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<div> <div style="text-align: center; font-family: 'Times New Roman', serif; font-size: 10pt;">
<div style="line-height: 11.4pt; text-indent: 0pt; display: block; margin-left: 0pt; margin-right: 0pt;" align="justify"><font style="display: inline; font-family: 'Times New Roman', serif; font-size: 10pt; font-weight: bold;" class="_mt"><font style="display: inline; text-decoration: underline;" class="_mt">12. Debt Obligations</font></font></div>
<div style="line-height: 11.4pt; text-indent: 0pt; display: block;"><br /></div>
<div style="line-height: 11.4pt; text-indent: 0pt; display: block; margin-left: 0pt; margin-right: 0pt;" align="justify">
<div style="text-align: justify; line-height: 11.4pt; text-indent: 0pt; display: block; margin-left: 0pt; margin-right: 0pt;"><font style="display: inline; font-family: 'Times New Roman', serif; font-size: 10pt;" class="_mt"><font style="display: inline; font-family: 'Times New Roman', serif; font-size: 10pt;" class="_mt"><font style="letter-spacing: 9pt;" class="_mt"> <font style="letter-spacing: 9pt;" class="_mt"> </font></font>In the first quarter of 2010, we issued $300 of 7.875 percent notes due 2020 ("2020 Notes") which resulted in net proceeds to us of $292, after deducting underwriting discount and fees. In addition, we extinguished our existing $1.2 billion senior secured term loan facility ("2014 Term Loan") and $350 senior secured asset-based revolving credit facility ("2013 Revolver"), replacing them with a $1,150 senior secured credit facility ("Credit Facility"). The Credit Facility consists of an $850 term loan maturing in 2017 ("2017 Term Loan") and a $300 revolving credit facility maturing in 2015 ("2015 Revolver"). As a result of the early extinguishment of our 2014 Term Loan and 2013 Revolver, we incurred an $80 non-cash charge related to the write-off of deferred debt issuance costs on our 2014 Term Loan and 2013 Revolver and a $9 prepayment penalty for the early extinguishment of the 2014 Term Loan. These amounts were recorded in loss on debt extinguishment for the six months ended June 30, 2010.</font></font></div></div>
<div style="text-indent: 0pt; display: block; margin-left: 0pt; margin-right: 0pt;">
<div style="line-height: 11.4pt; text-indent: 0pt; display: block;"><br /></div></div>
<div style="line-height: 11.4pt; text-indent: 36pt; display: block; margin-left: 0pt; margin-right: 0pt;" align="justify"><font style="display: inline; font-family: 'Times New Roman', serif; font-size: 10pt;" class="_mt">We had no short-term borrowings at June 30, 2010 and $16 at December 31, 2009, comprised of other lines of credit.</font><br /></div>
<div style="line-height: 11.4pt; text-indent: 0pt; display: block;"> </div>
<div style="text-align: left; line-height: 11.4pt; text-indent: 0pt; display: block; margin-left: 36pt; margin-right: 0pt;">Our long-term debt consisted of the following as of June 30, 2010 and December 31, 2009:</div>
<div style="text-align: left; line-height: 11.4pt; text-indent: 0pt; display: block; margin-left: 36pt; margin-right: 0pt;"> </div>
<div style="text-align: left;">
<div>
<table style="font-family: 'Times New Roman', serif; font-size: 10pt;" cellspacing="0" cellpadding="0" width="100%">
<tr><td style="padding-bottom: 2px;" valign="bottom"><font style="display: inline; font-family: 'Times New Roman', serif; font-size: 10pt;" class="_mt"> </font></td>
<td style="padding-bottom: 2px;" valign="bottom"><font style="display: inline; font-family: 'Times New Roman', serif; font-size: 10pt; font-weight: bold;" class="_mt"> </font></td>
<td style="border-bottom: black 2px solid;" valign="bottom" colspan="2" nowrap="nowrap">
<div style="line-height: 9.1pt; text-indent: 0pt; display: block; margin-left: 0pt; margin-right: 0pt;" align="center"><font style="display: inline; font-family: 'Times New Roman', serif; font-size: 10pt; font-weight: bold;" class="_mt">June 30,</font></div>
