EXHIBIT 10.1

 

EXECUTION COPY

 

EMPLOYMENT AGREEMENT

 

This Employment Agreement (the “Agreement”), dated as of April 12, 2010, is made
by and between SPECIALIZED TECHNOLOGY RESOURCES, INC., a Delaware corporation
(together with any successor thereto, the “Company”), and ALAN N. FORMAN, of New
Rochelle, New York (the “Executive”).

 

Recitals

 

A.                                   The Company desires to engage the Executive
to perform services under the terms hereof and the Executive desires to be
employed by the Company.

 

B.                                     The Company desires to be assured that
the unique and expert services of the Executive will be substantially available
to the Company, and that the Executive is willing and able to render such
services on the terms hereinafter set forth.

 

C.                                     The Company desires to be assured that
the confidential information and goodwill of the Company will be preserved for
the exclusive benefit of the Company.

 

Terms

 

In consideration of such employment and the respective agreements of the parties
set forth below, and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereby agree as
follows:

 

1.                                      Certain Definitions

 

(a)                                  “Annual Base Salary” shall have the meaning
set forth in Section 3(a).

 

(b)                                 “Annual Bonus” shall have the meaning set
forth in Section 3(b).

 

(c)                                  “Board” shall mean the Board of Directors
of Parent.

 

(d)                                 The Company shall have “Cause” to terminate
the Executive’s employment hereunder upon:  (i) the Executive’s breach of
Section 2(c) (other than any such failure resulting from the Executive’s
Disability), which is not remedied within 30 days after receipt by the Executive
of written notice from the Company specifying such failure in reasonable detail
or the Executive’s breach of Section 21; (ii) the Executive’s failure or refusal
to follow the reasonable instructions of the Board or the board of directors of
any Subsidiary of the Company, which failure or refusal is not cured within 30
days following written notice; (iii) the Executive’s conviction of a felony or
of a misdemeanor if such misdemeanor involves moral turpitude or
misrepresentation, including a plea of guilty or nolo contendere; (iv) the
Executive’s unlawful use (including being under the influence) or possession of
illegal drugs on the Company’s or any of its Subsidiaries’ premises; (v) the
Executive’s commission of any act of fraud, embezzlement, misappropriation of
funds, material misrepresentation, breach of fiduciary duty or other act of
dishonesty detrimental to the Company or any of its Subsidiaries; or (vi) the
Executive’s intentional wrongful act or gross negligence that has a material
detrimental effect on the Company or its Subsidiaries.

 

(e)                                  “Company” shall have the meaning set forth
in the preamble hereto.

 

(f)                                    “Date of Termination” shall mean (i) if
the Executive’s employment is terminated by his death, the date of his death;
(ii) if the Executive’s employment is terminated due to his Disability, the date
determined pursuant to Section 4(a)(ii); (iii) if the Executive’s employment is
terminated pursuant to Section 4(a)(iii)-(vi) either the date indicated in the
Notice of Termination or any earlier date specified by the

 

--------------------------------------------------------------------------------

 

Company pursuant to Section 4(b); or (iv) if the Executive’s employment is
terminated pursuant to Section 4(a)(vii) the date on which the Term expires.

 

(g)                                 “Disability” shall mean any physical or
mental illness, injury or infirmity which prevents the Executive from performing
the Executive’s job functions for a period of (i) one hundred twenty consecutive
calendar days or (ii) an aggregate of one hundred eighty calendar days out of
any consecutive twelve month period.  Any determination of disability shall be
made by the Board in consultation with a qualified physician or physicians
selected by the Board and reasonably acceptable to the Executive.  The failure
of the Executive to submit to a reasonable examination by such physician or
physicians shall act as an estoppel to any objection by the Executive to the
determination of disability by the Board.

 

(h)                                 “Effective Date” shall have the meaning set
forth in Section 2(b).

 

(i)                                     “Executive” shall have the meaning set
forth in the preamble hereto.

 

(j)                                     The Executive shall have “Good Reason”
to resign his employment upon the occurrence (without the Executive’s prior
written consent) of any of the following:  (A) a material diminution in the
nature or scope of the Executive’s responsibilities, duties or authority in his
capacity as Vice President and General Counsel, without regard to any other
responsibilities, duties or authority the Executive may have had or performed
for the Company at any time; (B) the Company’s material breach of this
Agreement; (C) any change in the Executive’s reporting relationship so that he
no longer reports to the Chief Executive Officer; (D) a relocation of the
Executive’s place of employment to a location more than thirty miles by road
from Enfield, Connecticut; or (E) any decrease in the Executive’s Annual Base
Salary, target bonus percentage as set forth in Section 3(a), or benefit plans,
programs and arrangements as in effect from time to time (other than a general
reduction in base salary, target bonus percentages or benefit plans, programs
and arrangements that affects all members of senior management equally);
provided, however, that the Executive may not resign his employment for Good
Reason unless:  (x) the Executive provided the Company with at least 30 days
prior written notice of his intent to resign for Good Reason (which notice must
be provided within 45 days following (i) the occurrence of the
event(s) purported to constitute Good Reason, or (ii) if the Executive could not
reasonably have known of the occurrence of any of such events, the date on which
the Executive had actual knowledge of the occurrence of any of such events); and
(y) the Company has not remedied the alleged occurrence(s) within the 30-day
period following its receipt of such notice from the Executive.

 

(k)                                  “Notice of Termination” shall have the
meaning set forth in Section 4(b).

 

(l)                                     “Parent” means STR Holdings, Inc., a
Delaware corporation.

