	 	 	16	 
	Section 10.5 Complete Agreement; Headings, Counterparts
	 	 	16	 
	Section 10.6 Partition
	 	 	16	 
	Section 10.7 Benefits of Agreement; No Third-Party Rights; Monsanto as a Party
	 	 	17	 
	Section 10.8 Binding Agreement
	 	 	17	 
	Section 10.9 No Strict Construction
	 	 	17	 
	Section 10.10 Attorneys’ Fees and Disbursements
	 	 	17	 
	Section 10.11 Effectiveness
	 	 	17	 
	 
	 	 	 	 
	APPENDIX A. DEFINITIONS
	 	 	 	 






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TABLE OF CONTENTS
(Continued)





	 	 	 	 	 
	 	 	Page	 
	SCHEDULE 1. MEMBER AND MANAGER INFORMATION
	 	 	 	 
	 
	 	 	 	 
	SCHEDULE 2. FORM OF MANAGER AGREEMENT
	 	 	 	 
	 
	 	 	 	 
	EXHIBIT A. SETTLEMENT AGREEMENT
	 	 	 	 






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          THIS LIMITED LIABILITY COMPANY AGREEMENT dated as of February 28, 2008, (this
“Agreement”), is adopted, executed and agreed to, for good and valuable consideration, by
SFC LLC (the “Company”) and the undersigned Member. Certain terms used herein are defined
in Appendix A attached hereto.




ARTICLE I

GENERAL PROVISIONS; CAPITAL CONTRIBUTIONS; DEFINITIONS




          Section 1.1 Formation. The formation of the Company pursuant to and in accordance
with the Delaware Limited Liability Company Act, 6 Del. C. §18-101, et seq., as amended from time
to time (the “Act”), occurred on September 11, 2007. An authorized person, within the
meaning of the Act, has executed, delivered and filed the certificate of formation of the Company
(which certificate of formation as amended from time to time is referred to as the
“Certificate”). Upon the undersigned Member’s (i) execution of this Agreement or a
counterpart hereof and (ii) making of the capital contributions required by Section 1.9, such
Member shall be admitted to the Company as its sole initial member (the “Sole Member”).




          Section 1.2 Name. The name of the Company will be “SFC LLC” or such other name as the
Board of Managers may from time to time designate.




          Section 1.3 Purpose. (a) The sole purposes of the Company are:





          (i) to acquire, own, hold, invest, safekeep and distribute the Deposited Property, as
expressly permitted by and in accordance with the terms of the Settlement Agreement;




          (ii) to execute, deliver and perform its obligations under the Settlement Agreement and
the Services Agreement; and




          (iii) to engage in any lawful act or activity and to exercise any powers permitted to
limited liability companies organized under the laws of the State of Delaware that are
necessary for the accomplishment of the purposes set forth in clauses (i) and (ii) of this
Section 1.3(a).



               (b) The Company, by or through any of its Managers acting on behalf of the Company, may enter
into and perform its obligations expressly permitted by the Settlement Agreement and all documents,
agreements or certificates contemplated thereby or related thereto, all without any further act,
vote or approval of any Member or any of its Managers or officers.



          Section 1.4 Powers. Subject to Section 1.5, the Company, and the Board of Managers on behalf of the Company
shall have and exercise all powers and rights conferred upon or permitted of limited liability
companies formed pursuant to the Act that are necessary to the accomplishment of its purposes as
set forth in Section 1.3.



 









 







          Section 1.5 Limitations on the Company’s Powers.




               (a) Except for Permitted Obligations, the Company shall not incur, assume, guarantee or suffer
to exist any indebtedness or other liability or obligation until there are no longer outstanding
any Permitted Obligations and all Permitted Obligations have been fully and finally satisfied.



               (b) Until there are no longer outstanding any Permitted Obligations and all Permitted
Obligations have been fully and finally satisfied, the Company shall not, and the Members and
Managers shall not take any action to, amend, alter, change or repeal this Agreement, any of the
definitions set forth in Appendix A hereto or Schedule 1 of this Agreement without the
unanimous written consent of the Board of Managers (including the affirmative vote of the
Independent Manager) and Monsanto and any purported amendment without such consent shall be null
and void.



               (c) Notwithstanding any other provision of this Agreement and any provision of law that
otherwise so empowers the Company, the Members or the Board of Managers, until there are no longer
outstanding any Permitted Obligations and all Permitted Obligations have been fully and finally
satisfied, the Company shall not be authorized or empowered, nor shall the Members or the Board of
Managers permit the Company to take any action in violation or contravention of the Settlement
Agreement or fail to take any action expressly required by the Settlement Agreement.



               (d) Until there are no longer outstanding any Permitted Obligations and all Permitted
Obligations have been fully and finally satisfied, the Company shall do or cause to be done all
things necessary to preserve and keep in full force and effect its existence, rights (charter and
statutory) and franchises and comply with applicable law. The Company shall also:




          (1) maintain its own separate books and records and bank accounts;




          (2) at all times hold itself out to the public and all other Persons as
a legal entity separate from any other Person;




          (3) have its own Board of Managers;




          (4) not commingle its assets with assets of any other Person and
maintain separate financial statements, showing its assets and liabilities
separate and apart from those of any other Person, and not have its assets
listed on any financial statements of any other Person; provided,
however, that the Company’s assets may be included in a
consolidated financial statement of any of its Affiliates (as required under
US GAAP) provided that appropriate notation is made on such
consolidated financial statements to indicate the separateness of the
Company from such Affiliate and to indicate that the Company’s assets and
credit are not available to satisfy debts and other obligations of such
Affiliate or any other Person;



2









 






          (5) conduct its business in its own name and strictly comply with all
organizational formalities to maintain its separate existence;




          (6) pay its own liabilities, obligations and indebtedness only out of
its own funds;




          (7) maintain an arm’s length relationship with its Affiliates and
members;




          (8) not hold out its credit or assets as being available to satisfy the
liabilities, obligations or indebtedness of others;




          (9) allocate fairly and reasonably any overhead for shared operating
expenses;




          (10) not pledge its assets for the benefit of any other Person;




          (11) correct any known misunderstanding regarding its separate
identity;




          (12) cause its Board of Managers to meet or act pursuant to written
consent as necessary to carry out the purposes for which the Company was
formed and observe all other Delaware limited liability company formalities;




          (13) not consolidate or merge the Company with or into any Person, or
sell any of the material assets of the Company, and




          (14) not acquire any securities of any of its Members.