<div style="line-height: 9.1pt; text-indent: 0pt; display: block; margin-left: 0pt; margin-right: 0pt;" align="center"><font style="display: inline; font-family: 'Times New Roman', serif; font-size: 10pt; font-weight: bold;" class="_mt"><font style="display: inline;" class="_mt">2010</font></font></div></td>
<td style="text-align: left; padding-bottom: 2px;" valign="bottom" nowrap="nowrap"><font style="display: inline; font-family: 'Times New Roman', serif; font-size: 10pt; font-weight: bold;" class="_mt"> </font></td>
<td style="padding-bottom: 2px;" valign="bottom"><font style="display: inline; font-family: 'Times New Roman', serif; font-size: 10pt; font-weight: bold;" class="_mt"> </font></td>
<td style="border-bottom: black 2px solid;" valign="bottom" colspan="2" nowrap="nowrap">
<div style="line-height: 9.1pt; text-indent: 0pt; display: block; margin-left: 0pt; margin-right: 0pt;" align="center"><font style="display: inline; font-family: 'Times New Roman', serif; font-size: 10pt; font-weight: bold;" class="_mt">December 31,</font></div>
<div style="line-height: 9.1pt; text-indent: 0pt; display: block; margin-left: 0pt; margin-right: 0pt;" align="center"><font style="display: inline; font-family: 'Times New Roman', serif; font-size: 10pt; font-weight: bold;" class="_mt"><font style="display: inline;" class="_mt">2009</font></font></div></td>
<td style="text-align: left; padding-bottom: 2px;" valign="bottom" nowrap="nowrap"><font style="display: inline; font-family: 'Times New Roman', serif; font-size: 10pt; font-weight: bold;" class="_mt"> </font></td></tr>
<tr><td valign="bottom"><font style="display: inline; font-family: 'Times New Roman', serif; font-size: 10pt;" class="_mt"> </font></td>
<td valign="bottom"><font style="display: inline; font-family: 'Times New Roman', serif; font-size: 10pt;" class="_mt"> </font></td>
<td valign="bottom" colspan="2" nowrap="nowrap"><font style="display: inline; font-family: 'Times New Roman', serif; font-size: 10pt;" class="_mt"> </font></td>
<td style="text-align: left;" valign="bottom" nowrap="nowrap"><font style="display: inline; font-family: 'Times New Roman', serif; font-size: 10pt;" class="_mt"> </font></td>
<td valign="bottom"><font style="display: inline; font-family: 'Times New Roman', serif; font-size: 10pt;" class="_mt"> </font></td>
<td valign="bottom" colspan="2" nowrap="nowrap"><font style="display: inline; font-family: 'Times New Roman', serif; font-size: 10pt;" class="_mt"> </font></td>
<td style="text-align: left;" valign="bottom" nowrap="nowrap"><font style="display: inline; font-family: 'Times New Roman', serif; font-size: 10pt;" class="_mt"> </font></td></tr>
<tr bgcolor="#cceeff"><td valign="bottom" width="76%" align="left">
<div style="line-height: 9.1pt; text-indent: 0pt; display: block; margin-left: 0pt; margin-right: 0pt;" align="left"><font style="display: inline; font-family: 'Times New Roman', serif; font-size: 10pt;" class="_mt">2017 Term Loan</font></div></td>
<td valign="bottom" width="1%" align="left"><font style="display: inline; font-family: 'Times New Roman', serif; font-size: 10pt; font-weight: bold;" class="_mt"> </font></td>
<td style="text-align: left;" valign="bottom" width="1%"><font style="display: inline; font-family: 'Times New Roman', serif; font-size: 10pt; font-weight: bold;" class="_mt">$</font></td>
<td style="text-align: right;" valign="bottom" width="9%"><font style="display: inline; font-family: 'Times New Roman', serif; font-size: 10pt; font-weight: bold;" class="_mt">848</font></td>
<td style="text-align: left;" valign="bottom" width="1%" nowrap="nowrap"><font style="display: inline; font-family: 'Times New Roman', serif; font-size: 10pt; font-weight: bold;" class="_mt"> </font></td>
<td valign="bottom" width="1%" align="left"><font style="display: inline; font-family: 'Times New Roman', serif; font-size: 10pt;" class="_mt"> </font></td>