 

(m)                               “Term” shall have the meaning set forth in
Section 2(b).

 

2.                                      Employment

 

(a)                                  In General.  The Company shall employ the
Executive and the Executive shall enter the employ of the Company, for the
period set forth in Section 2(b), in the position set forth in Section 2(c), and
upon the other terms and conditions herein provided.

 

(b)                                 Term of Employment.  The initial term of
employment under this Agreement (the “Initial Term”) shall be for the period
beginning on May 3, 2010 (the “Effective Date”) and ending on the third
anniversary thereof, unless earlier terminated as provided in Section 4.  The
employment term hereunder shall automatically be extended for successive
one-year periods (“Extension Terms” and, collectively with the Initial Term, the
“Term”) unless either party gives written notice of non-extension to the other
no later than 90 days prior to the expiration of the then applicable Term.

 

(c)                                  Position and Duties.  The Executive shall
serve as Vice President and General Counsel of the Company and the Parent, with
responsibilities, duties and authority customary for such position, subject to

 

2

--------------------------------------------------------------------------------

 

direction by the Chief Executive Officer.  The Executive shall report to the
Chief Executive Officer.  The Executive shall devote substantially all his
working time and efforts to the business and affairs of the Company and its
subsidiaries.  The Executive agrees to observe and comply with the Company’s
rules and policies as adopted by the Company from time to time.  During the
Term, it shall not be a violation of this Agreement for the Executive to
(i) serve on industry trade, civic or charitable boards or committees;
(ii) deliver lectures or fulfill speaking engagements; or (iii) manage personal
investments (which shall include (x) investments by the Executive of his
personal assets in any business which does not compete directly or indirectly
with the Company, in such form or manner as will not require any services on the
part of the Executive in the operation of such business and (y) the purchase by
the Executive of a total of up to 1% of the regularly traded securities of any
entity, whether or not it competes with the Company), as long as, in the
reasonable judgment of the Chief Executive Officer of the Company, such
activities do not and will not interfere with the performance of the Executive’s
duties and responsibilities as an employee of the Company.   The Executive shall
perform his duties hereunder at the Company’s corporate headquarters in Enfield,
Connecticut, provided, however, that, for as long as the Executive resides in
New Rochelle, New York, the Executive may work from his residence one day each
week; and shall travel as necessary or as reasonably requested by the Chief
Executive Officer of the Company.

 

3.                                      Compensation and Related Matters

 

(a)                                  Annual Base Salary.  During the Term, the
Executive shall receive a base salary at a rate of $235,000.00 per annum, which
shall be paid in accordance with the customary payroll practices of the Company,
subject to increase as determined by the Board in its sole discretion (the
“Annual Base Salary”).  The Executive’s Annual Base Salary will be reviewed
annually by the Board and the Board may, in its sole discretion, increase the
Annual Base Salary considering the Executive’s performance and that of the
Company.

 

(b)                                 Bonus Compensation; Equity Incentives.

 

(i)                                     In addition to the Annual Base Salary,
for each fiscal year, or portion thereof, during the Term, the Executive shall
be eligible to participate in the Company’s management incentive plan (or any
successor incentive plan adopted by the Board) pursuant to which Executive may
be paid a target amount of 35% of his Annual Base Salary except as the parties
may have agreed otherwise in writing (the “Annual Bonus”).  The Annual Bonus
will be based upon performance measured against goals established by the Chief
Executive Officer and the Board.  Any Annual Bonus otherwise payable for the
2010 fiscal year, shall be pro-rated for the portion of the 2010 fiscal year in
which the Executive is employed following the Effective Date.

 

(ii)                                  In the discretion of management, Executive
shall be eligible to receive awards pursuant to the terms of the STR
Holdings, Inc. 2009 Equity Incentive Plan (the “Equity Incentive Plan”).

 

(iii)                               On the Effective Date, Executive shall
receive a signing bonus in an amount equal to $100,000 (the “Signing Bonus”);
provided, however, should Executive’s employment be terminated within one year
after the Effective Date either by the Company for Cause or by the Executive
without Good Reason, Executive shall reimburse the Company in an amount equal to
the Signing Bonus.

 

(c)                                  Benefits.  The Executive shall be entitled
to participate in employee benefit plans, programs and arrangements of the
Company now (or, to the extent determined by the Board, hereafter) in effect
which are applicable to the senior management of the Company.

 

(d)                                 Vacation.  During the Term, the Executive
shall be entitled to three weeks paid vacation each calendar year.  Any vacation
shall be taken at the reasonable and mutual convenience of the Company and the
Executive.

 

(e)                                  Expenses.  The Company shall promptly
reimburse the Executive for all reasonable travel and other business expenses
incurred by him in the performance of his duties to the Company in accordance
with the Company’s applicable expense reimbursement policies and procedures. 
Travel expenses between the Executive’s

 

3

--------------------------------------------------------------------------------

 

residence and the Company’s corporate headquarters in Enfield, Connecticut and
Executive’s lodging, non-business meals and other living expenses incurred while
performing his duties in Enfield, Connecticut shall be deemed personal and not
business expenses.  Membership fees for applicable bar associations, required
continuing legal education and other professional fees or costs approved by the
Chief Executive Officer shall be deemed business expenses.

