Document:

Exhibit
10.2

 

STR
Holdings, Inc.

2009 Equity Incentive Plan

 

Article 1.               Establishment &
Purpose

 

1.1  Establishment.  STR Holdings, Inc., a Delaware
corporation (hereinafter referred to as the “Company”), establishes the
2009 Equity Incentive Plan (hereinafter referred to as the “Plan”) as
set forth in this document.

 

1.2  Purpose of the Plan.  The purpose of this Plan is to attract,
retain and motivate officers and employees of, consultants to, and non-employee
directors providing services to the Company and its Subsidiaries and
Affiliates, and to promote the success of the Company’s business by providing
them with appropriate incentives and rewards either through a proprietary
interest in the long-term success of the Company or compensation based on
fulfilling their performance goals.

 

Article 2.               Definitions

 

Whenever capitalized in the Plan, the following
terms shall have the meanings set forth below.

 

2.1          “Affiliate” means any
entity that the Company, either directly or indirectly, is in common control
with, is controlled by or controls or any entity in which the Company has a
substantial direct or indirect equity interest, as determined by the Board.

 

2.2          “Award” means any
Option, Stock Appreciation Right, Restricted Stock, Dividend Equivalent or
Other Stock-Based Award that is granted under the Plan.

 

2.3          “Award Agreement” means either (a) a
written agreement entered into by the Company and a Participant setting forth
the terms and provisions applicable to an Award granted under this Plan, or (b) a
written statement issued by the Company to a Participant describing the terms
and provisions of the actual grant of such Award.

 

2.4          “Beneficial Owner” or “Beneficial Ownership” shall have the meaning
ascribed to such term in Rule 13d-3 of the General Rules and Regulations
under the Exchange Act.

 

2.5          “Board” means the
Board of Directors of the Company.

 

2.6          “Change of Control” means the
occurrence of any of the following events with respect to the Company, (i) any
consolidation or merger with or into any other corporation, partnership,
limited liability company or other entity in which the holders of capital stock
of the Company immediately prior to such merger or consolidation no longer
beneficially own, directly or indirectly, a majority of the outstanding capital
stock or equity interest of the surviving corporation, partnership, limited
liability company or other entity immediately after such merger or
consolidation, (ii) the sale or transfer of the capital stock of the
Company in which the holders of capital stock of the Company immediately prior
to such sale or transfer no longer beneficially own, directly or indirectly, a
majority of the outstanding capital stock or equity interest of the Company
immediately after such sale or transfer, (iii) a sale or transfer of all
or substantially all of the assets of the Company, or (iv) the license of
all or substantially all of the assets of the Company where such license is
substantially equivalent to a sale or transfer of all or substantially all of
the assets of the Company.

 

 

2.7          “Code” means the U.S.
Internal Revenue Code of 1986, as amended from time to time.

 

2.8          “Committee” means the
Board, or any committee designated by the Board to administer this Plan.

 

2.9          “Company” means STR
Holdings, Inc., a Delaware corporation, and any successor thereto.

 

2.10        “Consultant” means any
person (other than an Employee or a Director) who is engaged by the Company, a
Subsidiary or an Affiliate to render consulting or advisory services to the
Company or such Subsidiary or Affiliate.

 

2.11        “Director” means a member
of the Board who is not an Employee.

 

2.12        “Dividend Equivalent” means any
right to a dividend equivalent granted from time to time under Article 6
of the Plan.

 

2.13        “Effective Date” means the date
set forth in Section 14.14.

 

2.14        “Employee” means an
officer or other employee of the Company, its Subsidiaries or an Affiliate,
including a member of the Board who is such an employee.

 

2.15        “Exchange Act” means the
Securities Exchange Act of 1934, as amended from time to time.

 

2.16        “Fair Market Value” means, as of
any date of determination (i)  if the Shares are listed on any established
stock exchange or a national market system, its fair market value shall be the
closing sales price for a share of such stock (or the closing bid, if no sales
were reported) as quoted on such exchange or system for the last market trading
day prior to the time of determination, as reported in The Wall
Street Journal or such other source as the Board deems reliable; (ii) 
if the Shares are regularly quoted by a recognized securities dealer but
selling prices are not reported, its fair market value shall be the mean
between the high bid and low asked prices for a Share on the last market
trading day prior to the day of determination; or (iii) in the absence of
an established market for the Shares, the fair market value thereof shall be
determined in good faith by the Board through a reasonable application of a
reasonable valuation method.

 

2.17        “Incentive Stock Option” means an Option
intended to meet the requirements of an incentive stock option as defined in Section 422
of the Code and designated as an Incentive Stock Option.

 

2.18        “Nonqualified Stock Option” means an
Option that is not an Incentive Stock Option.

 

2.19        “Other Stock-Based Award” means any right
granted under Article 10 of the Plan.

 

2.20        “Option” means any
stock option granted form time to time under Article 6 of the Plan.

 

2.21        “Option Price” means the
purchase price per Share subject to an Option, as determined pursuant to Section 6.2
of the Plan.

 

2.22        “Participant” means any
eligible person as set forth in Section 4.1 to whom an Award is granted.

 

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2.23        “Plan” means the STR
Holdings, Inc. Equity Incentive Plan.

 

2.24        “Restricted Stock” means any
Award granted under Article 8.

 

2.25        “Restriction Period” means the
period during which Restricted Stock awarded under Article 8 of the Plan
is subject to forfeiture.

 

2.26        “Service” means service
as an Employee, Director or Consultant.

 

2.27        “Share” means a share
of common stock of the Company, par value
$[      ] per share, or such other class or kind
of shares or other securities resulting from the application of Section 12.1
hereof.

 

2.28        “Stock Appreciation Right” means any
right granted under Article 7.

 

2.29        “Subsidiary” means any
corporation (other than the Company) in an unbroken chain of corporations
beginning with the Company (or any parent of the Company) if each of the
corporations, other than the last corporation in each unbroken chain owns stock
possessing 50% or more of the total combined voting power of all classes of
stock in one of the other corporations in such chain.

