2. Terms of Employment.(a) Position and Duties.(i) During the Employment Period, (A) the Executive shall continue to serve as SeniorVice President, Solutia Inc. and President, CPFilms reporting directly to the Company’sChief Executive Officer, with such authority, duties andresponsibilities consistent with such position and as may be reasonably assigned to himfrom time to time by the Company’s Chief Executive Officer.(ii) During the Employment Period, the Executive shall serve the Company faithfully,diligently and to the best of his ability, and shall devote substantially all of his timeand efforts during normal business hours to the business and affairs of the Company. Duringthe Employment Period it shall not be a violation of this Agreement for the Executive to (A)deliver lectures, fulfill speaking engagements or teach at educational institutions, and (B)manage personal investments, so long as such activities described in clauses A and B do notinterfere with the performance of the Executive’s responsibilities as an employee of theCompany in accordance with this Agreement, and (C) with the advance approval of the Board,serve on corporate, civic or charitable boards or committees.(b) Compensation.(i) Base Salary. During the Employment Period, the Executive shall receive anannual base salary (“Annual Base Salary”) of not less than $333,000, which shall be paid inaccordance with the Company’s normal payroll practice. Thereafter, the Board or theExecutive Compensation and Development Committee of the Board (“ECDC”) shall review annuallyExecutive’s compensation and may elect to increase his Annual Base Salary.(ii) Annual Bonuses. In addition to Annual Base Salary, the Executive shallparticipate in the Company’s Annual Incentive Program, or any successor annual bonusplan(s), with a target annual bonus opportunity of not less than 100% of his Annual BaseSalary. In addition, during the Employment Period, the Executive shall be entitled toparticipate in all long-term and other incentive plans, practices, policies and programsgenerally applicable to senior executive officers of the Company and its affiliatedcompanies.(iii) Equity Compensation. During the Employment Period, the Executive shallhave the right to participate in an equity compensation arrangement to be established by theBoard or the ECDC of the Board and subject to such terms and conditions as will bedetermined by the Board in its sole discretion.(iv) Savings and Retirement Plans. During the Employment Period, the Executiveshall be entitled to participate in all savings and retirement plans, practices, policiesand programs generally applicable to senior executive officers of the Company and itsaffiliated companies, subject to the Board’s authority to modify or terminate any suchplans, practices, policies or programs on a Company-wide basis at any time.(v) Welfare Benefit Plans. During the Employment Period, the Executive and/orthe Executive’s family, as the case may be, shall be eligible for participation in and shallreceive all benefits under welfare benefit plans, practices, policies and programs providedby the Company and its affiliated companies (including, without limitation, medical,prescription drug, dental, disability, salary continuance,employee life, group life, accidental death and travel accident insurance plans andprograms) to the extent generally applicable to senior executive officers of the Company andits affiliated companies, subject to the Board’s authority to modify or terminate any suchplans, practices, policies or programs on a Company-wide basis at any time.
 
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(vi) Expenses. During the Employment Period, the Executive shall be entitledto receive prompt reimbursement, in accordance with Company policy, for all reasonableexpenses incurred by the Executive in performing his duties hereunder.(vii) Vacation. During the Employment Period, the Executive shall be entitledto paid vacation in accordance with the plans, policies, programs and practices of theCompany and its affiliated companies as in effect from time to time.3. Termination of Employment.(a) Death or Disability. The Executive’s employment shall terminate automaticallyupon the Executive’s death during the Employment Period. If the Company determines in good faiththat the Disability of the Executive has occurred during the Employment Period (pursuant to thedefinition of Disability set forth below), it may give to the Executive written notice inaccordance with Section 8(b) of this Agreement of its intention to terminate the Executive’semployment. In such event, the Executive’s employment with the Company shall terminate effectiveon the 30th day after receipt of such notice by the Executive (the “Disability Effective Date”),provided that, within the 30 days after such receipt, the Executive shall not have returned tofull-time performance of the Executive’s duties. For purposes of this Agreement, “Disability”shall mean the Executive’s long-term disability for purposes of any reasonable occupation asdetermined under the Company’s disability plan that is applicable to the Executive.(b) Cause. The Company may terminate the Executive’s employment during the EmploymentPeriod for Cause. For purposes of this Agreement, “Cause” shall mean:(i) the willful and continued failure of the Executive to perform substantially theExecutive’s duties with the Company or one of its affiliates (other than any such failureresulting from incapacity due to physical or mental illness), after a written demand forsubstantial performance is delivered to the Executive by the Board or the Chief ExecutiveOfficer of the Company which specifically identifies the manner in which the Board or theChief Executive Officer believes that the Executive has not substantially performed theExecutive’s duties;(ii) the willful engaging by the Executive in illegal conduct or gross misconduct whichis materially and demonstrably injurious to the Company;(iii) the Executive’s conviction of, or plea of guilty or no contest to, a felony orany other crime involving moral turpitude, fraud, theft, embezzlement or dishonesty; or(iv) the Executive’s habitual drug or alcohol abuse.