 

(f)                                    Equity Grant.         On the Effective
Date, and pursuant to the terms and subject to the conditions set forth in the
award agreement between Parent and the Executive and the Equity Incentive Plan,
Executive shall be granted options to purchase 125,000 shares of Parent common
stock at an exercise price equal to the fair market value of a share of Parent
common stock as of the date of grant.  These options shall vest in 48 equal
monthly installments as of the last day of each of the successive 48 months
after May 2010, beginning with the last day of June 2010, subject to the Equity
Incentive Plan and the award agreement, and shall be Incentive Stock Options as
defined in, and to the extent permitted by, the Equity Incentive Plan and
Section 422 of the Internal Revenue Code of 1986, as amended (the “Code”), and,
to the extent not so permitted, shall be Nonqualified Stock Options, as defined
in the Equity Incentive Plan.

 

4.                                      Termination.  The Executive’s employment
hereunder may be terminated by the Company or the Executive, as applicable,
without any breach of this Agreement only under the following circumstances:

 

(a)                                  Circumstances

 

(i)                                     Death.  The Executive’s employment
hereunder shall terminate upon his death.

 

(ii)                                  Disability.  If the Executive incurs a
Disability, the Company may give the Executive written notice of its intention
to terminate the Executive’s employment.  In that event, the Executive’s
employment with the Company shall terminate effective on the later of the 30th
day after receipt of such notice by the Executive or the date specified in such
notice, provided that within the 30 days after such receipt, the Executive shall
not have returned to full-time performance of his duties.

 

(iii)                               Termination for Cause.  The Company may
terminate the Executive’s employment for Cause.

 

(iv)                              Termination without Cause.  The Company may
terminate the Executive’s employment without Cause.

 

(v)                                 Resignation for Good Reason.  The Executive
may resign his employment for Good Reason.

 

(vi)                              Resignation without Good Reason.  The
Executive may resign his employment without Good Reason.

 

(vii)                           Non-renewal.  Either party may notify the other
of his or its intent not to renew this Agreement at least 90 days prior to the
expiration of the Term, which shall be treated as a termination without Cause if
such notice is given by the Company and the Company does not concurrently waive
the Executive’s obligations under Section 2 of the Agreement Not to Compete, or
a resignation without Good Reason if such notice is given by the Executive.

 

(b)                                 Notice of Termination.  Any termination of
the Executive’s employment by the Company or by the Executive under this
Section 4 (other than termination pursuant to paragraph (a)(i)) shall be
communicated by a written notice to the other party hereto indicating (i) the
specific termination provision in this Agreement relied upon, (ii) except with
respect to a termination pursuant to Section 4(a)(iv) or 4(a)(vi), setting forth
in reasonable detail the facts and circumstances claimed to provide a basis for
termination of the Executive’s employment under the provision so indicated, and
(iii) specifying a Date of Termination which, if submitted by the Executive (or,
in the case of a termination described in Section 4(a)(ii), by the Company),
shall be at least 30 days following the receipt

 

4

--------------------------------------------------------------------------------

 

of such notice (a “Notice of Termination”); provided, however, that a Notice of
Termination delivered by the Company pursuant to Section 4(a)(ii) shall not be
required to specify a Date of Termination, in which case the Date of Termination
shall be determined pursuant to Section 4(a)(ii); and provided, further, that in
the event that the Executive delivers a Notice of Termination to the Company,
the Company may, in its sole discretion, change the Date of Termination to any
date that occurs following the date of Company’s receipt of such Notice of
Termination (even if such date is prior to the date specified in such Notice of
Termination; provided, however, that the Company may not change a Date of
Termination specified in a Notice of Termination delivered by the Executive
pursuant to Section 4(a)(v) to a date which is less than 90 days following the
receipt of such notice).  A Notice of Termination submitted by the Company may
provide for a Date of Termination on the date the Executive receives the Notice
of Termination, or any date thereafter elected by the Company in its sole
discretion; provided, however, that a Notice of Termination delivered by the
Company pursuant to Section 4(a)(iv) may not provide for a Date of Termination
which is less than 90 days following the receipt of such notice.  The failure by
the Executive or the Company to set forth in the Notice of Termination any fact
or circumstance which contributes to a showing of Cause or Good Reason shall not
waive any right of the Executive or the Company hereunder or preclude the
Executive or the Company from asserting such fact or circumstance in enforcing
the Executive’s or the Company’s rights hereunder.

 

5.                                      Company Obligations Upon Termination of
Employment

 

(a)                                  In General.  Upon a termination of the
Executive’s employment for any reason, the Executive (or the Executive’s estate)
shall be entitled to receive in a lump sum within 20 business days following
the  Date of Termination: the sum of the Executive’s Annual Base Salary through
the Date of Termination and any expenses owed to the Executive under
Section 3(e).  The Executive shall also be entitled to receive in a lump sum any
awarded but unpaid Annual Bonus for the fiscal year of the Company prior to the
fiscal year during which the Date of Termination occurs (except in the event of
a termination by the Company for Cause) within 20 business days following the
Company’s receipt of audited financial statements for such prior fiscal year. 
The Executive shall also be entitled to any accrued vacation pay owed to the
Executive pursuant to Section 3(d); any amount arising from the Executive’s
participation in, or benefits under, any employee benefit plans, programs or
arrangements under Section 3(c) (including without limitation, any disability or
life insurance benefit plans, programs or arrangements), which amounts shall be
payable in accordance with the terms and conditions of such employee benefit
plans, programs or arrangements; and any benefits that may be due the Executive
under the Equity Incentive Plan or award agreements between the Executive and
the Company.