               (e) Notwithstanding any other provision of this Agreement and any provision of law that
otherwise so empowers it, until there are no longer outstanding any Permitted Obligations and all
Permitted Obligations have been fully and finally satisfied, no Member shall sell, transfer, pledge
or otherwise permit the imposition of a lien on its ownership interest in the Company without the
prior unanimous consent of the Board of Managers and Monsanto.



          Section 1.6 Material Actions. Until there are no longer outstanding any Permitted Obligations and all Permitted
Obligations have been fully and finally satisfied, no Person or Persons (including the Board of
Managers), acting alone or together, shall be authorized or empowered, nor shall any of them permit
the Company to, without the prior unanimous written consent of all the Managers (including the
Independent Manager), take any Material Action, it being understood that any Material Action taken
without obtaining such unanimous written consent shall, to the fullest extent permitted by law, be
null and void ab initio.



3









 







          Section 1.7 Members. The name and the mailing address of the Sole Member is set forth
on Schedule 1 attached hereto. The Board of Managers shall amend from time to time
Schedule 1 to reflect any addition, resignation, withdrawal or termination of the Members.
Subject to Section 1.5, Members may act by written consent.




          Section 1.8 Registered Office; Registered Agent; Place of Business. The registered
office of the Company required by the Act to be maintained in the State of Delaware shall be the
office of the initial Registered Agent named in the Certificate (the “Registered Agent”) or such
other office (which need not be a place of business of the Company) as the Board of Managers may
designate from time to time in the manner provided by law. The Registered Agent of the Company in
the State of Delaware shall be the initial Registered Agent named in the Certificate or such other
person or persons as the Board of Managers may designate from time to time in the manner provided
by law. The Company may maintain a chief executive office and principal place of business at such
place or places inside or outside the State of Delaware as the Board of Managers may designate from
time to time.




          Section 1.9 Capital Contributions.




               (a) Promptly following the execution of this Agreement, Solutia shall contribute to the
Company the amount set forth on Schedule 1, in exchange for which Solutia shall receive the
sole Member interest in the Company. The Sole Member is not required to make any additional capital
contribution to the Company and may only make or be deemed to have made, as additional capital
contributions, those amounts that are permitted to be made to the Company as contributions pursuant
to the terms of the Settlement Agreement. Any Person hereafter admitted as a Member of the Company
shall make such contributions of cash to the Company as shall be determined by the Board of
Managers at the time of each such admission. The Persons hereafter admitted as Members of the
Company shall not be required to make any additional capital contribution to the Company and may
only make additional capital contributions to the Company upon the written consent of each of the
other Members an the Board of Managers. All such additional contributions shall take the form of a
cash transfer. The Board of Managers shall amend Schedule 1 from time to time to reflect
any capital contribution made by any Member. The provisions of this Agreement, including this
Section 1.9, are intended solely to benefit the Members, and, to the fullest extent permitted by
law, shall not be construed as conferring any benefit upon any creditor of the Company (and no such
creditor of
the Company shall be a third-party beneficiary of this Agreement) and no Member shall have any
duty or obligation to any creditor of the Company to make any contribution to the Company or to
issue any call for capital pursuant to this Agreement.



               (b) No Member shall have any responsibility to restore any negative balance in such Member’s
Capital Account or to contribute to or in respect of liabilities or obligations of the Company,
whether arising in tort, contract or otherwise, or return distributions made by the Company except
as required by the Act or other applicable law. The failure of the Company to observe any
formalities or requirements relating to the exercise of its powers or management of its business or
affairs under this Agreement or the Act shall not be grounds for imposing personal liability on the
Members for liabilities of the Company.



4









 





               (c) No interest shall be paid by the Company on capital contributions or on balances in
Capital Accounts.



               (d) A Member shall not be entitled to withdraw any part of its Capital Account or to receive
any distributions from the Company except as provided in Articles III and VI; nor shall a Member be
entitled to make any capital contribution to the Company other than as expressly provided herein.



          Section 1.10 Term. The Company shall continue in existence until dissolved and
terminated in accordance with the Settlement Agreement and Article VI of this Agreement.




          Section 1.11 Limited Liability. Except as otherwise expressly provided by the Act,
the debts, obligations and liabilities of the Company, whether arising in contract, tort or
otherwise, shall be the debts, obligations and liabilities solely of the Company, and neither any
Member nor any Manager of the Company shall be obligated personally for any such debt, obligation
or liability of the Company solely by reason of being a Member or Manager of the Company.




          Section 1.12 No State-law Partnership. The Member(s) intend that the Company be
treated as a disregarded entity for tax purposes and that the Company not be a partnership
(including a limited partnership) or joint venture, and that no Member be a partner or joint
venturer of any other Member, for any purposes other than U.S. federal and, if applicable, state
tax purposes, and neither this Agreement nor any other document entered into by the Company or any
Member shall be construed to suggest otherwise. The Member(s) intend that each Member and the
Company shall file all tax returns and shall otherwise take all tax and financial reporting
positions in a manner consistent with such treatment.




          Section 1.13 Execution, Delivery and Filing of Certificates. Christopher Valeri is
hereby designated as an “authorized person” within the meaning of the Act, and has executed,
delivered and filed the Certificate of Formation with the
Delaware Secretary of State. Upon the execution of this Agreement by the Sole Member, such
Person’s powers as an “authorized person” ceased, and each Manager named herein shall become a
designated “authorized person” and shall continue as the designated “authorized person” within the
meaning of the Act.




          Section 1.14 Existence of the Company. The existence of the Company as a separate
legal entity shall continue in accordance with the Settlement Agreement and Article VI hereof until
cancellation of the Certificate of Formation as provided in the Act.




          Section 1.15 No Petition. Neither Solutia nor Monsanto shall, or shall permit any of
their respective subsidiaries (other than, in the case if Solutia, SFC LLC itself) to, prior to the
date that is two years and one day after the full and final satisfaction by SFC LLC of all of the
Permitted Obligations, acquiesce, petition or otherwise invoke the process of any Governmental
Authority for the purpose of commencing or sustaining a case against SFC LLC under any Insolvency
Law or appointing a receiver, liquidator, assignee, trustee, custodian, sequestrator or other
similar official of SFC LLC or any substantial part of its property, or ordering the winding up or
liquidation of the affairs of SFC LLC.