<td style="text-align: left;" valign="bottom" width="1%"><font style="display: inline; font-family: 'Times New Roman', serif; font-size: 10pt;" class="_mt">$</font></td>
<td style="text-align: right;" valign="bottom" width="9%"><font style="display: inline; font-family: 'Times New Roman', serif; font-size: 10pt;" class="_mt">--</font></td>
<td style="text-align: left;" valign="bottom" width="1%" nowrap="nowrap"><font style="display: inline; font-family: 'Times New Roman', serif; font-size: 10pt;" class="_mt"> </font></td></tr>
<tr bgcolor="white"><td valign="bottom" width="76%" align="left">
<div style="line-height: 9.1pt; text-indent: 0pt; display: block; margin-left: 0pt; margin-right: 0pt;" align="left"><font style="display: inline; font-family: 'Times New Roman', serif; font-size: 10pt;" class="_mt">2014 Term Loan</font></div></td>
<td valign="bottom" width="1%" align="left"><font style="display: inline; font-family: 'Times New Roman', serif; font-size: 10pt; font-weight: bold;" class="_mt"> </font></td>
<td style="text-align: left;" valign="bottom" width="1%"><font style="display: inline; font-family: 'Times New Roman', serif; font-size: 10pt; font-weight: bold;" class="_mt"> </font></td>
<td style="text-align: right;" valign="bottom" width="9%"><font style="display: inline; font-family: 'Times New Roman', serif; font-size: 10pt; font-weight: bold;" class="_mt">--</font></td>
<td style="text-align: left;" valign="bottom" width="1%" nowrap="nowrap"><font style="display: inline; font-family: 'Times New Roman', serif; font-size: 10pt; font-weight: bold;" class="_mt"> </font></td>
<td valign="bottom" width="1%" align="left"><font style="display: inline; font-family: 'Times New Roman', serif; font-size: 10pt;" class="_mt"> </font></td>
<td style="text-align: left;" valign="bottom" width="1%"><font style="display: inline; font-family: 'Times New Roman', serif; font-size: 10pt;" class="_mt"> </font></td>
<td style="text-align: right;" valign="bottom" width="9%"><font style="display: inline; font-family: 'Times New Roman', serif; font-size: 10pt;" class="_mt">876</font></td>
<td style="text-align: left;" valign="bottom" width="1%" nowrap="nowrap"><font style="display: inline; font-family: 'Times New Roman', serif; font-size: 10pt;" class="_mt"> </font></td></tr>
<tr bgcolor="#cceeff"><td valign="bottom" width="76%" align="left">
<div style="line-height: 9.1pt; text-indent: 0pt; display: block; margin-left: 0pt; margin-right: 0pt;" align="left"><font style="display: inline; font-family: 'Times New Roman', serif; font-size: 10pt;" class="_mt">8.75% 2017 Notes</font></div></td>
<td valign="bottom" width="1%" align="left"><font style="display: inline; font-family: 'Times New Roman', serif; font-size: 10pt; font-weight: bold;" class="_mt"> </font></td>
<td style="text-align: left;" valign="bottom" width="1%"><font style="display: inline; font-family: 'Times New Roman', serif; font-size: 10pt; font-weight: bold;" class="_mt"> </font></td>
<td style="text-align: right;" valign="bottom" width="9%"><font style="display: inline; font-family: 'Times New Roman', serif; font-size: 10pt; font-weight: bold;" class="_mt">400</font></td>
<td style="text-align: left;" valign="bottom" width="1%" nowrap="nowrap"><font style="display: inline; font-family: 'Times New Roman', serif; font-size: 10pt; font-weight: bold;" class="_mt"> </font></td>
<td valign="bottom" width="1%" align="left"><font style="display: inline; font-family: 'Times New Roman', serif; font-size: 10pt;" class="_mt"> </font></td>
<td style="text-align: left;" valign="bottom" width="1%"><font style="display: inline; font-family: 'Times New Roman', serif; font-size: 10pt;" class="_mt"> </font></td>
<td style="text-align: right;" valign="bottom" width="9%"><font style="display: inline; font-family: 'Times New Roman', serif; font-size: 10pt;" class="_mt">400</font></td>
<td style="text-align: left;" valign="bottom" width="1%" nowrap="nowrap"><font style="display: inline; font-family: 'Times New Roman', serif; font-size: 10pt;" class="_mt"> </font></td></tr>