 
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For purposes of this provision, no act or failure to act, on the part of the Executive, shall beconsidered “willful” unless it is done, or omitted to be done, by the Executive in bad faith orwithout reasonable belief that the Executive’s action or omission was in the best interests of theCompany. Any act, or failure to act, based upon authority given pursuant to a resolution dulyadopted by the Board or upon the instructions of the Chief Executive Officer or based upon theadvice of counsel for the Company shall be conclusively presumed to be done, or omitted to be done,by the Executive in good faith and in the best interests of the Company. The cessation ofemployment of the Executive shall not be deemed to be for Cause unless and until there shall havebeen delivered to the Executive a copy of a resolution duly adopted by the affirmative vote of notless than a majority of the entire membership of the Board at a meeting of the Board called andheld for such purpose (after reasonable notice is provided to the Executive and the Executive isgiven an opportunity, together with counsel, in the case of conduct described in subparagraph (i)or (ii) above, to be heard before the Board), finding that, in the good faith opinion of the Board,the Executive is guilty of the conduct described in subparagraph (i),(ii), (iii) or (iv) above, andspecifying the particulars thereof in detail.(c) Good Reason. The Executive’s employment may be terminated by the Executive forGood Reason. For purposes of this Agreement, “Good Reason” shall mean:(i) a material failure by the Company to comply with any of the provisions of Section2(b) of this Agreement relating to compensation, other than an isolated, insubstantial andinadvertent failure not occurring in bad faith and which is remedied by the Company promptlyafter receipt of notice thereof given by the Executive;(ii) the assignment to the Executive of any duties inconsistent in any respect with theExecutive’s position as Senior Vice President, Solutia Inc. and President, CPFilms and theauthority, duties and responsibilities contemplated by Section 2(a) of this Agreement, orany other action by the Company, including a fundamental change to the nature and scope ofthe Company’s business, which results in a material diminution in such position, authority,duties or responsibilities, excluding for this purpose an isolated, insubstantial andinadvertent action not taken in bad faith and which is remedied by the Company promptlyafter receipt of notice thereof given by the Executive; or(iii) Executive’s receipt of the Company’s written notice not to renew the Agreement orthe failure of the Company and the Executive to enter into a new employment agreement by nolater than the last day of the Employment Period.If the Executive terminates his employment for Good Reason pursuant to subparagraph (ii) above as aresult of a sale by the Company of substantially all of its assets, then the Executive shall makehimself available to the Company as a paid independent consultant for such fee, at such times, oversuch period of time and for such number of hours as the parties shall reasonably agree, takingaccount of any new employment that the Executive may undertake.