5









 







ARTICLE II

CAPITAL ACCOUNTS




          Section 2.1 Capital Accounts. A “Capital Account” will be established for each Member
on the books of the Company and will be adjusted as follows:




               (a) Such Member’s contributions to the capital of the Company will be credited to such
Member’s Capital Account when received by the Company from or on behalf of such Member.



               (b) At the end of each fiscal year of the Company and upon dissolution and winding up of the
Company pursuant to Article VI, Profits for such period allocated to such Member pursuant to
Section 3.2 shall be credited and Losses for such period allocated to such Member pursuant to
Section 3.2 shall be debited, as the case may be, to such Member’s Capital Account.



               (c) Any amounts distributed to such Member will be debited against such Member’s Capital
Account.



               (d) Such Member’s Capital Account will otherwise be adjusted in accordance with Treas. Reg. 1.
704-1(b)(2)(iv).



          Section 2.2 Computation of Amounts. For purposes of computing the amount of any item of income, gain, loss, deduction or
expense to be reflected in Capital Accounts, the determination, recognition and classification of
each such item shall be the same as its determination, recognition and classification for federal
income tax purposes; provided that




               (a) any income that is exempt from Federal income tax shall be added to such taxable income or
losses and any expenditures of the Company described in Section 705(a)(2)(B) of the Code or treated
as Section 705(a)(2)(B) of the Code expenditures pursuant to Treasury Regulation
Section 1.704-1(b)(2)(iv)(i), shall be subtracted from such taxable income or losses;



               (b) if the Book Value of any Company property is adjusted pursuant to Treasury Regulation
Section 1.704-1(b)(2)(iv)(e) (in connection with a distribution of such property) or (f) (in
connection with a revaluation of Capital Accounts), the amount of such adjustment shall be taken
into account as gain or loss from the disposition of such property; and



               (c) if property that is reflected on the books of the Company has a Book Value that differs
from the adjusted tax basis of such property, depreciation, amortization and gain or loss with
respect to such property shall be determined by reference to such Book Value.



          Section 2.3 Distribution in Kind. If property is to be distributed in kind to the
Member(s) pursuant to this Agreement, (i) the value of such property shall first be adjusted
pursuant to Section 2.2(b) to its value (as determined pursuant to Article VII as of the date of
such distribution), (ii) the Capital Accounts of the Member(s) shall be adjusted immediately prior
to the distribution as if such property were sold at its value (as so determined) and (iii) the
value




6









 







of such property (as so determined) received by each Member shall be debited against such
Member’s respective Capital Account at the time of distribution.




ARTICLE III .

DISTRIBUTIONS AND ALLOCATIONS




          Section 3.1 Distributions. Distributions of cash or other assets of the Company shall
be made only at such times, only in such amounts and only in such manner as expressly permitted by
the Settlement Agreement. Unless otherwise expressly required by the Settlement Agreement,
distributions to Members shall be made pro rata based on the Percentage Interests held by each of
the Members. Notwithstanding any provision to the contrary contained in this Agreement, the
Company shall not make a distribution to any Member on account of such Member’s interest in the
Company (i) if such distribution would violate Section 18-607 of the Act or other applicable law or
(ii) except as expressly permitted by the Settlement Agreement, until all Permitted Obligations
have been fully and finally satisfied.




          Section 3.2 Allocation of Profits and Losses. Except as may be required by the Code, each item of income, gain, loss, deduction or
expense to the Company shall be allocated among the Member(s) in proportion to the Percentage
Interests held by each Member.




ARTICLE IV

MANAGEMENT AND MEMBER RIGHTS




          Section 4.1 Management Authority. (a) Subject to Sections 1.5 and 1.6 of this
Agreement, the business and affairs of the Company shall be managed by or under the direction of a
board of managers (each a “Manager” and collectively the “Board of Managers”)
consisting of one (1) or more Managers. The Managers shall be appointed by the Sole Member. Until
the date that is two years and one day from the date upon which the Permitted Obligations have been
fully and finally satisfied, the Board of Managers shall include an Independent Manager appointed
pursuant to Section 4.1(d). Each Manager elected, designated or appointed shall hold office until
a successor is elected and qualified or until such Manager’s earlier death, incompetence,
resignation or removal. Managers need not be Members.




               (b) Subject to Sections 1.3, 1.5 and 1.6 of this Agreement, the Board of Managers shall have
the power to do any and all acts necessary to or for the furtherance of the purposes set forth in
Section 1.3, including all powers, statutory or otherwise. Subject to Sections 1.5 and 1.6 and the
Settlement Agreement, the Board of Managers and any individual Manager authorized by the Board of
Managers shall have the authority to bind the Company in any manner expressly permitted by the
Settlement Agreement and in compliance with the terms thereof. No Member, unless such Member is
also a Manager and acts in its capacity as Manager, shall have any authority to act for or bind the
Company but shall have only the right to vote on or approve the actions herein specified to be
voted on or approved by the Members or as otherwise specified in the Act.



               (c) Subject to Section 1.5 of this Agreement, so long as the Permitted Obligations are
outstanding, the Company shall not be authorized or empowered, nor shall the Members or the Board
of Managers permit the Company, to take the following actions:



7









 






               (i) the lease, exchange, mortgage, pledge, or other transfer or disposition of any of
the assets of the Company except as expressly permitted by the Settlement Agreement;




               (ii) to the fullest extent permitted by law, engage in any dissolution, liquidation,
consolidation, merger or transfer of ownership interests other than such activities as are
expressly required by the Settlement Agreement;




               (iii) any amendment to the Certificate or this Agreement;




               (iv) the incurrence of indebtedness by the Company (or the guarantee of indebtedness of
any other Person) except as expressly required by the Settlement Agreement;




               (v) any transaction involving an actual or potential conflict of interest between a
Manager and the Company; or




               (vi) a change in the nature of the business of the Company.



