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                                                              Exhibit 10(e)


                                  AGREEMENT

         AGREEMENT by and between Solutia Inc., a Delaware corporation (the
"Company"), and John F. Saucier (the "Executive"), dated as of the 19th day
of July 2004 (the "Effective Date").

         The Board of Directors of the Company (the "Board") has determined
that it is in the best interests of the Company and its stakeholders to
assure that the Company will have the continued dedication of the Executive
for a substantial period of time. To induce the Executive to continue to
serve the Company until June 30, 2006, the Company will provide the
Executive with, among other things, a cash retention payment, payable in
installments, and a special transaction bonus. It is the Board's judgment
that such a retention arrangement and special bonus arrangement is in the
best interest of the Company and its stakeholders, and is consistent with
the desire of the Board to maximize the value of the Company. Therefore, in
order to accomplish these objectives, the Board has caused the Company to
enter into this Agreement.

         NOW, THEREFORE, IT IS HEREBY AGREED AS FOLLOWS:

         1. Retention and Special Bonus Payments.
            ------------------------------------

                  (a) The Company shall pay to the Executive a cash
retention payment of $600,000 in four equal installments of $150,000 payable
on each of the date on which this agreement is approved by the United States
Bankruptcy Court for the Southern District of New York, December 31, 2004,
June 30, 2005 and December 31, 2005, provided that, with respect to each
such installment payment, the Executive has been continuously employed by
the Company from the Effective Date through the date of such installment
payment.

                  (b) If, upon the occurrence of a Change in Control, the
Executive (i) is employed by the Company and (ii) is not offered an
employment agreement providing terms of employment substantially similar to
those under which he is employed at the Effective Date, then the Company
shall pay to the Executive both (x) a special bonus of $400,000, and (y) any
cash retention payments referred to in Section 1(a) that have accrued but
not theretofore been paid, both such special bonus and retention payments to
be paid in a lump sum in cash within ten days of the Company's receipt from
the Executive of a Waiver and Release executed and delivered in the manner
described in Section 10(g) hereof. If the special bonus is paid to the
Executive pursuant to this paragraph, then no amounts except for the Accrued
Obligations (as defined below), if any, and the Other Benefits (as defined
below), if any, shall be payable to the Executive pursuant to Section 5.

         2. Employment Period. The Company hereby agrees to continue the
            -----------------
Executive in its employ, and the Executive hereby agrees to remain in the
employ of the Company subject to the terms and conditions of this Agreement,
for the period (the "Employment Period") commencing on the Effective Date
and ending on June 30, 2006. Where the context permits, all references to
the Company shall include an affiliate of the Company by which the Executive
is employed. As used in this Agreement, the term "affiliate" or "affiliated
companies" shall include any company controlled by, controlling or under
common control with the Company. The obligations of the Company and the
Executive under this Agreement including, without limitation, the obligations


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under Sections 5, 6 and 7, shall survive the termination of the Employment
Period to the extent necessary to accomplish the purposes thereof.

         3. Terms of Employment.
            -------------------

                  (a) Position and Duties.
                      -------------------

                           (i) During the Employment Period, (A) the
         Executive shall serve as President, Integrated Nylon of the
         Company, with such authority, duties, responsibilities and
         reporting requirements as may be reasonably assigned to him from
         time to time by the Company's Chief Executive Officer and (B) the
         Executive's services shall be performed at the location where the
         Executive was employed immediately preceding the Effective Date or
         at any office or location of the Company not more than 50 miles
         from the Company's headquarters in St. Louis, Missouri.

                           (ii) During the Employment Period, the Executive
         shall serve the Company faithfully, diligently and to the best of
         his ability, and shall devote substantially all of his time and
         efforts during normal business hours to the business and affairs of
         the Company. During the Employment Period it shall not be a
         violation of this Agreement for the Executive to (A) deliver
         lectures, fulfill speaking engagements or teach at educational
         institutions, and (B) manage personal investments, so long as such
         activities described in clauses A and B do not interfere with the
         performance of the Executive's responsibilities as an employee of
         the Company in accordance with this Agreement, and (C) with the
         advance approval of the Board, serve on corporate, civic or
         charitable boards or committees.