<tr bgcolor="white"><td style="padding-bottom: 2px;" valign="bottom" width="76%" align="left">
<div style="line-height: 9.1pt; text-indent: 0pt; display: block; margin-left: 0pt; margin-right: 0pt;" align="left"><font style="display: inline; font-family: 'Times New Roman', serif; font-size: 10pt;" class="_mt">7.875% 2020 Notes</font></div></td>
<td style="padding-bottom: 2px;" valign="bottom" width="1%" align="left"><font style="display: inline; font-family: 'Times New Roman', serif; font-size: 10pt; font-weight: bold;" class="_mt"> </font></td>
<td style="border-bottom: black 2px solid; text-align: left;" valign="bottom" width="1%"><font style="display: inline; font-family: 'Times New Roman', serif; font-size: 10pt; font-weight: bold;" class="_mt"> </font></td>
<td style="border-bottom: black 2px solid; text-align: right;" valign="bottom" width="9%"><font style="display: inline; font-family: 'Times New Roman', serif; font-size: 10pt; font-weight: bold;" class="_mt"><font style="display: inline;" class="_mt">300</font></font></td>
<td style="text-align: left; padding-bottom: 2px;" valign="bottom" width="1%" nowrap="nowrap"><font style="display: inline; font-family: 'Times New Roman', serif; font-size: 10pt; font-weight: bold;" class="_mt"> </font></td>
<td style="padding-bottom: 2px;" valign="bottom" width="1%" align="left"><font style="display: inline; font-family: 'Times New Roman', serif; font-size: 10pt;" class="_mt"> </font></td>
<td style="border-bottom: black 2px solid; text-align: left;" valign="bottom" width="1%"><font style="display: inline; font-family: 'Times New Roman', serif; font-size: 10pt;" class="_mt"> </font></td>
<td style="border-bottom: black 2px solid; text-align: right;" valign="bottom" width="9%"><font style="display: inline; font-family: 'Times New Roman', serif; font-size: 10pt;" class="_mt"><font style="display: inline;" class="_mt">--</font></font></td>
<td style="text-align: left; padding-bottom: 2px;" valign="bottom" width="1%" nowrap="nowrap"><font style="display: inline; font-family: 'Times New Roman', serif; font-size: 10pt;" class="_mt"> </font></td></tr>
<tr bgcolor="#cceeff"><td valign="bottom" width="76%" align="left">
<div style="line-height: 9.1pt; text-indent: 0pt; display: block; margin-left: 0pt; margin-right: 0pt;" align="left"><font style="display: inline; font-family: 'Times New Roman', serif; font-size: 10pt;" class="_mt"><font style="margin-left: 21.6pt;" class="_mt"> </font>Total principal amount</font></div></td>
<td valign="bottom" width="1%" align="left"><font style="display: inline; font-family: 'Times New Roman', serif; font-size: 10pt; font-weight: bold;" class="_mt"> </font></td>
<td style="text-align: left;" valign="bottom" width="1%"><font style="display: inline; font-family: 'Times New Roman', serif; font-size: 10pt; font-weight: bold;" class="_mt"> </font></td>
<td style="text-align: right;" valign="bottom" width="9%"><font style="display: inline; font-family: 'Times New Roman', serif; font-size: 10pt; font-weight: bold;" class="_mt">1,548</font></td>
<td style="text-align: left;" valign="bottom" width="1%" nowrap="nowrap"><font style="display: inline; font-family: 'Times New Roman', serif; font-size: 10pt; font-weight: bold;" class="_mt"> </font></td>
<td valign="bottom" width="1%" align="left"><font style="display: inline; font-family: 'Times New Roman', serif; font-size: 10pt;" class="_mt"> </font></td>
<td style="text-align: left;" valign="bottom" width="1%"><font style="display: inline; font-family: 'Times New Roman', serif; font-size: 10pt;" class="_mt"> </font></td>
<td style="text-align: right;" valign="bottom" width="9%"><font style="display: inline; font-family: 'Times New Roman', serif; font-size: 10pt;" class="_mt">1,276</font></td>
<td style="text-align: left;" valign="bottom" width="1%" nowrap="nowrap"><font style="display: inline; font-family: 'Times New Roman', serif; font-size: 10pt;" class="_mt"> </font></td></tr>
