Exhibit 10.7


 


EXECUTION
COPY


 


EMPLOYMENT AGREEMENT


 


This
Employment Agreement (the “Agreement”), dated as of August 17,
2009, is made by and between SPECIALIZED TECHNOLOGY RESOURCES, INC., a Delaware
corporation (together with any successor thereto, the “Company”), and
MARK A. DUFFY, of Naperville, Illinois (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 Managers 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 the date specified by the
Company pursuant to Section 4(b), whichever is earlier; 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 President of STR Quality Assurance, 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 LLC, a Delaware limited liability company.


 


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


 


2

















 


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 August 24, 2009 (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 60 days prior
to the expiration of the then applicable Term.


 


(c)           Position and Duties.  The Executive shall serve as
President of STR Quality Assurance, with responsibilities, duties and authority
customary for such position, subject to 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 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 $250,000.00 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.


 


(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 40% 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 


 


3

















 


established by the
Chief Executive Officer and the Board. 
For purposes of the 2009 fiscal year, the Executive shall be entitled to
not less than a pro-rata share of his Annual Bonus for the portion of the 2009
fiscal year in which the Executive is employed following the Effective Date.  In the discretion of management, Executive
shall be eligible to receive incentive units pursuant to the terms of the Third
Amended and Restated Limited Liability Company Agreement of STR Holdings LLC
(the “LLC Agreement”).


 


(ii)           On the Effective Date, Executive shall receive a signing bonus in an
amount equal to $125,000 (the “Signing Bonus”); provided,
however, should Executive terminate
within one year after the Effective Date either for Cause or 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 four 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
(including, without limitation, (i) transitional living expenses for the
one-year period following the Effective Date in an amount not to exceed $25,000
and (ii) relocation expenses paid by Executive within eighteen months from
the Effective Date, which shall include reasonable realtor and household moving
fees, in an amount not to exceed $175,000). 
Commuting expenses during the transition period will also be covered by
the Company.


 


(f)            Equity Grant.         On the Effective Date, and
pursuant to the terms and subject to the conditions set forth in the Incentive
Unit Grant Agreement between Parent and the Executive and the LLC Agreement,
Executive shall be granted 145,834 Class C Units, 52,083 Class D
Units and 52,083 Class E Units.


 


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 


 


4

















 


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 60 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 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).  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.  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 Executive’s termination: the sum of the Executive’s Annual 


 


5

















 


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 LLC Agreement or incentive
unit 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 twelve 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;


 


(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


 


6














 


(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 twelfth 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
twelve months from the Date of Termination, the Company shall pay for such COBRA
coverage through such twelve 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):


 


7

















 


If to the Company, to:


 


Specialized Technology
Resources, Inc.

10 Water Street

Enfield, Connecticut  06082-4899

Attn:  Barry A. Morris

Facsimile:  (860) 749-9158


 


with a copy to:


 


DLJ Merchant Banking

Eleven Madison Avenue, 16th Floor

New York, New York  10010

Attn:  Susan C. Schnabel

Facsimile:  (310) 712-2734


 


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 


 


8

















 


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.


 


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.


 


9

















 


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.


 


10

















 


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


 


 


	
   

  	
  /s/ Mark A. Duffy

  
	
   

  	
  Mark A. Duffy

  
	
   

  	
  970 East Porter Avenue

  
	
   

  	
  Naperville, IL 60540-5528

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  SPECIALIZED TECHNOLOGY RESOURCES, INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Barry A. Morris

  
	
   

  	
   

  	
  Name: Barry A. Morris

  
	
   

  	
   

  	
  Title:
  Executive Vice President and Chief Financial Officer

  



 


signature page for employment agreement (DUFFY)


 

















 


Appendix A


 


Agreement Not To Compete


 


2














 


EXECUTION COPY


 


AGREEMENT
NOT TO COMPETE


 


This
Agreement Not To Compete (this “Agreement”) dated as of
August         , 2009 (the “Effective
Date”), is made by and between SPECIALIZED TECHNOLOGY RESOURCES, INC., a
Delaware corporation (together with any successor thereto, the “Company”), and MARK A.
DUFFY, of Naperville, Illinois (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 President of STR Quality Assurance.


 


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 twelve (12) 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 LLC 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 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


 


2

















 


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 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.


 


3

















 


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


 


with
a copy to:


 


DLJ
Merchant Banking


Eleven
Madison Avenue, 16th Floor


New
York, New York 10010


Attn:
Susan C. Schnabel


Facsimile:
(310) 712-2734


 


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.


 


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.


 


4

















 


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 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


 


5

















 


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.


 


6

















 


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


 


 


	
   

  	
  /s/ Mark A. Duffy

  
	
   

  	
  Mark A. Duffy

  
	
   

  	
  970 East Porter Avenue

  
	
   

  	
  Naperville, IL 60540-5528

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  SPECIALIZED TECHNOLOGY
  RESOURCES, INC.,

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  /s/ Barry A.
  Morris

  
	
   

  	
  By: Barry A. Morris

  
	
   

  	
  Its: Executive Vice
  President and Chief Financial Officer

  



 


SIGNATURE
PAGE FOR NON-COMPETE AGREEMENT (DUFFY)