                  (b) Compensation.
                      ------------

                           (i) Base Salary. The Executive shall receive an
                               -----------
         annual base salary ("Annual Base Salary") of not less than $320,000
         which shall be retroactive to May 5, 2004, and which shall be paid
         in accordance with the Company's normal payroll practices.

                           (ii) Annual Bonuses. In addition to Annual Base
                                --------------
         Salary, the Executive shall participate in the Company's Annual
         Incentive Program, or any successor annual bonus plan(s), with a
         target annual bonus opportunity equal to 100% of his Annual Base
         Salary. In addition, during the Employment Period, the Executive
         shall be entitled to participate in all long-term and other
         incentive plans, practices, policies and programs generally
         applicable to senior executives of the Company and its affiliated
         companies.

                           (iii) Savings and Retirement Plans. During the
                                 ----------------------------
         Employment Period, the Executive shall be entitled to participate
         in all savings and retirement plans, practices, policies and
         programs generally applicable to senior executives of the Company
         and its affiliated companies, subject to the Board's authority to
         modify or terminate any such plans, practices, policies and
         programs on a Company-wide basis at any time.

                           (iv) Welfare Benefit Plans. During the Employment
                                ---------------------
         Period, the Executive and/or the Executive's family, as the case
         may be, shall be eligible for


                                     2

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         participation in and shall receive all benefits under welfare
         benefit plans, practices, policies and programs provided by the
         Company and its affiliated companies (including, without
         limitation, medical, prescription, dental, disability, salary
         continuance, employee life, group life, accidental death and travel
         accident insurance plans and programs) to the extent generally
         applicable to senior executives of the Company and its affiliated
         companies, subject to the Board's authority to modify or terminate
         any such plans, practices, policies and programs on a Company-wide
         basis at any time.

                           (v) Expenses. During the Employment Period, the
                               --------
         Executive shall be entitled to receive prompt reimbursement, in
         accordance with Company policy, for all reasonable expenses
         incurred by the Executive in performing his duties hereunder.

                           (vi) Vacation. During the Employment Period, the
                                --------
         Executive shall be entitled to paid vacation in accordance with the
         plans, policies, programs and practices of the Company and its
         affiliated companies as in effect from time to time.

         4. Termination of Employment.
            -------------------------

                  (a) Death or Disability. The Executive's employment shall
                      -------------------
terminate automatically upon the Executive's death during the Employment
Period. If the Company determines in good faith that the Disability of the
Executive has occurred during the Employment Period (pursuant to the
definition of Disability set forth below), it may give to the Executive
written notice in accordance with Section 9(b) of this Agreement of its
intention to terminate the Executive's employment. In such event, the
Executive's employment with the Company shall terminate effective on the
30th day after receipt of such notice by the Executive (the "Disability
Effective Date"), provided that, within the 30 days after such receipt, the
Executive shall not have returned to full-time performance of the
Executive's duties. For purposes of this Agreement, "Disability" shall mean
the Executive's long-term disability for purposes of any reasonable
occupation as determined under the Company's disability plan that is
applicable to the Executive.

                  (b) Cause. The Company may terminate the Executive's
                      -----
employment during the Employment Period for Cause. For purposes of this
Agreement, "Cause" shall mean:

                           (i) the willful and continued failure of the
         Executive to perform substantially the Executive's duties with the
         Company or one of its affiliates (other than any such failure
         resulting from incapacity due to physical or mental illness), after
         a written demand for substantial performance is delivered to the
         Executive by the Board or the Chief Executive Officer of the
         Company which specifically identifies the manner in which the Board
         or Chief Executive Officer believes that the Executive has not
         substantially performed the Executive's duties;

                           (ii) the willful engaging by the Executive in
         illegal conduct or gross misconduct which is materially and
         demonstrably injurious to the Company;

                           (iii) the Executive's conviction of, or plea of
         guilty or no contest to, a felony or any other crime involving
         moral turpitude, fraud, theft, embezzlement or dishonesty; or


                                     3

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                           (iv) the Executive's habitual drug or alcohol
         abuse.

