Document:

EX-10.2

 

Exhibit 10.2

PROCENTURY CORPORATION

ANNUAL INCENTIVE PLAN

Amended and Restated

Effective November 14, 2007

 

 

TABLE OF CONTENTS

	 	 	 	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	SECTION 1.	 	ESTABLISHMENT AND PURPOSE	 	 	1	 
	SECTION 2.	 	DEFINITIONS	 	 	1	 
	 

	 	 	2.1	 	 	DEFINITIONS
	 	 	1	 
	SECTION 3.	 	ADMINISTRATION	 	 	5	 
	 

	 	 	3.1	 	 	POWERS AND AUTHORITY
	 	 	5	 
	 

	 	 	3.2	 	 	DETERMINATIONS
	 	 	5	 
	 

	 	 	3.3	 	 	DELEGATION
	 	 	5	 
	 

	 	 	3.4	 	 	BOOKS AND RECORDS
	 	 	5	 
	 

	 	 	3.5	 	 	INDEMNIFICATION
	 	 	6	 
	SECTION 4.	 	PARTICIPATION	 	 	6	 
	 

	 	 	4.1	 	 	PARTICIPATION
	 	 	6	 
	 

	 	 	4.2	 	 	CONTINUING PARTICIPATION
	 	 	6	 
	SECTION 5.	 	TARGET INCENTIVE AWARDS, INCENTIVE AWARDS AND
PERFORMANCE GOALS	 	 	6	 
	 

	 	 	5.1	 	 	IN GENERAL
	 	 	6	 
	 

	 	 	5.2	 	 	CRITERIA FOR PERFORMANCE GOALS
	 	 	6	 
	 

	 	 	5.3	 	 	LIMIT ON INCENTIVE AWARDS
	 	 	7	 
	SECTION 6.	 	VALUATION AND PAYMENT OF INCENTIVE AWARDS	 	 	7	 
	 

	 	 	6.1	 	 	AMOUNT OF AWARD
	 	 	7	 
	 

	 	 	6.2	 	 	ADJUSTMENTS TO AMOUNT OF AWARD
	 	 	7	 
	SECTION 7.	 	MANNER OF PAYMENT	 	 	8	 
	SECTION 8.	 	FORFEITURE	 	 	9	 
	SECTION 9.	 	AMENDMENT AND TERMINATION OF PLAN	 	 	9	 
	SECTION 10.	 	MISCELLANEOUS PROVISIONS	 	 	9	 
	 

	 	 	10.1	 	 	BENEFITS NOT GUARANTEED
	 	 	9	 
	 

	 	 	10.2	 	 	NO RIGHT TO PARTICIPATE
	 	 	9	 
	 

	 	 	10.3	 	 	UNIFORMITY
	 	 	9	 
	 

	 	 	10.4	 	 	EMPLOYMENT RIGHT
	 	 	9	 
	 

	 	 	10.5	 	 	ASSIGNMENT
	 	 	10	 
	 

	 	 	10.6	 	 	UNFUNDED PLAN
	 	 	10	 
	 

	 	 	10.7	 	 	TAX WITHHOLDING
	 	 	10	 
	 

	 	 	10.8	 	 	NOTICES
	 	 	10	 

i

 

	 	 	 	 	 	 	 	 	 	 	 
	 

	 	 	10.9	 	 	SEVERABILITY
	 	 	10	 
	 

	 	 	10.10	 	 	GOVERNING LAW
	 	 	10	 
	 

	 	 	10.11	 	 	EFFECTIVE DATE
	 	 	10	 

ii

 

PROCENTURY CORPORATION

ANNUAL INCENTIVE PLAN

(Amended and Restated Effective November 14, 2007)

SECTION 1.

ESTABLISHMENT AND PURPOSE

     The purpose of the Plan is to advance the interests of ProCentury and its shareholders by
providing certain of its corporate officers and key employees with annual incentive compensation
which is tied to the achievement of pre-established and objective performance goals. The Plan is
intended to provide Participants with annual incentive compensation which is not subject to the
deduction limitation rules prescribed under Section 162(m) of the Code and should be construed to
the extent possible as providing for remuneration which is “qualified performance-based
compensation” within the meaning of Section 162(m) of the Code and the regulations promulgated
thereunder. The Plan is intended to qualify for an exemption from the deferred compensation plan
rules prescribed under Section 409A of the Code as a short-term deferral arrangement. The Plan is
amended and restated effective November 14, 2007, in order to comply with the requirements of
Section 409A of the Code.

SECTION 2.

DEFINITIONS

     2.1 DEFINITIONS. The following terms shall have the following meanings as used in this Plan:

	 	(a)	 	“ACCOUNTING DATE” means the last day of a Performance Period.
	 
	 	(b)	 	“ANNUAL PAYMENT DATE” means the 15th day of the third calendar
month next following the end of each Performance Period.
	 
	 	(c)	 	“BASE SALARY” means, with respect to any Participant for any
Performance Period, the annual rate of salary of the Participant in effect at
the time the Target Incentive Award was established and approved for the
Participant for that Performance Period.
	 
	 	(d)	 	“BENEFICIARY” means each person, trust or entity designated by
the Participant, on the form provided by the Company, to receive any amount
payable under the Plan in the event of a Participant’s death, or in the absence
of such a designation, the Participant’s estate.
	 
	 	(e)	 	“BOARD” means the Company’s Board of Directors or, to the
extent it delegates authority to the Committee, the Committee.
	 
	 	(f)	 	“CEO” means at any time the person serving or acting at such
time as the chief executive officer of ProCentury.

 

 

	 	(g)	 	“CODE” shall mean the Internal Revenue Code of 1986, as
amended.
	 
	 	(h)	 	“COMMITTEE” means the compensation committee, if any, or other
committee of the Board duly appointed to administer the Plan and having such
powers as shall be specified by the Board. Notwithstanding anything to the
contrary contained in this Plan, if the Company is subject to Section 162(m) of
the Code, the Committee shall be composed of, or otherwise any determination
regarding any Award with respect to any person constituting a “covered
employee” within the meaning of Section 162(m) of the Code shall be made by,
not less than two directors, each of whom is intended to be an “outside
director” within the meaning of Section 162(m) of the Code and a “non-employee
director” under Rule16b-3 of the Exchange Act.
	 
	 	(i)	 	“COMPANY” means ProCentury, each of its Subsidiaries, and
successors, and assigns of each of the foregoing.
	 
	 	(j)	 	“DISABILITY” shall have the same meaning as defined in the
Company’s long-term disability plan as in effect from time to time or, if there
is no such plan in effect at the applicable time, a Participant’s inability to
discharge his/her responsibilities to the Company by reason of physical or
mental illness or incapacity, whether arising out of sickness, accident or
otherwise, which shall be evidenced by the written determination of a qualified
medical doctor selected by the Company specifying the date upon which such
disability commenced and that it has continued uninterrupted for at least one
hundred eighty (180) days. For this purpose, any person who qualifies for a
credit against income taxes under Section 22 of the Code shall be considered
disabled.
	 
	 	(k)	 	“EXECUTIVE” means the corporate officers of the Company and
such other key employees designated by the Committee and approved by the Board.
	 
	 	(l)	 	“FAIR MARKET VALUE” means, as of any date, the value of a share
of Stock or other property as determined by the Board, in its sole discretion,
or by ProCentury, in its sole discretion, if such determination is expressly
allocated to ProCentury herein, subject to the following:

	 	(1)	 	If there is a trading market for the Stock, the
Fair Market Value of a share of Stock shall be the daily trading price
as of the close of market (or, if there is no such closing price, the
mean of the closing bid and asked prices) on such date quoted by Nasdaq
or such other national or regional securities exchange or market system
constituting the primary market for the Stock, as reported in The Wall
Street Journal or such other source as ProCentury deems reliable. If
the relevant date does not fall on a day on which the Stock was traded,
Fair Market Value shall be such closing price

2

 

	 	 	 	(or the mean of the closing bid and asked prices) quoted for the most
recent day prior to such date on which the Stock was so traded.

	 	(2)	 	If there is no public market for the Stock, the
Fair Market Value of a share of Stock shall be as determined by the
Board without regard to any restriction other than a restriction which,
by its terms, will never lapse.

	 	(m)	 	“FOR CAUSE” means, with respect to any Participant: (1) being
convicted of, pleading guilty to, or confessing to any act of fraud,
misappropriation or embezzlement against the Company or being convicted of or
pleading guilty to a felony; (2) willfully, other than pursuant to the advice
of Company legal counsel, violating or causing the Company to violate a law
which, in the opinion of Company legal counsel, is reasonable grounds for civil
or criminal penalties against the Company or its Board; (3) not correcting
within thirty (30) days after receipt of notice any act or omission that, in
the opinion of the Company’s legal counsel, gives rise to a cause of action by
the Company or its Board personally against the employee to specifically
enforce or restrain some action for purpose of avoiding some loss or damage, or
to recover losses or damages, for an amount in excess of $10,000; (4) not
correcting within thirty (30) days after receipt of notice any act of
dishonesty against the Company; (5) failing within thirty (30) days after
receipt of notice to cure any violations of any covenants of the employee to
maintain confidentiality of Company information, properly use and return when
required Company property, not compete with Company business, or not solicit
Company agents, employees or customers contained in any employment or other
agreement with the Company.
	 
	 	(n)	 	“INCENTIVE AWARD” means the amount awarded and paid to a
Participant during a Performance Period that is based upon the Target Incentive
Award and the degree of achievement of Performance Goals for the Performance
Period.
	 
	 	(o)	 	“PARTICIPANT” means an Executive of the Company who is
designated by the Committee and approved by the Board for participation in the
Plan for a Performance Period.
	 