 
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(d) Notice of Termination. Any termination by the Company for Cause, or by theExecutive for Good Reason, shall be communicated by Notice of Termination to the other party heretogiven in accordance with Section 8(b) of this Agreement. For purposes of thisAgreement, a “Notice of Termination” means a written notice which (i) indicates the specifictermination provision in this Agreement relied upon, (ii) to the extent applicable, sets forth inreasonable detail the facts and circumstances claimed to provide a basis for termination of theExecutive’s employment under the provision so indicated and (iii) if the Date of Termination (asdefined below) is other than the date of receipt of such notice, specifies the termination date(which date shall be not more than thirty days after the giving of such notice). The failure bythe Executive or the Company to set forth in the Notice of Termination any fact or circumstancewhich contributes to a showing of Good Reason or Cause shall not waive any right of the Executiveor the Company, respectively, hereunder or preclude the Executive or the Company, respectively,from asserting such fact or circumstance in enforcing the Executive’s or the Company’s rightshereunder.(e) Date of Termination. “Date of Termination” means (i) if the Executive’semployment is terminated by the Company for Cause, or by the Executive for Good Reason, the date ofreceipt of the Notice of Termination or any later date specified therein, as the case may be, (ii)if the Executive’s employment is terminated by the Company other than for Cause or Disability, theDate of Termination shall be the date on which the Company notifies the Executive of suchtermination and (iii) if the Executive’s employment is terminated by reason of death or Disability,the Date of Termination shall be the date of death of the Executive or the Disability EffectiveDate, as the case may be.4. Obligations of the Company upon Termination.(a) Good Reason; Other Than for Cause. Except as provided in Section 4(b) below, if,during the Employment Period, the Company shall terminate the Executive’s employment other than forCause or the Executive shall terminate employment for Good Reason:(i) the Company shall pay to the Executive in a lump sum in cash within ten days of theDate of Termination, or, with respect to the payments described in Sections 4(a)(i)(B) and(C), such other time described in Section 8(g), the aggregate of the following amounts:A. the sum of (1) the Executive’s accrued Annual Base Salary through the Dateof Termination, (2) any unpaid annual bonus earned by the Executive with respect tothe previous year, and (3) any accrued vacation pay, in each case to the extent nottheretofore paid (the sum of the amounts described in clauses (1), (2) and (3) shallbe hereinafter referred to as the “Accrued Obligations”); andB. an amount equal to the average annualized payment the Executive received forthe 3 years (or such shorter period during which the Executive has served as aSenior Vice President of the Company) immediately preceding the Date of Terminationunder the Company’s Annual Incentive Program, multiplied by the number of days thathave transpired during that fiscal year immediately prior to the Date ofTermination, divided by 365; and
 
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C. an amount equal to 200% of the sum of (i) the Executive’s Annual Base Salaryimmediately prior to the Date of Termination and (ii) the average annualized paymentthe Executive received for the 3 years (or such shorter period during which theExecutive has served as a Senior Vice President of the Company) immediatelypreceding the Date of Termination under the Company’s Annual Incentive Program (the“Severance Payment”).(ii) subject to the provisions of Section 8(g) hereof, to the extent not theretoforepaid or provided, the Company shall timely pay or provide to the Executive any other amountsor benefits, excluding any severance or separation pay or benefits, required to be paid orprovided or which the Executive is eligible to receive under any plan, program, policy,practice, contract or agreement of the Company and its affiliated companies, including,without limitation, the vested benefit, if any, of the Executive under any qualified definedbenefit or defined contribution retirement plan of the Company and its affiliated companiesin which the Executive participates, in accordance with the terms of such plan (such otheramounts and benefits shall be hereinafter referred to as the “Other Benefits”);(iii) the Company shall continue to provide at its expense (on the same basis as at theExecutive’s Date of Termination) for the continued participation of the Executive and, tothe extent applicable, his family, in the Company’s medical, dental, vision and lifeinsurance plans and programs, for a period of four months commencing with the Date ofTermination; and(iv) upon request of the Executive, the Company shall provide outplacement services tothe Executive for up to twelve months and up to an aggregate cost of $25,000.(b) Change in Control. If the Company shall terminate the Executive’s employmentother than for Cause or the Executive shall terminate employment for Good Reason upon a Change inControl (pursuant to the definition of Change in Control set forth below) or at any time within 24months after the Change in Control, then the Executive shall be entitled to receive (1) all amountsas provided for in Section 4(a) hereof, provided, however, that the Severance Payment under thisSection 4(b) will be an amount equal to 250% of the sum of (i) the Executive’s Annual Base Salaryimmediately prior to the Date of Termination and (ii) the average annualized payment the Executivereceived for the 3 most recent years under the Company’s Annual Incentive Program (or such shorterperiod during which the Executive has served as a Senior Vice President of the Company), and (2)immediate vesting of all outstanding equity awards granted pursuant to the Company’s equitycompensation plan as may be in effect from time to time.