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

                  (c) Good Reason. The Executive's employment may be
                      -----------
terminated by the Executive for Good Reason. For purposes of this Agreement,
"Good Reason" shall mean:

                           (i) a material failure by the Company to comply
         with any of the provisions of Section 3(b) of this Agreement
         relating to compensation, other than an isolated, insubstantial and
         inadvertent failure not occurring in bad faith and which is
         remedied by the Company promptly after receipt of notice thereof
         given by the Executive;

                           (ii) the assignment to the Executive of any
         duties inconsistent in any respect with the Executive's position as
         President, Integrated Nylon, and the authority, duties and
         responsibilities contemplated by Section 3(a) of this Agreement, or
         any other action by the Company which results in a material
         diminution in such position, authority, duties or responsibilities,
         excluding for this purpose an isolated, insubstantial and
         inadvertent action not taken in bad faith and which is remedied by
         the Company promptly after receipt of notice thereof given by the
         Executive; or

                           (iii) the Company's requiring the Executive to be
         based at any office or location other than as provided in Section
         3(a)(i)(B) hereof or the Company's requiring the Executive to
         travel on Company business to a substantially greater extent than
         required immediately prior to the Effective Date.

                  (d) Notice of Termination. Any termination by the Company
                      ---------------------
for Cause, or by the Executive for Good Reason, shall be communicated by
Notice of Termination to the other party hereto given in accordance with
Section 9(b) of this Agreement. For purposes of this Agreement, a "Notice of
Termination" means a written notice which (i) indicates the specific
termination provision in this Agreement relied upon, (ii) to the extent
applicable, sets forth in reasonable detail the facts and circumstances
claimed to provide a basis for termination of the


                                     4

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Executive's employment under the provision so indicated and (iii) if the
Date of Termination (as defined below) is other than the date of receipt of
such notice, specifies the termination date (which date shall be not more
than thirty days after the giving of such notice). The failure by the
Executive or the Company to set forth in the Notice of Termination any fact
or circumstance which contributes to a showing of Good Reason or Cause shall
not waive any right of the Executive or the Company, respectively, hereunder
or preclude the Executive or the Company, respectively, from asserting such
fact or circumstance in enforcing the Executive's or the Company's rights
hereunder.

                  (e) Date of Termination. "Date of Termination" means (i)
                      -------------------
if the Executive's employment is terminated by the Company for Cause, or by
the Executive for Good Reason, the date of receipt of the Notice of
Termination or any later date specified therein, as the case may be, (ii) if
the Executive's employment is terminated by the Company other than for Cause
or Disability, the Date of Termination shall be the date on which the
Company notifies the Executive of such termination and (iii) if the
Executive's employment is terminated by reason of death or Disability, the
Date of Termination shall be the date of death of the Executive or the
Disability Effective Date, as the case may be.

                  (f) Change in Control. "Change in Control" means a sale of
                      -----------------
substantially all of the assets of the Company's Integrated Nylon reporting
segment.

         5. Obligations of the Company upon Termination.
            -------------------------------------------

                  (a) Good Reason; Other Than for Cause. If, during the
                      ---------------------------------
Employment Period, the Company shall terminate the Executive's employment
other than for Cause or the Executive shall terminate employment for Good
Reason:

                           (i) the Company shall pay to the Executive in a
         lump sum in cash within ten days of its receipt from the Executive
         of a Waiver and Release executed and delivered pursuant to Section
         10(g) hereof, the aggregate of the following amounts:

                                    A. the sum of (1) the Executive's
                  accrued Annual Base Salary through the Date of
                  Termination, (2) any annual bonus earned by the Executive
                  with respect to the previous year, and (3) any accrued
                  vacation pay, in each case to the extent not theretofore
                  paid (the sum of the amounts described in clauses (1), (2)
                  and (3) shall be hereinafter referred to as the "Accrued
                  Obligations"); and

                                    B. the sum of (1) an amount equal to
                  100% of his Annual Base Salary, and (2) the cash retention
                  payments referred to in Section 1(a) hereof but only to
                  the extent not theretofore paid to the Executive,
                  following which payment no additional amount shall
                  thereafter be paid pursuant to Section 1(a) hereof.