	 	(p)	 	“PERFORMANCE GOALS” means any one or more criteria and
objectives established by the Committee in accordance with Section 5.2, which
shall be approved by the Board and the Company’s shareholders (to the extent
required by Section 162(m) of the Code), and which must be satisfied during a
Performance Period as a condition of the Participant’s receipt of an Incentive
Award for such Performance Period.

3

 

	 	(q)	 	“PERFORMANCE PERIOD” means the then-current fiscal year of
ProCentury.
	 
	 	(r)	 	“PLAN” shall mean ProCentury Corporation Annual Incentive Plan.
	 
	 	(s)	 	“PROCENTURY” shall mean the ProCentury Corporation.
	 
	 	(t)	 	“QUALIFIED RETIREMENT” means at any time, unless otherwise
defined in the notice of a Target Incentive Award of the Participant,
termination of a Participant’s Service after the sum of the Participant’s (1)
years of Service and (2) years of age equals or exceeds seventy-five (75).
	 
	 	(u)	 	“SERVICE” means a Participant’s employment or service with the
Company in the capacity of an Executive. The Participant’s Service shall not
be deemed to have terminated merely because of a change in the capacity in
which the Participant renders Service to the Company or a change in the form of
organization of ProCentury or any Subsidiary for which the Participant renders
such Service; provided, however, the Service of a Participant shall be deemed
to have terminated if the Participant is demoted so that the Participant’s
employment status is no longer that of an Executive. Furthermore, a
Participant’s Service shall not be deemed to have terminated if the Participant
takes any military leave, sick leave, or other bona fide leave of absence
approved by ProCentury or, if applicable, the Subsidiary, provided, however,
that if any such leave exceeds ninety (90) days, on the ninety-first (91st) day
of such leave the Participant’s Service shall be deemed to have terminated
unless the Participant’s right to return to Service with the Company is
guaranteed by statute or contract. The Participant’s Service shall be deemed
to have terminated either upon an actual termination of Service or, if the
Service is with a Subsidiary, upon that organization’s ceasing to be a
“Subsidiary” within the meaning of this Plan. Subject to the foregoing,
ProCentury, in its sole discretion, shall determine whether the Participant’s
Service has terminated and the effective date of such termination.
	 
	 	(v)	 	“STOCK” means, at any date, the Common Shares of ProCentury, as
adjusted from time to time through such date for any change in the capital
structure of ProCentury, such as stock dividend, stock split, reverse stock
split, recapitalization, combination, reclassification or similar change.
	 
	 	(w)	 	“SUBSIDIARY” means, at any time, any organization, corporate or
noncorporate, in an unbroken chain of organizations beginning with the Company
if, at the time, each of the organizations to the last organization in the
chain owns 50 percent or more of the total combined voting power of all
classes’ capital stock or other beneficial interests of such organization.

4

 

	 	(x)	 	“TARGET INCENTIVE AWARD” means the target award established by
the Committee and approved by the Board for each Participant for an applicable
Performance Period. The target bonus will be expressed as a percentage of a
Participant’s base salary, based upon such criteria as may be established by
the Committee, or otherwise as the Committee may determine appropriate with
input from the CEO, and which shall be approved by the Company’s shareholders
(to the extent required by Section 162(m) of the Code).

SECTION 3.

ADMINISTRATION

     3.1 POWERS AND AUTHORITY. Except as specifically provided elsewhere in this Plan, the Plan
shall be administered by the Committee. The Committee shall administer the Plan in accordance with
any rules, policies, or procedures which it deems appropriate. Subject to the provisions of the
Plan, the Committee shall have full and complete authority to: (a) construe, interpret and
implement the Plan; (b) prescribe, amend and rescind rules relating to the Plan; (c) exercise all
of the powers granted to it under the Plan; (d) make any factual determination which it believes
necessary or advisable for the administration of the Plan; (e) determine the conditions subject to
which the Incentive Awards may be made or payable; and (f) make any other determinations which it
believes necessary or advisable for the administration of the Plan.

     3.2 DETERMINATIONS. All determinations made by the Committee shall be final and binding upon
all persons (subject only to the overall authority of Board), including any Participant or
Beneficiary or other person claiming through or on behalf of such Participant. Such determinations
need not be uniform and may be made selectively among persons who receive, or are eligible to
receive, Incentive Awards under the Plan. The Committee is intended to have final authority
(subject to the overall authority of the Board) to determine which Executives are Participants for
each Performance Period under Section 4 and the Target Incentive Awards, the applicable Performance
Goals and the criteria and objectives for determining Performance Goals for such Performance
Periods under Section 5. Notwithstanding anything to the contrary contained in this Plan, if the
Company is subject to Section 162(m) of the Code, any determination regarding any Incentive Award
with respect to any person constituting a “covered employee” within the meaning of Section 162(m)
of the Code shall be made by the Committee.

     3.3 DELEGATION. The Committee may delegate to one or more of its members or to any other
person or persons such ministerial duties as it may deem advisable. The Committee may also employ
attorneys, consultants, accountants or other professional advisors and shall be entitled to rely
upon the advice, opinions or valuations of any such advisors.

     3.4 BOOKS AND RECORDS. The Committee and others to whom the Committee has delegated such
duties shall keep a record of all their proceedings and actions and shall maintain all such books
of account, records and other data as shall be necessary for the proper administration of the Plan.

5

 

     3.5 INDEMNIFICATION. The Committee shall not be personally liable for any action,
interpretation or determination made with respect to the Plan or Incentive Award made thereunder,
and the Committee shall be indemnified and protected by the Company with respect to any liability
he or she may incur with respect to any such action, interpretation or determination, to the extent
permitted by applicable law.

SECTION 4.

PARTICIPATION

     4.1 PARTICIPATION. Prior to the commencement of each Performance Period, the Committee shall
designate, subject to approval of the Board, the Executives of the Company who are Participants for
the Performance Period. Only those Executives so approved shall be Participants for such
Performance Period.

     4.2 CONTINUING PARTICIPATION. The designation or approval of an Executive as a Participant
for any Performance Period shall not entitle the Executive to be a Participant for any subsequent
Performance Period unless designated and approved for that Performance Period.

SECTION 5.

TARGET INCENTIVE AWARDS,

INCENTIVE AWARDS AND PERFORMANCE GOALS

     5.1 IN GENERAL. Prior to the commencement of each Performance Period or as soon as possible
thereafter (but in no event later than ninety (90) days after the commencement of the Performance
Period), the Committee shall establish, subject to approval of the Board, for each Participant the
Target Incentive Awards for such Performance Period, the applicable Performance Goals for such
Performance Period, and the amount of Incentive Award payable under the Plan based on the degree of
achievement of the applicable Performance Goals. The Performance Goals established by the
Committee and approved by the Board may be different for each Performance Period. As soon as
possible after the establishment of the Target Incentive Awards and Performance Goals, each
Participant shall be notified in writing of the Target Incentive Awards and the corresponding
Performance Goals.

     5.2 CRITERIA FOR PERFORMANCE GOALS. The Committee shall establish, subject to approval of the
Board, for each Performance Period the Performance Goals upon which the Target Incentive Awards
will be based. For each Performance Period, the Committee shall specify the criteria and
objectives used to determine the Performance Goals, including but not limited to the price of the
Stock; market share; sales; units sales volume; return on equity; assets, capital or sales;
economic profit; total shareholder return; costs; margins; earning(s) per share; cash flow;
customer satisfaction; pre-tax profit; operating profit; earnings before interest and taxes;
earnings before interest, taxes, depreciation and amortization; debt/capital ratio; revenues from
new product development; percentage of revenues derived from designated lines of business; and any
combination of the foregoing. The Committee may establish minimum Performance Goals that must be
satisfied before an Incentive Award will be payable to a Participant. The intent is that Target
Incentive Awards will not, to the extent possible, result in

6

 

loss of a deduction by the Company under Section 162(m) of the Code, and to the extent that
the Company is subject to such Section 162(m), the terms and amounts of Target Incentive Awards for
employees constituting “covered employees” within the meaning of Section 162(m) shall take into
account the limits on deduction of that Section.

     5.3 LIMIT ON INCENTIVE AWARDS. In no event may a Participant’s Incentive Award actually
determined for any Performance Period exceed 150 percent of the Participant’s Target Incentive
Award for that Performance Period without express approval by the Board of such Incentive Award
after determination of the actual amount thereof, and unless the Board otherwise determines,
payment of the amount of any Incentive Award in excess of 150 percent of the Participant’s Target
Incentive Award shall be in shares of Stock or other property having a Fair Market Value equal to
such excess.

SECTION 6.

VALUATION AND PAYMENT OF INCENTIVE AWARDS

     6.1 AMOUNT OF AWARD. A Participant shall be eligible to receive payment of a Target Incentive
Award only to the extent that the Performance Goals for such Target Incentive Award are achieved
and the Target Incentive Award, as applied against such Performance Goals, determines that all or
some portion of such Participant’s Target Incentive Award has been earned for the Performance
Period. As soon as practicable after the end of a Performance Period, the Committee shall meet to
review and certify in writing whether, and to what extent, the Performance Goals for the
Performance Period have been achieved and, if so, to calculate and certify in writing that amount
of the Target Incentive Award earned by each Participant for such Performance Period based upon
such Participant’s Target Incentive Award. The Committee shall then determine, or under its
direction determine, with input from the CEO, the amount of the Incentive Award payable to each
Participant and in so doing may use discretion to decrease the Incentive Award based on the degree
of achievement of the applicable Performance Goals for each Performance Period, subject to any
limitations of any applicable provision of law, including Section 162(m) of the Code.