 

2.30        “Ten Percent Stockholder” means a person
who on any given date owns, either directly or indirectly (taking into account
the attribution rules contained in Section 424(d) of the Code),
stock possessing more than 10% of the total combined voting power of all
classes of stock of the Company or a Subsidiary or Affiliate.

 

Article 3.               Administration

 

3.1          Authority of the Committee.  The Plan shall be administered by the
Committee, which shall have full power to interpret and administer the Plan and
full authority to select the Directors, Employees and Consultants to whom
Awards will be granted and determine the type and amount of Awards to be
granted to each such Director, Employee or Consultant, the terms and conditions
of Awards granted under the Plan and the terms of Award Agreements to be
entered into with Participants.  Without limiting the generality of the foregoing,
the Committee may, in its sole discretion, clarify, construe or resolve any
ambiguity in, or interpret any provision of, any provision of the Plan or any
Award Agreement, accelerate or waive vesting of Awards and exercisability of
Awards, extend the term or period of exercisability of any Awards, modify the
purchase price under any Award, or waive any terms or conditions applicable to
any Award; provided that no action taken by the Committee shall adversely
affect in any material respect the rights granted to any Participant under any
outstanding Awards without the Participant’s written consent (other than
pursuant to Article 11 or Article 12 hereof).  Awards may, in the discretion of the
Committee, be made under the Plan in assumption of, or in substitution for,
outstanding awards previously granted by the Company or its affiliates or a
company acquired by the Company or with which the Company combines.  The Committee shall have full and
exclusive discretionary power to adopt rules, forms, instruments, and
guidelines for administering the Plan as the Committee deems necessary or
proper.  All actions taken and all
interpretations and determinations made by the Committee or by the Board (or
any other committee or sub-committee thereof), as applicable, shall be final
and binding upon the Participants, the Company, and all other interested
individuals.

 

3.2          Delegation.  The Committee may delegate to one or more of
its members, one or more officers of the Company or any of its Subsidiaries,
and one or more agents or advisors such administrative duties or powers as it
may deem advisable.

 

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Article 4.               Eligibility
and Participation

 

4.1          Eligibility.  Participants will consist of such Employees,
Consultants, and Directors as the Committee in its sole discretion determines
and whom the Committee may designate from time to time to receive awards under
the Plan.  Designation of a Participant
in any year shall not require the Committee to designate such person to receive
an award in any other year or, once designated, to receive the same type or
amount of award as granted to the Participant in any other year.

 

4.2          Types of Award.  Awards under the Plan may be granted in any
one or a combination of:  (a) Options,
(b) Stock Appreciation Rights, (c) Restricted Stock, (d) Dividend
Equivalents and (e) Other Stock-Based Awards.  Awards granted under the Plan shall be
evidenced by Award Agreements (which need not be identical) that provide
additional terms and conditions associated with such Awards, as determined by
the Committee in its sole discretion; provided, however, that in the event of any conflict between the
provisions of the Plan and any such Award Agreement, the provisions of the Plan
shall prevail.

 

Article 5.               Shares
Subject to the Plan and Maximum Awards

 

5.1          Number of Shares Available for
Awards.

 

(a)           General.  Subject to adjustment as
provided in Section 5.1(b) and Article 12, the maximum number of
Shares available for issuance to Participants pursuant to Awards under the Plan
shall be [          ]
Shares.  The Shares available for
issuance under the Plan may consist, in whole or in part, of authorized and
unissued Shares or treasury Shares. The number of Shares available for granting
Incentive Stock Options under the Plan shall not exceed
[          ] Shares, subject
to adjustments provided in Article 12 hereof and subject to the provisions
of Sections 422 or 424 of the Code or any successor provisions.  Any Shares delivered to the Company as part
or full payment for the purchase price of an Award granted under this Plan or,
to the extent the Committee determines that the availability of Incentive Stock
Options under the Plan will not be compromised, to satisfy the Company’s
withholding obligation with respect to an Award granted under this Plan, shall
again be available for Awards under the Plan. 
The maximum number of Shares that can be granted to any one Participant,
in any calendar year, shall not exceed [          ]
Shares.

 

(b)           Additional Shares.  In the event that any outstanding Award
expires, is forfeited, cancelled or otherwise terminated without consideration
(i.e., Shares or cash) therefor, the Shares subject to such Award, to the
extent of any such forfeiture, cancellation, expiration, termination or
settlement for cash, shall again be available for Awards under the Plan. If the
Committee authorizes the assumption under this Plan, in connection with any
merger, consolidation, acquisition of property or stock, or reorganization, of
awards granted under another plan, such assumption shall not reduce the maximum
number of Shares available for issuance under this Plan.

 

Article 6.               Stock
Options

 

6.1          Grant of Options.  The Committee is hereby authorized to grant
Options to Participants.  Each Option shall
permit a Participant to purchase from the Company a stated number of Shares at
an Option Price established by the Committee, subject to the terms and
conditions described in this Article 6 

 

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and to such additional terms and conditions, as
established by the Committee, in its sole discretion, that are consistent with
the provisions of the Plan.  Options
shall be designated as either Incentive Stock Options or Nonqualified Stock
Options, provided that Options granted to Directors and Consultants shall be
Nonqualified Stock Options.  An Option
granted as an Incentive Stock Option shall, to the extent it fails to qualify
as an Incentive Stock Option, be treated as a Nonqualified Stock Option.  Neither the Committee nor the Company or any
of its Affiliates shall be liable to any Participant or to any other person if
it is determined that an Option intended to be an Incentive Stock Option does
not qualify as an Incentive Stock Option. 
Options shall be evidenced by Award Agreements which shall state the
number of Shares covered by such Option. 
Such agreements shall conform to the requirements of the Plan, and may
contain such other provisions, as the Committee shall deem advisable.

 

6.2          Terms of Option Grant.  The Option Price shall be
determined by the Committee at the time of grant, but shall not be less than
100% of the Fair Market Value of a Share on the date of grant.  In the case of any Incentive Stock Option
granted to a Ten Percent Stockholder, the Option Price shall not be less than
110% of the Fair Market Value of a Share on the date of grant.