                           (ii) subject to the provisions of Section 9(f)
         hereof, to the extent not theretofore paid or provided, the Company
         shall timely pay or provide to the Executive any other amounts or
         benefits, excluding any severance or separation pay or benefits,
         required to be paid or provided or which the Executive is eligible
         to receive under any plan, program, policy, practice, contract or
         agreement of the Company and its affiliated companies, including,
         without limitation, the vested benefit, if any, of the Executive

                                     5

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         under any qualified defined benefit or defined contribution
         retirement plan of the Company and its affiliated companies in
         which the Executive participates, in accordance with the terms of
         such plan (such other amounts and benefits shall be hereinafter
         referred to as the "Other Benefits");

                           (iii) the Company shall continue to provide at
         its expense (on the same basis as at the Executive's Date of
         Termination) for the continued participation of the Executive and,
         to the extent applicable, his family, in the Company's medical,
         dental, vision and life insurance plans and programs, for a period
         of four months commencing with the Date of Termination; and

                           (iv) upon request of the Executive, the Company
         shall provide outplacement services to the Executive for up to
         twelve months and up to an aggregate cost of $25,000.

                  (b) Death. If the Executive's employment is terminated by
                      -----
reason of the Executive's death during the Employment Period, this Agreement
shall terminate without further obligations to the Executive's legal
representatives under this Agreement, other than for timely payment or
provision of the following:

                  (i) Accrued Obligations;

                  (ii) Other Benefits;

                  (iii) an amount equal to the product of (x) $400,000 and
(y) a fraction, the numerator of which is the number of whole months that
have elapsed from July 1, 2004 through the Date of Termination, and the
denominator of which is 24; and

                  (iv) an amount equal to the product of (x) any amounts
described in Section 1(a) that remain unpaid, and (y) a fraction, the
numerator of which is the number of days that have elapsed from the
Effective Date through the Date of Termination, and the denominator of which
is the number of days between the Effective Date and June 30, 2006.

Accrued Obligations shall be paid to the Executive's estate or beneficiary,
as applicable, in a lump sum in cash within 30 days of the Date of
Termination.

                  (c) Disability. If the Executive's employment is
                      ----------
terminated by reason of the Executive's Disability during the Employment
Period, this Agreement shall terminate without further obligations to the
Executive, other than for timely payment or provision of the following:

                  (i) Accrued Obligations;

                  (ii) Other Benefits;

                  (iii) an amount equal to the product of (x) $400,000 and
(y) a fraction, the numerator of which is the number of whole months that
have elapsed from July 1, 2004 through the Date of Termination, and the
denominator of which is 24; and

                                     6

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                  (iv) an amount equal to the product of (x) any amounts
described in Section 1(a) that remain unpaid, and (y) a fraction, the
numerator of which is the number of days that have elapsed from the
Effective Date through the Date of Termination, and the denominator of which
is the number of days between the Effective Date and June 30, 2006.

Accrued Obligations shall be paid to the Executive in a lump sum in cash
within 30 days of the Date of Termination.

                  (d) Cause; Other than for Good Reason. If the Executive's
                      ---------------------------------
employment shall be terminated for Cause during the Employment Period, or if
the Executive voluntarily terminates employment during the Employment
Period, excluding a termination for Good Reason, this Agreement shall
terminate without further obligations to the Executive, other than for
Accrued Obligations and the timely payment or provision of Other Benefits.
In such case, all Accrued Obligations shall be paid to the Executive in a
lump sum in cash within 30 days of the Date of Termination.

         6. Full Settlement; Legal Fees. The Company's obligation to make
            ---------------------------
the payments provided for in this Agreement and otherwise to perform its
obligations hereunder shall not be affected by any set-off, counterclaim,
recoupment, defense or other claim, right or action which the Company may
have against the Executive or others. In no event shall the Executive be
obligated to seek other employment or take any other action by way of
mitigation of the amounts payable to the Executive under any of the
provisions of this Agreement, and such amounts shall not be reduced whether
or not the Executive obtains other employment. The Company agrees to pay, to
the full extent permitted by law, all legal fees and expenses which the
Executive may reasonably incur as a result of any contest, in which the
Executive is the prevailing party, by the Company, the Executive or others
of the validity or enforceability of, or liability under, any provision of
this Agreement or any guarantee of performance thereof (whether such contest
is between the Company and the Executive or between either of them and any
third party, and including as a result of any contest by the Executive about
the amount of any payment pursuant to this Agreement), plus in each case
interest on any payment from the time at which the liability for the
applicable legal fees and expenses was incurred by Executive, at the
applicable Federal rate provided for in Section 7872(f) (2)(A) of the
Internal Revenue Code of 1986, as amended (the "Code").