 

(b)                                 Termination without Cause or Resignation for
Good Reason.  If the Executive’s employment shall be terminated by the Company
without Cause or by the Executive for Good Reason (but not by reason of the
Executive’s death, Disability, termination by the Company for Cause or
termination by the Executive without Good Reason), then, in addition to the
payments and benefits described in Section 5(a) (including benefits under stock
option agreements), the Company shall:

 

(i)                                     Continue to pay to the Executive, in
accordance with the Company’s regular payroll practice following the Date of
Termination, the Executive’s Annual Base Salary, and continue the Executive’s
participation at active employee contribution rates in the Company’s health,
life insurance and retirement plans through nine months from the Date of
Termination; provided that each payment is intended to constitute a separate
payment within the meaning of Code Section 409A and the regulations thereunder;
provided, further 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 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.  During such nine months, Executive shall not be
required to seek or accept any other employment nor shall any other employment
income of the Executive earned during such nine months constitute grounds for
any reduction of the continued salary payment obligation of the Company under
this Section 5(b)(i).;

 

5

--------------------------------------------------------------------------------

 

(ii)                                  If the Executive otherwise would have been
entitled to receive a payment pursuant to the Company’s bonus plan had he been
employed on the last day of the Company’s fiscal year, then pay to the Executive
on April 30 of the year following the year in which the Executive’s termination
occurs, (and in the event that the Company has not received its audited
financial statements for the prior year by April 30 of such year, such bonus
shall be paid as soon as practicable thereafter, consistent with the provisions
of Code Section 409A, but in no event later than the last day of such following
year), the amount of such payment, multiplied by a fraction the numerator of
which is the number of days during such fiscal year that the Executive was
employed and the denominator of which is 365; and

 

(iii)                               Continue paid coverage for the Executive and
any eligible dependents under all Company group health benefit plans in which
the Executive and any dependents were entitled to participate immediately prior
to the Date of Termination through the ninth month after the Date of
Termination, to the extent permitted thereunder.  As of the date that the
Executive ceases to receive coverage under any group health plan pursuant to
this Section 5(b)(iii), the Executive shall be eligible to elect to receive
“COBRA” continuation coverage to the extent permitted by Section 601 et seq. of
the Employee Retirement Income Security Act of 1974, as amended, and if such
coverage ceases prior to nine months from the Date of Termination, the Company
shall pay for such COBRA coverage through such nine month period.

 

6.                                      Agreement Not To Compete.  As of the
date hereof the Executive shall enter into an Agreement Not To Compete, in
substantially the form attached hereto as Appendix A, the terms and conditions
of which are incorporated herein by this reference.  If the Executive breaches
any his covenants in such Agreement Not to Compete, then notwithstanding any
other provision of this Agreement, the Executive shall be entitled to no further
payments or benefits provided for in this Agreement.

 

7.                                      Assignment and Successors.  The Company
may assign its rights under this Agreement to any entity, including any
successor to all or substantially all the assets of the Company, by merger or
otherwise, shall use its best efforts to require any such successor or other
assignee to assume its obligations under this Agreement, and may assign or
encumber this Agreement and its rights hereunder as security for indebtedness of
the Company and entities controlled by the Company or under common control with
the Company.  The Executive may not assign his rights or obligations under this
Agreement to any individual or entity.  This Agreement shall be binding upon and
inure to the benefit of the Company, the Executive and their respective
successors, assigns, personnel and legal representatives, executors,
administrators, heirs, distributees, devisees, and legatees, as applicable.

 

8.                                      Governing Law.  This Agreement shall be
governed, construed, interpreted and enforced in accordance with the substantive
laws of the State of New York, without reference to the principles of conflicts
of law of the State of New York or any other jurisdiction, and where applicable,
the laws of the United States.

 

9.                                      Validity.  The invalidity or
unenforceability of any provision or provisions of this Agreement shall not
affect the validity or enforceability of any other provision of this Agreement,
which shall remain in full force and effect.

 

10.                               Notices.  Any notice, request, claim, demand,
document and other communication hereunder to any party shall be effective upon
receipt (or refusal of receipt) and shall be in writing and delivered personally
or sent by telex, telecopy, or certified or registered mail, postage prepaid, to
the following address (or at any other address as any party shall have specified
by notice in writing to the other party):

 

If to the Company, to:

 

Specialized Technology Resources, Inc.
10 Water Street
Enfield, Connecticut  06082-4899
Attn:  Barry A. Morris
Facsimile:  (860) 749-9158

 

6

--------------------------------------------------------------------------------

 

If to the Executive, at the address set forth on the signature page hereto.

 

11.                               Counterparts.  This Agreement may be executed
in several counterparts, each of which shall be deemed to be an original, but
all of which together will constitute one and the same Agreement.

 

12.                               Entire Agreement.  The terms of this Agreement
(together with any other agreements and instruments contemplated hereby or
referred to herein) is intended by the parties to be the final expression of
their agreement with respect to the employment of the Executive by the Company
and may not be contradicted by evidence of any prior or contemporaneous
agreement.  The parties further intend that this Agreement shall constitute the
complete and exclusive statement of its terms and that no extrinsic evidence
whatsoever may be introduced in any judicial, administrative, or other legal
proceeding to vary the terms of this Agreement.

 

13.                               Amendments; Waivers.  This Agreement may not
be modified, amended, or terminated except by an instrument in writing, signed
by the Executive and a duly authorized officer of Company.  By an instrument in
writing similarly executed, the Executive or a duly authorized officer of the
Company may waive compliance by the other party or parties with any provision of
this Agreement that such other party was or is obligated to comply with or
perform; provided, however, that such waiver shall not operate as a waiver of,
or estoppel with respect to, any other or subsequent failure.  No failure to
exercise and no delay in exercising any right, remedy, or power hereunder
preclude any other or further exercise of any other right, remedy, or power
provided herein or by law or in equity.  Notwithstanding anything herein to the
contrary, no amendment may be made to this Agreement if it would cause the
Agreement or any payment hereunder not to be in compliance with Code
Section 409A.