<tr bgcolor="white"><td valign="bottom" width="76%" align="left">
<div style="line-height: 9.1pt; text-indent: 0pt; display: block; margin-left: 0pt; margin-right: 0pt;" align="left"><font style="display: inline; font-family: 'Times New Roman', serif; font-size: 10pt;" class="_mt">Less: Unamortized debt discount</font></div></td>
<td valign="bottom" width="1%" align="left"><font style="display: inline; font-family: 'Times New Roman', serif; font-size: 10pt; font-weight: bold;" class="_mt"> </font></td>
<td style="text-align: left;" valign="bottom" width="1%"><font style="display: inline; font-family: 'Times New Roman', serif; font-size: 10pt; font-weight: bold;" class="_mt"> </font></td>
<td style="text-align: right;" valign="bottom" width="9%"><font style="display: inline; font-family: 'Times New Roman', serif; font-size: 10pt; font-weight: bold;" class="_mt">(6</font></td>
<td style="text-align: left;" valign="bottom" width="1%" nowrap="nowrap"><font style="display: inline; font-family: 'Times New Roman', serif; font-size: 10pt; font-weight: bold;" class="_mt">)</font></td>
<td valign="bottom" width="1%" align="left"><font style="display: inline; font-family: 'Times New Roman', serif; font-size: 10pt;" class="_mt"> </font></td>
<td style="text-align: left;" valign="bottom" width="1%"><font style="display: inline; font-family: 'Times New Roman', serif; font-size: 10pt;" class="_mt"> </font></td>
<td style="text-align: right;" valign="bottom" width="9%"><font style="display: inline; font-family: 'Times New Roman', serif; font-size: 10pt;" class="_mt">--</font></td>
<td style="text-align: left;" valign="bottom" width="1%" nowrap="nowrap"><font style="display: inline; font-family: 'Times New Roman', serif; font-size: 10pt;" class="_mt"> </font></td></tr>
<tr bgcolor="#cceeff"><td style="padding-bottom: 2px;" valign="bottom" width="76%" align="left">
<div style="line-height: 9.1pt; text-indent: 0pt; display: block; margin-left: 0pt; margin-right: 0pt;" align="left"><font style="display: inline; font-family: 'Times New Roman', serif; font-size: 10pt;" class="_mt">Less: Current portion of long-term debt</font></div></td>
<td style="padding-bottom: 2px;" valign="bottom" width="1%" align="left"><font style="display: inline; font-family: 'Times New Roman', serif; font-size: 10pt; font-weight: bold;" class="_mt"> </font></td>
<td style="border-bottom: black 2px solid; text-align: left;" valign="bottom" width="1%"><font style="display: inline; font-family: 'Times New Roman', serif; font-size: 10pt; font-weight: bold;" class="_mt"> </font></td>
<td style="border-bottom: black 2px solid; text-align: right;" valign="bottom" width="9%"><font style="display: inline; font-family: 'Times New Roman', serif; font-size: 10pt; font-weight: bold;" class="_mt"><font style="display: inline;" class="_mt">(8</font></font></td>
<td style="text-align: left; padding-bottom: 2px;" valign="bottom" width="1%" nowrap="nowrap"><font style="display: inline; font-family: 'Times New Roman', serif; font-size: 10pt; font-weight: bold;" class="_mt">)</font></td>
<td style="padding-bottom: 2px;" valign="bottom" width="1%" align="left"><font style="display: inline; font-family: 'Times New Roman', serif; font-size: 10pt;" class="_mt"> </font></td>
<td style="border-bottom: black 2px solid; text-align: left;" valign="bottom" width="1%"><font style="display: inline; font-family: 'Times New Roman', serif; font-size: 10pt;" class="_mt"> </font></td>
<td style="border-bottom: black 2px solid; text-align: right;" valign="bottom" width="9%"><font style="display: inline; font-family: 'Times New Roman', serif; font-size: 10pt;" class="_mt"><font style="display: inline;" class="_mt">(12</font></font></td>
<td style="text-align: left; padding-bottom: 2px;" valign="bottom" width="1%" nowrap="nowrap"><font style="display: inline; font-family: 'Times New Roman', serif; font-size: 10pt;" class="_mt">)</font></td></tr>