               (d) Until the date that is two years and one day from the date upon which the Permitted
Obligations have been satisfied in full, the Company shall at all times have at least one
Independent Manager who shall be appointed by the Members. Notwithstanding anything to the
contrary in this Agreement, to the fullest extent permitted by law, including Section 18-1101(c) of
the Act, the approval of the Independent Manager shall be required for any Material Action and the
Independent Manager shall consider the interests of the Company and its creditors in acting or
otherwise voting for any Material Action. No appointment of an Independent Manager shall be
effective unless and until such Independent Manager shall (i) have accepted his or her appointment
as an Independent Manager by a written instrument (which may be a counterpart signature page to the
Independent Manager Agreement attached hereto as Schedule 2), and (ii) have executed such other
documents and instruments, including a counterpart to this Agreement, as shall be required by the
Sole Member in its sole discretion, and no resignation or removal of an Independent Manager and no
appointment of a successor Independent Manager shall be effective until such successor shall have
satisfied the requirements of such clauses (i) and (ii). In the event of a vacancy in the position
of Independent Manager, the Member shall, as soon as practicable, appoint a successor Independent
Manager. All right, power and authority of the Independent Managers shall be limited to the extent
necessary to exercise those rights and perform those duties specifically set forth in this
Agreement. Except as provided in the second sentence of this Section 4.1(d), in exercising their
rights and performing their duties under this Agreement, any Independent Manager shall have a
fiduciary duty of loyalty and care similar to that of a director of a business corporation
organized under the General Corporation Law of the State of Delaware. No Independent Manager shall
at any time serve as trustee in bankruptcy for any Affiliate of the Company.



               (e) The Board of Managers may hold meetings, both regular and special, within or outside the
State of Delaware. Regular meetings of the Board of Managers may be held at such time and at such
place as shall from time to time be determined by the Board of Managers. Special meetings of the
Board of Managers may be called by any one or more of



8









 




the Managers on not less than one (1) day’s
notice to each Manager by telephone, facsimile, mail, telegram or any other means of communication.




               (f) At all meetings of the Board of Managers, a majority of the Managers shall constitute a
quorum for the transaction of business and, except as otherwise provided in any other provision of
this Agreement, the act of a majority of the Managers present at any meeting at which there is a
quorum shall be the act of the Board of Managers. If a quorum shall not be present at any meeting
of the Board of Managers, the Managers present at such meeting may adjourn the meeting from time to
time, without notice other than announcement at the meeting, until a quorum shall be present. Any
action required or permitted to be taken at any meeting of the Board of Managers may be taken
without a meeting if all members of the Board of Managers, as the case may be, consent thereto in
writing, and the writing or writings are filed with the minutes of proceedings of the Board of
Managers.



               (g) Managers may participate in meetings of the Board of Managers, by means of telephone
conference or similar communications equipment that allows all persons participating in the meeting
to hear each other, and such participation in a meeting shall constitute presence in person at the
meeting and shall be counted for purposes of determining whether a quorum exists. If all the
participants are participating by telephone conference or similar communications equipment, the
meeting shall be deemed to be held at the principal place of business of the Company.



               (h) The Managers may be paid their expenses, if any, of attendance at meetings of the Board of
Managers.



               (i) Unless otherwise restricted by law, any Manager or the entire Board of Managers, may be
removed, with or without cause, at any time by the unanimous action of the Members, and any vacancy
caused by any such removal may be filled by unanimous action of the Members.



               (j) Subject, in the case of the Independent Manager, to Section 4.1(d) of this Agreement, in
exercising the rights and performing the duties of Managers under this Agreement, each Manager
shall have a fiduciary duty of loyalty and care similar to that of a director of a business
corporation organized under the General Corporation Law of the State of Delaware.



          Section 4.2 Indemnification.




               (a) Neither a Member, a Manager nor any Affiliate of a Member or Manager shall be liable,
responsible or accountable in damages or otherwise to the Company or the Members for any act or
omission by any such Person performed in good faith pursuant to the authority granted to such
Person by this Agreement or in accordance with its provisions, and in a manner reasonably believed
by such Person to be within the scope of the authority granted to such Person and in, or not
opposed to, the best interest of the Company; provided that such act or omission did not
constitute fraud, willful misconduct, gross negligence or bad faith.



               (b) The Company shall indemnify and hold harmless the Company’s employees, Members, Managers
and each director, officer, partner and employee thereof, against



9









 




any liability, loss, damage, cost
or expense incurred by any of them on behalf of the Company or in furtherance of the Company’s
interests, to the fullest extent permitted by applicable law, without relieving any such Person of
liability for fraud, willful misconduct, gross negligence or bad faith. Notwithstanding the
foregoing, any indemnity under this Section by the Company shall be provided for to the extent of
Company assets only and no Member or Manager shall have any personal liability with respect to the
satisfaction of any required indemnification of the above-mentioned Persons.





               (i) Any indemnification required to be made by the Company shall be made promptly
following the fixing of the liability, loss, damage, cost or expense incurred or suffered by
a final judgment of any court, settlement, contract or otherwise. In addition, the Company
may advance funds to a Person claiming indemnification for
legal expenses and other costs incurred as a result of a legal action brought against
such Person only if (i) the legal action relates to the performance of duties or services by
the Person on behalf of the Company, (ii) the legal action is initiated by a party other
than a Member, and (iii) such Person undertakes to repay the advanced funds to the Company
if it is determined that such Person is not entitled to indemnification pursuant to the
terms of this Agreement.




               (ii) The termination of any action or proceeding by judgment, order, settlement,
conviction or upon a plea of nolo contendere or its equivalent shall not, of itself, create
a presumption that (A) the Person being indemnified hereunder did not act in good faith and
in a manner which the Person reasonably believed, in the case of conduct in the Person’s
official capacity, to be in the Company’s best interests and in all other cases, to be at
least not opposed to the Company’s best interests, or (B) with respect to any criminal
proceeding, that the Person had reasonable cause to believe that the conduct was lawful.




               (iii) Without the necessity of entering into an express contract, all rights to
indemnification and advances under this Agreement shall be deemed to be contractual rights
and be effective to the same extent as if provided for in a contract between the Company and
the Person seeking indemnification. Any right to indemnification or advances granted by
this Agreement shall be enforceable by or on behalf of the Person holding such right in any
court of competent jurisdiction, if (A) the claim for indemnification or advances is denied,
in whole or in part, or (B) no disposition of such claim is made within ninety (90) days of
request therefor. The claimant in such enforcement action, if successful in whole or in
part, shall be also be entitled to be paid the expense of prosecuting a claim for
indemnification. It shall be a defense to any such action (other than an action brought to
enforce a claim for expenses incurred in connection with any action or proceeding in advance
of its final disposition when the required affirmation and undertaking have been tendered to
the Company) that the claimant has not met the standards of conduct which make it
permissible for the Company to indemnify the claimant for the amount claimed, but the burden
of proving such defense shall be on the Company. Neither the failure of the Company to have
made a determination prior to the commencement of such action that indemnification of the
claimant is proper in the circumstances because the claimant has met the applicable standard
of conduct, nor an actual determination by the Company that the claimant has



10









 






not met such
applicable standard of conduct, shall be a defense to the action or create a presumption
that the claimant has not met the applicable standard of conduct.