 

6.3          Option Term.  The term of each Option
shall be determined by the Committee at the time of grant and shall be stated
in the Award Agreement, but in no event shall such term be greater than ten
years (or, in the case on an Incentive Stock Option granted to a Ten Percent
Stockholder, five years).

 

6.4          Time of Exercise.  Options granted under this Article 6
shall be exercisable at such times and be subject to such restrictions and
conditions as the Committee shall in each instance approve, which terms and
restrictions need not be the same for each grant or for each Participant.

 

6.5          Method of Exercise.  Except as otherwise provided in the Plan or
in an Award Agreement, an Option may be exercised for all, or from time to time
any part, of the Shares for which it is then exercisable.  For purposes of this Article 6, the
exercise date of an Option shall be the later of the date a notice of exercise
is received by the Company and, if applicable, the date payment is received by
the Company pursuant to clauses (i), (ii), (iii), (iv), or (v) in the
following sentence. The aggregate Option Price for the Shares as to which an
Option is exercised shall be paid to the Company in full at the time of
exercise at the election of the Participant (i) in cash or its equivalent
(e.g., by cashier’s check), (ii) to the extent permitted by the Committee,
in Shares having a Fair Market Value equal to the aggregate Option Price for
the Shares being purchased and satisfying such other requirements as may be
imposed by the Committee, (iii) partly in cash and, to the extent
permitted by the Committee, partly in such Shares, (iv) by reducing the
number of Shares otherwise deliverable upon the exercise of the Option by the
number of Shares having a Fair Market Value equal to the Option Price, or (v) if
there is a public market for the Shares at such time, subject to such
requirements as may be imposed by the Committee, through the delivery of irrevocable
instructions to a broker to sell Shares obtained upon the exercise of the
Option and to deliver promptly to the Company an amount out of the proceeds of
such sale equal to the aggregate Option Price for the Shares being purchased.  The Committee may prescribe any other method
of payment that it determines to be consistent with applicable law and the
purpose of the Plan.

 

6.6          Limitations on Incentive Stock
Options.  Incentive Stock Options may be
granted only to employees of the Company or of a “parent corporation” or “subsidiary
corporation” (as such terms are defined in Section 424 of the Code) at the
date of grant.  The aggregate Fair Market
Value (generally determined as of the time the Option is granted) of the Shares
with respect to which Incentive Stock Options are exercisable for the first
time by a Participant during any calendar year (under all plans of the Company
and of any parent corporation or subsidiary corporation) shall not exceed one
hundred thousand dollars ($100,000).  For
purposes of the preceding sentence, Incentive Stock Options will be taken into
account generally in the order in which they are granted.  No Incentive Stock Option may be exercised
later than ten (10) years after the date it is granted.  Each provision of the Plan and each Award 

 

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Agreement relating to an Incentive Stock Option
shall be construed so that each Incentive Stock Option shall be an incentive
stock option as defined in Section 422 of the Code, and any provisions of
the Award Agreement thereof that cannot be so construed shall be disregarded.

 

Article 7.               Stock
Appreciation Rights

 

7.1          Grant of Stock Appreciation
Rights.  The Committee is hereby
authorized to grant Stock Appreciation Rights to Participants, including a
grant of Stock Appreciation Rights in tandem with any Option at the same time
such Option is granted (a “Tandem SAR”). 
Stock Appreciation Rights shall be evidenced by Award Agreements that
shall conform to the requirements of the Plan and may contain such other
provisions, as the Committee shall deem advisable.  Subject to the terms of the Plan and any
applicable Award Agreement, a Stock Appreciation Right granted under the Plan
shall confer on the holder thereof a right to receive, upon exercise thereof,
the excess of (a) the Fair Market Value of a specified number of Shares on
the date of exercise over (b) the grant price of the right as specified by
the Committee on the date of the grant.  Such
payment may be in the form of cash, Shares, other property or any combination
thereof, as the Committee shall determine in its sole discretion.

 

7.2          Terms of Stock Appreciation Right.  Subject to the terms of the Plan and any
applicable Award Agreement, the grant price (which shall not be less than 100% of
the Fair Market Value of a Share on the date of grant), term, methods of
exercise, methods of settlement, and any other terms and conditions of any
Stock Appreciation Right shall be as determined by the Committee.  The Committee may impose such other conditions
or restrictions on the exercise of any Stock Appreciation Right as it may deem
appropriate.  Unless otherwise provided
in the Award Agreement, no Stock Appreciation Right shall have a term of more
than 10 years from the date of grant.

 

7.3          Tandem Stock Appreciation Rights
and Options.  A Tandem
SAR shall be exercisable only to the extent that the related Option is
exercisable and shall expire no later than the expiration of the related
Option.  Upon the exercise of all or a
portion of a Tandem SAR, a Participant shall be required to forfeit the right
to purchase an equivalent portion of the related Option (and, when a Share is
purchased under the related Option, the Participant shall be required to
forfeit an equivalent portion of the Stock Appreciation Right).

 

Article 8.               Restricted
Stock

 

8.1          Grant of Restricted Stock.  An Award of Restricted Stock
is a grant by the Company of a specified number of Shares to the Participant,
which Shares may be subject to forfeiture upon the occurrence of specified
events.  Participants shall be awarded
Restricted Stock in exchange for consideration not less than the minimum
consideration required by applicable law.  Restricted Stock shall be evidenced by
an Award Agreement, which shall conform to the requirements of the Plan and may
contain such other provisions, as the Committee shall deem advisable.