     6.2 ADJUSTMENTS TO AMOUNT OF AWARD. Except as otherwise provided, below, a Participant shall
not be entitled to receive an Incentive Award for any Performance Period unless in the Service of
the Company for the entire Performance Period through its Accounting Date:

	 	(a)	 	QUALIFIED RETIREMENT, DISABILITY, OR DEATH. Unless otherwise
provided in the Participant’s employment agreement with the Company or the
Committee otherwise provides with respect to the Target Incentive Award at the
time it is established for the Participant, a Participant whose Service ceases
before the end of a Performance Period because of Qualified Retirement,
Disability, or Death shall receive an Incentive Award after the end of the
Performance Period equal to the Incentive Award that the Participant would have
received if the Participant had been a Participant during the entire
Performance Period, prorated by multiplying such Incentive Award by the ratio
of the number of calendar

7

 

	 	 	 	months of Service (disregarding fractions of less than a full calendar
month) completed by the Participant during the Performance Period to the
total number of calendar months in that Performance Period.

	 	(b)	 	CHANGE IN EMPLOYMENT STATUS. Unless otherwise provided in the
Participant’s employment agreement with the Company or the Committee otherwise
provides with respect to the Target Incentive Award at the time it is
established for the Participant, a Participant whose Service is deemed
terminated prior to the end of the Performance Period because of a demotion so
that the Participant’s employment status is no longer that of an Executive or
because of a leave exceeding ninety (90) days shall receive an Incentive Award
after the end of the Performance Period equal to the Incentive Award that the
Participant would have received if the Participant had been a Participant
during the entire Performance Period, prorated by multiplying such Incentive
Award by the ratio of the number of calendar months of Service (disregarding
fractions of less than a full calendar month) completed by the Participant
during the Performance Period to the total number of calendar months in that
Performance Period.
	 
	 	(c)	 	NEW EXECUTIVES. In the case of an Executive recently hired by
Company, the Committee shall have discretion, subject to approval of the Board,
to allow such Executive to participate in the Plan on a prorated basis.

SECTION 7.

MANNER OF PAYMENT

     Except as otherwise provided in this Plan, payment of each Incentive Award will be made in a
cash lump sum payment or, at the discretion of the Committee, in Stock equal to the Fair Market
Value of the amount of the Incentive Award. Payment shall be made as soon as administratively
possible after each Accounting Date, but in no event later than the Annual Payment Date. Deposit
of any sum in any financial institution to the credit of any Participant or Beneficiary shall
constitute payment into the hands of that Participant or Beneficiary.

8

 

SECTION 8.

FORFEITURE

     Unless otherwise provided in the Participant’s employment agreement with the Company or the
Committee otherwise provides with respect to the Target Incentive Award at the time it is
established for the Participant, any Participant shall forfeit each Incentive Award for all
Performance Periods if required by applicable law or if the Participant is terminated For Cause as
determined by the Committee; and in such event, neither the forfeiting Participant nor any
Beneficiary shall be entitled to payment of any Incentive Award that is unpaid with respect to any
prior Performance Period or to any Incentive Award for any current or future Performance Period.

SECTION 9.

AMENDMENT AND TERMINATION OF PLAN

     The Board may, at any time in its sole discretion, terminate or amend the Plan, provided that
no termination or amendment shall be made that will impair the right of a Participant to receive an
Incentive Award for any Performance Period ending prior to the year in which the termination or
amendment is adopted, or if later, effective. No amendment adopted after the start of a
Performance Period may directly or indirectly increase the amount of the Incentive Award or alter
the performance criteria in a manner which will increase any Incentive Award for such Performance
Period.

SECTION 10.

MISCELLANEOUS PROVISIONS

     10.1 BENEFITS NOT GUARANTEED. No Participant is guaranteed that an Incentive Award will be
payable under the Plan as a result of the establishment and maintenance of this Plan and such
Participant’s participation in the Plan.

     10.2 NO RIGHT TO PARTICIPATE. No Executive or other person shall have any claim or right to
participate in or otherwise be granted an Incentive Award under the Plan. The adoption of the Plan
shall not constitute a contract between the Company and a Participant. No designation of an
Executive as a Participant for all or any part of a Performance Period shall create a right to an
Incentive Award under the Plan for any other Performance Period.

     10.3 UNIFORMITY. Determinations under the Plan need not be uniform and may be made
selectively among persons who receive, or are eligible to receive, awards under the Plan, whether
or not such persons are similarly situated.

     10.4 EMPLOYMENT RIGHT. No Executive or other person shall have any claim or right to be
granted an Incentive Award under the Plan. Neither the Plan nor any action taken hereunder shall
be construed as giving any Executive any right to be retained in the employ of

9

 

the Company or to be entitled to any remuneration or benefits not set forth in the Plan or
interfere with or limit the right of the Company to terminate the Participant’s employment at any
time.

     10.5 ASSIGNMENT. Subject to the provisions of the Plan, no Incentive Award granted under this
Plan may be sold, transferred, pledged, assigned, encumbered or otherwise alienated or
hypothecated, other than by will or by the laws of descent and distribution. Payment of any amount
due or to become due under this Plan shall not be subject to the claims of creditors of the
Participant or to execution or garnishment or any other legal or equitable proceeding or process.

     10.6 UNFUNDED PLAN. The Plan shall at all times be unfunded, and no provision shall at any
time be made with respect to segregating assets of the Company for payment of any benefits
hereunder. No Participant or Beneficiary shall have any interest in any particular assets of the
Company by reason of the right to receive a benefit under the Plan, and any such Participant shall
have only the rights of a general unsecured creditor of the Company. Nothing contained in the
Plan, and no action taken pursuant to its provisions, shall create or be construed to create a
trust of any kind, or a fiduciary relationship between the Company and any Participant or
Beneficiary.

     10.7 TAX WITHHOLDING. The Company shall have the right to deduct from all amounts paid
pursuant to the Plan any federal, state or local income or payroll taxes required by law to be
withheld with respect to such awards.

     10.8 NOTICES. Any notice or filing required or permitted to be give a Participant shall be
sufficient if in writing and sent through the U.S. Postal Service, certified mail, return receipt
requested, to the Participant or Participant’s legal representative at the Participant’s last known
mailing address.

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

     10.10 GOVERNING LAW. The Plan, and all agreements hereunder, shall be governed by the laws of
the state of Ohio.

     10.11 EFFECTIVE DATE. The Plan shall be effective only upon the approval by the shareholders
of the Company in a manner consistent with the shareholder approval requirements of Section 162(m)
of the Code, and shall remain effective until such time as it may be terminated pursuant to Section
9.

10

 

     IN WITNESS WHEREOF, ProCentury has adopted this amendment and restatement of the Plan this                      
day of                                          , 2007.

	 	 	 	 	 
	 	PROCENTURY CORPORATION

 	 
	 	By:  	 	 
	 	 	 	 
	 	Its:  	 	 

11

 

	 	 	 	 	 

PROCENTURY CORPORATION

ANNUAL INCENTIVE PLAN

BENEFICIARY DESIGNATION

To: Committee, the administrator of the ProCentury Corporation Annual Incentive Plan

Pursuant to the ProCentury Corporation Annual Incentive Plan, the undersigned hereby designates the
following Beneficiary or Beneficiaries to receive any benefits which may be payable under the Plan
upon the undersigned’s death:

	 	 	 
	(1)
	 	 
	 

	 	 
	 
	 	 
	 

	 	 
	 
	 	 
	(2)

	 	If the Beneficiary or Beneficiaries named in (1) above is or are not living when benefits
become payable, then to:
	 
	 	 
	 

	 	 
	 
	 	 
	 

	 	 
	 
	 	 

This Beneficiary Designation revokes all prior designations made by the undersigned and is subject
to all the terms of the Plan.

	 	 	 	 	 	 	 	 	 
	Dated:

	 	 	 	 
	 	 	 	 
	 

	 	 
	 	 	 	 	 	 
	 

	 	 	 	 	 	Participant	 	 

12EX-10(XX)

 

    Exhibit 10(xx)

 

 

    REGISTRATION
    RIGHTS AGREEMENT

    by and among

    SOLUTIA, INC.

    and

    THE HOLDERS SET FORTH HEREIN

    Dated as of November 19, 2007

 

 

    TABLE
    OF CONTENTS

 

	 	 	 	 	 	 	 
	
 
	
 
	
 
	
 
	
    Page

	 

	

    ARTICLE I.

	
 
	
    DEFINITIONS
	
 
	 
	
    1
	 

	

    ARTICLE II.

	
 
	
    REPRESENTATIONS AND WARRANTIES OF THE COMPANY
	
 
	 
	
    4
	 

	

    Section 2.1
    

	
 
	
    Representations and Warranties of the Company
	
 
	 
	
    4
	 

	

    ARTICLE III.

	
 
	
    SHELF REGISTRATION
	
 
	 
	
    6
	 

	

    Section 3.1
    

	
 
	
    Shelf Registration Statement
	
 
	 
	
    6
	 

	

    Section 3.2
    

	
 
	
    Shelf Registration Procedures
	
 
	 
	
    7
	 

	

    ARTICLE IV.

	
 
	
    UNDERWRITTEN OFFERINGS
	
 
	 
	
    8
	 

	

    Section 4.1
    

	
 
	
    Right to Underwritten Offerings
	
 
	 
	
    8
	 

	

    Section 4.2
    

	
 
	
    Underwritten Offering Procedures
	
 
	 
	
    9
	 

	

    ARTICLE V.

	
 
	
    PIGGYBACK REGISTRATION
	
 
	 
	
    10
	 

	

    Section 5.1
    

	
 
	
    Right to Piggyback
	
 
	 
	
    10
	 

	

    Section 5.2
    

	
 
	
    Priority on Piggyback Registrations
	
 
	 
	
    10
	 

	

    Section 5.3
    

	
 
	
    Withdrawal of Piggyback Registration
	
 
	 
	
    11
	 

	

    ARTICLE VI.

	
 
	
    BLACKOUT PERIOD
	
 
	 
	
    11
	 

	

    Section 6.1
    

	
 
	
    Shelf Registration and Piggyback Registration Blackout
	
 
	 
	
    11
	 

	

    Section 6.2
    

	
 
	
    Blackout Period Limits
	
 
	 
	
    12
	 

	

    ARTICLE VII.