 

14.                               No Inconsistent Actions.  The parties hereto
shall not voluntarily undertake or fail to undertake any action or course of
action inconsistent with the provisions or essential intent of this Agreement. 
Furthermore, it is the intent of the parties hereto to act in a fair and
reasonable manner with respect to the interpretation and application of the
provisions of this Agreement.

 

15.                               Construction.  This Agreement shall be deemed
drafted equally by both the parties.  Its language shall be construed as a whole
and according to its fair meaning.  Any presumption or principle that the
language is to be construed against any party shall not apply.  The headings in
this Agreement are only for convenience and are not intended to affect
construction or interpretation.  Any references to paragraphs, subparagraphs,
sections or subsections are to those parts of this Agreement, unless the context
clearly indicates to the contrary.  Also, unless the context clearly indicates
to the contrary, (a) the plural includes the singular and the singular includes
the plural; (b) “or” is used both conjunctively and disjunctively; (c) “any,”
“all,” “each,” or “every” means “any and all,” and “each and every”;
(d) “includes” and “including” are each “without limitation”; (e) “herein,”
“hereof,” “hereunder” and other similar compounds of the word “here” refer to
the entire Agreement and not to any particular paragraph, subparagraph, section
or subsection; and (f) all pronouns and any variations thereof shall be deemed
to refer to the masculine, feminine, neuter, singular or plural as the identity
of the entities or persons referred to may require.

 

16.                               Enforcement.  If any provision of this
Agreement is held to be illegal, invalid or unenforceable under present or
future laws effective during the term of this Agreement, such provision shall be
fully severable; this Agreement shall be construed and enforced as if such
illegal, invalid or unenforceable provision had never comprised a portion of
this Agreement; and the remaining provisions of this Agreement shall remain in
full force and effect and shall not be affected by the illegal, invalid or
unenforceable provision or by its severance from this Agreement.  Furthermore,
in lieu of such illegal, invalid or unenforceable provision there shall be added
automatically as part of this Agreement a provision as similar in terms to such
illegal, invalid or unenforceable provision as may be possible and be legal,
valid and enforceable.

 

17.                               Withholding.  The Company shall be entitled to
withhold from any amounts payable under this Agreement any federal, state, local
or foreign withholding or other taxes or charges that the Company is required to
withhold.  The Company shall be entitled to rely on an opinion of counsel if any
questions as to the amount or requirement of withholding shall arise.

 

7

--------------------------------------------------------------------------------

 

18.                               Employee Acknowledgement.  The Executive
acknowledges that he has read and understands this Agreement, is fully aware of
its legal effect and has consulted with legal counsel as to its legal effect,
has not acted in reliance upon any representations or promises made by the
Company other than those contained in writing herein, and has entered into this
Agreement freely based on his judgment.

 

19.                               Survival.  The expiration or termination of
the Term shall not impair the rights or obligations of any party hereto, which
shall have accrued prior to such expiration or termination.

 

20.                               Disputes.  All disputes between the parties
arising from or in connection with this Agreement or the Executive’s employment
hereunder, including those relating to the existence and validity of this
agreement to arbitrate, shall be submitted to full and binding arbitration in
Hartford, Connecticut, before a panel of three arbitrators and administered by
the American Arbitration Association under its National Rules for the Resolution
of Employment Disputes, and judgment upon the award rendered by the arbitrators
may be entered by any court having jurisdiction thereof.  Each party shall be
responsible for its own costs and expenses of such arbitration.  Notwithstanding
the foregoing, nothing in this Section 20 shall prevent or otherwise hinder the
ability of the Company to seek injunctive relief, including temporary
restraining orders, preliminary injunctions and permanent injunctions in
connection with any controversy or claim arising out of or relating to the
Agreement Not to Compete.

 

21.                               Representation by the Executive.  The
Executive represents and warrants that his entering into this Agreement does
not, and that his performance under this Agreement will not, violate the
provisions of any agreement or instrument to which the Executive is a party or
any decree, judgment or order to which the Executive is subject, and that this
Agreement constitutes a valid and binding obligation of the Executive in
accordance with its terms.  Breach of the representation contained in this
Section 21 will render all of the Company’s obligations under this Agreement
void ab initio.

 

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

 

 

 

 

 

/s/ Alan N. Forman

 

 

 

Alan N. Forman

 

 

 

201 Barnard Road

 

 

 

New Rochelle, New York 10801

 

 

 

 

 

 

 

 

 

 

 

SPECIALIZED TECHNOLOGY RESOURCES, INC.

 

 

 

 

 

 

 

 

 

 

 

By:

/s/ Barry A. Morris

 

 

 

 

Barry A. Morris

 

 

 

 

Executive Vice President and Chief Financial Officer

 

SIGNATURE PAGE FOR EMPLOYMENT AGREEMENT (FORMAN)

 

8

--------------------------------------------------------------------------------

 

Appendix A

 

Agreement Not To Compete

 

EXECUTION COPY

 

AGREEMENT NOT TO COMPETE

 

This Agreement Not To Compete (this “Agreement”) dated as of April 12, 2010 (the
“Effective Date”), is made by and between SPECIALIZED TECHNOLOGY RESOURCES,
INC., a Delaware corporation (together with any successor thereto, the
“Company”), and ALAN N. FORMAN, of New Rochelle, New York (the “Employee”).