         7. Confidential Information and Competitive Activity.
            -------------------------------------------------

                  (a) Confidential Information. As used herein,
                      ------------------------
"Confidential Information" means all technical and business information of
the Company and its affiliated companies, whether patentable or not, which
is of a confidential, trade secret and/or proprietary character and which is
either developed by the Executive (alone or with others) or to which the
Executive has had access during the Executive's employment. "Confidential
Information" shall also include confidential evaluations of, and the
confidential use or non-use by the Company or any affiliated company of,
technical or business information in the public domain.

         The Executive shall use the Executive's best efforts and diligence
both during and after employment by the Company to protect the confidential,
trade secret and/or proprietary character of all Confidential Information.
The Executive shall not, directly or indirectly, use (for the


                                     7

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Executive or another) or disclose any Confidential Information, for so long
as it shall remain proprietary or protectible as confidential or trade
secret information, except as may be necessary for the performance of the
Executive's duties with the Company.

         The Executive shall deliver promptly to the Company, at the
termination of the Executive's employment, or at any other time at the
Company's request, without retaining any copies, all documents and other
material in the Executive's possession relating, directly or indirectly, to
any Confidential Information.

         Each of the Executive's obligations in this Section shall also
apply to the confidential, trade secret and proprietary information learned
or acquired by the Executive during the Executive's employment from others
with whom the Company or any affiliated company has a business relationship.

         The Executive understands that the Executive is not to disclose to
the Company or any affiliated company, or use for its benefit, any of the
confidential, trade secret or proprietary information of others, including
any of the Executive's former employers.

                  (b) Competitive Activity; Nonsolicitation. In the event
                      -------------------------------------
that, during the Employment Period, Executive shall voluntarily terminate
his employment hereunder be terminated by the Company without Cause or
terminate his employment hereunder for Good Reason, then the Executive shall
not, directly or indirectly (whether as owner, partner, consultant, employee
or otherwise), at any time during the six months following termination of
his employment with the Company or any affiliate for any reason, engage in
or contribute his knowledge to any work or activity that involves a product,
process, apparatus, service or development which is then competitive with or
similar to a product, process, apparatus, service or development on which he
worked or with respect to which he had access to Confidential Information
while employed by the Company or an affiliate at any time during the period
of five years immediately prior to his Date of Termination ("Competitive
Work"). However, the Executive shall be permitted to engage in such proposed
work or activity, and the Company shall furnish him a written consent to
that effect signed by an officer of the Company, if the Executive shall have
furnished to the Company clear and convincing written evidence, including
assurances from the Executive and his new employer, that the fulfillment of
his duties in such proposed work or activity would not likely cause him to
disclose, base judgment upon, or use any Confidential Information. In
addition, during his employment by the Company or an affiliate and for a
period of six months thereafter, the Executive shall not, directly or
indirectly, (i) induce or attempt to induce a salaried employee of the
Company or any of its affiliates to accept employment or affiliation
involving Competitive Work with another firm or corporation of which the
Executive is an employee, owner, partner or consultant, or (ii) induce or
attempt to induce any customer, supplier, licensee or other person having a
business relationship with the Company to cease doing business with the
Company or interfere materially with the relationship between the Company
and any such customer, supplier, licensee or other person having a business
relationship with the Company.

                  (c) Injunctive Relief. Executive agrees that the
                      -----------------
restrictions imposed upon him by this Section 7 are fair and reasonable
considering the nature of the Company's business and are reasonably required
for the protection of the Company. Executive also acknowledges that a


                                     8

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breach of any of the provisions of this Section 7 may result in continuing
and irreparable damages to the Company for which there may be no adequate
remedy at law, and that the Company, in addition to all other relief
available to it, shall be entitled to the issuance of a temporary
restraining order, preliminary injunction and permanent injunction
restraining the Executive from committing or continuing to commit any breach
of the provisions of this Section 7.

