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                                                              Exhibit 10(aa)


                             RETENTION AGREEMENT
                             -------------------

This Retention Agreement ("Agreement") is entered into by and between
Solutia Inc., a Delaware corporation ("Solutia") and Rosemary L. Klein
("Employee"), as of the date indicated on the signature page attached
hereto.

WHEREAS, Employee and Solutia had previously entered into a retention
agreement prior to Solutia's commencement of its Chapter 11 Bankruptcy
filing ("Prior Agreement"); and

WHEREAS, as a result of the Chapter 11 Bankruptcy filing, the Prior
Agreement became subject to the United States Bankruptcy Court's approval;
and

WHEREAS, the Bankruptcy Court ruled that the Prior Agreement was null and
void from the beginning; and

WHEREAS, the Bankruptcy Court granted approval of this revised Retention
Agreement; and

WHEREAS, Solutia believes that establishing an incentive arrangement for
Employee will increase the likelihood that Solutia will continue to have
Employee's advice, counsel, leadership and dedication.

NOW, THEREFORE, for good and valuable consideration, Solutia and Employee,
intending to be bound, agree as set forth in this Agreement.

1) EMPLOYMENT
   ----------

   a) Employee's employment with Solutia during the Employment Period
      will be under the same terms and conditions as those that applied
      immediately prior to the date of this Agreement (or as subsequently
      amended from time to time). The "Employment Period" for purposes of
      this Agreement shall mean the period beginning on the date of this
      Agreement and ending six months after the Emergence Date (as
      defined below).

   b) Nothing in this Agreement is intended, and nothing herein will be
      construed as limiting the ability of Employee or Solutia to
      terminate such employment. Moreover, Employee understands that
      their employment will remain as an "at will" relationship.

   c) During the Employment Period, Employee will:

      i)   Devote all business time to the duties of employment with Solutia;

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      ii)  perform all duties of employment with Solutia faithfully and
           effectively and to the best of Employee's ability;

      iii) act in the best interests of Solutia and its shareholders and
           engage in no conflict of interest with Solutia.

2) COMPENSATION; SPECIAL AWARD
   ---------------------------

   a) During the Employment Period, Solutia will compensate Employee in
      accordance with the terms and conditions in effect immediately
      prior to the date of this Agreement (as amended from time to time),
      including eligibility for an award under the terms of the Solutia
      Inc. Annual Incentive Plan ("AIP"). Nothing in this Agreement shall
      be construed to provide Employee with the right to participate in
      the AIP or any other incentive or benefit plan if Solutia
      determines to change or terminate such plan and the change or
      termination is generally applicable to employees who are similarly
      situated to Employee.

   b) In addition to the foregoing, subject to Section 2(c) below,
      Employee shall receive a special incentive award (the "Special
      Award"). The amount of the Special Award will be 75% of Employee's
      base salary as of the date of the Special Award payment.

   c) The Special Award will be paid in four (4) equal installments, less
      applicable taxes and withholdings, on the following dates and,
      provided that the Employee has fulfilled the obligations set forth
      in Section 1 of this Agreement, in the judgment of the CEO of
      Solutia or his designee:

      i)   On or about June 30, 2004, Solutia will pay to Employee 25% of the
           Special Award, less applicable taxes and withholdings, provided
           that Employee is employed by Solutia on such date.

      ii)  On or about December 31, 2004, Solutia will pay to Employee 25% of
           the Special Award, less applicable taxes and withholdings, provided
           that Employee is employed by Solutia on such date.

      iii) As soon as practicable following the time, if ever, at which both
           (x) the United States Bankruptcy Court for the Southern District of
           New York shall have confirmed a plan of reorganization of Solutia
           under Chapter 11 of the United States Bankruptcy Code and (y) such
           confirmation shall have become non-appealable (the "Emergence
           Date"), Solutia will pay to Employee 25% of the Special Award, less
           applicable taxes and withholdings, provided that Employee is
           employed by Solutia on such date.

      iv)  On the six (6) month anniversary of the Emergence Date, Solutia
           will pay to Employee 25% of the Special Award, less applicable
           taxes and withholdings, provided that Employee is employed by
           Solutia on such date.

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3) TERMINATION OF EMPLOYMENT
   -------------------------

   a) If, prior to an applicable installment payment date during the
      Employment Period, Employee (i) retires or voluntarily terminates
      employment with Solutia (other than as a result of death or
      Disability); (ii) announces his or her intent to so retire or
      terminate employment; or (iii) is terminated by Solutia for Cause,
      Employee will not receive any portion of the Special Award
      installment payment applicable to that installment period. "Cause"
      as used in this Agreement shall include willful misconduct,
      dishonesty, insubordination, conviction of a felony or its
      equivalent, negligence in the performance of Employee's duties,
      the illegal use of drugs or controlled substances and violation of
      Solutia's policies (including without limitation Solutia's
      Guidelines for Employee Conduct) in such a manner as to expose the
      employer to administrative, civil or criminal liability;

   b) If, prior to an applicable installment payment date during the
      Employment Period, Employee is terminated other than for Cause,
      Solutia shall pay to Employee in a lump sum, less applicable taxes
      and withholdings, any unpaid amounts that would have otherwise been
      payable to Employee pursuant to Section 2(b).