               (iv) The rights conferred on any Person by this Agreement shall not be exclusive of any
other right which such Person may have or hereafter acquire under any statute, agreements or
otherwise, both as to action in the Person’s official capacity and as to action in any other
capacity.




               (v) The rights conferred on any Person by this Section shall continue to inure to the
benefit of any person who has ceased to be a Member, Manager or employee of the Company.




               (vi) Any repeal of this Section or of the Agreement shall only be prospective, and no
repeal or modification hereof shall adversely affect the rights under this Agreement in
effect at the time of the alleged occurrence of any conduct.




               (vii) If this Agreement or any portion hereof shall be invalidated on any ground by any
court of competent jurisdiction, the Company shall indemnify each Person to whom
indemnification is available to the fullest extent permitted by any applicable portion of
this Agreement that shall not have been invalidated, or by any other applicable law.



               (c) Each Member agrees to defend, indemnify and hold the other Members and the Company
harmless from and against any claim, expense or liability arising out of or relating to any breach
of the Member’s obligations under this Agreement or the Act, or the Member’s fiduciary obligations
to the other Members and the Company.



ARTICLE V

MEMBERS




          Section 5.1 Transfer of the Company Interest.




               (a) Subject to Section 5.3, no Member shall sell, assign, transfer or otherwise dispose of
(directly or indirectly), whether voluntarily or involuntarily or by operation of law (a
“Transfer”), all or any portion of such Member’s interest in the Company without the prior written
consent of the Board of Managers and Monsanto, which consent may be given or withheld in its sole
discretion. No Member shall pledge or otherwise encumber all or any portion of such Member’s
interest in the Company, without the prior written consent of the Board of Managers and Monsanto,
which consent may be given or withheld in its sole and absolute discretion.



               (b) Notwithstanding any other provision of this Agreement, any Transfer by the Members in
contravention of any of the provisions of this Section 5.1 shall be void and ineffective, and shall
not bind, or be recognized by, the Company.



               (c) If and to the extent any Transfer of an interest in the Company is made pursuant to and in
accordance with the terms of this Agreement, this Agreement (including the Appendix, Schedule and
Exhibits hereto) shall be amended by the Board of Managers to



11









 




reflect the Transfer of the Company
interest to the transferee, to admit the transferee as a Member and to reflect the elimination of
the transferring Member (or the reduction of such transferring Member’s interest in the Company)
and (if and to the extent then required by the Act) a certificate of amendment to the Certificate
reflecting such admission and elimination (or reduction) shall be filed in accordance with the Act.
The effectiveness of the Transfer of an interest in the Company permitted hereunder and the
admission of any substitute Member pursuant to Section 5.3 shall be deemed effective upon the later
to occur of the time of Transfer of an interest in the Company to such transferee or the first date
that the Board of Managers receives evidence of such Transfer, including the terms thereof. If the
transferring Member has transferred all or any of its interest in the Company pursuant to this
Section 5.1, then, upon the
later to occur of the time of such Transfer or the first date that the Board of Managers
receives evidence of such Transfer, including the terms thereof, the transferring Member shall
cease to be a Member with respect to such interest. Notwithstanding anything in this Agreement to
the contrary, any successor to a Member by merger or consolidation shall, without further act, be a
Member hereunder, and such merger or consolidation shall not constitute an assignment for purposes
of this Agreement and the Company shall continue without dissolution.




               (d) Any person or entity who acquires in any manner whatsoever any interest in the Company,
irrespective of whether such person or entity has accepted and adopted in writing the terms and
provisions of this Agreement, shall be deemed by the acceptance of the benefits of the acquisition
thereof to have (i) made all of the capital contributions, (ii) received all of the distributions,
and (iii) agreed to be subject to and bound by all of the terms and conditions of this Agreement,
that any predecessor in such interest in the Company made, received and was subject to or bound.



          Section 5.2 Member Rights; Meetings. No Member, unless such Member is also a Manager
and acts in its capacity as Manager, shall have any right, power or duty, including the right to
approve or vote on any matter, except as expressly required by the Act or other applicable law or
as expressly provided for hereunder.




               (a) Unless a greater vote is required by the Act or as expressly provided for hereunder, the
affirmative vote of a Majority in Interest of the Members entitled to vote shall be required to
approve any proposed action.



               (b) Meetings of the Members for the transaction of such business as may properly come before
such Members shall be held at such place, on such date and at such time as a Member or Members
holding a Majority in Interest shall determine. Special meetings of Members for any proper purpose
or purposes may be called at any time by the Board of Managers or the Member or Members holding a
Majority in Interest. The Company shall deliver oral or written notice (written notice may be
delivered by mail) stating the date, time, place and purposes of any meeting to each Member
entitled to vote at the meeting. Such notice shall be given not less than four (4) and not more
than sixty (60) days before the date of the meeting.



               (c) Any action required or permitted to be taken at an annual or special meeting of the
Members may be taken without a meeting, without prior notice, and without a vote, provided
that written consents, setting forth all proposed actions to be taken at such meeting, are signed
by the Members holding at least the minimum Percentage Interest that would



12









 




be necessary to
authorize or take such action at a meeting at which all Members entitled to vote on such action
were present and voted. Every written consent shall bear the date and signature of each Member who
signs such consent. Prompt notice of the taking of action without a meeting by less than unanimous
written consent shall be given to all Members who have not consented in writing to such action.




          Section 5.3 Additional Members. The Board of Managers shall have the sole right to admit additional Members upon such terms
and conditions and at such time or times as the Board of Managers shall in its sole discretion
determine; provided that, notwithstanding the foregoing, so long as any Permitted
Obligation remains outstanding, no additional Members may be admitted to the Company without the
prior unanimous consent of the Board of Managers and Monsanto. In connection with any such
admission, the Board of Managers shall amend Schedule 1 to reflect the name, address and
capital contribution of the additional Member and the new Percentage Interests of all Members.