 

8.2          Terms of Restricted Stock Awards.  Each Award Agreement evidencing a Restricted
Stock grant shall specify the period(s) of restriction, the number of
Shares of Restricted Stock subject to the Award, the purchase price of such
Shares of Restricted Stock, the performance, employment or other conditions
(including the termination of a Participant’s Service whether due to death,
disability or other cause) under which the Restricted Stock may become vested
or may be forfeited to the Company and such other provisions as the Committee
shall determine.  Upon determination of
the number of Shares of Restricted Stock to be granted to the Participant and
payment of any purchase price, the Committee shall direct that a certificate or
certificates representing the number of Shares be issued to the Participant
with the Participant designated as the registered owner. The certificate(s) representing
such shares shall be legended as to sale, transfer, assignment, pledge or other
encumbrances during the Restriction Period and 

 

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deposited by the Participant, together with a stock
power endorsed in blank, with the Company, to be held in escrow during the
Restriction Period.  At the end of the
Restriction Period, the restrictions imposed hereunder shall lapse with respect
to the number of shares of Restricted Stock as determined by the Committee, and
the legend shall be removed and such number of Shares delivered to the
Participant (or, where appropriate, the Participant’s legal representative).

 

8.3          Voting and Dividend Rights.  Unless otherwise determined
by the Committee and set forth in a Participant’s Award Agreement, Participants
holding Restricted Stock granted hereunder shall have the right to exercise
voting rights with respect to the Restricted Stock and shall have the right to
receive dividends on such Restricted Stock.

 

8.4          Performance Goals.  The Committee may condition the grant of
Restricted Stock or the expiration of the Restriction Period upon the
Participant’s achievement of one or more performance goal(s) specified in
the Award Agreement. If the Participant fails to achieve the specified
performance goal(s), the Committee shall not grant the Restricted Stock to such
Participant or the Participant shall forfeit the Award of Restricted Stock to
the Company, as applicable, unless otherwise provided in the Participant’s
Award Agreement or the applicable stockholders agreement.

 

8.5          Section 83(b) Election.  If a Participant makes an
election pursuant to Section 83(b) of the Code concerning Restricted
Stock, the Participant shall be required to promptly file a copy of such
election with the Company.

 

Article 9.               Dividend
Equivalents

 

The Committee may grant
Dividend Equivalents to Participants based on the dividends declared on Shares
that are subject to any Award.  The grant
of Dividend Equivalents shall be treated as a separate Award.  Dividend Equivalents shall be credited to a notional account maintained by the Company, as
of dividend payment dates during the period between the date the Award is
granted and the date the Award is exercised, vested, expired, credited or
paid.  Such Dividend Equivalents shall be
converted to cash or Shares by such formula and at such time and subject to
such limitations as may be determined by the Committee.  As determined by the Committee, Dividend
Equivalents granted with respect to any Option or Stock Appreciation Right may
be payable regardless of whether such Option or Stock Appreciation Right is
subsequently exercised.

 

Article 10.            Other
Stock-Based Awards

 

The Committee, in its sole discretion, may grant
Awards of Shares and Awards that are valued, in whole or in part, by reference
to, or are otherwise based on the Fair Market Value of, Shares (the “Other
Stock-Based Awards”).  Such Other
Stock-Based Awards shall be in such form, and dependent on such conditions, as
the Committee shall determine, including, without limitation, the right to
receive one or more Shares (or the equivalent cash value of such Shares) upon
the completion of a specified period of service, the occurrence of an event
and/or the attainment of performance objectives.  Other Stock-Based Awards may be granted alone
or in addition to any other Awards granted under the Plan.  Subject to the provisions of the Plan, the
Committee shall determine to whom and when Other Stock-Based Awards will be
made, the number of Shares to be awarded under (or otherwise related to) such
Other Stock-Based Awards; whether such Other Stock-Based Awards shall be
settled in cash, Shares or a combination of cash and Shares; and all other
terms and conditions of such Awards (including, without limitation, the vesting
provisions thereof and provisions ensuring that all Shares so awarded and
issued shall be fully paid and non-assessable).

 

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Article 11.            Compliance
with Section 409A of the Code

 

11.1        General.  To the extent that the Plan and/or Awards are
subject to Section 409A of the Code, the Committee may, in its sole
discretion and without a Participant’s prior consent, amend the Plan and/or
Awards, adopt policies and procedures, or take any other actions (including
amendments, policies, procedures and actions with retroactive effect) as are
necessary or appropriate to (a) exempt the Plan and/or any Award from the
application of Section 409A of the Code, (b) preserve the intended
tax treatment of any such Award, or (c) comply with the requirements of Section 409A
of the Code, Department of Treasury regulations and other interpretive guidance
issued thereunder, including without limitation any such regulations or other
guidance that may be issued after the date of the grant (“Section 409A
Guidance”).  This Plan shall be
interpreted at all times in such a manner that the terms and provisions of the
Plan and Awards are exempt from or comply with Section 409A Guidance.

 

11.2        Timing of Payment.  All
Awards that would otherwise be subject to Section 409A of the Code shall
be paid or otherwise settled on or as soon as practicable after the applicable
vesting date and not later than the 15th day of the third month from the end of
(i) the Participant’s tax
year that includes the applicable payment or settlement date, or (ii) the
Company’s tax year that includes the applicable payment or settlement date,
whichever is later; provided, however, that the Committee reserves the right to delay
payment or specify a compliant payment date with respect to any such Award
under the circumstances set forth in Section 409A Guidance; provided, further, that
notwithstanding any contrary provision in the Plan or Award Agreement, any
payment(s) that are otherwise required to be made under the Plan to a “specified
employee” (as defined under Section 409A of the Code) as a result of his
or her separation from service (other than a payment that is not subject to Section 409A
of the Code) shall be delayed for the first six (6) months following such
separation from service (or, if earlier, the date of death of the specified
employee) and shall instead be paid (in a manner set forth in the Award
Agreement) on the payment date that immediately follows the end of such
six-month period or as soon as administratively practicable thereafter.