	
 
	
    PROCEDURES AND EXPENSES
	
 
	 
	
    12
	 

	

    Section 7.1
    

	
 
	
    Registration Procedures
	
 
	 
	
    12
	 

	

    Section 7.2
    

	
 
	
    Information from Holders; Holders’ Obligations
	
 
	 
	
    15
	 

	

    Section 7.3
    

	
 
	
    Suspension of Disposition
	
 
	 
	
    16
	 

	

    Section 7.4
    

	
 
	
    Registration Expenses
	
 
	 
	
    17
	 

	

    ARTICLE VIII.

	
 
	
    INDEMNIFICATION
	
 
	 
	
    17
	 

	

    Section 8.1
    

	
 
	
    Indemnification by the Company
	
 
	 
	
    17
	 

	

    Section 8.2
    

	
 
	
    Indemnification by Holders
	
 
	 
	
    18
	 

	

    Section 8.3
    

	
 
	
    Conduct of Indemnification Proceedings
	
 
	 
	
    19
	 

	

    Section 8.4
    

	
 
	
    Contribution, etc. 
	
 
	 
	
    19
	 

	

    ARTICLE IX.

	
 
	
    FREE WRITING PROSPECTUSES
	
 
	 
	
    20
	 

	

    ARTICLE X.

	
 
	
    RULE 144
	
 
	 
	
    20
	 

	

    ARTICLE XI.

	
 
	
    PRIVATE PLACEMENT
	
 
	 
	
    21
	 

	

    ARTICLE XII.

	
 
	
    MISCELLANEOUS
	
 
	 
	
    21
	 

	

    Section 12.1
    

	
 
	
    Notices
	
 
	 
	
    21
	 

	

    Section 12.2
    

	
 
	
    Severability
	
 
	 
	
    22
	 

	

    Section 12.3
    

	
 
	
    Assignment; Certain Specified Third Party Beneficiaries
	
 
	 
	
    22
	 

	

    Section 12.4
    

	
 
	
    Entire Agreement
	
 
	 
	
    22
	 

	

    Section 12.5
    

	
 
	
    Waivers and Amendments
	
 
	 
	
    22
	 

	

    Section 12.6
    

	
 
	
    Counterparts
	
 
	 
	
    22
	 

	

    Section 12.7
    

	
 
	
    Governing Law; Venue
	
 
	 
	
    23
	 

	

    Section 12.8
    

	
 
	
    Headings
	
 
	 
	
    23
	 

	

    Section 12.9
    

	
 
	
    Specific Performance
	
 
	 
	
    23
	 

	

    Section 12.10
    

	
 
	
    Termination
	
 
	 
	
    23
	 

	

    Section 12.11
    

	
 
	
    No Conflicting Rights
	
 
	 
	
    23
	 

	

    EXHIBITS

	
 
	
 
	
 
	 
	
 
	 

	

    Exhibit A

	
 
	
    Form of Selling Securityholder Notice and Questionnaire
	
 
	 
	
 
	 

	

    Exhibit B

	
 
	
    Form of Joinder Agreement
	
 
	 
	
 
	 

    

    i

 

    REGISTRATION
    RIGHTS AGREEMENT

 

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

 

    RECITALS

 

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

 

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

 

    AGREEMENTS

 

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

 

    ARTICLE I.

    

 

    DEFINITIONS
    

 

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

 

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

 

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

 

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

 

    “Amended Plan” means the Debtors’
    Fifth Amended Joint Plan of Reorganization attached as
    Exhibit A to the related Disclosure Statement, as approved
    by Order of the Bankruptcy Court entered on October 19,
    2007, as it may be amended or supplemented from time to time.

 

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

 

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

 

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

 

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

    

    1

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

    “NASDAQ” means the NASDAQ National
    Market.

 

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

 

    “NYSE” means the New York Stock Exchange.

 

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

    

    2

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

    

    3

 

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

 

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

 

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

 

    ARTICLE II.

    

 

    REPRESENTATIONS
    AND WARRANTIES OF THE COMPANY
    

 

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

 

    (a) Incorporation and
    Qualification.  The Company and each of its
    Subsidiaries is a legal entity duly organized, validly existing
    and in good standing under the laws of their respective
    jurisdictions of organization, with the requisite power and
    authority to own its properties and conduct its business as
    currently conducted, and is duly qualified as a foreign
    corporation for the transaction of business and is in good
    standing under the laws of each other jurisdiction in which it
    owns or leases properties or conducts any business so as to
    require such qualification, except to the extent the failure to
    be so organized, validly existing, qualified or in good standing
    has not had or would not reasonably be expected to have, a
    Material Adverse Effect. For purposes of this Agreement, a
    “Material Adverse Effect” shall mean any
    circumstance, change in or effect on the Company and the
    Company’s Subsidiaries, taken as a whole, that individually
    or in the aggregate with all other circumstances, changes in or
    effects on the Company and the Company’s Subsidiaries,
    taken as a whole, is or is reasonably likely to be materially
    adverse to the busi ness, operations, assets or liabilities
    (including without limitation contingent liabilities), results
    of operations or the conditions (financial or otherwise) of the
    Company and the Company’s Subsidiaries taken as a whole;
    provided, however, that none of the following
    shall be deemed, either alone or in combination, to constitute a
    Material Adverse Effect: (i) changes in any statute, rule
    or regulation after the date hereof, (ii) changes generally
    affecting the industries in which the Company and its
    Subsidiaries operate, (iii) changes in laws, GAAP or
    accounting principles, and (iv) changes after the date
    hereof resulting from the announcement or the existence of, or
    compliance with, this Agreement or the Settlement Term Sheet, or
    the announcement of the Rights Offering, the Amended Plan or any
    of the other transactions contemplated hereby or thereby;
    provided, further, that any circumstance, change
    or effect described in clauses (i), (ii), (iii) or
    (iv) shall not, either alone or in combination, constitute
    a “Material Adverse Effect” only if the impact of such
    circumstance, change or effect on the Company and its
    Subsidiaries, taken as a whole, is not materially
    disproportionate as compared to its impact on other participants
    in the industries in which the Company and its Subsidiaries
    operate.

 

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

 

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

 

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

    

    4

 

 

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

 

    (f) No Conflict.  Subject to the
    entry of the Agreement Order and the expiration, or waiver by
    the Bankruptcy Court, of any applicable waiting period set forth
    in the Bankruptcy Rules, the execution and delivery by the
    Company of this Agreement and compliance by the Company with all
    of the provisions hereof and the consummation of the
    transactions contemplated hereby (i) will not conflict with
    or result in a breach or violation of, any of the terms or
    provisions of, or constitute a default under (with or without
    notice or lapse of time, or both), or result in the acceleration
    of, or the creation of any lien under, any indenture, mortgage,
    deed of trust, loan agreement or other agreement or instrument
    to which the Company or any of its Subsidiaries is a party or by
    which the Company or any of its Subsidiaries is bound or to
    which any of the property or assets of the Company or any of its
    Subsidiaries is subject, (ii) will not result in any
    violation of the provisions of the certificate of incorporation
    or bylaws of the Company included in the Amended Plan and as
    applicable to the Company from and after the Effective Date and
    (iii) will not result in any material violation of, or any
    termination or material impairment of any rights under, any
    statute or any license, authorization, injunction, judgment,
    order, decree, rule or regulation of any court or governmental
    agency or body having jurisdiction over the Company or any of
    its Subsidiaries or any of their properties, except in any such
    case described in subclause (i) or (iii) as have been
    described in an effective Registration Statement or as will not
    have and are not reasonably expected to have, individually or in
    the aggregate, a Material Adverse Effect.

 

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

 

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

 

    (i) Issuer Free Writing
    Prospectus.  Each Issuer Free Writing
    Prospectus complies in all material respects with the Securities
    Act, has been filed in accordance with the Securities Act (to
    the extent required thereby) and, when taken together with the
    Preliminary Prospectus accompanying, or delivered

    

    5

 

    prior to delivery of, such Issuer Free Writing Prospectus, did
    not, and at the Effective Date will not, contain any untrue
    statement of a material fact or omit to state a material fact
    necessary in order to make the statements therein, in the light
    of the circumstances under which they were made, not misleading;
    provided, that the Company makes no representation and
    warranty with respect to any statements or omissions made in
    each such Issuer Free Writing Prospectus in reliance upon and in
    conformity with information relating to any Holder furnished to
    the Company in writing by such Holder expressly for use in any
    Issuer Free Writing Prospectus.

 

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

 

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

 

    (l) No Registration Rights.  Except
    (i) to the extent covered by the Registration Statement and
    the Preliminary Prospectus and (ii) with respect to rights
    granted un der this Agreement or the Monsanto Registration
    Rights Agreement, no Person has the right to require the Company
    or any of its Subsidiaries to register any securities for sale
    under the Securities Act or will have the right to require the
    Company or any of its Subsidiaries to register any securities
    for sale under the Securities Act by reason of the filing of the
    Registration Statement with the SEC.

 

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

 

    ARTICLE III.

    

 

    SHELF
    REGISTRATION
    

 

    Section 3.1  Shelf
    Registration Statement.  The Company has filed
    the Shelf Registration Statement with the SEC on
    October 26, 2007 and will use its reasonable best efforts
    to (i) file an amendment to the Shelf Registration
    Statement on or prior to two Business Days prior to the
    effective date of the Amended Plan and (ii) cause the Shelf
    Registration Statement to be declared effective by the SEC no
    later than the effective date of Amended Plan on an appropriate
    form under the Securities Act relating to the offer and sale of
    the Registrable Securities by the Holders thereof from time to
    time in accordance with the methods of distribution set forth in
    the Shelf Registration Statement and Rule 415 under the
    Securities Act. Once the Shelf Registration Statement is
    declared effective by the SEC, the Company shall use its
    reasonable best efforts to

    

    6

 

    cause the Shelf Registration Statement to remain continually
    effective, supplemented and amended, and not subject to any stop
    order, injunction or similar order or requirement of the SEC,
    until the earlier of (a) the expiration of the Required
    Period or (b) the date on which all Registrable Securities
    shall cease to be Registrable Securities. The Company’s
    obligations under this Section 3.1 are subject to the
    provisions of Article VI.