                  (d) Blue Pencil. If, at any time, the provisions of this
                      -----------
Section 7 shall be determined to be invalid or unenforceable under any
applicable law, by reason of being vague or unreasonable as to area,
duration or scope of activity, this Agreement shall be considered divisible
and shall become and be immediately amended to only such area, duration and
scope of activity as shall be determined to be reasonable and enforceable by
the court or other body having jurisdiction over the matter and the
Executive and the Company agree that this Agreement shall be valid and
binding as though any invalid or unenforceable provision had not been
included herein.

         8. Successors.
            ----------

                  (a) This Agreement is personal to the Executive and
without the prior written consent of the Company shall not be assignable by
the Executive otherwise than by will or the laws of descent and
distribution. This Agreement shall inure to the benefit of and be
enforceable by the Executive's legal representatives.

                  (b) This Agreement shall inure to the benefit of and be
binding upon the Company and its successors and assigns.

         9. Miscellaneous.
            -------------

                  (a) This Agreement shall be governed by and construed in
accordance with the laws of the State of Delaware, without reference to
principles of conflict of laws. The captions of this Agreement are not part
of the provisions hereof and shall have no force or effect. This Agreement
may not be amended or modified otherwise than by a written agreement
executed by the parties hereto or their respective successors and legal
representatives.

                  (b) All notices and other communications hereunder shall
be in writing and shall be given by hand delivery to the other party or by
registered or certified mail, return receipt requested, postage prepaid,
addressed as follows:

                  If to the Executive:

                  John F. Saucier
                  [home address]


                                     9

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                  If to the Company:

                  Jeffry N. Quinn, Esq.
                  President and Chief Executive Officer
                  Solutia Inc.
                  P.O. Box 66760
                  St. Louis, MO 63166-6760


                  With a copy to:

                  Rosemary L. Klein
                  Vice President, Secretary and General Counsel -
                  Corporate and External Affairs
                  Solutia Inc.
                  P.O. Box 66760
                  St. Louis, MO 63166-6760

or to such other address as either party shall have furnished to the other
in writing in accordance herewith. Notice and communications shall be
effective when actually received by the addressee.

                  (c) The invalidity or unenforceability of any one or more
provisions of this Agreement shall not affect the validity or enforceability
of any other provision of this Agreement, which shall remain in full force
and effect.

                  (d) The Company may withhold from any amounts payable
under this Agreement such Federal, state, local or foreign taxes as shall be
required to be withheld pursuant to any applicable law or regulation.

                  (e) The Executive's or the Company's failure to insist
upon strict compliance with any provision of this Agreement or the failure
to assert any right the Executive or the Company may have hereunder shall
not be deemed to be a waiver of such provision or right or any other
provision or right of this Agreement.

                  (f) This Agreement constitutes the entire agreement
between the parties with respect to the subject matter hereof and supersedes
all prior agreements, oral and written, between the parties hereto with
respect to the subject matter hereof. This Agreement also supersedes,
without limitation, the Employment Agreement dated as of February 28, 1998,
between the Company and the Executive (the "Change in Control Agreement"),
the agreement dated as of December 15, 2003 between the Company and the
Executive (the "Retention Agreement"), and any other prior employment
agreement between the Company and the Executive; provided, that this
Agreement shall have no effect on the Executive's rights under any plan,
program, policy or practice provided by the Company or any of its affiliated
companies except that the benefits and other payments provided for pursuant
to Section 5 hereof shall be in lieu of any severance or separation pay or
benefits to which the Executive might otherwise be entitled under any plan,
program, policy or arrangement of the Company and its affiliates. In

                                     10

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consideration of the promises set forth in the Agreement, and of the mutual
releases set forth in this paragraph, each party hereto relinquishes all
rights, and releases the other from all promises, liabilities and
commitments that may have existed under the Change in Control Agreement, the
Retention Agreement, and any other employment agreements, which shall be
null and void and of no further effect.