 

Article 12.            Adjustments

 

12.1        Adjustments in Capitalization.  In the event of any corporate event or
transaction (including, but not limited to, a change in the Shares of the
Company or the capitalization of the Company) such as a merger, consolidation,
reorganization, recapitalization, separation, stock dividend, stock split,
reverse stock split, split up, spin-off, combination of Shares, exchange of
Shares, dividend in kind, extraordinary cash dividend, or other like change in
capital structure (other than normal cash dividends) to stockholders of the
Company, or any similar corporate event or transaction, the Committee, to
prevent dilution or enlargement of Participants’ rights under the Plan, shall
substitute or adjust, in its sole discretion, (a) the number and kind of
Shares or other securities that may be issued under the Plan, the number and
kind of Shares or other securities subject to outstanding Awards, and/or where
applicable, the exercise price, base value or purchase price applicable to such
Awards; (b) grant a right to receive one or more payments of securities,
cash and/or property (which right may be evidenced as an additional Award under
this Plan) in respect of any outstanding Award, or (c) provide for the
settlement of any outstanding Award (other than a Stock Option or Stock
Appreciation Right) in such securities, cash and/or other property as would
have been received had the Award been settled in full immediately prior to such
corporate event or transaction; provided, however, that in the case of an adjustment made in
accordance with (b) or (c) above, the right to any securities, cash
and/or property may be issued subject to the same vesting schedule as the
outstanding Award being adjusted; and provided, further, that any adjustment
pursuant to this Section 12.1 shall comply with Section 409A of the
Code, to the extent applicable.  Should
the vesting of any Award be conditioned upon the Company’s attainment of
performance conditions, the Board may make such adjustments to the terms and
conditions of such 

 

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Awards and the criteria therein to recognize unusual
and nonrecurring events affecting the Company or in response to changes in
applicable laws, regulations or accounting principles.

 

12.2        Change of Control.  Upon the occurrence of a Change of Control
after the Effective Date, unless otherwise specifically prohibited under
applicable laws or by the applicable rules and regulations of any
governing governmental agencies or national securities exchanges, or unless the
Committee shall determine otherwise in the Award Agreement, the Committee is
authorized (but not obligated) to make adjustments in the terms and conditions
of outstanding Awards, including without limitation the following (or any
combination thereof): (i) continuation or assumption of such outstanding
Awards under the Plan by the Company (if it is the surviving company or
corporation) or by the surviving company or corporation or its parent; (ii) substitution
by the surviving company or corporation or its parent of awards with
substantially the same terms for such outstanding Awards; (iii) accelerated
exercisability, vesting and/or lapse of restrictions under all then outstanding
Awards immediately prior to the occurrence of such event; (iv) upon
written notice, provided that any outstanding Awards must be exercised, to the
extent then exercisable, within fifteen days immediately prior to the scheduled
consummation of the event, or such other period as determined by the Committee
(in either case contingent upon the consummation of the event), and at the end
of such period, such Awards shall terminate to the extent not so exercised
within the relevant period; and (v) cancellation of all or any portion of
outstanding Awards for fair value (as determined in the sole discretion of the
Committee) which, in the case of Options and Stock Appreciation Rights, may
equal the excess, if any, of the value of the consideration to be paid in the
Change of Control transaction to holders of the same number of Shares subject
to such Options or Stock Appreciation Rights (or, if no such consideration is
paid, Fair Market Value of the Shares subject to such outstanding Awards or
portion thereof being canceled) over the aggregate Option Price or grant price,
as applicable, with respect to such Awards or portion thereof being canceled.

 

Article 13.            Duration,
Amendment, Modification, Suspension, and Termination

 

13.1        Duration of the Plan.  Unless sooner terminated as provided in Section 13.2, the Plan
shall terminate on the tenth (10th) anniversary of the Effective Date.

 

13.2        Amendment, Modification,
Suspension, and Termination of Plan.  The Board may amend, alter,
suspend, discontinue, or terminate the Plan or any portion thereof or any Award
(or Award Agreement) thereunder at any time; provided that, subject to Article 11,
no such amendment, alteration, suspension, discontinuation or termination shall
be made (i) without stockholder approval if such approval is necessary to
comply with any tax or regulatory requirement applicable to the Plan and (ii) without
the consent of the Participant, if such action would materially diminish any of
the rights of any Participant under any Award theretofore granted to such
Participant under the Plan; provided, however, the Committee may amend the Plan, any Award or any
Award Agreement in such manner as it deems necessary to comply with applicable
laws.

 

Article 14.            General
Provisions

 

14.1        No Right to Service. The granting of an Award under the Plan
shall impose no obligation on the Company, any Subsidiary or any Affiliate to
continue the Service of a Participant and shall not lessen or affect any right
that the Company, any Subsidiary or any Affiliate may have to terminate the
Service of such Participant. No Participant or other person shall have any
claim to be granted any Award, and there is no obligation for uniformity of
treatment of Participants, or holders or beneficiaries of Awards. The terms and
conditions of Awards and the Committee’s determinations and interpretations
with respect thereto need not be the same with respect to each Participant
(whether or not such Participants are similarly situated).

 

9

 

14.2        Settlement of Awards; No
Fractional Shares.  Each Award Agreement shall establish the form
in which the Award shall be settled.  No
fractional Shares shall be issued or delivered pursuant to the Plan or any
Award.  The Committee shall determine
whether cash, Awards, other securities or other property shall be issued or
paid in lieu of fractional Shares or whether such fractional Shares or any
rights thereto shall be rounded, forfeited or otherwise eliminated.

 

14.3        Tax Withholding.  The Company shall have the power and the right to deduct or withhold,
or require a Participant to remit to the Company, the minimum statutory amount
to satisfy federal, state, and local taxes, domestic or foreign, required by
law or regulation to be withheld with respect to any taxable event arising as a
result of the Plan.  With respect to
required withholding, Participants may elect, subject to the approval of the
Committee, to satisfy the withholding requirement, in whole or in part, by
having the Company withhold Shares or by delivering Shares to the Company,
having a Fair Market Value on the date the tax is to be determined equal to the
minimum statutory total tax that could be imposed on the transaction.