<tr bgcolor="white"><td style="padding-bottom: 4px;" valign="bottom" width="76%" align="left">
<div style="line-height: 9.1pt; text-indent: 0pt; display: block; margin-left: 0pt; margin-right: 0pt;" align="left"><font style="display: inline; font-family: 'Times New Roman', serif; font-size: 10pt; font-weight: bold;" class="_mt">Total</font></div></td>
<td style="padding-bottom: 4px;" valign="bottom" width="1%" align="left"><font style="display: inline; font-family: 'Times New Roman', serif; font-size: 10pt; font-weight: bold;" class="_mt"> </font></td>
<td style="border-bottom: black 3px double; text-align: left;" valign="bottom" width="1%"><font style="display: inline; font-family: 'Times New Roman', serif; font-size: 10pt; font-weight: bold;" class="_mt">$</font></td>
<td style="border-bottom: black 3px double; text-align: right;" valign="bottom" width="9%"><font style="display: inline; font-family: 'Times New Roman', serif; font-size: 10pt; font-weight: bold;" class="_mt"><font style="display: inline;" class="_mt">1,534</font></font></td>
<td style="text-align: left; padding-bottom: 4px;" valign="bottom" width="1%" nowrap="nowrap"><font style="display: inline; font-family: 'Times New Roman', serif; font-size: 10pt; font-weight: bold;" class="_mt"> </font></td>
<td style="padding-bottom: 4px;" valign="bottom" width="1%" align="left"><font style="display: inline; font-family: 'Times New Roman', serif; font-size: 10pt;" class="_mt"> </font></td>
<td style="border-bottom: black 3px double; text-align: left;" valign="bottom" width="1%"><font style="display: inline; font-family: 'Times New Roman', serif; font-size: 10pt;" class="_mt">$</font></td>
<td style="border-bottom: black 3px double; text-align: right;" valign="bottom" width="9%"><font style="display: inline; font-family: 'Times New Roman', serif; font-size: 10pt;" class="_mt"><font style="display: inline;" class="_mt">1,264</font></font></td>
<td style="text-align: left; padding-bottom: 4px;" valign="bottom" width="1%" nowrap="nowrap"><font style="display: inline; font-family: 'Times New Roman', serif; font-size: 10pt;" class="_mt"> </font></td></tr></table></div></div>
<div style="line-height: 10.25pt; text-indent: 0pt; display: block;"><br /></div>
<div style="line-height: 11.4pt; text-indent: 36pt; display: block; margin-left: 0pt; margin-right: 0pt;" align="justify"><font style="display: inline; font-family: 'Times New Roman', serif; font-size: 10pt;" class="_mt">The weighted average interest rate on our total debt outstanding was 6.4 percent and 7.7 percent at June 30, 2010 and December 31, 2009, respectively. Our weighted average interest rate on short-term debt outstanding was 2.1 percent at December 31, 2009.</font></div>
<div style="line-height: 11.4pt; text-indent: 0pt; display: block;"><br /></div>
<div style="line-height: 11.4pt; text-indent: 36pt; display: block; margin-left: 0pt; margin-right: 0pt;" align="justify">
<div style="line-height: 11.4pt; text-indent: 36pt; display: block; margin-left: 0pt; margin-right: 0pt;" align="justify"><font style="display: inline; font-family: 'Times New Roman', serif; font-size: 10pt;" class="_mt"><font style="display: inline; font-family: 'Times New Roman', serif; font-size: 10pt;" class="_mt">The $400 of 8.75 percent notes due in 2017 ("2017 Notes") were issued at par and require semi-annual interest payments. The 2020 Notes were issued at 99.5 percent of par and require semi-annual interest payments. Our current subsidiaries CPFilms Inc., Flexsys America L.P., Flexsys America Co., Monchem International, Inc., Solutia Inter-America, Inc., Solutia Overseas, Inc., S E Investment LLC and future subsidiaries as defined by the 2017 Notes and 2020 Notes ("The Notes"), subject to certain exceptions are guarantors ("Note Guarantors") of The Notes as of June 30, 2010. Solutia Business Enterprises Inc., a previous guarantor of the 2017 Notes, 2020 Notes and 2017 Term Loan, was merged into Solutia Inc. during the second quarter of 2010.</font></font></div></div>