 
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(i) For purposes of this Agreement, “Change in Control” shall be deemed to haveoccurred if:A. Any “person” (as such term is used in Sections 13(d) and 14(d) of theExchange Act) is or becomes a “beneficial owner” (as defined in Rule 13d-3 under theExchange Act), directly or indirectly, of securities of theCompany representing more than 50% of the voting power of the then outstandingsecurities of the Company, and such person owns more aggregate voting power of theCompany’s then outstanding securities entitled to vote generally in the election ofdirectors than any other person;B. The shareholders of the Company approve (or, if shareholder approval is notrequired, the Board approves) an agreement providing for (x) the merger orconsolidation of the Company with another corporation where the shareholders of theCompany, immediately prior to the merger or consolidation, will not beneficiallyown, immediately after the merger or consolidation, shares entitling suchshareholders to 50% or more of all votes to which all shareholders of the survivingcorporation would be entitled in the election of directors (without consideration ofthe rights of any class of stock to elect directors by a separate class vote), (y)the sale or other disposition of 50% or more of the Company’s assets that it owns asof the Effective Date of this Agreement, or (z) a liquidation or dissolution of theCompany; provided, however, the effectiveness of a plan of reorganization pursuantto which a majority of the common stock of the reorganized Company is distributed(i) to Persons who are (a) holders of claims against the Company; (b) holders ofequity interests in the Company; and/or (c) designated in the Company’s plan ofreorganization proposal dated December 8, 2006, to receive common stock of thereorganized Company; or (ii) to or for the benefit of Company management, shall notconstitute a “Change in Control”; orC. Directors are elected such that a majority of the members of the Board shallhave been members of the Board for less than two years, unless the election ornomination for election of each new director who was not a director at the beginningof such two-year period was approved by a vote of at least two-thirds of thedirectors then still in office who were directors at the beginning of such period.(c) Death. If the Executive’s employment is terminated by reason of the Executive’sdeath during the Employment Period, this Agreement shall terminate without further obligations tothe Executive’s legal representatives under this Agreement, other than for timely payment orprovision of the following:(i) Accrued Obligations; and(ii) Other Benefits.Accrued Obligations shall be paid to the Executive’s estate or beneficiary, as applicable, in alump sum in cash within 30 days of the Date of Termination.
 
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(d) Disability. If the Executive’s employment is terminated by reason of theExecutive’s Disability during the Employment Period, this Agreement shall terminate without furtherobligations to the Executive, other than for timely payment or provision of the following:(i) Accrued Obligations; and(ii) Other Benefits.Accrued Obligations shall be paid to the Executive in a lump sum in cash within 30 days of the Dateof Termination.(e) Cause. If the Executive’s employment shall be terminated for Cause during theEmployment Period this Agreement shall terminate without further obligations to the Executive,other than for Accrued Obligations and the timely payment or provision of Other Benefits. In suchcase, all Accrued Obligations shall be paid to the Executive in a lump sum in cash within 30 daysof the Date of Termination.(f) Other than for Good Reason. If the Executive shall voluntarily terminateemployment, excluding a termination for Good Reason, he shall receive the Accrued Obligations paidin a lump sum in cash within 10 days of the Date of Termination. In such case, the Executive shallalso receive timely payment or provision of Other Benefits.5. Full Settlement; Legal Fees. The Company’s obligation to make the paymentsprovided for in this Agreement and otherwise to perform its obligations hereunder shall not beaffected by any set-off, counterclaim, recoupment, defense or other claim, right or action whichthe Company may have against the Executive or others. In no event shall the Executive be obligatedto seek other employment or take any other action by way of mitigation of the amounts payable tothe Executive under any of the provisions of this Agreement, and such amounts shall not be reducedwhether or not the Executive obtains other employment. The Company agrees to pay, to the fullextent permitted by law, all legal fees and expenses which the Executive may reasonably incur as aresult of any contest, by the Company, the Executive or others of the validity or enforceabilityof, or liability under, any provision of this Agreement or any guarantee of performance thereof(whether such contest is between the Company and the Executive or between either of them and anythird party, and including as a result of any contest by the Executive about the amount of anypayment pursuant to this Agreement). The Company shall make payment of such reimbursements fromtime to time, but in no event later than the last day of the calendar year following the calendaryear in which such expenses are incurred, provided the Executive timely submits reasonabledocumentation of such expenses. In the event the Executive is not the prevailing party in any suchcontest, the Executive shall pay back any reimbursements made by the Company hereunder within 30days of final disposition of such contest.6. Confidential Information and Competitive Activity.(a) Confidential Information. As used herein, “Confidential Information” means alltechnical and business information of the Company and its affiliated companies, whether patentableor not, which is of a confidential, trade secret and/or proprietary character and which is eitherdeveloped by the Executive (alone or with others) or to which the Executive has had access duringthe Executive’s employment. “Confidential Information” shall also include confidential evaluationsof, and the confidential use or non-use by the Company or any affiliated company of, technical orbusiness information in the public domain.