 

14.4        No Guarantees Regarding Tax
Treatment.  Participants (or their beneficiaries) shall
be responsible for all taxes with respect to any Awards under the Plan.  The Committee and the Company make no
guarantees to any person regarding the tax treatment of Awards or payments made
under the Plan.  Neither the Committee nor
the Company has any obligation to take any action to prevent the assessment of
any excise tax on any person with respect to any Award under Section 409A
of the Code or otherwise and none of the Company, any of its Subsidiaries or
Affiliates, or any of their employees or representatives shall have any
liability to a Participant with respect thereto.

 

14.5        Non-Transferability of
Awards.  Except as provided by the terms of any
applicable stockholders agreement or unless otherwise determined by the
Committee, an Award shall not be transferable or assignable by the Participant
except in the event of his death (subject to the applicable laws of descent and
distribution) and any such purported assignment, alienation, pledge,
attachment, sale, transfer or encumbrance shall be void and unenforceable
against the Company or any Affiliate.  An
award exercisable after the death of a Participant may be exercised by the
legatees, personal representatives or distributees of the Participant. Any
permitted transfer of the Awards to heirs or legatees of the Participant shall
not be effective to bind the Company unless the Committee shall have been
furnished with written notice thereof and a copy of such evidence as the
Committee may deem necessary to establish the validity of the transfer and the
acceptance by the transferee or transferees of the terms and conditions hereof.

 

14.6        Conditions and Restrictions on
Shares.  The Committee may impose such other
conditions or restrictions on any Shares received in connection with an Award
as it may deem advisable or desirable. 
These restrictions may include, but shall not be limited to, a
requirement that the Participant hold the Shares received for a specified
period of time or a requirement that a Participant represent and warrant in
writing that the Participant is acquiring the Shares for investment and without
any present intention to sell or distribute such Shares.  The certificates for Shares may include any
legend which the Committee deems appropriate to reflect any conditions and
restrictions applicable to such Shares.

 

14.7        Shares Not Registered. 
Shares and Awards shall not be issued under the Plan unless the issuance
and delivery of such Shares and any Awards comply with (or are exempt from) all
applicable requirements of law, including (without limitation) the Securities
Act of 1933, as amended, the rules and regulations promulgated thereunder,
State securities laws and regulations, and the regulations of any stock
exchange or other securities market on which the Company’s securities may then
be traded.  Except as set forth in an
Award Agreement, the Company shall not be obligated to file any registration
statement under any applicable securities laws to permit the purchase or
issuance of any Shares or any Awards under the Plan, and accordingly any
certificates for Shares or documents granting Awards may have an appropriate
legend or statement of applicable restrictions endorsed thereon.  If the Company deems it necessary to 

 

10

 

ensure that the issuance of securities under the
Plan is not required to be registered under any applicable securities laws,
each Participant to whom such security would be purchased or issued shall
deliver to the Company an agreement or certificate containing such
representations, warranties and covenants as the Company which satisfies such
requirements.

 

14.8        Rights as a Stockholder.  Except as otherwise provided herein or in the applicable Award
Agreement, a Participant shall have none of the rights of a stockholder with
respect to Shares covered by any Award until the Participant becomes the record
holder of such Shares.

 

14.9        Severability.  If any provision of the Plan or any Award is or becomes or is deemed to
be invalid, illegal, or unenforceable in any jurisdiction, or as to any person
or Award, or would disqualify the Plan or any Award under any law deemed
applicable by the Committee, such provision shall be construed or deemed
amended to conform to applicable laws, or if it cannot be so construed or
deemed amended without, in the determination of the Committee, materially altering
the intent of the Plan or the Award, such provision shall be stricken as to
such jurisdiction, person, or Award, and the remainder of the Plan and any such
Award shall remain in full force and effect.

 

14.10      Unfunded Plan.  Participants shall have no right, title, or interest whatsoever in or
to any investments that the Company or any of its Subsidiaries may make to aid
it in meeting its obligations under the Plan. 
Nothing contained in the Plan, and no action taken pursuant to its
provisions, shall create or be construed to create a trust of any kind, or a
fiduciary relationship between the Company and any Participant, beneficiary,
legal representative, or any other person. 
To the extent that any person acquires a right to receive payments from
the Company or any of its Subsidiaries under the Plan, such right shall be no
greater than the right of an unsecured general creditor of the Company or a
Subsidiary, as the case may be.  All
payments to be made hereunder shall be paid from the general funds of the
Company or a Subsidiary, as the case may be, and no special or separate fund
shall be established and no segregation of assets shall be made to assure
payment of such amounts.  The Plan is not
subject to the U.S. Employee Retirement Income Security Act of 1974, as amended
from time to time.

 

14.11      No Constraint on Corporate
Action.  Nothing in the Plan shall be construed to (a) limit,
impair, or otherwise affect the Company’s or its Subsidiary’s right or power to
make adjustments, reclassifications, reorganizations, or changes of its capital
or business structure, or to merge or consolidate, or dissolve, liquidate,
sell, or transfer all or any part of its business or assets, or (b) limit
the right or power of the Company or its Subsidiary to take any action which
such entity deems to be necessary or appropriate.

 

14.12      Successors.  All obligations of the Company under the Plan
with respect to Awards granted hereunder shall be binding on any successor to
the Company, whether the existence of such successor is the result of a direct
or indirect purchase, merger, consolidation, or otherwise, of all or
substantially all of the business or assets of the Company.

 

14.13      Governing Law.  The Plan and each Award
Agreement shall be governed by the laws of the State of Delaware, excluding any
conflicts or choice of law rule or principle that might otherwise refer
construction or interpretation of the Plan to the substantive law of another
jurisdiction.

 

14.14      Effective Date. The Plan shall
be effective as of the date of adoption by the Board, which date is set forth
below (the “Effective Date”), provided that the Plan is approved by the
stockholders of the Company at an annual meeting or any special meeting of
stockholders of the Company within 12 months of the Effective Date, and such
approval of stockholders shall be a condition to the right of each Participant
to receive any Award hereunder.  Any
Award granted under the Plan prior to such approval of stockholders shall be
effective as of the date of grant, but no such Award may be exercised or
settled and 

 

11

 

no restrictions relating to any Award may lapse
prior to such stockholder approval, and if stockholders fail to approve the
Plan as specified hereunder, any such Award shall be cancelled.