                  (g) No amounts shall be payable pursuant to Section 1(b),
5(a) or 5(d) of this Agreement unless and until the Executive shall have
executed and delivered a waiver and release of claims against the Company
substantially in the form attached hereto as Exhibit A.

                  (h) Except as otherwise provided by Section 7(c), in the
event of any dispute, controversy or claim arising out of or relating to
this Agreement or Executive's employment or termination thereof, the parties
hereby agree to settle such dispute, controversy or claim in a binding
arbitration by a single arbitrator in accordance with the Commercial
Arbitration Rules of the American Arbitration Association, which arbitration
shall be conducted in St. Louis, Missouri. The parties agree that the
arbitral award shall be final and non-appealable and, except as otherwise
provided by Section 7(c), shall be the sole and exclusive remedy between the
parties hereunder. The parties agree that judgment on the arbitral award may
be entered in any court having competent jurisdiction over the parties or
their assets.

IN WITNESS WHEREOF, the Executive has hereunto set the Executive's hand and,
pursuant to the authorization from its Board of Directors, the Company has
caused these presents to be executed in its name on its behalf, all as of
the day and year first above written.


                                      /s/ John F. Saucier
                                      ----------------------------------------
                                      John F. Saucier


                                      SOLUTIA INC.


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






                                     11

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                                                                   Exhibit A
                                                                   ---------

                             WAIVER AND RELEASE

         Reference is made to that Agreement (the "Agreement"), dated as of
July 19, 2004, by and between Solutia, Inc., a Delaware Corporation (the
"Company"), and John F. Saucier (the "Executive"). This Waiver and Release
(this "Waiver") is made as of the __ day of ____________, 200_, by the
Executive pursuant to Section 9(g) of the Agreement.

              Release and Waiver of Claims Against the Company
              ------------------------------------------------

         (a) The Executive, on behalf of himself, his agents, heirs,
successors, assigns, executors and administrators, in consideration for the
payments and other consideration provided for under the Agreement, hereby
forever releases and discharges the Company and its successors, their
affiliated entities, and their past and present directors, employees,
agents, attorneys, accountants, representatives, plan fiduciaries,
successors and assigns from any and all known and unknown causes of action,
actions, judgments, liens, indebtedness, damages, losses, claims,
liabilities, and demands of whatsoever kind and character in any manner
whatsoever arising on or prior to the date of this Waiver, including but not
limited to (i) any claim for breach of contract, breach of implied covenant,
breach of oral or written promise, wrongful termination, intentional
infliction of emotional distress, defamation, interference with contract
relations or prospective economic advantage, negligence, misrepresentation
or employment discrimination, and including without limitation alleged
violations of Title VII of the Civil Rights Act of 1964, as amended,
prohibiting discrimination based on race, color, religion, sex or national
origin; the Family and Medical Leave Act; the Americans With Disabilities
Act; the Age Discrimination in Employment Act; other federal, state and
local laws, ordinances and regulations; and any unemployment or workers'
compensation law, excepting only those obligations of the Company expressly
recited in the Agreement or this Waiver and any claims to benefits under the
Company's employee benefit plans as defined exclusively in written plan
documents; (ii) any and all liability that was or may have been alleged
against or imputed to the Company by the Executive or by anyone acting on
his behalf; (iii) all claims for wages, monetary or equitable relief,
employment or reemployment with the Company in any position, and any
punitive, compensatory or liquidated damages; and (iv) all rights to and
claims for attorneys' fees and costs except as otherwise provided herein or
in the Agreement.

         (b) The Executive shall not file or cause to be filed any action,
suit, claim, charge or proceeding with any federal, state or local court or
agency relating to any claim within the scope of this Waiver. In the event
there is presently pending any action, suit, claim, charge or proceeding
within the scope of this Waiver, or if such a proceeding is commenced in the
future, the Executive shall promptly withdraw it, with prejudice, to the
extent he has the power to do so. The Executive represents and warrants that
he has not assigned any claim released herein, or authorized any other
person to assert any claim on his behalf.