 

Recitals

 

A.                                   Contemporaneously with the execution
hereof, the Company and Employee are executing an Employment Agreement (the
“Employment Agreement”) pursuant to which the Company will employ Employee as
its Vice President and General Counsel.

 

B.                                     Pursuant to the Employment Agreement,
Employee has agreed to enter into this Agreement as a condition of his
employment.

 

Terms

 

In consideration of the Employment Agreement, the respective agreements of the
parties herein and other good and valuable consideration received by each party
from the other, the parties agree as follows:

 

1.                                       Defined Terms. Any capitalized term
used herein but not defined shall have the meaning ascribed to such term in the
Employment Agreement.

 

2.                                       Agreement Not to Compete. For a period
equal to the term of Employee’s employment with the Company and through the date
which is nine (9) months following the Employee’s Date of Termination for any
reason (the “Initial Noncompetition Period”), Employee shall not, without the
prior written consent of the Company, and whether as employee, principal, agent,
shareholder, partner, consultant, advisor, limited liability company manager or
member, director, or otherwise, directly or indirectly, compete with the Company
or any subsidiary of the Company in the business of manufacturing solar panel
encapsulent, or the business of providing consumer product quality assurance
services to third parties (collectively, the “Business”). The making or
guarantying of a loan, lease or any other financial arrangement to, with or for
any person or entity that engages in any of the activities described in the
preceding sentence shall be deemed a breach of the covenant set forth in the
preceding sentence. However, Employee may purchase or own up to 1% of the
outstanding stock of any publicly traded corporation that competes with the
Company or any Company Affiliate, but may not be employed by or otherwise
participate in the activities of such corporation. For purposes of this
agreement, “Company Affiliate” means any entity directly or indirectly
controlled by the Company, and also includes STR Holdings, Inc. and any of its
direct or indirect subsidiaries.

 

The Company shall have the option to extend the Initial Noncompetition Period
for an additional twelve (12) months (the “Extended Noncompetition Period” and,
together with the Initial Noncompetition Period, the “Noncompetition Period”);
provided, that the Company gives the Executive written notice of such extension
at least six (6) months prior to the expiration of the Initial Noncompetition
Period, and agrees to pay to the Employee, in accordance with the Company’s
regular payroll practice, the Executive’s Annual Base Salary, and to continue
the

 

9

--------------------------------------------------------------------------------

 

Executive’s participation in the Company’s health and life insurance and
retirement plans through the Extended Noncompetition Period.

 

Employee represents and warrants that he does not own, directly, indirectly, in
whole or in part, beneficially or otherwise, any company or enterprise that
competes with or participates in the Business, or otherwise engage in any
activity that would violate this Section 1.

 

3.                                       Confidential Information;
Non-Solicitation; Non-Disparagement; Inventions.

 

(a)                                  Employee acknowledges that he will occupy a
position of trust and confidence with the Company and may become familiar with
the following, any and all of which constitute confidential information of the
Company or Company Affiliates (collectively, the “Confidential Information”):
(i) all information related to vendors, suppliers and customers, including,
without limitation, customer lists, the identities of existing, past or
prospective customers and acquisition targets, prices charged or proposed to be
charged to customers, customer contacts, special customer requirements and all
related information; (ii) all marketing plans, materials and techniques;
(iii) all methods of business operation and related procedures of the Company or
Company Affiliates; and (iv) all patterns, devices, compilations of information,
copyrightable material and technical information, if any, in each case that
relates in any way to the Business of the Company or any Company Affiliate.

 

(b)                                 Employee acknowledges and agrees that all
Confidential Information learned or obtained by him is the property of the
Company or a Company Affiliate. Therefore, Employee shall not at any time
disclose to any unauthorized persons or use for his own account or for the
benefit of any third party any Confidential Information, whether Employee has
such information in his memory or embodied in writing or other physical form,
without the Company’s prior written consent (which it may grant or withhold in
its sole discretion), unless and to the extent that the Confidential Information
is or becomes generally known to and available for use by the public other than
as a result of Employee’s fault or, to Employee’s knowledge, the fault of any
other person bound by a duty of confidentiality to the Company or any Company
Affiliate. Employee agrees to deliver to the Company at any time the Company may
request, all documents, memoranda, notes, plans, records, reports, and other
documentation, models, components, devices, or computer software, whether
embodied in a disk or in other form (and all copies of all of the foregoing),
relating to the businesses, operations, or affairs of the Company or any Company
Affiliate and any other Confidential Information that Employee may then possess
or have under Employee’s control.

 

(c)                                  If the Employee or any entity controlled by
Employee (an “Employee Affiliate”) is required by law to disclose any
Confidential Information, Employee shall promptly notify the Company in writing
so that the Company may seek a protective order or other motion to prevent or
limit the production or disclosure of such information. If such motion has been
denied, then the person required to disclose such information may disclose only
such portion of such information that, based on advice of Employee’s outside
legal counsel, is required by law to be disclosed (provided that the person
required to disclose such information shall use all reasonable efforts to
preserve the confidentiality of the remainder of such information). Employee
shall continue to be bound by his obligations pursuant to this Agreement for any
information that is not required to be disclosed, or that has been afforded
protective treatment, pursuant to such motion.