 

    Section 3.2  Shelf
    Registration Procedures.

 

    (a) During the Required Period, any Holder shall be
    entitled, subject to the remainder of this Section 3.2, to
    register all or any part of its Registrable Securities for sale
    pursuant to the Shelf Registration Statement and to sell all or
    any part of the Registrable Securities registered on behalf of
    such Holder pursuant to the Shelf Registration Statement
    (“Holder Shelf Offering”). Notwithstanding any
    other provision of this Agreement, no Holder may include any of
    its Registrable Securities in a Holder Shelf Offering pursuant
    to this Agreement unless the Holder shall provide to the Company
    a fully completed notice and questionnaire in substantially the
    form set forth in Exhibit A hereto (the
    “Questionnaire”) and such other information in
    writing as may be reasonably requested by the Company pursuant
    to Section 7.2 (the “Selling Holder
    Information”). In order to be named as a selling
    securityholder in the Shelf Registration Statement or Prospectus
    at the time it initially becomes effective under the Securities
    Act, each Holder must no later than three Business Days prior to
    the Effective Date of the Shelf Registration Statement, which
    will be at least 15 days following notice by the Company of
    the expected initial Effective Date (the “Company
    Registration Notice”), furnish in writing the completed
    Questionnaire and such other Selling Holder Information that the
    Company may reasonably request in writing, if any, to the
    Company. The Company Registration Notice shall set forth
    (1) the expected Effective Date of the Shelf Registration
    Statement and (2) the date by which Holders must return a
    completed Questionnaire in order to be named as selling
    securityholders in the Shelf Registration Statement. In
    addition, if such Company Registration Notice is given prior to
    the effective date of the Amended Plan, then the Company shall
    provide the following information to the Holders on or prior to
    five (5) Business Days prior to the Effective Date of the
    Shelf Registration Statement: (a) for each class under the
    Amended Plan receiving shares of New Common Stock, the
    approximate number of shares of New Common Stock that a holder
    of $1,000 in Allowed Claims (as defined in the Amended Plan) of
    such class would receive on the effective date of the Amended
    Plan and (b) for each series of notes under the Prepetition
    Indenture (as defined in the Amended Plan), the approximate
    number of shares of New Common Stock that a holder of $1,000 in
    principal amount of such series would receive on the effective
    date of the Amended Plan.

 

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

    

    7

 

    under the Securities Act of any post-effective amendment filed
    pursuant to this Article III. If such Selling Holder
    Information is delivered during a Blackout Period, the Company
    shall so inform the Holder delivering such Selling Holder
    Information and shall take the actions set forth in this
    Section 3.2(a) upon expiration of the Blackout Period as
    though such Holder’s Selling Holder Information had been
    delivered on the expiration date of such Blackout Period.

 

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

 

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

 

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

 

    ARTICLE IV.

    

 

    UNDERWRITTEN
    OFFERINGS
    

 

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

    

    8

 

    Section 4.2  Underwritten
    Offering Procedures.

 

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

 

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

 

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

 

    (d) If and to the extent requested by the managing
    underwriter for any Underwritten Offering, each Holder who
    “beneficially owns” (as such term is defined under and
    determined pursuant to
    Rule 13d-3
    under the Exchange Act) 5% or more of the outstanding shares of
    New Common Stock that is a party to this Agreement shall agree
    with such managing underwriter (such agreement, a
    “Lock-Up”), for a period (the “Lock-Up
    Period”) beginning on a date not earlier than 5
    Business Days prior to the date of pricing of such Underwritten
    Offering and ending not later than 90 days after the date
    of such pricing, to the effect that such Holder shall not
    directly or indirectly (i) offer, pledge, sell, contract to
    sell, grant any options for the sale of, seek the redemption of
    or otherwise transfer or dispose of (including pursuant to a
    registration statement) any shares of New Common Stock (or
    securities exchangeable or exercisable for any shares of New
    Common Stock) held by such Holder, (ii) enter into a
    transaction which would have the same effect, or enter into any
    swap, hedge or other arrangement that transfers, in whole or in
    part, any of the economic consequences of ownership of the
    shares of New Common Stock held by such Holder, whether any such
    aforementioned transaction is to be settled by delivery of
    shares of New Common Stock or such other securities, in cash or
    otherwise, or (iii) publicly disclose the intention to make
    any such offer, sale, pledge, transfer or disposition, or to
    enter into any such transaction, swap, hedge or other
    arrangement, so long as the directors and executive officers of
    the Company agree to such limits, except for any Holder that,
    not later than 5 days following receipt of written notice
    from the Company that the Company will be filing a Registration
    Statement within 15 days of such notice with respect to an
    Underwritten Offering, shall have irrevocably agreed by delivery
    of written notice to the Company to terminate all of its rights
    under this Agreement, including under any outstanding Shelf
    Registration Statement; provided, that neither this
    Section 4.2(d) nor any
    Lock-Up
    shall prohibit a Holder from exercising rights or complying with
    agreements entered into by such Holder prior to the commencement
    of such
    Lock-Up
    Period or prevent such Holder from selling pursuant to such
    Underwritten Offering; and provided further, that with
    respect to any Holder that is a broker-dealer or an affiliate of
    a broker-dealer, the provisions of any
    Lock-Up
    shall not apply to any transactions effected for or on behalf of

    

    9

 

    any bona fide customer or client of such Holder (other than a
    customer or client who is a beneficial owner of the Registrable
    Securities held by such Holder).

 

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

 

    ARTICLE V.
    

 

    PIGGYBACK
    REGISTRATION
    

 

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

 

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

 

    (i) if such Piggyback Registration is a primary
    registration by the Company for its own account, the Company
    shall include in such Piggyback Registration: (A) first,
    up to the full amount of (1) Registrable Securities
    requested to be included in such Piggyback Registration by the
    Holders pursuant to Section 5.1 hereof and
    (2) Registrable Securities to be included in such
    registration by Holders (as the capitalized terms used in this
    clause (2) are defined in the Monsanto Registration Rights
    Agreement), allocated among such Holders (as defined herein and
    in the Monsanto Registration Rights Agreement) on a pro rata
    basis based on the amount of securities requested to be included
    in such Piggyback Registration or registration, as the case may
    be; (B) second, up to the full amount of securities to be
    offered by the Company, and (C) third, up to the full
    amount of securities requested to be included in such Piggyback

    

    10

 

    Registration by any Other Stockholders in accordance with the
    priorities, if any, then existing among the Company and the
    Other Stockholders so that the total amount of securities to be
    included in such Underwritten Offering is the full amount that,
    in the view of such managing underwriter, can be sold without
    adversely affecting the successful marketing (including pricing)
    of the securities included in such Underwritten
    Offering; and

 

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

 

    Section 5.3  Withdrawal
    of Piggyback Registration.

 

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

 

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

 

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

 

    ARTICLE VI.
    

 

    BLACKOUT
    PERIOD
    

 

    Section 6.1  Shelf
    Registration and Piggyback Registration
    Blackout.  Notwithstanding any other provision
    of this Agreement to the contrary, if the President and Chief
    Executive Officer of the Company determine in good faith, as
    evidenced by a signed certificate attesting to same, that the
    registration and distribution of Registrable Securities
    (a) would materially impede, delay or interfere with, or
    require premature disclosure of, any material financing,
    offering, acquisition, corporate reorganization or other
    significant transaction, or any negotiations, discussions or
    pending proposals with respect thereto, involving the Company or
    any of its Subsidiaries or (b) would require disclosure of
    non-public material information, the disclosure of which would
    materially and adversely affect the Company, the Company shall
    (i) be entitled to postpone the preparation, filing or
    effectiveness or suspend the effectiveness of a Registration
    Statement
    and/or the
    use of any resale Prospectus for a reasonable period of time not
    to exceed 60 days and (ii) promptly give the Holders
    notice of such postponement or suspension (which notice need not
    specify the nature of the event giving rise to such suspension).

    

    11

 

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

 

    ARTICLE VII.

