Exhibit 10.4

 

EXECUTION COPY

 

AMENDMENT TO THE

 

EMPLOYMENT AGREEMENT

 

BETWEEN

 

SPECIALIZED TECHNOLOGY RESOURCES, INC.

 

AND

 

DENNIS L. JILOT

 

This Amendment (the “Amendment”) to that certain Employment Agreement (the
“Agreement”) by and between Specialized Technology Resources, Inc., a Delaware
corporation (together with any successor thereto, the “Company”) and Dennis L.
Jilot (the “Executive”), dated as of July 18, 2008, is made as of the date
hereof by and between the Company and the Executive.

 

RECITALS

 

WHEREAS, the Company and the Executive entered into the Agreement as of July 18,
2008;

 

WHEREAS, Section 14 of the Agreement permits the Company and the Executive to
amend or supplement the Agreement by a writing signed by a duly authorized
officer of the Company and the Executive; and

 

WHEREAS, the Company and the Executive wish to amend the Agreement with respect
to the contemplated issuance of restricted shares of STR Holdings LLC, a
Delaware limited liability company (together with any successor thereto,
“Parent”), pursuant to Section 6 of the Agreement.

 

AGREEMENT

 

In consideration of the mutual promises, covenants and conditions hereinafter
set forth, the Company and the Executive agree to amend the Agreement as
follows:

 

1.             All capitalized terms not defined herein shall have the meaning
ascribed to them in the Agreement.

 

2.             Section 6 of the Agreement is hereby amended and restated in its
entirety with the following:

 

“6.           Restricted Stock; Phantom Units.

 

(a)           In General.  Upon the occurrence of an initial public offering or,
if earlier, the conversion of Parent to an entity treated as a corporation for
federal income tax purposes (a “Conversion”), the Company intends to issue to
the Executive a number of restricted shares of Parent having an aggregate fair
market value (at the initial public offering price or, in the case of a
Conversion, at a price determined in good faith by the Board) equal to the fair
market value at the date of the initial public offering or Conversion of 223,464
Class A Units of Parent (the “Restricted Shares”); provided, however, should
neither an initial public offering nor a Conversion occur by December 31, 2009,
the Company intends to issue to the Executive 223,464 phantom Class A Units of
Parent (such phantom Class A Units of Parent, the “Phantom Units”).  In the
event the

 