          Section 5.4 Resignation of a Member. So long as any Permitted Obligations are
outstanding, the Sole Member may not resign without prior unanimous consent of the Board of
Managers and Monsanto. A Member (other than the Sole Member) may resign from the Company with the
written consent of the Board of Managers. The Sole Member shall not be permitted to resign
pursuant to this Section 5.4 unless an additional member of the Company is admitted to the Company
in accordance with Section 5.3. Such admission shall be deemed effective immediately prior to the
resignation, and, immediately following such admission, the resigning Member shall cease to be a
member of the Company.




          Section 5.5 Termination of a Member. Notwithstanding the provisions of Section 5.4, a
person or entity will no longer be a Member for purposes of this Agreement upon an Event of
Withdrawal, provided, however, that a Terminated Member shall continue to be deemed
a Member for all purposes under Section 4.2. The Terminated Member shall only be entitled to
continue to receive allocation of Profits and Losses and distributions of the Company, including
distributions pursuant to Article VI hereof, as and when paid by the Company, to the same extent
such Terminated Member was entitled to such distributions as a Member. Such Terminated Member’s
successors and assigns will not be entitled to participate in any Company decision or
determination, and such Terminated Member’s successors and assigns will acquire only such
Terminated Member’s right to receive allocation of Profits and Losses and to share in the Company
distributions.




ARTICLE VI

DURATION




          Section 6.1 Duration. (a) Subject to the provisions of Section 6.2 of this Agreement,
the Company shall be dissolved and its affairs wound up and terminated upon the first to occur of
the following:





               (i) Two years after the distribution of all assets of the Company in accordance with
the Settlement Agreement (unless the Settlement Agreement provides at any time for a
different term); or



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               (ii) The entry of a decree of judicial dissolution under Section 18-802 of the Act;


provided, however, that the Sole Member shall have the right, in its sole
discretion, to extend the existence of the Company beyond the date otherwise provided for in this
Section 6.1(a).




               (b) Except as otherwise set forth in this Article VI, the Members intend for the Company to
have perpetual existence. The bankruptcy (as defined in Section 18-101(1) of the Act) of any
Member shall not cause such Member to cease to be a member of the Company and upon the occurrence
of such an event, the business of the Company shall continue without dissolution. Each Member
waives any right it may have to agree in writing to dissolve the Company upon the Bankruptcy (as
defined in Section 18-101(1) of the Act) of any other Member or the occurrence of any other event
that causes such other Member to cease to be a Member of the Company.



          Section 6.2 Winding Up. Upon dissolution of the Company, the Company shall be
liquidated in an orderly manner. The Board of Managers shall be the liquidator pursuant to this
Agreement and shall proceed diligently to wind up the affairs of the Company and make final
distributions as provided herein and in the Act. The costs of liquidation shall be borne at the
Company’s expense. The steps to be accomplished by the liquidator are as follows:




               (a) First, the liquidator shall satisfy all of the Company’s known or reasonably anticipated
debts and liabilities to creditors other than Members (whether by payment or the reasonable
provision for payment thereof) including, without limitation, any outstanding Permitted
Obligations;



               (b) Second, the liquidator shall satisfy all of the Company’s debts and liabilities to Members
(whether by payment or the reasonable provision for payment thereof); and



               (c) Third, all remaining assets, if any, shall be distributed to the Members in accordance
with Section 3.1.



          Section 6.3 Termination. The Company shall terminate when all of the assets of the
Company, after payment of or due provision for all debts, liabilities and obligations of the
Company, shall have been distributed in the manner provided for in this Article VI, and the
Certificate of the Company shall have been canceled in the manner required by the Act.




ARTICLE VII

VALUATION




          Section 7.1 Valuation. For purposes of this Agreement, the value of any property
contributed by or distributed to any Member shall be valued as specified in the Settlement
Agreement, or, if not so specified, as determined by the Board of Managers.




14









 








ARTICLE VIII

CERTIFICATION OF MEMBERSHIP INTERESTS




          Section 8.1 Membership Interest. The membership interests in the Company shall not be
certificated; provided that the Board of Managers may approve a form of certificate and
issue the same in its discretion.




ARTICLE IX

BOOKS OF ACCOUNT; MEETINGS




          Section 9.1 Books. Subject to the Services Agreement, the Board of Managers will
maintain on behalf of the Company complete and accurate books of account of the Company’s affairs
at the Company’s principal office, which books will be open to inspection by any Member (or such
Member’s authorized representative) or Monsanto at any time during ordinary business hours and
shall be maintained in accordance with the Act.




          Section 9.2 Fiscal Year. The fiscal year of the Company shall end on December 31 of
each year.




          Section 9.3 Tax Allocation and Reports. (a) The income, gains, losses, deductions and
credits of the Company will be allocated, for federal, state and local income tax purposes, among
the Members in accordance with the allocation of such income, gains, losses, deductions and credits
among the Members for computing their Capital Accounts, except as otherwise provided in the Code or
other applicable law.




               (b) In accordance with Section 704(c) of the Code and the Treasury Regulations thereunder,
income, gain, loss, deduction and expense with respect to any property contributed to the capital
of the Company shall, solely for tax purposes, be allocated among the Members so as to take account
of any variation between the adjusted basis of such property to the Company for federal income tax
purposes and its fair market value at the time of contribution.



               (c) Within 120 days after the end of each fiscal year, the Tax Matters Partner (as defined
below) shall cause the Company to furnish each Member and Monsanto with a copy of the Company’s tax
return and form K-1 for such fiscal year, unless Company files as part of a consolidated return.



               (d) The Company hereby designates the Sole Member to act as the “Tax Matters Partner” (as
defined in Section 6231(a)(7) of the Code) in accordance with Sections 6221 through 6233 of the
Code.



               (e) If and for so long as the Company has only one Member, the Company shall make an election
on IRS Form 8832 to be treated as a domestic entity with a single owner electing to be disregarded
as a separate entity.



               (f) Within 75 days after the end of each fiscal year, the Company shall deliver, or cause to
be delivered, to Monsanto unaudited financial statements of the Company which shall include a
balance sheet, an income statement and a statement of cash flows.



15









 





ARTICLE X

MISCELLANEOUS




          Section 10.1 Amendments. Subject to Section 1.5 of this Agreement, this Agreement may
be amended or modified and any provision hereof may be waived by the affirmative vote of Members
holding a majority of the Percentage Interests; provided, however, that any
amendment or modification reducing disproportionately a Member’s Percentage Interest or other
interest in the profits or losses or in distributions or increasing such Member’s capital
contribution shall be effective only with such Member’s consent.