<div style="line-height: 11.4pt; text-indent: 0pt; display: block;"><br /></div>
<div style="line-height: 11.4pt; text-indent: 36pt; display: block; margin-left: 0pt; margin-right: 0pt;" align="justify"><font style="display: inline; font-family: 'Times New Roman', serif; font-size: 10pt;" class="_mt">The 2017 Term loan was issued at 99.5 percent of the principal amount bearing interest at LIBOR plus 3.25 percent with a 1.50 percent LIBOR floor. We are required to pay 1 percent of the principal of the 2017 Term Loan annually via quarterly payments. The 2015 Revolver bears interest at our option, at LIBOR plus 3.50 percent with no LIBOR floor or at the prime rate plus 2.50 percent with no prime rate floor. LIBOR based interest for the 2017 Term Loan and 2015 Revolver is payable on the last day of each relevant interest period (defined as one, two, three or six months or other periods available to all lenders under each facility) and, in the case of any interest period longer than three months, on each successive date three months after the first day of such interest period. Prime based interest for the 2015 Revolver is payable quarterly in arrears. CPFilms Inc., Flexsys America L.P., Flexsys America Co., Monchem International, Inc., Solutia Inter-America, Inc., Solutia Overseas, Inc. and future subsidiaries, as defined by the Credit Facility, subject to certain exceptions (the "Credit Facility Guarantors"), are guarantors of our obligations under the Credit Facility. The Credit Facility and the related guarantees are secured by liens on substantially all of our and the Credit Facility Guarantors' present and future assets.</font></div>
<div style="line-height: 11.4pt; text-indent: 0pt; display: block;"><br /></div>
<div style="line-height: 11.4pt; text-indent: 36pt; display: block; margin-left: 0pt; margin-right: 0pt;" align="justify"><font style="display: inline; font-family: 'Times New Roman', serif; font-size: 10pt;" class="_mt">The Credit Facility and The Notes include a number of customary covenants and events of default, including the maintenance of certain financial covenants that restrict our ability to, among other things, incur additional debt; make certain investments; pay dividends, repurchase stock, sell certain assets or merge with or into other companies; enter into new lines of business; and prepay, redeem or exchange our debt. The Credit Facility also includes the maintenance of the following financial covenants: (i) total leverage ratio and (ii) fixed charge coverage ratio as defined by the Credit Facility. We were in compliance with all applicable covenants as of June 30, 2010.</font></div></div> </div>
12. Debt Obligations
In the first quarter of 2010, we issued $300 of 7.875 percent notes due 2020 ("2020
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Information about short-term and long-term debt arrangements, which includes amounts of borrowings under each line of credit, note payable, commercial paper issue, bonds indenture, debenture issue, and any other contractual agreement to repay funds, and about the underlying arrangements, rationale for a classification as long-term, including repayment terms, interest rates, collateral provided, restrictions on use of assets and activities, whether or not in compliance with debt covenants, and other matters important to users of the financial statements, such as the effects of refinancing and noncompliance with debt covenants.
Reference 1: http://www.xbrl.org/2003/role/presentationRef
-Publisher SEC
-Name Regulation S-X (SX)
-Number 210
-Section 02
-Paragraph 19, 20, 22
-Article 5
Reference 2: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Statement of Financial Accounting Standard (FAS)
-Number 129
-Paragraph 2, 4
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