 
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The Executive shall use the Executive’s best efforts and diligence both during and afteremployment by the Company to protect the confidential, trade secret and/or proprietary character ofall Confidential Information. The Executive shall not, directly or indirectly, use (for theExecutive or another) or disclose any Confidential Information, for so long as it shall remainproprietary or protectible as confidential or trade secret information, except as may be necessaryfor the performance of the Executive’s duties with the Company.The Executive shall deliver promptly to the Company, at the termination of the Executive’semployment, or at any other time at the Company’s request, without retaining any copies, alldocuments and other material in the Executive’s possession relating, directly or indirectly, to anyConfidential Information.Each of the Executive’s obligations in this Section shall also apply to the confidential,trade secret and proprietary information learned or acquired by the Executive during theExecutive’s employment from others with whom the Company or any affiliated company has a businessrelationship.The Executive understands that the Executive is not to disclose to the Company or anyaffiliated company, or use for its benefit, any of the confidential, trade secret or proprietaryinformation of others, including any of the Executive’s former employers.(b) Covenant Not to Compete.(i) Definitions. For purposes of this Section, in addition to terms defined elsewhereherein, the following capitalized terms have the following meanings. (A) “Affiliate” means: (i) any Person which, directly orindirectly, is in control of, is controlled by or is under common control withthe party for whom an affiliate is being determined; (ii) any Person who is adirector or officer of any Person described in clause (i) above or of the partyfor whom an affiliate is being determined; or (iii) any partner (general orlimited), trustee, beneficiary, spouse, child or sibling of any Persondescribed in clause (i) above or of the party for whom an affiliate is beingdetermined. For purposes hereof, control of a Person means the power, director indirect, to: (x) vote 5% or more of the securities having ordinary votingpower for the election of directors (or comparable positions) of such Person;or (y) direct or cause the direction of the management and policies of suchPerson, whether by contract or otherwise and either alone or in conjunctionwith others.  (B) “Business” means any business in which CPF is currentlyengaged, including, but not limited to, the business of designing,manufacturing and selling window film, precision coated films, tint or shadingproducts and related services and any other businesses which CPF may engage inor substantially contemplate engaging in through formal evaluation or studyduring the Employment Period.