          Section 10.2 Successors. Except as otherwise provided herein, this Agreement will
inure to the benefit of and be binding upon the Members and their respective legal representatives,
heirs, successors and permitted assigns.




          Section 10.3 Governing Law; Severability. The Agreement will be construed in
accordance with the laws of the State of Delaware, and, to the maximum extent possible, in such
manner as to comply with the terms and conditions of the Act. If it is determined by a court of
competent jurisdiction that any provision of this Agreement is invalid under applicable law, such
provision will be ineffective only to the extent of such prohibition or invalidity, without
invalidating the remainder of this Agreement.




          Section 10.4 Notices. All notices, demands and other communications to be given and
delivered under or by reason of provisions under this Agreement shall be in writing and shall be
deemed to have been given when personally delivered, mailed by first class mail (postage prepaid
and return receipt requested), sent by telecopy or sent by reputable overnight courier service
(charges prepaid) to the addresses or telecopy numbers set forth in Schedule 1 hereto or to
such other addresses or telecopy numbers as have been supplied in writing to the Company.




          Section 10.5 Complete Agreement; Headings, Counterparts. This Agreement terminates
and supersedes all other agreements concerning the subject matter hereof previously entered into
among any of the parties. Descriptive headings are for convenience only and will not control or
affect the meaning or construction of any provision
of this Agreement. Wherever from the context it appears appropriate, each term stated in
either the singular or the plural shall include the singular and the plural, and pronouns stated in
either the masculine, feminine or the neuter gender shall include the masculine, the feminine and
the neuter. This Agreement may be executed in any number of counterparts, any one of which need
not contain the signatures of more than one party, but all such counterparts together will
constitute one agreement.




          Section 10.6 Partition. Except as otherwise expressly provided in this Agreement, to
the fullest extent permitted by law, each Member hereby irrevocably waives any right or power that
such Member might have to cause the Company or any of its assets to be partitioned, to cause the
appointment of a receiver for all or any portion of the assets of the Company as a result of the
actual or potential insolvency of the Company, to compel any sale of all or any portion of the
assets of the Company pursuant to any applicable law or to file a complaint or to institute any
proceeding at law or in equity to cause the dissolution, liquidation, winding up or termination of
the Company. No Member shall have any interest in any specific






16









 







assets of the Company, and no
Member shall have the status of a creditor with respect to any distribution pursuant to Section 3.1
hereof. The interest of the Members in the Company is personal property.




          Section 10.7 Benefits of Agreement; No Third-Party Rights; Monsanto as a Party. None
of the provisions of this Agreement shall be for the benefit of or enforceable by any creditor of
the Company or by any creditor of any Member. Nothing in this Agreement shall be deemed to create
any right in any Person (except as otherwise provided in Section 4.2) not a party hereto, and this
Agreement shall not be construed in any respect to be a contract in whole or in part for the
benefit of any third Person. Monsanto shall be a party to this Agreement solely for purposes of
Sections 1.5, 4.1(d), 5.1(a), 5.3, 5.4, 9.1, 9.3(c) and 10.1 of this Agreement.




          Section 10.8 Binding Agreement. Notwithstanding any other provision of this
Agreement, each Member agrees that this Agreement constitutes a legal, valid and binding agreement
of the Member.




          Section 10.9 No Strict Construction. In the event an ambiguity or question of intent
or interpretation arises, this Agreement shall be construed as if drafted jointly by the Persons
(if more than one) then parties hereto, and no presumption or burden of proof shall arise favoring
or disfavoring any party by virtue of the authorship of any of the provisions of this Agreement.




          Section 10.10 Attorneys’ Fees and Disbursements. If the Company or any Member engages
an attorney in connection with any action or proceeding (including arbitration) to enforce or
construe this Agreement or their rights or obligations under limited liability company law, the
prevailing party in such action or
proceeding shall be entitled to recover its reasonable attorneys’ fees and disbursements. In
the event different parties are the prevailing parties on different issues, the attorneys’ fees and
disbursements shall be apportioned in proportion to the value of the issues decided for and against
the parties.




          Section 10.11 Effectiveness. Pursuant to Section 18-201(d) of the Act, this Agreement
shall be effective as of 12:01 a.m., New York time, on the Effective Date of the Plan, as defined
in the Settlement Agreement.




* * * * * * * * *




17









 





          IN WITNESS WHEREOF, the parties below caused this Agreement to be signed as of the date first
above written.




	 	 	 	 	 
	 	Solutia Inc.

 	 
	 	By:  	/s/ Rosemary L. Klein
 	 
	 	 	Name:  	Rosemary L. Klein 	 
	 	 	Its: Senior Vice President, General Counsel and Secretary	 
	 
	 	SFC LLC

 	 
	 	By:  	:  /s/ James A. Tichenor
 	 
	 	 	Name:  	James A. Tichenor 	 
	 	 	Its: Authorized Manager 	 
	 





 









 





APPENDIX A




DEFINITIONS





     When used in this Agreement, the following terms not otherwise defined herein have the
following meanings:



          “Act” has the meaning set forth in Section 1.1.




          “Affiliate” means, with respect to any Person, any other Person directly or indirectly
Controlling or Controlled by or under direct or indirect common Control with such Person.




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




          “Assignee” means person or entity to whom a Company interest has been transferred in a
Transfer, unless and until such person or entity becomes a Member with respect to such Company
interest.




          “Book Value” means, with respect to any Company property, the Company’s adjusted basis
for federal income tax purposes, except that the initial Book Value of any property contributed by
a Member to the Company shall be the value of such property on the date of such contribution, as
agreed by the Board of Managers and the Member contributing the property, and the Book Value of any
Company property shall be adjusted pursuant to Treasury Regulation Section 1.704-1(b)(2)(iv)(e) (in
connection with a distribution of such property) or (f) (in connection with a revaluation of
Capital Accounts).




          “Board of Managers” has the meaning set forth in Section 4.1(a).




          “Capital Account” has the meaning set forth in Section 2.1.




          “Certificate” has the meaning set forth in Section 1.1.




          “Code” means the Internal Revenue Code of 1986, as amended from time to time, and the
regulations promulgated thereunder.




          “Company” has the meaning set forth in Section 1.1.