 

*                              *                              *
 
This Plan was duly adopted and approved by the Board of Directors of the Company by resolution at a meeting held on the                             day of                           , 2009.
 

STR
HOLDINGS, INC.

 

 

	
   

  	
   

  
	
  Name:

  
	
  Title:

  

 

12Exhibit 10.3

 

Execution Copy

 

EMPLOYMENT
AGREEMENT

 

This Employment Agreement (the
“Agreement”), dated as of July 18, 2008 (the “Effective Date”),
is made by and between SPECIALIZED TECHNOLOGY RESOURCES, INC., a Delaware
corporation (together with any successor thereto, the “Company”), and
DENNIS L. JILOT (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)           “Board” shall mean the Board
of Managers of Parent.

 

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

 

(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; (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 (x) 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 and (y) a
disability upon which Executive would be deemed disabled under the definitions
contained in the long-term disability insurance policy(s) maintained by
the Company for the benefit of Executive pursuant to Section 3(c) of
this Agreement.  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 the preamble hereto.

 

(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 Chairman, President and Chief Executive Officer, 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 Board; (D) 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); or (E) Executive is removed from the Board of
Directors of the Company; 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 180 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, or any successor thereto, a Delaware limited liability company.

 

(m)          “Restricted Shares” shall have the meaning set forth
in Section 6.

 

2

 

(n)           “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 July 18,
2008 and ending on the fourth 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 Chairman,
President and Chief Executive Officer of the Company, with responsibilities,
duties and authority customary for such position.  The Executive shall report to the Board.  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 5% 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 Board, 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 primarily from his
office located in Reno, Nevada, and at such other locations as are mutually
determined by the Executive and the Board, and shall travel as necessary or as
reasonably requested by the Board.

 

3.             Compensation and Related Matters

 

(a)           Annual Base Salary.  During the Term, and effective as of December 31,
2007, the Executive shall receive a base salary at a rate of $500,000 per annum,
which shall be paid in accordance with the customary payroll practices of the
Company (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 and consistent with past
practices, increase the Annual Base Salary considering the Executive’s
performance and that of the Company.

 

(b)           Bonus Compensation.  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 50% of his Annual Base Salary except as the parties
may have agreed otherwise in writing; provided, however, in no event shall Executive be paid a regular bonus
in excess of 100% of his Annual Base Salary. 
The 

 

3

 

Executive’s
bonus will be based upon performance measured against mutually agreed upon
goals to be established as soon as practicable after the date hereof.  In the discretion of management, Executive
shall be eligible to receive incentive units pursuant to the terms of the
Amended and Restated Limited Liability Company Agreement of STR Holdings LLC
(the “LLC Agreement”).  Any bonus
shall be paid no later than the 15th day of the third month following the end
of the calendar year in which such bonus is earned and vested.

 

(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 under Executive’s
current employment agreement, dated September 1, 2003.  For the sake of clarity, Executive shall be
entitled to continue to participate in, on the same or substantially similar
terms, (i) his current long-term disability insurance policy provided by
Provident Life and Accident Insurance Company, (ii) his current life
insurance policy provided by MassMutual Financial Group, (iii) his current
long-term care insurance policy provided by CNA – Continental Casualty Company
(Executive’s wife, Linda Jilot, shall also be entitled to continue to
participate in, on the same or substantially similar terms, her current
long-term care insurance policy provided by CNA – Continental Casualty
Company).  In addition, during the Term,
Executive shall be entitled to reimbursement of the annual membership dues and
standard fees of the La Costa Club of which the Executive is currently a member
not to exceed $9,000.

 

(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.

 

(f)            Legal Expenses. 
Notwithstanding anything to the contrary above, the Company further
agrees to reimburse Executive for Executive’s legal costs up to an amount equal
to $5,000 in connection with the review of this Agreement and the proposed
terms of Employee’s employment hereunder and/or related tax preparation
services by Executive’s legal counsel and/or accountant.

 

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 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 90 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 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 Base Salary
through the Date of 

 

5

 

Termination;
a pro rata portion of Executive’s bonus, if any, for the applicable period of
the calendar year ending on the Date of Termination (which portion of the bonus
shall be reasonably determined by the Board at the end of the year in which
termination occurs in accordance with the Board’s bonus determination policies
then in effect); and any expenses owed to the Executive under Section 3(e).  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 for Good Reason.  If the Executive’s employment shall be
terminated by the Company without Cause or by the Executive for Good Reason
(including by reason of the Executive’s death or Disability but not by reason
of the Executive’s 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 (or
the Executive’s estate), 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 and/or the Executive’s wife’s participation in the
Company’s health and life insurance plans through twenty seven 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. 
Notwithstanding the foregoing provisions of this Paragraph 5(b)(i) or
anything in this Agreement to the contrary, the health and life insurance
benefits that are not non-taxable medical benefits, “disability pay” or “death
benefit” plans within the meaning of Treasury Regulation Section 1.409A-1(a)(5)
shall be provided and administered in a manner that complies with Treasury
Regulation Section 1.409A-3(i)(1)(iv), which requires that (i) the
amount of such benefits provided during one taxable year shall not affect the
amount of such benefits provided in any other taxable year, except that to the
extent such benefits consist of the reimbursement of expenses referred to in Section 105(b) of
the Code, a maximum, if provided under the terms of the plan providing such
health and life insurance benefits, may be imposed on the amount of such
reimbursements over some or all of the period in which such benefit is to be
provided to the Executive and/or the Executive’s wife, as described in Treasury
Regulation Section 1.409A-3(i)(iv)(B), (ii) to the extent that any
such benefits consist of 

 

6

 

reimbursement of eligible expenses, such
reimbursement must be made on or before the last day of the Executive’s taxable
year following the taxable year in which the expense was incurred and (iii) no
such benefit may be liquidated or exchanged for another benefit;