    

 

    PROCEDURES
    AND EXPENSES
    

 

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

 

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

 

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

 

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

 

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

 

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

 

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

    

    12

 

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

 

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

 

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

 

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

 

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

 

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

 

    (g) subject to Article VI, as promptly as reasonably
    practicable after the occurrence of any event contemplated by
    Sections 7.1(d)(v) or 7.1(d)(vi) hereof, use its reasonable
    best efforts to prepare (and furnish at its expense, subject to
    any notice by the Company in accordance with
    Section 7.1(d), to the Selling Holders a reasonable number
    of copies of) a supplement or post-effective amendment to the
    applicable Registration Statement or a supplement to the related
    Prospectus (including by means of an Issuer Free Writing
    Prospectus), or file any other required document so that, as
    thereafter delivered to the purchasers of the Registrable
    Securities being sold thereunder, such Prospectus or Issuer Free
    Writing Prospectus shall not contain an untrue statement of a
    material fact or omit to state any material fact

    

    13

 

    required to be stated therein or necessary to make the
    statements therein, in light of the circumstances under which
    they were made, not misleading;

 

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

 

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

 

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

 

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

 

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

 

    (i) upon reasonable notice and at reasonable times during
    normal business hours, make reasonably available for inspection
    by a representative of each Selling Holder, one firm of counsel
    for the Selling Holders retained in accordance with
    Section 7.4, the managing underwriter, if any,
    participating in any disposition of Registrable Securities and
    its counsel and any single accountant retained by the Selling
    Holders or any such underwriter, all financial and other
    records, pertinent corporate documents and properties of the
    Company, and cause the appropriate officers, directors and
    employees of the Company to make reasonably available for such
    inspection all such relevant information reasonably requested in
    writing by them in connection with the Registration Statement as
    is customary for “due diligence” investigations of the
    type, nature and extent appropriate for an offering of the type
    contemplated; provided that such Persons shall first
    agree in writing with the Company that any information that is
    reasonably designated by the Company as confidential at the time
    of delivery shall be kept confidential by such Persons and shall
    be used solely for the purposes of exercising rights under this
    Agreement and such Person shall not engage in trading any
    securities of the Company until such material non-public
    information becomes publicly available, except nothing in such
    writing shall restrict (i) disclosure of such information
    if it is required by court or administrative order or is
    necessary to respond to inquiries of regulatory authorities,
    (ii) disclosure of such information if it is required by
    law (including any disclosure requirements pursuant to federal
    or state securities laws in connection with any disposition of
    Registrable Securities), (iii) sharing information with
    other underwriters, agents or dealers participating in the
    disposition of any Registrable Securities, subject to the
    execution by such other underwriters, agents or dealers of
    reasonable non-disclosure agreements with the Company and
    (iv) using any such documents or other information in
    investigating or defending itself against claims made or
    threatened by purchasers, regulatory authorities or others in
    connection with the disposition of any Registrable Securities.

    

    14

 

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

 

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

 

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

 

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

 

    (n) use its reasonable best efforts to assist Holders in
    the marketing of such Registrable Securities (including without
    limitation, having officers of the Company attend “road
    shows” for Underwritten Offerings and analyst or investor
    presentations and rating agency presentations and such other
    selling or informational activities requested by the Holders of
    a majority of the Registrable Securities or the managing
    underwriter for such Offerings upon reasonable prior notice and
    subject to reasonable scheduling flexibility; provided,
    however, that officers of the Company will not be
    required to attend more than one series of road shows in any
    120 day period; provided, further, that to
    the extent that any Underwritten Offering is suspended or
    postponed for any reason not caused by the Holders and then
    subsequently re-instated, any previous attendance by officers of
    road shows relating to such Underwritten Offering shall not
    excuse the officers of the Company from attending subsequent
    road shows relating to such Underwritten Offering for purposes
    of this Section 7.1(n), regardless if such subsequent road shows
    are within 120 days of the previous road shows.

 

    Section 7.2  Information
    from Holders; Holders’ Obligations.

 

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

 

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

 

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

    

    15

 

    such information as may be required to enable the Company to
    prepare a supplement or post-effective amendment to any such
    Registration Statement or a supplement to such Prospectus or
    Free Writing Prospectus.

 

    (d) With respect to any Registration Statement for an
    Underwritten Offering, the inclusion of a Holder’s
    Registrable Securities therein shall be conditioned, at the
    managing underwriter’s request, upon the execution and
    delivery by such Holder of an underwriting agreement; provided
    that the underwriting agreement is in customary form and
    reasonably acceptable to Company and the Holders of a majority
    of the Registrable Securities to be included in the Underwritten
    Offering.

 

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

 

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

 

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

 

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

 

    Section 7.3  Suspension
    of Disposition.

 

    (a) Each Selling Holder agrees by acquisition of a
    Registrable Security that, upon receipt of any written notice
    from the Company of the occurrence of any event of the type
    described in Sections 7.1(d)(ii), 7.1(d)(iii), 7.1(d)(iv),
    7.1(d)(v) or 7.1(d)(vi), such Holder shall discontinue
    disposition of Registrable Securities covered by a Registration
    Statement, Prospectus or Free Writing Prospectus and suspend use
    of such Prospectus or Free Writing Prospectus until such
    Holder’s receipt of the copies of the supplemented or
    amended Prospectus contemplated by Section 7.1(g) or until
    it is advised by the Company in writing that the use of the
    applicable Prospectus or Free Writing Prospectus may be resumed
    and have received copies of any additional or supplemental
    filings that are incorporated or deemed to be incorporated by
    reference in such Prospectus or Free Writing Prospectus. In the
    event the Company shall give any such notice, the Required
    Period shall be extended by the number of days during the time
    period from and including the date of the giving of such notice
    to and including the date when each Selling Holder of
    Registrable Securities covered by such Registration Statement
    has received (i) the copies of the supplemented or amended
    Prospectus or Issuer Free Writing Prospectus contemplated by
    Section 7.1(g) or (ii) the advice referenced in this
    Section 7.3(a).

 

    (b) Each Selling Holder shall be deemed to have agreed
    that, upon receipt of any notice from the Company contemplated
    by Section 6.1, such Selling Holder shall discontinue
    disposition of Registrable Securities covered by a Registration
    Statement, Prospectus or Free Writing Prospectus and suspend use
    of such Prospectus or Free Writing Prospectus until the earlier
    to occur of the Holder’s receipt of (i) copies of a

    

    16

 

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

 

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

 

    Section 7.4  Registration
    Expenses.

 

    (a) Without limiting any of the obligations in the
    Commitment Agreement or Article VIII hereof, all fees and
    expenses incurred by the Company in complying with
    Articles III, IV and V and Section 7.1
    (“Registration Expenses”) shall be borne by the
    Company. These fees and expenses shall include without
    limitation (i) all registration, filing and qualification
    fees, including fees made with the NASD, (ii) printing,
    duplicating and delivery expenses, (iii) fees and
    disbursements of counsel for the Company, (iv) fees and
    expenses of complying with state securities or “blue
    sky” laws (including the reasonable, documented fees and
    expenses of the counsel specified in Section 7.4(b) in
    connection therewith), (v) fees and disbursements of all
    independent registered public accountants referred to in Section
    7.1(h)(ii) (including the expenses of any special audit and
    “comfort” letters required by or incident to such
    performance) and (vi) fees and expenses in connection with
    listing the Registrable Securities on the NYSE or quoting the
    Registrable Securities on the NASDAQ or any other exchange or
    automated trading system in accordance with the other terms of
    this Agreement.

 

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

 

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

 

    ARTICLE VIII.

    

 

    INDEMNIFICATION
    

 

    Section 8.1  Indemnification
    by the Company.  The Company agrees to
    indemnify and hold harmless each Holder of Registrable
    Securities that are included in a Registration Statement
    pursuant to this Agreement, such Holder’s Affiliates, and
    their respective officers, directors, employees, partners and
    agents, and each

    

    17

 

    Person, if any, who controls any such Holder within the meaning
    of either Section 15 of the Securities Act or
    Section 20 of the Exchange Act and any underwriter (as
    defined in the Securities Act), selling agent or other
    securities professional for such Holder that facilities the
    disposition of Registrable Securities for such Holder, and any
    Person who controls such underwriter, selling agent or other
    securities professional within the meaning of either
    Section 15 of the Securities Act or Section 20 of the
    Exchange Act (each, a “Holder Indemnified
    Person”), from and against, and agrees to reimburse
    each Holder Indemnified Person with respect to, any and all
    losses, claims, damages, liabilities and expenses (including
    without limitation, subject to Section 8.3, the reasonable
    legal fees and other reasonable out-of-pocket expenses incurred
    in investigating, responding to or defending against any claim,
    challenge, litigation, investigation or proceeding, including
    without limitation, all costs of appearing as a witness in any
    claim, challenge, litigation, investigation or proceeding)
    (collectively, “Damages”) based upon, arising
    out of or resulting from, (i) any untrue statement or
    alleged untrue statement of a material fact contained in any
    Registration Statement, Prospectus, Preliminary Prospectus or
    Issuer Free Writing Prospectus, relating to the Registrable
    Securities, or any amendment thereof or supplement thereto, or
    any omission or alleged omission to state therein a material
    fact required to be stated therein or necessary, in light of the
    circumstances under which they were made, to make the statements
    therein not misleading or (ii) any violation or alleged
    violation by the Company of the Securities Act, the Exchange
    Act, any federal or state securities law or any rule or
    regulation promulgated under the Securities, the Exchange Act or
    any federal or state securities law in connection with any
    Registration Statement, Prospectus, Preliminary Prospectus or
    Issuer Free Writing Prospectus, relating to the Registrable
    Securities, or any amendment thereof or supplement thereto;
    provided, however, that the Company shall not be
    liable in any such case to the extent that any such Damages
    arise out of or are based upon an untrue statement or omission
    or alleged untrue statement or alleged omission made in such
    Registration Statement, Prospectus, Preliminary Prospectus or
    Free Writing Prospectus, or any amendment thereof or supplement
    thereto, in strict conformity with information relating to any
    Holder furnished to the Company in writing by such Holder or
    Holder Indemnified Person expressly for use therein.