 
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 (C) “Person” means any natural person, corporation, limitedpartnership, general partnership, joint venture, association, company, trust,joint stock company, bank, trust company, land trust, vehicle trust, businesstrust, real estate investment trust, estate, limited liability company, limitedliability partnership or other organization irrespective of whether it is alegal entity, and any governmental authority.  (D) “Non-Compete Term” means the Employment Period for solong as it is in effect and regardless of the reason it ends and the two (2)year period thereafter.(ii) Restrictions on Competition. Except on behalf of or as directed by the Company,Executive shall not, during the Non-Compete Term, directly or indirectly, anywhere in the world:(i) engage in the Business; (ii) engage in any business which is in competition with CPF; (iii)invest in any Person which is engaged in the Business or is engaged in any business which is incompetition with CPF; (iv) be employed by or provide consulting services to any Person engaged inthe Business or engaged in any business which is in competition with CPF; or (v) solicit, attemptto solicit, call upon, or otherwise accept for his own benefit or for the benefit of any otherPerson, any client or customer of CPF or in any way attempt to divert business from CPF(or itsrespective Affiliates, successors and assigns); or (vi) attempt to interfere with CPF’srelationship with any of its customers.(c) Non-Solicitation of Employees. Executive agrees that, so long as he is employedby the Company and for a period of two (2) years after the termination of his employment for anyreason whatsoever (regardless of which party terminates the employment relationship), he shall not,without the prior written approval of the Company (which approval may be granted or withheld in theCompany’s sole discretion), either individually or through an Affiliate, anywhere in the world,solicit, recruit, hire, attempt to hire, interfere with or otherwise accept services from anyemployee or independent contractor engaged by CPF within the preceding twelve (12) months or induceany employee or independent contractor engaged by CPF within the preceding twelve (12) months toterminate their relationship with CPF. This restriction is intended to protect CPF confidentialbusiness information, trade secrets, customer relationships, supply relationships, goodwill andloyalty.(d) Permitted Investments. Anything herein to the contrary notwithstanding, aninvestment by Executive in publicly traded stock of a Person which is engaged in the Business or isengaged in any business which is in competition with CPF shall not violate Section 7(b)(ii) hereofprovided that Executive and all Affiliates of Executive own, in the aggregate, less than 2% of allthe issued and outstanding stock of such Person.(e) Restrictions, Reasonable Review. Executive hereby agrees that the restrictionsset forth in this Section 7 are an integral aspect of this Agreement and are reasonable andnecessary and, accordingly, that the Company (and their respective Affiliates, successors andassigns) shall be entitled to injunctive relief, from a court having jurisdiction with respect tothe matter, for the purpose of restraining Executive and any Person in which Executive has aninterest (as described in Section 7(b)(ii) hereof) from any actual or threatened breach of therestrictions set forth in this Section 7 and to any other appropriate relief. If any court ofcompetent jurisdiction or arbitrator determines that the time period, activities covered orthe geographical scope referenced in this Section 7 is unreasonable or otherwise in contraventionof the law, such restrictions shall not be determined to be null and void and of no effect, butshall be reformed by the court or arbitrator to impose a reasonable time period, activities coveredor geographical scope, as the case may be.
 
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(f) Specific Performance and Injunctive Relief. Executive recognizes that, if heshall fail to perform, observe or discharge any of his obligations under this Section 7, no remedyat law will provide adequate relief to the Company. Therefore, the Company is hereby authorized todemand specific performance of this Section 7, and shall be entitled to temporary and permanentinjunctive relief, in a court of competent jurisdiction at any time when Executive shall fail tocomply with any of the provisions of this Section 7 applicable to him.(g) Acknowledgments. Executive hereby acknowledges and agrees that CPF’s Business isworldwide in scope and activity and that the Company has a protectable business interest in itscustomer relationships and stock in trade throughout the world.(h) Blue Pencil. If, at any time, the provisions of this Section 7 shall bedetermined to be invalid or unenforceable under any applicable law, by reason of being vague orunreasonable as to area, duration or scope of activity, this Agreement shall be considereddivisible and shall become and be immediately amended to only such area, duration and scope ofactivity as shall be determined to be reasonable and enforceable by the court or other body havingjurisdiction over the matter and the Executive and the Company agree that this Agreement as amendedshall be valid and binding as though any invalid or unenforceable provision had not been includedherein.7. Successors.(a) This Agreement is personal to the Executive and without the prior written consent of theCompany shall not be assignable by the Executive otherwise than by will or the laws of descent anddistribution. This Agreement shall inure to the benefit of and be enforceable by the Executive’slegal representatives.(b) This Agreement shall inure to the benefit of and be binding upon the Company and itssuccessors and assigns.8. Miscellaneous.(a) This Agreement shall be governed by and construed in accordance with the laws of the Stateof Delaware, without reference to principles of conflict of laws. The captions of this Agreementare not part of the provisions hereof and shall have no force or effect. This Agreement may not beamended or modified otherwise than by a written agreement executed by the parties hereto or theirrespective successors and legal representatives.
 
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(b) All notices and other communications hereunder shall be in writing and shall be given byhand delivery to the other party or by registered or certified mail, return receipt requested,postage prepaid, addressed as follows:If to the Executive:Kent J. Davies