 

(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 (or the Executive’s estate) 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/or the Executive’s wife 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 twenty-seventh 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.             Restricted Stock.  Upon the occurrence of an
initial public offering, Parent intends to issue to the Executive restricted
shares at the initial public offering price with an aggregate fair market value
equal to $6,000,000 (the “Restricted Shares”); provided, however, should
an initial public offering not occur by April 1, 2009, Parent intends to
issue to the Executive Restricted Shares at the then fair market price with an
aggregate fair market value equal to $6,000,000.  Executive shall have the option to make an
election under Section 83(b) of the Internal Revenue Code of 1986, as
amended (“Code”), to include the fair market value of the restricted shares in
his current taxable income as of the date of issuance, and Parent agrees to
reasonably cooperate with Executive if he chooses to make this election. The
Restricted Shares shall be subject to the reasonable terms and conditions of
any equity incentive plan adopted by the Board or the compensation committee of
the Board and shall vest in equal 1/60th installments as of the last day of
each of the 60 successive calendar months beginning after the date of issuance
of such Restricted Shares; provided, however, if Executive is still actively
employed in his current capacity as
Chairman, President and Chief Executive Officer of the Company as of the fourth
anniversary of the Effective Date, the remaining unvested Restricted Shares
shall become immediately vested.  In the event of a Change of Control or in the event
the Executive’s employment is terminated by the Company without Cause or by the
Executive for Good Reason (including by reason of the Executive’s death or
Disability), the Restricted Shares, to the extent they then remain unvested,
shall become immediately and fully vested. 
A “Change of Control” shall mean (i) the sale (in one transaction
or a series of transactions) of all or substantially all of the assets of the
Company to a third party; (ii) a sale or issuance (in one transaction or a
series of transactions) of any securities resulting in more than 50% of the
voting power of the Company 

 

7

 

being
held by a “person” or “group” (as such terms are used in the Exchange Act) that
does not include any of the then existing shareholders of the Company or any of
their respective Affiliates; or (iii) a merger or consolidation of the
Company with or into another Person if following such merger or consolidation,
more than 50% of the voting power of the Company is held by a “person” or “group”
(as such terms are used in the Exchange Act) that does not include any of the
then existing shareholders of the Company or any of their respective
Affiliates.

 

7.            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.

 

8.            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.

 

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

 

10.          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.

 

11.          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

 

8

 

with a copy to:

 

DLJ Merchant Banking Partners

Credit Suisse Alternative Investments

2121 Avenue of the Stars

Suite 3300

Los Angeles, CA 90067

Attn:  Susan C. Schnabel

Facsimile:  (310) 282-7798

 

12.          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.

 

13.          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.

 

14.          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.

 

15.          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.

 

16.          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 

 

9

 

deemed
to refer to the masculine, feminine, neuter, singular or plural as the identity
of the entities or persons referred to may require.

 

17.          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.

 

18.          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.

 

19.          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.

 

20.          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.

 

21.          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
Reno, Nevada, 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 21 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.

 

 [signature page follows]

 

10

 

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

 

	
   

  	
   

  
	
   

  	
  Dennis L. Jilot

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  SPECIALIZED TECHNOLOGY 

  
	
   

  	
  RESOURCES, INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Name: Barry A. Morris

  
	
   

  	
   

  	
  Title: Vice President and
  Chief Financial 

    Officer

  

 

 

SIGNATURE PAGE FOR EMPLOYMENT AGREEMENT (JILOT)

 

 

Appendix A

 

Agreement
Not To Compete

 

[Please see attached]

 

2

 

Execution Copy

 

AGREEMENT NOT TO COMPETE

 

This
Agreement Not To Compete (this “Agreement”) dated as of July 18,
2008 (the “Effective Date”), is made by and between SPECIALIZED
TECHNOLOGY RESOURCES, INC., a Delaware corporation (together with any successor
thereto, the “Company”), and DENNIS L. JILOT (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
Chairman, President and Chief Executive Officer.

 

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 twenty-seven (27) months following the Employee’s Date of Termination
for any reason (the “Initial Noncompetition Period”), provided Company
is not in material default under this Agreement or the Employment Agreement,
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 5% of the outstanding stock of any publicly traded corporation
that competes with the Company or any Company Affiliate in the Business, 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.

 

Provided Company is not in
material default under this Agreement or the Employment Agreement, 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
Salary, and to continue the Executive’s participation in the Company’s health
and life insurance and retirement plans through the Extended Noncompetition
Period.  For all purposes of this
Agreement and the Employment Agreement (including article 3. below), the
Noncompetition Period shall not apply or restrict Employee’s activities, nor
shall the term of the Noncompetition Period be extended, during any time
Company is in material default under this Agreement or the Employment
Agreement.

 

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, or if Company does not seek a protective order or other
motion, 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 

 

2

 

person
required to disclose such information shall use all reasonable efforts to
preserve the confidentiality of the remainder of such information).  Company shall reimburse Employee for the
reasonable expenses (including legal fees and costs) he incurs in responding to
or opposing a request for him to disclose Confidential 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 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 or an Employee Affiliate 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,  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 

 

3

 

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

 

with a copy to:

 

DLJ Merchant Banking
Partners

Credit Suisse Alternative
Investments

2121 Avenue of the Stars

Suite 3300

Los Angeles, CA 90067

Attn:  Susan C. Schnabel

Facsimile:  (310) 282-7798

 

If to 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.

 

4

 

10.           Governing
Law.  This Agreement shall be
governed by and construed in accordance with the internal laws of the State of
Nevada, 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 Agreement, expressed or implied,
is 

 

5

 

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.

 

6

 

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

 

	
   

  	
   

  
	
   

  	
  Dennis L. Jilot

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  SPECIALIZED TECHNOLOGY

  RESOURCES, INC.,

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By: Barry A. Morris

  
	
   

  	
  Its: Vice President and
  Chief Financial Officer

  

 

 

SIGNATURE PAGE FOR
NON-COMPETE AGREEMENT (JILOT)

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