   c) If Employee is not actively employed for the entire installment
      period due to disability, sick leave, family leave, or other
      approved leave of absence, but is otherwise eligible for a Special
      Award, the Award will be pro-rated to cover only the time actively
      employed plus any qualifying leave (up to 12 weeks) under the
      federal Family Medical Leave Act, but will not cover any other
      disability or other leave. Employee must return to active
      employment in order to qualify for the Special Award installment,
      and will be paid only after he or she so returns.

   d) Payment of the Special Award terminates any and all obligations of
      Solutia under this Agreement.

   e) Solutia retains the right to condition payment of any portion of
      the Special Award on Employee signing a waiver and release, in a
      form acceptable to Solutia.

4) GENERAL
   -------

   a) Employee agrees not to disclose the existence of this Agreement or
      any of its terms to anyone other than Employee's spouse and a
      financial or legal advisor who agrees in writing to be bound not to
      make any such disclosure. Notwithstanding anything to the contrary
      in this Agreement, in the event this Agreement or its terms are
      disclosed by Employee, Employee's spouse or a legal or financial
      advisor, Employee will not receive any portion of the Special
      Award.

   b) All amounts required by law to be withheld from any payment made
      pursuant to this Agreement, including any and all amounts required
      to be withheld by the

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      Internal Revenue Code or by the Federal Insurance Contribution Act,
      any applicable state or foreign country's income tax act, any
      applicable city, county or municipality's earnings or income tax
      act, will be withheld.

   c) This Agreement will be binding upon and inure to the benefit of
      Employee and Employee's estate, and Solutia and any successor,
      direct or indirect, of Solutia, whether such succession, direct or
      indirect, of Solutia, results from a merger, consolidation,
      liquidation, reorganization, purchase of securities, acquisition of
      assets or otherwise.

   d) The interests of Employee under this Agreement are not subject to
      the claims of Employee's creditors and may not be voluntarily or
      involuntarily sold, transferred, alienated, assigned, pledged,
      anticipated or encumbered. Any attempt by Employee or any other
      person or entity to sell, transfer, alienate, assign, pledge,
      anticipate, encumber, charge or otherwise dispose of any right to
      benefits payable hereunder will be void and shall terminate any
      obligation of Solutia hereunder to make payment. At no time will
      any interest or other charge be due or payable on any amounts owing
      hereunder.

   e) The payment provided under this Agreement is not intended to
      qualify under Section 401 of the Internal Revenue Code and will be
      paid from the general assets of Solutia or a third party. Nothing
      contained herein shall require Solutia to segregate any monies from
      its general funds or to create any trusts, or to make any special
      deposits for amounts payable to Employee. In no case will any
      amounts paid under this Agreement be taken into account in
      determining any of Employee's Solutia benefits, including without
      limitation savings and investment plan contributions, pension, life
      insurance and disability or in determining any other incentive
      award or compensation.

   f) Any provision in this Agreement which is prohibited or
      unenforceable in any jurisdiction will, as to such jurisdiction, be
      ineffective only to the extent of such prohibition or
      unenforceability without invalidating or affecting the remaining
      provisions hereof, and any such prohibition or unenforceability in
      any jurisdiction will not invalidate or render unenforceable such
      provision in any other jurisdiction.

   g) Solutia has full power and authority in its sole discretion to
      construe, interpret, and administer this Agreement. Decisions of
      Solutia shall be final, conclusive, and binding on all parties
      hereto.

   h) This Agreement will in all respects be governed by, and construed
      in accordance with, the laws of the State of Delaware, without
      reference to conflicts of law principles thereunder.

   i) This Agreement constitutes the entire agreement between the parties
      with respect to the subject matter hereof and supersede all prior
      agreements, oral and

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      written, between the parties hereto with respect to the subject matter
      hereof, if any. Separate copies of this document shall constitute
      original documents which may be signed separately, but which together
      will constitute one single agreement.

   j) In the event of any breach by Employee of any term or condition set
      forth in this Agreement, Employee's right to receive the Special
      Payment shall immediately be forfeited.

   k) The Employee acknowledges that Employee has carefully read this
      Agreement in its entirety, fully understands its provisions and its
      final and binding effect, and that Employee is signing this
      Agreement voluntarily.

IN WITNESS WHEREOF, the parties have duly executed and delivered this
Agreement as of June 17, 2004.
                -------------
                    Date

                                           SOLUTIA INC.

                                           By: /s/ Robert E. Lorah
                                               -------------------
                                                 Robert E. Lorah

                                           Title: Director, Human Resources

Accepted and Agreed to

EMPLOYEE:

By: /s/ Rosemary L. Klein
    ---------------------
      Rosemary L. Klein
      --------------------------
      Printed Name


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