          “Control” means the possession, directly or indirectly, or the power to direct or
cause the direction of the management or policies of a Person, whether through the ownership of
voting securities or general partnership or managing member interests, by contract or otherwise.
“Controlling” and “Controlled” shall have correlative meanings. Without limiting the generality of
the foregoing, a Person shall be deemed to Control any other Person in which it owns, directly or
indirectly, a majority of the ownership interests.




          “Deposited Property” means the contribution, in the form of cash and/or interest
bearing demand promissory notes and any other property transferred to the Company pursuant to



 









 






the terms and conditions of the Settlement Agreement, and all Profits and other proceeds
thereof (if any).




          “Event of Withdrawal” means the death or dissolution of a Member.




          “Governmental Authority” means the government of the United States of America, any
other nation or any political subdivision thereof, whether state or local, and any agency,
authority, instrumentality, regulatory body, court, central bank or other entity exercising
executive, legislative, judicial, taxing, regulatory or administrative powers or functions of or
pertaining to government.




          “Independent Manager” means a natural person who is not at the time of initial
appointment as a manager or at any time while serving as a manager of the Company and has not been
at any time during the five (5) years preceding such initial appointment:





	 	(a)	 	a stockholder, officer, trustee, employee, partner, member, attorney or counsel
of the Company, any Member or any Affiliate of either of them;
	 
	 	(b)	 	a creditor, customer, supplier, or other person who derives any of its
purchases or revenues from its activities with the Member, the Company or any Affiliate
of either of them;
	 
	 	(c)	 	a Person Controlling or under common Control with any Person excluded from
serving as Independent Director under clause (a) or (b) above; or
	 
	 	(d)	 	a member of the immediate family by blood or marriage of any Person excluded
from serving as Independent Manager under clause (a) or (b) above.




A natural person who satisfies the foregoing definition other than subparagraph (b) shall not be
disqualified from serving as an Independent Manager of the Company if such individual is an
Independent Manager provided by a nationally-recognized company that provides professional
independent managers (a “Professional Independent Manager”) and other corporate services in
the ordinary course of its business. A natural person who otherwise satisfies the foregoing
definition other than subparagraph (a) by reason of being an independent manager of a “special
purpose entity” affiliated with the Company shall not be disqualified from serving as an
Independent Manager of the Company if either (i) such individual is a Professional Independent
Manager or (ii) the fees that such individual earns from serving as independent manager of
Affiliates of the Company in any given year constitute in the aggregate less than five percent (5%)
of such individual’s annual income for that year. Notwithstanding the immediately preceding
sentence, an Independent Manager may not simultaneously serve as an Independent Manager of the
Company and an independent manager of a special purpose entity that owns a direct or indirect
equity interest in the Company or a direct or indirect interest in any co-borrower with the
Company. For purposes of this paragraph, a “special purpose entity” is an
entity, whose organizational documents contain restrictions on its activities and impose
requirements intended to preserve such entity’s separateness that are substantially similar to the
Special Purpose Provisions of this Agreement.




2









 








          “Independent Manager Agreement” means the Independent Manager Agreement attached
hereto as Schedule 2.




          “Insolvency Law” means any federal or state bankruptcy, insolvency or similar law.




          “Losses” for any period means all items of Company loss, deduction and expense for
such period determined according to Section 2.2 of this Agreement.




          “Majority in Interest” means a majority of Percentage Interests of all Members.




          “Material Action” means to institute proceedings to have the Company be adjudicated
bankrupt or insolvent, or consent to the institution of bankruptcy or insolvency proceedings
against the Company or file a petition seeking, or consent to, reorganization or relief with
respect to the Company under any applicable federal or state Law relating to bankruptcy, or consent
to the appointment of a receiver, liquidator, assignee, trustee, sequestrator (or other similar
official) of the Company or a substantial part of its property, or make any assignment for the
benefit of creditors of the Company, or admit in writing the Company’s inability to pay its debts
generally as they become due, or, to the fullest extent permitted by Law, take action in
furtherance of any such action, or dissolve or liquidate the Company, or create any partnership,
joint venture or subsidiary, or convey, sell, lease, transfer, encumber or otherwise dispose of the
Deposited Property (except as expressly permitted by the Settlement Agreement), or enter into any
transaction not expressly permitted by the Settlement Agreement.




          “Member” means a Member, an Assignee and, solely for the purposes of Section 4.2, a
Terminated Member.




          “Monsanto” means the Monsanto Company, a Delaware corporation.




          “Officer’s Certificate” means a certificate signed by any officer of the Company who
is authorized to act for the Company in matters relating to the Company.




          “Percentage Interest” means, in respect of each Member, such Member’s interest in the
income, gains, losses, deductions and expenses of the Company as set forth on Schedule 1.




          “Permitted Obligations” means any and all obligations expressly permitted to be
undertaken by the Company pursuant to the Settlement Agreement.




          “Person” means any individual, corporation, partnership, joint venture, limited
liability company, limited liability partnership, association, joint-stock company, trust,
unincorporated organization, or other organization, whether or not a legal entity, and any
governmental authority.




          “Profits” for any period means all items of Company income and gain for such period
determined according to Section 2.2.




          “Registered Agent” has the meaning given to it in Section 1.7 of this Agreement.




3









 








          “Services Agreement” means the Services Agreement dated as of February 28, 2008
between Solutia Inc. and the Company.




          “Settlement Agreement” means the Amended and Restated Settlement Agreement, dated as
of February 28, 2008, by and among Solutia Inc., Monsanto Company and the Company, a copy of which
is attached hereto as Exhibit A, as the same may be amended from time to time.




          “Sole Member” means Solutia.




          “Solutia” means Solutia Inc., a Delaware corporation.




          “Terminated Member” means a person who has ceased to be a Member pursuant to Section
5.5.




          “Transfer” has the meaning set forth in Section 5.1.




          B. Rules of Construction. Definitions in this Agreement apply equally to both the
singular and plural forms of the defined terms. The words “include” and “including” shall be
deemed to be followed by the phrase “without limitation”, except when used in the computation of
time periods. The terms “herein,” “hereof” and “hereunder” and other words of similar import refer
to this Agreement as a whole and not to any particular Section, paragraph or subdivision. The
Section titles appear as a matter of convenience only and shall not affect the interpretation of
this Agreement. All Article, Section, paragraph, clause, Exhibit or Schedule references not
attributed to a particular document or the Act shall be references to such parts of this Agreement.
Capitalized terms used but not defined herein shall have the meaning ascribed thereto in the
Settlement Agreement.





4