 

(d)                                 During the Noncompetition Period, Employee
will not, and will not permit any Employee Affiliate to, directly or indirectly,
(a) recruit or otherwise solicit or induce any employee, customer, subscriber or
supplier of the Company or any Company Affiliate to terminate its employment or
arrangement with the Company or any Company Affiliate, otherwise change its
relationship with the Company or any Company Affiliate, or establish any
relationship with Employee or any Employee Affiliate to compete in the Business
or (b) without the Company’s prior written consent, hire any employee of the
Company or any Company Affiliate, including any person whose employment with the
Company or any Company Affiliate is terminated by such employee without Good
Reason.

 

(e)                                  During the Noncompetition Period, Employee
agrees not to disparage in any material respect the Company or any Company
Affiliate, any of their respective products or practices, or any of their
respective directors, officers, managers, agents, representatives, stockholders,
members or affiliates, either orally or

 

10

--------------------------------------------------------------------------------

 

in writing. The Company and any Company Affiliates (including without limitation
any officers or directors of the Company or any Company Affiliate) agree not to
disparage in any material respect the Employee either orally or in writing.
Notwithstanding the forgoing, nothing contained herein shall limit the ability
of either party, as applicable, to provide truthful testimony as required by law
or any judicial or administrative process.

 

(f)                                    All rights to discoveries, inventions,
improvements and innovations (including all data and records pertaining thereto)
related to the Business of the Company or any Company Affiliate, whether or not
patentable, copyrightable, registrable as a trademark, or reduced to writing,
that Employee may discover, invent or originate during the term of Employee’s
consulting arrangement or employment with the Company or any Company Affiliate,
and for a period of 12 months thereafter, either alone or with others and
whether or not during working hours or by the use of the facilities of either
the Company or any of its subsidiaries (“Inventions”), shall be the exclusive
property of the Company. Employee shall promptly disclose all Inventions to the
Company, shall execute at the request of the Company any assignments or other
documents the Company may deem necessary to protect or perfect its rights
therein, and shall assist the Company, at the Company’s expense, in obtaining,
defending and enforcing the Company’s rights therein. Employee hereby appoints
the Company as his attorney-in-fact to execute on his behalf any assignments or
other documents deemed necessary by the Company to protect or perfect its rights
to any Inventions.

 

4.                                       Remedies. The necessity of protection
against the competition of Employee and the nature and scope of such protection
has been carefully considered and agreed upon by the parties hereto. Employee
and the Company acknowledge that the duration, scope and geographic area
applicable to the restrictions set forth in this Agreement are fair, reasonable
and necessary. Employee acknowledges that the consideration provided for herein
is sufficient and adequate to compensate Employee for agreeing to the
restrictions contained in this Agreement and that such restrictions will not
cause him undue hardship. If, however, any court determines that the foregoing
restrictions are unreasonable and for that reason unenforceable, such
restrictions shall be modified, rewritten or interpreted to include as much of
their nature and scope as will render them enforceable. Employee and the Company
agree that a monetary remedy for a breach of this Agreement will be inadequate
and will be impracticable and extremely difficult to prove, and further agree
that such a breach would cause the Company irreparable harm, and that the
Company and the Company Affiliates shall be entitled to temporary and permanent
injunctive relief without the necessity of proving actual damages. Employee
agrees that the Company and the Company Affiliates shall be entitled to such
injunctive relief, including temporary restraining orders, preliminary
injunctions and permanent injunctions, without the necessity of posting bond or
other undertaking in connection therewith.

 

5.                                       Notices. Notices sent by the Company or
Employee hereunder shall be made in writing to such party at the below addresses
or as the Company and Employee may otherwise agree in writing.

 

If to the Company, to:

 

Specialized Technology Resources, Inc.

10 Water Street

Enfield, Connecticut 06082-4899

Attn: Barry A. Morris

Facsimile: (860) 749-9158

 

If to the Employee, at the address set forth on the signature page hereto.

 

6.                                       Counterparts. This Agreement may be
executed in two or more counterparts, each of which shall be deemed an original,
but all of which together shall constitute one and the same instrument.

 

7.                                       Headings. The headings herein are for
convenience only, do not constitute part of this Agreement, and shall not be
deemed to limit or affect any of the provisions hereof.

 

11

--------------------------------------------------------------------------------

 

8.                                       Entire Understanding. This Agreement
and the other agreements and instruments incorporated herein constitute the
entire agreement and understanding between the parties, and supersede all prior
agreements and understandings, both written and oral, between the parties hereto
with respect to the subject matter hereof.

 

9.                                       Amendments. This Agreement may not be
modified or changed except by written instrument signed by each of the parties
hereto that expressly states the intention of the parties to modify or change
this Agreement.

 

10.                                 Governing Law. This Agreement shall be
governed by and construed in accordance with the internal laws of the State of
New York, without regard to principles of conflicts of laws.

 

11.                                 Construction. Whenever in this Agreement the
context so requires, references to the masculine shall be deemed to include
feminine and the neuter, references to the neuter shall be deemed to include the
masculine and feminine, and references to the plural shall be deemed to include
the singular and the singular to include the plural.

 

12.                                 Cooperation. Each party hereto shall
cooperate with the other party and shall take such further action and shall
execute and deliver such further documents as may be necessary or desirable in
order to carry out the provisions and purposes of this Agreement.