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Restricted Shares are issued to the Executive, the Executive shall have the
option to make an election under Section 83(b) of the Internal Revenue Code of
1986, as amended (“Code” and such an election, an “83(b) Election”), to include
the fair market value of the Restricted Shares in his current taxable income as
of the date of issuance, and Parent agrees to reasonably cooperate with the
Executive if he chooses to make this election.  The Restricted Shares or Phantom
Units, as the case may be, shall be subject to any terms and conditions
reasonably determined by the Board of Directors of the Company or the
compensation committee of the Board of Directors of the Company and shall
entitle the Executive to receive the value of the Class A Units underlying the
Phantom Units (or the equity interests into which such Class A Units have
converted) payable by the Company to the Executive, in cash or in equity of
Parent or the Company (or either of their successors), at the earliest of
(a) July 18, 2012, (b) a Change of Control and (c) the Executive’s termination
by the Company without Cause or by the Executive for Good Reason (including by
reason of the Executive’s death or Disability) (such earliest date, the “Payment
Date”); provided, that in the event that Executive is determined by the Company
to be a “specified employee” (as defined in Code Section 409A(2)(B) and
determined in accordance with Code Section 416(i) (without regard to paragraph
(5) thereof)) of the Company at a time when its stock is deemed to be publicly
traded on an established securities market, any payments determined to be
“nonqualified deferred compensation” payable following termination of employment
shall be made no earlier than the earlier of (i) the last day of the sixth (6th)
complete calendar month following such termination of employment, or
(ii) Executive’s death, consistent with the provisions of Code Section 409A. 
Any payment delayed by reason of the prior sentence shall be paid out in a
single lump sum at the end of such required delay period in order to catch up to
the original payment schedule.  The Restricted Shares or Phantom Units, as the
case may be, shall vest in equal 1/60th installments as of the last day of each
of the 60 successive calendar months beginning after April 2009, which, for the
sake of clarity, means that the first vesting date for such Restricted Shares or
Phantom Units will be May 31, 2009; provided, however, if the Executive is still
actively employed in his current capacity as Chairman, President and Chief
Executive Officer of the Company as of July 18, 2012, the remaining unvested
Restricted Shares or Phantom Units, as the case may be, shall become immediately
vested; provided, further that if Executive’s employment is terminated by the
Company for Cause or by the Executive without Good Reason, Executive shall
immediately forfeit any Restricted Shares or Phantom Units that remain unvested
as of the date of such termination.  In the event of a Change of Control or in
the event the Executive’s employment is terminated by the Company without Cause
or by the Executive for Good Reason (including by reason of the Executive’s
death or Disability) whether prior to or after the issuance date of the
Restricted Shares or Phantom Units, as the case may be, the Restricted Shares or
Phantom Units, as the case may be, to the extent they then remain unvested,
shall become immediately and fully vested and payable in accordance with the
terms of this Section 6(a).  A “Change of Control” shall mean (i) the sale (in
one transaction or a series of transactions) of all or substantially all of the
assets of the Company to a third party; (ii) a sale or issuance (in one
transaction or a series of transactions) of any securities resulting in more
than 50% of the voting power of the Company being held, directly or indirectly,
by a “person” or “group” (as such terms are used in the Exchange Act) that does
not include any of the then existing shareholders of the Company or any of their
respective Affiliates; or (iii) a merger or consolidation of the Company with or
into another Person if following such merger or consolidation, more than 50% of
the voting power of the Company is held, directly or indirectly, by a “person”
or “group” (as such terms are used in the Exchange Act) that does not include
any of the then existing shareholders of the Company or any of their respective
Affiliates;

 

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provided, however, notwithstanding the foregoing provisions of this Paragraph
6(a) or anything in this Agreement to the contrary, the definition of “Change of
Control” herein shall in all instances comply with Treasury Regulation Section
1.409A-3(a)(5).

 

(b)           Gross-Up.  In the event the Phantom Units are issued to the
Executive, upon the payment by the Company of the amounts described in
Section 6(a) above, the Company shall pay to the Executive an amount in cash to
compensate the Executive for the difference between the federal income taxes
payable with respect to amounts received pursuant to Section 6(a) above and the
federal income taxes that would have been payable by the Executive were the
Executive to have (i) been issued Restricted Shares on April 1, 2009, (ii) made
an 83(b) Election with respect to his receipt of such Restricted Shares and
(iii) to have sold such Restricted Shares on the Payment Date for an amount
equal to the amount payable pursuant to Section 6(a).  Any payment made by the
Company to the Executive pursuant to this Section 6(b) shall be made no later
than the end of the taxable year of the Executive following the taxable year in
which the Executive remits such taxes.

 

3.             All other provisions of the Agreement not specifically amended by
this Amendment shall remain in full force and effect.  This Amendment shall
become automatically effective upon the execution of this Amendment by the
Company and the Executive.

 

4.             This Amendment shall be construed in accordance with and governed
by the laws of the State of Nevada, without giving effect to the provisions,
policies or principles thereof relating to choice or conflict of laws.

 

5.             This Amendment may be executed in counterparts and by facsimile
signature, each of which shall be deemed an original, but all of which together
shall constitute one instrument.

 

[Signature Page Follows]

 

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IN WITNESS WHEREOF, the parties have executed this Amendment as of the date
first written above.

 

 

 

/s/ Dennis L. Jilot

 

Dennis L. Jilot

 

 

 

 

 

SPECIALIZED TECHNOLOGY RESOURCES, INC.

 

 

 

 

 

By:

/s/ Barry A. Morris

 

Name: Barry A. Morris

 

Title:   Executive Vice President and Chief Financial Officer

 

SIGNATURE PAGE TO AMENDMENT (D. JILOT EMPLOYMENT AGMT)

 

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