         (c) In the event any action, suit, claim, charge or proceeding
within the scope of this Waiver is brought by any government agency,
putative class representative or other third party to


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vindicate any alleged rights of the Executive, (i) the Executive shall,
except to the extent required or compelled by law, legal process or
subpoena, refrain from participating, testifying or producing documents
therein, and (ii) all damages, inclusive of attorneys' fees, if any,
required to be paid to the Executive by the Company as a consequence of such
action, suit, claim, charge or proceeding shall be repaid to the Company by
the Executive within ten (10) days of his receipt thereof.

         (d) In the event of a breach of this Waiver by the Executive, the
Company's obligations pursuant to the Agreement shall cease as of the date
of such breach. Furthermore, the Executive understands that his breach of
the provisions of this Waiver will cause monetary damages to the Company.
Thus, should the Executive breach the provisions of this Waiver, he shall be
required to pay the Company, as liquidated damages, the amount of the
consideration paid by the Company to the Executive pursuant to the Agreement
plus all costs and expenses, including all attorneys' fees and expenses,
that the Company incurs in enforcing this Waiver. The Executive agrees that
the foregoing amount of liquidated damages is reasonable and necessary, and
does not constitute a penalty.

         Voluntary Execution of Waiver.
         ------------------------------

         BY HIS SIGNATURE BELOW, THE EXECUTIVE ACKNOWLEDGES THAT:

         (A) I HAVE RECEIVED A COPY OF THIS WAIVER AND WAS OFFERED A PERIOD
OF TWENTY-ONE (21) DAYS TO REVIEW AND CONSIDER IT;

         (B) IF I SIGN THIS WAIVER PRIOR TO THE EXPIRATION OF TWENTY-ONE
(21) DAYS, I KNOWINGLY AND VOLUNTARILY WAIVE AND GIVE UP THIS RIGHT OF
REVIEW;

         (C) I HAVE THE RIGHT TO REVOKE THIS WAIVER FOR A PERIOD OF SEVEN
(7) DAYS AFTER I SIGN IT BY MAILING OR DELIVERING A WRITTEN NOTICE OF
REVOCATION TO THE COMPANY'S CHIEF EXECUTIVE OFFICER OR GENERAL COUNSEL, NO
LATER THAN THE CLOSE OF BUSINESS ON THE SEVENTH DAY AFTER THE DAY ON WHICH I
SIGNED THIS WAIVER;

         (D) THIS WAIVER SHALL NOT BECOME EFFECTIVE OR ENFORCEABLE UNTIL THE
SEVEN DAY REVOCATION PERIOD HAS EXPIRED WITHOUT THE WAIVER HAVING BEEN
REVOKED;

         (E) THIS WAIVER WILL BE FINAL AND BINDING AFTER THE EXPIRATION OF
THE REVOCATION PERIOD REFERRED TO IN (C). I AGREE NOT TO CHALLENGE ITS
ENFORCEABILITY;

         (F) I AM AWARE OF MY RIGHT TO CONSULT AN ATTORNEY, HAVE BEEN
ADVISED IN WRITING TO CONSULT WITH AN ATTORNEY, AND HAVE HAD THE OPPORTUNITY
TO CONSULT WITH AN ATTORNEY, IF DESIRED, PRIOR TO SIGNING THIS WAIVER;


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         (G) NO PROMISE OR INDUCEMENT FOR THIS WAIVER HAS BEEN MADE EXCEPT
AS SET FORTH IN THIS WAIVER;

         (H) I AM LEGALLY COMPETENT TO EXECUTE THIS WAIVER AND ACCEPT FULL
RESPONSIBILITY FOR IT; AND

         (I) I HAVE CAREFULLY READ THIS WAIVER, ACKNOWLEDGE THAT I HAVE NOT
RELIED ON ANY REPRESENTATION OR STATEMENT, WRITTEN OR ORAL, NOT SET FORTH IN
THIS DOCUMENT OR THE AGREEMENT, AND WARRANT AND REPRESENT THAT I AM SIGNING
THIS WAIVER KNOWINGLY AND VOLUNTARILY.

         Intending to be legally bound, I have signed this Waiver as of the
date first set forth above.



                                       ---------------------------------------
                                       John F. Saucier









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