 

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

    

    18

 

    Section 8.3  Conduct
    of Indemnification Proceedings.  If any claim,
    challenge, litigation, investigation or proceeding (including
    any governmental or regulatory investigation) shall be brought
    or asserted against any Person in respect of which indemnity may
    be sought pursuant to either of Section 8.1 or
    Section 8.2, such Person (the “Indemnified
    Person”) shall promptly notify the Person against whom
    such indemnity may be sought (the “Indemnifying
    Person”) in writing; provided that (i) the
    omission to so notify the Indemnifying Person shall not relieve
    it from any liability that it may have hereunder except to the
    extent it has been materially prejudiced by such failure and
    (ii) the omission to so notify the Indemnifying Person
    shall not relieve it from any liability that it may have to an
    Indemnified Person otherwise than on account of this
    Article VIII. In case any such claim, challenge,
    litigation, investigation or proceeding is brought against any
    Indemnified Person and it notifies the Indemnifying Person of
    the commencement thereof, the Indemnifying Person shall be
    entitled to participate therein and, to the extent that it may
    elect by written notice delivered to such Indemnified Person, to
    assume the defense thereof and retain counsel reasonably
    satisfactory to the Indemnified Person to represent the
    Indemnified Person and any others the Indemnifying Person may
    designate in such proceeding and shall pay the reasonable fees
    and expenses of such counsel related to such proceeding. In any
    such proceeding, any Indemnified Person shall have the right to
    retain its own counsel, but the fees and expenses of such
    counsel shall be at the expense of such Indemnified Person
    unless (i) the Indemnifying Person and the Indemnified
    Person shall have mutually agreed in writing to the contrary,
    (ii) the Indemnifying Person shall have failed within a
    reasonable time to retain counsel reasonably satisfactory to the
    Indemnified Person as contemplated by the preceding sentence or
    (iii) the named parties in any such proceeding (including
    any impleaded parties) include both the Indemnifying Person and
    the Indemnified Person and representation of both parties by the
    same counsel would be inappropriate due to actual or potential
    conflicts of interests between them. It is understood that the
    Indemnifying Person shall not, in connection with any proceeding
    or related proceeding in the same jurisdiction, be liable for
    the fees and expenses of more than one separate firm (in
    addition to any local counsel) for all Indemnified Persons, and
    that all such fees and expenses shall be reimbursed as they are
    incurred. Any such separate firm for the Holders and such
    control Persons of the Holders shall be designated in writing by
    the Holders and any such separate firm for the Company, the
    directors and officers of the Company and such control Persons
    of the Company shall be designated in writing by the Company.
    The Indemnifying Person shall not be liable for any settlement
    of any pending or threatened proceeding effected without its
    prior written consent (which consent shall not be unreasonably
    withheld), but if settled with such consent or if there be a
    final judgment for the plaintiff, the Indemnifying Person agrees
    to indemnify in accordance with, and subject to the limitations
    of, Section 8.1 and Section 8.2 above, as the case may
    be, any Indemnified Person from and against any loss or
    liability by reason of such settlement or judgment. No
    Indemnifying Person shall, without the prior written consent of
    the Indemnified Persons (which consent shall not be unreasonably
    withheld), effect any settlement of any pending proceeding in
    respect of which any Indemnified Person is a party or of any
    threatened proceeding in respect of which any Indemnified Person
    could have been a party and indemnity could have been sought
    hereunder by such Indemnified Person, unless such settlement
    (i) includes an unconditional release of such Indemnifi ed
    Person from all liability on claims that are the subject matter
    of such proceeding and (ii) does not include any statement
    as to or any admission of fault, culpability or a failure to act
    by or on behalf of any Indemnified Person.

 

    Section 8.4  Contribution,
    etc.

 

    (a) If the indemnification provided for in this
    Article VIII is held by a court of competent jurisdiction
    to be unavailable to an Indemnified Person or insufficient in
    respect of any Damages referred to therein, then each
    Indemnifying Person under such paragraph, in lieu of
    indemnifying such Indemnified Person thereunder, shall
    contribute to the amount paid or payable by such Indemnified
    Person as a result of such Damages (i) in such proportion
    as is appropriate to reflect the relative benefits received by
    the Company on the one hand and the Holder on the other hand
    with respect to the sale by such Holder of Registrable
    Securities or (ii) if the allocation provided by
    clause (i) above is not permitted by applicable law, in
    such proportion as is appropriate to reflect not only the
    relative benefits referred to in clause (i) above but also
    the relative fault of the Company on the one hand and of such
    Holder on the other in connection with the statements or
    omissions that resulted in such Damages, as well as any other
    relevant equitable considerations. Benefits received by the
    Company shall be deemed to be equal to the total value received
    or proposed to be received (before deducting expenses) by the
    Company pursuant to the sale of New Common Stock contemplated by
    the Commitment Agreement.

    

    19

 

    Benefits received by any Holder shall be deemed to be equal to
    the value to such Holder of having the offer and sale of the
    Registrable Securities registered under the Securities Act. The
    relative fault of the Company on the one hand and such Holder on
    the other shall be determined by reference to, among other
    things, whether any untrue or any alleged untrue statement of a
    material fact or the omission or alleged omission to state a
    material fact relates to information supplied by the Company or
    by such Holder and the parties’ relevant intent, knowledge,
    information and opportunity to correct or prevent such statement
    or omission.

 

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

 

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

 

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

 

    ARTICLE IX.

    

 

    FREE WRITING
    PROSPECTUSES
    

 

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

 

    ARTICLE X.

    

 

    RULE 144
    

 

    With a view to making available the benefits of certain rules
    and regulations of the SEC which may permit the sale of
    Registrable Securities to the public without registration, the
    Company agrees to (a) use its reasonable best efforts to
    file with the SEC in a timely manner all reports and other
    documents required of the Company under the Exchange Act;
    (b) upon written request of any Holder of Registrable
    Securities, furnish to such Holder promptly a written statement
    by the Company as to its compliance with the reporting

    

    20

 

    requirements of Rule 144 and of the Exchange Act, and such
    other reports and documents as any Holder reasonably may request
    in availing itself of any rule or regulation of the SEC allowing
    such Holder to sell any Registrable Securities without
    registration; and (c) take such other actions as may be
    reasonably required by the Company’s transfer agent to
    consummate any distribution of Registrable Securities that may
    be permitted in accordance with the terms and conditions of
    Rule 144.

 

    ARTICLE XI.

    

 

    PRIVATE
    PLACEMENT
    

 

    Except for Section 4.2(d), the Company agrees that nothing
    in this Agreement shall prohibit the Holders, at any time and
    from time to time, from selling or otherwise transferring
    Registrable Securities pursuant to a private placement or other
    transaction which is not registered pursuant to the Securities
    Act. To the extent requested by a Holder, the Company shall take
    all reasonable steps necessary to assist and cooperate with such
    Holder to facilitate such sale or transfer, including providing
    due diligence access to potential purchasers, and entering into
    a private placement agreement containing customary
    representations and warranties, indemnifications, opinions and
    other typical closing conditions.

 

    ARTICLE XII.

    

 

    MISCELLANEOUS
    

 

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

 

    (a) If to the Company:

 

    Solutia Inc.

    575 Maryville Centre Drive

    P.O. Box 66760

    St Louis, Missouri

    Attention: General Counsel

    Fax:
    (314) 674-8703

 

    with a copy to:

 

			
	 	    Kirkland & Ellis LLP

    153 East 53rd Street

    New York, New York
    10022-4611

    Attention:
	
    Thomas W. Christopher

    Jonathan S. Henes

    Fax:
    (212) 446-4900

 

    

    21

 

 

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

 

    with a copy to:

 

    Haynes and Boone, LLP

    901 Main St., Suite 3100

    Dallas, TX 75202

    Attention: Janice V. Sharry

    Fax:
    (214) 200-0620

 

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

 

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

 

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

 

    Section 12.5  Waivers
    and Amendments.  This Agreement may be
    amended, modified, superseded, cancelled, renewed or extended,
    and the terms and conditions of this Agreement may be waived,
    only by a written instrument, (A) if prior to the effective
    date of the Amended Plan, signed by (i) the Company, and
    (ii) holders of a
    662/3%
    of commitments under the Commitment Agreement, (B) if after
    the effective date of the Amended Plan, signed by (i) the
    Company, and (ii) Holders of a majority of the Registrable
    Securities. No delay on the part of any party in exercising any
    right, power or privilege pursuant to this Agreement shall
    operate as a waiver thereof, nor shall any waiver on the part of
    any party of any right, power or privilege pursuant to this
    Agreement, nor shall any single or partial exercise of any
    right, power or privilege pursuant to this Agreement, preclude
    any other or further exercise thereof or the exercise of any
    other right, power or privilege pursuant to this Agreement. The
    rights and remedies provided pursuant to this Agreement are
    cumulative and are not exclusive of any rights or remedies which
    any party otherwise may have at law or in equity.

 

    Section 12.6  Counterparts.  This
    Agreement may be executed in any number of counterparts, all of
    which shall be considered one and the same agreement and shall
    become effective when counterparts have

    

    22

 

    been signed by each of the parties and delivered to the other
    party (including via facsimile or other electronic
    transmission), it being understood that each party need not sign
    the same counterpart.

 

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

 

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

 

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

 

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

 

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

    [Signature Page Follows]

    

    23

 

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

 

    SOLUTIA, INC.

 

			
	 	    By:
	

    Name:     

			
	 	    Title: 
	

 

    [Signature Page of Registration Rights Agreement]

    

    24

 

    LONGACRE FUND MANAGEMENT, L.L.C., as Investment Manager,
    on behalf of Longacre Master Fund, Ltd and Longacre Capital
    Partners (QP), L.P.

 

			
	 	    By:
	
        

    Name: Steven Weissman

    Title: Member

 

    Address:

    810 Seventh Avenue, 22nd Floor

    New York, NY 10019

    Attention: John Brecker

    Fax:
    (212) 259-4304

 

    [Signature Page of Registration Rights Agreement]

    

    25

 

    MERRILL LYNCH PIERCE, FENNER & SMITH
    INCORPORATED

 

			
	 	    By: 
	
        

    Name:     Ronald Torok

			
	 	    Title: 
	
    Director

 

    Address:

    4 World Financial Center

    250 Vesey Street

    New York, NY 10080

    Attention: Chris Moon/Ron Torok

    Fax:
    (212) 449-0769

 

    [Signature Page of Registration Rights Agreement]

    

    26

 

    GMAM INVESTMENT FUNDS TRUST II

    By: Murray Capital Management, Inc., its agent

 

			
	 	    By:
	
        

    Name:     Scott V. Beechert

			
	 	    Title:     
	
    General Counsel &

    Chief Compliance Officer

 

    RECAP INTERNATIONAL (MASTER) LTD.