 

13.                                 Waiver. Employee or the Company may, by
express written notice to the other: (i) waive any inaccuracies in the
representations or warranties of the other party contained in this Agreement or
in any document delivered pursuant to this Agreement; (ii) waive compliance with
any of the covenants of the other party contained in this Agreement; or
(iii) waive or modify performance of any of the obligations of the other party.
No action taken pursuant to this Agreement shall be deemed to constitute a
waiver by the party taking such action, possessing such knowledge or performing
such investigation of compliance with the representations, warranties, covenants
and agreements contained herein. The waiver by any party hereto of a breach of
any provision of this Agreement shall not operate or be constituted as a waiver
of any subsequent breach. The failure of any party to insist, in any one or more
instances, upon performance of any of the terms, covenants or conditions of this
Agreement shall not be construed as a waiver or relinquishment of any rights
granted hereunder or any such term, covenant or condition.

 

14.                                 Knowledge and Skill. THE EMPLOYEE REPRESENTS
AND WARRANTS THAT THE KNOWLEDGE, SKILLS AND ABILITIES HE OR SHE POSSESSES AT THE
TIME OF COMMENCEMENT OF EMPLOYMENT HEREUNDER ARE SUFFICIENT TO PERMIT HIM OR
HER, IN THE EVENT OF TERMINATION OF HIS OR HER EMPLOYMENT HEREUNDER, TO EARN A
LIVELIHOOD SATISFACTORY TO HIMSELF WITHOUT VIOLATING ANY PROVISION HEREOF, FOR
EXAMPLE, BY USING SUCH KNOWLEDGE, SKILLS AND ABILITIES, OR SOME OF THEM, IN THE
SERVICE OF A NON-COMPETITOR.

 

15.                                 Interpretation of Agreement. Each party
hereto cooperated in the drafting and preparation of this Agreement and the
documents referred to herein, and any and all drafts relating thereto shall be
deemed the work product of the parties and may not be construed against any
party by reason of its preparation. Accordingly, any rule of law, or any legal
decision that would require interpretation of any ambiguities in this Agreement
against the party that drafted it, is of no application and is hereby expressly
waived. The provisions of this Agreement shall be interpreted in a reasonable
manner to effect the intentions of the parties regarding this Agreement.

 

16.                                 Parties in Interest; Assignment. This
Agreement shall inure to the benefit of and be binding upon the parties hereto
and their respective permitted successors, assigns, heirs and/or personal
representatives, except that neither this Agreement nor any interest herein
shall be assigned or assignable by operation of law or otherwise by Employee
without the prior written consent of the Company. Nothing in this

 

12

--------------------------------------------------------------------------------

 

Agreement, expressed or implied, is intended to confer on any person other than
the parties and their respective successors and permitted assigns any rights or
remedies under or by reason of this Agreement.

 

17.                                 Severability. If, notwithstanding the
express, carefully considered agreement of the Company and Employee set forth
herein, any provision of this Agreement shall be deemed invalid, unenforceable
or illegal, or if the period during which this Agreement is to remain effective
is found to exceed the legally permissible period or the territory with respect
to which this Agreement is to be effective is found to exceed the legally
permissible territory, then notwithstanding such invalidity, unenforceability or
illegality the remainder of this Agreement shall continue in full force and
effect during the maximum period and for the maximum territory legally
permissible.

 

18.                                 Waiver of Jury Trial. Consistent with the
intention of Section 10, the Company and Employee each further waives its or his
respective right to a jury trial of any claim or cause of action arising out of
this Agreement or any dealings between them relating to the subject matter of
this Agreement. The scope of this waiver is intended to be all-encompassing of
any and all disputes that may be filed in any court and that relate to the
subject matter of this Agreement, including, without limitation, contract
claims, tort claims, and all other common law and statutory claims. This waiver
is irrevocable, meaning that it may not be modified either orally or in writing,
and this waiver shall apply to any subsequent amendments, supplements or other
modifications to this Agreement or to any other document or agreement relating
to the transactions contemplated by this Agreement.

 

19.                                 Specific Performance and Other Equitable
Relief. Without in any way limiting the provisions of Section 4, Employee
acknowledges that the remedies at law of the Company and Company Affiliates for
failure of Employee to perform any act required to be performed by Employee
under this Agreement are inadequate and, therefore, that the Company and Company
Affiliates shall be entitled to specific performance of this Agreement by
Employee and to such other equitable relief as a court may deem appropriate to
prevent any further violation of this Agreement by Employee, and to exercise
such remedies cumulatively or in conjunction with all other rights and remedies
provided by law or under this Agreement.

 

20.                                 Full Understanding. Employee represents that
he fully understands his right to discuss all aspects of this Agreement with his
private attorney, and that to the extent, if any, Employee desired, Employee
availed himself of this right. Employee further represents that he has carefully
read and fully understands all of the provisions of this Agreement, that
Employee is competent to execute this Agreement, that Employee’s agreement to
execute and deliver this Agreement has not been obtained by any duress and that
Employee freely and voluntarily enters into it, and that Employee has read this
Agreement in its entirety and fully understands the meaning, intent and
consequences of this Agreement.

 

13

--------------------------------------------------------------------------------

 

IN WITNESS WHEREOF, the parties hereto have executed this Agreement Not to
Compete as of the date first written above.

 

 

 

/s/ Alan N. Forman

 

Alan N. Forman

 

201 Barnard Road

 

New Rochelle, New York 10801

 

 

 

 

 

SPECIALIZED TECHNOLOGY RESOURCES, INC.,

 

 

 

 

 

 

 

By:

/s/ Barry A. Morris

 

 

Barry A. Morris

 

 

Executive Vice President and Chief Financial Officer

 

SIGNATURE PAGE FOR NON-COMPETE AGREEMENT (FORMAN)

 

14

--------------------------------------------------------------------------------