    By: Murray Capital Management, Inc., its agent

 

			
	 	    By: 
	
        

    Name:     Scott V. Beechert

			
	 	    Title:     
	
    General Counsel &

    Chief Compliance Officer

 

    INSTITUTIONAL BENCHMARK SERIES (MASTER FEEDER) LTD., a
    segregated accounts company, solely with respect to the Muscida
    series.

    By: Murray Capital Management, Inc., its agent

 

			
	 	    By: 
	
        

    Name:     Scott V. Beechert

			
	 	    Title:     
	
    General Counsel &

    Chief Compliance Officer

 

    Address (for the above three entities):

    c/o Murray
    Capital Management, Inc.

    680 Fifth Avenue

    New York, NY 10019

    Attention: General Counsel

    Fax:
    (212) 582-5525

 

    [Signature Page of Registration Rights Agreement]

    

    27

 

    SOUTHPAW ASSET MANAGEMENT LP, as Investment Manager, on
    behalf of Southpaw Credit Opportunity Master Fund LP and
    GPC 76, LLC

 

			
	 	    By: 
	
        

    Name:     Kevin Wyman

			
	 	    Title: 
	
    Managing Member of 

    General Partner-Southpow 

    Holdings LLC

 

    Address:

    Southpaw Asset Management LP

    4 Greenwich Office Park, 1st Floor

    Greenwich, CT 06831

    Attention: Arif Y. Gangat

    Fax:
    (203) 862-6201

 

    [Signature Page of Registration Rights Agreement]

    

    28

 

    UBS SECURITIES LLC

 

			
	 	    By: 
	
        

    Name:     Mark Lane

			
	 	    Title: 
	
    Managing Director

 

			
	 	    By:
	
        

    Name:     Thomas A. Tormey

			
	 	    Title: 
	
    Director

 

    Address:

    677 Washington Boulevard

    Stamford, CT 06901

    Attention: Thomas A. Tormey

    Fax:
    (203) 719-0207

    W/ Copy To:

    Fixed Income Legal

    Fax:
    (203) 719-0680

 

    [Signature Page of Registration Rights Agreement]

    

    29

 

    Exhibit A

 

    SOLUTIA
    INC.

 

    Form of Selling Securityholder Notice and Questionnaire

 

    The undersigned beneficial owner (the “Selling
    Securityholder”) of common stock (the
    “Registrable Securities”) of Solutia Inc. (the
    “Company”) understands that the Company has
    filed or intends to file with the Securities and Exchange
    Commission (the “Commission”) a Registration
    Statement for the registration and resale of the Registrable
    Securities, in accordance with the terms of the Registration
    Rights Agreement, dated as of November 19, 2007 (the
    “Registration Rights Agreement”), among the
    Company and the Holders referred to therein. A copy of the
    Registration Rights Agreement is available from the Company upon
    request at the address set forth below. All capitalized terms
    used and not otherwise defined herein shall have the meanings
    ascribed thereto in the Registration Rights Agreement.

 

    NOTICE

 

    The undersigned Selling Securityholder of Registrable Securities
    hereby gives notice to the Company of its intention to sell or
    otherwise dispose of Registrable Securities beneficially owned
    by it and listed below in Item 3 (unless otherwise
    specified under Item 3) pursuant to the Registration
    Statement. The undersigned, by signing and returning this Notice
    and Questionnaire, understands that it will be bound by the
    terms and conditions of this Notice and Questionnaire and the
    Registration Rights Agreement. Pursuant to the Registration
    Rights Agreement, the undersigned has agreed to indemnify and
    hold harmless the Company’s directors and officers and each
    Person, if any, who controls the Company within the meaning of
    either Section 15 of the Securities Act or Section 20
    of the Exchange Act, from and against losses arising in
    connection with statements concerning the undersigned made in
    the Registration Statement or the related prospectus in reliance
    upon the information provided in this Notice and Questionnaire.

 

    The undersigned Selling Securityholder hereby provides the
    following information to the Company and represents and warrants
    that such information is accurate and complete:

    

    Exh. A-1

 

    QUESTIONNAIRE

 

    1. Name.

 

    (a) Full Legal Name of Selling Securityholder:

 

    (b) Full Legal Name of Registered Holder (if not the same
    as (a) above) through which Registrable Securities Listed
    in Item 3 below are held:

 

    (c) Full Legal name of DTC Participant (if applicable and
    if not the same as (b) above) through which Registrable
    Securities listed in Item 3 below are held:

 

    (d) Full Legal Name of Natural Control Person (which means
    a natural person who directly or indirectly alone or with others
    has power to vote or dispose of the securities covered by the
    questionnaire):

 

    2. Address for Notices to Selling Securityholder:

 

    Telephone:

 

    Fax:

 

    Email:

 

    Contact Person:

 

    3. Beneficial Ownership of Registrable Securities:

 

    Type and Principal Amount of Registrable Securities beneficially
    owned:

 

    4. Broker-Dealer Status:

 

    (a) Are you a broker-dealer?

 

    Yes  o
         No  o
    

 

    Note: If yes, the SEC’s staff has indicated that you
    should be identified as an underwriter in the Registration
    Statement.

 

    (b) If you are a registered broker-dealer, do you consent
    to being named as an underwriter in the Registration Statement?

 

    Yes  o
         No  o
    

 

    (a) Are you an affiliate of a broker-dealer?

 

    Yes  o
         No  o
    

 

    If yes, please identify the registered broker-dealer with whom
    the Selling Securityholder is affiliated and the nature of the
    affiliation:

 

    (b) If you are an affiliate of a broker-dealer, do you
    certify that you bought the Registrable Securities in the
    ordinary course of business, and at the time of the purchase of
    the Registrable Securities to be resold, you had no agreements
    or understandings, directly or indirectly, with any person to
    distribute the Registrable Securities?

 

    Yes  o
         No  o
    

 

    Note: If no, the SEC’s staff has indicated that you
    should be identified as an underwriter in the Registration
    Statement.

 

    5. Beneficial Ownership of Other Securities of the
    Company Owned by the Selling Securityholder:

 

    Except as set forth below in this Item 5, the undersigned
    Selling Securityholder is not the beneficial or registered owner
    of any securities of the Company other than the Registrable
    Securities listed above in Item 3.

    

    Exh. A-2

 

    Type and Amount of Other Securities beneficially owned by the
    Selling Securityholder:

 

    6. Relationships with the Company:

 

    Except as set forth below, neither the undersigned Selling
    Securityholder nor any of its affiliates, officers, directors or
    principal equity holders (owners of 5% or more of the equity
    securities of the undersigned) has held any position or office
    or has had any other material relationship with the Company (or
    its predecessors or affiliates) during the past three years.

 

    State any exceptions here:

 

    The undersigned agrees to promptly notify the Company of any
    inaccuracies or changes in the information provided herein that
    may occur subsequent to the date hereof and at any time while
    the Registration Statement remains in effect.

 

    By signing below, the undersigned consents to the disclosure of
    the information contained herein in its answers to Items 1
    through 6 and the inclusion of such information in the
    Registration Statement and the related prospectus. The
    undersigned understands that such information will be relied
    upon by the Company in connection with the preparation or
    amendment of the Registration Statement and the related
    prospectus.

 

    IN WITNESS WHEREOF the undersigned, by authority duly given, has
    caused this Notice and Questionnaire to be executed and
    delivered either in person or by its duly authorized agent.

 

    Dated:

 

    Beneficial Owner:

 

			
	    By:
	

	 

    Name:     

				
	 	    Title: 
	

	 

 

    PLEASE FAX A COPY OF THE COMPLETED AND EXECUTED NOTICE AND
    QUESTIONNAIRE, AND RETURN THE ORIGINAL BY OVERNIGHT MAIL, TO:

 

 

    Solutia Inc.

    575 Maryville Centre Drive

    P.O. Box 66760

    St Louis, Missouri

    Attention: General Counsel

    Fax:
    (314) 674-8703

    

    Exh. A-3

 

    Exhibit B

 

    FORM OF
    JOINDER AGREEMENT

 

    The undersigned, being the transferee of
    [     ] shares of the common stock
    (the “Registrable Securities”), of Solutia
    Inc., a Delaware corporation (the “Company”),
    as a condition to obtaining the benefits of the Registration
    Rights Agreement dated as of November 19, 2007 initially
    among the Company and the Holders referred to therein (the
    “Registration Rights Agreement”), acknowledges
    that matters pertaining to the registration of such Registrable
    Securities is governed by the Registration Rights Agreement, and
    the undersigned hereby (1) acknowledges receipt of a copy
    of the Registration Rights Agreement, and (2) agrees to be
    bound by the provisions of the Registration Rights Agreement and
    undertakes to perform each obligation as if a “Holder”
    thereunder and an original signatory thereto in such capacity.
    Capitalized terms used but not defined in this Joinder Agreement
    shall have the meanings ascribed thereto in the Registration
    Rights Agreement.

 

    This Joinder Agreement shall be construed and enforced in
    accordance with the laws of the State of New York without regard
    or giving effect to its principles of conflicts of law. This
    Joinder Agreement shall bind, and inure to the benefit of, the
    parties hereto and their respective devisees, heirs, personal
    and legal representatives, executors, administrators, successors
    and assigns.

 

    [Remainder of Page Intentionally Left Blank]

    

    Exh. B-1

 

    IN WITNESS WHEREOF, the undersigned has executed this Joinder
    Agreement this , 200 .

 

    (Print Name of Transferee)

 

			
	 	    By: 
	
        

    Name:     

    Title:

 

    Address and Facsimile Number for Notices:

 

    Acknowledged and Agreed by:

 

    SOLUTIA, INC.

 

			
	    By: 
	

	 

    Name:     

				
	 	    Title: 
	

	 

    

    Exh. B-2

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00133-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00133-of-00352.parquet"}]]